On why I don’t buy growth stocks, and how a diversified, income-focused portfolio with controlled risk can outperform hype-driven picks.
Palantir is up over 750% over the last 5 years. NVIDIA is up over 1400% in the last 5 years. MicroStrategy is up 2200% over the last 10 years.
Seeing numbers like that, and seeing investors flash their green profits on stocks like these, there is an obvious appeal to growth investing.
But here’s why I don’t buy growth stocks.
Survivorship Bias: I Don’t Buy Growth Stocks Based on Past Winners
Stock pickers suffer from a kind of survivorship bias; the fact that we know of the successful ones is only because they have been successful, and we are only aware of the fact after the matter.
In other words, we notice the winners after they’ve already won, and we forget about or most likely never even heard of all the others who didn’t make it.
This gives us a false impression.
It makes it seem like successful stock picking is common, or that it’s easy if you’re smart or work hard.
But that’s not really the case.
For every investor who made a lot of money picking the right stocks, there are many more who lost money or did worse than average.
We just don’t hear about them; they disappear from the story.
Think of it like a talent show or the Olympics, where we only see the finalists on TV.
We never see the thousands of people who tried out and didn’t make it.
That doesn’t mean they didn’t try or weren’t good. It just means we only remember the ones who made it through. That’s survivorship bias.
In the stock market, this bias can lead people to think that picking stocks is a reliable way to get rich.
But in reality, it’s very hard to beat the overall market, especially over many years.
Some people get lucky for a while, but that doesn’t mean they can do it again.
Just because someone succeeded once doesn’t mean they’ll always succeed or that we can copy what they did.
Survivorship bias reminds us to look at the full picture, not just the success stories.
If we only pay attention to the winners, we miss the lessons from those who didn’t make it.
Viral Success vs. Reality: I Don’t Buy Growth Stocks Recommended by YouTubers
You might see this play out with YouTubers who talk about investing.
They often highlight their winning stock picks, the ones that made a lot of money or grew quickly, because those are more exciting and get more views.
But they don’t always show the picks that didn’t work out. Sometimes they quietly remove those videos or just never mention them again.
Chances are, you’ve never heard of the stock-picking YouTubers who never picked a winning stock at all.
They might have stopped making videos, or never gained enough attention to build an audience in the first place.
In that way, survivorship bias affects who we even get to watch and learn from.
We end up seeing only the success stories, again and again, and that can give the false impression that picking the right stocks is easy or common, when it’s actually the rare exception.
Beating the Market is Rare
Very few active fund managers consistently beat their benchmarks, especially over the long term.
According to the S&P Dow Jones Indices’ SPIVA (S&P Indices Versus Active) reports, which are among the most respected sources on this, the results of U.S. Equity Fund Managers are striking;
- Over 1 year, roughly 40–45% of active managers beat their benchmark.
- Over 5 years, only about 20–25% do.
- Over 10 years, typically under 10% beat the benchmark.
- Over 15 years, it drops even further, often less than 5%.
This pattern is consistent not just in the U.S., but across most global markets, including Europe, Canada, Australia, and emerging markets.
Even though some managers beat the market in a given year, very few do so consistently, and almost none beat the market after fees and costs over long periods.
And these are people paid to do that; it’s literally their job to beat their respective benchmarks, and they can dedicate hours and hours per week to attempting to do that.
We, on the other hand, have other things to do.
The Luck Factor: I Don’t Buy Growth Stocks Based on Short-Term Streaks
It’s hard to know whether someone is actually skilled or just lucky, even if they beat the market for a while.
This is the real existential dilemma of stock picking: not only is it hard to succeed, but it’s also hard to even tell if you’re good at it.
Imagine flipping a coin 10 times. Some people will randomly get 8 or 9 heads. Does that make them expert coin flippers?
Of course not; it was just a chance.
The same thing can happen with investing. A person might pick a few winning stocks in a row, but that doesn’t prove they’re skilled. It could just be a lucky streak.
The problem is, luck can look just like skill, especially in the short term.
By the time we think someone is “good,” it might already be too late; they could just as easily be about to enter a long losing streak.
In fact, research shows that even professional fund managers (the small number of ones that do beat the benchmark that is) even they often can’t tell if their own outperformance is repeatable.
Therefore, it’s hard by itself to pick stocks successfully, but also hard to know if you are good at it, even when you think you are good at it.
On top of that, I am actually ok with average market returns.
That’s why the bulk of my portfolio lives in what I call The Boring Middle.
The Boring Middle
This is the part of my strategy that doesn’t try to beat the market. It is the market.
I use one fund, FWRG, the Invesco FTSE All-World UCITS ETF (Acc), for this.
It’s globally diversified, low-cost, and reinvests dividends automatically.
No watching charts, no reacting to news and no trying to guess the next hot sector.
Just buy it regularly, let it tick away in the background, and move on with your life.
So, when I say I’m okay with “average market returns,” what does that actually mean?
Well, a global fund like FWRG tracks thousands of companies across developed and emerging markets.
Historically, the average annual return for this kind of global equity exposure, after inflation, is around 7% per year over the long term.
Some years it’s up big and some years it’s down. But if you zoom out far enough, that’s roughly the long-run trajectory.
It’s not exactly a get-rich-quick plan or an exciting YouTube video on 3 stocks to buy now. But it’s not bad either.
Compound that over 20 or 30 years, and it’s enough to change your life, without needing to be lucky, or “good,” or even constantly switched on.
I Don’t Buy Growth Stocks to “Beat” the Average
Some people think settling for market returns is admitting defeat.
Something they might not know is that Benjamin Graham, the father of value investing and Warren Buffett’s own teacher, came to a similar conclusion late in life.
In a 1976 interview, Graham said:
“I am no longer an advocate of elaborate techniques of security analysis to find superior value opportunities. This was a rewarding activity, say, 40 years ago, but the situation has changed a great deal since then.”
He went on to say that for most investors, the best results would likely come from a simple portfolio invested in index funds, and this was before index funds were even popular.
In other words, even the guy who literally wrote the book on stock picking came to see that beating the market had become incredibly difficult, and probably not worth the effort for most people.
That ties into the Efficient Market Hypothesis, the idea that stock prices already reflect all the known information.
If that’s true, trying to outsmart the market isn’t just hard; it might be basically impossible over the long term.
That brings us to Jack Bogle, the founder of Vanguard. His advice is:
“Don’t look for the needle in the haystack. Just buy the haystack.”
That’s exactly what I’m doing with FWRG. It owns thousands of companies across developed and emerging markets. It doesn’t try to beat the market. It is the market.
Therefore, I’m not trying to find the next Nvidia or timing the next dip.
I’m just building slowly, in the boring middle, where the real wealth grows in the background.
The Rest of The Metronome Portfolio
Aside from the “boring” middle, the Metronome Portfolio has two other important layers: the Base and the Tip, each with its own purpose.
The Base: The Foundation of The Portfolio That Pays your Bills
This is the most reliable part of the portfolio. It’s the part designed to cover your Minimum Viable Lifestyle through dividend income.
The base is made up of carefully chosen, dividend-paying companies that keep ticking along even when markets are turbulent.
Picking dividend stocks is different from picking growth stocks.
It’s more like choosing the horses you think will finish the race, not necessarily the ones that will win it.
With growth stocks, you’re often trying to find the next big winner, the company that will grow the fastest or deliver the highest return.
It’s a bet on outperformance, and usually comes with more risk and more volatility.
Dividend investing takes a different approach.
Instead of trying to predict who finishes first, you focus on companies that are reliable, durable, and steady, the kind that;
- Keep running
- Keep generating profits
- Keep paying out dividends over time
It’s less about speed and more about staying power. You don’t need them to sprint upwards on the chart.
You just need them to make it to the end, quarter after quarter, year after year.
These are the stocks that help you sleep at night. They won’t shoot the lights out, but they send you cash regularly.
That means even during market dips, you have income coming in, and that gives you an element of freedom.
In my case, the Base gave me peace of mind during short contracts and unstable periods, like COVID, when income was less predictable.
The Tip: The Controlled Outlet for Risk
The tip is a small, speculative slice of the portfolio set aside for high-risk, high-reward plays.
For instance, crypto, moonshot stocks, or that one biotech company you’ve researched for 10 hours straight.
This part is tiny, ideally less than 3% but definitely less than 5% of the portfolio.
The tip is there to scratch the itch; to explore upside without endangering the rest of your financial plan.
If it all goes to zero, no problem, you’re still standing strong. But if it works out, you’ve got a little bonus.
The key is that it’s fenced off. You can be curious without being reckless.
Why Growth Stocks are Only Worth It for Asymmetric Upside
If you’re picking growth stocks, you’re usually doing it for the promise of asymmetric upside.
You’re willing to take on more risk because you believe the potential reward is many multiples of your initial investment.
That’s totally fair in theory.
But here’s the question: If you’re that confident in your picks, why not go all in?
Why not use leverage, options, or concentrated bets to maximise those returns?
Deep down, most people know they’re not that sure.
If you’re not sure, then taking big swings with your whole portfolio doesn’t make sense. That’s where the logic starts to break down.
Even if you were that sure, the irony is that there are more efficient ways to chase asymmetric upside than buying individual growth stocks.
If I believed a certain company was a 10x opportunity, I’d probably take that trade in the Tip of my portfolio, where I can isolate risk, limit exposure, and still benefit massively if it works out.
That’s asymmetric thinking done properly:
- Small downside
- Large upside
- Limited capital at risk
But too many people flip that around; they expose their entire portfolio to high-volatility growth stocks, hoping to win big.
That’s not targeted asymmetric investing. That’s just gambling with poor risk management.
The Metronome Portfolio is built around this exact insight.
- The Base pays the bills.
- The Middle compounds steadily.
- The Tip is reserved for ideas with genuine asymmetric return potential—where even a small allocation can make a meaningful difference without putting the rest of the plan in jeopardy.
Asymmetric upside is worth chasing, but only if you pursue it rationally.
That means admitting that if you’re not willing to go all-in with leverage on your growth stock picks, you might not believe in them as much as you think.
We Don’t Get Paid to Research
Professional fund managers, those who spend all day analysing companies, reading financial reports, meeting with executives, and building intricate models, do it because it’s literally their job. It’s what they’re paid to do, full-time.
Most of us are doing this in our spare time, between work, family, and everything else life throws at us.
So we’re competing against people who do this for a living, using tools we don’t have, with information we often get later, and with less time to act on it.
That’s a serious mismatch.
And even then, most professionals still don’t beat the market over the long run.
Therefore, ask yourself: if they can’t do it with all their advantages, why would we expect to?
And more importantly, why should we?
Why spend hours researching stock picks when you could get solid returns with a simple, diversified ETF that runs on autopilot?
Unless researching stocks is something you truly love doing for its own sake, there’s just not much payoff for the average investor.
We don’t get paid to research.
But we do pay the price in time, stress, and often lower returns, just to chase a statistically unlikely outcome.
That’s not a trade I’m willing to make.
Final Thoughts: Why I Don’t Buy Growth Stocks
If you love researching individual companies, watching trends, and making bold bets, that’s totally fine.
But personally, I’ve realised that chasing alpha isn’t the path I want to take.
For me, simplicity, predictability, and a strategy that actually works in real life win.
That’s why I built the Metronome Portfolio.
It’s not flashy, it won’t go viral, but it helps me sleep at night.
It balances security with growth, discipline with flexibility, and risk with realism.
Therefore, whether markets go up, down, or sideways, I’ve got a portfolio model that keeps ticking.