Selling my first stock this week

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Barefootgirl
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Selling my first stock this week

Post by Barefootgirl »

...and it almost feels like a high school graduation.

About 20+ years ago, I had just finished paying off my student loans and I was finally in the black, with a freshly minted MBA.

I was young, exuberant and naive, so I bought my first stock in a dividend reinvestment plan - Exxon Mobil. I sent Exxon money every month for about 10 years and then I just stopped as I became more enamored of index funds and diversification, etc. I never sold Exxon or the other company stocks I held in that account, I decided (like a crazy aunt living in the basement) to just let it be, I guess I was the buy and hold type before it was cool. Not long ago, I decided it was finally time to just get rid of that old account, so I sold the stocks to roll the money into index funds…except one, Exxon Mobil.

I know we aren't supposed to get attached to our investments, but this one gets to me. Through all the other ups and downs of my life in the past 20 years, this is the only the investment that has more or less (much more now!) stayed the course. :beer

BFG
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bondsr4me
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Re: Selling my first stock this week

Post by bondsr4me »

why not hold on to it? you are probably getting a VERY GOOD dividend yield, so just keep it. in this rate environment, where would you be able to get the kinda yield you are getting now? I am assuming you don't "need" the money, so just leave it alone. Exxon most likely will be here long after you and I are gone; kinda like Walmart, GE and other megacaps. If I owned it, I would KEEP it. Have you compared it's performance to any index fund you are considering investing in? Don't let all the indexing stuff cause you to make a bad investment decision.
KEEP IT.
Don
livesoft
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Re: Selling my first stock this week

Post by livesoft »

I felt the same way about Vanguard Windosor II when I sold it (see this thread: http://www.bogleheads.org/forum/viewtopic.php?t=48435

But I've never felt that way about stock. I just gave away the last shares of something I've owned a long time. That's 4 less dividend transactions I have to worry about every year.
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grayfox
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Re: Selling my first stock this week

Post by grayfox »

According to M*, 1/14/1994 - 1/13/2014, Growth of $10,000

VFINX 55,398.41
XOM 102,475.33

Almost twice as much investing in XOM than in the index fund.

http://quote.morningstar.com/fund/chart ... ture=en-US
z3r0c00l
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Re: Selling my first stock this week

Post by z3r0c00l »

Considering the odds of a severe oil spill in the future, plus the prospects for methane clathrates, I support your choice to sell.
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leonidas
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Re: Selling my first stock this week

Post by leonidas »

I also have a few stocks still lingering around from the old days. Consumer goods, health care, utilities and oil mainly. You are taking company specific risks but if it is not a huge percentage of your portfolio then I would just keep it. My total non-indexed portfolio is < 9% so it does not bother me.
Caduceus
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Re: Selling my first stock this week

Post by Caduceus »

Yeah, you never forgot your first. In my case, before I began indexing, my first stock tripled in two years at which point I sold all of it, so it never became sentimental to me.

Now, my VWO (emerging markets) ... that's a different story :) I have a feeling that's going to cause me a lot of heartbreak along the way. But hopefully also a lot of joy.
Grt2bOutdoors
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Re: Selling my first stock this week

Post by Grt2bOutdoors »

z3r0c00l wrote:Considering the odds of a severe oil spill in the future, plus the prospects for methane clathrates, I support your choice to sell.
Considering that most of the world consumes fossil fuel energy with no immediate nor future replacement in sight and the fact that ExxonMobil is not the largest nor biggest deep sea oil driller, I find your reasoning to be full of holes.

KEEP IT!
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Toons
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Re: Selling my first stock this week

Post by Toons »

Grt2bOutdoors wrote:
z3r0c00l wrote:Considering the odds of a severe oil spill in the future, plus the prospects for methane clathrates, I support your choice to sell.
Considering that most of the world consumes fossil fuel energy with no immediate nor future replacement in sight and the fact that ExxonMobil is not the largest nor biggest deep sea oil driller, I find your reasoning to be full of holes.

KEEP IT!
+5,Without a doubt,keep it :happy

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Re: Selling my first stock this week

Post by placeholder »

BFG since this was a DRIP with add investment along the way do you have accurate basis information for the capital gains (assuming the gains + tax bracket make that a concern)?
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Re: Selling my first stock this week

Post by Grt2bOutdoors »

placeholder wrote:BFG since this was a DRIP with add investment along the way do you have accurate basis information for the capital gains (assuming the gains + tax bracket make that a concern)?
If she doesn't, the stock transfer agent - Computershare does. I know this because I have the same drip and the records go all the way back to inception, nearly 20 years ago. Who say's companies don't care about the little guys? :)
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Tamahome
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Re: Selling my first stock this week

Post by Tamahome »

Congratulations!
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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ogd
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Re: Selling my first stock this week

Post by ogd »

Good for you! It can be hard to let go after a good run like that, but in the end we're not stockpickers and you'd lose the diversification free lunch by holding too much Exxon. It's a already large chunk of the index as it is.

Re: oil spills, Exxon is just as vulnerable (need I remind you?) and if anything the public will demand blood the next time it happens.

Re: future alternative to oil: by the time it shows up, it will be too late. The market will have crushed the stock before you had a chance to see it. The growth of electric cars would already make me nervous.

Add to that the possibility that there is a swing in public opinion (combined with alternatives) leading to the kind of oil taxes you have in Europe, and once again Exxon will very quickly stop being a money maker.

Finally, that dividend is not fixed income. In a prolonged recession, oil sales will collapse and so will Exxon's profits.
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Barefootgirl
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Re: Selling my first stock this week

Post by Barefootgirl »

What Gr8toutdoors said, ditto on the records. Man, wrap your head around trying to figure out DRIP cost basis, lol. throw in a few splits, reverse splits over the yrs, you get the picture.


I found another asset today that I forgot I had - GE stock. I thought I had already sold that one.

I am sold on the benefits of indices, but single stocks can be fun if you play them like a side bet, ha! trying to keep it light.

BFG
How many retired people does it take to screw in a lightbulb? Only one, but he takes all day.
Topic Author
Barefootgirl
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Re: Selling my first stock this week

Post by Barefootgirl »

I also noticed that the stock can also be held in a Traditional or Roth IRA with the Exxon plan - not sure, Grt2bOutdoors, if you saw what.

BFG
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TimeRunner
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Re: Selling my first stock this week

Post by TimeRunner »

You might consider opening a DAF (Donor Advised Fund) with some of your shares, skip the cap gains tax and take a charitable contribution deduction. Then just make your charitable gifts from your new charitable fund. Works slick and you'll be set for charity gifts for a while. Fidelity's minimum is $5K, Vanguard's is $25K, and there's others. :beer
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Grt2bOutdoors
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Re: Selling my first stock this week

Post by Grt2bOutdoors »

ogd wrote:Good for you! It can be hard to let go after a good run like that, but in the end we're not stockpickers and you'd lose the diversification free lunch by holding too much Exxon. It's a already large chunk of the index as it is.

Re: oil spills, Exxon is just as vulnerable (need I remind you?) and if anything the public will demand blood the next time it happens.
Need I remind everyone, the world still runs on oil. Sure, you can just "fine" the oil industry - in the end, you and I will be paying for it in the form of higher prices. I'm sure Royal Dutch Shell, Total, Eni, Statoil, BHP, Chevron, ConocoPhillips, Anadarko, and countless others are shuddering at the thought of fines. It's the cost of doing business and we all know who pays for it in the end.
Re: future alternative to oil: by the time it shows up, it will be too late. The market will have crushed the stock before you had a chance to see it. The growth of electric cars would already make me nervous.
Oh goody!!! Electric cars!!! The oil guys are just salivating at the thought of all those electric cars on the road. See, fossil fuel is used in the vast majority of electric generation in the US. Now, coal is still big, but with the environmentalists knocking on their door, zero new nuclear plants being built (courtesy of NIMBY movements) and the cheap cost of natural gas, more and more new and planned generation is going to use gas. Hydro, solar and wind generation is just a drop in the bucket. Fortunately, there is an over-abundance of natural gas in this country and to the north - Oh Canada! Oil production as a by-product produces natural gas - typically the oil companies re-inject it into the ground to maintain reservoir pressure or flare it (burn it!), but now with the anticipated demand for natural gas - they will likely pipe it to end-users, and an electric outlet in everyone's home plays right into the e&p's hand. We also have shale production - amazingly, they are finding shale gas all over the place - Haynesville, Eagle Ford, Marcellus, Utica, Piceance, etc. If you don't know, Exxon is the largest holder of natural gas reserves in the lower 48 - they had their own, then they picked up Mobil and then topped that off with XTO. We haven't even talked about Canada - talk to Encana about that. Also, Exxon is at the forefront of electric car batteries - who knew? For all we know someone from Exxon is reading this forum. :)
Add to that the possibility that there is a swing in public opinion (combined with alternatives) leading to the kind of oil taxes you have in Europe, and once again Exxon will very quickly stop being a money maker.Oh, the dreaded oil taxes in Europe - that's really dissuaded use of oil there - why the last time we were there the hotel used chopped wood to heat the water for my shower. Come on, Exxon just build a floating pier in the Adriatic Sea in Italy to convert LNG that is tankered there into natural gas which is then piped to Italy and sold to end-users. I don't see the Italian government which owns 70% of a major oil company (ENI) or any other European country (hello Norway, UK, France, Russia, etc) killing the goose that feeds them.

Finally, that dividend is not fixed income. In a prolonged recession, oil sales will collapse and so will Exxon's profits.Ah, true - a dividend is not fixed income - it is derived from the result of a profitable endeavor, the company is plenty profitable. But don't take my word for it - take a look at their balance sheet and cash flow statement. In a prolonged recession, people will still need to heat their homes, buy goods made of rubber, plastic, ibruprofen, band-aids, plastic bags, food containers, get to the doctor, turn on a light, use the internet - believe it or not, oil use and the rest of the world are intricately involved. Exxon is not only an oil exploration and production company, it is one of the largest refiners in the world, a technology company and one of the largest chemical companies in the world. Before Exxon collapses, you will see far far more weaker companies go the way of the Dodo bird and that will be a plus for Exxon.
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livesoft
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Re: Selling my first stock this week

Post by livesoft »

TimeRunner wrote:You might consider opening a DAF (Donor Advised Fund) ….
And you can name your DAF almost anything you want including "The Barefoot Girl Charitable Trust". How would like to hear that on your local NPR radio station:

"This edition of All Things Considered is brought to you by The Barefoot Girl Charitable Trust and by …."
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Grt2bOutdoors
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Re: Selling my first stock this week

Post by Grt2bOutdoors »

Barefootgirl wrote:I also noticed that the stock can also be held in a Traditional or Roth IRA with the Exxon plan - not sure, Grt2bOutdoors, if you saw what.

BFG
Yes, I knew that, but just in case I want to TLH, can't practice that in an IRA.
BTW, I've never practiced TLH with XOM - buy, hold, reinvest only. I just preserve my option to do so - just in case "ogd"'s stark predictions come true.
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ogd
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Re: Selling my first stock this week

Post by ogd »

Grt2boutdoors: no need to be snarky. I was pointing out the dangers, remote or not, of sectoral concentration, particularly in something that we'd all love to get rid of. By the time these possibilities no longer elicit replies starting with "Oh" and "Ah", it will be too late for some of these companies. You heard it here first. :beer

As for single company diversification, you're darn right that the companies should fear the fines and the customer backlash. Take a look at BP -- we're talking 50% losses, your own private Recession if you were a shareholder.

Image
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BigFoot48
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Re: Selling my first stock this week

Post by BigFoot48 »

As a Mobil retiree, I kept my Mobil, then later Exxon-Mobil stock for years after adopting the Boglehead philosophy of the wisdom of owning the market. But in my last portfolio simplification, I decided I either believed in the value of owning broad market index funds or I didn't, and I decided to sell my last individual stock holding, Exxon-Mobil.

It was a little sad, a working life transition, but I knew if I ever really missed the stock I could buy some shares again, as they were fungible. But I haven't missed it, and am looking forward to a final transition to three or four funds a few years from now, after also getting slice and dice out of my system.

Sell it, or not, it really matters little in the scheme of things.
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cheese_breath
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Re: Selling my first stock this week

Post by cheese_breath »

Barefoot, If these shares weren't in a tax deferred account I hope you kept track of the basis for all these dividend reinvestments so you can accurately declare the capital gains on your income tax.
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dimdum
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Re: Selling my first stock this week

Post by dimdum »

What percentage of your "total portfolio" does XOM represent ? If its under 10%, keep it.
SGM
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Re: Selling my first stock this week

Post by SGM »

I never found it difficult to keep track of the basis of drips. I just kept a running tab at the end of each year of all dividends and all purchases. I did that directly on the last statement of the year which I kept in a binder. Regardless of splits, dividends and purchases it is a simple division to get price paid per share. It gets more difficult if you sell in dribs and drabs while still purchasing in the plan and reinvesting dividends. I only did that with one stock plan. When I found out that the receiver of my stock immediately sold it instead of using it to increase the endowment I decided against giving appreciated stock as a charitable donation. That might change in the future.

I target to keep any residual individual stock below 5% of my total investments. I see no compelling reason to sell XOM. I wouldn't hold onto it for sentimental reasons though. It is trite, but you may love XOM, but XOM doesn't even know you exist.

There is no cost to holding an individual stock in a brokerage account except paying taxes on dividends. There is risk of having too much invested in one company or one sector, but personally I have no problem with some allocation to individual stocks. There may be an argument that XOM and other oil majors are underpriced because of fear of a BP disaster and fear of oil being replaced by a cheaper fuel. I think the latter is mostly wishful thinking. XOM did pretty well despite the Exxon Valdez disaster. I have no crystal ball, but I do not get scared about the many predicted disasters one reads about. If I did I would never have invested in the market at all and would have been a lot poorer. I am fully aware that companies come and go, but I cannot get worked up over holding a small amount of XOM.
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dphilipps
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Re: Selling my first stock this week

Post by dphilipps »

If you own the Total Stock Market index or an S&P 500 index fund, you'll continue to own a meaningful chunk of XOM, as it makes up 2% of Total Stock and 2.6% of the S&P 500.
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Re: Selling my first stock this week

Post by z3r0c00l »

Grt2bOutdoors wrote:
z3r0c00l wrote:Considering the odds of a severe oil spill in the future, plus the prospects for methane clathrates, I support your choice to sell.
Considering that most of the world consumes fossil fuel energy with no immediate nor future replacement in sight and the fact that ExxonMobil is not the largest nor biggest deep sea oil driller, I find your reasoning to be full of holes.

KEEP IT!
Lehman brothers too... did you keep it? My post was only one line one, you could have found the name of the near future replacement for oil in it. Remember the BP oil spill? If things had shaken out a bit worse, BP would be gone today. Don't confuse yourself, owning a single stock exposes you to a non-zero risk of losing every penny held in that stock. Companies regularly go to zero, even famous big companies like Kodak which is the number 1 producer of film, a product that most of the world consumes with no immediate nor future replacement in sight. This electronic camera thing is a fad.
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Grt2bOutdoors
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Re: Selling my first stock this week

Post by Grt2bOutdoors »

ogd wrote:Grt2boutdoors: no need to be snarky. I was pointing out the dangers, remote or not, of sectoral concentration, particularly in something that we'd all love to get rid of. By the time these possibilities no longer elicit replies starting with "Oh" and "Ah", it will be too late for some of these companies. You heard it here first. :beer

As for single company diversification, you're darn right that the companies should fear the fines and the customer backlash. Take a look at BP -- we're talking 50% losses, your own private Recession if you were a shareholder.

Image
You make valid points. I also made valid points as to the strengths of the company in question. Regardless of what we think, it ultimately is BFG's decision to buy or sell. I hold it, I hold others too - including BP picked up at near the low in the stock when the bad news came out. You can't pick a point in time and say - look it's down 50% or vice versa - look up I'm up 50%, you buy something on it's merits. It's a private recession if you hold all of your limited assets in one sector or one company, I think that is not the case with BFG, it certainly isn't with me - I hold index funds, individual stock and bonds, bond funds, cash - no gold though.
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Grt2bOutdoors
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Re: Selling my first stock this week

Post by Grt2bOutdoors »

z3r0c00l wrote:
Grt2bOutdoors wrote:
z3r0c00l wrote:Considering the odds of a severe oil spill in the future, plus the prospects for methane clathrates, I support your choice to sell.
Considering that most of the world consumes fossil fuel energy with no immediate nor future replacement in sight and the fact that ExxonMobil is not the largest nor biggest deep sea oil driller, I find your reasoning to be full of holes.

KEEP IT!
Lehman brothers too... did you keep it? My post was only one line one, you could have found the name of the near future replacement for oil in it. Remember the BP oil spill? If things had shaken out a bit worse, BP would be gone today. Don't confuse yourself, owning a single stock exposes you to a non-zero risk of losing every penny held in that stock. Companies regularly go to zero, even famous big companies like Kodak which is the number 1 producer of film, a product that most of the world consumes with no immediate nor future replacement in sight. This electronic camera thing is a fad.
I never liked Dick Fuld - it was always a dog that company. Sure, I remember the BP spill, the noise provided an excellent "entry" point into the stock and many folks took advantage of it. I'm well aware of the risks of holding individual stock. Kodak was representative of poor management - hire poor management and that is what you get, using a fat dividend to hide their missteps was just brilliant on behalf of the board and management, until the cash flow ceased to support it - after letting the Japanese eat their breakfast, lunch and dinner.
This isn't meant to be snarky --- Are your sure about the electronic camera being a fad? Do you think the carburetor's are coming back in cars as well? The point is your crystal ball is as cloudy as mine.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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ogd
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Re: Selling my first stock this week

Post by ogd »

Grt2bOutdoors wrote: I hold it, I hold others too - including BP picked up at near the low in the stock when the bad news came out. You can't pick a point in time and say - look it's down 50% or vice versa - look up I'm up 50%, you buy something on it's merits.
Interestingly enough, the selling of BP does not appear to have been overdone, it's still lagging by the same 50% that it was at the bottom. The market got it right. 50 billion (and counting) really does hurt.
Grt2bOutdoors wrote:Do you think the carburetor's are coming back in cars as well?
I sort of miss the carburetor. It was the one thing I could tinker with under the hood, in cold weather, on my old crappy car. Now I'm reduced to pouring liquids and handing the keys to a mechanic. :?
MP173
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Re: Selling my first stock this week

Post by MP173 »

BFG:

I first purchased Exxon on May 7, 1995 thru the Direct Purchase Program and added money on a regular basis. If you are ready to sell, go right ahead. Warren Buffet's Berkshire Hathaway will probably purchase your shares, as they are accumulating shares.

You take risk by being nondiversified. As others asked, what percentage of XOM is your overall portfolio. What would happen if XOM lost 50% of its value?

Dividend is currently.63 per share which is about 2.5% (closing price of $98.78) and it carries a higher credit rating that the United States.

XOM is one of the most efficient companies in the world. Upstream, downstream, and chemical production allows it to use each barrel of oil efficiently...the byproducts of the gasoline are used as feedstock in the chemical production usually next door to the refinery. How about all of that natural gas they are sitting on?

XOM is positioned for today and the future. But, if it doesn't make sense for you to hold it...then don't.

Ed
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