Picking Stocks | Common Sense Investing

In this episode of Common Sense Investing, the speaker talks about the risks associated with owning individual stocks. He explains the difference between systematic and non-systematic risk and that non-systematic risk, which is the risk of an individual stock, can be easily diversified away by using low-cost index funds and therefore is not a compensated risk. Despite this, many people still irrationally hold large positions in individual stocks due to biases such as the desire to speculate and confusion between familiarity and safety. The speaker also mentions that stock prices are random and that successful speculation is usually attributed to luck.