Avis, the Unpredictability of Stocks & Index Investing 3-27-25

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This is Scott Becker with the Becker Private Equity and Business Podcast. Today's discussion is around Avis Rent-A-Car, unpredictability, and index funds. So this is the reason why I stick to index funds. And part of this is there's almost no ability to predict unless you're a genius of some sort. And I think then it's still hard to What is going to happen with individual stocks?

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And here's the story today. Today, Avis Rent-A-Car, Avis Budget, which has been down for the last year or so, really struggling, has been in a lot of trouble, jumped 20% today. And you might ask, why did Avis jump 20% today? And I thought maybe good earnings, maybe that it had somebody who's trying to buy Avis Budget. But no, the reason Avis Budget jumped today is

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It's because of the potential increase of imposition of tariffs on autos. And this led people to believe that this is going to have a real positive effect on the rental car business because less people will buy autos, more people will rent autos. Again, if you have the ability to follow this kind of stuff and make those kinds of predictions, more power to you.

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What we've seen over the years is index funds almost always outperform managed mutual funds, managed investment portfolios, because the ability to actually predict better than index funds is lost on 90% of people. There is a small percentage that outperform the index funds, but most of us don't.

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So when I see Avis today pop 20%, I'm reminded of the inability of most of us to predict individual stocks and what's going to happen. I would have never thought deeply enough or at scale enough or at specific enough that this stock would jump based on the imposition of more tariffs on autos by President Trump. There are so many pieces of this you have to follow to be able to make that prediction.