GO
Loading...

Kaminsky's Call: 5 Stocks Represent 27 Percent of S&P Performance

Apple, Berkshire Hathaway, Citigroup, Philip Morris International, McDonald's.

They're not just household names. They're also vivid illustrations of how closet indexers can destroy your wealth, and here's why.

The Fab Five, as we dubbed them on The Strategy Session, represent 27 percent of the S&P's performance year-to-date, an extraordinary measure by any historical standard. Put another way, if you're not long those five companies, you might as well be short the market. And that's exactly why putting your money in an index fund is so dangerous.

Symbol
Price
 
Change
%Change
VOW3
---
SC0Y
---
MCD
---
PM
---

In my new book Smarter Than The Street, I discuss at length the great myth of index investing. When you put your money in a so-called index fund, you're not only taking a passive approach to investing, you're also passing up all the lucrative investment opportunities that present themselves in any kind of market.

In short, you'll lose money when the market goes down and limit your gains when stocks rally. Every generation has its own Apple. You just have to find it.

And that's why at the end of the day, you need to know how to pick stocks if you want to create wealth. Just ask anyone who owned the Fab Five.

Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

DISCLOSURE:
Gary Kaminsky does not hold any equity positions.

DISCLAIMER:
The content of this blog is published in the United States of America and persons who access it agree to do so in accordance with applicable U.S. law.

All opinions expressed in this blog are solely the opinions of Gary Kaminsky and do not reflect the opinions of CNBC, NBC UNIVERSAL or their parent company or affiliates, and may have been previously disseminated on television, radio, internet or another medium. You should not treat any opinion expressed by Mr. Kaminsky as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Kaminsky’s opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Kaminsky, CNBC, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Mr. Kaminsky’s statements and opinions are subject to change without notice. No part of Mr. Kaminsky’s compensation from CNBC is related to the specific opinions he expresses.

Past performance is not indicative of future results. Neither Mr. Kaminsky nor CNBC guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.