Stock Investing

[FREE866]

There are way too many "bond investing" threads on here so need to change the convo here!


Where are my stock investors at? and how do you invest in them?


I learned a long time ago I'm an awful stock picker so I'm committed to all ETF's. No fees and tax efficient.

 

[nvestysly]

Stock picker here...

Not saying I'm great at it but it serves us (me and DW) well. Except for BRK-B and two other stocks that don't pay dividends, all of our holdings are stocks and ETF's that pay dividends. Dividends are what we live on - it's amazing how dividends grow and grow over time.

Some of the holdings are in accounts that we don't currently draw money from so they are in dividend reinvestment mode - once again, amazing how the dividends grow, buy more shares via reinvestment, and compound over time.

 

[target2019]

There's a thread called What Stocks are you shopping, or similar.

Threads about individual stocks seem to die out. There's diverse opinions.

 

[Montecfo]

Mostly individual security and some funds and ETFs.

We used to have a fairly active stock picking thread.

 

[OldShooter]

Recovered stock picker here. But first I have to say there is nothing special about an ETF versus a conventional fund that pertains to stock picking. An ETF is just a flavor of mutual fund and, yes, they do have fees and some are higher than conventional funds. Depending on your tax situation, yes they may be more tax efficient because you have more flexibility in realizing capital gains. ETFs also come with bid/ask spreads as a cost and some risk due to the "authorized participant" arbitrage feature (https://www.investopedia.com/terms/a/authorizedparticipant.asp). The authorized participants are third parties at the table, looking out for their own profitability. As a matter of principle I don't like that.

Both flavors of mutual fund come with stock picking strategies or passive indexing strategies. Around 70 years of studies, many by Morningstar, consistently show that low cost is the only reliable predictor of fund performance. Index funds have the lowest cost. Simple mathematics says that the average stock picker will underperform an index strategy. Dr. William Sharpe explains: https://web.stanford.edu/~wfsharpe/art/active/active.htm

Here is some reading:

"The Coffee House Investor" by Bill Schultheis https://www.amazon.com/Coffeehouse-Investor-Wealth-Ignore-Street/dp/159184584X (This is Bill's first book; read it before reading his second one.)

"The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

"The Simple Path to Wealth" by JL Collins: https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926

"Winning the Loser's Game" by Charles Ellis https://www.amazon.com/Winning-Losers-Game-Strategies-Successful-dp-1264258461/dp/1264258461 (latest edition, May 2021)

"A Random Walk Down Wall Street" by Burton Malkiel https://www.amazon.com/Random-Walk-Down-Wall-Street-dp-1324051132/dp/1324051132 (latest edition January 2023)​

Burton Malkiel: " ... The indexing strategy is the one I recommend most highly. At least the core of every portfolio ought to be indexed. I recognize, however, that telling most investors that there is no hope of beating the averages is like telling a six year old that there is no Santa Claus. It takes the zing out of life.

 

[GrayHare]

I keep some cash available for downturns, and invest more the bigger the downturn. For example, I was buying during the worst covid period. You won't catch stocks at their absolute low, but close is good enough for me.

 

[Al18]

Buy low, sell high. Many growth stocks and funds are near their yearly high, so not attractive right now. Some value/dividend are down. SCHD is a good value/dividend fund.

 

[MichaelB]

Just a reminder, threads in this forum (Fire and Money) are open to discuss the advantages of passive vs active investing. If the OP prefers a discussion about individual stocks, we can move this thread to the “Active investing” forum.

 

[Montecfo]

I keep some cash available for downturns, and invest more the bigger the downturn. For example, I was buying during the worst covid period. You won't catch stocks at their absolute low, but close is good enough for me.

Yes. That was an amazing opportunity which I used to great advantage.

 

[FREE866]

Buy low, sell high. Many growth stocks and funds are near their yearly high, so not attractive right now. Some value/dividend are down. SCHD is a good value/dividend fund.

I guess that depends on your goals. I'm looking for total return. Although SCHD has performed okay last few years it has a return much less in comparison to SCHG, SPY, and VTI.

 

[Al18]

More volatility with SPY. I prefer a more stable fund. Total 5 yr return with SPY is 96.55%, while total 5 yr return for SCHD is 84.74%, according to https://weissratings.com/en/etf/schd-nyse-arca
I prefer diversification in my stock holdings.I have some SP500 funds, Equal weight SP500 fund RSP and SCHD.

 

[OldShooter]

Buy low, sell high. Many growth stocks and funds are near their yearly high, so not attractive right now. Some value/dividend are down. SCHD is a good value/dividend fund.

Will Rogers: " Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it."

Taylor Larimore's market timing quotes https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

 

[FREE866]

More volatility with SPY. I prefer a more stable fund. Total 5 yr return with SPY is 96.55%, while total 5 yr return for SCHD is 84.74%, according to https://weissratings.com/en/etf/schd-nyse-arca
I prefer diversification in my stock holdings.I have some SP500 funds, Equal weight SP500 fund RSP and SCHD.

On the Schwab site it has a 5 year return of SPY of 81% vs 56% for SCHD
Odd there is such a difference on Weiss
But, yes I would assume it's less volatile. I look at volatility as the "price" I pay for market returns. Which is what I want.

 

[OldShooter]

On the Schwab site it has a 5 year return of SPY of 81% vs 56% for SCHD
Odd there is such a difference on Weiss
But, yes I would assume it's less volatile. I look at volatility as the "price" I pay for market returns. Which is what I want.

I look at it a little differently. As a long-term investor, my holding period damps out any volatility concerns. Volatility is basically statistical noise, which is why academics talk about "noise traders" who, in aggregate, are losers. Because it's statistical, though, there are some who get lucky every once in a while.

A few years ago when I was developing my Adult-Ed investing class I spent a bunch of time with a TDAmeritrade branch manager. At that time TD's business focus was on day traders. After an hour or so we were pretty comfortable with each other, so I asked: "How did your day traders do in the market last year?" There was a long, embarrassed pause, then she said "One and a half percent." That would have been 2017, when the market indices were up between 20% and 40%.

 

[youbet]

I look at it a little differently. As a long-term investor, my holding period damps out any volatility concerns. Volatility is basically statistical noise, which is why academics talk about "noise traders" who, in aggregate, are losers. Because it's statistical, though, there are some who get lucky every once in a while.

A few years ago when I was developing my Adult-Ed investing class I spent a bunch of time with a TDAmeritrade branch manager. At that time TD's business focus was on day traders. After an hour or so we were pretty comfortable with each other, so I asked: "How did your day traders do in the market last year?" There was a long, embarrassed pause, then she said "One and a half percent." That would have been 2017, when the market indices were up between 20% and 40%.

There's a lot of space between day trading and buy and hold TSM.

 

[FREE866]

I look at it a little differently. As a long-term investor, my holding period damps out any volatility concerns. Volatility is basically statistical noise, which is why academics talk about "noise traders" who, in aggregate, are losers. Because it's statistical, though, there are some who get lucky every once in a while.
a40%.

Seems like we are in agreement.

 

[target2019]

There are way too many "bond investing" threads on here so need to change the convo here!


Where are my stock investors at? and how do you invest in them?

I learned a long time ago I'm an awful stock picker so I'm committed to all ETF's. No fees and tax efficient.

I've read your other replies in this thread also.

I'm still unclear of the focus of your original question. Are you looking for those who have invested in individual stocks? Or perhaps you're thinking of stock equity funds (like SPYD, SCHD, VOO, etc.)?

FYI, we are invested in passive index funds, and that is 80-85% of our assets. We also have a taxable brokerage of inherited assets, such as stocks and funds.

There are so many opinions here, and I think it may help if I knew a little more about your question. I am a practical investor. I'm not suggesting I am a great teacher or proponent of a dogmatic approach.

I've set up various accounts to meet the common suggested focus (lots of GROWTH in Roth, etc.) But I also use certain funds and stocks for other purpose.

I also help son with his taxable account, which is all about GROWTH at this time. He went wild with tech a few years ago, and has asked me to help smooth over, mitigate, etc.

 

[FREE866]

I've read your other replies in this thread also.

I'm still unclear of the focus of your original question. Are you looking for those who have invested in individual stocks? Or perhaps you're thinking of stock equity funds (like SPYD, SCHD, VOO, etc.)?

FYI, we are invested in passive index funds, and that is 80-85% of our assets. We also have a taxable brokerage of inherited assets, such as stocks and funds.

There are so many opinions here, and I think it may help if I knew a little more about your question. I am a practical investor. I'm not suggesting I am a great teacher or proponent of a dogmatic approach.

I've set up various accounts to meet the common suggested focus (lots of GROWTH in Roth, etc.) But I also use certain funds and stocks for other purpose.

I also help son with his taxable account, which is all about GROWTH at this time. He went wild with tech a few years ago, and has asked me to help smooth over, mitigate, etc.

Really was just curious how others went about getting stock representation in their portfolios. Seems like most of the threads are more bond focused , that’s all.

 

[TheWizard]

Buy low, sell high. Many growth stocks and funds are near their yearly high, so not attractive right now. Some value/dividend are down. SCHD is a good value/dividend fund.

I realize that Buy Low, Sell High is a generic investing quip.
But for investors who actually do this, now what?
You sold high on Friday afternoon and now have a large lump of cash heading to your settlement fund.
What's the next move?

 

[FLSUnFIRE]

Pretty much all passive now. Own one stock that I'm liquidating first as I fund my retirement to simplify my holdings as it is small enough to not make a difference in my financial situation at this point.



I did enjoy picking but was much better disciplined at buying than selling even when I knew they were at a fair/over valuation. My approach was a discounted cash flow model at a rate of return I wanted. I was pretty conservative in my analysis over the years and did beat the market slightly even after holding a few too long. In addition to earnings, I also avoided highly leveraged companies and banks. My self-managed part was always small and I liquidated all but the one position I still hold to pay for my divorce and simplify my financial life. I'll occasionally get the itch to do some analysis but it's just not fun if I'm not going to act on it. I've recently thought about taking a few $ in my Roth as play money (so taxes aren't an issue) and seeing if I can beat the index.... more for entertainment and mental stimulation than anything else.

 

[TheWizard]

Really was just curious how others went about getting stock representation in their portfolios. Seems like most of the threads are more bond focused , that’s all.

Back in ye olden days, I had money going into my 403(b) monthly, about 2/3 into stock funds.
Nowadays in retirement, I invest excess income into indexed stock ETFs, like VOO, VGT, QQQ.
I use limit orders to buy these and have a few that are active presently. But with the recent uptick in the market, they might expire unfilled unless I raise the limit price at some point...

 

[Al18]

Hopefully you invested in some stocks or stock funds while you were working. When you retire decades later with a 60% stock/40% fixed income fund, you need to raise money to live on. Assuming you start with $1 million and you need $40,000 to live on, you sell $24,000 in stock and $16,000 in fixed income to live on. Assuming you are married filing joint, you owe no federal income tax.

 

[Closet_Gamer]

Really was just curious how others went about getting stock representation in their portfolios. Seems like most of the threads are more bond focused , that’s all.

My 401K is in a target date fund that automatically spreads money across domestic, intl, and bond holdings.

For the portion I manage, I rely on ETFs and mutual funds, largely indexed.

My asset allocation has specific percentages dedicated to large cap, small cap and international stocks.

Within large cap, I keep money spread between indices for rebalancing and guiding new money. I use DIA, SWPPX, and QQQ. I have found this useful.

I have heartburn over the outsized impact of the magnificent 7, so I keep a bit of money stashed in DLN (dividend tilt) and VTV (value). VTV has been a dog since I did it two years ago. Truthfully, from a total portfolio value my investment is VTV is noise so I may just punt it.

I rely on VB for small cap coverage.

On international, I use a fundamental index which I originally got into as a tax loss harvesting exercise during Covid. Its FNDF. I also keep money in VYMI which is a dividend focused international ETF. International holdings have been pretty rough performers for a long time so I like at least getting a dividend off some of the allocation.

So:
DIA
SWPPX
QQQ
DLN
VTV
VB
FNDF
VYMI

The portfolio could be simplified but I like it. Plus all the positions other than VTV have big gains at this point. No way will I pay cap gains taxes just to get some simplification.

Hope this helps.

 

[target2019]

Really was just curious how others went about getting stock representation in their portfolios. Seems like most of the threads are more bond focused , that’s all.

Ok, I understand now. You're wondering about equity funds spread across various accounts. This adds up to about 62.5% equities. I am -T and she is -S.

Roth-T International Value Fund 3.5% VTRIX
R-IRA-T Total International Stock Index ETF 6.2% VXUS

R-IRA-S Schwab S&P 500 Index 9.0% SWPPX
IRA-S/D STAR Fund 1.4% VGSTX (proxy)
SEP+Roth-T Total Stock Market Index Fund Adm 9.8% VTSAX
Roth-S Vanguard 500 Index Adm 6.8% VFIAX
Roth-T REIT Index Fund Admiral Shares 4.8% VGSLX
R-IRA-T Vanguard Extended Market (+SCHG) ETF 11.0% VXF
Roth-S Vanguard Small-Cap Value Index Fund 2.3% VSIAX
Taxable Schwab Brokerage 7.8% VASGX (proxy)

 

[OldShooter]

Ok, I understand now. You're wondering about equity funds spread across various accounts. This adds up to about 62.5% equities. I am -T and she is -S.

Roth-T International Value Fund 3.5% VTRIX
R-IRA-T Total International Stock Index ETF 6.2% VXUS

R-IRA-S Schwab S&P 500 Index 9.0% SWPPX
IRA-S/D STAR Fund 1.4% VGSTX (proxy)
SEP+Roth-T Total Stock Market Index Fund Adm 9.8% VTSAX
Roth-S Vanguard 500 Index Adm 6.8% VFIAX
Roth-T REIT Index Fund Admiral Shares 4.8% VGSLX
R-IRA-T Vanguard Extended Market (+SCHG) ETF 11.0% VXF
Roth-S Vanguard Small-Cap Value Index Fund 2.3% VSIAX
Taxable Schwab Brokerage 7.8% VASGX (proxy)

Nothing wrong with this and DW and my portfolios were probably similar a few years ago, but then I decided that I was lazy and getting no benefit from the complexity. If I had @target2019's portfolio, here is what my lazy self would be thinking:

No reason to have more than one S&P 500 fund. They are essentially all the same.

No reason to have an extended market fund because with an S&P 500 fund, you just have a home-made total market fund.

Total market is almost perfectly correlated with S&P 500 so there's no reason to hold both. Ditch the S&P funds, ditch the extended market fund, buy more total market VTSAX.

Small-Cap Value Index Fund at 2.3% is a trivial amount and cannot possibly affect the portfolio in a meaningful way. Ditch it in favor of more VTSAX.

STAR fund at 1.4% same story, ditch in favor of more VTSAX.

VASGX is kind of a black box. What can I buy that gives me more visibility and control?​

See how easy it is to simplify? I'm too lazy to do it, but I'm pretty sure that portfoliovisualizer would reveal that the simplified portfolio is highly correlated with the complex starting point.

Nassim Taleb says "Don't tell me what you think. Show me your porfolio." OK, fair enough. We are well over 90% in VTWAX. So, essentially one fund.