Gentlemen's Stock Picking Club

[greg]

While listening to NPR yesterday, I thought it would be nice to have our own small stock picking [-]thread[/-] club right here in FIRE-land. It would be fun to observe people's thinkin processes and perhaps learn things too, and after a bit of time it would be interesting to find out if, collectively, we are smarter than the S&P 500 or some facsimile, hold ourselves up to the world as a gestalt of stock pickin prodigies. It would require a mildly higher skill set than just picking individual stocks in isolation as we attempt to add balance and complementing features--whatever those are--to the smallish portfolio.

So to keep it simple: ten large cap stocks at 10K hypothetical dollars each=$100k total, folks volunteer their picks, we argue a bit about the choices and or alternatives and then vote each one up and down. We sell or vote to sell whenever someone makes the suggestion. As simple and straightforward as possible; majority rules. If that works, we maybe move on to ten small-caps. Someone could set up an MSN or Yahoo portfolio sight where we could each go to examine our hypothetical progress. Someone who has actually done this before should run it? I'm at the end of my ability right here.

So as a first order of business, can we let the ladies join too, please?

Second order of business, I still like GE as a base and stable holding and as dividend payer.

 

[novaman]

I'll join.

I like Citigroup (C) and or Bank of America (BAC). Bank stocks are getting hammered right now.

 

[CyclingInvestor]

I consider JNJ and PG both to be well-valued blue chips.

 

[greg]

Double post mistake; see below

 

[greg]

I'll join.

I like Citigroup (C) and or Bank of America (BAC). Bank stocks are getting hammered right now.

I certainly think that two int'l bank stocks (20%-30% of the portfolio) would be good choices also (How much int'l business does BAC do, if any?). I really like large cap industrials for the next ten years or so, infrastructure build out coming?, the rise of emerging market nations as consumers of roads and electricity and makers of sewage and stuff and such, etc.

 

[LOL!]

My spouse was in two different investment clubs over the last decade. My observation from that is that if you are gonna pick 10 large cap stocks, then you are just mimicking the S&P500 and consequently, will do about the same as that index.

Why not pick 3 large cap, 3 mid cap, 4 small cap and half of them half to be non-US stocks? That might help get you away from S&P500 returns.

Here's my picks: SPY, VTV, MDY, IWM, VBR, EEM, VWO, DLS, GWX, VNQ. Buy them only within the last 30 minutes of trading when they have dropped at least 1.5% (SPY, VTV), 2% (MDY, IWM, VBR, DLS, GWX), 3% (EEM, VWO, VNQ).

Good luck!

 

[greg]

My spouse was in two different investment clubs over the last decade. My observation from that is that if you are gonna pick 10 large cap stocks, then you are just mimicking the S&P500 and consequently, will do about the same as that index.

Why not pick 3 large cap, 3 mid cap, 4 small cap and half of them half to be non-US stocks? That might help get you away from S&P500 returns.

Good luck!

Yes, I agree about too closely mimicing the S&P.

How about picking ten S&P 500 stocks as our portfolio and then use the S&P as the benchmark to beat? Seems fairly straightforward to me, easy to keep track of, and would definitely bring out stock picking skills over indexing or ETF-choosing skill sets? But I like ETFs too.

Ten stocks from the Russell 1000?

 

[HFWR]

Asset appreciation would likely mimic the S&P500, but the divvies for a P&G/GE/J&J/BAC-type portfolio would probably boost overall returns beyond the S&P500, which is paying a paltry 1.8-ish% div...

 

[twaddle]

Well, any large-cap value slice is likely to beat the S&P500 if you let your benchmark run long enough. Just put it all in VIVAX.

Or do the Bernanke thing: 100% MO, baby!

 

[Leonidas]

I like this idea. But I want to suggest that we proceed along the lines that LOL and Greg are talking about - with a slight twist.

Why don't we pick a sector - or even an industry - and then pick 3 large cap, 3 mid cap, 4 small cap, plus some foreign? We can work our way through the sectors and/or industries we think have the most potential for LT gain, and then we would have a palette of different companies to look at within promising sectors. It might even spur some interesting discussion on allocation.

 

[twaddle]

I always thought that the real test of stock picking skills was risk-adjusted returns. If you want to demonstrate alpha, you need to pick stocks that outperform your benchmark without increasing volatility.

 

[greg]

How about a ten stock retirement (safer?) portfolio and a separate ten stock shoot for the moon portfolio? Then benchmark it to a large cap or value index, a small cap index, and a total stock market index?

 

[BUM]

I'm game. Right now I like WU (I keep a GTC limit order at $18 ) and GE.

 

[bpp3]

Toyota.

 

[jIMOh]

My take is similar to some of replies already. large caps will mimic dow and S&P 500. Small caps can lead us to the promised land better.

I do plan on an individual stock position in my portfolio for growth and dividend income.

1/3 would be in blue chips (PG, MSFT, GE and many others already mentioned). This is around 10 stocks.
1/3 would be utilities. This is for a slightly higher yield. This is around 5-10 stocks.
1/3 would be in small caps/micrco caps WHICH PAY A DIVIDEND. This is around 60 stocks. In january I entered a contest with these tickers. It is barely beating the S&P YTD. Mid cap value for sure, some real small companies included.

EQY26.20+0.11CU33.99+0.74TRY15.22-0.17BEBE14.15+0.07PTNR14.89-0.12WNR48.68-1.25TR28.77-0.10ASCA26.10+0.40RES13.20-0.07*TRK37.52+0.41KRO21.3700-0.1180SHS26.2200-0.1800RNT25.23-0.06ALFA17.62+0.35OXPS23.03-0.02ROL26.10+0.11CNS34.84-0.15ZZ15.49+0.27ESLT42.55+0.51STFC30.14+0.23OO28.45-0.01MGG27.1973-0.7127TLB22.0900+0.6900WTS34.96+0.01WSO48.55+0.91ALJ33.7800-1.7900WWE14.29-0.13FFG37.9600-0.4400VCO42.33000.0000SYNT35.20+0.29GBL53.34+0.65BKE34.8000+0.2000HRZ27.71+0.05TNP67.61-0.59NRGP43.87-0.40ABG22.4100+0.5400FBN12.2800+0.1000TNH74.37+2.16PORK00EGLE24.20+0.58TOA2.68-0.13MWP50.48-1.20DRYS54.22+2.33VTO6.8200+0.1200RLRN13.15-0.08SUP20.56-0.11SGK21.94-0.53NL10.96-0.21KCP20.46+0.05VICR12.09-0.29*SBCF20.98-0.30MPX8.87+0.02XRM5.49-0.02*FF12.40+0.31IPAR22.18+0.11TAYC28.75+0.21DEBS26.33+0.07ALCO51.15+0.12SQM149.5300-3.2200MGPI14.72-0.28AP39.4000+0.1200PEGA11.90-0.31RCKB14.90+0.01NYM26.91-1.19OHB6.28-0.28SCL30.0400-0.1400CPY43.3900+0.5700QADI8.49+0.02VLG0.00000.0000

 

[bright eyed]

your thread title made me think there was going to be some nudity involved...

 

[REWahoo]

your thread title made me think there was going to be some nudity involved...

Hey, there's always the possibility someone will lose their shirt...

 

[HFWR]

your thread title made me think there was going to be some nudity involved...

This could [-]be[/-] get ugly...

 

[twaddle]

Toyota.

In dollars or yen?

I don't like any sectors that any sensitive to consumer spending or consumer borrowing for the next couple years, but TM does seem a bit oversold.

I nominate Eni SpA (E). Reasoning: foreign large cap could help if the dollar declines, I still like energy even if we hit a recession, and they trade below book value. Oh, and I guess the 4% yield doesn't hurt either.

Edit: Wow, I already learned a lesson from this exercise. Looks like Yahoo has the market cap wrong by a large margin, so forget that "below book value" bit.

 

[greg]

your thread title made me think there was going to be some nudity involved...

Strip [-]Poker[/-] Stock Picking: Must have a number of ladies involved to work properly. The loser each quarter makes a video and posts it to Youtube.

 

[bpp3]

In dollars or yen?

I don't like any sectors that any sensitive to consumer spending or consumer borrowing for the next couple years, but TM does seem a bit oversold.

In dollars, I guess. Which should provide some natural currency hedging, to damp out volatility. Assuming the goal is risk-adjusted returns.

 

[greg]

Beyond ThunderStocks: A bunch of gentlemen enter; one non-gentleman leaves.

OK, after thinking about the nature of you beasts (and having no one come forward to do [-]all the work[/-] polling and such), I had the following thought:

1) It seems to me that rather than benchmark against indexes, that we just have a mostly free for all against each other. Individualism reigns: We all pick our own 4 large caps, 3 mid caps, and 3 small caps. Foreign or domestic, it just doesn't matter. We post them on the day we start and "that day" determines the price we paid so everyone has a public record. (Someone needs to give me the ranges of large cap, mid cap, and small cap for all folks to follow also?)

2) We each start with $100K and buy $10K of each stock (and no tracking of trading costs). We allow one sell-buy before 2008, the dumping of one mistake and using the remainder of that $10K to buy another. We maintain our own portfolios and documentation, keeping track of dividends, splits, and such until the end of the year.

3) We allow folks who like ETFs and CEFs the option of substituting them for large cap stocks if they desire.

4) Other rules/guidelines?

At the end of the year, Dec 31st, we all show each other what we've got. The winner has the option (but not the obligation) to use Mad Max as his avatar for 2008 or Tina Turner--if a female wins.

Stock pickin time is here . . . . . . . . . . . ?

 

[greg]

So, I'm assuming no comments are a good thing?

I'm going in with the assumption that I just had a $100K windfall and need to put it into the market next week, hopefully on a dip day (a little timing but not too much). I'll use end of day prices for my ten choices (all choices made on one day next week). So far I've picked the following but may change in the next few days:

Large cap (+$10 billion): GE, DIA, EVX, and IAF ($40K)

Small cap (-$2 billion): EGLE, a smaller oil company, and ($30K)

Mid cap (between $2-10 billion): Vesta or solar panel maker/integrator choice?, a domestic utility?, and Pentair or something in the healthcare sector. ($30K)

I'll keep track of dividends as they accumulate in a MM fund, adding them to the capital gains at the end of the year.

I'm hesitant about domestic financials for the rest of this year, so I'm steering clear for now. I'll have commodities and Australian financials in IAF. GE is my mutual fund. And obviously, I like industrials right now.

I'm hoping this system is easy for everyone, with each person doing his/her own work but with enough info posted so that folks can see results, thinking processes, and . . . um . . . flaws--if they exist. I think things can be adjusted on the fly also, as people see problems. Sector stock picking, for example, could be done in a similar fashion, sort of hived off on a different thread if there is sufficient interest. No voting is needed; folks can quit whenever or start at any time, with little penalty.

 

[twaddle]

Hmm, so the game is to predict the highest gains over the next 4 months or so? No idea, but I figure the following could happen:

banks will report surprisingly bad earnings
the fed will lower the fed funds rate by 50bp
housing will really start to crumble in a big way

So, put me down for $150K in a medium-term bond fund, and shorting $50K of XHB. (Hmm, what happens if I don't have enough to cover?)

 

[greg]

Hmm, so the game is to predict the highest gains over the next 4 months or so? No idea, but I figure the following could happen:

banks will report surprisingly bad earnings
the fed will lower the fed funds rate by 50bp
housing will really start to crumble in a big way

So, put me down for $150K in a medium-term bond fund, and shorting $50K of XHB. (Hmm, what happens if I don't have enough to cover?)

A real 'strip stock Youtube video' made by you as a metaphor for you not being able to cover your . . . um . . . fake $100K financial assets?

How come things always go this way? Everybody always has to test the limits. Can't we all just [-]get along[/-] play by somewhat similar rules? The problem as I see it is you get to make one (actually two choices) big macro bet, and most everyone else gets stuck with ten mini stock bets. You know someone will come along wanting to buy $200K of bonds and shorting $100K of XHB, just out-leveraging you a tad, don't you? Then a third person.

We can almost read folks' bull/bear positions by reading between the lines of their ten stocks. I don't think an explicit two part bet gets us too far in learning, IMO.

My preference is 'no leverage and ten different $10K stock choices' that may or may not work together to achieve the biggest gain (or smallest loss) for you at the end of the year (whatever that means).