Who prefers individual stocks and why?

[Ed_The_Gypsy]

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.

 

[galeno]

I only know of one proven way to beat the market's average return: take MORE risk than the average.

 

[thegipper]

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.

 

[jetpack]

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.

 

[Greencheese]

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

 

[moneymaker]

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....

 

[target2019]

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.