Winning at stock picking over the long haul is very, very difficult business, but not impossible.
The first thing is, what does winning mean? As a long running theme here, one way to define winning is that the investor has enough money when he needs it, like at retirement. One way to get there of course is to save a lot and be in the ballpark performance-wise. With this in mind I wanted to spell out how to win in this context without being some sort stock picking genius. Below is a stock portfolio that someone who regularly read Smart Money and Money magazines regularly might have assembled in early 1993 (so 20 years ago).
Financials Fannie Mae and Bank of America
Tech Microsoft and Intel
Industrials General Electric
Telecom Southwestern Bell
Staples Procter & Gamble
These were all very popular stocks 20 years ago and the 1990s was a heyday for the equity market. A couple of notes on the list include that I believe BAC's chart would actually be Nationsbank as when they merged it was the BAC name that survived but not the shares. AT&T is actually Southwestern Bell because the original T is no more. Picking a mainstream financial stock going back so far is difficult because similar to BAC JPM has a lot of Bank One, Chemical and if I am remembering correctly I think Chemical bought Manufacturer's Hanover. Maybe Wells Fargo would have been a better choice.
Putting $10,000 equally into each of the ten names until early 1999 would have worked out as follows;
Fannie Mae $42,089
Bank of America $30,051
This would total $572,257 versus $332,519 putting the entire original $100,000 into Vanguard S&P 500 (VFINX). Having made no trades, by the summer of 2002 the values would be as follows;
Fannie Mae $45,831
Bank of America $34,029
The total in summer 2002 would have dropped to $428,731 and the all-VFINX option would have been at $247,508. At the 2009 lows this is what it would have looked like;
Fannie Mae $280
Bank of America $5219
The total at the March 2009 low would have been $248,190 versus the all VFINX option at $207,650. Finally, having held on to all ten through Friday;
Fannie Mae $219 lag
Bank of America $17,741 lag
Merck $36,574 lag
AT&T $47,014 lag