Buy and Hold Forever Stocks
Re: Buy and Hold Forever Stocks
I would not be buying Exxon here and now for several reasons. Yes it is cheaper now than it has been in a while BUT it has serious issues. The company has not been performing very well for at least 5+ years and it shows in the annual reports and related data. That is why the company is rated a sell or reduce by many analysts. The key issue is the oil reserves are shrinking. The actual oil pumped and sold every year is also shrinking. The company is being forced out of Russia and all those huge reserves they found and has lost a ton on invested $$ there and may not ever recover it. They almost completely missed the US fracking boom and only got back in last year by buying a NG company. And now that the oil price has gone down they are depleting their cash reserve as well. Oh yea they have also been buying back tons of stock at very high prices for years instead of paying bigger dividends, only good for the top management IMO. I thought seriously about selling when the stock got to $100+ last year and just pay the taxes.
And for those that love GE, what did you think of GE when the GE Finance Division and related financing companies almost went broke during the 2008 crisis? How much smaller is the company now that they have reduced all those loans and quit most of that crazy seller financing?
And for those that love GE, what did you think of GE when the GE Finance Division and related financing companies almost went broke during the 2008 crisis? How much smaller is the company now that they have reduced all those loans and quit most of that crazy seller financing?
Re: Buy and Hold Forever Stocks
Most expert actively managed funds can't beat index funds over the long haul, but I don't think passively managing a diverse group of large cap stocks is the worst thing you can do. After all, Total Stock Market is mostly a large cap fund with the top 25 holdings making up about 25% of the fund. Personally, I don't think it is worth the effort in research, wasted time (life is short), and uncertainty (stress).
http://www.bogleheads.org/wiki/Passivel ... dual_stock
Stocks that I have considered before finding Bogleheads:
AAPL, AMZN, GOOG, F, T, V, PG, JNJ, WFM, COST, BRK.B, COP
http://www.bogleheads.org/wiki/Passivel ... dual_stock
Stocks that I have considered before finding Bogleheads:
AAPL, AMZN, GOOG, F, T, V, PG, JNJ, WFM, COST, BRK.B, COP
You can't stop the waves, but you can learn to surf
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Re: Buy and Hold Forever Stocks
That is precisely what I want to know about, because it always comes up in these discussions. That's how you decide what is a "buy and hold forever" stock.heartandsoul wrote:Not sure about 'high conviction stocks'...nisiprius wrote:Someone please propose a fair, objective test of the hypothesis:
"High-conviction stocks outperform the benchmark index of the category they belong to."
Of course, an equally weighted portfolio outperforms a cap-weighted portfolio because, for the same set of stocks, equal weighting amounts to a small-cap tilt. More reward, yes, but for more risk. It's just an obfuscated factor play. And it still leaves open the obvious point that there are equal-weighted index funds.but there is plenty of evidence (Wiki 'individual stock portfolio' links, studies of Dimson etc) to suggest that an equal weighted portfolio of stocks is likely to outperform an index fund...
But it's beside the point. The original poster, and others who suggest supplementing a traditional cap-weighted index fund with one or two stocks, great stocks, blue-chip stocks, stocks to buy and hold forever, are not suggesting using an equal-weighted index fund. They are suggesting picking a tiny number of stocks. And how do you pick them? Through personal conviction.
So, once again: how would you devise an objective test of "the merits of 'high-conviction' stocks?"
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.
Re: Buy and Hold Forever Stocks
My buy and hold stock has been MO. I started acquiring through the ESOP plan back in 1979. Next Dec., when I hit 59 1/2 I will start reducing my exposure from about 11% of my portfolio to around 5%
Re: Buy and Hold Forever Stocks
For Runalong - I have a couple of non-traditional (BH-wise) stock/etf investments I expect to hold very long term (forever seems a bit of a jinx for me - lol). Apple is one and IBB (a biotech etf - not a single stock) is the other. I do restrict them to about 20% of my investment portfolio, routing the surplus to the larger set of holdings in index funds. I also held Amazon stock since its inception and finally parted with it last week as it rebounded. When I found the BH site, I had a complicated suite of stocks due to an inheritance from my Dad, but they have all been sold off for index funds over the last year. But I plan to keep my own original choices - Apple and IBB - for the long haul. Or until it stops making sense to me.
Re: Buy and Hold Forever Stocks
nisiprius: I don't know how to formulate an objective test of high-conviction stocks.
That's why I only have two and they make up only about 5% of my portfolio. Out of a universe of thousands of stocks, these are the only two I have an emotional attachment to. I feel better about owning them. I would regret it if I ignored my instincts and watched them outperform without me. The risk is minor and manageable.
My wife and I read about the detrimental effects of excess sugar consumption ("excess" = what most Americans think of as "normal"). She cut out all sugar. I cut out 95%. She does fine with others but I would be a little afraid that I might become shrill and self-righteous and hard to get along with if I ever became that much of a purist. You've all met the type. And I'm pretty sure that the 5% isn't going to shorten my life.
There might be a metaphor in here somewhere but I can't quite put my finger on it.
That's why I only have two and they make up only about 5% of my portfolio. Out of a universe of thousands of stocks, these are the only two I have an emotional attachment to. I feel better about owning them. I would regret it if I ignored my instincts and watched them outperform without me. The risk is minor and manageable.
My wife and I read about the detrimental effects of excess sugar consumption ("excess" = what most Americans think of as "normal"). She cut out all sugar. I cut out 95%. She does fine with others but I would be a little afraid that I might become shrill and self-righteous and hard to get along with if I ever became that much of a purist. You've all met the type. And I'm pretty sure that the 5% isn't going to shorten my life.
There might be a metaphor in here somewhere but I can't quite put my finger on it.
Re: Buy and Hold Forever Stocks
nisiprius: I did think of one example of high-conviciton stocks that sort of constitutes a test (6+ years, 84 picks):
http://www.sabrientsystems.com/performa ... n-vs-sp500
I began piggy-backing on their annual recommendations a few years ago, cherry-picking 5-6 a year which have outperformed even Sabrient's overall returns (though I would have done fine buying the whole list which is announced in mid-January each year).
This year (since 1/14/15 semi-public announcement, so less than 6 weeks) their 13 picks are up 12% vs 5% for VTI. I already had AA & NXPI (-0.6% and +7.5% since 1/14) and added TSO, TSM, FDX and VRX (+35%, +19%, +4% and +27%) so I'm up a little over 14% as of this moment.
At some point you have to wonder if the guy who flips heads over tails 2/3 of the time is really just a statistical anomaly or is there something non-random going on. But I'll grant you that we don't have a bear market test yet (the beta of my current six picks is less than 1.1).
http://www.sabrientsystems.com/performa ... n-vs-sp500
I began piggy-backing on their annual recommendations a few years ago, cherry-picking 5-6 a year which have outperformed even Sabrient's overall returns (though I would have done fine buying the whole list which is announced in mid-January each year).
This year (since 1/14/15 semi-public announcement, so less than 6 weeks) their 13 picks are up 12% vs 5% for VTI. I already had AA & NXPI (-0.6% and +7.5% since 1/14) and added TSO, TSM, FDX and VRX (+35%, +19%, +4% and +27%) so I'm up a little over 14% as of this moment.
At some point you have to wonder if the guy who flips heads over tails 2/3 of the time is really just a statistical anomaly or is there something non-random going on. But I'll grant you that we don't have a bear market test yet (the beta of my current six picks is less than 1.1).
Re: Buy and Hold Forever Stocks
DIS (great, recently)
BHP (had been great, not so much now but good tax-free dividend yield)
FAST (oy vey!)
Some ETFs - XLY (consumer discretionary, DIS-heavy), XLB (materials), XLI (industrials), XTN (transport), XLV (health).
BHP (had been great, not so much now but good tax-free dividend yield)
FAST (oy vey!)
Some ETFs - XLY (consumer discretionary, DIS-heavy), XLB (materials), XLI (industrials), XTN (transport), XLV (health).
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Re: Buy and Hold Forever Stocks
Forever is a very long time.
In 1900, the Dow Stocks were:
American Cotton Oil
Federal Steel *
Peoples Gas
American Steel & Wire *
General Electric Company *
Tennessee Coal, Iron and Railroad
American Sugar
National Lead
U.S. Leather (Preferred)
Continental Tobacco *
Pacific Mail Steamship
U.S. Rubber
In 1950, these were the Dow stocks:
Allied Chemical
General Electric Company
Procter & Gamble Company
American Can
General Foods
Sears Roebuck & Company
American Smelting
General Motors Corporation
Standard Oil of California
American Telephone and Telegraph Company*
Goodyear
Standard Oil (NJ)
American Tobacco B
International Harvester
Texas Company
Bethlehem Steel
International Nickel
Union Carbide
Chrysler
Johns-Manville
United Aircraft *
Corn Products Refining
Loew's
U.S. Steel
E. I. du Pont de Nemours and Company
National Distillers
Westinghouse Electric
Eastman Kodak Company
National Steel
Woolworth
It would appear that GE is the closest thing we have to a "forever" stock. Most companies eventually go out of business.
In 1900, the Dow Stocks were:
American Cotton Oil
Federal Steel *
Peoples Gas
American Steel & Wire *
General Electric Company *
Tennessee Coal, Iron and Railroad
American Sugar
National Lead
U.S. Leather (Preferred)
Continental Tobacco *
Pacific Mail Steamship
U.S. Rubber
In 1950, these were the Dow stocks:
Allied Chemical
General Electric Company
Procter & Gamble Company
American Can
General Foods
Sears Roebuck & Company
American Smelting
General Motors Corporation
Standard Oil of California
American Telephone and Telegraph Company*
Goodyear
Standard Oil (NJ)
American Tobacco B
International Harvester
Texas Company
Bethlehem Steel
International Nickel
Union Carbide
Chrysler
Johns-Manville
United Aircraft *
Corn Products Refining
Loew's
U.S. Steel
E. I. du Pont de Nemours and Company
National Distillers
Westinghouse Electric
Eastman Kodak Company
National Steel
Woolworth
It would appear that GE is the closest thing we have to a "forever" stock. Most companies eventually go out of business.
Few decisions in life motivated by greed ever have happy outcomes--Peter Bernstein, The 60/40 Solution
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Re: Buy and Hold Forever Stocks
Yes, conviction is often the driver for stock selection but it doesn't have to be. At the other extreme you could throw darts at the market to pick your portfolio. Or, like me, you could use a couple of simple screens such as market cap and sector diversification but still be entirely agnostic as to which stocks will perform best in the future.nisiprius wrote:That is precisely what I want to know about, because it always comes up in these discussions. That's how you decide what is a "buy and hold forever" stock.
The key is not having conviction about any particular stocks but about an individual stock portfolio.
An equal weighted portfolio, if sufficiently diversified, is not significantly riskier than an index fund but the outperfomance seems to be pretty significant over time. Equal weight index funds are a different, and IMO inferior, vehicle to long-term buy and hold individual stock portfolios.nisiprius wrote: Of course, an equally weighted portfolio outperforms a cap-weighted portfolio because, for the same set of stocks, equal weighting amounts to a small-cap tilt. More reward, yes, but for more risk. It's just an obfuscated factor play. And it still leaves open the obvious point that there are equal-weighted index funds.
But it's beside the point. The original poster, and others who suggest supplementing a traditional cap-weighted index fund with one or two stocks, great stocks, blue-chip stocks, stocks to buy and hold forever, are not suggesting using an equal-weighted index fund. They are suggesting picking a tiny number of stocks. And how do you pick them? Through personal conviction.
So, once again: how would you devise an objective test of "the merits of 'high-conviction' stocks?"
I accept this is something of a diversion from the intent of the original poster and only bring it up because of the insistence of others that index funds are optimal. When it comes to portfolios of one or two stocks I have little to add and agree that is a very risky strategy. Unless you have reliable inside information
'Life is a strange thing. Just when you think you learned how to use it. It's gone' SS
Re: Buy and Hold Forever Stocks
RunningRad: I don't suppose that most people on this forum plan on their "forever" being 65 more years, although thanks to some of the holdings in Jazz56's IBB etf, some of us MIGHT still be here even in 2130 (though the USA as we know it might not).
By the time I'm 80 I'm sure I will have moved everything into a very simple BH-approved portfolio and I'm equally sure that AAPL and BRK-B (and for all I know, Warren & Charlie!) will survive that long (two decades).
(PS: good stuff, heartandsoul)
By the time I'm 80 I'm sure I will have moved everything into a very simple BH-approved portfolio and I'm equally sure that AAPL and BRK-B (and for all I know, Warren & Charlie!) will survive that long (two decades).
(PS: good stuff, heartandsoul)
Re: Buy and Hold Forever Stocks
I own a few including BRK which I sort of like in a taxable account
It's gambling
I do it for fun
I wouldn't recommend it as sound advice
Some people have all kinds of tilts, individual stocks, alternative investments like peer lending but for the most part there is little evidence for it.
It's gambling
I do it for fun
I wouldn't recommend it as sound advice
Some people have all kinds of tilts, individual stocks, alternative investments like peer lending but for the most part there is little evidence for it.
Re: Buy and Hold Forever Stocks
I own:
2280 shares of GE
1100 shares of T
1000 shares of SO (Southern Company).
Each of these stocks pay dividends in alternate months so there is an income stream of just over $500 per month.
It's not "free money" - I know that.
I've been using the money to pay home/auto insurance, property taxes and what's left towards health insurance premiums.
2280 shares of GE
1100 shares of T
1000 shares of SO (Southern Company).
Each of these stocks pay dividends in alternate months so there is an income stream of just over $500 per month.
It's not "free money" - I know that.
I've been using the money to pay home/auto insurance, property taxes and what's left towards health insurance premiums.
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Re: Buy and Hold Forever Stocks
What do you mean by "an equal weight portfolio?" If it is something different from "the S&P 500 Equal Weight Index," then how exactly do you choose your "equal" weights to be differently equal from equal?heartandsoul wrote:...An equal weighted portfolio, if sufficiently diversified, is not significantly riskier than an index fund but the outperfomance seems to be pretty significant over time. Equal weight index funds are a different, and IMO inferior, vehicle to long-term buy and hold individual stock portfolios...
If you mean "I pick a few great stocks from the S&P 500 and then I weight them equally" then you are back to "high conviction" again.
As for "riskier," Morningstar is showing me that the 10-year standard deviation for Guggenheim Equal Weight ETF, RSP, which tracks the Equal Weighted S&P 500, as 17.49, compared to 14.68 for the Vanguard 500 Index Fund, VFINX. It is also showing me a 56% drop between 12/31/2007 and 3/6/2009 compared to 52% for VFINX, which isn't a big difference but confirms that sure, RSP is riskier. And the "holdings style" charts show clearly that RSP is holding smaller-cap stocks on average than VFINX. It is very close to being over the line and being classified as a "mid-cap" fund.
There's no evidence for equal-weighting being some kind of improved version of the S&P 500, it's just sloppy way of introducing a mid-cap tilt.
VFINX:
RSP:
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.
Re: Buy and Hold Forever Stocks
If I remember, GE is the only stock left from the original Dow Jones index. So the odds are stacked against the individual picking a winner.
Interesting graphic regarding the S&P500 components:
[quote]At the current churn rate, 75% of the S&P 500 firms in 2011 will be replaced by new firms entering the S&P500 in 2027.[/quote]
http://www.aei.org/publication/charts-o ... 500-index/
Of course just because it goes out of the SP500 doesn't mean it will be worthless to hold.
For me, if it is a high quality dividend paying stock...then maybe. Otherwise I see little value for me to hold any individual stocks.
Also, will people really be able to hold onto a position "forever?" I think it's a strong belief in that company in the forseeable investment horizon/lifetime in the investor.
I doubt anyone will still hold on to a "Lehman Brothers" stock until the NYSE delisted it.
Interesting graphic regarding the S&P500 components:
[quote]At the current churn rate, 75% of the S&P 500 firms in 2011 will be replaced by new firms entering the S&P500 in 2027.[/quote]
http://www.aei.org/publication/charts-o ... 500-index/
Of course just because it goes out of the SP500 doesn't mean it will be worthless to hold.
For me, if it is a high quality dividend paying stock...then maybe. Otherwise I see little value for me to hold any individual stocks.
Also, will people really be able to hold onto a position "forever?" I think it's a strong belief in that company in the forseeable investment horizon/lifetime in the investor.
I doubt anyone will still hold on to a "Lehman Brothers" stock until the NYSE delisted it.
Re: Buy and Hold Forever Stocks
I do own up to being a GE shareholder. It is one of the "Four Horsemen of Underperformance" in my individual stock portfolio. The "Four Horsemen" are GE, Pfizer, Microsoft, and AIG. And yes, I kept my AIG stock after the spectacular crash and burn. Microsoft has actually been performing fairly well and no perhaps my "four horsemen" are down to three. But still, I sold Oracle to buy Microsoft and I would have done better to have kept Oracle.knpstr wrote:Is GE forever?nedsaid wrote:There is nothing wrong with owning individual stocks. I still do after having purchased my first stock in 1987 or 1988. My individual issues are about 15% of my retirement portfolio.
Having said that, buying and holding an index fund would be the better choice.
The problem is that nothing is forever. Not Eastman Kodak, not Digital Equipment Corporation, not Nortel. Industries die and companies go out of business. So if you own a portfolio of individual stocks, I would advise that you do at least minimal maintenance on it.
Buying and holding a portfolio of blue chip stocks for a very long time is a good strategy. But nothing is 100% foolproof. Even very good companies can eventually go bust. One might have to do the minimal weeding and pruning of a portfolio. As Peter Lynch said, trade your stocks and keep your spouse.
If you have a portfolio of individual stocks, you want a holding period of at least five years. I would like a holding period of forever but somehow the world keeps changing.
So no, GE will at some point not be forever. If you own it, you probably should keep it. But the world changes.
A fool and his money are good for business.
Re: Buy and Hold Forever Stocks
I purchased my first 1000 shares of GE for $6.79 per share, the 2nd 1000 at $14.85 and 280 at $23.00nedsaid wrote:
I do own up to being a GE shareholder. It is one of the "Four Horsemen of Underperformance" in my individual stock portfolio. The "Four Horsemen" are GE, Pfizer, Microsoft, and AIG. And yes, I kept my AIG stock after the spectacular crash and burn. Microsoft has actually been performing fairly well and no perhaps my "four horsemen" are down to three. But still, I sold Oracle to buy Microsoft and I would have done better to have kept Oracle.
This is the only real brag I have in the stock buy/sell universe.
Re: Buy and Hold Forever Stocks
I bought in at "bargain" prices in the years after the 2000 crash but GE was still overpriced. I am still underwater on the stock. I did not share in your excellent timing.tbradnc wrote:I purchased my first 1000 shares of GE for $6.79 per share, the 2nd 1000 at $14.85 and 280 at $23.00nedsaid wrote:
I do own up to being a GE shareholder. It is one of the "Four Horsemen of Underperformance" in my individual stock portfolio. The "Four Horsemen" are GE, Pfizer, Microsoft, and AIG. And yes, I kept my AIG stock after the spectacular crash and burn. Microsoft has actually been performing fairly well and no perhaps my "four horsemen" are down to three. But still, I sold Oracle to buy Microsoft and I would have done better to have kept Oracle.
This is the only real brag I have in the stock buy/sell universe.
A fool and his money are good for business.
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Re: Buy and Hold Forever Stocks
How about great companies in energy and technology? I'm thinking keepers like Enron and Blackberry.
Re: Buy and Hold Forever Stocks
I own about 14 stocks encompassing about 13% of my portfolio including Apple, Costco, BofA, Johnson & Johnson, HP, Philip Morris, Procter & Gamble, Union Pacific, Health Care REIT, Waste Management, etc. Some I have held for more than 10 yrs, some just a year or so. I also speculate/gamble a little, recently bought UGA, held for 2-weeks and got lucky and made about $1300. I also have bought BLV and EDV to play the up and downs, some good some not.
I like the Boglehead philosophy and try to subscribe to it as best I can. But I cannot control some gambling urges so instead of gambling at casinos, sports, cards, etc. I gamble on Stocks and ETF's. I only do the real speculative gambling in small amounts making $1000 or losing $1000 here and there. It has worked for me and it keeps me from touching the rest of my buy-and-hold funds.
I like the Boglehead philosophy and try to subscribe to it as best I can. But I cannot control some gambling urges so instead of gambling at casinos, sports, cards, etc. I gamble on Stocks and ETF's. I only do the real speculative gambling in small amounts making $1000 or losing $1000 here and there. It has worked for me and it keeps me from touching the rest of my buy-and-hold funds.
Re: Buy and Hold Forever Stocks
I just had a look at the 1000 I purchased for $6.79 - the trade was executed on March 6, 2009. I remember seeing it trade for under $7 per share and thinking that was just crazy so I set a limit order for 1000 at $6.80, left and came back a few hours later and saw that it had executed.nedsaid wrote:
I bought in at "bargain" prices in the years after the 2000 crash but GE was still overpriced. I am still underwater on the stock. I did not share in your excellent timing.
My 15 minutes of fame.
Re: Buy and Hold Forever Stocks
Ditto on not playing with any individual stocks after 2008/2009, and so I went to 100% indexing. Recovered from that bottom and decided to play with some AAPL options (5% of portfolio quickly became 20/30/40% plus). I think what you're asking is exactly the scenario that played out for me (luckily). Now I need to diversify away from AAPL, but that's easy as I have to sell as options have an expiration date.wassabi wrote:Absolutely nothing wrong with having 5% of your portfolio in individual stocks. Even most Bogleheads agree. Congrats on the smart Apple play. I would like to have a few 'sentimental stocks' of my own, but just haven't found the right ones yet. I suppose they're sort of like lovers -- you have to have that special chemistry. Can't force the relationship.Runalong wrote:Should I be exasperated or just "LOL" as the kids say?
Is there a way to ask a question on this forum of those participants who perchance allow themselves some little exception or other to Generally Accepted Bogleheads Standards without getting inundated by the Holy Bogle Church's own self-appointed Guardians of Orthodoxy, constantly monitoring everything that appears on the forum with the express mission of stamping out any hint of incipient heresy as soon as it dares poke its head out of the ground?
I know what Bogle Fundamentalists believe and do. But sometimes I like to dabble around the edges of heresy and see what I find there.
Is there really no way for those of us who do allow some exception or other (while generally adhering to the overall philosophy) to discuss our exceptions without being told over and over how foolish we are for our doctrinal impurities?
Anyway, AAPL has a special place in my portfolio because, about a decade ago I looked at what was happening there and came to the conclusion that in a decade or so Apple would Rule the Universe and I sold almost everything else I had in my itty-bitty portfolio and invested it all in Apple. That's how I was able to retire much earlier than I expected. I've since sold off about 80% of my original pre-split purchase but will hold the remainder forever, and with their cash flow being as totally ridiculous as it is, that isn't only a sentimental decision. Berkshire-Hathaway should need no justification; together these two comprise about 5% of my total portfolio. Anyway, my "forever" is closer than 1/4 century than to 1/2 century so that allows for a bit of wild and crazy recklessness.
OK, I vented my exasperation, now I can just LOL as you guys continue to do what you always do. As you were, gentlemen.
At any rate, congrats my friend.
If I were to hold stock beyond this, I'm in full agreement it would be exactly as you mentioned, namely AAPL and BRK.
And I provided merely a photo from my iPhone on the purchase of BRK options, and Geico immediately provided their 8% discount.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
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Re: Buy and Hold Forever Stocks
What I mean is a portfolio of 50-100 stocks chosen from the S&P 500, equal weighted on purchase and then held forever. Stocks are chosen from as many sectors of the economy as possible to give the maximum benefit (read risk reduction) from cross-correlations.nisiprius wrote:What do you mean by "an equal weight portfolio?" If it is something different from "the S&P 500 Equal Weight Index," then how exactly do you choose your "equal" weights to be differently equal from equal?
As I said, I am talking about buy and hold stock portfolios not EW index funds. Very different beasts. When it comes to evidence for outperformance of an EW portfolio then this recent link by pkcrafter shows it quite well;nisiprius wrote:As for "riskier," Morningstar is showing me that the 10-year standard deviation for Guggenheim Equal Weight ETF, RSP, which tracks the Equal Weighted S&P 500, as 17.49, compared to 14.68 for the Vanguard 500 Index Fund, VFINX. It is also showing me a 56% drop between 12/31/2007 and 3/6/2009 compared to 52% for VFINX, which isn't a big difference but confirms that sure, RSP is riskier. And the "holdings style" charts show clearly that RSP is holding smaller-cap stocks on average than VFINX. It is very close to being over the line and being classified as a "mid-cap" fund.
There's no evidence for equal-weighting being some kind of improved version of the S&P 500, it's just sloppy way of introducing a mid-cap tilt.
http://www.fool.com/investing/general/2 ... he-sp.aspx
From which;
Furthermore, calculations by noted Prof. Jeremy Siegel of the Wharton School demonstrate that purchasing each original company and holding them for those 50 years (included those that went through bankruptcy, buyout, or index removal) as compared with just buying an index fund would have netted you a better return of 88 basis points per year. That might not sound like a lot, but if you invested $1,000 in each strategy in 1957 you'd have made $84,000 more with the individual buy-and-hold strategy than with a straight index fund purchase. Let this be another reminder that buying and holding solid companies at reasonable prices is still the way to go for a happy retirement.
When it comes to individual stock portfolio risk it has been determined by Surz and Price that 60 stocks eliminates 98% of excess standard deviation;
http://www.bogleheads.org/wiki/Passivel ... ual_stocks
'Life is a strange thing. Just when you think you learned how to use it. It's gone' SS
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Re: Buy and Hold Forever Stocks
Noted. However, MOAT is not a buy-n-hold ETF. They're trading regularly there. The original question had to do with selecting a stock worth holding for the long term. I would stick by the bargain priced "wide moat" suggestion. They're the only stocks that we can reasonably presume will be still prospering 20 years from now. As M* defines it: "narrow moat" stocks have a competitive edge likely to last no more than 10 years. "No moat" stocks have no competitive advantages at all.Runalong wrote:Over its three-year lifespan (so far), Morningstar's MOAT etf has fallen short of the index (VTI).
I wouldn't be surprised to see MOAT outperform in bear markets but I suspect that the wide-moat argument is well-enough known that it has already been priced in. OTOH, AAPL is certainly a wide-moat stock from my perspective (I'm not sure how Morningstar classifies it). I think AAPL keeps getting under-appreciated because no company in history has ever done as well as it has been doing and it's natural to want to believe that they can't keep it up: AAPL's market cap now exceeds that of the entire S&P 600 (small cap) and is twice that of the second biggest company (XOM). I think I read that they earned more last quarter than 450 of the S&P 500 COMBINED!
But nowadays I'm holding onto my remaining AAPL shares not as a growth stock but as a dividend juggernaut.
While you are excited about AAPL, I would caution about "can't miss" companies. ESPECIALLY in the tech industry. Every time Apple innovates something, ten other competitors are spending $100 million to design a better one and the knock-offs will be on the shelves in a few months. M* gives AAPL a "narrow moat" rating, FWIW.
I honor my personality flaws, for without them I would have no personality at all.
Re: Buy and Hold Forever Stocks
RunningRad wrote:It would appear that GE is the closest thing we have to a "forever" stock. Most companies eventually go out of business.
Often they are acquired or they spin off parts of their business. I think if you initially invest in a diversified set of stocks, you don't need to worry about when to sell.
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Re: Buy and Hold Forever Stocks
You may not be recommending at this price, but the reasoning you provide is a bit off base. Let's take it step by step: 1) the company has not been performing well. How do you define "performing well" is it by stock price action, dividend increases, acreage acquired, production, FID's pending, etc. Or do you define it by the amount of economic value per unit of production realized? I'd say for a behemoth the size of ExxonMobil, you're going to have a difficult sell in saying that production growth is the overriding key factor in performance. It is the extra value added that counts here, I'd rather the company produce the most profitable barrels and leave the rest in the ground until the economics justify the lifting expense. 2) Depletion of cash reserves? Hmmm, what is an appropriate level of "non-producing" cash to be held on the balance sheet? Their overall debt level is extremely manageable, you'd be hard pressed to find almost any other industrial company with lower levels and the financial flexibility they retain. 3) As far as acquisitions, it's true they purchased XTO, but that acquisition took place in the second quarter of 2010, it was announced in December 2009. It was acquired to purchase fracking technology that XTO (the old Cross Timbers) pioneered, but they also picked up 45 trillion cubic feet of gas. Exxon paid off the entirety of $10 billion in debt held by XTO, and bought back all of the stock issued in the acquisition - they kept the gas and acreage. 4) It's a matter of debate if you believe repurchasing of stock did not benefit you as a shareholder - true, no cash hit your wallet but as one who might hold an index fund, you reserve the right to realize cash at any time by selling shares when you wish to. In addition, the reduction of shares increases your proportion of resources per share, your earnings per share and your actual cash dividends per share. If there was serious dilution in shares issued and outstanding due to management compensation where my ownership stake was being diluted, I would suppose I would be saying the same thing, there are other companies out there where it's certainly the case. 5) From the high of $104.76, the stock is now at $89.30, so it's down 14.75%. If a 20% decline in prices signifies a bear market, you're not there yet. The stock is a hold, it's not different this time, the industry is subject to booms and busts as I'm sure you've realized that over your holding period. I don't follow what the talking heads say - they squawk all the time because they need to justify their ridiculous paycheck, if they don't generate churning in customer accounts, they don't eat.btenny wrote:I would not be buying Exxon here and now for several reasons. Yes it is cheaper now than it has been in a while BUT it has serious issues. The company has not been performing very well for at least 5+ years and it shows in the annual reports and related data. That is why the company is rated a sell or reduce by many analysts. The key issue is the oil reserves are shrinking. The actual oil pumped and sold every year is also shrinking. The company is being forced out of Russia and all those huge reserves they found and has lost a ton on invested $$ there and may not ever recover it. They almost completely missed the US fracking boom and only got back in last year by buying a NG company. And now that the oil price has gone down they are depleting their cash reserve as well. Oh yea they have also been buying back tons of stock at very high prices for years instead of paying bigger dividends, only good for the top management IMO. I thought seriously about selling when the stock got to $100+ last year and just pay the taxes.
And for those that love GE, what did you think of GE when the GE Finance Division and related financing companies almost went broke during the 2008 crisis? How much smaller is the company now that they have reduced all those loans and quit most of that crazy seller financing?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Buy and Hold Forever Stocks
You're right, if you held Enron Oil and Gas, you've done well for yourself. The stock symbol is EOG, they are making a killing in the Eagle Ford oil shale. On the other hand, if you kept Enron the utility, you've done poorly.boroc7 wrote:How about great companies in energy and technology? I'm thinking keepers like Enron and Blackberry.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Buy and Hold Forever Stocks
I used to work for AT&T. It was considered a "widows and orphans stock," a safe choice, one decision stock. In 1983, it had a million employees. After deregulation took all the profit out of long distance, the value of the stock dropped precipitously and the company, with 17,500 employees left, was sold for a pittance to SBC Communications in November of 2005.
During World War II, the entire Austrian stock market dropped to zero.
Nothing is forever. I don't expect to need my investments for much more than the next twenty years, if I live that long.
During World War II, the entire Austrian stock market dropped to zero.
Nothing is forever. I don't expect to need my investments for much more than the next twenty years, if I live that long.
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Re: Buy and Hold Forever Stocks
I've owned the Howard Hughes Company (HHC) since shortly after the spinoff from General Growth Properties (GGP), it was a classic "cats and dogs" spin in the mold of Liberty Media with a great capital allocator, Bill Ackman of Pershing Square, as the chairman and the management team he brought on spent $20MM of their own money to buy warrants (which they've done extremely well on!). It's up about 3-fold since the spin. HHC owns major development assets in Houston (Woodlands and Bridgeland), Vegas (Summerlin), Maryland (Columbia), Hawaii (Ward Village), New York (South Street Seaport), and a few others. They're pouring money into their assets, the company currently screens very poorly, but at some point in the next few years they'll do another spinoff of assets that belong in a REIT structure and the value will keep compounding. I'll sell when Bill Ackman sells the company.
Re: Buy and Hold Forever Stocks
I've read that AT&T shareholders who held on to the shares of the Baby Bells that were spun off did pretty well.DonCamillo wrote:I used to work for AT&T. It was considered a "widows and orphans stock," a safe choice, one decision stock. In 1983, it had a million employees. After deregulation took all the profit out of long distance, the value of the stock dropped precipitously and the company, with 17,500 employees left, was sold for a pittance to SBC Communications in November of 2005.
Re: Buy and Hold Forever Stocks
My buy and hold for a long time are:
GE
AAPL
AEP
VZ
PG
UA
UPS
I don't know how long I will hold them, I have held GE for the past 20 years and it has been a dog over the past handful. I got these guys on autopilot and DRIP. Sure one may go the way of Enron or Kodak, but they may also be successful.
GE
AAPL
AEP
VZ
PG
UA
UPS
I don't know how long I will hold them, I have held GE for the past 20 years and it has been a dog over the past handful. I got these guys on autopilot and DRIP. Sure one may go the way of Enron or Kodak, but they may also be successful.
Re: Buy and Hold Forever Stocks
Interesting discussion, but I'm a Newbie and just have a question about this. Why are the dividends so prized? If need a little $ why not just cash out something? Trying to understand why some love dividends and other do not.Runalong wrote: But nowadays I'm holding onto my remaining AAPL shares not as a growth stock but as a dividend juggernaut.
Thanks.
Re: Buy and Hold Forever Stocks
And 20 years ago how many of those stocks would have made anyones buy and hold forever list? I expect if we look back in 20 years about half of any list we make today will look stupid. Now if the other half does well enough to compensate is the tougher question;) And that is just 20 years. When I think about forever, I am thinking 50+ years. Almost half (well VZ is sort of trickey) of that list wasn't even around in 1965.bucksfan2 wrote:My buy and hold for a long time are:
GE
AAPL
AEP
VZ
PG
UA
UPS
I don't know how long I will hold them, I have held GE for the past 20 years and it has been a dog over the past handful. I got these guys on autopilot and DRIP. Sure one may go the way of Enron or Kodak, but they may also be successful.
That being said the buy a dozen bluechips has been a lot of peoples retirement strategy up until the past 20 years or so. Compared to paying 1.5%+ for some mutual fund where the manager was constantly churning, it was a pretty decent strategy.
Re: Buy and Hold Forever Stocks
That's a pretty good question. I could also use some education because I feel like I must be missing something. I've posted a few times about the dividend stocks I have.island wrote:Interesting discussion, but I'm a Newbie and just have a question about this. Why are the dividends so prized? If need a little $ why not just cash out something? Trying to understand why some love dividends and other do not.Runalong wrote: But nowadays I'm holding onto my remaining AAPL shares not as a growth stock but as a dividend juggernaut.
Thanks.
Using T as an example:
With dividend:
I have 1110 shares.
Quarterly dividend is $517.
After each dividend I still have 1100 shares and $517 cash.
Without dividend:
1 have 1100 shares
No dividend, so I need to sell 15 shares at todays close to get close to $517 cash (assuming commision free trade)
Now I have 1085 shares and $513.15
Without the dividend would I not eventually run out of shares to sell? The share price has traded in a fairly narrow range for a pretty good while.
Should you assume that the share price would be higher if dividends were not paid?
If that's true, would it be higher by the exact amount that has been paid out in dividends?
Re: Buy and Hold Forever Stocks
The price is in a narrow range because they keeping handing out the profits instead of growing the business. If they squander that money or use it more productively than you can is a toss up. And for what it is worth, you probably will never run out of shares. At some point along the way, the stock will get high enough that they will do a split:) T is a pain to evaluate since the only has history back to 2005. Before then it was a different company. And before 1984 it was also a different company.tbradnc wrote:That's a pretty good question. I could also use some education because I feel like I must be missing something. I've posted a few times about the dividend stocks I have.island wrote:Interesting discussion, but I'm a Newbie and just have a question about this. Why are the dividends so prized? If need a little $ why not just cash out something? Trying to understand why some love dividends and other do not.Runalong wrote: But nowadays I'm holding onto my remaining AAPL shares not as a growth stock but as a dividend juggernaut.
Thanks.
Using T as an example:
With dividend:
I have 1110 shares.
Quarterly dividend is $517.
After each dividend I still have 1100 shares and $517 cash.
Without dividend:
1 have 1100 shares
No dividend, so I need to sell 15 shares at todays close to get close to $517 cash (assuming commision free trade)
Now I have 1085 shares and $513.15
Without the dividend would I not eventually run out of shares to sell? The share price has traded in a fairly narrow range for a pretty good while.
Should you assume that the share price would be higher if dividends were not paid?
If that's true, would it be higher by the exact amount that has been paid out in dividends?
Dividends were definitely a lot more valuable when it took a 75+ dollar trade to get money out of the market. With todays 2 buck trades it is a much smaller issue.
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Re: Buy and Hold Forever Stocks
For the first hundred years, the shareholders in the now defunct company also did pretty well. That is why it was a "widows and orphans" stock. People who kept everything that was spun off the original AT&T have done pretty well, and I suspect there are some of those stocks that will continue to do well for a while. I suspect there are some that are at risk of failing right now, and others that are still a poor investment. I suspect that I own them all, through the Vanguard Total Stock Market Index Fund. That seems to be a better way to capture the value of a large group of companies than buying one stock and keeping everything it spins off.Beliavsky wrote:I've read that AT&T shareholders who held on to the shares of the Baby Bells that were spun off did pretty well.DonCamillo wrote:I used to work for AT&T. It was considered a "widows and orphans stock," a safe choice, one decision stock. In 1983, it had a million employees. After deregulation took all the profit out of long distance, the value of the stock dropped precipitously and the company, with 17,500 employees left, was sold for a pittance to SBC Communications in November of 2005.
It has amazed me how much the Public Switched Telephone Network has been replaced by the Internet. Most phone calls go over VOIP. The companies who own the fiber for the Internet include a lot of companies not in the traditional telephone business. Wireless is now more important than land lines. My granddaughter does not call me. She does not even use a phone. She FaceTimes or texts me from her iPod. Everything in communications is changing, and that is great for the economy, great for employment, great for the stock market, but not so great for any individual company which is always at risk of being flatfooted by change. Right now, about 90% of the profit in telecommunications might be going to Apple in iPhone profits. I doubt that will be true in ten years, although it is possible.
Les vieillards aiment à donner de bons préceptes, pour se consoler de n'être plus en état de donner de mauvais exemples. |
(François, duc de La Rochefoucauld, maxim 93)
Re: Buy and Hold Forever Stocks
I could make an argument for 3 (GE, AEP or any utility, and PG.) Going forward its just a guess more than anything else and that is why I say buy and hold for a long time. The problem with buy and hold forever is forever is a long time. If I take a snapshot right now these are a handful of stocks that I own where I like the company not only now but going forward. Is it a forever time period, I can't tell you, I would like it to be.randomguy wrote:And 20 years ago how many of those stocks would have made anyones buy and hold forever list? I expect if we look back in 20 years about half of any list we make today will look stupid. Now if the other half does well enough to compensate is the tougher question;) And that is just 20 years. When I think about forever, I am thinking 50+ years. Almost half (well VZ is sort of trickey) of that list wasn't even around in 1965.bucksfan2 wrote:My buy and hold for a long time are:
GE
AAPL
AEP
VZ
PG
UA
UPS
I don't know how long I will hold them, I have held GE for the past 20 years and it has been a dog over the past handful. I got these guys on autopilot and DRIP. Sure one may go the way of Enron or Kodak, but they may also be successful.
That being said the buy a dozen bluechips has been a lot of peoples retirement strategy up until the past 20 years or so. Compared to paying 1.5%+ for some mutual fund where the manager was constantly churning, it was a pretty decent strategy.
Re: Buy and Hold Forever Stocks
thanks all for the discussion and input.
as for the newbie dividends question a good introduction is this book:
http://www.amazon.com/The-Little-Book-B ... 0470567996
as for the newbie dividends question a good introduction is this book:
http://www.amazon.com/The-Little-Book-B ... 0470567996
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Re: Buy and Hold Forever Stocks
btenny wrote:I hold a block of Exxon Mobil (XOM) and have held it for 30+ years, way before I became a Boglehead or even knew about mutual funds etc.. The stock has split 3-4 times over the years and way outpaced the SP500. That single stock paid my kids way through college and now pays me more in dividends annually than I paid for the stock originally. Selling now would mean big capital gains taxes so I plan to hold it forever and pass it to my heirs. Although right now owning oil stocks is not very good and has not been for 4 years or so.
+1 to each, some of the stocks I own are because they were gifted to me, inclulding PG, XOM, KO, MMM, etc. I also hold them in DRiP accounts so the dividends can just compound for me over time and I'll pass them down once I collect some Dividends in retirement (30 years from now).Toons wrote:I hold Msft, Mcdonalds,WalMart,Coca-Cola,Disney,Dominion Resources,Praxair,and have owned all with the exception of Disney for over 20 years and my plans are to pass them on to the next generation.
Re: Buy and Hold Forever Stocks
lol, I feel for you, Runalong! I don't know that I'll hold them for life, but a few very-long-term holdings of mine:Runalong: Should I be exasperated or just "LOL" as the kids say?
Is there a way to ask a question on this forum of those participants who perchance allow themselves some little exception or other to Generally Accepted Bogleheads Standards without getting inundated by the Holy Bogle Church's own self-appointed Guardians of Orthodoxy,
GOOG(L)
Chevron
Pepsi
Philip Morris Int'l
AWR (water utility)
Lockheed Martin
Traveler's Insurance
Berkshire B shares
Most predate my discovery of the Bogleheads book and forum.
Re: Buy and Hold Forever Stocks
GE, AT & T, and PG. Buy and hold, but probably not forever... (bought most of the GE at ~$7.40/share during the wreck, so it's been good to me). Currently buying GE and PG via DRIP, but only as a nice 'forced savings' plan. Without paying much attention these holdings alone have now grown nicely in the past few years (which I suppose is more an endorsement of embracing DRIP investing than 'buy and hold forever' strategy, but it works...).
RTR
RTR
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Re: Buy and Hold Forever Stocks
Buy & Hold forever is really a mistake that if you do it long enough will end up costing you money.
Maybe if you have enough diversification (and enough money) you can survive relatively unscathed, but it is no reason to through money away.
As long as you aren't of the crowd that believes you won't ever lose money if you don't sell a losing investment you will probably be ok.
There is nothing wrong with Buy & Hold that re-evaluates why you bought the investment on occasion and sells if necessary.
fd
Maybe if you have enough diversification (and enough money) you can survive relatively unscathed, but it is no reason to through money away.
As long as you aren't of the crowd that believes you won't ever lose money if you don't sell a losing investment you will probably be ok.
There is nothing wrong with Buy & Hold that re-evaluates why you bought the investment on occasion and sells if necessary.
fd
I love simulated data. It turns the impossible into the possible!
Re: Buy and Hold Forever Stocks
There's a list somewhere of companies that have increased their dividends every year for +50 years. I think those would be good candidates-----they've proven to withstand several major economic downturns and a 2-3% dividend yield is very close to a bond.
Re: Buy and Hold Forever Stocks
100 shares of CCL gets you cabin credit on any of their cruise lines. Hubby and I like to cruise and have done incredibly well on this one!
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Re: Buy and Hold Forever Stocks
Corporate finance theory says they should not be. The company can make a more tax efficient distribution to shareholders by buying back shares.island wrote:Interesting discussion, but I'm a Newbie and just have a question about this. Why are the dividends so prized? If need a little $ why not just cash out something? Trying to understand why some love dividends and other do not.Runalong wrote: But nowadays I'm holding onto my remaining AAPL shares not as a growth stock but as a dividend juggernaut.
Thanks.
However they seem to be a good thing: companies that only hold or increase their dividends over the long run.
The best guess is a Principle-Agent argument. That is, the managers and the board are not the stockholders (the Principal) they are Agents (managers appointed by the Principal), most shares are held by diversified shareholders like mutual funds that are not in possession of inside information or control.
But the managers do have inside information. They know how things are really going. When the Board decides to increase the dividend it is a strong signal that:
- the earnings are really there. EPS can be manipulated, Dividends Per Share cannot be. The company really has the cash to pay out
- they are not tempted to squander that money in value destroying acquisitions or investments
- things really *are* getting better, or they wouldn't be increasing the dividend
Dividends thus are what is called in Game Theory a 'credible signal' for the health of the company.
Note Berkshire Hathaway does not pay a dividend, it would be too tax inefficient for its CEO and largest shareholder (Warren Buffett). He buys back shares when he thinks the BH share price is below his estimate of its intrinsic value. As long as Buffett remains alive I don't expect that to change.
For Microsoft it was only when Bill Gates stepped down from being CEO and began to focus on his philanthropic activities that they paid a dividend (now quite a chunky one). Apple only when Steve Jobs was dead. Amazon (still run by its founder who owns 16% of the stock) does not pay a dividend.
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Re: Buy and Hold Forever Stocks
Polaroid and Kodak, you mean.boroc7 wrote:How about great companies in energy and technology? I'm thinking keepers like Enron and Blackberry.
Re: Buy and Hold Forever Stocks
I am not recommending these, but you asked. We have individual stocks in 2 companies that have too much capital gains for me to justify selling. So it looks like I am holding them forever unless I need the money. Our cost basis was low, so even if they go to zero it will have been an interesting ride.
CAT
RHT
lafder
CAT
RHT
lafder
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Re: Buy and Hold Forever Stocks
Evidence, data, references or just your personal unsubstantiated opinion?FinancialDave wrote:Buy & Hold forever is really a mistake that if you do it long enough will end up costing you money.
Maybe if you have enough diversification (and enough money) you can survive relatively unscathed, but it is no reason to through money away.
As long as you aren't of the crowd that believes you won't ever lose money if you don't sell a losing investment you will probably be ok.
There is nothing wrong with Buy & Hold that re-evaluates why you bought the investment on occasion and sells if necessary.
fd
'Life is a strange thing. Just when you think you learned how to use it. It's gone' SS
Re: Buy and Hold Forever Stocks
I've owned these stocks for at least 15 years or longer. I probably won't sell them until I retire; mostly due to capital gains taxes I'd incur at this point. They include Coca-Cola, Proctor and Gamble, Pfizer, Home Depot, and Intel. I don't add to the positions anymore. This is about 8% of our portfolio.
We also use about 5% of our portfolio for "play money" - it is for stocks that we intend to turn over if they hit a target price; so more short-term.
We also use about 5% of our portfolio for "play money" - it is for stocks that we intend to turn over if they hit a target price; so more short-term.
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Re: Buy and Hold Forever Stocks
VSEQXRunalong wrote:GE is actually the company I was thinking about when I wrote this post but I'll probably end up putting the money in VSEQX instead.