Investing in stocks in the current market conditions: how and when would you do it?

[k1982]

[Title was "how many Bogleheads cheating..". Thread merged, see below --admin LadyGeek]

..on buying individual stocks right now?

[rkhusky]

Why would anyone do that when it is so easy to buy TSM and/or TISM?

[retired@50]

Not me. I've been simplifying my portfolio, not making things worse.

Regards,

[atdharris]

I admit, I bought some Amazon a few weeks ago at $1675. It has paid off well. Otherwise, I added to VWO and TLH'd VOO into VTI

[k1982]

during this turmoil i actually just went all in with VFIAX @ Vanguard
(i use to have 3 -5 fund portfolio and i didn't like the mess so i cleaned it up when all this hit us a month ago and i feel more at ease now)

however, i been very tempted to get ...greedy ...on names like Boeing or Norwegian Cruise line
cannot seem to pull the trigger

p.s. afraid of the consequences

[renue74]

OK...I'll bite.

2 weeks ago, I bought Carnival at $16.25 on a Friday morning. (200 shares)

I was twitchy all day and kept thinking about it.....then I sold it at $17.25 that same Friday afternoon.

Caught my hand slapped by Vanguard for "free loading," my stock trading that day and on a 90 day probation where I have have to have $ in my settlement account to buy.

It's OK...I've rebalanced and added new $ to my TSM fund multiple times since then.

[JoMoney]

There's no rule against it. I've just done it before, and have no desire to get back into that.

[retired@50]

OK...I'll bite.

2 weeks ago, I bought Carnival at $16.25 on a Friday morning. (200 shares)

I was twitchy all day and kept thinking about it.....then I sold it at $17.25 that same Friday afternoon.

Caught my hand slapped by Vanguard for "free loading," my stock trading that day and on a 90 day probation where I have have to have $ in my settlement account to buy.

It's OK...I've rebalanced and added new $ to my TSM fund multiple times since then.

Well, I guess that's one way to make $200.

Regards,

[k1982]

huh? prohibited by Vanguard for trading stocks
i thought you could trade stocks all day long on there

i know mutual fund trades have restrictions

[anil686]

I bought a share of Brk B to get the NFM discount during the annual meeting +/- Geico discount if it is better than our current priced policy

Bought Carnival 100 shares at $12.50 for the $100 credit. We like Princess cruises and - at the time - had a high dividend yield. Not so much any more...

[retired@50]

huh? prohibited by Vanguard for trading stocks
i thought you could trade stocks all day long on there

i know mutual fund trades have restrictions

I think the problem is that the buyer (renue74) didn't have the $3,250 (16.25 * 200) in their settlement account. Free-rider.

Regards,

[k1982]

oh i get it now!
thanks for the clear up

couldn't Vanguard just sell your mutual funds if the money wasn't in your money market fund? or does it just cancel the stock trade

just curious. i never bought stocks at Vanguard.
just index funds

[sometimesinvestor]

Cramer who haS actually praised index funds argues that quality stocks defined as those with strong balance sheets and decent prospects are better investments than index funds since the latter contains many stocks that might do badly in the current and near future. For examples would you want to invest in cruise lines. I am currently in the middle by making additional investments in sector spdrs. i.e i am investing fairly diversified but avoiding certain sectors.Energy, for example, is not on my buy list though if i chose to buy individual stocks I would rather buy Exxon than Occidental. Maybe I am just chicken'
I am sure there are bargains in some downtrodden stocks but like most on this site I am unwilling or unable to do in depth research

[retired@50]

oh i get it now!
thanks for the clear up

couldn't Vanguard just sell your mutual funds if the money wasn't in your money market fund? or does it just cancel the stock trade

just curious. i never bought stocks at Vanguard.
just index funds

I'm not sure how they would handle the situation, since I don't engage in this sort of behavior. I think you have one day to add money to the settlement account, but no more. I suppose you might be able to read up on the Vanguard trading policy if you're truly curious.

https://investor.vanguard.com/investing ... ing/trades

Regards,

[Dottie57]

Why would anyone do that when it is so easy to buy TSM and/or TISM?

+1

[k1982]

oh wow Carnival does look very appetizing ...

until i saw the dividend yield at almost 23% huh?? sounds like they seem desperate or about to bankrupt

then again i don't know what i'm talking about . cause i don't do individual stocks. but something seems off...

[k1982]

but seriously can anyone explain such a huge dividend when the stock just went down 80% +

[renue74]

huh? prohibited by Vanguard for trading stocks
i thought you could trade stocks all day long on there

i know mutual fund trades have restrictions

"free-loading" is when you buy a stock and don't have money in your settlement account....but sell the stock before your money arrives in the account to cover the stock buy.

By the way, Carnival cut their dividends to 0. I think they just announced it. Plus, they are exercising some more credit to keep afloat. (pun intended)

[dmcmahon]

20 years on the wagon, and I fell off yesterday. Back to step 1 of 12!

[k1982]

Norwegian Cruise Line has $0 dividend with similar disasters

[watchnerd]

I'm always buying a single company individual stock via my ESPP.

Cannot pass up 10% discount.

[ARoseByAnyOtherName]

oh wow Carnival does look very appetizing ...

until i saw the dividend yield at almost 23% huh?? sounds like they seem desperate or about to bankrupt

then again i don't know what i'm talking about . cause i don't do individual stocks. but something seems off...

Appetizing? Between now and the heat death of the universe approximately zero people will want to get on board a cruise ship. Not an appetizing business in my book.

[Rosencrantz1]

I've bought some individual stocks near their lows over the past couple of weeks. I've also bought quite a lot of VOO too.

[yangtui]

I have zero interest in owning individual stocks.

[Bama12]

I'm not cheating, I always buy individual stock. I also buy index funds.

Why wouldn't you buy good individual stocks? Remember you get the junk stocks too when you buy most index funds.

I have made a ton the last month buying and selling good stocks.

If you don't understand what you are doing just buy index and spend time learning.

[MarkRoulo]

but seriously can anyone explain such a huge dividend when the stock just went down 80% +

Carnival paid out a $2/share dividend LAST year on earnings of a bit more than $4/share.

And had a share price around $50/share. This works out to about a 4% dividend.

Today the stock trades under $10/share because folks are worried that the company is going to go bankrupt and even if it is re-organized the current shareholders will get zero-d out.

Carnival is NOT committing to pay out a $2/share dividend this upcoming year. I would be very surprised if they do. They'd probably like last year's dividends back if they could arrange that, but they can't.

[Cubicle]

Based on the thread title, I was expecting a very different conversation. I'm a little disappointed to be honest...

[02nz]

Cramer who haS actually praised index funds argues that quality stocks defined as those with strong balance sheets and decent prospects are better investments than index funds since the latter contains many stocks that might do badly in the current and near future. For examples would you want to invest in cruise lines. I am currently in the middle by making additional investments in sector spdrs. i.e i am investing fairly diversified but avoiding certain sectors.Energy, for example, is not on my buy list though if i chose to buy individual stocks I would rather buy Exxon than Occidental. Maybe I am just chicken'
I am sure there are bargains in some downtrodden stocks but like most on this site I am unwilling or unable to do in depth research

Of course Microsoft looks like a better investment than Royal Caribbean, but Cramer and you aren't the only ones who have this insight. The market has priced that in. The market can be wrong, of course. But those who've tried to improve on index funds by weeding out "bad" companies have generally managed to underperform the index.

[watchnerd]

Based on the thread title, I was expecting a very different conversation. I'm a little disappointed to be honest...

Quarantine opportunity costs.

[BogleBoogie]

..on buying individual stocks right now?

I am. And I never do.

[YRT70]

[Thread merged into here, see below. --admin LadyGeek]

Given the current volatile market conditions, suppose you have 200k in cash that you'd (eventually) would want to invest in stocks, how and when would you do it?

I've read that lump sum tends to beat DCA, but the exceptions are when stock prices are falling, like might be the case now.
Based on that I think DCA might be the way to go. But I don't know when DCA should start, at what interval and for how long it should last.

Of course I understand that no one has a crystal ball but I expect there might be some rational advice in regard to this nonetheless.

And are there any more objective ways (/indicators) to determine that we are reaching the bottom?

If anyone has found some good articles on these questions I'd like to read that.

[UpperNwGuy]

There's another active thread on here about investments you would never touch with a ten foot pole. Individual stocks are on my list of investments i would never touch with a ten foot pole.

I realize that some folk on here dabble in individual stocks, but.... cruise lines during a pandemic????? Are you guys nuts?

[theorist]

Here’s one of many more or less equally reasonable recent short articles about your question:

https://awealthofcommonsense.com/2020/0 ... ket-crash/

The long and short of it is, DCA for psychological comfort if you want to, but the main point is to get the money invested. Trying to time the market bottom is a losing proposition. You could do 25% every two weeks, for instance, and probably be just fine. A priori no one can say whether that will turn out better or worse than investing it all tomorrow, or all in one month.

Good luck!

[lgs88]

YRT70,

Remember that this is as much an emotional management decision as a financial management decision. Think about regret minimization.

I had a lump sum some multiple of the one you described. I knew that lump sum beat DCA about 2/3s of the time, and I wanted to make the financially optimal decision. So I invested my lump sum -- on February 18th!

Were I you, I'd DCA. Were I me six weeks ago, I'd DCA too!

lgs88

[Slowtraveler]

Personally, I'd throw it all in now, price is fair enough. If I were so worried, I'd change my asset allocation.

To answer your question directly: If I had to DCA... At least 100k in the morning and the other 100k on a preset date or series of dates. Ie- 100k now, 50k on May 1st, 50k on June 1st.

[Iridium]

oh wow Carnival does look very appetizing ...

until i saw the dividend yield at almost 23% huh?? sounds like they seem desperate or about to bankrupt

then again i don't know what i'm talking about . cause i don't do individual stocks. but something seems off...

Appetizing? Between now and the heat death of the universe approximately zero people will want to get on board a cruise ship. Not an appetizing business in my book.

Not to drag this thread too far off topic, but I am still interested in taking a cruise once this all blows over. I am very concerned about all those still stuck on cruise ships and hope it gets resolved soon. However, I'm not going to let a once a century pandemic dictate how I vacation. Not like I expect one to pop up every year. I suppose I could be part of the 'approximately zero', but there are vacation spots that have gotten horrible press that have recovered relatively quickly. The ability to float away during a civil disturbance or natural disaster makes up for any incremental pandemic risk.

To be clear: while I fully expect cruising to recover, the companies themselves may not survive and maybe forced to wither go through bankruptcy or have their assets bought at heavy discount by outside firms.

[Briscoe]

This is such a hard question to answer but personally, I would DCA it in weekly over about 6m - 12m.

[StormShadow]

Given the current volatile market conditions, suppose you have 200k in cash that you'd (eventually) would want to invest in stocks, how and when would you do it?

Normally I would lump sum according to my asset allocation and be done with it.

But given how volatile the stock market is at present, I wouldn't fault you for DCA. Who knows when it'll settle down... a good guess would be some point after infection/death rates settle down and stay-at-home/quarantine measures are relaxed.

That all said, stocks look pretty darn cheap right now. Assuming you are saving for retirement many years in the future, I think now is already a reasonable time to start DCA if not a straight up lump sum.

[YRT70]

Here’s one of many more or less equally reasonable recent short articles about your question:

https://awealthofcommonsense.com/2020/0 ... ket-crash/

The long and short of it is, DCA for psychological comfort if you want to, but the main point is to get the money invested. Trying to time the market bottom is a losing proposition. You could do 25% every two weeks, for instance, and probably be just fine. A priori no one can say whether that will turn out better or worse than investing it all tomorrow, or all in one month.

Good luck!

Very useful article. Thanks for sharing and the advice.

YRT70,

Remember that this is as much an emotional management decision as a financial management decision. Think about regret minimization.

I had a lump sum some multiple of the one you described. I knew that lump sum beat DCA about 2/3s of the time, and I wanted to make the financially optimal decision. So I invested my lump sum -- on February 18th!

Were I you, I'd DCA. Were I me six weeks ago, I'd DCA too!

lgs88

Thanks. Sorry to hear that. I think similarly now, I try to minimise regret.

Personally, I'd throw it all in now, price is fair enough. If I were so worried, I'd change my asset allocation.

To answer your question directly: If I had to DCA... At least 100k in the morning and the other 100k on a preset date or series of dates. Ie- 100k now, 50k on May 1st, 50k on June 1st.

Thanks. I'm currently considering DCA on a fixed schedule or playing it by ear.

[YRT70]

This is such a hard question to answer but personally, I would DCA it in weekly over about 6m - 12m.

Good advice imo. This is my current intention (DCA over about 6M).

[YRT70]

Given the current volatile market conditions, suppose you have 200k in cash that you'd (eventually) would want to invest in stocks, how and when would you do it?

Normally I would lump sum according to my asset allocation and be done with it.

But given how volatile the stock market is at present, I wouldn't fault you for DCA. Who knows when it'll settle down... a good guess would be some point after infection/death rates settle down and stay-at-home/quarantine measures are relaxed.

That all said, stocks look pretty darn cheap right now. Assuming you are saving for retirement many years in the future, I think now is already a reasonable time to start DCA if not a straight up lump sum.

Thanks for the advice. I'm an early retiree basically. This is why I'm more risk adverse.

[Bama12]

There's another active thread on here about investments you would never touch with a ten foot pole. Individual stocks are on my list of investments i would never touch with a ten foot pole.

I realize that some folk on here dabble in individual stocks, but.... cruise lines during a pandemic????? Are you guys nuts?

Cruise Lines will be on my buying list when they get to about 1.00 and the pandemic is going way down. Same with Air Lines.

[Steve Reading]

I had a lump sum some multiple of the one you described. I knew that lump sum beat DCA about 2/3s of the time, and I wanted to make the financially optimal decision. So I invested my lump sum -- on February 18th!

Were I you, I'd DCA. Were I me six weeks ago, I'd DCA too!

Humans love to learn and make conclusions based on the results of their actions. Unfortunately, in the world of probability, that’s bad learning some times. You could make a bad decision that turned out ok (reinforcing bad behavior) OR make a good decision that turned out poorly (making you shy away from good behavior).

You made the correct decision. You chose a strategy that stacked the odds in your favor. If you keep using behavior that stacks odds in your favor (lump-sum, keeping high deductibles, not taking out electronics insurance, buying equities, etc) over a lifetime, results will show.

[justsomeguy2018]

I'm always buying a single company individual stock via my ESPP.

Cannot pass up 10% discount.

Curious on your thoughts - I get a 100% employer match on my first $800 of stock buys every year. Have to hold for 5 years though unless you get canned or leave the company. Is that a good deal?

[watchnerd]

Curious on your thoughts - I get a 100% employer match on my first $800 of stock buys every year. Have to hold for 5 years though unless you get canned or leave the company. Is that a good deal?

It's only $800.

$160/year.

$3.46/week.

Not something I would get excited about or want to have locked in for 5 years.

[sterjs]

Curious on your thoughts - I get a 100% employer match on my first $800 of stock buys every year. Have to hold for 5 years though unless you get canned or leave the company. Is that a good deal?

Absolutely. Starting with 100% profit on an investment is a good deal. The stock has to drop 50% over five years before your principal is at risk.

[ARoseByAnyOtherName]

I'm always buying a single company individual stock via my ESPP.

Cannot pass up 10% discount.

Curious on your thoughts - I get a 100% employer match on my first $800 of stock buys every year. Have to hold for 5 years though unless you get canned or leave the company. Is that a good deal?

The match amount is so low that it’s a complete waste of time, and the 5 year holding period is really way too long. It’s a bad deal.

Other ESPP programs I am familiar with are structured much differently.

[StevieG72]

Nope, peeked at Delta since Warren Buffett bought a boatload. I will not buy, my simple portfolio has served me well.

[JonnyDVM]

I’m buying some. I also bought a chunk of small cap value index yesterday. Are you going to make a citizens arrest or just report me to the three fund police ?

[bearcub]

I bought some KHC a few weeks ago. No logical reason. Maybe cause I always liked the underdog. Very beat up stock. If it comes back great, if not well. Not a big investment. Buffett will either have the last laugh or I think he will be ok if it flops.