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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 02:19 PM   #41
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Re: Why when it comes to equities, I'm sticking to funds...

Balanced index on one side, Unclemick's Norwegian widow stocks on the other - in spite of ups/downs, ying and yang - neither side has blown the barn doors off my porfolio(since 1977) to be the hands down winner. I too reread Bernstein's 15 Stock Diversification Myth quite often.

85% balanced index (Target Retirement) , 15% individual stocks.

If I get bored or lazy or whatever - well then I may just go out and buy -

A Kayak!

heh heh heh heh , , .

P.S. Hopefully I'm past the rental RE phase - in my 14th year of ER. The remodelling bug may bite again - or not!
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 02:43 PM   #42
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by al_bundy
i just checked the chart, and you just described a cup and handle chart pattern. I've read it in the technical analysis literature, but never really heard a first person account.
Funny, I thought it described a raised middle finger chart pattern. Anyway, it's nice to know I'm setting an example...even if it is a bad one.

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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 03:42 PM   #43
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Re: Why when it comes to equities, I'm sticking to funds...

Quote:
Originally Posted by CyclingInvestor
I do not feel comfortable investing in companies which do not meet my criteria,
which is inevitiable with fund investing.
Yes, that's really what keeps me from doing much fund/ETF investing too. Almost every time you post I nod in agreement. I'll bet there's a lot of overlap in our portfolios as my criteria are similar to yours.
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 04:09 PM   #44
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Re: Why when it comes to equities, I'm sticking to funds...

I mainly buy individual stocks (and use ETFs rather than mutual funds where that isn't a reasonable option). It hasn't been hard to do at least as well, better mostly, than the overall markets, and individual stocks are extremely tax efficient, have no hidden fees and all activity completely controlable.

Another big reason though, is that buying individual stocks is just much more interesting than buying mutual funds.
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 04:25 PM   #45
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Re: Why when it comes to equities, I'm sticking to funds...

I have the bulk of my money in funds but I have been known to buy a stock or two and I'm with wahoo in that I don't really enjoy it .I do have a small amount set aside for penney stocks.It's amazing they are highly speculative but they let me sleep well.XKEM,BKMP
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 04:30 PM   #46
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by Anansi


Another big reason though, is that buying individual stocks is just much more interesting than buying mutual funds.
unclemick is going to have to take you behind the shed & give you a lesson on keeping those hormones under control
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 04:37 PM   #47
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Re: Why when it comes to equities, I'm sticking to funds...

I guess I'm a little odd in that I'm happy keeping it simple. The plan for the stock portion is 3 index funds covering S&P, small cap, and emerging/int'l respectively. Will some of you guys beat my returns? sure. I tried to play with the big boys in the dot-com days and got creamed even though I picked "sensible" stuff. Basically I did a dogs of the dow type portfolio and some telecom stocks from worthy competitiors who turned out to have been telling even wilder lies about their financial state than we were, and I did the deer in the headlights thing and couldn't quite bring myself to sell. Between that portfolio experience and my lay-off from corporate America, I did some soul searching re: my personal rick tolerance and decided a pleasant night's sleep is worth getting a % or 2 less return. If I get braver as I learn more about stock picking, I might designate 5% of my stock portfolio as play money and see what happens...
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 04:38 PM   #48
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Re: Why when it comes to equities, I'm sticking to funds...

"I guess I'm a little odd in that I'm happy keeping it simple"

If you can sleep well at night and live your life how you want who cares eh? Be happy!
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 04:45 PM   #49
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by Mwsinron
If you can sleep well at night and live your life how you want who cares eh? Be happy!
That's the key. It's interesting reading all of the variations that people are using that meet that criteria.

Someone needs to write a book "Zen and the art of portfolio selection"
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 05:26 PM   #50
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by yakers
unclemick is going to have to take you behind the shed & give you a lesson on keeping those hormones under control
Consider picking stocks a hobby. One that makes money. Unlike any of my other hobbies.
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 06:08 PM   #51
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by Anansi
Consider picking stocks a hobby. One that makes money. Unlike any of my other hobbies.
Agreed!

My other Hobby: RC helicopters.. Now that is fun but $$$$$

Heres a link to someone flying a trex on google videos!

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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 06:12 PM   #52
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Re: Why when it comes to equities, I'm sticking to funds...

I couldnt imagine individual stocks in multi million dollar portfolio...when I get there, I will let you know but sounds like a hassle..
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-05-2007, 06:37 PM   #53
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by REWahoo!
I've never been comfortable buying individual stocks. On the few occasions I've stuck my toe in the water I've made some money and lost some money, and thankfully had only had one really big loser. But I've rarely been able to sleep well while owning them and usually felt a sense of relief once I sold.
I'm with you. I had a couple of educational years in the late 90s where I did very well with individual tech stocks. It was mostly an experiment "for fun", but I very quickly figured out that it was WAY more work than I was willing to put in to stay on top of things, and I wasn't willing to put a large portion of my investments that way. It seemed that I would end up having a full time job as a fund manager when I retired if I tried to do that.

And I definitely agree with Brewer's comment that it may be more about having a sufficiently strong stomach than brains.

So in the interest of "getting a life" during retirement, I went with funds and a simple investment approach that didn't require much monitoring at all.

Audrey
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-06-2007, 05:33 AM   #54
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Re: Why when it comes to equities, I'm sticking to funds...

I learned my lesson. My biggest problem investing in individual stocks is me. On average, I wound up ok... but I got burned... or I should say, I burned myself on a few stocks.

I will stick with funds (of some sort) from here on out. I am using funds for other holdings as well (i.e., bonds, etc...).
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-06-2007, 06:03 AM   #55
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by OKLibrarian
I did some soul searching re: my personal rick tolerance and decided a pleasant night's sleep is worth getting a % or 2 less return. If I get braver as I learn more about stock picking, I might designate 5% of my stock portfolio as play money and see what happens...
The good news is that, if you are typical, you won't even be giving up that 1 or 2% by sticking with ETFs or low expense funds. But, if like many of us, you have to fiddle with someting, then the 5% "playing around" account is probably a smart way to avoid major damage.


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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-06-2007, 08:16 AM   #56
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Re: Why when it comes to equities, I'm sticking to funds...

Quote:
Originally Posted by Anansi
Consider picking stocks a hobby. One that makes money. Unlike any of my other hobbies.
For us it is mandatory for us to actively manage the portfolio until it reaches our target for 3.5% SWR. It is also a hobby and a habit. I wonder if we are going to be able to kick the habit after we reach the goal. It is also fun to hear news about our specific holdings. There is a much stronger connection with our companies than with the funds that our in our sheltered portfolio.

We had out loses in the 2000 swoon but so did everyone else in equities... 8)
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-06-2007, 09:58 AM   #57
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Re: Why when it comes to equities, I'm sticking to funds...

Quote:
Originally Posted by webbach
Back to LOL's comments re: dividend spin off and tax implications. This year I started freaking out about paying taxes on dividend proceeds during my accumulation phase. It seems that our desired outcome in ER is at loggerheads with what we are doing in the accumulation phase. The problem is that one (presumably) would like to switch to higher-yielding funds during ER, but doing so would incur cap gains taxes on the sale of the lower-yielding funds we prefer prior to ER for the lower tax load. I've shied away from DVY in favor of SPY because of the yield. Does anyone have any input? Should we not worry about the tax implications now in favor of higher yield in ER? On a related note, given that cap gains and dividend tax is currently 15%, is there a difference in ER between higher yield vs. higher cap gain? Anyone's crystal ball say that one tax rate will outpace the other in, say, 2015?

WEBBY
I am 20 years from ER and 30 years from normal retirement. I am starting this "dividend accumulation" strategy right now. In a taxable acount. Single biggest reason is I have read that dividends by blue chip companies tend to increase higher than inflation, and the favorable tax treatment of dividends is my plan for at least 25% of my retirement income.

I have no issue paying "some taxes" over next 20 years to accumulate enough dividends to live off of in retirement.

Plan 1 is to buy the highest yielding stocks in the DOW, around $1200 total each year. MSFT, PG etc. The goal is 100k-200k of dividend paying stocks yielding me ~$4500/year. The tap out RMDs to top of tax bracket each year to supplement this.

Plan 1 suggests that 100k of assets are in blue chips. Plan 2 suggests to supplement this with around 50k-100k in addition in much smaller dividend paying companies (somebody mentioned ALD earlier, HPT and many other smaller dividend payers in much smaller positions for the Plan 2 part of portfolio.

Plan 3 is to find a way to increase portfolio from 200k to 500k. 500k yielding 3% is $15k. This is enough to be around 25% of the income needed during retirement. This 15k should increase higher than inflation each year. More than likely this phase comes with selling of a house, or something similar (cash windfall).

I do not mind paying some taxes along the way to have a reasonable taxable account size. I'd rather have a tax problem than an income problem.
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-06-2007, 10:15 AM   #58
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by jIMOh
Plan 1 is to buy the highest yielding stocks in the DOW, around $1200 total each year. MSFT, PG etc. The goal is 100k-200k of dividend paying stocks yielding me ~$4500/year. The tap out RMDs to top of tax bracket each year to supplement this.
Dow Diamonds (ETF) yields a little over 2%. It is a nice easy way to own the Dow. That is a little shy of your 3% goal.

Perhaps a better option is the Vanguard High Dividend Yield ETF (VYM). It is yielding about 2.78%.

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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-06-2007, 10:25 AM   #59
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by jIMOh
I am starting this "dividend accumulation" strategy right now. In a taxable acount. Single biggest reason is I have read that dividends by blue chip companies tend to increase higher than inflation, and the favorable tax treatment of dividends is my plan for at least 25% of my retirement income.
Many of us on this board can remember when dividend income was double-taxed and discouraged, so stock buybacks & swashbuckling corporate raiders were the way to unlock the true value of your investments. Every earnings-estimate concensus was beaten by a penny/share, too. Don't miss those days a bit.

But I've read Siegel's "The Future For Investors" and it sure is hard for the CFO to lie when the dividends are paid out. We have about eight percent of our portfolio in a DOW dividend ETF (DVY) and another 21% in PowerShares' International Dividend ETF (PID). We're reinvesting dividends in both and I'd buy more DVY if the share price took a major hit.
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Re: Why when it comes to equities, I'm sticking to funds...
Old 04-06-2007, 10:25 AM   #60
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Re: Why when it comes to equities, I'm sticking to funds...

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Originally Posted by Nords
Was it Bernstein who said he'd rather live his life than take on a bunch of single-stock risks? While I may have obsessive-compulsive tendencies, I'm pretty sure that I'm not in the same class as Buffett. The smart move is index ETFs, and that's where we're heading in a leisurely manner.
I'm curious if the reason you are moving to ETFs is because you are out of the accumulation phase or if you see some inherent benefit to ETFs over indexed funds that I'm overlooking? I looked at it briefly, but it just didn't seem to make sense for me since I have very early on in my accumulation.
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