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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain
Old 11-05-2005, 12:07 PM   #41
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain

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Originally Posted by Apocalypse . . .um . . .SOON
Years to Go:* I bought WMB near the bottom, and like a fool sold too soon, anticipating another crash.* I also bought Calpine (and lost).* Did well on ILD, a preferred stock/bond that I sold too.* I was down there in the 'muck of fear' with the best of them.* Plus, I'll never forget my Enron debacle.

--Greg
Considering the Enron precedent I don't think you were foolish to anticipate a further WMB crash.* Although they did have cool cartoons in their ads!
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain
Old 11-05-2005, 03:20 PM   #42
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain

Quote:
Originally Posted by Apocalypse . . .um . . .SOON

...
Warren Buffett exists in the middle somewhere, plus he has a staff of highly paid and trained researchers.* He can dig up the diamonds/values, study them carefully, expose any flaws or opportunities, and then make investment determinations.* He also has unlimited amounts of time to do this, employee man-hours consumed.* *Most Individuals don't have this luxury unless it's a full-time job.

...

I don't like either of the first two extremes at this stage of my life.* But I'm also well aware that I am not W. Buffet.* I can prove that too.

--Greg
There's no need to be Warren Buffett when you can just buy BRK shares.

Hey I'm not 100% in one investment either, but I do like more focus than alot of people here. I have about 20% of my net worth in Fidelity Low Priced Stock in my IRA, 20% in a plain-jane savings type account, and the rest of the 60% is split between BRK and exploiting a particular index derivative characteristic that I have discovered (up 30% on that in the last year, who knows how long that will last).

I just see no reason to have my money in companies that are absolute turds, which is what happens when you are in an index fund. I also happen to agree with many of the analysts that think the next 10+ years in the general market will be relatively flat and that many more non-index funds will outperform index funds over that time frame.

I am also only 33, and saving a pretty big portion of what I make, so I can afford more "risk" than some others here.

Good luck to all in their investments.
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain
Old 11-05-2005, 03:33 PM   #43
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain

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Originally Posted by . . . Yrs to Go
Couldn't agree more.

I'm a corporate bond research analyst for a major Wall Street firm.* Consider my advantages:

1) I spend 60+ hours / week doing nothing else.
2) I have a staff of people (working even longer hours) building financial models, combing through bond indentures & regulatory filings, and digging up all kinds of obscure data.
3) I have the resources to hire lawyers, consultants or other specialists as needed.
4) I have access to senior management.
5) I talk daily with major money managers (i.e. PIMCO, Fidelity, etc) so I know what they are thinking.
6) Through my sales and trading desks I have an idea what these money managers are actually buying and selling.
7) I specialize in a specific industry sector so all of these resources are brought to bear on a narrow slice of the market.
8 ) I work directly with a market making trading desk so our trades capture the bid / offer spread, rather than paying it

With all these advantages it is still not easy to "beat the market" - largely because everyone else on the Street is in a similar position.* Individual investors are seriously disadvantaged by comparison.
So Years, why are you slumming around here?

Ha
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain
Old 11-05-2005, 04:16 PM   #44
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain

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Originally Posted by Piffle
There's no need to be Warren Buffett when you can just buy BRK shares.*
I know it is a bit egotistical to quote oneself, but so be it.*

I'd like to make one more plug for a tighter focus of investments.* *You don't have to spend tons and tons of time researching investments, you just have to spend some time researching investment MANAGERS.* Why would I spend hours upon hours of time researching stocks when I can hire the best of the best to do it for me?* Do some research and figure out what managers/groups have LONG-TERM track records of beating the indexes.* Study their philosophies of investing and make sure you are comfortable with them.* I don't happen to think that some of these guys with 20-30+ years of success beating averages are just bell curve outliers.* If I spent 40 hours a week studying stocks I could probably beat most of these guys (I've done it), just because of how nimble I can be as an individual investor.* But I'm just not willing to do the time right now.

Here are a few of my favorites, FYI-

Warren Buffett - I think everyone here knows who this is.*

That Tillinghast guy that runs Fidelity Low-Priced Stock Fund - This guy really understands stocks.* I've read a bit about him and I'm impressed enough to have 20% of my bucks under his management.* I kinda lucked out in that this was originally a 401k and I only had 4 fund choices and fell into this one.* Now I'd have to really be spooked to pull it out as the fund is closed to new investment.

The Dodge and Cox guys - These guys are also not only sharp, but pretty conservative, and can still beat the averages.

Ok, that's it from me for now.* I have to go hide from all you Bernstein Fanatics.*
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain
Old 11-05-2005, 05:16 PM   #45
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Re: Diversifying Doesn't Lower Risk, But It Does Lower Potential Gain

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Originally Posted by HaHa
So Years, why are you slumming around here?

Ha
Not exactly sure what you mean.

But the quote you referenced refers only to the corporate bond market and to a specific industry within that market.* Furthermore, my employer prohibits me from investing in any way within my sector coverage responsibilities.* So all those "advantages" don't benefit me personally.*

And although I know plenty about money and investing, I knew very little about retirement planning - which is why I'm here.
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