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

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Emily1980
Posts: 132
Joined: Wed Jan 27, 2016 1:48 pm

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

Post by Emily1980 » Wed Sep 27, 2017 12:31 am

My boyfriend in college was a finance major. I had no interest in my finances at all, let alone in the field of finance back then. He was pretty arrogant. He kept saying that Warren Buffet was over the hill. This was before the tech bubble burst, of course. I was nineteen years old when his parents handed over their entire net worth to him to manage. He invested it all in Lucent Technology, which another poster in this thread mentioned, and rode it all the way down to 25 cents a share his roommates said. I'd broken up with him while he was still up 15 percent for the year. I couldn't stand his constant crowing. I don't think he missed me one iota, but I'm sure he still misses the money to this day.

Whenever I get the urge to buy individual stocks, I think of my college boyfriend.

Though, I did buy AMLP (the double-taxed MLP ETF) in early march of last year and hold it for one year. I thought I was pretty smart making almost 30 percent until I realized that I could have made the same amount with less risk by simply investing in the small cap value index fund I already own. I invested less than 2 percent of our portfolio in AMLP.

I'm considering buying Equifax when I rebalance our portfolio in Nov and holding it for like 5 minutes (a few months) to see if I can make a quick buck. I wouldn't put more than 1 percent of our portfolio in it. The other stock I'm looking at is Fresh Del Monte Produce. I have no opinion on this stock, actually. I scanned the top 25 stocks listed on Morningstar's web page for DFA's small value fund (DISVX edit: DFSVX) that I have no access to. FDP was on the list and one of the only stocks with a negative return year to date. Other than that, the company seems to have a low debt ratio and I read some press releases explaining the missed earnings as a function of some temporary setback other than a systemic problem with the company. I'd hold that for ideally no longer than two years. Preferably one or less if it turned around faster.

I dunno. I may or may not do anything. If I do, it won't be with a big enough portion of our portfolio to make a difference. So I'm not sure why I bother...
Last edited by Emily1980 on Wed Sep 27, 2017 10:04 am, edited 1 time in total.

Grt2bOutdoors
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Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

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

Post by Grt2bOutdoors » Wed Sep 27, 2017 7:45 am

JaneyLH wrote:
Tue Sep 26, 2017 11:18 pm
There is a big benefit to people who own a minimum of 100 shares of stock in the cruise ship lines and then sign up for a cruise on that line. I've owned 100 shares of Carnival for many years and have gotten cabin credits on a number of cruises. I thought, why not sign up for RCL, since Royal Caribbean offers a similar benefit? In about a year, RCL stock has gone from 68 (when I purchased it) to 118. Carnival has gone from 36 to 65. Yes, I think I have made out well with these individual stocks. Not to mention the cabin credits I have earned! But I have no interest in buying any other individual stocks.
The Wm. Wrigley Jr. Company turned out to be an excellent investment. Not only did they increase the dividend like clockwork with subsequent appreciation in stock value, but every year at Christmas time, they would mail each registered shareholder a present consisting of 20 packs of one of their iconic brands. Talk about shareholder appreciation. Unfortunately, that all came to an end when Mars bought them out for $80 as a share in cash. :(
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
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Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

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

Post by Grt2bOutdoors » Wed Sep 27, 2017 7:47 am

Emily1980 wrote:
Wed Sep 27, 2017 12:31 am

I dunno. I may or may not do anything. If I do, it won't be with a big enough portion of our portfolio to make a difference. So I'm not sure why I bother...
Entertainment value. Hold it long enough and 1% could very well turn out to be something meaningful, you never know with lottery tickets. :wink:
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Runalong
Posts: 138
Joined: Mon Jun 13, 2011 5:22 pm

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

Post by Runalong » Thu Sep 28, 2017 5:04 pm

I've done well, but I don't recommend it. Knowing what to buy is the easy part, knowing when to sell is hard. Emotions are the really hard part - any system will go through bad spells- does that mean your system isn't working anymore (not impossible as things do change) or is it just a temporary deviation (usually is) and you should stick with it? If you're playing with pretend money, it's easy, if your personal financial future is on the line, it's hard not to be swayed by the feelings of the moment. So I recommend the Bogle philosophy to anyone who asks me.

I own about 40 individual stocks (less than half of my portfolio). I buy them all in the same $ amount, high enough to somewhat minimize trading costs as my average turnover is approx 20 weeks (5 months). Since knowing when to sell is the hardest part I simply sell the two lowest rated (according to my system) stocks each week and replace them with the two highest on my watch list. My ratings leave room for subjectivity so I look at things like industry diversification, etc when trying to decide which 2 of the 5-10 highest (virtually equal) rated stocks to buy.

I track my sells for 3-4 months after I sell them and they generally don't do as well as my holdings but I make plenty of mistakes. All in all my picks beat VTI about 55% of the time, but my winners gain more than my losers lose.

It's fairly time consuming but small gains are multiplied by the power of compounding and I was able to retire early (and comfortably by my simple standards - we are quite middle middle class but we are preparing to take our third trip overseas this year - 5 weeks each in NZ and then in Europe and now 2 in Costa Rica. 15 years ago my total retirement savings were measured in 5 figures). I wouldn't do it if I didn't enjoy it, it's fun to look at the portfolio at the end of the day and see if I "won". Some day I'll just put this money on auto-pilot but not quite yet.

I am gradually transitioning to a more conservative portfolio, more bonds, etc and less "risky" stocks. In addition to those 40 I have a few long-term hold stocks (AAPL, FB, COST, and until recently AMZN and I am slowly adding to that part of my portfolio some stocks that are held by both VIG and VDC - ADM so far).

My system is quantitative, only occasionally do I play a hunch. I had a Houston bank (GNBC) on my watch list (not in the top 10 though) and bought it right after the hurricane since I knew a lot of folks would need loans, etc. It's up 15% since. But in general my intuitions are about as good (bad) as anyone else's.

I tweak my system about once a year so we'll see what happens next bear market, though, as I said, my overall portfolio is a lot more conservative than it used to be and gradually becoming even more so.

youngin87
Posts: 39
Joined: Sun Feb 19, 2017 12:25 am

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

Post by youngin87 » Thu Sep 28, 2017 10:38 pm

Runalong wrote:
Thu Sep 28, 2017 5:04 pm
I've done well, but I don't recommend it. Knowing what to buy is the easy part, knowing when to sell is hard. Emotions are the really hard part - any system will go through bad spells- does that mean your system isn't working anymore (not impossible as things do change) or is it just a temporary deviation (usually is) and you should stick with it?
Very true. Apple dropped to 91 in 2016?? Easy buy. Nintendo is about to release its greatest gaming system since the Wii? Easy buy. Synchrony Bank dropped to 28 and Buffet recently bought it? Easy buy.

But how long do I hold Apple? Until it reaches a new high or until I retire? Do I sell Nintendo now or wait until after Black Friday? Synchrony Bank hold 1 or 10 years?

monsterid
Posts: 132
Joined: Sat Dec 31, 2016 7:10 pm

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

Post by monsterid » Thu Sep 28, 2017 10:48 pm

I hold about 20% of my portfolio in individual stocks because it keeps me interested and I enjoy it. I have a background in finance, so I guess I'm suppose to be good at it. Some years I underperform, some I outperform.

YTD I'm up 42.4% across my portfolio with the 80% in passive ETFs up ~14% (the market). So I've really killed it thus far on individual stocks. I'm usually buying small cap stocks which would go against much of the very good advice on this forum. But hey it keeps me interested and is almost sort of a hobby.

Baker1357
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Joined: Fri Sep 29, 2017 5:07 am

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

Post by Baker1357 » Fri Sep 29, 2017 5:17 am

Very average joe here, have a trading account for 24 years now, separate from my rrsp and lira account, tax-deferred accounts in Canada, average return for that period is just under 19%. Some winners, some losers, helped me learn a lot. Semi-retired now, part-timer, but this account plays no real part of my retirement income.

Grt2bOutdoors
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Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

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

Post by Grt2bOutdoors » Fri Sep 29, 2017 11:40 am

youngin87 wrote:
Thu Sep 28, 2017 10:38 pm
Runalong wrote:
Thu Sep 28, 2017 5:04 pm
I've done well, but I don't recommend it. Knowing what to buy is the easy part, knowing when to sell is hard. Emotions are the really hard part - any system will go through bad spells- does that mean your system isn't working anymore (not impossible as things do change) or is it just a temporary deviation (usually is) and you should stick with it?
Very true. Apple dropped to 91 in 2016?? Easy buy. Nintendo is about to release its greatest gaming system since the Wii? Easy buy. Synchrony Bank dropped to 28 and Buffet recently bought it? Easy buy.

But how long do I hold Apple? Until it reaches a new high or until I retire? Do I sell Nintendo now or wait until after Black Friday? Synchrony Bank hold 1 or 10 years?
Synchrony Bank was a GE spin-off. Easy buy because some buys it? :oops: You hold it forever if you believe in its underlying business and who the ultimate customers are. If you don't know, then don't buy. I also bought, but I bought it via my investment in Total Stock Market index - as you say, easy buy. :)
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Garthilk
Posts: 50
Joined: Wed Oct 09, 2013 10:59 pm

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

Post by Garthilk » Fri Sep 29, 2017 5:58 pm

About 40% of my portfolio is in an after tax account which I select individual stocks. The focus is on dividend growth stocks, with occasional off strategy purchases. Examples, of doing well, would be buying BAC starting at 8 with Warren and averaging down to 5. Same for C.

Buying dividend growth stocks where 5 and 10 year average dividend yield is at all time highs, when the PE is below the 5 and 10 year averages and in which earnings growth is still growing. Ensuring that the dividend growth rate is consistent and not lumpy. Such as buying KO whenever the yield is 3.25 and higher. Or MCD any time its close 3.6%, etc. There at least a dozen stocks that I have sussed out the specific numbers on which I buy whenever they reach certain markers.

I'm forced to do a massive amount of after tax investing and I've adopted a dividend growth strategy with plans to live off the dividends.

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