Mom's FA says to sell IBM

[bobandsherry]

And today I got notice that he sold it for 147.08.

Not bad. I made 5% on the price over 8 months not including dividends.

Or alternatively could have put in S&P 500, 8/21 it closed at 2428, closed today at 2670, that's 242 points or 9.96% return over same period. And you wouldn't have paid for FA to handle trade for you.

 

[pb4uski]

Yup.... the FA should have sold a week ago. Chart compares Total Stock, S&P 500 and IBM.

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares Fund VTSAX chart

 

[OldShooter]

... And you wouldn't have paid for FA to handle trade for you.

And, much more importantly, you would not be courting risk by holding a small number of individual stocks.

 

[RobbieB]

I did OK. With the dividends I made 7% and there is no cost to trade.

 

[pb4uski]

WADR, to claim that you did "OK" is a rationalization. You made less than the index but assumed greater than market risk and volatility.

 

[RobbieB]

It's not like I own 5 stocks eh?

 

[bobandsherry]

I did OK. With the dividends I made 7% and there is no cost to trade.

Perhaps no cost for trade, but going to guess that you are paying your FA a fee somewhere (% of your portfolio or something, or he's really being charitable). If I were using a FA and ended up 3% worse than a simple index and took on additional risk of single security investment, I wouldn't consider that being OK. I'd just chock that up to taking my lumps. But if you consider that a win, then congrats.

 

[bobandsherry]

Yup.... the FA should have sold a week ago. Chart compares Total Stock, S&P 500 and IBM.

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares Fund VTSAX chart

 

[RobbieB]

Oh, IBM is not a "win" in the big picture, but he does well (overall) in the big picture.

I just chimed in when I got a buy notification while this thread was running. And today I got the sell notice.

 

[Qs Laptop]

Yup.... the FA should have sold a week ago. Chart compares Total Stock, S&P 500 and IBM.

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares Fund VTSAX chart

http://quotes.morningstar.com/chart...dDay":"04/22/2018","chartWidth":955,"SMA":[]}

 

[target2019]

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares Fund VTSAX chart

Love that link!
More telling to go ten year chart. IBM has gone nowhere, for about 7 years. The dividend has held up, is probably one positive.

 

[kcowan]

Oh, IBM is not a "win" in the big picture, but he does well (overall) in the big picture.

I just chimed in when I got a buy notification while this thread was running. And today I got the sell notice.

Does the FA churn the account?

 

[RobbieB]

I have a mix of ~70 different stocks in different sectors. Mostly high cap dividend stocks. He probably trades 20% annually. No cost to trade, AUM plan.

So I guess you could call all that activity "churning", but since there is no cost to trade churning doesn't really mean anything.

 

[harley]

I have a mix of ~70 different stocks in different sectors. Mostly high cap dividend stocks. He probably trades 20% annually. No cost to trade, AUM plan.

So I guess you could call all that activity "churning", but since there is no cost to trade churning doesn't really mean anything.

It will effect your taxes, though. Unless he always waits until something is a LTCG your taxes could end up being higher than they need to be. That cost would need to be included when calculating your overall return rate.

 

[RobbieB]

He's pretty good about that, short term cap gains were only 5 grand last year.

 

[OldShooter]

I have a mix of ~70 different stocks in different sectors. ...

Good diversification. IOW you have probably diversified away almost all of your individual stocks issue risk, leaving you with only the market risk. Total return and SD are probably about the same as a US total market fund, which costs under 20bps.

It would be interesting if you could compare your portfolio results to something like VTSMX.

 

[kcowan]

I have a mix of ~70 different stocks in different sectors. Mostly high cap dividend stocks. He probably trades 20% annually. No cost to trade, AUM plan.

So I guess you could call all that activity "churning", but since there is no cost to trade churning doesn't really mean anything.

Yea 20% is a long way from churning. The only thing to watch is that they are not trading you into their company's book of stocks. I had that happen in the 90s. A trusted broker retired after 20 years and his replacement moved me into his company book before I fired him.