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Just starting your investing journey? Here's what the pros say about how to split your money between single stocks and ETFs.

Just starting your investing journey? Here's what the pros say about how to split your money between single stocks and ETFs.

A friend who's just starting out investing and opened up their first brokerage account asked me the other day: How much should they be putting into single stocks versus ETFs that track the broader market?
It's a good question. Individual stocks, while riskier than diversified ETFs, have the potential for more explosive growth. With stories of retail investors striking it rich with stocks like Nvidia, Apple, Microsoft, and Palantir in recent years, trying your hand at stock picking is tempting.
Seeking an informed view, I asked a few financial experts what they think. Questions like these are always tough to answer in generalities — the right answer depends on someone's individual circumstances, goals, risk tolerance, and timeline. But even with the assumption that the investor is in their 20s and has a long time horizon, the answer was unanimous among the four experts I spoke with — It's better to just have your equity exposure in passive funds.
There are several reasons behind their advice. A big one is the amount of time it takes to research which stocks to buy.
"If you're starting to build a portfolio today, you're much better off focusing your time and energy and attention on your career and making money and putting more money away and just keeping it diversified," said Jason Browne, a Chartered Financial Consultant and the founder of Alexis Investment Partners. "In other words, make sure that you're participating in the growth of the stock market over time instead of spending your time trying to pick individual winners."
Then there's the competition, who you're buying and selling from: Wall Street investors, whose full-time job is watching the market.
"Competing with all those people down there, the tens of thousands and hundreds of thousands of people who have their eyes glued to the screen all day, figuring out how to make a buck," said Chris Chen, a Certified Financial Planner and wealth strategist at Insight Financial Strategists. "As individuals, it's very difficult to do that."
The odds of beating the market are also pretty low, no matter who you are. Even the Wall Street professionals, on average, don't have an impressive track record. Only 15% of large-cap funds have beaten the S&P 500 over the last decade, according to SPIVA data from December 2024. That number is about the same for the last three-year period. During 2024, only 34% of funds beat the index.
A 2024 study from Arizona State University professor Hendrik Bessembinder also found that around 51% of 29,078 US stocks listed since 1925 have lost value over the lifetimes with a median return of -7.4%.
3 tips for stock picking
Those numbers aren't exactly appetizing. But if you're still convinced you can pick winners, or at least want the thrill of trying, there are a few tips experts recommend keeping in mind.
First, allocate a small percentage of your portfolio to individual stocks — something like 5%-10%.
"When you're younger, you can take bigger swings," said Tyler Meyer, a certified financial planner and the founder of Retire to Abundance. "But generally speaking, I would stay away from more than 5% into individual investments."
Second, come up with a method for picking your stocks. While it's probably overly time consuming to do the sort of financial analysis done on Wall Street, there are theories you can go off of, Chen said.
For example, you might consider the Dogs of the Dow theory, Chen said, which posits that the 10 stocks in the Dow Jones Industrial Average with the highest dividends in a given year are the cheapest in the index, and are therefore primed for outperformance in the following year.
Or you could wait for blue-chip stocks like Apple, Meta, and Alphabet to undergo and significant correction and buy the dip, Browne said.
"Every year for whatever reason they fall out of bed," Browne said. "You do have the ability then to add a little bit of value by just trading around the normal trading patterns of those names, because they are so volatile."
Another, less scientific option (but touted by investing icon Warren Buffett) is to buy what you understand. Business Insider recently profiled several everday investors who made winning stock picks based on observations in their day-to-day live.
Third and finally, be prepared to hold onto a stock for at least three-to-five years.
"Statistically, that's when you're going to see the increases in stocks," said Melissa Cox, a Certified Financial Planner and the owner of Future-Focused Wealth. "It's not an overnight thing."
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Tech companies building massive AI data centers should pay to power them
Tech companies building massive AI data centers should pay to power them

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Tech companies building massive AI data centers should pay to power them

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Pixel 10 Pro Price Leak Confirms Google's Bold Decisions
Pixel 10 Pro Price Leak Confirms Google's Bold Decisions

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Pixel 10 Pro Price Leak Confirms Google's Bold Decisions

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After Soaring Nearly 100% So Far This Year, Where Will Palantir Stock Be at the End of 2025?
After Soaring Nearly 100% So Far This Year, Where Will Palantir Stock Be at the End of 2025?

Yahoo

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After Soaring Nearly 100% So Far This Year, Where Will Palantir Stock Be at the End of 2025?

Key Points Palantir has witnessed a meteoric rise in its share price thanks to the company's successful foray into the artificial intelligence (AI) arena. Several respected investors on Wall Street have been applying different approaches when it comes to investing in Palantir, making it hard to discern how "smart money" feels about the company. Palantir is trading for a historically high valuation, and broader buying and selling themes from institutional money managers could suggest a sell-off is on the horizon. 10 stocks we like better than Palantir Technologies › Outside of Nvidia, I'd argue that no other company has benefited from the tailwinds of the artificial intelligence (AI) revolution as much as data mining specialist Palantir Technologies (NASDAQ: PLTR). Over the last three years, shares of Palantir have gained more than 1,300%. Just this year alone, Palantir stock has rocketed by 97%. 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Thanks to a nifty tool called a form 13F, investors can access an itemized breakdown of all of the buys and sells from hedge funds during a given quarter. During the first quarter, famed billionaire investor Stanley Druckenmiller sold out of his fund's Palantir position. In addition, Cathie Wood has been trimming exposure to Palantir in Ark's portfolio as well. On the flip side, billionaire investors Ken Griffin and Israel Englander both added to their funds' respective Palantir positions during the first quarter. Given these dynamics, it might be hard to discern how Wall Street really feels about Palantir. I think there are some nuances to point out given the details above. First, both Druckenmiller and Wood have been in and out of Palantir stock in the past -- this is not the first time each investor reduced their exposure to the data analytics darling. On top of that, I think Griffin's and Englander's activity should be taken with a grain of salt. Both investors run highly sophisticated, multistrategy hedge funds. From time to time, some of this activity may include being a market maker. Although it may appear bullish that Palantir stock is held in Griffin's Citadel and Englander's Millennium Management portfolios, I wouldn't quite buy that narrative. Neither fund is necessarily known for holding positions for the long term. Moreover, as a multistrategy fund with a number of different teams and objectives, I think that it's highly likely that Citadel and Millennium have a layered and complex hedge strategy when it comes to owning a volatile growth stock such as Palantir. Where will Palantir stock be at the end of 2025? The chart below illustrates institutional buying and selling of Palantir stock over the last few years. Given that buying (the purple line) remains elevated over selling (the orange line), this could suggest that Palantir remains a favorite among institutional portfolios. However, as I expressed above, not all hedge funds and money managers have the same strategy. In other words, some of this elevated buying could be part of a broader, more complex trading strategy and less so an endorsement of long-term accumulation. Over the last few months, Palantir stock has become increasingly more expensive. In fact, the company is trading well beyond levels seen during peak days of the dot-com or COVID-19 bubbles. While it's impossible to know for certain where Palantir stock will be trading by the end of the year, smart investors know that nothing goes up in a straight line forever. A good indicator for how investors feel about Palantir's prospects should come after the company reports second-quarter earnings in a couple of weeks. As a reminder, shares fell off a cliff for a brief moment following the company's first-quarter blowout report. Expectations are rising with each passing report, and I would not be surprised to see Palantir stock sell off again -- even if its Q2 results are stellar. Given the convergence between institutional buying and selling, combined with Palantir's increasingly expensive valuation, I can't help but be cautious at this point. I do think a valuation correction could be in store sooner or later and would not be surprised if shares are trading for a considerably lower price by the end of the year. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Adam Spatacco has positions in Alphabet, Amazon, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, Palantir Technologies, Salesforce, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. After Soaring Nearly 100% So Far This Year, Where Will Palantir Stock Be at the End of 2025? was originally published by The Motley Fool

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