Talking stocks, trading, and investing in general

[SkinnyGoomba]

No, I think most people should utilize professional advice. My knee jerk reaction was to the notion that one should submit because if a fund manager can't do it, they most certainly cannot do it either.

By hobbyist I mean someone who has educated themselves on investing, like most of the people who regularly participate in this thread. People who have actively decided to take their own specific approach.

I have a degree in finance, but I am a hobbyist investor, because I do not manage money professionally.

My initial reaction was a bit excessive, so I do apologize for the knee-jerk overreaction.

 

[idfnl]



I think the expectation to beat the market is unsound for most investors, professional or not. Now does "most" mean 51% or 90%? That I can't answer. While you may think choosing individual investments is best for you and that you'll consistently beat the market on a risk-adjusted basis, do you think that most people looking to invest should be doing the same thing? And do you think that those people should be looking for individual stock advice on this thread?

I'm not a fund manager but I think you're painting with a broad brush here. As has been stated multiple times, what a few of us are talking about are passively managed funds so egos, etc. shouldn't be in play and the expense ratios are extremely thin (often less than 10 bps). I'm not saying that people should throw their money into expensive funds. Having said that, I invest in some PE and VC funds, but that's a different ball of wax.

That number is above 90% for sure.

To me personally, beating the market is a goal, but it's not always the goal of a fund manager. Some manage a fund for dividend return, low risk, bonds, and every flavor of trading you can think of such as international, country specific, commodity, etc. Perhaps I'm being a bit misleading and myopic to suggest they can't beat the market when it's not always the goal.

It's probably more accurate to say they attempt to beat each other in funds of a similar class and risk profile. This said, a fund still suffers from the fact that no matter what, you're getting trimmed on fees up or down.

I'm personally very comfortable with the level or risk I take which is probably more than most passive or fund based investors. I do back the truck up on a raw bet at times, and I have exactly 1 fund (ADAVX) which monthly pays a nice 8% annualized dividend on a body of investments that I normally don't overlap on. I like the control, and I can say I've regularly beaten the market, sometimes by dumb luck but also because I believed in GOOG when it IPO'd.

No, I think most people should utilize professional advice. My knee jerk reaction was to the notion that one should submit because if a fund manager can't do it, they most certainly cannot do it either.

By hobbyist I mean someone who has educated themselves on investing, like most of the people who regularly participate in this thread. People who have actively decided to take their own specific approach.

I have a degree in finance, but I am a hobbyist investor, because I do not manage money professionally.

My initial reaction was a bit excessive, so I do apologize for the knee-jerk overreaction.

I don't think your initial post was that knee jerk. Fund managers are not oracles, and have to operate within specific boundaries, such as owning the stocks their firm targets as a buy. It's not as if they can put together a trade in 5 minutes and jump in and out of it for a quick win. Their building large positions and holding them for significant periods.

If you want to hit home runs, a fund isn't usually the place for that.

I don't believe I will personally ever transition to funds, I enjoy the game too much for sitting back and watching it grow.

Speaking of which:

Made a good couple of trades on KITE and have settled with 30 free shares waiting for a new moment to move back in. Lots of volatility here to trade on. I'm not going to retire on this but I've done well considering I did it in 2 1/2 sessions.

 

[UnFacconable]

I'm not sure why but we appear to be talking past each other. You guys keep talking about active fund managers when I'm just talking about passive funds. No one here has said that fund managers are oracles and the research shows that in general they cannot do well enough to offset the fees they charge. That's the reason Jack Bogle founded Vanguard and he's been proven right.

I believe that anyone posting in this thread and asking how to invest their money should be investing in passive funds. It's one of those "if you have to ask" type of things. I have no problem with you guys who know what you're doing trading stock tips amongst each other but I sure hope there aren't unsophisticated investors out there throwing their money into the stocks commonly referenced in this thread or engaging in short-term trading of any kind.

 

[idfnl]



I'm not sure why but we appear to be talking past each other. You guys keep talking about active fund managers when I'm just talking about passive funds. No one here has said that fund managers are oracles and the research shows that in general they cannot do well enough to offset the fees they charge. That's the reason Jack Bogle founded Vanguard and he's been proven right.

I believe that anyone posting in this thread and asking how to invest their money should be investing in passive funds. It's one of those "if you have to ask" type of things. I have no problem with you guys who know what you're doing trading stock tips amongst each other but I sure hope there aren't unsophisticated investors out there throwing their money into the stocks commonly referenced in this thread or engaging in short-term trading of any kind.

If we are talking past each other, then I've misunderstood. I think the point I was making to an extent is that index/passive funds are great, but they don't always reflect the risk profile you want.

If I was 23, a fair percentage of my money in an index fund makes sense, but if I was 65, I am more focused on income and don't want to take the risk of another '08.

You're right to a degree, if you're asking, going passive is an option, but when in investing history have you ever had as much access to information about stocks as you do today? If you do some basic learning and gain confidence, trading individual equities can be rewarding. Too often I hear people talk about it now being worth the time and risk, there I totally disagree.

I have been trading stocks since I was 16, I never bought a fund unless I was trapped in the horrible 401k meat grinder. The first stock I ever bought was Johnson & Johnson. The fund I mentioned above is the only fund I've ever bought.

 

[SkinnyGoomba]

The issue I take with passive funds is that they are often not what I want. Buy any given dividend growth fund and they are paying 3%~ because they are mimicking the category, where the individual investor can be more specific by choosing individual stocks that better represent their goal. In all of my portfolios combined I probably own 35 different stocks, but that would be very odd for most funds to own so few companies.

I ended up putting a few on the chopping block recently because they were bought without conviction, but a normal fund has much more turnover than that because it's the nature of the beast for them. I do not have to turnover stock, because mimicking the index with precision does not matter to me, nor do I have to deal with outflows of cash. Because of this I pay less cap. gains tax and I can torpedo losers if needed and have a write off, both things that a fund manager is not going to pay attention to (and I would not if I were them).

I own a vanguard fund that is very close to what I am doing on my own in terms of the description. However my portfolios individually pay larger dividends and over the past three years I've out performed that fund every year. I bought it out of laziness for a smaller portfolio, and while it has done well I often ask myself why I still own it.

 

[idfnl]



The issue I take with passive funds is that they are often not what I want. Buy any given dividend growth fund and they are paying 3%~ because they are mimicking the category, where the individual investor can be more specific by choosing individual stocks that better represent their goal. In all of my portfolios combined I probably own 35 different stocks, but that would be very odd for most funds to own so few companies.

I ended up putting a few on the chopping block recently because they were bought without conviction, but a normal fund has much more turnover than that because it's the nature of the beast for them. I do not have to turnover stock, because mimicking the index with precision does not matter to me, nor do I have to deal with outflows of cash. Because of this I pay less cap. gains tax and I can torpedo losers if needed and have a write off, both things that a fund manager is not going to pay attention to (and I would not if I were them).

I own a vanguard fund that is very close to what I am doing on my own in terms of the description. However my portfolios individually pay larger dividends and over the past three years I've out performed that fund every year. I bought it out of laziness for a smaller portfolio, and while it has done well I often ask myself why I still own it.

Out of curiosity, what did you dump?

 

[SkinnyGoomba]

I sold off VOD and MAT.

I'm down to;
CVX, XOM, PM, PFE, VZ, MO, WFC, GE, MDLZ, KRFT, COP, RDS-A, CHD, BAC, BP, T, PG, LO, PEG, AWK, NSC, GSK, RAI, DOW, CINF.

So actually only 25 companies.

 

[idfnl]



I sold off VOD and MAT.

I'm down to;
CVX, XOM, PM, PFE, VZ, MO, WFC, GE, MDLZ, KRFT, COP, RDS-A, CHD, BAC, BP, T, PG, LO, PEG, AWK, NSC, GSK, RAI, DOW, CINF.

So actually only 25 companies.

Interesting. You're really into blue chips. Never heard of LO, but now I understand... cigarette company name change.

You kept MDLZ after the spinoff... I sold mine but still hold KRFT. We overlap on BAC as well, but otherwise that's it.

 

[SkinnyGoomba]

Very true, I prefer bluechips. The are reliable, so I feel confident placing rather large bets (by %) on them when they take a big dip. They are also very reliable in the way of dividends.

LO is going to be RAI very soon, at $68~/sh. I'm a little disappointed that the combined company is going to divest their E-cigs, but the FTC may want them to divest even more for the sake of competition.

MDLZ has been improving a lot, I've had it since the spin off and will likely keep it for years to come even though the dividend is on the low side.

I also sold Diageo earlier this year in favor of BP, to collect a higher dividend.

 

[GreenFrog]

How old is everyone here and how would you characterize your investing style (very conservative to very risky)?

 

[SkinnyGoomba]

GF I'm 29, but I certainly invest like I'm 80, actually even have an 80y/o friend who considers me a bit conservative.

One last comment to the previous topic, It's my opinion that this thread is not meant as advice, instead we're chronicling our experiences and moves as investors and sharing ideas. Which is also why it is common that people who arrive in this thread looking for exact guidance are usually directed to seek professional assistance.

IRL, and on the net, people looking for very specific guidance make me uncomfortable.

 

[idfnl]

40's.

Risk profile is mitigation thru diversification, moderate to moderately high risk. I like to own smaller amounts of a larger number of stocks, way more than most would own. I have about 80 different positions now.

My favorite strategy is to sell profits and keep free shares. Playing with the houses money really shifts your risk tolerance and keeps you on top of the stocks price movement, giving you new entry points because you follow it, EPZM being a good example, and most recently I am developing it with KITE which I think is an extremely good buyout candidate. This strategy also keeps the money fresh and moving into different areas depending on market conditions.

In addition, I actively sell covered calls which has a small but significant impact on my returns.

I've also started to believe more in dividends, partly influenced from this thread. I rebalanced a few months ago towards emphasizing them a bit more. I am very happy so far with the moves I made to dividend and leveraged dividend ETF's.

 

[lbdash]

Does anyone believe we are in a bubble and ready for a correction to begin within the next 6 months? I am sitting on the sidelines all cash right now, a part of me is wishing the crash will hit hard soon so that I can take advantage of it.

 

[jbarwick]

29 with a very passive fund portfolio of 80% equity/20% bonds. Switched once I got engaged and my wife is super conservative to the point where most calculators were putting her at 50% bonds. I think I mentioned this but she wanted to buy a lot of real estate but we settled on having a portion of our portfolio related to that (I don't count our house as part of this). Education in accounting and finance.

I will say that there is less stress on the fund side of things. I don't have to worry about individual stocks going up or down, just really look at the direction of the market. If there were no funds, I would probably mimic something like SG to own a broad range of blue chips.

As for the "crash" coming in 6 months question...who knows. I'd much rather be in and ride the ups and downs then sitting on the sideline. Think of all those people in 07/08 who sold at lows and just sat out this recent bull market. Not only are they worse off, they are waiting on the next "crash" to get in and no one knows when that will be. Hell some major catalyst could happen on Monday or Tuesday and shift the whole world (probably something terrorist related as similar to 9/11 moving the market).

A question for everyone who is married. Do you look at your household portfolio or just your side of the investments? If I were to guess, most households don't lump together their portfolios and overload on risk in one area.

 

[AriGold]



How old is everyone here and how would you characterize your investing style (very conservative to very risky)?

I'm in my 20s, but I don't diversify in the traditional sense. I find maybe 5-6 of the best opportunities and go hard at them. High conviction of course but it means I have to research the hell out of it. But that isn't hard for me because it's part of my job.

Mostly look at high growth opportunities with very sound businesses/management. Definitely not your "bluechips" but I also do like to buy leaders in the tech space as it tends to be a "winner take all" kind of industry.

Long term I want to move into VC.


I am a long term investor and combine it with technical buying. Need the high conviction and long term focus otherwise the volatility would keep me up at night.

Some recent positions:
FUEL at $14.80
AMZN at $313
SPWR at $33

Does anyone else invest like this?