Stock Investing

[Al18]

If you want to have more exposure to the SP500 and believe the magnificent 7 have an outsize weight on the fund, you may want to look at the equal weight SP500 fund RSP, with a 0.2% expense ratio and a 5 year total return of 72.61% at https://weissratings.com/en/etf/rsp-nyse-arca

 

[youbet]

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


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I think you'll find that much of the fixed investing going on by forum members is active investing. Most of the equity investing going on is broad based index funds. So, lots more to talk about with fixed investing than there is with long term, buy and hold, index investing.

 

[Montecfo]

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?

For me since I do this often, buy low PE out of favor replacement.

 

[Fermion]

I was doing individual stock investing for while in a taxable account but I closed it down because it was beginning to be a headache qualifying for ACA subsidies and such. I suppose I could do it in a Roth or IRA but just have not found the time. It is more gambling than investing though lol.

I do have a fair bit of Vanda still, which is really down now at $3.70 or so a share. Most of my purchases were in the $6 to $10 range. I am probably out of that one if it ever hits $20 or thereabouts, then I am likely done with stock picking. It is fairly hard.

 

[GrayHare]

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?

Sit in cash and look for something that is a good value, waiting as long as needed. I have done well to buy into large cap stocks undergoing a temporary setback. Boeing is a current candidate. They have problems but the company isn't going away anytime soon. Enter a limit order to buy at a price you like.

 

[kgtest]

"picking" for us is limited to what we have available to "pick from" and what account. With that said... I buy AAPL from time to time.

35.75% of our portfolio is AAPL. if it goes above 39 I will SELL... for the first time in... a long time. The only other time I sold AAPL was to market time and it worked out alright. Mainly DCA into that one over time, but also have some exposure to via ETFs... This has been a PILLAR of our investing growth over this past decade. Will it continue to be the next, time will tell. I am not a great "picker". The other stocks I picked and just didn't do great with were UNP, XOM, CASY, MMM, TASR, DAL, 3DFX and likely one or two others. I did earn money on MOST of these, with a couple being duds.

I remember losing a lot with 3DFX which was my first time ever buying stock during .com. It was a chip maker. NVDA...man had I known...

The problem is, I sort of aim for 20 to 40% returns. So I also tend to cut the anchor when the stocks are underperforming...mainly the NASDAQ.

I am tempted to take 3% and put it into NVDA but I might have missed the boat on that one.

Another one I remember was TASR. I thought for sure I had something, but the company ended up getting bought out and I sold after losing about 47% of the stock's value. I think it amounted to about $1500. It was a long time ago but it hurt at the time. Now it would be a blemish.

I can't find a company as consistently stable as AAPL...that I somewhat actually agree in most of the fundamental's, products getting released, innovation, and leadership.

They always seem to know how to churn out a profit over at AAPL.

The LOWEST I bought it at was at $96/share at the advice of Running_Man from this forum here. He probably made me 100s of thousands on that advice alone, so if you are still aroung Running_Man, I know you like to hangout in the charts thread every now and then, thank you sir!

I could see plays in hindsight that made sense. XOM would have been good had my timing and patience been better.

The thing with picking LOTS of stocks to try and beat the market means you need to NOT BE WRONG, a LOT. And it's actually a lot easier to be wrong, than I think it is to find the unicorn and be right. I haven't quite developed a system myself that seems to be of any consistent formula.

I know there are some folks on here who have what appears to be well-thought-out strategy, options plays, sector and market timers etc...and to some extent you can probably do this. I myself look at bank interest rates as one bellweather, the VIX index as another, OIL as a third...I can't list them all dang.

But a lot of folks post their numbers and likely more conservative than I, still have fairly similar performance...often outperforming most of the major 3 indices.

I also see a LOT of people are content with 4 to 6 or 7% returns are GREAT. I want 10, 20, 30, 40!!!

I just don't think I can get there picking a bunch of stuff, plus I have 3 littles and time is my greatest enemy and largest asset that seems to be the most preciously unavailable.

Soooo....

I hold MOSTLY ETFs and a couple Index funds in the 401ks.. With the exception of AAPL. But I might make a play on NVDA this week if it hits a bump somehow. I think AI might be the ticket for the near-term here.

 

[kgtest]

For me since I do this often, buy low PE out of favor replacement.

SO then DON'T buy NVDA lol! The PE is...INSANE!

 

[GrayHare]

I stopped letting high PEs discourage me because they can reflect a consensus that future earnings will be higher. If you agree with the consensus opinion, the stock can still be a fair buy. Low PEs are usually less risky, but you're not going to find the next NVDA there, at least not after people have heard of the company.

 

[FREE866]

I stopped letting high PEs discourage me because they can reflect a consensus that future earnings will be higher. If you agree with the consenus opinion, the stock can still be a fair buy. Low PEs are usually less risky, but you're not going to find the next NVDA there, at least not after people have heard of the company.

This. Moreover, it's been proven that PEs are not very predictive on where a stock is going. Even Schiller of the famed "CAPE ratio" has admitted such.



Proof is in the pudding though....look at the PEs on the magnificent 7 three, five or ten years ago. My sense is they were high then , yet you would have made a fortune buying the stocks. I didn't and don't buy individual stocks. I just want market returns so I buy ETFS as I'm a believer that the future will somewhat mirror the past.

 

[OldShooter]

... The problem is, I sort of aim for 20 to 40% returns. ... I also see a LOT of people are content with 4 to 6 or 7% returns are GREAT. I want 10, 20, 30, 40!!! ...

William Bernstein: “Make no mistake about it: The object of this particular game is not to get rich – It’s to not get poor.”

William Bernstein: “Do you think that by choosing a portfolio of only a few stocks that you hope will score big, you are maximizing your chances of becoming wealthy? Indeed you are, but you are also maximizing the chances of a retirement of cat food cuisine.”

... a lot of folks post their numbers and likely more conservative than I, still have fairly similar performance...often outperforming most of the major 3 indices. ...

The people who lose, which are the majority, don't post. Nassim Taleb refers to this as "silent evidence."

Taleb's story on Silent Evidence: "Diagoras, a nonbeliever in the gods, was shown painted tablets bearing the portraits of some worshippers who prayed, then survived a subsequent shipwreck. The implication was that praying protects you from drowning. Diagoras asked, “Where are the pictures of those who prayed, then drowned?”​

 

[Al18]

NVDA has a P/E of 78
ARM has a P/E of 462
AMD has a P/E of 1742

Which is insane?

 

[Montecfo]

SO then DON'T buy NVDA lol! The PE is...INSANE!

I do not own it, but I believe there is a case to buy it, even here. Trailing PE is a lot less useful when a company is growing earnings very rapidly.

 

[Montecfo]

NVDA has a P/E of 78
ARM has a P/E of 462
AMD has a P/E of 1742

Which is insane?

Trailing PE is may be interesting, but it is not predictive especially for rapid growers.

Forward PE is more useful in my opinion, though it also has limitations of course, mainly the crystal ball problem.

 

[GrayHare]

For very high PEs one needs to check the value of E. When company earnings are near zero, P/E can become very high due to the small divisor. One dollar's increase in earnings can then have an outsized effect. For example, the PE of company A whose earnings grow from $10/share to $11 won't change much, but the PE of company B whose earnings grow from 0.01/share to $1.01 will suddenly look lots better. This applies to AMD who reported earning 0.13 per share.

 

[FREE866]

For very high PEs one needs to check the value of E. When company earnings are near zero, P/E can become very high due to the small divisor. One dollar's increase in earnings can then have an outsized effect. For example, the PE of company A whose earnings grow from $10/share to $11 won't change much, but the PE of company B whose earnings grow from 0.01/share to $1.01 will suddenly look lots better. This applies to AMD who reported earning 0.13 per share.

Right. As I said, I don't buy individual stocks, but when I hear people who manage money and who also really understand the AI landscape talk about the seismic shift that they feel we are about to enter companies like AMD and Nvidia are positioned to absolutely explode.

 

[W2R]

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

Well, I figure "Let's see.... I'm a retired oceanographer with absolutely no training or experience in buying stocks. What the h*** do I know about choosing such purchases, compared with what the Wall Street wizards know?" (Answer: nothing, zero, zippo).

So, instead of buying individual stocks, I buy mutual funds. I figure mutual fund managers have some pretty sharp guys choosing their stocks, and within the fund they balance them for me so I don't have to do so much balancing. I have several Vanguard funds, including Total Stock Market Index Fund (VTSAX), FTSE All-World Ex-US Index Fund (VFWAX), and I also I do favor Wellesley Income Fund (VWIAX) although it's not entirely stocks.

 

[kgtest]

NVDA has a P/E of 78
ARM has a P/E of 462
AMD has a P/E of 1742

Which is insane?

Wow! I hadn't looked. Probably another reason I am not the most well suited stock "picker". NVDA seems like a WIN though.

 

[Finance Dave]

I have a few individual stocks, but in total it's less than 2% of our portfolio...more for fun than anything.

I pick ETFs based on the 9-block diagram so that I have some of small/med/large and stable/growth/aggressive. I also want to have about 5% international exposure.

One thing I will note is that over the past few years I've significantly lowered my exposure to IVV, as basically it's a proxy for QQQ...a handful of tech companies make up the bulk of the performance. Instead, I've moved to RSP, an equal-weighted version of IVV. Although it has not performed as well, it's not nearly as exposed to the ups and downs of the tech companies, and that volatility is what I was trying to dampen.

 

[DrRoy]

Buy low, sell high.

Index funds/EFT's only, and NO MARKET TIMING.

 

[target2019]

Right. As I said, I don't buy individual stocks, but when I hear people who manage money and who also really understand the AI landscape talk about the seismic shift that they feel we are about to enter companies like AMD and Nvidia are positioned to absolutely explode.

You will benefit from some of the explosion in your S&P500 fund.

In fact, more exploding will help many more companies than AMD and NVDA.

I wonder how much AI is understood by money managers? I genuinely think it is a theme that advisors and managers are parroting.

One could use stock slices to buy fractional shares in 10 companies at a time. https://www.schwab.com/fractional-shares-stock-slices

 

[FREE866]

You will benefit from some of the explosion in your S&P500 fund.

In fact, more exploding will help many more companies than AMD and NVDA.

Right. That's my thinking. I don't want the agonizing challenge of which one to buy, when to sell it or hold, ugh. I like and want simplicity--market returns, minimal cost, tax efficient.

 

[Qs Laptop]

Right. As I said, I don't buy individual stocks, but when I hear people who manage money and who also really understand the AI landscape talk about the seismic shift that they feel we are about to enter companies like AMD and Nvidia are positioned to absolutely explode.

You will benefit from some of the explosion in your S&P500 fund.

In fact, more exploding will help many more companies than AMD and NVDA.

I wonder how much AI is understood by money managers? I genuinely think it is a theme that advisors and managers are parroting.

Right. That's my thinking. I don't want the agonizing challenge of which one to buy, when to sell it or hold, ugh. I like and want simplicity--market returns, minimal cost, tax efficient.

If you want to get in on the AI craze, you'd be better off investing in a NASDAQ index fund. QQQ is an ETF that invests in the top 100 NASDAQ companies. This means you are concentrating your investments in technology (mostly) and in the top 100 companies. You are not getting all the companies in the S&P 500 index fund, including the bottom 250 companies.

QQQ is more volatile but gives a much better total return. It is for investors that want to be more aggressive than the S&P500 index (like me.)

Here is the chart of QQQ vs. VFIAX over the past 5 years.

 

[FREE866]

If you want to get in on the AI craze, you'd be better off investing in a NASDAQ index fund. QQQ is an ETF that invests in the top 100 NASDAQ companies. This means you are concentrating your investments in technology (mostly) and in the top 100 companies. You are not getting all the companies in the S&P 500 index fund, including the bottom 250 companies.

QQQ is more volatile but gives a much better total return. It is for investors that want to be more aggressive than the S&P500 index (like me.)

Here is the chart of QQQ vs. VFIAX over the past 5 years.

View attachment 48305

Great points.


I own SCHG which is large cap growth and trades somewhat in line with QQQ. I also own VTI which also has a lot of large cap growth. Also currently have 27% of my portfolio in IWM as I want small cap representation.

 

[Qs Laptop]

Great points.


I own SCHG which is large cap growth and trades somewhat in line with QQQ. I also own VTI which also has a lot of large cap growth.

You are well represented for large cap growth with these two funds. Maybe some overlap. Also, with VTI you are getting the entire market including the bottom 50% of the dogs.

Also currently have 27% of my portfolio in IWM as I want small cap representation.

Same thing here with IWM, but even more pronounced. You are getting an index made up of 2,000 small cap stocks, which means you are also buying 1,000 of the bottom stocks. Small cap stocks have been going sideways for the past 4-5 years, it was not a good place to be, although there is reason to believe they might wake up in 2024.

This is fine if your objective is to own the entire small cap market. I get the sense though, that you want to be more aggressive. If so, I would suggest AVUV for the small cap index ETF (I own it). You could also move some (all?) of VTI into QQQ, if you want to be more aggressive. But you are just fine where you are at. Just depends on how much risk you want to take on.

 

[FREE866]

I get the sense though, that you want to be more aggressive.

Don't tempt me!


Nah, I'm good. Only real major move I've made in my 7+ years of retirement is fairly recently I moved out of all my SCHE ( emerging markets) and SCHF ( International) I just couldn't look at them any more ESP SCHE. Didn't have large holding in them ( thank God) , but they just really dragged the whole return. Still up ~11% annually over last 7 years which has been great. And I do believe small stocks will have their day eventually.