Any "average Joe" here actually make out well with individual stocks?

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wstalcup
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Any "average Joe" here actually make out well with individual stocks?

Post by wstalcup » Tue Sep 19, 2017 11:44 am

HI,
not looking for strategies as that for the most part I have given up on individual stocks.. just wondering if anyone here besides a "Warren Buffet" person can claim it work out for them?

Here's my experience
A while ago, I attempted to use heavy research, logic, etc for picking stocks :
Looked at dozens of attributes like P/E < 15, ROE > 20%, price/book < 1, quick ratio > .5 and so on...
After finding a supposedly good stock, I would pull the trigger on it, figuring ok well maybe this one will have a greater than 50% chance of increasing...
Turn out the VAST majority of them dropped like a lead zeppelin :oops: (Seriously! 2 of them actually fell drastically 1-2 days after I bought!)

So nowadays I stick mostly to low cost ETFs and occasionally a stock.. its been working fairly well for me. For example, I bought STOR a few months ago solely on the fact that Buffet bought it. It so far has been doing great, even though still on paper it doesn't look so great!
Best investment advice: "Invest in your education" -Bill Gates

Jack FFR1846
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Jack FFR1846 » Tue Sep 19, 2017 11:49 am

I used to semi-day trade in companies I knew. Fairchild, ON, Ford and the like. I'd ride waves up and down, selling whenever my couple grand could get me $100 before fees. I rode these waves pretty well for a year or so using 2 brokerages. Scottrade and ameritrade.

Then I bought Polaroid in one account (how could I possibly go wrong with this 100 year old company) and IMPX (fab in the penny stock land) and with 2 events, turned my $4000 investment into $15 hard cash.....which got lost in the mail.

Most speculators will tell you all about the first paragraph here and never tell you the second.
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wstalcup
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by wstalcup » Tue Sep 19, 2017 12:06 pm

doh! sorry to hear! :( I jumped out of a window after 1 of my trades (luckily I live in a 1 story house) anyway, I think it was a good learning experience for me. Discovered that I'm not a mastermind, better off just staying within the pack, slow and steady wins the race!
Best investment advice: "Invest in your education" -Bill Gates

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by carolinaman » Tue Sep 19, 2017 12:11 pm

I used to dabble with a few stocks of companies I was familiar with and whose industries I understood to some extent. I had a very mixed bag of results. Some winners but more that were disappointing in some way. I learned that good companies are not necessarily good investments, at least within a year two, and that I was better off in a well diversified broad market index. It took a while for me to learn this.

I rarely discuss finances with other people, but about a year ago, I had lunch with this guy who seemed to be a pretty savvy investor. He was invested in lots of different things: individual stocks, MLPs, etc. I was very impressed with his investment knowledge. Later in our conversation he mentioned that his son invested solely in a target date fund and that his son's investment results were as good as his. Hmmmm....

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by peterinjapan » Tue Sep 19, 2017 12:22 pm

One thing you'll hear a lot here is, avoid individual stocks because of "individual stock risk. I'm slowly getting rid of my individual stocks, and moving towards good ETF's that I like. That said, I've done quite well with Facebook, Apple, GE (though I recently sold it) and so on. In general your best not bother with it, unless you have a lot of knowledge about that company.

PVW
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by PVW » Tue Sep 19, 2017 1:17 pm

I've made out very well with BRK. Bought in 2005 and have done very well compared to the S&P 500 index.

You didn't ask, but I've also done very poorly with SHLD. I forget the details, but I bought around $120 when I read a story that Eddie Lampert was going to be the next Warren Buffett. That prophecy hasn't materialized and I think I sold at about $80. (So I did very well with that stock compared to the people that still own it.)

I think stories of doing well in individual stocks just foster the gambler instinct in some of us. Given the number of investors, there are bound to be stories of fabulous riches (which are often due to dumb luck). Given the lack of discipline in most individual investors, I believe the odds of beating the market are overwhelmingly against you. For disciplined investors, you probably have a 50% chance of beating the market.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by freebeer » Tue Sep 19, 2017 1:27 pm

wstalcup wrote:
Tue Sep 19, 2017 11:44 am
HI,
not looking for strategies as that for the most part I have given up on individual stocks.. just wondering if anyone here besides a "Warren Buffet" person can claim it work out for them? ... For example, I bought STOR a few months ago solely on the fact that Buffet bought it. It so far has been doing great, even though still on paper it doesn't look so great!
Uh, anyone can claim they went to a casino and won $400 playing slot machines. And some people even do. Such anecdotes are not evidence supporting that it's a good financial decision to play the slots. And thanks to survivorship bias I'd expect that a majority of Bogleheads on this forum who will admit to buying individual stocks feel it's worked out for them. Which means nothing except that they have been lucky. And of course buying something AFTER it's known that Warren Buffett has bought it doesn't qualify as investing like Warren Buffett either.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by GibsonL6s » Tue Sep 19, 2017 1:41 pm

My only two significant positions are MO and BRKB and they have done well. I got lucky buying CXW before the election based on dividend yield and getting the Trump bump on it. I have done worse in sector ETF bets I have made than individual stocks. My issue is that I occasionally like to pick individual stocks but don't want to build out an entire portfolio of stocks, so I am trying to end up with a few core ETFs and then have a bit of fun with some stocks.

chicagoan23
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by chicagoan23 » Tue Sep 19, 2017 1:42 pm

My experience has been that I've generally made out well where I have been following a company and take advantage of sudden drops in the price. Of course, once you're in you need to know when to get out, which is much tougher.

Here's a recent example for me: I had been following ADM for a while and bought about a year and a half ago after a sudden drop in the price during the January 2016 almost-correction: viewtopic.php?t=182029#p2760503

Since then it has beaten the market with an average annual return of 26.2%, compared to 20.1% for the S&P 500 (with dividends reinvested), but had I sold a few months ago I would have been much better off, as the market has beaten it soundly since it reported first quarter earnings in April 2017. And of course I'm taking far more risk than had I just been in the index fund. I've trailed the market on some other purchases, although so far I've managed to avoid the big wipe-out losers.

For this reason I have 85% of my stock holdings in mutual funds; the remainder is "educated guess" money that is riskier.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by bikechuck » Tue Sep 19, 2017 2:06 pm

I have one individual stock from a former employer in a tax deferred IRA that I want to sell next year (my first full year of retirement). I want to wait to take advantage of the net unrealized appreciation tax rules when I am in a lower tax bracket.

I have been very lucky as this stock is up by approx 28% this year and was up by double digits last year as well. Of course it could crash just before I sell it and with my luck it probably will.

I cannot wait to dump it and I never intend to purchase any individual stocks in the future!

DetroitRick
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by DetroitRick » Tue Sep 19, 2017 2:17 pm

Yes. Particularly for the last 10 years, where I've consistently held a diversified portfolio of stocks (39 as of today). I should say partially diversified - small caps are under-represented in my stock portfolio, as are emerging markets. Return-wise, I've done slightly better than I could have done with funds (average about 0.65% greater return per year the long run versus the applicable indices matching my strategy). I don't day-trade, I buy after extensive research around 70% of the time, and gut/industry knowledge around 30%.

It's not right for everybody, but it serves me well. Only 18% of my total portfolio is in individual stocks. The rest is fund-based. Why not 100%? Too much work, and certain segments would be a challenge for me to cover - small cap domestic and emerging markets. Plus bond positions. And this 18% is entirely in my taxable universe - and that is where I have gotten the biggest benefit in the last 5 years. Much deeper control over capital gains and losses, especially relative to my MAGI targets under the ACA (health insurance). Add in that savings and it has unquestionably been worth my time. Plus there is that fun factor for me - my biggest reason for maintaining this portfolio.

Yet, for 3 close friends and relatives that have come to me for investment advice recently, I've steered them all away from individual stocks and into funds (in light of THEIR specific abilities, time and needs). Individual stock investing is simply a tactic - like any other you have to evaluate its suitability in relation to your individual needs and abilities.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Petrocelli » Tue Sep 19, 2017 2:20 pm

When I was 26, I had 10,000 shares in a company that I got for $1 a share. It was my dad's company, so I did no research before acquiring the stock.

When I was 27, the stock was featured in Money Magazine's cover article, "5 Hot Stocks for 1987!" (or something like that).

The stock went to split adjusted price of around 60. Some days, it would change in value more than I would make in a year as a lawyer.

Total luck.
Petrocelli (not the real Rico, but just a fan)

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welderwannabe
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by welderwannabe » Tue Sep 19, 2017 2:24 pm

Avoid diversifiable risk. There is enough systematic (undiversfiable) risk already, you don't need to add to it. This is especially true if you are a individual investor and don't have the vast resources to spend on trying to manage the diversifiable risk and look for alpha.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

limeyx
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by limeyx » Tue Sep 19, 2017 2:53 pm

Currently sitting on about $38K of Apple, Facebook and Google left over from my advisor days
Seriously considering selling (Gain of around $8K) but it wont hit long term gains until Jan 2018 so I am still dithering over it

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oldcomputerguy
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by oldcomputerguy » Tue Sep 19, 2017 3:02 pm

Pure luck, I bought some Intel right after the Pentiun "divide bug" came about. Sold it a few months later, made a few bucks.

Since then... Nope.
:(
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DurangoWino
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by DurangoWino » Tue Sep 19, 2017 3:26 pm

Actually have been fortunate in one account to be up 54% since Feb. 2016. Picked the bottom which was just pure luck. Moved around in a few stocks, RDSB, SUN, BEP and now in ARI. All pay nice dividends which I reinvest in additional stock.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by GibsonL6s » Tue Sep 19, 2017 3:34 pm

I think another part of the invest in individual stock question is that of concentration. As you select "many" individual stocks you start diversifying. I have no doubt that if you want to buy individual stocks and concentrate your holdings in either a few stocks or many in a sector of the market, you can beat the market, provided you are right.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by sschullo » Tue Sep 19, 2017 3:41 pm

Petrocelli wrote:
Tue Sep 19, 2017 2:20 pm
When I was 26, I had 10,000 shares in a company that I got for $1 a share. It was my dad's company, so I did no research before acquiring the stock.

When I was 27, the stock was featured in Money Magazine's cover article, "5 Hot Stocks for 1987!" (or something like that).

The stock went to split adjusted price of around 60. Some days, it would change in value more than I would make in a year as a lawyer.

Total luck.
Yeah, similar experience with making or losing in one day as much as my annual salary (but it was a teacher's salary which is a lot less). What a useless waste of time, and energy, except for one thing, it was an important mistake to make and I learned my risk tolerance.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

deltaneutral83
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by deltaneutral83 » Tue Sep 19, 2017 3:43 pm

People do not come onto message boards to post their 6 figure losses or combined 6 figure losses, or dare I say 7 for the high rollers on here. Plenty out there who locked in big losses whether it be single stocks or mutual funds back in 2008 anyhow for one reason or another. Human psychology at work. Or the survivorship bias in play if you will as only the winners will report back.

I have read countless "how are you doing" or "how have you done" threads on countless forums. 98% of the posts are about gains on their single stock picks over the last 3 decades while also having a perfect model wife, kids who get scholarships to ivy league schools, and earn a fantastic living as a sole proprietor.

Plenty of mid level banking execs who are around 55-65 years old is sitting on some pretty weak stock options from where they were ten years ago (BAC/WF/C, etc etc).

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by JFanni » Tue Sep 19, 2017 3:55 pm

My father bought me 100 shares of Schering-Plough back in 1987, Never touched it, reinvested all dividends. Got bought out by Merck a while back. Not as good as Buffet but beat the S&P. But again it was pure luck.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by livesoft » Tue Sep 19, 2017 4:00 pm

deltaneutral83 wrote:
Tue Sep 19, 2017 3:43 pm
People do not come onto message boards to post their 6 figure losses or combined 6 figure losses, or dare I say 7 for the high rollers on here.
C'mon, lots of folks posted on this forum about big losses in 2008-2009. It's one the main reasons I have [not] paid any cap gains taxes since about 1999 and also why I learned so much about tax-loss harvesting.

My spouse was in two investment clubs. One of them thought they were doing great: Whole Foods early on and many others. A later analysis showed they underperformed the Vanguard S&P500 index fund. But they did learn quite a lot about investing and wine and cooking.
Last edited by livesoft on Tue Sep 19, 2017 4:16 pm, edited 1 time in total.
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deltaneutral83
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by deltaneutral83 » Tue Sep 19, 2017 4:14 pm

livesoft wrote:
Tue Sep 19, 2017 4:00 pm
deltaneutral83 wrote:
Tue Sep 19, 2017 3:43 pm
People do not come onto message boards to post their 6 figure losses or combined 6 figure losses, or dare I say 7 for the high rollers on here.
C'mon, lots of folks posted on this forum about big losses in 2008-2009. It's one the main reasons I have paid any cap gains taxes since about 1999 and also why I learned so much about tax-loss harvesting.

My spouse was in two investment clubs. One of them thought they were doing great: Whole Foods early on and many others. A later analysis showed they underperformed the Vanguard S&P500 index fund. But they did learn quite a lot about investing and wine and cooking.
Clever, I guess I should have clarified that the folks I was referencing were not exactly tax loss harvesting irrespective of if it was 2009 or whenever. This was more, "hit the sell button on 75% or more of the portfolio between Sept 2008 and Jan 2009 and then hide under the bed for three years and come back into the market after the Dow races past 14k" type of thing.

acanthurus
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by acanthurus » Tue Sep 19, 2017 4:31 pm

I was fortunate to be sitting on 80% cash in 2008. I was trying to start a business and was self-funding. 2009 happened and I decided to get a job instead.

Between May '09 and October '09 I invested 100% in stocks. I am no guru, I understood little of stock investing. My metric was "will this company exist next year". I purchased large, well known companies mostly in industrials, materials, and technology. I didn't reinvest dividends, but on a price return basis the portfolio beat the SP500 by almost 5% CAGR since 2010. Most of my holdings pay dividends in excess of the S&P, so I probably outperformed by a little bit more than that had dividends been reinvested. There was a 2.5 year period of significant under-performance, which only recently disappeared with the post-election rally. On a risk-adjusted basis I've done much worse than the SP500 (Sharpe, Sortino, etc).

I was throwing darts and apparently won. My largest holding right now is VTSAX, but I still have a good chunk of that highly appreciated portfolio of stocks. I'd probably cash out if it weren't for capital gains taxes and me being OK with the volatility.

hushpuppy
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by hushpuppy » Tue Sep 19, 2017 4:45 pm

I learned the hard way that individual stocks were not something that I could successfully own. I bought at least two stocks that went bankrupt. One of those I averaged down as it fell in price. I believe that I lost $20,000 on that one stock.

I also bought one stock from my working days industry. I knew much more about this industry than the typical man on the street. That made absolutely no difference, because a politician with very limited knowledge caused a several year and over a billion dollar investment to become worthless. I think I only lost about 2/3 of that investment.

I was also personally aware of a major design flaw in a project I worked on that ultimately cost an unplanned expenditure of a few hundred million. I knew about the problem early on and was considering buying the associated stock, after the expected price drop. The price drop never came.

However, I have no doubt that some can be successful with individual stocks. I also have no doubt that real estate, business ownership and many other paths to financial success exist.

Mutual Funds work best for me. Vanguard has been my choice for the last 30 years. I have also tried Dodge & Cox, Janus, American Century, T. Rowe Price, Fidelity, and many others. To each their own

Regards,

hushpuppy

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by McGilicutty » Tue Sep 19, 2017 4:54 pm

I've done well with individual stocks, but I started investing in tech stocks in December 2016 at near the start of what has been an incredible tech bull market. The QQQ (Nasdaq 100) is up around 24% since then.

Here's the stocks I bought:
Tesla at 200 (now at 375)
Nvidia at 105 (now at 187)
Shopify at 75 (now at 122)
Intuitive Surgical at 811 (now at 1045)

One I missed is OLED which I started following at 109 (now at 142). Another stock I'm watching is ANET.

I don't claim any special stock-picking skill. My reasons for buying the above four companies were pretty simple:
-Tesla because Elon Musk seems like he might be the next Steve Jobs
-Nvidia because they make the chips which appear to be at the center of the AI revolution (e.g., gaming, cloud data centers, and autonomous cars)
-Shopify because some guy from the Motley Fool was pushing it pretty hard
-Intuitive Surgical because they crushed quarterly earnings a couple of quarters back

I have about 10% of my portfolio in individual stocks and the rest in either S&P 500 index ETFs or the total stock market ETF.

randomguy
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by randomguy » Tue Sep 19, 2017 4:58 pm

livesoft wrote:
Tue Sep 19, 2017 4:00 pm
deltaneutral83 wrote:
Tue Sep 19, 2017 3:43 pm
People do not come onto message boards to post their 6 figure losses or combined 6 figure losses, or dare I say 7 for the high rollers on here.
C'mon, lots of folks posted on this forum about big losses in 2008-2009. It's one the main reasons I have [not] paid any cap gains taxes since about 1999 and also why I learned so much about tax-loss harvesting.

My spouse was in two investment clubs. One of them thought they were doing great: Whole Foods early on and many others. A later analysis showed they underperformed the Vanguard S&P500 index fund. But they did learn quite a lot about investing and wine and cooking.

Part of that is passive bragging about their account size since everyone was in the same boat in 2008. I would be a lot different if you talk about losing 50% in say 1999 when the market was way up.

I have made a killing investing in individual stocks. Just happened to work at 2 companies that got bought out and I ended up making like 4x on each of them in about 3-5 years. My index funds haven't come close to that. I also recognize that it was pretty much pure luck. At the 2nd company, it was between that one and one other which was willing to pay me 10k/year more. I picked the first one for nonfinancial reasons and got lucky.

DrGoogle2017
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by DrGoogle2017 » Tue Sep 19, 2017 5:18 pm

My brother invested 100% of his 401k in one single company stock, it did so well in the 2000s but he was told to diversify, so he did, he still has close to 50% of his 401k in that stock. Luckily that stock had a 60% run YTD. He did say, he believe in being lucky.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by roflwaffle » Tue Sep 19, 2017 5:27 pm

I'm currently sitting on maybe ten grand of my company stock (ESPP). I'm going to sell whatever counts as long term capital gains, which is maybe a few thousand dollars at the moment, but I'm on the fence about whether to do it this year and pay the 15% in taxes, or increase my 401k contributions next year to see if I can get my AGI below $37k+ and avoid any capital gains tax by selling it in 2018.

Edit - There are a couple stocks I might have picked in the past, but that's only because I was unemployed and had enough time to thoroughly research whatever was interesting to me. Now that I'm working full time again, I wouldn't pick an individual stock if I was paid to do it. I suspect it might be possible to use a set of leading indicators to decide where to allocate my investment dollars, but that's also very low reward, something like a fraction of a percent/year difference, and I could be fooling myself somewhere based on some typo or mistaken assumption.

randomguy
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by randomguy » Tue Sep 19, 2017 9:51 pm

It isn't hard to beat the market with individual stocks. It also isn't that hard to get crushed by it. If you only buy say 10 stocks the huge amount of randomness dominates. On average the people will do as well as index investors. The problem is that your odds of being well above or below average are high. And it is very unlikley you (or anyone you know) has the skill to make much of a difference using publically available info. You end up making guessing (the internet is going to be huge. Did you invest in amazon or @home:)) and thinking it is skill when things work out.

Gasem
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Gasem » Tue Sep 19, 2017 11:16 pm

If you want to invest like Warren buffet just buy BRK.B. I own it and it does quite well

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Chip » Wed Sep 20, 2017 7:09 am

bikechuck wrote:
Tue Sep 19, 2017 2:06 pm
I have one individual stock from a former employer in a tax deferred IRA that I want to sell next year (my first full year of retirement). I want to wait to take advantage of the net unrealized appreciation tax rules when I am in a lower tax bracket.
I hope the stock is still in a company plan (e.g. 401k) vs. an IRA. If you transferred it from a company plan to an IRA it is no longer eligible for NUA tax treatment.

wstalcup
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by wstalcup » Wed Sep 20, 2017 8:21 am

ok, thanks everyone. all great stories! sounds like half do well with individual stocks and half don't!

Originally, I thought going with individual stocks were best for me, but once they tanked, that is when I became well aware of the predicament of what to do next... buy more? hold? sell? An individual stock could recover, or stay flat for years, or even never recover at all! Obvy, I couldn't count on myself picking the right choice on what to do next, since I was the one who decided to buy that piece of crap stock that flopped in the first place! :P

but now, dealing with mostly just ETFs, I do sleep much better at night! For example, if VOO drops, the only thing I need to do is just buy more for dollar-cost averaging. As for investing goes, I can be reasonably assured, that VOO will recover and over the long haul, still offer an average ~10% gain per year. And if for some reason, VOO never recovers.. (i.e. top 500 US companies go bankrupt) then I would have a lot more to worry about than losing money in the stock market anyway!
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Righty
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Righty » Wed Sep 20, 2017 9:15 am

In a past life I worked in an occupation that gave me insight into a wide variety of clients' investment accounts - many of the investors who were doing very well were invested in individual stocks. The wrinkle - these people are not trying to find the next "hot stock" or chasing returns. They are buying $100-$500 lots of diversified blue-chip companies paying above average dividends. Doing this for a period of 30 - 40 years resulted in pretty competitive returns and a portfolio that created a decent income stream. You could almost say it was a Bogle-ish approach of sorts.

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Artful Dodger
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Artful Dodger » Wed Sep 20, 2017 1:53 pm

I used to buy a lot of individual stocks in the 90s and early part of the 2000s. I was beating the S&P, but I got clobbered pretty bad on two bank stocks when the 2008 crash came. My other stuff went down, but so did most funds so I wouldn't have been any different, but for my shares of Countrywide and Indymac. I came to believe what you read in Bogles' book about fund managers - they may have an up year or two, but over time it's hard to beat the average, and when you take fund expenses into account, you aren't beating the average.

That being said, I set up a spousal IRA for my wife in the early 2000s, and she was for a time in a stock picking club. She took large positions in Apple and Facebook early on, and is at a 250% gain over the past 4 or 5 years. I'd like to say it was luck. She has taken positions in other stocks that haven't done as well, but they were smaller bets, and taken as a whole she's still beat the market handily.

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Re: Any "average Joe" here actually make out well with individual stocks?

Post by deltaneutral83 » Wed Sep 20, 2017 2:26 pm

Righty wrote:
Wed Sep 20, 2017 9:15 am
In a past life I worked in an occupation that gave me insight into a wide variety of clients' investment accounts - many of the investors who were doing very well were invested in individual stocks. The wrinkle - these people are not trying to find the next "hot stock" or chasing returns. They are buying $100-$500 lots of diversified blue-chip companies paying above average dividends. Doing this for a period of 30 - 40 years resulted in pretty competitive returns and a portfolio that created a decent income stream. You could almost say it was a Bogle-ish approach of sorts.
I don't really see what the difference between this strategy and buying VOO/SPY/IVV is? I'm happy to pay 4 basis points for someone to do this for me and automatically reinvest the divs. Interesting you mentioned 40 years because that's how old Bogle's first 500 Index is. It has returned CAGR 11.5% so take maybe 50 bps (to be conservative) out for fees and call it 11% CAGR. Those guys you reference clearing 11% CAGR the last 40 years on their large cap picks?

Swansea
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Swansea » Wed Sep 20, 2017 3:11 pm

I owned a few individual stocks in my IRA for ten years plus. When I evaluated the performance, it pretty much matched the S&P 500. So I moved to the Vanguard Total Stock Market to spread out the risk. But I learned a lot and had some fun doing it.

sidneyinplanning
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by sidneyinplanning » Wed Sep 20, 2017 3:28 pm

Short run price movement is so difficult to predict. I found picking stock is only 1/3 of the story. Learning when to sell, hold and what to do after selling is even harder. Just like other average Joes, my success rate in picking stock is just average; so 98% of the asset is in CD, cash, ETF and mutual funds. Stock picking is now more entertainment and happy to see a price plunge of a company for some bad events.

Righty
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Righty » Wed Sep 20, 2017 3:29 pm

deltaneutral83 wrote:
Wed Sep 20, 2017 2:26 pm
Righty wrote:
Wed Sep 20, 2017 9:15 am
In a past life I worked in an occupation that gave me insight into a wide variety of clients' investment accounts - many of the investors who were doing very well were invested in individual stocks. The wrinkle - these people are not trying to find the next "hot stock" or chasing returns. They are buying $100-$500 lots of diversified blue-chip companies paying above average dividends. Doing this for a period of 30 - 40 years resulted in pretty competitive returns and a portfolio that created a decent income stream. You could almost say it was a Bogle-ish approach of sorts.
I don't really see what the difference between this strategy and buying VOO/SPY/IVV is? I'm happy to pay 4 basis points for someone to do this for me and automatically reinvest the divs. Interesting you mentioned 40 years because that's how old Bogle's first 500 Index is. It has returned CAGR 11.5% so take maybe 50 bps (to be conservative) out for fees and call it 11% CAGR. Those guys you reference clearing 11% CAGR the last 40 years on their large cap picks?
There is not a huge difference in outcomes vs. and index - I was just answering the OP's question. Not every approach to owning individual stocks is the same and there is a conservative approach with would still resonate with many on this forum.

Whether or not it clears an 11% CAGR - I couldn't tell you and most people like this aren't that concerned with 9% or 10% or 11% or 12%. They were building up a nice nest egg that was kicking off a good income stream for them in retirement.

best2u
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by best2u » Wed Sep 20, 2017 3:54 pm

As I closed in on retirement age I began to think about the need for retirement income. I read about the dividend aristocrats and wanted to see if it was worth the effort and was something I should consider. I purchased two stocks in 2010, both of which I still own. They have both appreciated in value and throw off good dividends. Either just my luck or I didn't get the best strategy, I think index funds have been the better bet over the same period. I will be selling these stocks after retirement when it could be more advantageous tax wise.

itstoomuch
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by itstoomuch » Wed Sep 20, 2017 4:37 pm

We have a pseudo fixed Income in SS, pension, deferred GLWB annuities which is enough and allows me to be more aggressive (kitces, Bernstein, others) with our discretionary account which grown substantially more than indexes since 2012. Held large amount of cash since later part of 2016 which we used to finance a downsize home. Our individual holdings is now constrained because our total amount is smaller. How I invest is now different. discretionary account ~ 6% of total. We do OK in individual stocks but there are substantial risks that I take. I would not say we are "doing well" in individual stocks.
Ymmv
Last edited by itstoomuch on Wed Sep 20, 2017 4:43 pm, edited 1 time in total.
Rev90517; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax 25%. Early SS. FundRatio (FR) >1.1 67/70yo

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Toons
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Toons » Wed Sep 20, 2017 4:40 pm

I am pleased with the ROI of my holdings : Coke,Walmart,Mcdonalds.
25 years .
:happy
"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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KlingKlang
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by KlingKlang » Wed Sep 20, 2017 5:08 pm

Losers:

Cedar Fair LP(FUN) 300 shares
Purchased 12/99 - 7/06
Sold 12/09
Loss $2900
Sold when the news turned bad, plus filling out the tax forms for this MLP by hand just got to be too painful.

General Motors (GM) 100 shares
Purchased 12/99
Sold 10/06
Loss $3900
My "Dogs of the DOW" pick.

General Electric (GE) 300 shares
Purchased 05/00 - 06/02
Still owned $4400 unrealized loss
"The one stock that everyone should own!"

Winner:

RPM (RPM) 200 shares
Purchased 09/01
Still owned $8800 unrealized gain plus dividend increases each year
My dividend achiever pick.

MP173
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by MP173 » Wed Sep 20, 2017 5:55 pm

Lets see, here are a couple of examples of individual stocks I have purchased:

Equifax...down from $140 per share to $96 in about 10 days.

Aashe Transportation...purchased at $7.50 per share and it cashed out at $0.0. Rode that trucker to bankruptcy in the late 1990s.

Rite Aid...purchased at $4.50 per share in about 2001 and it is now $2.44 per share. My friend convinced me it was a turn around story. It was, only it has turned the wrong way!

Pfizer - began purchasing in 2003 at $31.00 per share and it currently is in the $36.00 range.

I could throw in a couple more examples but you should get the message.

So, why am I still in individual stocks? That is a fair question. At this time I only wish to show you what can go wrong.

Ed

Monster99
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Monster99 » Wed Sep 20, 2017 7:30 pm

My swan-song was Lucent Tech in 1998 - bought shares at $30 and saw them soar into the low $80's. In 2000, they started downward and I foolishly justified adding to positions to profit more. Ended at ~$7. Wrote that loss off for over 5 years. During this time my DW invested in VBINX and just ignored it - She won that argument and I gave up trying to "Beat the Market".

RAchip
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by RAchip » Wed Sep 20, 2017 8:12 pm

A portfolio of individual stocks has worked well for me. Buying individual blue chip dividend stocks and never selling them is a proven winning strategy in my opinion.

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badbreath
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by badbreath » Wed Sep 20, 2017 9:34 pm

The company I work for offers a DRIP plan to buy their stock. 25 years ago the stock in the $30s so I thought lets put $50 a month into this maybe for kids collage, vacation. I keep on investing and now it's about 330 shares and the stock now is in the $180s. It's a good chunk of change but still only about 3% of the portfolio.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

jrtexas
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by jrtexas » Wed Sep 20, 2017 9:55 pm

Up over 10%. AAPL,T,JNJ,PG,PM. I dont invest if they don't pay a dividend.

Boglegrappler
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Boglegrappler » Wed Sep 20, 2017 10:08 pm

We’ve done fairly well with individual stocks, but we own well over 30. Plus we aren’t average joes in terms of experience, having worked in the financial businesss for a long time, and seen a lot. We’re a bit ahead of the sp500 over last ten years, but it varies a /bit depending on what quarter yo u look at. Commissions are $8 a trade, although we’ve been essentially buy and hold. I do like the idea that I cHoose my own gains/losses schedule, and can’t get stuck with gains during a sell -off. [Weve got substantial positions in sp500 index funds too, just as a benchmark.]

One thing that stands out in the OP is that no company earning 20% on equity is going to sell near or below book value unless it’s growth prospects are literally negative (dying industries) or it leverage is far too high. The old metrics used to pick stocks post WWII aren’t going to be that useful in today’s info driven world, with very few “secrets” waiting to be discovered. The old Bem Graham school of investing is what led Buffett to Berkshire Hathaway, which was not a good investment for him based on what it was and became when he bought it. It looked cheap, but it wasn’t.

Caduceus
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by Caduceus » Thu Sep 21, 2017 4:42 am

It wouldn't be surprising to find folks who've done well the last few years through stock-picking. Anyone who's bought into the "growth" stories - companies like Amazon, Netflix, Tesla - would have had many chances to outperform the U.S. stock index. Everyone's a stock-picking genius when the broad market rises. The question is who's left behind when the inevitable stock dip comes.

Stock prices can't outrun earnings and fundamentals forever. At some point, the music will stop.

DeepEddy
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Re: Any "average Joe" here actually make out well with individual stocks?

Post by DeepEddy » Thu Sep 21, 2017 8:17 am

I have run two Schwab accounts for the last three years - one for myself that is purely dedicated to swing trading and one for my young son which has a diversified portfolio of individual stocks.

On the swing trading account, I look for established companies with low risk of bankruptcy where the stock has historically fluctuated within a certain window. I track them carefully and buy when I see dips. I automatically sell if there is 15% gain or 15% loss. I sell a lot of gains before 15%, but usually keep the losers until they hit the 15% threshold. I concentrate on energy stocks and companies that have a lot of physical assets - I stay away from technology and all the high flier/high return players.

I have beaten the portfolio account by small percentages two out of three years.

Been stung a couple of times (BP), but the automatic sell keeps the carnage to a minimum. Also have sold a few right before big gains - but that's ok. If you make 15% and still feel like you've lost, that's your problem.

Currently in CRZO and down 6%, we'll see where it goes.

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