Stocks as long term investments

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IPer
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Re: Stocks as long term investments

Post by IPer »

nedsaid wrote:
IPer wrote:
Yes, and as I said I don't look at my stock portfolio as being smart compared to Total Stock Market, but I like them.
Don't feel bad. If you read through my posts, I confess my investing sins and admit to doing some un-Boglehead things. But overall, my investment philosophy aligns very closely to the Boglehead philosophy. I am pretty big into a low cost, low turnover style of investing. I buy what I like and my portfolio shows it. I am sure that if I posted it in detail that there would be gasps at some of the things that I have done. I have given a lot of detail but not listed individual positions. If you like what you own and you are getting acceptable investment results, go ahead and be happy with what you have.

Big picture is that the expense ratio of my portfolio is probably 0.50%. I am value oriented. I own active mutual funds, index funds, ETF's based on indexes, and individual stocks. I tilt towards small/mid cap stocks. I invest about 26% of my stocks and about 8% of my bonds Internationally. I am mostly a conservative and cautious investor but I do own rather aggressive funds too. A portion of my active funds are funds I have paid loads on though the vast majority of my funds are no-load funds. I am not a perfect Boglehead by any means. But there actually is a method to my madness and I have put a lot of thought into what I am doing.

I also have posted my investment results. So you can see what I have done and how I have done it. I am a bit coy as I don't want to reveal all the detail of my financial life. But I put a lot out there because it is only fair. If I am recommending things to people, it is only fair for them to see what I am doing with my own money. I am a firm believer that people should eat their own cooking. I have done pretty good but I am certainly no Peter Lynch or Warren Buffett.

I also have my Investment Policy Statement out there somewhere. I have put a lot out there for people to scrutinize.
+3 Thumbs up to Nedsaid, mine looks similar though I did away with all actively managed mutual funds about 7 years ago, though if I were in a Vanguard Active
Fund I would feel differently, I have watched a few of them over time, the others though just seem to such in the averages and I would rather do it myself once
I knew enough about the fund to make it seem attractive.
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nedsaid
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Re: Stocks as long term investments

Post by nedsaid »

An advantage to individual stocks is that you know what you own. An active mutual fund can do "window dressing" near the end of the quarter to make it look like they owned the hot stocks that everyone loves. In reality, these hot stocks may have been in the portfolio only for a few days and had no impact on performance. So you really don't know for sure what your manager has been doing.

Index Funds of course are even better. You know exactly what you own and you have hundreds if not thousands of stocks in there. Very broad diversification with very low costs. And of course no style drift.

I am certainly not advocating that everyone go out and buy a portfolio of individual stocks. You will have a very hard time beating the indexes. With a 50-90 stock portfolio, I would expect those stocks to perform in line with the indexes assuming you are diversifying across industry sectors and that you are not overpaying for those stocks. I am assuming you are a conscientious stock picker.

It is interesting that the Wall Street Journal used to pit professional money managers against darts thrown randomly at a stock page. They featured this in a column. Hint: The Darts usually won. This illustrates two points, stock picking to beat the market is very difficult to do. Second, this might be the mid-cap/small cap premium at work. The analysis on Wall Street focuses on the bigger and best known stocks. You would expect that the darts would tend to hit anything except the 100 or so mega-caps that represent over 50% of the market capitalization of the Total US Market. In other words, odds are good the darts would hit small and mid-cap stocks much more than the largest US Companies. A third point could be made that this illustrates the randomness of stock returns.

So you might up the stock pages on a corkboard and throw 50-90 darts at it and you actually might get better results than you get with stock picking. This is why I index more and more. I am mostly retired from stock picking. Reading Peter Lynch's books did not make me Peter Lynch. Sigh!
A fool and his money are good for business.
IPer
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Re: Stocks as long term investments

Post by IPer »

Hey Nedsaid, did we hijack this thread?!
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nedsaid
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Re: Stocks as long term investments

Post by nedsaid »

Iper, we certainly didn't change the subject. I think everyone else lost interest including the original poster. Thanks for your comments.
A fool and his money are good for business.
IPer
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Re: Stocks as long term investments

Post by IPer »

Well nice visiting with you, I am outta this thread, let them use it if they will! Best regards!
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Confuscious
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Re: Stocks as long term investments

Post by Confuscious »

IMO stocks are great for 5-10 year investments. During the recent recession I bought dollar tree, nike, and Apple. I figured these are big enough companies & will weather the storm. Of course, these are major companies and when the economy does well these companies explode. I'm up something like 300%. Im going to sell and be happy. I do have index funds that I'm keeping long term for retirement. For me, having 3x the returns is worth the risk. FYI, individual stocks 5-10% of total portfolio.
John3754
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Re: Stocks as long term investments

Post by John3754 »

Confuscious wrote:IMO stocks are great for 5-10 year investments. During the recent recession I bought dollar tree, nike, and Apple. I figured these are big enough companies & will weather the storm. Of course, these are major companies and when the economy does well these companies explode. I'm up something like 300%. Im going to sell and be happy. I do have index funds that I'm keeping long term for retirement. For me, having 3x the returns is worth the risk. FYI, individual stocks 5-10% of total portfolio.
Except the total US market index is also up something like 300% since the depths of the recession, so you got the same return as the index except with more risk.
Confuscious
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Joined: Tue Jan 21, 2014 10:35 pm

Re: Stocks as long term investments

Post by Confuscious »

John3754 wrote:
Confuscious wrote:IMO stocks are great for 5-10 year investments. During the recent recession I bought dollar tree, nike, and Apple. I figured these are big enough companies & will weather the storm. Of course, these are major companies and when the economy does well these companies explode. I'm up something like 300%. Im going to sell and be happy. I do have index funds that I'm keeping long term for retirement. For me, having 3x the returns is worth the risk. FYI, individual stocks 5-10% of total portfolio.
Except the total US market index is also up something like 300% since the depths of the recession, so you got the same return as the index except with more risk.
Based on numbers from March of 2009 (the depths) - today:

Dollar tree 7.42-58.94 or 694%
Nike 21.46-90.90 or 323%
Apple 13.91-105.92 or 661%
Dollar tree +Nike + apple = avg 559%

Vtsax 16.61-49.22 or 196%

:mrgreen:
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