[doovd]

> what’s the role of buying and/or trading individual stocks?

Loads of reasons to do so:

1. You might have enough alpha to beat the returns of an index.

2.You prefer a more market neutral strategy and construct your own basket, maintaining it over various timescales.

The fact is that most of these reasons don't apply to your average retail investor though.

[terabytest]

Would you be willing to go into more detail about those two reasons? I feel I don’t have enough experience to understand the reasoning underlying them.

[ironSkillet]

I can try to provide some additional information:

1. If you have a view of current market dynamics that you think many other investors have wrong, it can be profitable to go long/short an individual stock. E.g. you have some data suggesting that company XYZ is going to have a great quarter relative to market expectations, and buy some of the stock. Hedge funds do this all the time, with mixed success.

2. Some investors don't want to be exposed to the up/down trends in the overall market, and would prefer an investing strategy whose return/risk profile is independent of the general market. You can do this by creating long/short portfolios in individual sectors/stocks. For example, if you are long stock A, short stock B, you can make money if the market rises or falls, as long as you were right about the relative performance of each stock. In a rising market, you would make money if stock A gained more than stock B. In a falling market, you would make money if stock A lost less than stock B.