Chasing Individual Stocks

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schildkrote
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Chasing Individual Stocks

Post by schildkrote » Thu May 21, 2020 1:28 pm

During the big dip in March I spent a considerable amount of time and money researching and making individual stock purchases. Some of these stocks I cashed out on already taking a small loss because I believe they were mistakes, the others are doing well and I am planning to hold for a year and cash out with the long term capital gains, and some I just feel are strong enough to hold for the long term. All in all I am pretty certain I will come out ahead with the strategy than if I had gone pure index funds/ETFs.

Even though I feel confident that the strategy worked in targeting individual companies, I find myself just psychologically beat. I have been watching the market constantly and making trades, and I just don't think its worth it anymore so I am going to get back to the Boglehead way of indexing and holding on for the long term in the future. Active asset management is just not for me! Just thought I'd share my experience with this forum.

DaftInvestor
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Re: Chasing Individual Stocks

Post by DaftInvestor » Thu May 21, 2020 1:36 pm

You highlight one of the reasons I got out of individual stocks decades ago: all the research became a second job for me.

Slowtraveler
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Re: Chasing Individual Stocks

Post by Slowtraveler » Thu May 21, 2020 1:38 pm

I agree. The only company I hold anymore is Alphabet and that's a very small percent of my portfolio. I managed to diversify everything else as a breathe if fresh air. All new funds go to the indexes.

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TheTimeLord
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Re: Chasing Individual Stocks

Post by TheTimeLord » Thu May 21, 2020 1:40 pm

DaftInvestor wrote:
Thu May 21, 2020 1:36 pm
You highlight one of the reasons I got out of individual stocks decades ago: all the research became a second job for me.
+1. I played a little bit with some individual stocks a couple months back but decided for the most part it was still too much effort.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

stocknoob4111
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Re: Chasing Individual Stocks

Post by stocknoob4111 » Thu May 21, 2020 8:08 pm

A friend bought $100K of FB at $147, at the time I thought he was nuts to take so much risk, well... he sold today at $230 making a cool $56,000 in profit for holding 30 days. Meanwhile my diversified index based portfolio has gone nowhere in the last Two and Half years :oops:

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea? I wanted to buy United Healthcare when it hit $195 during the March dip but I stuck to my philosophy of NOT buying individual stocks, again UNH hit $295 recently and still hovering around there, huge missed opportunity.

What I've seen is that the good gets tossed with the bathwater in the indiscriminate wave of panic but eventually the good stocks rebound - this could be the golden opportunity if you know where to look.

retired@50
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Re: Chasing Individual Stocks

Post by retired@50 » Thu May 21, 2020 8:12 pm

schildkrote wrote:
Thu May 21, 2020 1:28 pm
All in all I am pretty certain I will come out ahead with the strategy than if I had gone pure index funds/ETFs.
This sounds like a quotation from an active fund manager. I wish you luck, but I'm glad to read that you've already given up... :beer

Regards,
This is one person's opinion. Nothing more.

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schildkrote
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Re: Chasing Individual Stocks

Post by schildkrote » Thu May 21, 2020 8:55 pm

retired@50 wrote:
Thu May 21, 2020 8:12 pm
schildkrote wrote:
Thu May 21, 2020 1:28 pm
All in all I am pretty certain I will come out ahead with the strategy than if I had gone pure index funds/ETFs.
This sounds like a quotation from an active fund manager. I wish you luck, but I'm glad to read that you've already given up... :beer

Regards,

Haha, well when you buy oil stocks for less than 25% value you tend to make some money. I think this stock dip was a bit of an extreme case, it happened so fast and like stocknoob mentions if you know where to look you can make some serious money during a panic sell off. I deff wouldn’t have thought to put 100k in Facebook though 😂

Rosencrantz1
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Re: Chasing Individual Stocks

Post by Rosencrantz1 » Thu May 21, 2020 9:08 pm

Well, I'll chime in.

I bought 3 individual stocks, MGM, MCD, and AAPL. All three are higher than what I paid for them - especially MGM (in terms of %).

Now the question is how long do I hold them? I'm thinking a long time in at least two cases. Other than browsing their financials and reading some analysts reports, it wasn't too onerous (plus, I'm retired).

And, yes, the vast majority of our equities are in VOO/VTI.

EDIT to add - oh yeah, I also bought a few shares of Luckin coffee AFTER their fraud announcement and promptly sold it days later and took a hit of a couple of $$/share. Total loss there about $200. I read later on this board that "fraud is pervasive" in China. NOW he tells me... :D

Rosencrantz1
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Re: Chasing Individual Stocks

Post by Rosencrantz1 » Thu May 21, 2020 9:24 pm

stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm
A friend bought $100K of FB at $147, at the time I thought he was nuts to take so much risk, well... he sold today at $230 making a cool $56,000 in profit for holding 30 days. Meanwhile my diversified index based portfolio has gone nowhere in the last Two and Half years :oops:

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea? I wanted to buy United Healthcare when it hit $195 during the March dip but I stuck to my philosophy of NOT buying individual stocks, again UNH hit $295 recently and still hovering around there, huge missed opportunity.

What I've seen is that the good gets tossed with the bathwater in the indiscriminate wave of panic but eventually the good stocks rebound - this could be the golden opportunity if you know where to look.
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...

stocknoob4111
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Re: Chasing Individual Stocks

Post by stocknoob4111 » Thu May 21, 2020 9:37 pm

Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
A lot of people now are dabbling with individual stocks and making a killing.. Another friend of mine bought CCL (Carnival Cruise lines) at $10, not even the absolute bottom (which was $8), sold at $14, a 40% gain in just a few days!

corp_sharecropper
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Re: Chasing Individual Stocks

Post by corp_sharecropper » Thu May 21, 2020 9:58 pm

Instead of single company stocks, I recommend options on index ETFs (when I say "recommend", I don't mean for the boglehead who is perfectly happy with their current 3-fund situation, etc). I say this because you don't need to waste a bunch of time researching a company, it's just basic math, volatility, time, probabilities, and unless you're writing naked puts/calls a degree of "safe" & uncallable leverage. You can take bullish or bearish positions, buy cheap "lotto tickets", grind out income in a sideways market, emulate long ETF positions for far less capital, and plenty of other plays. But basically you can totally do it with out having a second job of researching individual companies. I'm sure this won't be popular with the most devout bogleheads but anyone with an open mind can see that there's a place & a time when basic options plays are ok and well suited (especially if you are young), like covered calls, wheels, deep ITM LEAPS, synthetic longs, and plenty of others that are completely different than the mythical horror stories of writing naked puts/calls that are basically enshrined, wrongfully, in the popular imagination.

02nz
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Re: Chasing Individual Stocks

Post by 02nz » Thu May 21, 2020 11:53 pm

All these friends sharing stories of their big stock pick wins ... do you think the stories of big losses are told at the same rate?

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schildkrote
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Re: Chasing Individual Stocks

Post by schildkrote » Fri May 22, 2020 1:06 am

02nz wrote:
Thu May 21, 2020 11:53 pm
All these friends sharing stories of their big stock pick wins ... do you think the stories of big losses are told at the same rate?
Sure I’ll share one, I sold all my Amazon Shares in 2017 that I had originally bought for $290 per share because I thought it had reached its peak (hint...Amazon never reaches its peak and I regret that decision every time I turn on CNBC these days) to buy 20k of Chinese stock (BABA and TCEHY), the next week Trump announced his tariff war on China and it took me almost 2 years to break even again on them. Just offloaded the last stock in April, glad to be rid of those terrible “I don’t know where my money is going, I think it’s going to an Internet company, but actually it’s owned by the communist party of China and financing their military stocks.”

DonIce
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Re: Chasing Individual Stocks

Post by DonIce » Fri May 22, 2020 2:47 am

Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
Anyone who's got ~$2M in TSM/S&P500 (which seemingly is most bogleheads) has $100k or more in MSFT and in AAPL.

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Re: Chasing Individual Stocks

Post by DonIce » Fri May 22, 2020 2:54 am

stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm
What I've seen is that the good gets tossed with the bathwater in the indiscriminate wave of panic but eventually the good stocks rebound - this could be the golden opportunity if you know where to look.
Of course. A big chunk of stocks are held through broad market ETFs/MFs. So when people cash out their equities, it hits all stocks hard. Part of the impact of people investing in ETFs/MFs rather than individual stocks is it raises the correlations of stocks with each other during market downturns.

However, when the broad market is down by 30%, you don't really need to "know where to look" to make money on the rebound, you can just buy the broad market on the cheap. FB stock may have gone up by ~50%, but the S&P500 has gone up ~25%. And I'd rather have a 2x as big position in the S&P500 to make the same gain.

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Harry Livermore
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Re: Chasing Individual Stocks

Post by Harry Livermore » Fri May 22, 2020 7:04 am

stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea?
I'm sure I'm in the minority on this forum, but I would say that your conclusion above is true. I'm a big believer in value, and the Ben Graham "margin of safety". The sudden, sharp downturn in March made many stock prices plunge to absurdly low valuations. I bought more shares in some of my individual holdings, and had a short list of companies I'd like to own shares in... unfortunately, the "stay at home" order made my business and income go to zero, and the effect was to spook me into thinking I was going to need the "dry powder" for living expenses. So I missed that window...
I'm not sure "chasing" is the right word, if you enjoy researching individual companies, and have the patience to let your ideas play out. The best construct for this, in my opinion, is being a member of an investment club. Meeting in person, sharing ideas, making presentations to fellow club members, are all good ways to share and test your ideas. Even if the club is not investing together as a partnership it's a useful exercise.
If you are a stock nerd (like me ) and enjoy it as a pursuit, I think it's perfectly compatible with the BH philosophy if you limit the individual stock holdings' percentage of your overall portfolio.
Cheers
Last edited by Harry Livermore on Wed Jun 03, 2020 3:08 pm, edited 1 time in total.

Redlion
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Re: Chasing Individual Stocks

Post by Redlion » Fri May 22, 2020 7:14 am

stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm
A friend bought $100K of FB at $147, at the time I thought he was nuts to take so much risk, well... he sold today at $230 making a cool $56,000 in profit for holding 30 days. Meanwhile my diversified index based portfolio has gone nowhere in the last Two and Half years

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea? I wanted to buy United Healthcare when it hit $195 during the March dip but I stuck to my philosophy of NOT buying individual stocks, again UNH hit $295 recently and still hovering around there, huge missed opportunity.

What I've seen is that the good gets tossed with the bathwater in the indiscriminate wave of panic but eventually the good stocks rebound - this could be the golden opportunity if you know where to look.
Sounds like your friend found the needle in the haystack, Maybe he could buy you a hamburger with his proceeds. :happy

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Re: Chasing Individual Stocks

Post by Anon9001 » Fri May 22, 2020 7:25 am

The biggest bargains are in micro cap/small caps stocks where retail investors are more prominent in setting the prices of the securities. I would not waste my time on buying a large cap stock regardless of how quality it is due to the intense competition for alpha in that space among professionals. I bought a small-cap stock that has zero debt and is in a duopoly industry with good ROE. Know what the P/E for that company was? It was slightly less than the index. A quality company like that should be trading at a premium to the index yet it is trading at the same price. The retail investors were too dumb in setting the price of that company.

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schildkrote
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Re: Chasing Individual Stocks

Post by schildkrote » Fri May 22, 2020 7:38 am

Harry Livermore wrote:
Fri May 22, 2020 7:04 am
stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea?
I'm sure I'm in the minority on this forum, but I would say that your conclusion above is true. I'm a big believer in value, and the Ben Graham "margin of safety". the sudden, sharp downturn in March made many stock prices plunge to absurdly low valuations. I bought more shares in some of my individual holdings, and had a short list of companies I'd like to own shares in... unfortunately, the "stay at home" order made my business and income go to zero, and the effect was to spook me into thinking I was going to need the "dry powder" for living expenses. So I missed that window...
I'm not sure "chasing" is the right word, if you enjoy researching individual companies, and have the patience to let your ideas play out. The best construct for this, in my opinion, is being a member of an investment club. Meeting in person, sharing ideas, making presentations to fellow club members, are all good ways to share and test your ideas. Even if the club is not investing together as a partnership it's a useful exercise.
If you are a stock nerd (like me ) and enjoy it as a pursuit, I think it's perfectly compatible with the BH philosophy if you limit the individual stock holdings' percentage of your overall portfolio.
Cheers
Agree, I think the recent dip was a better than usual time to increase holdings in solid companies for your long term portfolio or maybe get into a certain sector that you really want more exposure in and/or feel extremely confident it. But like you said it needs to be limited to a certain percentage of the portfolio. For me, I've set a goal to limit it to 10% of the portfolio, but I'm currently sitting at around 15%.

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Re: Chasing Individual Stocks

Post by bondsr4me » Fri May 22, 2020 7:53 am

schildkrote wrote:
Fri May 22, 2020 7:38 am
Harry Livermore wrote:
Fri May 22, 2020 7:04 am
stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea?
I'm sure I'm in the minority on this forum, but I would say that your conclusion above is true. I'm a big believer in value, and the Ben Graham "margin of safety". the sudden, sharp downturn in March made many stock prices plunge to absurdly low valuations. I bought more shares in some of my individual holdings, and had a short list of companies I'd like to own shares in... unfortunately, the "stay at home" order made my business and income go to zero, and the effect was to spook me into thinking I was going to need the "dry powder" for living expenses. So I missed that window...
I'm not sure "chasing" is the right word, if you enjoy researching individual companies, and have the patience to let your ideas play out. The best construct for this, in my opinion, is being a member of an investment club. Meeting in person, sharing ideas, making presentations to fellow club members, are all good ways to share and test your ideas. Even if the club is not investing together as a partnership it's a useful exercise.
If you are a stock nerd (like me ) and enjoy it as a pursuit, I think it's perfectly compatible with the BH philosophy if you limit the individual stock holdings' percentage of your overall portfolio.
Cheers
Agree, I think the recent dip was a better than usual time to increase holdings in solid companies for your long term portfolio or maybe get into a certain sector that you really want more exposure in and/or feel extremely confident it. But like you said it needs to be limited to a certain percentage of the portfolio. For me, I've set a goal to limit it to 10% of the portfolio, but I'm currently sitting at around 15%.
+1

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Re: Chasing Individual Stocks

Post by nisiprius » Fri May 22, 2020 7:53 am

In my opinion it is just a way of adding some random noise and manager risk on top of the intrinsic risks of the stock market, without any likelihood of getting extra return to compensate for it... and an opportunity to experience unnecessary emotional highs and lows.
...solid companies for your long term portfolio...
What are these "solid companies" and how do you recognize them? Other than in hindsight? Is there any way in which GE was not a "solid company?" I suppose it is already now so long that younger investors cannot remember how GE was regarded for a hundred and ten years.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Harry Livermore
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Re: Chasing Individual Stocks

Post by Harry Livermore » Fri May 22, 2020 7:56 am

schildkrote wrote:
Fri May 22, 2020 7:38 am

Agree, I think the recent dip was a better than usual time to increase holdings in solid companies for your long term portfolio or maybe get into a certain sector that you really want more exposure in and/or feel extremely confident it. But like you said it needs to be limited to a certain percentage of the portfolio. For me, I've set a goal to limit it to 10% of the portfolio, but I'm currently sitting at around 15%.
Funny you mention this. I also have a goal of getting it up to 10% of my portfolio. But it's been on the back burner over the last 10 years, as maxing the small company retirement plan, beefing up 529s, paying down mortgages, and trying to increase the cash EF have all been more important. Now that the portfolio has grown so much, especially in the tax-advantaged space, I'm not sure I have enough working years left to get it up to 10%...
:sharebeer
Cheers

siriusblack
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Re: Chasing Individual Stocks

Post by siriusblack » Fri May 22, 2020 8:13 am

I don't buy individual stocks to make a killing. In general I expect the returns to be more or less in line with the broader market.

I buy individual stocks with a small % of my portfolio because:
1. I like it
2. It's educational
3. It keeps me grounded in the realities of business & the economy
4. It helps me with my regular job (business planning / product management)
5. It keeps me from doing stupid things with the majority of my portfolio
6. It helps me understand the fundamentals of the stock market-- and this reinforces #5-- i.e. I think I'm less likely to bail on the stock market because I understand how cash flow and earnings are related to stock prices

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Re: Chasing Individual Stocks

Post by Nowizard » Fri May 22, 2020 8:15 am

Some of us generally believe in the Efficient Market concept but with occasional caveats. There are always some stocks that are not efficiently priced based on analysis. They are called value stocks by most but are not necessarily in that category. For example, during this market, Amazon has hit an all-time high and specific stocks such as Intuitive Surgical have retreated since elective surgery was curtailed. Purchase of either would have resulted in significant, short-term gains. Though individual stock picking is questionable for most Bogleheads, there are times when relatively safe projections can be made. Even if not the case, some derive benefit from investing small amounts in individual stocks as an antidote to the itch to make major changes that could be a disaster. We have purchased a total of what is probably ten stocks over the past decade and profited from each purchase. Failure to sell a stock many years ago that had massive profits but eventually tanked is also a significant mistake made while investing. :happy :oops:

Tim

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Re: Chasing Individual Stocks

Post by TomatoTomahto » Fri May 22, 2020 8:39 am

DonIce wrote:
Fri May 22, 2020 2:47 am
Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
Anyone who's got ~$2M in TSM/S&P500 (which seemingly is most bogleheads) has $100k or more in MSFT and in AAPL.
+1

In my one and only trip to Las Vegas (for an industry conference) I put $20 on my lucky number in Roulette. The number came up. A friend standing next to me said to take the money off as it would never come up twice in a row. Being a pedant, I said that the ball was as likely to hit again as it was the first time and let it ride. The number came up again. It actually came up a third time. It did not the next four times, which was considerably less exciting than the first three times. I took my money and quit my gambling career as a winner.

I also went on one fishing trip in my life; caught a King Salmon; cooked it over a fire; retired as a 100% successful fisherman.

Disclosure: our only voluntarily purchased individual stock is BRK.A, which our kids can get the stepped up basis on when we croak.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Chasing Individual Stocks

Post by Rosencrantz1 » Fri May 22, 2020 9:24 am

DonIce wrote:
Fri May 22, 2020 2:47 am
Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
Anyone who's got ~$2M in TSM/S&P500 (which seemingly is most bogleheads) has $100k or more in MSFT and in AAPL.
I must be the 'poor' Boglehead - I don't have $2M in TSM. If I did, that'd make our portfolio worth in excess of $3M - got a ways to go yet.

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Re: Chasing Individual Stocks

Post by arcticpineapplecorp. » Fri May 22, 2020 9:42 am

schildkrote wrote:
Thu May 21, 2020 8:55 pm
retired@50 wrote:
Thu May 21, 2020 8:12 pm
schildkrote wrote:
Thu May 21, 2020 1:28 pm
All in all I am pretty certain I will come out ahead with the strategy than if I had gone pure index funds/ETFs.
This sounds like a quotation from an active fund manager. I wish you luck, but I'm glad to read that you've already given up... :beer

Regards,

Haha, well when you buy oil stocks for less than 25% value you tend to make some money. I think this stock dip was a bit of an extreme case, it happened so fast and like stocknoob mentions if you know where to look you can make some serious money during a panic sell off. I deff wouldn’t have thought to put 100k in Facebook though 😂
two thoughts:
1. the psychological exhaustion is a cost. Spending time watching the market costs something. Time is money. If people are watching the markets, that's a cost that isn't usually factored in to their investment performance. So while it's easy to say, "I made $X in two months!", did you subtract out the time you spent researching, watching, thinking anxiously, etc? Likely not.

2. regarding "buying oil stocks for less than 25% value you tend to make some money." Really? Read this post where people bought years ago on the dips:

viewtopic.php?f=10&t=306937&hilit=oil#p5156180
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Re: Chasing Individual Stocks

Post by index245 » Fri May 22, 2020 9:48 am

stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm
A friend bought $100K of FB at $147, at the time I thought he was nuts to take so much risk, well... he sold today at $230 making a cool $56,000 in profit for holding 30 days. Meanwhile my diversified index based portfolio has gone nowhere in the last Two and Half years :oops:

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea? I wanted to buy United Healthcare when it hit $195 during the March dip but I stuck to my philosophy of NOT buying individual stocks, again UNH hit $295 recently and still hovering around there, huge missed opportunity.

What I've seen is that the good gets tossed with the bathwater in the indiscriminate wave of panic but eventually the good stocks rebound - this could be the golden opportunity if you know where to look.
Worked out well, although the short term capital gains tax could be quite high depending on income. A lot of risk involved for a 40k-ish profit.

However, I know I'm in the minority in thinking that Google and Facebook are still vulnerable to a downturn. You cannot capitalize long term if the companies paying for your ad sales are going out of business.

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Re: Chasing Individual Stocks

Post by Taylor Larimore » Fri May 22, 2020 10:31 am

schildkrote wrote:
Thu May 21, 2020 1:28 pm
During the big dip in March I spent a considerable amount of time and money researching and making individual stock purchases. Some of these stocks I cashed out on already taking a small loss because I believe they were mistakes, the others are doing well and I am planning to hold for a year and cash out with the long term capital gains, and some I just feel are strong enough to hold for the long term. All in all I am pretty certain I will come out ahead with the strategy than if I had gone pure index funds/ETFs.

Even though I feel confident that the strategy worked in targeting individual companies, I find myself just psychologically beat. I have been watching the market constantly and making trades, and I just don't think its worth it anymore so I am going to get back to the Boglehead way of indexing and holding on for the long term in the future. Active asset management is just not for me! Just thought I'd share my experience with this forum.
schildkrote:

Thank you for sharing your experience with individual stock speculation.

What Experts Say About Individual Stocks vs. Mutual Funds

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Attempting to build an investment program around a handful of individual securities is, for all but the most exceptional investors, a fool's errand."
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Chasing Individual Stocks

Post by abuss368 » Fri May 22, 2020 12:06 pm

schildkrote wrote:
Thu May 21, 2020 1:28 pm
During the big dip in March I spent a considerable amount of time and money researching and making individual stock purchases. Some of these stocks I cashed out on already taking a small loss because I believe they were mistakes, the others are doing well and I am planning to hold for a year and cash out with the long term capital gains, and some I just feel are strong enough to hold for the long term. All in all I am pretty certain I will come out ahead with the strategy than if I had gone pure index funds/ETFs.

Even though I feel confident that the strategy worked in targeting individual companies, I find myself just psychologically beat. I have been watching the market constantly and making trades, and I just don't think its worth it anymore so I am going to get back to the Boglehead way of indexing and holding on for the long term in the future. Active asset management is just not for me! Just thought I'd share my experience with this forum.
Welcome to the forum!

I think your post is an excellent summary that many others can appreciate and learn from.

Thank you for sharing.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Chasing Individual Stocks

Post by Fallible » Fri May 22, 2020 12:13 pm

Rosencrantz1 wrote:
Thu May 21, 2020 9:08 pm
...
I bought 3 individual stocks, MGM, MCD, and AAPL. All three are higher than what I paid for them - especially MGM (in terms of %).

Now the question is how long do I hold them? ...
Shouldn't the question about how long to hold be asked/answered before buying?
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

bgf
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Re: Chasing Individual Stocks

Post by bgf » Fri May 22, 2020 12:16 pm

I'm glad I'm past these days. I no longer even feel the envy.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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whodidntante
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Re: Chasing Individual Stocks

Post by whodidntante » Fri May 22, 2020 12:36 pm

Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm
A friend bought $100K of FB at $147, at the time I thought he was nuts to take so much risk, well... he sold today at $230 making a cool $56,000 in profit for holding 30 days. Meanwhile my diversified index based portfolio has gone nowhere in the last Two and Half years :oops:

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea? I wanted to buy United Healthcare when it hit $195 during the March dip but I stuck to my philosophy of NOT buying individual stocks, again UNH hit $295 recently and still hovering around there, huge missed opportunity.

What I've seen is that the good gets tossed with the bathwater in the indiscriminate wave of panic but eventually the good stocks rebound - this could be the golden opportunity if you know where to look.
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
I don't think trading 100k is necessarily gutsy. It depends on what happens if you lose it.

Rosencrantz1
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Re: Chasing Individual Stocks

Post by Rosencrantz1 » Fri May 22, 2020 12:38 pm

Fallible wrote:
Fri May 22, 2020 12:13 pm
Rosencrantz1 wrote:
Thu May 21, 2020 9:08 pm
...
I bought 3 individual stocks, MGM, MCD, and AAPL. All three are higher than what I paid for them - especially MGM (in terms of %).

Now the question is how long do I hold them? ...
Shouldn't the question about how long to hold be asked/answered before buying?
Not necessarily, in my view. The world is dynamic - will we have a working vaccine this year or next? will McDonald' menu evolve as to healthier eating? What will I read about Apple's gadget pipeline? Yes, the market 'knows' all these things (or thinks it does). As an investor, I just have to make the evaluation as to whether it's priced correctly for the long term (with known risks). For example - when I bought some MGM @ $7.25/share, I was operating under the idea that someday a vaccine would be discovered and that MGM would not go bankrupt in the next year. I guess time will tell - but, so far, it's looking good.

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Re: Chasing Individual Stocks

Post by Fallible » Fri May 22, 2020 12:39 pm

siriusblack wrote:
Fri May 22, 2020 8:13 am
I don't buy individual stocks to make a killing. In general I expect the returns to be more or less in line with the broader market.

I buy individual stocks with a small % of my portfolio because:
1. I like it
2. It's educational
3. It keeps me grounded in the realities of business & the economy
4. It helps me with my regular job (business planning / product management)
5. It keeps me from doing stupid things with the majority of my portfolio
6. It helps me understand the fundamentals of the stock market-- and this reinforces #5-- i.e. I think I'm less likely to bail on the stock market because I understand how cash flow and earnings are related to stock prices
Those are what you see as the pros. What are the cons?
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

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Re: Chasing Individual Stocks

Post by atdharris » Fri May 22, 2020 12:46 pm

I still hold individual names like the FAANGs from my old days of buying and selling, but otherwise yes, it is a second job to track and research each company. If I didn't have 200-300% gains in those stocks, I'd sell them. But I'm not complaining that they essentially appreciated during the market sell-off.

bondsr4me
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Re: Chasing Individual Stocks

Post by bondsr4me » Fri May 22, 2020 12:48 pm

siriusblack wrote:
Fri May 22, 2020 8:13 am
I don't buy individual stocks to make a killing. In general I expect the returns to be more or less in line with the broader market.

I buy individual stocks with a small % of my portfolio because:
1. I like it
2. It's educational
3. It keeps me grounded in the realities of business & the economy
4. It helps me with my regular job (business planning / product management)
5. It keeps me from doing stupid things with the majority of my portfolio
6. It helps me understand the fundamentals of the stock market-- and this reinforces #5-- i.e. I think I'm less likely to bail on the stock market because I understand how cash flow and earnings are related to stock prices
+1

Agree with all the above.

Rosencrantz1
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Re: Chasing Individual Stocks

Post by Rosencrantz1 » Fri May 22, 2020 12:59 pm

whodidntante wrote:
Fri May 22, 2020 12:36 pm
Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm
A friend bought $100K of FB at $147, at the time I thought he was nuts to take so much risk, well... he sold today at $230 making a cool $56,000 in profit for holding 30 days. Meanwhile my diversified index based portfolio has gone nowhere in the last Two and Half years :oops:

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea? I wanted to buy United Healthcare when it hit $195 during the March dip but I stuck to my philosophy of NOT buying individual stocks, again UNH hit $295 recently and still hovering around there, huge missed opportunity.

What I've seen is that the good gets tossed with the bathwater in the indiscriminate wave of panic but eventually the good stocks rebound - this could be the golden opportunity if you know where to look.
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
I don't think trading 100k is necessarily gutsy. It depends on what happens if you lose it.
Sounds like we may have a different definition of 'gutsy'. In my view, if someone buys $100K worth of ONE stock from an account with $500K in it, that's pretty gutsy (some may say 'stupid'). As opposed to buying $100K of a stock from an account worth $10M.

CBZ
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Re: Chasing Individual Stocks

Post by CBZ » Fri May 22, 2020 1:01 pm

Harry Livermore wrote:
Fri May 22, 2020 7:04 am
stocknoob4111 wrote:
Thu May 21, 2020 8:08 pm

Buying individual stocks is definitely risky but buying solid companies that are mis-priced due to panic may not be that bad of an idea?
I'm sure I'm in the minority on this forum, but I would say that your conclusion above is true. I'm a big believer in value, and the Ben Graham "margin of safety". the sudden, sharp downturn in March made many stock prices plunge to absurdly low valuations. I bought more shares in some of my individual holdings, and had a short list of companies I'd like to own shares in... unfortunately, the "stay at home" order made my business and income go to zero, and the effect was to spook me into thinking I was going to need the "dry powder" for living expenses. So I missed that window...
I'm not sure "chasing" is the right word, if you enjoy researching individual companies, and have the patience to let your ideas play out. The best construct for this, in my opinion, is being a member of an investment club. Meeting in person, sharing ideas, making presentations to fellow club members, are all good ways to share and test your ideas. Even if the club is not investing together as a partnership it's a useful exercise.
If you are a stock nerd (like me ) and enjoy it as a pursuit, I think it's perfectly compatible with the BH philosophy if you limit the individual stock holdings' percentage of your overall portfolio.
Cheers
Hi Harry, what % of your overall portfolio do you allocate to your basket of stocks? Thanks

core4portfolio
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Re: Chasing Individual Stocks

Post by core4portfolio » Fri May 22, 2020 1:06 pm

i chased but i limit to 8% of my portfolio.
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner

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Harry Livermore
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Re: Chasing Individual Stocks

Post by Harry Livermore » Fri May 22, 2020 1:43 pm

CBZ wrote:
Fri May 22, 2020 1:01 pm

Hi Harry, what % of your overall portfolio do you allocate to your basket of stocks? Thanks
Hi there, currently 3.06%, across 9 companies. As recently as 2015 it was closer to 10%.
Some of my biggest winners (AFL, RPM, MCD) I sold, or trimmed back, to help fund the purchase of our vacation rental property. I have since been letting dividends collect in the sweep account, with the intention of buying into some other companies I've had my eye on (as I've said, I chickened out due to the evaporation of my income) The short list is AWK, ADM, RTX, MRK, AMGN, V. I have owned AWK and MRK in the past. I had planned to start small positions at a market low, and then DRIP and make periodic, regular purchases to grow my positions. This is what I did years ago and it worked well over time.
I enjoy the monitoring and research (though I miss the camaraderie of the investment club) so it's not a big deal to stay on top of10-15 stocks for me.
Cheers

siriusblack
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Re: Chasing Individual Stocks

Post by siriusblack » Fri May 22, 2020 3:23 pm

Fallible wrote:
Fri May 22, 2020 12:39 pm
siriusblack wrote:
Fri May 22, 2020 8:13 am
I don't buy individual stocks to make a killing. In general I expect the returns to be more or less in line with the broader market.

I buy individual stocks with a small % of my portfolio because:
1. I like it
2. It's educational
3. It keeps me grounded in the realities of business & the economy
4. It helps me with my regular job (business planning / product management)
5. It keeps me from doing stupid things with the majority of my portfolio
6. It helps me understand the fundamentals of the stock market-- and this reinforces #5-- i.e. I think I'm less likely to bail on the stock market because I understand how cash flow and earnings are related to stock prices
Those are what you see as the pros. What are the cons?
I think many others on the thread have pointed out the reasons NOT to buy individual stocks. For me, here are the cons but I don't personally see these as major issues given my approach:
1. Tax efficiency. (I'm sure some people could get better tax efficiency with their buying/selling, but I'm not especially skilled at it.)
2. Takes a little more time than indexing-- but again I'll reiterate this is balanced by the fact that I enjoy it and I find it valuable in other ways than simply return.
3. Until last year I would have said fees. Back when a trade was $10-- if you bought stocks in $1000 blocks you are automatically paying 1% up front. Nowadays this is not a factor. (My buys and sells are now free.)
4. Diversification is obviously much less when picking individual stocks.

Robert20
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Re: Chasing Individual Stocks

Post by Robert20 » Sat May 23, 2020 1:17 pm

DonIce wrote:
Fri May 22, 2020 2:47 am
Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
Anyone who's got ~$2M in TSM/S&P500 (which seemingly is most bogleheads) has $100k or more in MSFT and in AAPL.
Good question... So what happens to VTI if tomorrow microsoft/APPLE file bankruptcy ((hypothetically)?.. Will price change from $150 (current price) to $120?.

(Dont answer that it wont happen.. less than 1% chance etc etc. these are trillion $ companies etc. I get it...)

retired@50
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Re: Chasing Individual Stocks

Post by retired@50 » Sat May 23, 2020 1:56 pm

Robert20 wrote:
Sat May 23, 2020 1:17 pm
DonIce wrote:
Fri May 22, 2020 2:47 am
Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
Anyone who's got ~$2M in TSM/S&P500 (which seemingly is most bogleheads) has $100k or more in MSFT and in AAPL.
Good question... So what happens to VTI if tomorrow microsoft/APPLE file bankruptcy ((hypothetically)?.. Will price change from $150 (current price) to $120?.

(Dont answer that it wont happen.. less than 1% chance etc etc. these are trillion $ companies etc. I get it...)
Theoretically,
If Microsoft was worth zero, the price would fall by about 3.7%. If Apple, then 3.6%. This is the percentage of VTI that is held in Microsoft / Apple.

This information is available here: http://www.crsp.org/indexes-pages/retur ... nstituents

Regards,
This is one person's opinion. Nothing more.

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Re: Chasing Individual Stocks

Post by abuss368 » Sat May 23, 2020 2:15 pm

I chased individual stocks lifetime ago and have not owned one for over 12 years and will never again.

I had homeruns (remember America On Line) and bad bad bad strikeouts (America Home Mortgage, Impact Mortgage, etc.)

Own the haystack rather than searching for the needle in the haystack. Simply buy Total Stock or S&P 500 and call it a day.

Years down the road you will be happy you did.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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happyisland
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Re: Chasing Individual Stocks

Post by happyisland » Sat May 23, 2020 3:03 pm

bgf wrote:
Fri May 22, 2020 12:16 pm
I'm glad I'm past these days. I no longer even feel the envy.
Haha - totally agree. I actually feel bad for the people out there who are still in the phase where they think they have a stock picking edge.

stocknoob4111
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Re: Chasing Individual Stocks

Post by stocknoob4111 » Wed Jun 03, 2020 1:47 pm

Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
same friend who chases individual stocks bought the airlines and the cruise lines at their lows and is now laughing all the way to the bank!! He bought Royal Caribbean at the lows and it's up 70% now since he bought it :shock: He also bought Tesla at $680 and now it's close to $900. Luck or skill? Who knows...

If you know what you are doing then individual stocks bought at the right time could return in a few days or weeks more than the S&P 500 could return in a decade!

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Re: Chasing Individual Stocks

Post by deltaneutral83 » Wed Jun 03, 2020 2:14 pm

stocknoob4111 wrote:
Wed Jun 03, 2020 1:47 pm


same friend who chases individual stocks bought the airlines and the cruise lines at their lows and is now laughing all the way to the bank!! He bought Royal Caribbean at the lows and it's up 70% now since he bought it :shock: He also bought Tesla at $680 and now it's close to $900. Luck or skill? Who knows...

If you know what you are doing then individual stocks bought at the right time could return in a few days or weeks more than the S&P 500 could return in a decade!
Need to compare apples to apples. What you have suggested is apples to oranges. I can go to Vegas and bet on red or black and double up in 15 seconds. But that's gambling, or when done in the stock market, that's speculating. TSLA isn't even making money yet I don't think.

Rosencrantz1
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Re: Chasing Individual Stocks

Post by Rosencrantz1 » Wed Jun 03, 2020 3:59 pm

stocknoob4111 wrote:
Wed Jun 03, 2020 1:47 pm
Rosencrantz1 wrote:
Thu May 21, 2020 9:24 pm
Yeah, that's gutsy. I can't imagine putting $100K into ONE stock. I've heard that old saying ... no guts, no glory...
same friend who chases individual stocks bought the airlines and the cruise lines at their lows and is now laughing all the way to the bank!! He bought Royal Caribbean at the lows and it's up 70% now since he bought it :shock: He also bought Tesla at $680 and now it's close to $900. Luck or skill? Who knows...

If you know what you are doing then individual stocks bought at the right time could return in a few days or weeks more than the S&P 500 could return in a decade!
Yeah - I've heard some stories like this. My best pick has been MGM - of which I bought starting at $7.25/share and continued buying up to about $13. So far, it's working out. Bought some MCD in the low 140s too - that's working so far too. On the down side, I bought some shares of Luckin AFTER their fraud announcement looking for a little pop - but, sold it a few days later and took the loss of a few $$. Such is life - win some - - lose some. The upside is that I'm most definitely 'up' so far with the few individual stocks I own.

'TINA' keeps luring me towards equities - I just have a hard time putting my $$ to work earning 1.xx%. Of course, if the market crashes tomorrow, cash at 1% would look really good...

disclosure: I've held AAPL for many, many years. YMMV.

dugtoni
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Re: Chasing Individual Stocks

Post by dugtoni » Wed Jun 03, 2020 4:44 pm

I have found myself in a similar situation of having picked a bunch of individual stocks in early April, and now I am getting tired out of keeping track of them. I am really just getting started in investing, and the market crash kind of pushed me into it, as I saw several really solid companies being sold at a huge discount, and I wanted to take advantage of it. I have made out ok, up about $1,200 on $8,000, but I really don't have the time or energy to be paying attention to how these stocks are doing, and would prefer just a few ETFs. So I am facing the dilemma of whether to just cash out and take the short term capital gain hit, or keep these individual stocks for a year until they turn into long term capital gains.

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