Buy the pick of the litter or buy the whole litter?

[redduck]

It seems that some very good companies have simply been hammered. So, the question is, does it make more sense to buy just the best of the bunch, let's say, Proctor and Gamble (OK, P&G hasn't exactly been hammered, but everyone is familiar with it) or does it make more sense to buy a mutual fund or ETF that specializes in Consumer Products?

 

[Animorph]

I'd at least buy a few of the bunch. I'd want to diversify the company risk a bit. I'd only go with the ETF if you don't want to pick individual stocks or don't have enough cash to diversify into several companies. Depending on how much of your portfolio is going into this and how risky each individual stock is, I might try 3 to 20 companies.

 

[ziggy29]

If I had the desire to pick individual stocks, I'd go with the 2-3 strongest in each sector you're looking at.

 

[Urchina]

This question assumes that you know which dog is the pick of the litter.

I, for one, don't. So, most of our investments are in index funds. I buy the whole litter. That's a lot more dogs, but it guarantees that I get the pick of the litter, too.

I also don't have to pay a handler to show my dogs, and it minimizes my time spent "handling" my investments, too, leaving me with extra time to spend with my kids.

I just finished reading "The little book of common sense investing" by John Bogle (Vanguard group's founder) and he makes a powerful case for index investing (which is what we tended towards anyway). It's an easy read and is worth the couple of hours it'll take you.

 

[haha]

ADX

It seems that some very good companies have simply been hammered. So, the question is, does it make more sense to buy just the best of the bunch, let's say, Proctor and Gamble (OK, P&G hasn't exactly been hammered, but everyone is familiar with it) or does it make more sense to buy a mutual fund or ETF that specializes in Consumer Products?

There is an excellent low expense closed end fund named Adams Express. They own real blue chips, plus some quality oil and gas and service companies via a cross holding in PEO, Petroleum and Resources- also a low expense fund. Both of these are currently selling at double digit discounts to NAV.

Ha

 

[travelover]

Or you could just buy Berkshire Hathaway stock...I've heard they've got a pretty good manager........