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Old 05-27-2013, 01:05 PM   #41
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Originally Posted by Ed_The_Gypsy View Post
I suppose it would if it were not in an IRA, but it is. Right now, my/our only investment outside of the IRA is the house.

The idea is to simplify things for her (and maybe me if my marbles fall out before I leave the game).
I forget how much of many people's savings are in tax-deferred programs. This makes it easy.

> 2/3 of mine is taxable.

Ha
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Old 05-27-2013, 01:21 PM   #42
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Rather than selling everything and buying a single fund, I told DW she could just leave everything where it is. No fancy rebalancing, but that's just a marginal benefit anyway. We don't hold anything I wouldn't mind keeping a long time.
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Old 05-27-2013, 01:51 PM   #43
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I have no mutual funds at this point - just individual stocks that pay dividends. There are a few major losers but also some major winners. This isn't a good time to buy stocks - though you never know. IMHO at some point the market will lurch down for a bit and I'd buy then. Since my stocks are paying dividends it lessens the market impact, as does the fact that the Dow was around 9,000 when I bought most of them. The dividends keep on coming (on most).

I also own a REIT and a - don't know what you call it, company buys key man insurance policies that aren't needed (in the $1M + size, good quality) and pays a hefty interest rate to me. I kind of laddered the money in that one. 6 mos. at 4 3/4 %... 3 years @7%. Seems fine to me. YMMV!

I have a pretty diverse portfolio and I actually like following this stuff, but I'm not a technical analyst - I go on gut instinct for the most part (assuming the balance sheet and industry looks okay).

Some of this is in tax-deferred or ROTH accounts, some in taxable. That affects things too.
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Old 05-27-2013, 05:57 PM   #44
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[QUOTE=thinker25;1323705]

...I actually like following this stuff, but I'm not a technical analyst - I go on gut instinct for the most part...

thinker25, you might want to re-think this.
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Old 05-28-2013, 11:27 AM   #45
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I like individual stocks for core holdings. However, it is so easy to buy a sector as part of an asset allocation in ETF's, so I combine those two ideas and it has worked well......
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Old 05-29-2013, 10:24 AM   #46
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I buy individual stocks because it is the only way I can achieve my goals.

I've seen two stock market crashes so far and I am only 37. I am convinced that the only viable way to invest is to go back to the old "widows and orphans" method, which is based on creating income from your investments.

The majority of the stocks I own are boring. They provide domestic essential services. I like boring stocks. When I buy into them I do so at a dividend yield that I am happy with. So, I don't need much dividend growth. I just need enough to offset inflation and I will be happy.

For the most part I can ignore the stock market. What I pay attention to is the quarterly results for each company. I have found this to be a low key, even enjoyable, way to invest.


Here are five examples:

Southern Company = A large utility company in the south east. Provides power for four states.

Waste Management Inc = Largest waste management company in the US. Owns and operates landfills, recycling, etc.

Correction Corporation of America = Largest private prison company. Owns and operates prisons, also the largest prisoner transportation company.

HCP Inc = Owns real estate leased to health care companies all over the US like nursing homes and hospitals.

AT&T = One of the largest telecom companies in the US.
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Old 01-02-2014, 02:10 PM   #47
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We used individual stocks from 1995-2005 and did very well. Since 2006 we use cheap ETFs and funds.

The main difference is time and stress. With our ETF / fund portfolio, I can completely ignore it and check on it once a year.

With individual stocks I was basically watching the market all the time.
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Old 01-02-2014, 02:33 PM   #48
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True. What I was thinking is, say you had 30 stocks, and let's say on average they followed the market pretty closely. Probably some would be up, some down, so you could realize a loss or a gain if you needed. But with an ETF that matched the market, you would have to go with what it was (up/down/flat).

OK, you might have ETF shares purchased at different times, and that would give you some choice. But I think on average, 30 stocks would provide more flexibility. It may or may not be significant, but it's something to think about.

-ERD50
I think the flexibility is more important now than ever, with significant subsidies available for Obamacare. It is extremely important to manage your income to avoid the very steep cliffs with losing out on subsidies. By judicious selling of some individual hedges I am managed to end the year with ($1,000) loss for the year, not that it matter this year but potentially next year, it might.

Not easy to do with coach potato portfolio of 3 or so ETF or funds.
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Old 01-02-2014, 03:28 PM   #49
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Addressing the OP main point. We have rehashed this in the past so I'll make this pretty short.

Virtually all the research showing the average investors does worse than index has been in the form, of looking at actively managed funds and finding out that yes they do provide investor with worse performance due to higher expense. But mutual funds are run by people and the fund manager change routinely. Nobody to my knowledge has actually tracked the investing performance of say the 2003 class of MBA students from Harvard, MIT, Penn etc who took jobs at Wall Street and see how they've done 10 years latter. Now if that study shows that aggregate these folks did worse than the index that would interesting.

The analogy somewhat flawed is you look at professional sports franchise only the Lakers, Celtics, and Yankee have win percentage over 600, in fact on average everybody else does worse than 500.. Then conclude that general managers/coaches don't matter so you higher the least expensive GM/coach.

Finally I have been invested mostly but not entirely in individual stocks since in my early 20s I've learned a lot over the last 30 years. Mostly I've learned that I have a good temperament for buying stocks and Warren Buffett says temperament is more important than intelligence.

Much of the confidence I had to buy in 2008 and early 2009 was because I have the skill to do fundamental analysis on stocks. It was much easier to say Apple was cheap at $85 in Dec 2008, or write long post explaining why Berkshire was very cheap at $70,000 a week before the market bottom in March 2009 than to make the generally argument that the whole market was cheap.

So yes for the average investor stick with index mutual funds, but when it comes to investing neither myself nor many of the board members are average.
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Old 01-02-2014, 03:42 PM   #50
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I'm still an individual stock guy although I do own a couple of etf's and one international fund. But I admit, I would have done better this year if I had simply used index funds with the same AA. But sometimes it works the other way. My returns are better over the last 5 years using individual stocks vs index funds.

As I get older, I will probably move more towards funds. The more my brain rust, the simpler I need to make it.
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Old 01-02-2014, 03:55 PM   #51
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So yes for the average investor stick with index mutual funds, but when it comes to investing neither myself nor many of the board members are average.
I aspire to average. Haven't made it yet.
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Old 01-02-2014, 07:15 PM   #52
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I only know of one proven way to beat the market's average return: take MORE risk than the average.
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AA = 60/35/5. Expected CAGR = 5.7%. GSD (5y) = 7.8%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.5%. Net Port Yield = 1.7%. Term = 36 yr. FI Duration = 4.9 yr. Portfolio survival probability = 86%.
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Old 02-08-2014, 11:28 AM   #53
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I buy stocks. I keep the number of stocks in the 20 range. I do a lot of research and screening. I like stocks that have a solid business with moat protection and a high return on equity. They have to be selling at reasonable valuations. If they pay a dividend that's a bonus. I like small caps that aren't widely followed. I avoid resource and oil and gas stocks. Have a good look at the metrics .Avoid stocks with high levels of debt . I have been doing this for 14 years and I have consistently beat the performance of benchmark index's. I am not a fan of mutual funds. They are good for the fund companies and the people that sell them. The ETF index stocks will over the long term outperform MFs . Bogle has this figured out. I should mention I am not a big trader. If I have a stock that has been going real good I will sell a good portion and look for something else.
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Old 02-08-2014, 12:24 PM   #54
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I certainly recommend considering individual stocks if you have large holdings i.e. > $1M, and you want to be a little more active in managing your funds.
Fees can certainly be lower than a mutual fund, especially if you buy and hold. You can try to just mimic a fund you like by looking at their holdings. If you don't do any trades in a year, your fees are 0%.. and you're only taxed on dividends.
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Old 02-10-2014, 09:20 PM   #55
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I have a few individual stocks as a small portion of my assets. I consider it more of a hobby/building a dividend portfolio to pay for all my future vacations
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Old 02-11-2014, 06:49 AM   #56
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Individual stocks are great except when you own something for 7+ years (MLP with great dividends), then all of the sudden they report earnings and the stock drops 50% in 1 day.....BWP, go check it out. I'm only 31, but in today's economic environment and uncertainty, I will never have any money that I absolutely depend on, (including retirement assets), in any one individual stock....I think it's best to spread out in mutual funds and etfs...may miss out on a few percentage points in gains, but you never really have to worry about a company tanking....
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Old 02-11-2014, 07:48 AM   #57
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Hi, curious, never bought an individual stock. Started with mutual funds, stopped and now only EFT's', long or short. Historical data indicates investor's who buy the market, DOW, S&P, etc., do better than those buying stocks. It costs less as well.
My F-I-L is a dirty rotten stock picker. There, I said it!

Seriously, historical data is not comparable to one stock. For instance, pick VZ. If I look at the entire history of this stock (since 1983) vs. S&P500, on price the index comes out ahead. If I look at dividends reinvested, VZ comes out way ahead. Currently the yield is 4.5%, and it has averaged similar in the past. The dividend keeps coming.

With an individual stock you can do worse than the index. But you can do better, sometimes with more price volatility. More work is required to pick something that fits your goals.

I don't own any individual stocks, so this is just what I see, not what I do.
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