[Sell off individual stocks?] How many own zero/few stocks?

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dolphinsaremammals
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Re: Poll: How many own zero/few stocks?

Post by dolphinsaremammals »

Ice-9 wrote: I bought 100,000 shares at $0.008 a share. That's right, less than a penny a share. Held it just over a year, and then tried to sell when it was showing at slightly above a penny. However, there's very little volume on a stock like that, and I had to lower the price to execute the sell. After decreasing the price and resetting a new order a few times, I ended up selling all of it for the same $0.008 a share I had paid for it.

However pointless that transaction, I ran into technical trouble using TurboTax to report it the following April. After a significant hold time on the phone with TurboTax tech support, I was told that (at least back in 2008) TurboTax had a limit of five digits that could be entered for the number of shares. So, I'll admit it, rather than do my entire tax return over the old fashioned way that year, I lied to the IRS about 1 share worth $0.008 that I had no gain or loss on. :!:
I am guessing you could have entered 50,000 twice. Not that I use TurboTax, I prefer my colored pencils.
Sagenick48
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Re: Poll: How many own zero/few stocks?

Post by Sagenick48 »

I started investing before index funds existed. My portfolio is still mostly individual stocks but I am gradually liquidating them and shifting to index funds.
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gkaplan
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Re: Poll: How many own zero/few stocks?

Post by gkaplan »

I still don't see a poll.
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nisiprius
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Re: Poll: How many own zero/few stocks?

Post by nisiprius »

SuperSaver wrote:...I'd hate to sell my "winners"...
Isn't selling them the point of having them? Buy low, sell high?

They (and you) are not winners until the exact moment when you do sell them. If you are starting to think of them as "winners," if you starting to think of them seriously as money instead of some number of shares of stocks, then the only logical thing to do is to bring reality into sync with your thinking... by turning them into money.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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EyeYield
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Re: Poll: How many own zero/few stocks?

Post by EyeYield »

Sagenick48 wrote:I started investing before index funds existed. My portfolio is still mostly individual stocks but I am gradually liquidating them and shifting to index funds.
Same here. When the index fund was first made available to the public, I was so fully entrenched in DRIP contributions, that I didn't notice, as most people didn't. It took a while for them to catch on with the general public and by that time I had my own mini index fund, diversified among the sectors of the S&P 500. Since becoming a BH, I've trimmed my heavy weights a little each year, as taxes allow, and now rebalance into my 4 new index funds. I still have pieces of 25 stocks.
After 50 years of investing luck, I'm glad to have made the discovery before my luck might have run out.
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IlliniDave
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Re: Poll: How many own zero/few stocks?

Post by IlliniDave »

I have no shares of individual stocks except a few of my employer's stock that I've accumulated passively over the years (< 1% of my portfolio). I am about 70-80% in index funds. The rest are term/duration-based bond funds (e.g., intermediate-term tax-exempt), and a couple non-index Vanguard equity funds. I'm not an index purist but I insist on low costs, and for equity funds, relatively low turnover.
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cheesepep
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Re: Poll: How many own zero/few stocks?

Post by cheesepep »

I am in a 100% stock portfolio and I have no intentions on changing. I have done well myself and have outperformed the greater market by any measurements. Yes, there are people who can outperform the market -- people who are smarter than the average bear. I don't consider myself to be Buffet's equal, but I do well for myself.
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BolderBoy
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Re: Poll: How many own zero/few stocks?

Post by BolderBoy »

SuperSaver wrote:Just trying to gauge how truly committed those on here are: How many of you are all-in with indexed funds only?
98% index funds + 1 tax-exempt municipal bond fund. Last time I bought a "stock" was in 1981 and I lost money on it.
jackholloway
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Re: Poll: How many own zero/few stocks?

Post by jackholloway »

When my stock grants in my employer vest, I own thier stock for a month or two.

Everything else is in index funds, primarily three fund, but with some legacy tilts to various size and value indices that I will cash out either when I need the money, my bracket drops, or the market drops the LTCG to something I am willing to pay.

I would sell the individual stocks unless you feel the need and desire to keep them. Expunge sentimentality, and buy what matches your knowledge and needs. For me, that is no individual stocks.
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packer16
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Re: Poll: How many own zero/few stocks?

Post by packer16 »

abuss368 wrote:I would say there is no need to select individual stocks. One is not compensated for the risks involved.

The last time we owned an individual stock was 2008. 6 years have passed real quick. I do not see the need for us to own them.

If you really want to hold an individual stock to make investing more interesting that is fine. You can select one or two stocks perhaps, maybe three. Jack Bogle, in his excellent book "The Little Book of Common Sense Investing" advised no more than 5% of your portfolio.

Best.
I think your assumption of uncompensated risk is under the assumption that the stock price is equal to the value. If this is not the case, then holding a group of undervalued undiversified stocks will be compensated more than a fairly valued diversified group of stocks. If you have no interest or ability to value stocks then you should not be invested in individual companies to begin with. Also if the stock is relatively large in size (mkt cap > $5 billion) then finding stocks selling for less than there value is not common, especially today in the USA.

A majority of my portfolio is in individual stocks, however, I value businesses for a living so the stretch to identify undervalued securities is not that great for me. For most folks, the stretch would be larger.

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Re: [Sell off individual stocks?] How many own zero/few stoc

Post by Alex Frakt »

I edited the title and moved the thread to the Investing - Help forum.
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fetch5482
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Re: [Sell off individual stocks?] How many own zero/few stoc

Post by fetch5482 »

At this time, the only individual stocks I trade are ones I get from RSU and ESPP.

ESPP is a no-brainer in my case - I get a 15% discount on the price at start of period or price at end of period - whichever is lower. So in worst case, I make a 15% or so discount by selling it the next day. Sure, I pay short-term capital tax.. but I see it as mostly risk-free free money.

A sizable percentage of my net worth are in RSUs. Unfortunately, I cannot do much about it due to black-out trading windows established by my employer. I will continue to have a large sum in RSUs until I fully vest and leave the employer.

Other than these, I have no other individual stock positions.
(AGE minus 23%) Bonds | 5% REITs | Balance 80% US (75/25 TSM/SCV) + 20% International (80/20 Developed/Emerging)
cherijoh
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Re: Poll: How many own zero/few stocks?

Post by cherijoh »

Nukeboilermaker wrote:The third is an ESPP (employee stock purchase) that I have confidence in, as I'm an indexer but still believe in this stock. I plan to sell the ESPP stock when the portfolio value reaches a target point/value (approximately every 4 to 6 years). With that money I will divide it into fourths and apply towards invest/spend/mortgage/college.
One of the problems with ESPP is that your continued employment may be correlated to the stock price - when times are bad and the stock tanks layoffs are quite likely to follow. Do you really want to have that much tied up in one company?

Packer16 wrote: I think your assumption of uncompensated risk is under the assumption that the stock price is equal to the value. If this is not the case, then holding a group of undervalued undiversified stocks will be compensated more than a fairly valued diversified group of stocks.
What do you know that the rest of Wall Street doesn't? How do you know they are undervalued while the market basket of stocks in an index fund is fairly valued?
carolinaman
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Re: [Sell off individual stocks?] How many own zero/few stoc

Post by carolinaman »

I own no stocks although have owned numerous ones over the years. I finally sold BRKB, the last one, a couple of years ago. Individual stocks require a lot of attention to manage and I frankly do not want to spend that much time with my investments. I primarily have index or other low cost funds but still do have a couple of active funds.
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packer16
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Re: [Sell off individual stocks?] How many own zero/few stoc

Post by packer16 »

I think some people have the impression that "Wall Street" has bunch of folks that adjust stock prices to there correct value like some type of computer algorithm. Nothing can be further from the truth. From what I have observed, there are two types of markets. One which is made up of larger international stocks (>$5 billion) for which the large pools of capital (mutual funds, pension funds, etc.) can easily buy and sell stocks at will. This is the market which is the most efficient and the prices are typically close to the stocks fair value range.

However, in some foreign markets which are not available to these folks or international individual investors (S. Korea is an example) or smaller cap companies that these large pools of capital cannot easily liquidate, there are some mispricings. These are the markets that although the information is out there, it is not utilized by those who can move the price close to value due to liquidity and small impact (if correct) that these purchases would have on the pools overall performance. The trend of folks moving from individual stocks to mutual funds (esp. index funds) has created more of these mispriced securities than would otherwise be the case. There is a large advantage to being small that many lose once they purchase a fund.

I am not saying I know anything that is not publicly available but that is not the real question. The question is not only information available but is someone who buys/sells stocks in sufficient volumes willing to act on this information. For larger stocks there is the willingness to act. For the smaller and less liquid stocks, the willingness is not as strong due to liquidity constraints, the period of time that is required for the price/value gap to close, the probability you will be wrong (at least 40% of the time) and the small effect on the pools overall performance.

I value companies for a living so I can at least estimate what is an acceptable valuation range for a good number of companies. It is my observation that most of the stocks in the index market basket are in the valuation range and the exceptions are what I focus on and own.

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Dandy
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Re: [Sell off individual stocks?] How many own zero/few stoc

Post by Dandy »

owned very few individual stocks in the past none now. I was "fortunate" to be able to sell positions during the 2008-9 crash to limit taxable gains.

I would not sell large cap gain stocks to go to total stock market under most conditions. I would just invest in proper index funds going forward.
Some exceptions would be if a very large percent of your assets were in one or two stocks or if you had a large position in a very risky stock e.g. a stock with a risky business model like Best Buy or Radio Shack. Another exception to consider would be employer or former employer stock. If you have your job, health care, pension etc tied up with a company you may not want to also have their stock. Something bad hits that company and you have a lot more at risk.
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Re: [Sell off individual stocks?] How many own zero/few stoc

Post by JW-Retired »

It was never a very large portion of our portfolio but at one time we had something like 10 individual stocks, many inherited long ago. Thanks to 2008/09 and gifting to the kids this year we have been able to get rid of all but three. Since 3 stocks are an obvious risk we will gift these over the next couple of years too. We would hate to use up our carryover loss bank by selling ourselves.

Our kids will pay a lower cap gains tax rate if/when they sell...... and more importantly it will become their problem. :)
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Nukeboilermaker
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Re: Poll: How many own zero/few stocks?

Post by Nukeboilermaker »

cherijoh wrote:
Nukeboilermaker wrote:The third is an ESPP (employee stock purchase) that I have confidence in, as I'm an indexer but still believe in this stock. I plan to sell the ESPP stock when the portfolio value reaches a target point/value (approximately every 4 to 6 years). With that money I will divide it into fourths and apply towards invest/spend/mortgage/college.
One of the problems with ESPP is that your continued employment may be correlated to the stock price - when times are bad and the stock tanks layoffs are quite likely to follow. Do you really want to have that much tied up in one company?

I'm in power generation industry and this in its own nature brings some stability(but given the topic of discussion not as much as it may sound like I am giving this). I'm also in a position that the company has spent $1 million to train me to perform. The qualifications I have make me very valuable for various jobs in the industry (including other companies). Though the concern you specifically mention is the correlation between employment and stock price, given there is no way to fully remove this risk I'm willing to accept the risk (which I feel is reasonable and manageable given my specific situation) that is there given the fact I'm limiting the size of my ESPP in relation to the rest of my portfolio. I simply believe in the company and "product" and choose to partake, hopefully making money every few years.
I do have more bonds in my portfolio then the average 28 year old to help with the assumed risk from my ESPP choice.
Last edited by Nukeboilermaker on Sat Aug 30, 2014 9:23 am, edited 1 time in total.
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ruralavalon
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Re: [Sell off individual stocks?] How many own zero/few stoc

Post by ruralavalon »

We hold no individual stocks, all of our equities are in index funds.
SuperSaver wrote:I'm 37, and contemplating the wisdom on here and slowly divesting my shares of individual stocks. Some of these were given to me by family, so there's the emotional bonds too that need be severed.
Those stocks are heartless, disloyal, unfaithful, and have no emotional bonds with you :o .
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