Almost bought an individual stock today...

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neomutiny06
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Almost bought an individual stock today...

Post by neomutiny06 » Thu Apr 28, 2016 3:30 pm

Yesterday I was in a breakfast meeting led by my company's CEO. Small group of people. I'm at a large global company...it was quite an experience to hear our CEO speak candidly about life, business, etc.

When the topic of our competitor Amazon came up, one thing he casually said is "I don't know why everybody doesn't buy AMZN stock, they are going to be the biggest company in the world in 10 years. Their Prime subscriber base alone is mind blowing."

I have never been tempted to buy individual stocks, but that comment made me think twice. I didn't do anything foolish, don't worry. However, it wasn't easy to see that AMZN stock was in the news today for 28% growth in sales, and the stock soared 12% today.

I'm sure you all have similar stories to this one...it would be helpful to hear how you were tempted, but ultimately stuck with your index funds with confidence.

mhalley
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Re: Almost bought an individual stock today...

Post by mhalley » Thu Apr 28, 2016 3:34 pm

Individual stocks are always tempting. Woulda shoulda coulda is a constant refrain. Shoulda sold apple before Icahn did!

itstoomuch
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Re: Almost bought an individual stock today...

Post by itstoomuch » Thu Apr 28, 2016 3:36 pm

Because
1) I'm 66/68,
2) It's almost May
3) I am going on a cruise tomorrow.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

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Yesterdaysnews
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Re: Almost bought an individual stock today...

Post by Yesterdaysnews » Thu Apr 28, 2016 3:55 pm

I certainly wish I had bought AMZN but at the same time I look at a Gilead and think I could have easily bought some of that company too if I were into individual stock picking.

Index investing I find much less stressful

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mhc
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Re: Almost bought an individual stock today...

Post by mhc » Thu Apr 28, 2016 3:56 pm

I have no stomach for individual stocks. I have seen them soar and then sink to new lows. It is similar to when my DW was pregnant with our first child. Every time I made breakfast sausage, she would vomit. Because of those experiences, she no longer eats breakfast sausage. Those experiences scarred her for life. My loses on individual stocks have scarred me for life.

FillorKill
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Re: Almost bought an individual stock today...

Post by FillorKill » Thu Apr 28, 2016 4:02 pm

Image

You never know.

alfaspider
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Re: Almost bought an individual stock today...

Post by alfaspider » Thu Apr 28, 2016 4:05 pm

I have a great deal of money tied up in my company's stock through restricted stock grants. Given I work in a very boom and bust industry, the swings in the value have been massive (+/- over 100% in a matter of 2-3 months). The only thing that keeps me sane is that I can't sell until vesting, and I can achieve some semblance of DCA by just selling every year as the next tranche vests. I would go absolutely nuts trying to manage a portfolio of individual stocks where I had to front the capital.

slickwillbo
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Re: Almost bought an individual stock today...

Post by slickwillbo » Thu Apr 28, 2016 4:10 pm

Too bad- you would've made 12% overnight :D

Theoretical
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Re: Almost bought an individual stock today...

Post by Theoretical » Thu Apr 28, 2016 4:18 pm

I bought a tiny block of Volkswagen OTC stock in December as a deep value play (1% of holdings) but got fed up with having to keep track of it specifically and all the things involved in an individual stock. As I went on, I realized that I'm ok with comically low valuations on a sector or bracket of stocks (like Emerging Value), but I'm not ok with holding a single falling knife. Quite simply, I don't trust an individual, plagued company not to go bankrupt/completely collapse/sniff stupid glue, but I am willing to take the risk of individual companies or clusters going that way.

Theoretical
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Re: Almost bought an individual stock today...

Post by Theoretical » Thu Apr 28, 2016 4:19 pm

FillorKill wrote:Image

You never know.
Man, that brings back memories!

Independent George
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Re: Almost bought an individual stock today...

Post by Independent George » Thu Apr 28, 2016 4:21 pm

I don't regret not buying Amazon, but I do regret not being smart enough to have bought UPS.

LateStarter1975
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Re: Almost bought an individual stock today...

Post by LateStarter1975 » Thu Apr 28, 2016 4:55 pm

Theoretical wrote:I bought a tiny block of Volkswagen OTC stock in December as a deep value play (1% of holdings) but got fed up with having to keep track of it specifically and all the things involved in an individual stock. As I went on, I realized that I'm ok with comically low valuations on a sector or bracket of stocks (like Emerging Value), but I'm not ok with holding a single falling knife. Quite simply, I don't trust an individual, plagued company not to go bankrupt/completely collapse/sniff stupid glue, but I am willing to take the risk of individual companies or clusters going that way.
This
Debt is dangerous...simple is beautiful

mattshwink
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Re: Almost bought an individual stock today...

Post by mattshwink » Thu Apr 28, 2016 4:56 pm

neomutiny06 wrote:Yesterday I was in a breakfast meeting led by my company's CEO. Small group of people. I'm at a large global company...it was quite an experience to hear our CEO speak candidly about life, business, etc.

When the topic of our competitor Amazon came up, one thing he casually said is "I don't know why everybody doesn't buy AMZN stock, they are going to be the biggest company in the world in 10 years. Their Prime subscriber base alone is mind blowing."

I have never been tempted to buy individual stocks, but that comment made me think twice. I didn't do anything foolish, don't worry. However, it wasn't easy to see that AMZN stock was in the news today for 28% growth in sales, and the stock soared 12% today.

I'm sure you all have similar stories to this one...it would be helpful to hear how you were tempted, but ultimately stuck with your index funds with confidence.
Amazon just posted it's 4th quarterly profit in a row. But keep in mind before that they lost money. Yes, they're big, yes their business model appears to be good and diversified. But they have lots of competition. Enron was a sure bet 17 years ago too. If you want to invest, use side money and keep your portfolio indexed according to your IPS. Anyone saying Amazon is going to be the biggest company in 10 years doesn't quite understand the market. Today Apple is almost twice as big, it posted quarterly sales of $50 billion compared to Amazon's $29 billion. Apple posted a quarterly profit of 10.5 billion, compared to Amazon's $513 million. In other words, Apple's profit was roughly 20 times Amazon's, with only a little less than double the sales.

Amazon could double in 10 years. It could also halve (or worse). No one knows the future.

Solo Prosperity
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Re: Almost bought an individual stock today...

Post by Solo Prosperity » Thu Apr 28, 2016 5:06 pm

mattshwink wrote:Anyone saying Amazon is going to be the biggest company in 10 years doesn't quite understand the market. Today Apple is almost twice as big, it posted quarterly sales of $50 billion compared to Amazon's $29 billion.
You know Apple had a MCap of $50 Billion 10 years ago right? I have no clue what Amazon will do in 10 years (Don't own any of it besides what is in my VTI holding) but it could easily be the largest. Their business seems to have a fairly large moat currently, so who knows what can happen if Bezos ever decides to increase their margins.

I will say I highly admire Mr. Bezos and his approach to his company. He has an awesome story and approach to business. I highly recommend reading about him. He seems like one of those unique CEO's who understands that it is about the long-game and not just playing quarter to quarter (i.e. They have one of the highest R&D expenditures consistently, higher than Apple).

Some good quotes from him:
1. "All businesses need to be young forever. If your customer base ages with you, you're Woolworth's."

2. "There are two kinds of companies: Those that work to try to charge more and those that work to charge less. We will be the second."

3. "Your margin is my opportunity."

4. "If you only do things where you know the answer in advance, your company goes away."

5. "We've had three big ideas at Amazon that we've stuck with for 18 years, and they're the reason we're successful: Put the customer first. Invent. And be patient."

6. "I very frequently get the question: 'What's going to change in the next 10 years?' And that is a very interesting question; it's a very common one. I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that that second question is actually the more important of the two -- because you can build a business strategy around the things that are stable in time. ... n our retail business, we know that customers want low prices, and I know that's going to be true 10 years from now. They want fast delivery; they want vast selection. It's impossible to imagine a future 10 years from now where a customer comes up and says, 'Jeff I love Amazon; I just wish the prices were a little higher,' [or] 'I love Amazon; I just wish you'd deliver a little more slowly.' Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it."

7. "If you're not stubborn, you'll give up on experiments too soon. And if you're not flexible, you'll pound your head against the wall and you won't see a different solution to a problem you're trying to solve."

8. "Any business plan won't survive its first encounter with reality. The reality will always be different. It will never be the plan."

9. "In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts."

10. "We've done price elasticity studies, and the answer is always that we should raise prices. We don't do that, because we believe -- and we have to take this as an article of faith -- that by keeping our prices very, very low, we earn trust with customers over time, and that that actually does maximize free cash flow over the long term."

11. "The framework I found, which made the decision [to start Amazon in 1994] incredibly easy, was what I called a regret minimization framework. I wanted to project myself forward to age 80 and say, 'OK, I'm looking back on my life. I want to minimize the number of regrets I have.' And I knew that when I was 80, I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn't regret that. But I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day."

12. "We innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent."

13. "When [competitors are] in the shower in the morning, they're thinking about how they're going to get ahead of one of their top competitors. Here in the shower, we're thinking about how we are going to invent something on behalf of a customer."

14. "A company shouldn't get addicted to being shiny, because shiny doesn't last."

15. "I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out."

16. "If you double the number of experiments you do per year, you're going to double your inventiveness."

17. "If you never want to be criticized, for goodness' sake don't do anything new."

18. "If you're long-term oriented, customer interests and shareholder interests are aligned."

19. "Invention requires a long-term willingness to be misunderstood. You do something that you genuinely believe in, that you have conviction about, but for a long period of time, well-meaning people may criticize that effort. When you receive criticism from well-meaning people, it pays to ask, 'Are they right?' And if they are, you need to adapt what they're doing. If they're not right, if you really have conviction that they're not right, you need to have that long-term willingness to be misunderstood. It's a key part of invention."

20. "You want to look at what other companies are doing. It's very important not to be hermetically sealed. But you don't want to look at it as if, 'OK, we're going to copy that.' You want to look at it and say, 'That's very interesting. What can we be inspired to do as a result of that?' And then put your own unique twist on it."

Tanelorn
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Re: Almost bought an individual stock today...

Post by Tanelorn » Thu Apr 28, 2016 5:09 pm

If you were going to buy a stock today, PRGN would have been a better choice than AMZN. Nothing like making a quick 700%! You wouldn't have thought the news they were planning to default on their debt and were suing the trade publication for pointing out their financial woes would have been good news, but that just goes to show it's hard to predict how things will react.

http://finance.yahoo.com/news/paragon-s ... 00841.html
On April 26, 2016, the Company and Mr. Michael Bodouroglou, the Company's Chairman, President, Chief Executive Officer and Interim Chief Financial Officer, filed a law suit against Tradewinds and their financial reporter, Mr. Joe Brady Stamford for defamation damages. In particular on February 18, 2016, Tradewinds reported that the Company had obtained its Board of Directors approval for filing bankruptcy under Chapter 11. The Company and its Board of Directors declared that the above statement was totally untrue...

In relation to the issued and outstanding senior unsecured notes due 2021 that bear interest at a rate of 8.375% per year ("Unsecured Notes"), the Company will not proceed with the interest payment, which is due on May 15, 2016, due to lack of liquidity.

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JaneyLH
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Re: Almost bought an individual stock today...

Post by JaneyLH » Thu Apr 28, 2016 6:14 pm

Independent George wrote:I don't regret not buying Amazon, but I do regret not being smart enough to have bought UPS.
I bought UPS, back when I had a FA managing my finances. I've been transitioning to a 3-fund portfolio over the last 2 years and still have some individual stocks left but am selling them when I need cash for living expenses. UPS is next up on my list. :happy But I never look at the current prices of things I've sold over the last 2 years to see what a big mistake it was, and don't miss the agony when one of my stocks is going down...

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Toons
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Re: Almost bought an individual stock today...

Post by Toons » Thu Apr 28, 2016 6:18 pm

I decided to buy Mcdonalds stock in 1990 after seeing cars lined up at the drive thru windows every time I passed one.
Who doesn't like cheeseburgers and Coke, :mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Toons
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Re: Almost bought an individual stock today...

Post by Toons » Thu Apr 28, 2016 6:21 pm

QuietWealth wrote:
mattshwink wrote:Anyone saying Amazon is going to be the biggest company in 10 years doesn't quite understand the market. Today Apple is almost twice as big, it posted quarterly sales of $50 billion compared to Amazon's $29 billion.
You know Apple had a MCap of $50 Billion 10 years ago right? I have no clue what Amazon will do in 10 years (Don't own any of it besides what is in my VTI holding) but it could easily be the largest. Their business seems to have a fairly large moat currently, so who knows what can happen if Bezos ever decides to increase their margins.

I will say I highly admire Mr. Bezos and his approach to his company. He has an awesome story and approach to business. I highly recommend reading about him. He seems like one of those unique CEO's who understands that it is about the long-game and not just playing quarter to quarter (i.e. They have one of the highest R&D expenditures consistently, higher than Apple).

Some good quotes from him:
1. "All businesses need to be young forever. If your customer base ages with you, you're Woolworth's."

2. "There are two kinds of companies: Those that work to try to charge more and those that work to charge less. We will be the second."

3. "Your margin is my opportunity."

4. "If you only do things where you know the answer in advance, your company goes away."

5. "We've had three big ideas at Amazon that we've stuck with for 18 years, and they're the reason we're successful: Put the customer first. Invent. And be patient."

6. "I very frequently get the question: 'What's going to change in the next 10 years?' And that is a very interesting question; it's a very common one. I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that that second question is actually the more important of the two -- because you can build a business strategy around the things that are stable in time. ... n our retail business, we know that customers want low prices, and I know that's going to be true 10 years from now. They want fast delivery; they want vast selection. It's impossible to imagine a future 10 years from now where a customer comes up and says, 'Jeff I love Amazon; I just wish the prices were a little higher,' [or] 'I love Amazon; I just wish you'd deliver a little more slowly.' Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it."

7. "If you're not stubborn, you'll give up on experiments too soon. And if you're not flexible, you'll pound your head against the wall and you won't see a different solution to a problem you're trying to solve."

8. "Any business plan won't survive its first encounter with reality. The reality will always be different. It will never be the plan."

9. "In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts."

10. "We've done price elasticity studies, and the answer is always that we should raise prices. We don't do that, because we believe -- and we have to take this as an article of faith -- that by keeping our prices very, very low, we earn trust with customers over time, and that that actually does maximize free cash flow over the long term."

11. "The framework I found, which made the decision [to start Amazon in 1994] incredibly easy, was what I called a regret minimization framework. I wanted to project myself forward to age 80 and say, 'OK, I'm looking back on my life. I want to minimize the number of regrets I have.' And I knew that when I was 80, I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn't regret that. But I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day."

12. "We innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent."

13. "When [competitors are] in the shower in the morning, they're thinking about how they're going to get ahead of one of their top competitors. Here in the shower, we're thinking about how we are going to invent something on behalf of a customer."

14. "A company shouldn't get addicted to being shiny, because shiny doesn't last."

15. "I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out."

16. "If you double the number of experiments you do per year, you're going to double your inventiveness."

17. "If you never want to be criticized, for goodness' sake don't do anything new."

18. "If you're long-term oriented, customer interests and shareholder interests are aligned."

19. "Invention requires a long-term willingness to be misunderstood. You do something that you genuinely believe in, that you have conviction about, but for a long period of time, well-meaning people may criticize that effort. When you receive criticism from well-meaning people, it pays to ask, 'Are they right?' And if they are, you need to adapt what they're doing. If they're not right, if you really have conviction that they're not right, you need to have that long-term willingness to be misunderstood. It's a key part of invention."

20. "You want to look at what other companies are doing. It's very important not to be hermetically sealed. But you don't want to look at it as if, 'OK, we're going to copy that.' You want to look at it and say, 'That's very interesting. What can we be inspired to do as a result of that?' And then put your own unique twist on it."



+1 :happy
Thanks for Posting.
Bezos- Genius.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

AnilG
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Re: Almost bought an individual stock today...

Post by AnilG » Thu Apr 28, 2016 6:31 pm

I have a small portion of my portfolio allocated to play money. Most of the time I put this play money in stocks. I have learnt a lot from investing in stocks - analyzing companies and industries, reviewing financial statements and SEC filings, identifying shenanigans, trends etc. While I have had spectacular failures, I also had some great successes. Overall, it has paid well in terms of financial return as well as personal and professional life. It is a hobby that doesn't require spending money instead generates money and keeps me busy and away from spending money.

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jwillis77373
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Re: Almost bought an individual stock today...

Post by jwillis77373 » Thu Apr 28, 2016 9:39 pm

Regret is a poor basis for making a future Stock pick.

Its beating yourself up for not knowing the future.

Changing history is also not something you can do about today, any better than your could do about it then.

If Individual Stocks never looked enticing, they would never sell.. or they would rarely sell.. in general when they look like such a good deal to so many people they will "peak" and be oversold by the time you can invest in them.. and then they have only one direction to go.

Nobody like to buy a fairly valued stock.. they're not interesting.

mattshwink
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Re: Almost bought an individual stock today...

Post by mattshwink » Thu Apr 28, 2016 9:54 pm

QuietWealth wrote:
mattshwink wrote:Anyone saying Amazon is going to be the biggest company in 10 years doesn't quite understand the market. Today Apple is almost twice as big, it posted quarterly sales of $50 billion compared to Amazon's $29 billion.
You know Apple had a MCap of $50 Billion 10 years ago right? I have no clue what Amazon will do in 10 years (Don't own any of it besides what is in my VTI holding) but it could easily be the largest. Their business seems to have a fairly large moat currently, so who knows what can happen if Bezos ever decides to increase their margins.

I will say I highly admire Mr. Bezos and his approach to his company. He has an awesome story and approach to business. I highly recommend reading about him. He seems like one of those unique CEO's who understands that it is about the long-game and not just playing quarter to quarter (i.e. They have one of the highest R&D expenditures consistently, higher than Apple).
I do know that :) But the point I was trying to make is that Apple's profits (and cash position) are way ahead of Amazon right now. Could they burn through that in 10 years. Could the next couple of IPhones not sell well? Sure.

But Amazon is just starting to be profitable. Can they continue growing? Can they continue profiting? While Amazon is a tech company it isn't like Apple (or Microsoft) for that matter. A majority of Amazon's sales really could be classified as retail. Retail is a cutthroat business with small margins. Streaming video should continue to grow. Cloud services could continue to grow. But can they outpace the other innovators out there? I don't think so....but no one knows. And that is the moral of the story. If we all knew we would have bought Amazon in June of 1997 and Apple in 1982. But we probably would have a bought a lot of other sure bet innovative companies as well (Pets.com, Enron, etc). Buy index funds. Hold them according to your AA. Maximize 401k and IRA space.

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JonnyDVM
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Re: Almost bought an individual stock today...

Post by JonnyDVM » Thu Apr 28, 2016 10:04 pm

Funny I almost did too. Coincidently read an article on BBC that said the head of Amazon was invested heavily in a company called General Fusion working on fusion power technology. Couldn't find a ticker symbol though. Must not be publicly traded. I then got bored and did something else. If you have an itch to gamble take 5% of your portfolio or whatever and buy individual stocks. Amazon wouldn't be my first choice though. I think people already know about that one. :happy
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

ToOLx
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Re: Almost bought an individual stock today...

Post by ToOLx » Fri Apr 29, 2016 5:30 am

Sure it is difficult to fight the temptation of loading up on the next hot stock. However we must revert back to our original train of thought and why we follow the boglehead's mantra of investing. I assume you are already invested in the VTI index, which has a sizable amount of Amazon stock already within. Food for thought. 8-)

Month-end ten largest holdings
(15.4% of total net assets) as of 03/31/2016
1 Apple Inc.
2 Alphabet Inc.
3 Microsoft Corp.
4 Exxon Mobil Corp.
5 General Electric Co.
6 Johnson & Johnson
7 Berkshire Hathaway Inc.
8 Facebook Inc.
9 AT&T Inc.
10 Amazon.com Inc.

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Re: Almost bought an individual stock today...

Post by oldcomputerguy » Fri Apr 29, 2016 5:47 am

I've looked at individual stocks in the past, and about a year ago even bought some shares of Corning, trying to get in on the surge of fiber optic wiring. Lo and behold, it sunk. Took a loss on it, never looked back.

Nowadays, I console myself with these thoughts: (1) There are over 3,000 stocks in the American stock market, so the odds of picking a winner are 1/3,000 or roughly 0.03%; (2) My broad market mutual funds own all 3,000, so the odds of my owning the winner are 100%.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

IowaFarmBoy
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Re: Almost bought an individual stock today...

Post by IowaFarmBoy » Fri Apr 29, 2016 6:06 am

I wish I had bought it before everyone knew it was going to the biggest company in the world in 10 years and priced it accordingly.

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Watty
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Re: Almost bought an individual stock today...

Post by Watty » Fri Apr 29, 2016 6:31 am

neomutiny06 wrote:When the topic of our competitor Amazon came up, one thing he casually said is "I don't know why everybody doesn't buy AMZN stock, they are going to be the biggest company in the world in 10 years. Their Prime subscriber base alone is mind blowing."

"You know it's time to sell when shoeshine boys give you stock tips. This bull market is over."

The CEO may not be a shoeshine boy but posts on the Internet are a good substitute.

The stock going up the next day was only a fluke.

Valuethinker
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Re: Almost bought an individual stock today...

Post by Valuethinker » Fri Apr 29, 2016 6:36 am

neomutiny06 wrote:Yesterday I was in a breakfast meeting led by my company's CEO. Small group of people. I'm at a large global company...it was quite an experience to hear our CEO speak candidly about life, business, etc.

When the topic of our competitor Amazon came up, one thing he casually said is "I don't know why everybody doesn't buy AMZN stock, they are going to be the biggest company in the world in 10 years. Their Prime subscriber base alone is mind blowing."

I have never been tempted to buy individual stocks, but that comment made me think twice. I didn't do anything foolish, don't worry. However, it wasn't easy to see that AMZN stock was in the news today for 28% growth in sales, and the stock soared 12% today.

I'm sure you all have similar stories to this one...it would be helpful to hear how you were tempted, but ultimately stuck with your index funds with confidence.
I believe it is the case that WalMart has more products on its website than Amazon-- makes you think, no?

Anyways Google is going to be the largest company in the world in 10 years time, why if I look at the market cap now... oh wait...

GE was a "one decision" stock once. Look up the torrid history of the "Nifty Fifty".

Valuethinker
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Re: Almost bought an individual stock today...

Post by Valuethinker » Fri Apr 29, 2016 6:43 am

JonnyDVM wrote:Funny I almost did too. Coincidently read an article on BBC that said the head of Amazon was invested heavily in a company called General Fusion working on fusion power technology. Couldn't find a ticker symbol though. Must not be publicly traded. I then got bored and did something else. If you have an itch to gamble take 5% of your portfolio or whatever and buy individual stocks. Amazon wouldn't be my first choice though. I think people already know about that one. :happy
Many of us here will remember KMS Industries, a great fusion "story stock".

https://en.wikipedia.org/wiki/KMS_Fusion

https://en.wikipedia.org/wiki/Kip_Siegel#KMS_Industries

Nuclear fusion as a practical commercial reality has been 50 years away since I first started thinking about it in about 1969... and until proven otherwise (which may happen, but I suspect not in my lifetime) controlled nuclear fusion will *still* be 50 years away ;-).

The 22nd century may well be fusion powered* (if Civilization lasts that long, and I have my doubts). The 21st? Not so much.

* the 21st is already fusion powered. Fossil fuels are just the Sun captured as ancient plants and animals-- geologic solar power if you will. Wind and solar PV are of course both the result of solar energy from the Sun ie nuclear fusion. I mean as in human generated, non hydrogen bomb, contained and controlled fusion.

azanon
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Re: Almost bought an individual stock today...

Post by azanon » Fri Apr 29, 2016 7:13 am

I happened to be off work yetserday, turned it on CNBC, and Kevin O'leary was talking about Amazon. The little bit I remember was him saying that Amazon in the only company in America that apparently isn't required to make money. At their current price, you can just throw "multiples" out the window. He said when their price finally comes back to Earth someday, there will be many grown men weeping, meaning those who own this stock at today's prices.

Solo Prosperity
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Re: Almost bought an individual stock today...

Post by Solo Prosperity » Fri Apr 29, 2016 12:40 pm

smartinwate wrote:I've looked at individual stocks in the past, and about a year ago even bought some shares of Corning, trying to get in on the surge of fiber optic wiring. Lo and behold, it sunk. Took a loss on it, never looked back.

Nowadays, I console myself with these thoughts: (1) There are over 3,000 stocks in the American stock market, so the odds of picking a winner are 1/3,000 or roughly 0.03%; (2) My broad market mutual funds own all 3,000, so the odds of my owning the winner are 100%.
Before someone takes this out of context, I don't advocate picking individual stocks outside of some small "fun account" that is 5% or less of your portfolio...if you choose to go that way...I do not.

But, the odds of picking a "winning stock" are not 0.03%...

From Swedroe:
“For the period 1983-2008, the Russell 3000 (which represents about 98 percent of the investable market) returned almost 10 percent a year, producing a total return of 1,074 percent! During this period, about 40 percent of stocks had a negative return and about 20 percent of stocks lost nearly all of their value. Sixty-four percent of all the stocks underperformed the Russell 3000. Clearly a small number of stocks are responsible for a majority of the gains — about 10 percent of stocks recorded huge wins in excess of 500 percent.”
So it seems like picking a "winning stock" is about a 1 in 3 chance. From 1983-2008 it was 36%. That number probably flucuates depending on the time period but it seems to fall somewhere around 1 in 3. Again, I still don't invest in individual stocks nor do I ever advocate doing it, but let's not just say crazy things.

jay22
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Re: Almost bought an individual stock today...

Post by jay22 » Fri Apr 29, 2016 1:38 pm

If I am so inclined, I'd rather invest in TRW Media & Telecom fund (PRMTX) than just Amazon.

gundlached
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Re: Almost bought an individual stock today...

Post by gundlached » Fri Apr 29, 2016 1:43 pm

If you could pick individual stocks reliably, you never would have wound up here in the first place.

Like everyone else, I tried and failed. Sorry AMZN, you're just part of my index funds now.

I must admit, though, I still hold 2% of my portfolio in BUD. I believe in their product and am constantly doing "research". :beer

Plus, whoever eventually finds my accounts when I die will have a laugh.

selters
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Re: Almost bought an individual stock today...

Post by selters » Fri Apr 29, 2016 1:49 pm

What is the price to earnings ratio of the Amazon stock? 300? So a lot of future growth is already priced in...

miles monroe
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Re: Almost bought an individual stock today...

Post by miles monroe » Fri Apr 29, 2016 2:05 pm

i have a friend who teases me about amazon every time we talk stocks.

when amazon when public (20 years ago?) the stock was priced at $18; adjusted for splits $1.50.

he asked me if i going to buy. i replied that it was just an online bookstore, and i preferred to go to the local store and browse. no way would i buy that stock. i didn't imagine what the future would bring to that "bookstore"......

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celia
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Re: Almost bought an individual stock today...

Post by celia » Fri Apr 29, 2016 2:11 pm

smartinwate wrote:I've looked at individual stocks in the past, and about a year ago even bought some shares of Corning, trying to get in on the surge of fiber optic wiring. Lo and behold, it sunk. Took a loss on it, never looked back.

Nowadays, I console myself with these thoughts: (1) There are over 3,000 stocks in the American stock market, so the odds of picking a winner are 1/3,000 or roughly 0.03%; (2) My broad market mutual funds own all 3,000, so the odds of my owning the winner are 100%.
There is more than 1 winner in those 3,000 stocks, isn't there?

There is more than 1 loser in that mutual fund, isn't there?

So you have at least 1 winner and at least 1 loser. Your reasoning isn't very accurate. :oops:
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

psystal
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Re: Almost bought an individual stock today...

Post by psystal » Fri Apr 29, 2016 2:25 pm

I'm all index funds now, but I understand the occasional temptation to pick stocks. As long as that money isn't an integral part of your retirement plans, I don't see any problem with it. I'm sure sometime in the next 30 years I'll buy an individual stock once or twice.

One piece of advice for the stock pickers:

Invest according to your interests, and never invest in something you do not understand.

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rmelvey
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Re: Almost bought an individual stock today...

Post by rmelvey » Fri Apr 29, 2016 2:33 pm

Amazon is my only individual stock holding, but not by choice! Half of my pay is in RSUs. If it were up to me I would be 100% bogle, but after the last couple of years I can't complain :beer

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Rainier
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Re: Almost bought an individual stock today...

Post by Rainier » Fri Apr 29, 2016 2:39 pm

Forget the stock. You should have bought out of the money Amazon calls that expired today. Why earn 12% in a day when you can earn 100%!

Honestly though, I'm trying really hard not to buy Apple. Less than 10x earnings including their $200b stockpile of cash and a growing dividend.

TomCat96
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Re: Almost bought an individual stock today...

Post by TomCat96 » Fri Apr 29, 2016 4:03 pm

neomutiny06 wrote:Yesterday I was in a breakfast meeting led by my company's CEO. Small group of people. I'm at a large global company...it was quite an experience to hear our CEO speak candidly about life, business, etc.

When the topic of our competitor Amazon came up, one thing he casually said is "I don't know why everybody doesn't buy AMZN stock, they are going to be the biggest company in the world in 10 years. Their Prime subscriber base alone is mind blowing."

I have never been tempted to buy individual stocks, but that comment made me think twice. I didn't do anything foolish, don't worry. However, it wasn't easy to see that AMZN stock was in the news today for 28% growth in sales, and the stock soared 12% today.

I'm sure you all have similar stories to this one...it would be helpful to hear how you were tempted, but ultimately stuck with your index funds with confidence.

This is precisely the kind of thought process that has gotten me in trouble in the past. As I am older and hopefully wiser, this is how I would analytically break down what happened to you.

The first point is that your friends comment, even if true, is no basis to buy the stock. I want to emphasize that again. It is not sufficient to merely know that a company has a vibrant economic future, or even the most vibrant economic future. If the price of the stock for example is so inflated that the price already takes into account that future growth it makes no sense to dump money in there. If someone told you almonds are healthy for you, and you went to whole foods only to find almonds at $200 a bag, would you buy then and there based on the suggestion? What if almonds were $500 a bag?

Almonds are concrete. They make sense to us. We as consumers have a good hold on their valuation. If I tried to sell you almonds at 200 a bag, you'd think I was crazy.

Stocks are not concrete. They are intangible. They certainly represent something intangible. But the point of the almond example is you must be ready to associate good suggestions with the current market price. Amazon is a good company. But so is Apple. What happened to Apple's price?

The second point is in regards to what happened to the stock. It soared 12%. What occurred there was essentially random chance.
Amazon does not normally soar 12% in one day. If it does not occur daily, then the timing of the gain was coincidental. Earning season is out. Had AMZN underperformed wall street's expectations, the stock could easily have dropped 12% in one day.

When you let your thought processes be guided by random anecdotes like what happened in your discussion, then your gains will be exactly that. Random. I can't point to you and say you will lose money. I cannot say you will make money. But you will certainly do no better than random chance, if your investment decisions are motivated by random conversations around you.

itstoomuch
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Re: Almost bought an individual stock today...

Post by itstoomuch » Fri Apr 29, 2016 4:41 pm

Don't understand AMZN.
I understand BGS :happyface
YMMV.
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spankasmurf
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Re: Almost bought an individual stock today...

Post by spankasmurf » Sat Apr 30, 2016 8:27 pm

Valuethinker wrote:
JonnyDVM wrote:Funny I almost did too. Coincidently read an article on BBC that said the head of Amazon was invested heavily in a company called General Fusion working on fusion power technology. Couldn't find a ticker symbol though. Must not be publicly traded. I then got bored and did something else. If you have an itch to gamble take 5% of your portfolio or whatever and buy individual stocks. Amazon wouldn't be my first choice though. I think people already know about that one. :happy
Many of us here will remember KMS Industries, a great fusion "story stock".

https://en.wikipedia.org/wiki/KMS_Fusion

https://en.wikipedia.org/wiki/Kip_Siegel#KMS_Industries

Nuclear fusion as a practical commercial reality has been 50 years away since I first started thinking about it in about 1969... and until proven otherwise (which may happen, but I suspect not in my lifetime) controlled nuclear fusion will *still* be 50 years away ;-).

The 22nd century may well be fusion powered* (if Civilization lasts that long, and I have my doubts). The 21st? Not so much.

* the 21st is already fusion powered. Fossil fuels are just the Sun captured as ancient plants and animals-- geologic solar power if you will. Wind and solar PV are of course both the result of solar energy from the Sun ie nuclear fusion. I mean as in human generated, non hydrogen bomb, contained and controlled fusion.
Holy Crap!! I worked for KMS about 9 months while in school in Ann Arbor back about 1989-90. They downsized and I was laid off - but they gave me like 2 weeks severance. Being the poor college student, I was thrilled.

I own some Amazon stock - bought it a few years ago and my avg price is around $350. Not planning to add at the current price. And, it's in my "play / gambling" account.

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SorenK
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Re: Almost bought an individual stock today...

Post by SorenK » Sat Apr 30, 2016 9:02 pm

We had a Krispy Kreme donuts come to town in early 2000s, and there were incredible lines, and I like the donuts. I was pretty sure investing in them would be a money maker, but I didn't have much cash. If I would have bought then, I'm pretty sure I'd still be down. I feel fortunate to learn from the experience of seeing a great product, but the stock got hammered because of management issues. They're no Amazon, but that's one of the experiences that pushed me away from individual stocks.

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JonnyDVM
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Re: Almost bought an individual stock today...

Post by JonnyDVM » Sat Apr 30, 2016 9:32 pm

spankasmurf wrote:
Valuethinker wrote:
JonnyDVM wrote:Funny I almost did too. Coincidently read an article on BBC that said the head of Amazon was invested heavily in a company called General Fusion working on fusion power technology. Couldn't find a ticker symbol though. Must not be publicly traded. I then got bored and did something else. If you have an itch to gamble take 5% of your portfolio or whatever and buy individual stocks. Amazon wouldn't be my first choice though. I think people already know about that one. :happy
Many of us here will remember KMS Industries, a great fusion "story stock".

https://en.wikipedia.org/wiki/KMS_Fusion

https://en.wikipedia.org/wiki/Kip_Siegel#KMS_Industries

Nuclear fusion as a practical commercial reality has been 50 years away since I first started thinking about it in about 1969... and until proven otherwise (which may happen, but I suspect not in my lifetime) controlled nuclear fusion will *still* be 50 years away ;-).

The 22nd century may well be fusion powered* (if Civilization lasts that long, and I have my doubts). The 21st? Not so much.

* the 21st is already fusion powered. Fossil fuels are just the Sun captured as ancient plants and animals-- geologic solar power if you will. Wind and solar PV are of course both the result of solar energy from the Sun ie nuclear fusion. I mean as in human generated, non hydrogen bomb, contained and controlled fusion.
Holy Crap!! I worked for KMS about 9 months while in school in Ann Arbor back about 1989-90. They downsized and I was laid off - but they gave me like 2 weeks severance. Being the poor college student, I was thrilled.

I own some Amazon stock - bought it a few years ago and my avg price is around $350. Not planning to add at the current price. And, it's in my "play / gambling" account.
Here's the article I was talking about if anyone is interested. http://www.bbc.com/future/story/2016042 ... ess-fusion

Maybe they actually will figure it out this time around? I want in on the gravy train if they do. All I could think of reading the article was Doc Oct in Spider-Man II.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

tbradnc
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Re: Almost bought an individual stock today...

Post by tbradnc » Sun May 01, 2016 6:39 am

All things being equal, buying a "good" stock is better than buying a Mercedes or BMW on my value scale...

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oldcomputerguy
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Re: Almost bought an individual stock today...

Post by oldcomputerguy » Sun May 01, 2016 6:44 pm

QuietWealth wrote: But, the odds of picking a "winning stock" are not 0.03%...
Yep, you're right. I don't know where that horrible piece of math came from.

I shouldn't post before my second cup of coffee.
:oops:
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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