opinions of a few individual stocks ?

[JohnEyles]

I am trying to clean up my stock allocation some, wanting to move towards
a portfolio of mostly index ETFs. On the other hand, I don't see any point in
selling off any really stellar stocks. So I solicit opinions regarding the following:
which do you think are so solid you'd keep them as part of a mostly-index-fund
stock allocation, and which would you get rid of ?

AMKR, A, BC, CISCO, GE, HD, HPQ, HRP, INTC, JPM, JNJ, KO, NKE, NT, NXL, PG, PEP ?

Thanks !

[Nords]

Quote:

Originally Posted by JohnEyles AMKR, A, BC, CISCO, GE, HD, HPQ, HRP, INTC, JPM, JNJ, KO, NKE, NT, NXL, PG, PEP ?

Are you asking if we'd buy these today at their closing prices?

Or are you asking if you should keep stuff you've had lying around? It makes a difference whether you bought Intel at $80... or $17.

As a general strategy you could sell enough of your losers to cancel out the taxable gains on your other investment winners. If I was selling a loser, for example, I'd start with Nortel. But not if you bought it at $1.90...

[JohnEyles]

Quote:

Originally Posted by Nords Are you asking if we'd buy these today at their closing prices? Or are you asking if you should keep stuff you've had lying around? It makes a difference whether you bought Intel at $80... or $17. As a general strategy you could sell enough of your losers to cancel out the taxable gains on your other investment winners. If I was selling a loser, for example, I'd start with Nortel. But not if you bought it at $1.90...

I guess I'm asking for strong opionions one way or the other, outside the middle
zone where second-order issues like cap-gains come into play: would you wanna
keep it even if there was some tax-related reason to sell it ? or, do you consider
it a bad place to have money sitting if you can move it elsewhere without too much
pain (cap-gains or fee issues) ? Does that make sense ? Never mind about half
my list is in tax-advantaged accounts anyhow.

BTW, maybe I'm misunderstanding you, but I don't think the history of what I paid
for any of these really matters, except to the extent it affects tax issues. The
only history that matters is that it's in my account already; I doubt many people
would design their stock allocation saying "I really SHOULD have some AMKR in
there" !!

[Cool Dood]

Do you have any other reasons to sell than for the "cleanliness" or simplicity of your portfolio? Unless you have some reason to think an index ETF will outperform your stocks or provide needed diversification, it doesn't seem worth the expense to switch to a more expensive holding. In my untrained, inexperienced opinion...

[Cool Dood]

And yes, other than taxes, fees, and similar concerns, I don't see what difference it makes if you bought something at $1 or at $100.

[JohnEyles]

Quote:

Originally Posted by Cool Dood Do you have any other reasons to sell than for the "cleanliness" or simplicity of your portfolio?

Not really - that and I've pretty much fallen for the whole portfolio-of-index-funds notion.

Quote:

Unless you have some reason to think an index ETF will outperform your stocks or provide needed diversification, it doesn't seem worth the expense to switch.

Unless it's a stock that isn't considered such a winner - which was kinda my question.

[ladelfina]

John Eyles, I am kinda in your same situation.. enamored of the ETF/index idea but with a load of stock that is puttering along fine. I was all eager to 'clean house' the more I frequented the forum and read up on index investing strategy, but whether due to analysis paralysis or just a grain of common sense I've drifted into the "if it ain't broke.." camp. When the time comes that I feel like I'm only doing as well as the market.. or worse.. then I will revisit my decision not to decide! I agree with CoolDood. Holding forever gives you an expense ratio barely distinguishable from zero. I guess you are asking if any of these look like they have less-than-rosy futures, but I think that's a good question with or without the context you describe.

I liked the look of JNJ and was considering picking up some.. AMKR.. you're right.. why?
I think my strategy going forward is going to be sticking with individual stocks with companies and sectors that I vaguely understand, and rely on ETFs/indexes for things that for me are gnarly or tedious, like small/micro cap, bonds, etc.


P.S. to all (a dumb question, perhaps): When numbers are thrown out like: "the S&P 500 is up X% YTD" is that usually with dividends, or not? I feel like I should know this!

I found a previous thread here:
http://early-retirement.org/forums/i...96353#msg96353

Quote:

I just poked around some more on S&P's website. And found out in their math of indexes pdf that there are TWO different S&P 500 index returns. Price Return, which is on price only. Total Return, which includes dividends reinvested . I found a new S&P press release that shows CY 2005 return as 4.91 %. They did not specify which return, but the URL for the document has Total Return in its name. S&P has added to the confusion by not clearly identifying which return. Many media outlets picked up and distributed the return for 2005 as 3.00%. So now I know that the return I should compare mutual funds to is the Total Return, which is 4.91% for 2005.

Confusing! What's the general consensus on these %ages? That is, which one is usually reported, and when people post about such benchmarks is it likely to be Total Return or..??

[maddythebeagle]

I also like JNJ and pick it up on the dips...probably the one I would keep if only want to keep 1...I dont follow the computer companies...probably should tell us why you bought any of these anyway...you made the initial decision

[brewer12345]

I agree about JNJ. Personally, I would be incined to boot most of them. If you don't have a strong reason to hold each and every stock, why risk your capital on things you either don't understand or can't/won't follow closely?

[LOL!]

Over the last couple of years, we have also moved away from individual stocks to ETFs. We had the stocks for a few major reasons: (1) no holding costs to own, (2) complete control over taxes via our sell decisions and (3) opportunity to sell covered calls.

My spouse's investment club recently dissolved after many years of following the NAIC methods for stock selection and purchase. It seems that all the members would rather keep things more diversified with ETFs and take a very long term outlook without having to watch things monthly or quarterly.

FWIW, stocks in your list that have been owned and sold: CSCO, GE, HD, HPQ, INTC.
At the present time, we own only 3 stocks: ING, MO, TXN and one stock owns us NT.

I agree with brewer, there is probably no reason to own any of them including JNJ. You will own some JNJ through mutual funds anyways.

Quote:

Originally Posted by JohnEyles AMKR, A, BC, CISCO, GE, HD, HPQ, HRP, INTC, JPM, JNJ, KO, NKE, NT, NXL, PG, PEP

[FinanceDude]

Agree to some extent with brewer and others, but some people just "like" owning a few stocks. FWIW, I would keep:

PG: pretty recession-proof

HD: as long as the mgmt team keeps delivering, they have a unique product others don't

JNJ: buy on the dips............I have made a ton of money in them over the years..........

Sell the rest.............buy ETFs for sector exposure........

[astromeria]

I've been selling off individual stocks because I got tired of following them closely, not because I thought indexing would be mroe profitable (actually in my case it's been a wash). Index funds don't need much watching--just enough to rebalance. It also makes doing taxes easier.

I retired coz I don't wanna work, not coz I wanna replace editing technical documentation with performing stock analysis. Editing was easier for me!

[saluki9]

Quote:

Originally Posted by Nords Are you asking if we'd buy these today at their closing prices? Or are you asking if you should keep stuff you've had lying around? It makes a difference whether you bought Intel at $80... or $17.

Other than taxes why would it matter if you bought Intel at $1 or $100 a share?

[unclemick]

Quote:

Originally Posted by FinanceDude Agree to some extent with brewer and others, but some people just "like" owning a few stocks.

First ten years of ER stocks(DRIP plans) provided as much as 40% income of a really cheap budget. Now at 13th year of ER - an over the hill old 63 - balanced index IRA, early SS has replaced stocks.

The stocks have been shifted mentally to the great hope catagory - Saints in the Superbowl, Viagra in the rest home, bragging rights to a few great stocks at the doughnut shop.

Still think it's a hormone thing. Unless you're strictly a dividend invvestor.

heh heh heh heh heh heh

[Dawg52]

Quote:

Originally Posted by unclemick2 The stocks have been shifted mentally to the great hope catagory - Saints in the Superbowl, Viagra in the rest home, bragging rights to a few great stocks at the doughnut shop.

Saints are actually showing some signs of life. Maybe you will get your wish before we are pushing up daisys.

[FIRE'd@51]

While I agree that it is generally preferable to hold index funds, if you are income oriented you might want to consider hanging on to some of the stocks which you hold in a taxable account which have a dividend yield greater than the S&P 500 (currently about 1.8%), especially if they have a history of raising their dividends, in order to take advantage of the favorable tax treatment. I'm not saying to hold a stock you don't want just for the dividend, but if you are indifferent about the stock, you might want to give consideration to the dividend. Of course, this doesn't apply to the REITS since their dividends don't qualify for the lower rates.

[yakers]

Like unclemick said:"unless you are a dividend investor". That would be one reason to keep dividend paying stocks like JNJ at least. I have collected 6 DRIP stocks which I intend to keep and change over to spending rather than reinvesting the dividends. I could hold them "forever" and leave them to the kids. And in a pinch I could sell them. You could also have divident funds/ETFs or sell off some assets but I expect that divident flow from appropriate stocks would reduce volitility in an ER portfolio.

[Nords]

Quote:

Originally Posted by JohnEyles I guess I'm asking for strong opionions one way or the other, outside the middle zone where second-order issues like cap-gains come into play: would you wanna keep it even if there was some tax-related reason to sell it ? or, do you consider it a bad place to have money sitting if you can move it elsewhere without too much pain (cap-gains or fee issues) ? Does that make sense ? Never mind about half my list is in tax-advantaged accounts anyhow. BTW, maybe I'm misunderstanding you, but I don't think the history of what I paid for any of these really matters, except to the extent it affects tax issues. The only history that matters is that it's in my account already; I doubt many people would design their stock allocation saying "I really SHOULD have some AMKR in there" !!

Phew, when it comes to paying taxes the cap gains are a first-order issue with me. Unrealized losses don't last forever and some of these stocks will never recover their glory days. But if you can't realize a loss then price doesn't matter.

I don't want to put words in your mouth, but I'm hearing "I want to move to index funds without inadvertently selling the world's best stock just before it starts its runup." But, heck, even Buffett regrets not selling Coke a few years ago.

Each of the stocks by itself, especially the larger caps, is probably relatively idiot- and recession-proof. But even Nortel has been brought down by fraud and Home Depot's Nardelli is taking the "jerk factor" to levels not seen since Chainsaw Al Dunlap. If you're not willing to keep an eye on them then any of them could gut your portfolio.

If you're not fascinated by the thought of keeping (& tracking) the individual stocks then it becomes a question of asset allocation & diversification. If a stock fits a particular asset allocation then you could keep it (especially if it's paying a high dividend, but again that's not an issue in a tax-deferred account). However every one of your stocks is probably easily replaced (and much better diversified) by replacing them with an index fund.

So with the info you've provided, if you're not interested in keeping tabs on single-stock risk and cap gains aren't an issue then I'd sell the lot and start over with an index-fund asset allocation. That'd be especially true for any investor if one of the stocks on that list happened to be their company's stock.

Quote:

Originally Posted by FIRE'd@51 While I agree that it is generally preferable to hold index funds, if you are income oriented you might want to consider hanging on to some of the stocks which you hold in a taxable account which have a dividend yield greater than the S&P 500 (currently about 1.8%), especially if they have a history of raising their dividends, in order to take advantage of the favorable tax treatment.

If by "tax advantaged" you mean tax-deferred, then I guess you wouldn't care about dividends either...

[FIRE'd@51]

Quote:

Originally Posted by Nords If by "tax advantaged" you mean tax-deferred, then I guess you wouldn't care about dividends either...

By "tax advantaged" I mean taxed at favorable rates - 15% max and 5% (0% in 2008-2010) in the 10% and 15% brackets.

[JohnEyles]

Quote:

Of course, this doesn't apply to the REITS since their dividends don't qualify for the lower rates.

Which reminds me of something I've been meaning to ask: should REITs be considered
part of one's stock or bond allocation ?

Quote:

but I'm hearing "I want to move to index funds without inadvertently selling the world's best stock just before it starts its runup."

Yes, that captures my thoughts pretty well, thanks.