Rethinking Individual Stocks

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michaelingp
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Re: Rethinking Individual Stocks

Post by michaelingp » Thu May 30, 2019 2:56 pm

DonCamillo wrote:
Thu May 30, 2019 1:20 pm

Actually, I was worried more about the Medicare MAGI than the taxes. When exceeding a threshold by a few dollars can mean paying an extra $200 plus a month increasing annually for the rest of your and your wife’s life, I wanted to avoid that. Compared to that, a few thousand dollars in extra taxes is just noise.
I was under the impression that the surcharge goes away when your income falls below the limit. I have found information on the web to that effect.

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DonCamillo
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Re: Rethinking Individual Stocks

Post by DonCamillo » Thu May 30, 2019 9:10 pm

michaelingp wrote:
Thu May 30, 2019 2:56 pm
DonCamillo wrote:
Thu May 30, 2019 1:20 pm

Actually, I was worried more about the Medicare MAGI than the taxes. When exceeding a threshold by a few dollars can mean paying an extra $200 plus a month increasing annually for the rest of your and your wife’s life, I wanted to avoid that. Compared to that, a few thousand dollars in extra taxes is just noise.
I was under the impression that the surcharge goes away when your income falls below the limit. I have found information on the web to that effect.
I know you can apply. But apparently the limit is frozen for ten year without adjustment for inflation in the hope of helping fund Medicare by pushing as many people as possible into paying extra. I am trying to avoid it as long as possible.
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Harry Livermore
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Re: Rethinking Individual Stocks

Post by Harry Livermore » Fri May 31, 2019 6:05 am

Don, you are on the Bogleheads forum. Almost everyone replying to your post will tell you that you would have been better off just in index funds.
I'm in a similar position, though I think about 20 years younger than you. I have a small portfolio (14) of individual stocks (many water utilities plus AFL, AOS, RPM, and a few others) purchased slowly over many years through company sponsored DRIPs. Many are 500% gainers or more. I was involved in an investment club in the early 1990s and selected many of my DRIPs via the NAIC's excellent tools and criteria. I began index investing at the same time, and the vast majority of our (wife and me) portfolio is in VG index funds, much of it in tax free or tax deferred accounts. I assume that my indexing has done slightly better over the years but I don't analyze my overall portfolio based on index fund versus stock. It seems as if the S&P has done over 500% for the same period.
I have kept the individual stocks because I still like them based on fundamentals, and they continue to perform well. I have also been eyeing the whole Medicare premium issue (I had to help my elderly mom work through Medicare) and it's more complicated than taxes, social security, insurance, and home ownership combined.
I agree to not let the tax tail wag the dog, but Don is right that a few dollars in extra income will penalize you many thousands of times over for many years in Medicare premiums. It's an absolute mess. Tax loss harvesting definitely can help. But ideally, the government would not participate in price discrimination and we would all feel free to spend the money we saved over the years.
Cheers

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Rager1
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Re: Rethinking Individual Stocks

Post by Rager1 » Fri May 31, 2019 6:31 am

Looking at the Medicare premiums in 2019, a married couple at the lowest possible rate will spend $3,252 for coverage in 2019. On the other hand, a married couple at the highest possible rate will spend $11,052 for premiums in 2019.

The difference is $7,800 in 2019. To me, you're doing a lot of work to get that savings.

I suspect you also enjoy the thrill of owning individual stocks. Index funds really are boring.

Ed

Patzer
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Re: Rethinking Individual Stocks

Post by Patzer » Fri May 31, 2019 7:24 am

A random basket of 50 stocks from the S&P 500 should perform the same as the S&P 500 over an infinite time horizon.
That said, it will have more volatility/risk, so it's risk adjusted return will be lower, and we don't have an infinite time horizon for things to balance out.

SCHB holds 2000 stocks and VTI holds 3800 stocks. There is virtually no difference in return or volatility between them. Diversification's benefits do have a limit. If you really did hold something like 400 individual stocks randomly picked from VTI without incurring additional transactions costs(i.e. a Merrill account with free trades), then you would probably effectively capture close to the full benefit of diversification for the US market.
In that case, you would probably outperform the market even on a risk adjusted basis by a few basis points, because of lack of fees, while also having some tax benefits.
The problem is of course, that rarely are people who ask about owning individual stocks buying 400 stocks, it is usually 15-25 stocks at the most, and in that case your risk adjusted return is much lower.

In addition to volatility and the associated risk adjusted return, there are 2 other big problem with individual stocks.

1. When someones individual stocks materially outperform the market and the person now thinks they are smarter than the market, instead of just lucky. That person then might put a larger and larger share of their portfolio into individual stocks, and experience far more volatility, which often leads to selling at the worst time. I have seen it with cryptocurrency and some popular stocks(TSLA) amongst my peer group.

With investing, we are our own worst enemy, and indexes are a really good way to protect ourselves from ourselves.

2. Researching, trading, and stressing about individual stocks is not free. Even if you manage to beat the market by 10-20 basis points (0.1-0.2%), how much time does it take to manage a basket of stocks, versus buying an index and going to the beach, and what is that time worth?

In Conclusion:
Individual stocks have a lot of hidden risks/costs.
Owning a few stocks you have a special relationship with may be okay, but I think they should never combine to be more than 10% of your portfolio.

Disclosure:
I own 2 individual stocks.
One is my employer and I plan to divest from it as soon as I can.
One is a stock I researched extensively and put 3.5% of my investable assets it. It's beating the market, but I think about that 3.5% more than the other 96.5% (time cost). I should be 100% indexes, but I actively traded for a decade and haven't completely beat those urges yet.

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vineviz
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Re: Rethinking Individual Stocks

Post by vineviz » Fri May 31, 2019 8:08 am

Patzer wrote:
Fri May 31, 2019 7:24 am
If you really did hold something like 400 individual stocks randomly picked from VTI without incurring additional transactions costs(i.e. a Merrill account with free trades), then you would probably effectively capture close to the full benefit of diversification for the US market.
In that case, you would probably outperform the market even on a risk adjusted basis by a few basis points, because of lack of fees, while also having some tax benefits.
There is a tiny subset of investors for whom there is another use case of individual stocks, namely investors who want to target a particular segment of equities for which there is no acceptable off-the-shelf index fund.

Example: I decided that allocating a portion of my US equites to utility stocks would improve my overall portfolio diversification.

There are about a dozen utility sector index funds but they all had some sort of drawback in my mind. The cheapest ones (e.g. VPU, FUTY, XLU) use market-cap weighting which would pull my portfolio towards large-caps more than I wanted. JHMU (JHancock Multifactor Utilities ETF) has a higher ER than I can justify. PSCU (Invesco S&P SmallCap Ult&Comnc Svc ETF) is both pricey and contains a lot of communications stocks I don't want. And so on.

So I currently allocate about 10% of my portfolio to a DIY index of mid-cap and small-cap utility stocks. Right now it's eleven stocks with market caps below $12 billion, equal-weighted at purchase, selected from the S&P Composite 1500 Value index. It's a low turnover approach that doesn't require much rebalancing: my average annual cost to manage it is about 4 bps, about half of the cheapest index fund. It's passive in implementation: if a stock is removed from the S&P Composite 1500 Value index (which is very infrequent) I sell it and replace it. Otherwise, I just monitor it in aggregate like any other index fund I own.

I can't imagine very many investors could justify the hassle of doing something like this.

The small number of investors who have portfolios of sufficient size, above-average investing discipline, and who jointly value diversification and low-cost might see some benefits to a DIY approach like this.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Patzer
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Re: Rethinking Individual Stocks

Post by Patzer » Fri May 31, 2019 9:04 am

vineviz wrote:
Fri May 31, 2019 8:08 am
There is a tiny subset of investors for whom there is another use case of individual stocks, namely investors who want to target a particular segment of equities for which there is no acceptable off-the-shelf index fund.

Example: I decided that allocating a portion of my US equites to utility stocks would improve my overall portfolio diversification.

There are about a dozen utility sector index funds but they all had some sort of drawback in my mind. The cheapest ones (e.g. VPU, FUTY, XLU) use market-cap weighting which would pull my portfolio towards large-caps more than I wanted. JHMU (JHancock Multifactor Utilities ETF) has a higher ER than I can justify. PSCU (Invesco S&P SmallCap Ult&Comnc Svc ETF) is both pricey and contains a lot of communications stocks I don't want. And so on.

So I currently allocate about 10% of my portfolio to a DIY index of mid-cap and small-cap utility stocks. Right now it's eleven stocks with market caps below $12 billion, equal-weighted at purchase, selected from the S&P Composite 1500 Value index. It's a low turnover approach that doesn't require much rebalancing: my average annual cost to manage it is about 4 bps, about half of the cheapest index fund. It's passive in implementation: if a stock is removed from the S&P Composite 1500 Value index (which is very infrequent) I sell it and replace it. Otherwise, I just monitor it in aggregate like any other index fund I own.

I can't imagine very many investors could justify the hassle of doing something like this.

The small number of investors who have portfolios of sufficient size, above-average investing discipline, and who jointly value diversification and low-cost might see some benefits to a DIY approach like this.
That seems like a good use case, and at the amounts you are holding, your risk is pretty limited.

I hold total market, and do not equal weight sectors, but I know some people like to be underweight their income source's sector, so they don't have double exposure to it (loss of income and loss of market value) if their industry takes a hit.

I am curious why you chose to be overweight in Utilities?

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vineviz
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Re: Rethinking Individual Stocks

Post by vineviz » Fri May 31, 2019 9:53 am

Patzer wrote:
Fri May 31, 2019 9:04 am
I am curious why you chose to be overweight in Utilities?
It's primarily about improving the diversification of the portfolio: utilities have the lowest correlation with the total market of any of the GICS sectors and (not coincidentally) improve factor diversification because of their high exposure to AQR's "Betting against Beta" factor.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

delamer
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Re: Rethinking Individual Stocks

Post by delamer » Fri May 31, 2019 11:14 am

DonCamillo wrote:
Thu May 30, 2019 9:10 pm
michaelingp wrote:
Thu May 30, 2019 2:56 pm
DonCamillo wrote:
Thu May 30, 2019 1:20 pm

Actually, I was worried more about the Medicare MAGI than the taxes. When exceeding a threshold by a few dollars can mean paying an extra $200 plus a month increasing annually for the rest of your and your wife’s life, I wanted to avoid that. Compared to that, a few thousand dollars in extra taxes is just noise.
I was under the impression that the surcharge goes away when your income falls below the limit. I have found information on the web to that effect.
I know you can apply. But apparently the limit is frozen for ten year without adjustment for inflation in the hope of helping fund Medicare by pushing as many people as possible into paying extra. I am trying to avoid it as long as possible.
Is this what you are referring to:

“The annual MAGI thresholds for IRMAA Medicare Premium surcharges are adjusted annually for inflation, although under the Affordable Care Act, the inflation adjustments to the MAGI thresholds were frozen in place from 2011 to 2019.”

From: https://www.kitces.com/blog/irmaa-medic ... hresholds/

Remember that the surcharge is based on your income from 2 years prior and so the amount of the surcharge can vary from year to year.

atdharris
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Re: Rethinking Individual Stocks

Post by atdharris » Fri May 31, 2019 11:41 am

I have 16 individual stocks that I inherited a few years ago that I want to pair down, but I also don't want to take the capital gains hits. I didn't sell when I inherited them and many are up a large amount since I received them. All are blue-chip companies though, so I guess it isn't that unsafe to keep them. The rest of my account is in funds and ETFs

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Chan_va
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Re: Rethinking Individual Stocks

Post by Chan_va » Fri May 31, 2019 11:50 am

DonCamillo wrote:
Thu May 30, 2019 1:20 pm
illumination wrote:
Mon May 27, 2019 1:05 pm
Maybe I'm confused, but the OP seems too focused on taxes when the real number that matters is total dollars.

Selling a loser may mean you stay under certain income limits and can have access to that money in other pots, but what if you simply had all that money instead in an index fund that was a "winner"? I'd rather have say $50,000 in capital gains I cashed out and then subsequently owed $10k more in taxes as opposed to a $10,000 loss I could write off on my taxes. At the end, it's more dollars in your pocket that matters.
Actually, I was worried more about the Medicare MAGI than the taxes. When exceeding a threshold by a few dollars can mean paying an extra $200 plus a month increasing annually for the rest of your and your wife’s life, I wanted to avoid that. Compared to that, a few thousand dollars in extra taxes is just noise.
That's an odd argument. Couldn't you achieve the same thing by donating your "winnings" to charity to get your MAGI below the limit?

delamer
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Re: Rethinking Individual Stocks

Post by delamer » Fri May 31, 2019 12:39 pm

atdharris wrote:
Fri May 31, 2019 11:41 am
I have 16 individual stocks that I inherited a few years ago that I want to pair down, but I also don't want to take the capital gains hits. I didn't sell when I inherited them and many are up a large amount since I received them. All are blue-chip companies though, so I guess it isn't that unsafe to keep them. The rest of my account is in funds and ETFs
I was in a similar situation, and have sold off a lot of the individual stocks over time.

The risk depends on the amount in each stock, the variety of industries represented by the stocks, and the total dollars in the individual stock relative to the rest of your portfolio.

If you inherited all telecom stocks, for example, that is a different risk than if the stocks are in different industries.

Or if one stock makes up half of the individual stock values, that is problematic.

Obviously, the capital gains aren’t an all-or-nothing issue. It may make sense to gradually divest.

international001
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Re: Rethinking Individual Stocks

Post by international001 » Fri May 31, 2019 6:07 pm

DonCamillo wrote:
Sat May 25, 2019 11:57 am

What I love about my individual stocks is Tax Loss Harvesting. While most of my individual stocks are up in value, some have gone down. I have to worry about exceeding the Medicare MAGA when I need extra income. But with tax loss harvesting, I can sell a blend of stocks with losses and gains so that I have no net gain for tax purposes.
(as far as I understand it, OP is not arguing about the benefits of diversification, just the benefit of diversifying yourself - and doing TLH- vs via an index fund)

Do you realize that the relative cost basis of the remaining portfolio decreased, leaving higher unrealized gains? So everything is deferred
Still, deferring the gains is the principle of TLH. You may as well use the money of the losers to buy other stocks

This is the principle of TLH, saving taxes, and your approach is interesting. But after a while, all the stocks tend to go up. So the benefit is marginal (mostly for the stocks you bought just few years ago).

Anyway, keep doing it while you can. Just make sure you have enough stocks to be somehow diversified.

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Re: Rethinking Individual Stocks

Post by bpp » Fri May 31, 2019 8:01 pm

DonCamillo wrote:
Sat May 25, 2019 11:57 am
What I love about my individual stocks is Tax Loss Harvesting. While most of my individual stocks are up in value, some have gone down.
[...]
Conclusion: Investing some of your money in individual stocks makes sense.
Yes, there is even a wiki page on doing this for tax reasons:

https://www.bogleheads.org/wiki/Passive ... ual_stocks

international001
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Re: Rethinking Individual Stocks

Post by international001 » Sat Jun 01, 2019 7:32 am

bpp wrote:
Fri May 31, 2019 8:01 pm
DonCamillo wrote:
Sat May 25, 2019 11:57 am
What I love about my individual stocks is Tax Loss Harvesting. While most of my individual stocks are up in value, some have gone down.
[...]
Conclusion: Investing some of your money in individual stocks makes sense.
Yes, there is even a wiki page on doing this for tax reasons:

https://www.bogleheads.org/wiki/Passive ... ual_stocks
Good info. But permanent 0.5%/year ? IT doesn't matter for how long have you had the portfolio and how low is your cost basis?

If this is a benefit, why no mutual fund has implemented this TLH strategy?

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nedsaid
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Re: Rethinking Individual Stocks

Post by nedsaid » Sat Jun 01, 2019 6:58 pm

Harry Livermore wrote:
Fri May 31, 2019 6:05 am

I agree to not let the tax tail wag the dog, but Don is right that a few dollars in extra income will penalize you many thousands of times over for many years in Medicare premiums. It's an absolute mess. Tax loss harvesting definitely can help. But ideally, the government would not participate in price discrimination and we would all feel free to spend the money we saved over the years.
Cheers
Seeing that Medicare premiums are tied to income now, this is an important consideration for retirees. There is also the taxability of Social Security. The issues surrounding retirement can be more complex than most people think, one reason that I often recommend that people have some financial planning done before they retire.
A fool and his money are good for business.

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Re: Rethinking Individual Stocks

Post by bpp » Mon Jun 03, 2019 3:04 am

international001 wrote:
Sat Jun 01, 2019 7:32 am
bpp wrote:
Fri May 31, 2019 8:01 pm
DonCamillo wrote:
Sat May 25, 2019 11:57 am
What I love about my individual stocks is Tax Loss Harvesting. While most of my individual stocks are up in value, some have gone down.
[...]
Conclusion: Investing some of your money in individual stocks makes sense.
Yes, there is even a wiki page on doing this for tax reasons:

https://www.bogleheads.org/wiki/Passive ... ual_stocks
Good info. But permanent 0.5%/year ? IT doesn't matter for how long have you had the portfolio and how low is your cost basis?
I don’t think anyone has guaranteed a permanent 0.5%/year.

As for cost basis, even if you don’t have any losses, there could be benefits from choosing to sell those tax lots with higher bases.
If this is a benefit, why no mutual fund has implemented this TLH strategy?
Mutual funds cannot pass losses through, so I don’t think an MF could implement this strategy. I think there are some robo-advisors that claim to do it, though I suspect their management costs would largely negate any practical benefit.

atdharris
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Re: Rethinking Individual Stocks

Post by atdharris » Fri Jun 07, 2019 9:28 am

delamer wrote:
Fri May 31, 2019 12:39 pm
atdharris wrote:
Fri May 31, 2019 11:41 am
I have 16 individual stocks that I inherited a few years ago that I want to pair down, but I also don't want to take the capital gains hits. I didn't sell when I inherited them and many are up a large amount since I received them. All are blue-chip companies though, so I guess it isn't that unsafe to keep them. The rest of my account is in funds and ETFs
I was in a similar situation, and have sold off a lot of the individual stocks over time.

The risk depends on the amount in each stock, the variety of industries represented by the stocks, and the total dollars in the individual stock relative to the rest of your portfolio.

If you inherited all telecom stocks, for example, that is a different risk than if the stocks are in different industries.

Or if one stock makes up half of the individual stock values, that is problematic.

Obviously, the capital gains aren’t an all-or-nothing issue. It may make sense to gradually divest.
It's a pretty well diversified basket. 4 bank stocks (BAC, JPM, WFC, AXP), big tech (AMZN, AAPL, FB, MSFT, GOOGL) which are up a ton, Home Depot, Walmart, CVS, Visa, McDonalds. Most of them aren't more than 2% of the total portfolio. I may gradually begin selling some shares, especially the FAANG stocks that have appreciated so much. A few are at losses (WFC, CVS) that I may as well unload soon.

The rest of the portfolio's equities are in ETFs VOO/IJR/VEA/VWO/AGG

international001
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Re: Rethinking Individual Stocks

Post by international001 » Mon Jun 10, 2019 5:12 am

bpp wrote:
Mon Jun 03, 2019 3:04 am

As for cost basis, even if you don’t have any losses, there could be benefits from choosing to sell those tax lots with higher bases.
Can you develop this? If I have :

A: 200 shares at $30 with cost basis $20
B: 100 shares at $30 with cost basis $10

Why is beneficial selling A instead of B?

Chip
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Re: Rethinking Individual Stocks

Post by Chip » Mon Jun 10, 2019 6:14 am

international001 wrote:
Mon Jun 10, 2019 5:12 am
Can you develop this? If I have :

A: 200 shares at $30 with cost basis $20
B: 100 shares at $30 with cost basis $10

Why is beneficial selling A instead of B?
I think the correct comparison is selling 100 shares of A vs. 100 shares of B. You get one half of the capital gains for the same total proceeds.

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Re: Rethinking Individual Stocks

Post by bpp » Mon Jun 10, 2019 6:51 am

Chip wrote:
Mon Jun 10, 2019 6:14 am
international001 wrote:
Mon Jun 10, 2019 5:12 am
Can you develop this? If I have :

A: 200 shares at $30 with cost basis $20
B: 100 shares at $30 with cost basis $10

Why is beneficial selling A instead of B?
I think the correct comparison is selling 100 shares of A vs. 100 shares of B. You get one half of the capital gains for the same total proceeds.
Yes.

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CyclingDuo
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Re: Rethinking Individual Stocks

Post by CyclingDuo » Mon Jun 10, 2019 10:03 am

atdharris wrote:
Fri Jun 07, 2019 9:28 am
It's a pretty well diversified basket. 4 bank stocks (BAC, JPM, WFC, AXP), big tech (AMZN, AAPL, FB, MSFT, GOOGL) which are up a ton, Home Depot, Walmart, CVS, Visa, McDonalds. Most of them aren't more than 2% of the total portfolio. I may gradually begin selling some shares, especially the FAANG stocks that have appreciated so much. A few are at losses (WFC, CVS) that I may as well unload soon.

The rest of the portfolio's equities are in ETFs VOO/IJR/VEA/VWO/AGG
Have you been reinvesting all the dividends from those stocks in your portfolio via DRIPs?
"Everywhere is within walking distance if you have the time." ~ Steven Wright

atdharris
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Re: Rethinking Individual Stocks

Post by atdharris » Mon Jun 10, 2019 11:22 am

CyclingDuo wrote:
Mon Jun 10, 2019 10:03 am
atdharris wrote:
Fri Jun 07, 2019 9:28 am
It's a pretty well diversified basket. 4 bank stocks (BAC, JPM, WFC, AXP), big tech (AMZN, AAPL, FB, MSFT, GOOGL) which are up a ton, Home Depot, Walmart, CVS, Visa, McDonalds. Most of them aren't more than 2% of the total portfolio. I may gradually begin selling some shares, especially the FAANG stocks that have appreciated so much. A few are at losses (WFC, CVS) that I may as well unload soon.

The rest of the portfolio's equities are in ETFs VOO/IJR/VEA/VWO/AGG
Have you been reinvesting all the dividends from those stocks in your portfolio via DRIPs?
No. I have never DRIP'd individual stocks. At this point, I use the dividends to either contribute to my Roth IRA each year to buy more of whatever ETFs I hold need re-balancing.

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CyclingDuo
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Re: Rethinking Individual Stocks

Post by CyclingDuo » Mon Jun 10, 2019 6:00 pm

atdharris wrote:
Mon Jun 10, 2019 11:22 am
CyclingDuo wrote:
Mon Jun 10, 2019 10:03 am
atdharris wrote:
Fri Jun 07, 2019 9:28 am
It's a pretty well diversified basket. 4 bank stocks (BAC, JPM, WFC, AXP), big tech (AMZN, AAPL, FB, MSFT, GOOGL) which are up a ton, Home Depot, Walmart, CVS, Visa, McDonalds. Most of them aren't more than 2% of the total portfolio. I may gradually begin selling some shares, especially the FAANG stocks that have appreciated so much. A few are at losses (WFC, CVS) that I may as well unload soon.

The rest of the portfolio's equities are in ETFs VOO/IJR/VEA/VWO/AGG
Have you been reinvesting all the dividends from those stocks in your portfolio via DRIPs?
No. I have never DRIP'd individual stocks. At this point, I use the dividends to either contribute to my Roth IRA each year to buy more of whatever ETFs I hold need re-balancing.
Either way - DRIPs or using the divvy's to deploy elsewhere - is a good strategy for the inherited stocks. :beer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

international001
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Re: Rethinking Individual Stocks

Post by international001 » Wed Jun 12, 2019 9:58 am

Chip wrote:
Mon Jun 10, 2019 6:14 am
international001 wrote:
Mon Jun 10, 2019 5:12 am
Can you develop this? If I have :

A: 200 shares at $30 with cost basis $20
B: 100 shares at $30 with cost basis $10

Why is beneficial selling A instead of B?
I think the correct comparison is selling 100 shares of A vs. 100 shares of B. You get one half of the capital gains for the same total proceeds.
Well, yes. But this is not really apples to apples

MotoTrojan
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Re: Rethinking Individual Stocks

Post by MotoTrojan » Wed Jun 12, 2019 10:13 am

international001 wrote:
Wed Jun 12, 2019 9:58 am
Chip wrote:
Mon Jun 10, 2019 6:14 am
international001 wrote:
Mon Jun 10, 2019 5:12 am
Can you develop this? If I have :

A: 200 shares at $30 with cost basis $20
B: 100 shares at $30 with cost basis $10

Why is beneficial selling A instead of B?
I think the correct comparison is selling 100 shares of A vs. 100 shares of B. You get one half of the capital gains for the same total proceeds.
Well, yes. But this is not really apples to apples
How is the same total proceeds not apples to apples?? Generally when people sell a financial asset their goal is to get a certain amount of cash in their pocket for something else, not to arbitrarily wipe out a position.

international001
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Re: Rethinking Individual Stocks

Post by international001 » Mon Jun 17, 2019 2:36 am

MotoTrojan wrote:
Wed Jun 12, 2019 10:13 am
international001 wrote:
Wed Jun 12, 2019 9:58 am
Chip wrote:
Mon Jun 10, 2019 6:14 am
international001 wrote:
Mon Jun 10, 2019 5:12 am
Can you develop this? If I have :

A: 200 shares at $30 with cost basis $20
B: 100 shares at $30 with cost basis $10

Why is beneficial selling A instead of B?
I think the correct comparison is selling 100 shares of A vs. 100 shares of B. You get one half of the capital gains for the same total proceeds.
Well, yes. But this is not really apples to apples
How is the same total proceeds not apples to apples?? Generally when people sell a financial asset their goal is to get a certain amount of cash in their pocket for something else, not to arbitrarily wipe out a position.
By apples to apples I meant having the same amount of capital gains

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