Why Buy Individual Stocks When ETFs Are Already Diversified?

10-Year ETF Reality Check Series_part 4

This post is part of a 4-part series analyzing long-term ETF strategies, risks, and smarter investment paths.


Many investors lean on ETFs like VOO for broad market exposure and sector diversification. But some still wonder: if the index already includes winners like Apple and Tesla, why bother picking individual stocks at all?

📊 ETF Diversification vs. Single-Stock Potential

Let’s compare the 10-year performance of four well-known U.S. giants — AAPL, TSLA, WMT, and JPM — with VOO. These represent sector leaders in technology, innovation, consumer staples, and finance.

Initial investment: $10,000 each, held from Jan 2015 to Dec 2024.

Performance summary comparing AAPL, TSLA, WMT, and VOO from 2015 to 2024

Growth chart of AAPL, TSLA, WMT, and VOO over 10 years

While VOO delivered a solid 14.46% annualized return, AAPL returned nearly 30% annually, and TSLA an explosive 43%. However, TSLA also had a -67% drawdown — a nightmare for risk-averse investors. WMT, despite its low volatility, outperformed VOO modestly.

🧠 Picking Stocks: Rewarding But Risky

What about choosing a "safe" mix of stocks from different sectors? Consider AAPL + JPM:

 
Performance summary comparing AAPL, JPM, and VOO over 10 years
Growth chart of AAPL, JPM, and VOO from 2015 to 2024
AAPL again dominated with a $105K end balance, but JPM underperformed relative to AAPL and barely beat VOO. The volatility was also higher than the index. Even with two “blue chip” stocks, concentration risk remains.

💡 Takeaway: Why ETFs Still Win for Most Investors

  • ETFs like VOO offer peace of mind with automatic sector balancing.
  • Individual stocks can outperform — if you pick the right ones and withstand the drawdowns.
  • Most long-term investors benefit more from consistency than brilliance.

In short: if you want excitement, pick stocks. If you want sleep, buy the index.

I hope this note brings a little more clarity, calm, and richness to your life.





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