A. This time of the year, if you turn to any financial media, it won't be hard for you to see the advice: where to invest in 2017. You will see a list of stocks that include some famous ones and some you have never heard of, one thing is common - they all look to have a great return in 2017 with good reasons.
The reality? It's best to ingore such "where to invest next year" advices, if you want to have a better chance beating the index.
Historical data has proven again and again, returns from such pundits' predictions are not better than the returns you could get easily by just putting your money in an index fund. For example, Barron's 2016 list, Forbest' 2016 list, CNBC's 2016 list all either underperformed or barely met index performances, without considering costs.
Why such a short list of candicates failed to beat the market consistently?
a. Index performance is driven by a small number of stocks (1 in 4), so your chance of a list 10 stocks all fall in that winners group is statistically against you.
b. A short list of stocks is not diversified, so any poor performance among the candidates could easily derail the entire portfolio's performance.