Why some people buy individual stocks when most feel impossible to do

[unclemick]

Time not timing was a factor(human not necessarily financial). Started ER with DRIP dividend stocks, cash, rental RE and let my 401k rollover ride in basically index funds although I wasn't totally pure with small doses of REIT, high yield corp, pssst Wellesley. Sold off over the years. At 22 yrs of ER - Vanguard life cycle type funds(aka index) and 4 DRIP div stocks left.

heh heh heh - now that the Saint's finally finally got a Superbowl I may dabble some more in 'a few good stocks' as male hormone medicine. I historically and still favor dividend growth type stocks. Big Dog (2006) is Vanguard Target Retirement 2015.

[Running_Man]

Quote:

Originally Posted by Totoro What do you think about big tobacco stocks / companies?

I had sold MO at the end of last year @ 54 but the tobacco stocks were upgraded by Value Line in their ratings and I got back in in June @49. For right now I like certain ones ok, their values are not great but acceptable. There is a level of risk in these stocks that requires to me at least a 4% dividend with double inflation increase expectations and at 50 MO just met that for me.

[Running_Man]

OK it has now been one year since my original post on my love of AMGN and actually in the last month there was an opportunity to purchase it near the price I paid - 130.09 was the print low for the stock. Just announced earnings today and they are doing much better than my original projections when I had stock value @ 2.29 and just announced raising dividend 27 percent to $4.00 per year quite a bit higher than I had in my original plan. Stock is caught in the Biotech overvaluation fight, but AMGN is not overvalued in my opinion.

So a year ago it was paying $2.44 in annual dividends and now dividend is up to $4.00 as their earnings are exploding upwards. AMGN expecting 10.75 for a PE of 15.5 you are getting great growth and income at a very cheap price. AMGN's main risk would be that bio-similar took away all their market. At this point the upside with new drug approvals is far more enticing to me than the risk of bio-similar.

As a point of comparison, just to drive indexers a bit batty, VTI which paid a quarterly dividend of .56 a year ago (vs AMGN .61) is now paying .51 (vs AMGN $1.00). While VTI is up 5.9% in the past year AMGN is up 10.46%.

The companies similar to AMGN that I own right now are IDA, WEC, KO, MO, MMM, HRL, CVS, CHD, ICE, ROP, VFC. all have increased dividend more than twice rate of inflation in last year and all have done well for me. There has been a hidden bull market in quality dividend risers for the past year as ZIRP continues to effect market. This bull market could end with an increase by FED in December but I believe all of them will continue to grow dividend faster than inflation.

I Also own GEO, HCP and MMP (relatively recent purchase after getting out of all oils about when I posted about AMGN as I thought oil would result in bear market of oil and related stocks - see oil stock thread.) as higher than average dividend stocks with good prospects for rating dividend at least as much as inflation and having shown a commitment to shareholders for dividends. But these stocks are not the same type of dividend stock as my other holdings.

RE: added interesting note from son of an old friend
I worked with a guy who was an early convert to indexing and in Jan 1995 when I was trying to get him to invest in individual stocks he asked me to give him one stock that could be held for the long term and beat S&P500 index, I told he should take 75% of his money and buy 30 year treasuries which at the time were yielding just under 8 percent and put 25% of his money in Brown Forman, because people were always going to drink and break dishes at restaurants. We bet 10 bucks on Brown Forman at 25% being better than the S&P 500 @ 25% of his portfolio writing up a letter, stating all this that his son found, in settling his affairs after his recent death in his financial information, unknown to me he bought 100 shares of Brown Forman in Jan 1995 for $5,500 and never sold, it was his sole holding in a brokerage account and that $5,500 is worth 40K todays after splits he now owns 375 shares, S&P 500 would be worth 23K with same investment, I never got my 10 bucks!

[Fermion]

AMGN was great. I did buy 200 shares at $132 on this recent dip but sold them way early in the rebound at $140. It is $164 now. I didn't think it would go up $24 in two weeks!

I still think Gilead is a good value here at $107. Yes their earnings may flatten out in 2016, but their management has been able to make some really good decisions for the past decade and likely will continue to do so. If it gets back down around $99 I am a buyer again.

[samclem]

Quote:

Originally Posted by Running_Man As a point of comparison, just to drive indexers a bit batty, VTI which paid a quarterly dividend of .56 a year ago (vs AMGN .61) is now paying .51 (vs AMGN $1.00). While VTI is up 5.9% in the past year AMGN is up 10.46%.

I won $2 with a scratch-off ticket one time. I was brilliant. I'm sure it just drove everyone batty.

[Running_Man]

Quote:

Originally Posted by samclem I won $2 with a scratch-off ticket one time. I was brilliant. I'm sure it just drove everyone batty.

Lol

[RISP]

Glad to hear you are doing so well, Running-Man. I wish I could say the same for my individual stock holdings.

Quote:

Originally Posted by Running_Man Just announced earnings today and they are doing much better than my original projections

So what you are saying is, you failed at predicting the future and got lucky?

Quote:

Originally Posted by Running_Man As a point of comparison, just to drive indexers a bit batty, VTI which paid a quarterly dividend of .56 a year ago (vs AMGN .61) is now paying .51 (vs AMGN $1.00). While VTI is up 5.9% in the past year AMGN is up 10.46%.

My stock index holdings are up 8.24% YTD plus dividends (Too lazy to look up the amount. It's anyway minor.), and I'm well diversified.

Quote:

Originally Posted by Running_Man I told he should take 75% of his money and buy 30 year treasuries which at the time were yielding just under 8 percent and put 25% of his money in Brown Forman, because people were always going to drink and break dishes at restaurants.

His entire stock allocation in one company? That's just horrible advice.

Oh, and samclem? Post of the year.

Quote:

Originally Posted by samclem I won $2 with a scratch-off ticket one time. I was brilliant. I'm sure it just drove everyone batty.

[Running_Man]

[QUOTE=RISP;1650192]/[Quote]


So what you are saying is, you failed at predicting the future and got lucky?

I view stock selections as similar to a job. If I took a job and got raises larger than I thought I would, I assume my performance was even better than I had planned and not that I was a failure. You are entitled though to your own definition.



His entire stock allocation in one company? That's just horrible advice.

He was the one who wanted one stock that could beat an index not me, as a lazy person who believed making money should be as simple as picking one idea and leaving it be for life, he wanted to know what I thought could equal that and I came up with the one company I knew would always have a business, Jack Daniels and broken dishes. He is the one who ultimately preferred the risk of lower returns that diversification offers as he did not follow my advice.

[Zathras]

A well diversified set of single stocks works very well for many people.
With indexes you have no direct control over capital gains, dividends, etc.

With individual stocks you have no fees, although indexes don't have big fees, they are still there.

Indexes do have advantages as well, which is why they are a good fit for some people.

I agree putting everything in one stock is little more than gambling, a portfolio of well researched, diversified group of individual dividend payers is nothing like gambling.

[Fermion]

Putting everything in one stock is gambling, but I wish I had put everything in Berk-A about 30 years ago.

[Zathras]

Quote:

Originally Posted by Fermion Putting everything in one stock is gambling, but I wish I had put everything in Berk-A about 30 years ago.

Well, with the benefit of hindsight, I sure wish I had put everything in TSLA when they first went public:face palm:

However, I'm glad I stick to a well diversified group of stocks. It lets me sleep better at night

[53anddone]

Quote:

Originally Posted by ScaredtoQuit Why is everyone so negative on following something other than the Bogle approach? Try investing in individual stocks… you might like it!! I’ve been following Josh Peters Dividend Investor newsletter recommendations for about 7 years now and have been achieving excellent results. By concentrating on higher than average dividend yields and companies that increase their dividends each year, in the long run you are quite likely to beat the market averages. Plus, if you have a low cost broker, your fees are lower than even the most inexpensive investment companies!! You can criticize my approach all you like, but until you actually try it, you’ll never know what you’re missing!!

Same here. This has worked very well for me and worth the $200 per year in spades.