Brand New to Boggleheads, Thoughts on my stocks?

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Chessoro
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Joined: Wed Nov 14, 2018 1:38 pm

Brand New to Boggleheads, Thoughts on my stocks?

Post by Chessoro » Wed Nov 14, 2018 1:48 pm

Hey all, I'm a 21 year old college student. I work as a part-time student assistant so my income is hardly anything. I was speaking with an older coworker about stocks as I just got into the market and I'm trying to learn. So far, I've invested around $800. Warren Buffett advises to invest in what you know so I bought:

4 Shares of Disney
3 Shares on Nintendo
1 Share of SPY (Because Warren swears by it)

Coworker seems to think I shouldn't invest into Nintendo, but I think that the stock will go up because of the new Smash game like it did last March because of the switch.

I know this isn't much money and I'm fully prepared to lose it all. The best way to learn is by making mistakes, so I either win or I learn. What do you guys think?

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fortfun
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Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by fortfun » Wed Nov 14, 2018 3:29 pm

Chessoro wrote:
Wed Nov 14, 2018 1:48 pm
Hey all, I'm a 21 year old college student. I work as a part-time student assistant so my income is hardly anything. I was speaking with an older coworker about stocks as I just got into the market and I'm trying to learn. So far, I've invested around $800. Warren Buffett advises to invest in what you know so I bought:

4 Shares of Disney
3 Shares on Nintendo
1 Share of SPY (Because Warren swears by it)

Coworker seems to think I shouldn't invest into Nintendo, but I think that the stock will go up because of the new Smash game like it did last March because of the switch.

I know this isn't much money and I'm fully prepared to lose it all. The best way to learn is by making mistakes, so I either win or I learn. What do you guys think?
Mostly Total Index Stock Market and target date fund stock holders on this board. Not really a Boglehead strategy to own individual stocks. Warren Buffet recommends total index stocks over individual stocks.

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welderwannabe
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Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by welderwannabe » Wed Nov 14, 2018 3:33 pm

Chessoro wrote:
Wed Nov 14, 2018 1:48 pm
Hey all, I'm a 21 year old college student. I work as a part-time student assistant so my income is hardly anything. I was speaking with an older coworker about stocks as I just got into the market and I'm trying to learn. So far, I've invested around $800. Warren Buffett advises to invest in what you know so I bought:

4 Shares of Disney
3 Shares on Nintendo
1 Share of SPY (Because Warren swears by it)

Coworker seems to think I shouldn't invest into Nintendo, but I think that the stock will go up because of the new Smash game like it did last March because of the switch.

I know this isn't much money and I'm fully prepared to lose it all. The best way to learn is by making mistakes, so I either win or I learn. What do you guys think?
Sell the Disney and Nintendo and put it all in SPY.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

j0e0r7
Posts: 59
Joined: Sat Feb 16, 2008 1:42 pm

Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by j0e0r7 » Wed Nov 14, 2018 3:35 pm

SPY is great.

If you're a college student, consider taking an intro to finance course. I did in law school kind of inadvertently and it was probably the most valuable class I took, looking back.

mhalley
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Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by mhalley » Wed Nov 14, 2018 3:37 pm

The philosophy here is that you should not invest in individual stocks due the high risk. Look at Enron, Sears, ge, etc. you should invest in a broad index of passive mutual funds. Read this guide

https://www.etf.com/docs/IfYouCan.pdf
Then read the bogleheads wiki.

https://www.bogleheads.org/wiki/Getting_started

FinancialRookie
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Joined: Wed Nov 14, 2018 1:37 pm

Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by FinancialRookie » Wed Nov 14, 2018 3:38 pm

All VTI or VOO and put it in a Roth IRA since your income is so low! This is the biggest thing I wish I could go back and do over. Listen to Warren, he might know what he is talking about.

DesertDiva
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Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by DesertDiva » Wed Nov 14, 2018 3:41 pm

A great place to start is by reading this page: https://www.bogleheads.org/wiki/Getting_started

Also look at the "Amazon" link above for recommended reading. It's a useful education!
♫ Stocks go up ♫ Stocks go down ♫ Stocks go up ♫ Stocks go down ♫

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Clever_Username
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Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by Clever_Username » Wed Nov 14, 2018 3:54 pm

Chessoro wrote:
Wed Nov 14, 2018 1:48 pm
Coworker seems to think I shouldn't invest into Nintendo, but I think that the stock will go up because of the new Smash game like it did last March because of the switch.
Is this game a secret, and you're doing insider trading? Or is it public knowledge, both in terms of the game's release and anticipated revenue? If it's the latter, why do you think it will cause the stock to go up? Are you of the belief that it will be more successful than is generally believed?
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

stimulacra
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Location: Houston

Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by stimulacra » Wed Nov 14, 2018 4:05 pm

I'm not sure if small lots will really move the needle much for you. I would just sell all individual tickers and by shares of SPY or a Target date fund until you have $10k-20k to then reallocate into equities and bonds.

At this point it's really about getting into the habit of saving and investing that will get the ball rolling for you.

Regarding owning individual stocks. Usually I only do it after a lot of research and I feel strongly about the future prospects of the business and it is a business I want to own. Usually the lot size would have to justify the transaction costs of the purchase, so for me that is somewhere in the neighborhood of $5-10k.

I would buy whatever broad market or target date fund that has the lowest expenses and doesn't incur a trading cost. What brokerage firm are you with?

Atilla
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Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by Atilla » Wed Nov 14, 2018 4:06 pm

I say keep the 2 individual stocks and see what happens to them. It will be a fun lesson. :D

All future money should go to an index ETF like SPY until you have a big enough pile of money you can play around with individual stocks on the side if you're still interested in that.

Definitely look at opening a ROTH account. You aren't paying any income taxes now to speak of, the money grows tax free and gets withdrawn tax free.
The Village Idiot - here for your entertainment.

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BL
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Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by BL » Wed Nov 14, 2018 4:07 pm

mhalley wrote:
Wed Nov 14, 2018 3:37 pm
The philosophy here is that you should not invest in individual stocks due the high risk. Look at Enron, Sears, ge, etc. you should invest in a broad index of passive mutual funds. Read this guide

https://www.etf.com/docs/IfYouCan.pdf
Then read the bogleheads wiki.

https://www.bogleheads.org/wiki/Getting_started
+1
If You Can pdf has more great stuff in 16 pages than any book I can think of! You can even buy it in book form at Amazon.com if you like.

When you get $1,000, you could do a Target Date fund if you wish in your Roth IRA. You can contribute to a Roth as much as you earn in W-2 wages up to 5500 this year and 6000 next year.

Stick around here and read in Wiki, watch the videos, and re-read If You Can, and you will be smarter about investing than all you friends together! There is a thread on the 3-fund portfolio here.

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Taylor Larimore
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What experts say about buying individual stocks

Post by Taylor Larimore » Wed Nov 14, 2018 4:20 pm

Cheesoro:

Welcome to the Bogleheads Forum!
fortfun wrote:
Wed Nov 14, 2018 3:29 pm
Chessoro wrote:
Wed Nov 14, 2018 1:48 pm
Hey all, I'm a 21 year old college student. I work as a part-time student assistant so my income is hardly anything. I was speaking with an older coworker about stocks as I just got into the market and I'm trying to learn. So far, I've invested around $800. Warren Buffett advises to invest in what you know so I bought:

4 Shares of Disney
3 Shares on Nintendo
1 Share of SPY (Because Warren swears by it)

Coworker seems to think I shouldn't invest into Nintendo, but I think that the stock will go up because of the new Smash game like it did last March because of the switch.

I know this isn't much money and I'm fully prepared to lose it all. The best way to learn is by making mistakes, so I either win or I learn. What do you guys think?
Mostly Total Index Stock Market and target date fund stock holders on this board. Not really a Boglehead strategy to own individual stocks. Warren Buffet recommends total index stocks over individual stocks.
Chessoro:

I think you are making the same mistake I made when I started investing: Buying individual stocks.

This is what experts say:
Michael Batnick, CFA: "Ordinary investors would be well served if they thought for a second about who they were transacting with. Over 90% of today’s volume is done by institutions, so chances are that your counter-party has done their homework."

Brett Arends, Wall Street Journal columnist: "Buy individual stocks only as a gamble."

Benjamin Graham: "I have little confidence, even in the ability of analysts, let alone untrained investors, to select common stocks what will give better than average results."

Bill Bernstein, author of The Four Pillars of Investing: "Picking individual stocks is like volleying with the Williams sisters."

Jack Bogle: "Attempting to build an investment program around a handful of individual securities is, for all but the most exceptional investors, a fool's errand."

Adam Bold, author, adviser: "Mutual funds don't have the pizzazz of the hot stocks of the moment. If you're looking for entertainment, go gambling in Las Vegas. But if you want to accumulate real money for your retirement and other goals, mutual funds are the safer bet."

James Dahle, MD, financial advisor, and author of The White-Coat Investor: “Think you know how to pick stocks? Then guess again. Every time you buy or sell the person on the other side of the trade likely has an IQ of 160, spends 70 hours per week analyzing his industry, and has access to computing power and databases you can only dream of.”

Dalbar Research Report (July 15, 2003): "The average equity investor earned a paltry 2.57% annually; compared to inflation of 3.14% and the 12.22% the S & P 500 index earned annually for the last 19 years."

Charles Ellis author of Winning the Loser's Game: "If you, like Walter Mitty, still fantasize that you can and will beat the pros, you'll need both luck and prayer."

Kenneth French: Former President of the American Finance Association: "The market is smarter than we are and no matter how smart we get, the market will always be smarter than we are."

Sy Harding, Forbes contributor: "My advice – avoid individual stocks! Even experienced full-time professional money managers, with staffs of trained people performing research, with access to data, software, and corporate contacts that most part-time investors could not come close to duplicating, struggle to match the market’s performance by buying, holding, or selling individual stocks."

Danial Kahneman, Nobel Laureate: "There is general agreement among researchers that nearly all stock pickers, whether they know it or not-and few of them do-are playing a game of chance."

Kiplinger Personal Finance “Eight Stocks to Buy Now” in its January, 2015 forecast issue under-performed its “Five Stocks to Sell” twelve months later.

Michael Lewis, former bond broker and financial journalist: "A vast industry of stockbrokers, financial planners, and investment advisers skims a fortune for themselves off the top in exchange for passing their clients' money on to people who, as a whole, cannot possibly outperform the market."

Mathwizard: The vast majority of trades you would make are between you and a professional investor. Both of you are assigning a value to the stock, and one of you thnks the price is high and another thinks it is low. Who do you suppose is more likely to be right.

Standard & Poor's: When the S&P 500 index was officially formed in 1957 to its 50th anniversary in 2007, only 86 of the original 500 companies still remained.

Larry Swedroe, author of many financial books: "Owning individual stocks and sector funds is more akin to speculating, not investing."

David Swensen, Chief Investment Officer of Yale University: "There's no way that spending a few hours a week looking at individual securities is going to equip an investor to compete with the incredibly talented, highly qualified, extremely educated individuals who spend their entire professional careers trying to pick stocks."

Eric Tyson, author of Mutual Funds for Dummies: The notion that most average people and non-investment professionals can, with minimal effort, beat the best full-time, experienced money managers is, how should I say, ludicrous and absurd."
Consider The Three-Fund Portfolio.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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oldzey
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Location: Land of Lincoln

Re: Brand New to Boggleheads, Thoughts on my stocks?

Post by oldzey » Wed Nov 14, 2018 5:11 pm

If you still want more information after going through all of these excellent free resources, then I'd recommend investing in this book:

The Bogleheads' Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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