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Thread: The Stock/Investment Thread

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    Default The Stock/Investment Thread

    I suspect a few of us are amateur investors. We once had a thread in the Atari CC that netted me a few good ideas (and one really bad one). But why not have a thread to discuss this stuff among those who are interested?

    As you may have noticed, S&P lowered its outlook for US debt. This somewhat refreshing bout of honesty sent stocks downward. Knowing full well there's a chance they will go down further, I decided to populate my new IRA with a few picks.

    Because I'm building an IRA, I'm focusing my choices on stocks that pay decent dividends, are in industries unlikely to go away and are generally market-leaders in their field. Overall this is not a particularly intensive strategy, but it's meant to be a long-term thing. So today I bought:

    Exxon
    Kraft
    JPMorgan
    WalMart

    I am a bit skeptical on WalMart, because it's not totally clear to me that they can sustain international growth.

    Anyone here make any semi-recent moves?

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    One of the stocks I had mentioned in the past, that I would've been interested in purchasing had I had the money to do so, recently doubled and stayed that way for about a day before falling back off to around its usual levels.

    I also have to do something like this as I have money vested with the company of the first job I ever held, and its set to be forfeit on the 31st of December 2012. It also currently sits at around $1000, so...must do something.

    You also would have done well to listen to my BP buying advice and waiting to sell on it...

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    I haven't had time to do proper research lately. Job's kept me too busy. I've just been shoving my money into mutual funds.

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    Quote Originally Posted by Illusions View Post
    One of the stocks I had mentioned in the past, that I would've been interested in purchasing had I had the money to do so, recently doubled and stayed that way for about a day before falling back off to around its usual levels.

    I also have to do something like this as I have money vested with the company of the first job I ever held, and its set to be forfeit on the 31st of December 2012. It also currently sits at around $1000, so...must do something.

    You also would have done well to listen to my BP buying advice and waiting to sell on it...
    A penny stock, really? Seems really risky, that's a volatile stock that hasn't had a great trajectory. Why do you like it?

    I did actually buy a bunch of BP stock this summer. Made 16% on it. I'm vaguely considering buying more because they may be a takeover target and the stock is depressed a bit due to their failed deal in Russia. But I don't really want to throw any more money at it.

    RE your options at your former employer-- is the company doing well? Can you sell the options instead of risking money on the stock?

    Quote Originally Posted by Wraith View Post
    I haven't had time to do proper research lately. Job's kept me too busy. I've just been shoving my money into mutual funds.
    Alas, at what fee? I've become a real stickler for fund fees of late. I find this tool really useful: http://www.sec.gov/investor/tools/mfcc/mfcc-int.htm

    Basically allows you to compare fund fees over time. Makes my boring Vanguard funds look really worthwhile.

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    Quote Originally Posted by Dreadnaught View Post
    A penny stock, really? Seems really risky, that's a volatile stock that hasn't had a great trajectory. Why do you like it?
    1. They're actually pretty predictable. They go up rather rapidly and then come down. Usually not more than a few halves of a cent or so.

    2. Read the LTHU Details. They seem to have a pretty stable market for what they do and it doesn't look like they're just going to up and go out of business anytime soon, especially in regards to any growing demands for lithium and related battery/energy technologies.

    3. They would not be a long term investment. I would've bought on days it went down, and sold on the days it went up. So on the day it went down to .024/.022 I would've sold the very next day when it hit .04/.044. Even if I completely missed a day I could've sold it at .035. Those don't seem like bad returns. Especially for not doing much of anything.

    4. With the amount of money I'd be investing (I'm unsure how much fees for online investing, buying, and selling are so that could mess up any plans), but their volatility means I'd be buying and selling stock once or twice or more a week, but seeing anywhere from $100 - $800 from each sale. Which isn't bad for a week compared to what I make now in retail. In fact that recent blip where they doubled in one day would've meant I'd have made more in one day from them than an entire year in retail. But their volatility combined with the amount of money I'd be investing would mean I'd be wiped out financially if they crapped out.

    5. I'm also unsure if buying and selling one company's stock in this manner is moral, or how they'd feel about it. It seems like it'd be way too easy to make money this way (sitting watching a stock ticker, buying low, selling high, compared to lifting boxes and stocking shelves 20+ hours a week). There either is some flaw to my plan, or some other problem that should crush it, like fees etc.

    I did actually buy a bunch of BP stock this summer. Made 16% on it. I'm vaguely considering buying more because they may be a takeover target and the stock is depressed a bit due to their failed deal in Russia. But I don't really want to throw any more money at it.
    Had you stuck with it longer you could've stood to make more

    RE your options at your former employer-- is the company doing well? Can you sell the options instead of risking money on the stock?
    Its profit sharing, not stock, so...but otherwise, the one doctor left who helped found the office is past retirement age, so he could retire anytime he wants, this would leave them with one doctor, who, while a good doctor, does not have as long of a history with patients who come there (years versus decades), nor as many patients that were seen by the one who would be retiring. They should still be in business though through the forfeit date.
    Last edited by Illusions; 04-19-2011 at 02:26 AM.

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    Maybe they will buy you out or something? Say you won't exercise the option for a fee? After all, they would probably like the shares to stay under their tent.

    Oh, I didn't sell the BP stock I'm still holding it. My overall philosophy seems very different from yours. I like to make long-term trades, with a few short-term wildcards here and there.

    I really don't think trading on the volatility of penny stocks is a great long-term strategy. It's basically a casino over the course of time because the volatility you're trading on isn't based on much more than the volume itself. IE you're trading on the volatility in a very small pool...with others who are likely also trading on the volatility.

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    Quote Originally Posted by Dreadnaught View Post
    Maybe they will buy you out or something? Say you won't exercise the option for a fee? After all, they would probably like the shares to stay under their tent.
    Its not shares of anything, its invested money. It was one of the job benefits.

    Oh, I didn't sell the BP stock I'm still holding it. My overall philosophy seems very different from yours. I like to make long-term trades, with a few short-term wildcards here and there.
    I would've sold BP the moment it hit above $40 per share.

    I really don't think trading on the volatility of penny stocks is a great long-term strategy. It's basically a casino over the course of time because the volatility you're trading on isn't based on much more than the volume itself. IE you're trading on the volatility in a very small pool...with others who are likely also trading on the volatility.
    Wouldn't be a long term strategy though, and I definitely wouldn't be looking to retire this way. Its more of a "How can I focus more time on doing stuff I enjoy and less on manual labor?". I still really don't get the casino thing you and Rand like to refer to. With gambling, or the related games of chance, while you can have a strategy your outcome is still reliant on random chance. This seems more like betting on a roller coaster. If you see it going up, you can be fairly certain that pretty soon its going down. If it goes down pretty far, its likely to start going up again. My worry is having money invested and the ride stopping, or fees/legalese eating it.

    Do you invest online? If so how are the fees? If you've bought/sold, how long has it usually taken for it to be bought/sold?

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    Ohhh, so you bought a stake in the company. I was perhaps thinking of "vested" in the traditional sense of a company giving you options that vest. So then what is the choice ahead of you?

    Now the question is even more on-topic!

    ***

    I use ING Direct for my cash savings and have found their affiliate Sharebuilder good for trading. Plus the integration between the savings account and the trading side helps if I want to move quickly on something. $9.95 per trade, with the usual options for dividend reinvestment, etc. I track performance by manually uploading trades into profiles in Google Finance, though tracking dividends in Google Finance is a fracking mess and I don't do it.

    My buying/selling cycle is pretty long. Right now I'm focused on accumulating long-term investments, so I sell rarely. What I have sold has usually been after 8-12 months.

    My goals are also modest at this point; now that I've saved enough cash for emergencies, I'm focused on earning a return that's higher than my savings account (without touching my emergency savings fund).

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    Quote Originally Posted by Dreadnaught View Post
    Ohhh, so you bought a stake in the company. I was perhaps thinking of "vested" in the traditional sense of a company giving you options that vest. So then what is the choice ahead of you?

    Now the question is even more on-topic!
    It can only be moved to a retirement fund. I don't really have enough time to research them, nor would I likely be the best at understanding what said research was telling me, so I have yet to do anything with it. I was looking into IRA's, but I'm not exactly sure what to do there.

    Also I myself didn't. It was one of the benefits that I was given for working there after X amount of years. The amount I'm vested was based on the amount of money I was earning + how long I continued working there after the original amounts were invested.

    I use ING Direct for my cash savings and have found their affiliate Sharebuilder good for trading. Plus the integration between the savings account and the trading side helps if I want to move quickly on something. $9.95 per trade, with the usual options for dividend reinvestment, etc. I track performance by manually uploading trades into profiles in Google Finance, though tracking dividends in Google Finance is a fracking mess and I don't do it.

    My buying/selling cycle is pretty long. Right now I'm focused on accumulating long-term investments, so I sell rarely. What I have sold has usually been after 8-12 months.

    My goals are also modest at this point; now that I've saved enough cash for emergencies, I'm focused on earning a return that's higher than my savings account (without touching my emergency savings fund).
    Any ideas of how bad it could get for me? Simply from this thread I'm tempted to use a part of my tax refund, $2500, to do some experimental trading for a month and see how it goes. If I could out perform my retail job in earnings though, the extra time could be put towards improving my resume and searching for another job, or just having extra money on top of whatever else I earn. Minimum wage + Part Time sucks to all hell when you're paying off $400 a month worth of college loans.

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    Short Google, McDonald's, and gold. (1 year horizon)

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    Quote Originally Posted by agamemnus View Post
    Short Google, McDonald's, and gold. (1 year horizon)
    Hmmm betting on a big rebound here in the states? I'll be curious to hear how this worked out in a year.

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    From the time Nintendo announced the Wii in 05 till it launched in 06, Nintendo's stock almost tripled. From then till its peak the stock doubled again. The stock has returned to more a level value now, but Nintendo is expected to announce its next console soon, and rumor mills are claiming its going to be a true powerhouse this time, and its coming to market well before the competition, its something I'm going to be watching.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

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    Quote Originally Posted by agamemnus View Post
    Short Google, McDonald's, and gold. (1 year horizon)
    The gold one I think isn't a great idea. Big reasons for its rise in value is the number of Chinese and Indians that can now afford it, and they're just not going to suddenly get poor again.

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    The only investment I believe in at the moment is money, and maybe gold. I'm still angry at Ronald for keeping me back on gold. I proposed a plan to start buying in 2005 but he vetoed it.
    Greece shows us that there is a kind of politician worse than the ones that break their election promises; the ones that keep their election promises.

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    Quote Originally Posted by Wraith View Post
    The gold one I think isn't a great idea. Big reasons for its rise in value is the number of Chinese and Indians that can now afford it, and they're just not going to suddenly get poor again.
    The price of gold is a combination of 3 things, or so--
    Its use in jewelry and industry -- rising slightly.
    The labor and energy cost of extracting it -- rising.
    Demand as an investment asset. Rising, a lot.

    All bubbles look good until they burst. What will happen when golds starts teetering? People will sell it in a panic. Gold will be less attractive as the US, South American, and European economies recover 2011-2012, even with the real inflation that it brings...

    Gold has been increasingly volatile IMO in the past few months, a sign that way more people are buying it for speculation than long-term holding or actual use. Late last year it started going steady in price before crashing and then rising like mad for no reason...

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    Quote Originally Posted by Illusions View Post
    It can only be moved to a retirement fund. I don't really have enough time to research them, nor would I likely be the best at understanding what said research was telling me, so I have yet to do anything with it. I was looking into IRA's, but I'm not exactly sure what to do there.

    Also I myself didn't. It was one of the benefits that I was given for working there after X amount of years. The amount I'm vested was based on the amount of money I was earning + how long I continued working there after the original amounts were invested.
    Gotcha, sounds like a pretty standard equity plan with restricted shares. Except for the part where you have to decide what to do with it. Or are they just making you move the shares into a management account that you control so they stop paying fees on it?

    Because you've already gotten the shares and presumably paid taxes, a Roth IRA probably makes sense because the appreciation on the shares will be tax free if don't sell before you're 65. That's sort of a long-term proposition there, so a lot depends on what you think the outlook of the company is.

    Unless they put these shares into a 401(k) where the contributions are tax-free. In which case just keep them there, that's the easiest thing to do. It seems a bit silly that you can't just put it into a regular non-retirement account.

    Any ideas of how bad it could get for me? Simply from this thread I'm tempted to use a part of my tax refund, $2500, to do some experimental trading for a month and see how it goes. If I could out perform my retail job in earnings though, the extra time could be put towards improving my resume and searching for another job, or just having extra money on top of whatever else I earn. Minimum wage + Part Time sucks to all hell when you're paying off $400 a month worth of college loans.
    I think it's of course possible to have hits. But most active managers who trade stocks regularly don't outperform the major market indexes. And computers using algorithms to sniff out these rapid opportunities will eventually stumble on the penny stocks you're looking at and could beat you to the punch.

    You may want to consider a compromise. Take half of your refund and invest it in some long-term but fairly conservative bets that also pay some dividends (utilities, CPG, energy, maybe some tech), and walk away. Then take the other half and actively trade it. Then check back in 12 - 18 months and see how far ahead you are. And if you did mak more from actively trading, was it enough to be worth the time you spent.

    ****

    Ag- Shorting gold makes some sense because there is a good chance the price increases are an asset bubble. But why short McDonalds and Google? Both are growing quickly, have solid performance and have made clear signs they intend to expand.

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    Quote Originally Posted by Dreadnaught View Post
    I suspect a few of us are amateur investors. We once had a thread in the Atari CC that netted me a few good ideas (and one really bad one). But why not have a thread to discuss this stuff among those who are interested?

    As you may have noticed, S&P lowered its outlook for US debt. This somewhat refreshing bout of honesty sent stocks downward. Knowing full well there's a chance they will go down further, I decided to populate my new IRA with a few picks.

    Because I'm building an IRA, I'm focusing my choices on stocks that pay decent dividends, are in industries unlikely to go away and are generally market-leaders in their field. Overall this is not a particularly intensive strategy, but it's meant to be a long-term thing. So today I bought:

    Exxon
    Kraft
    JPMorgan
    WalMart

    I am a bit skeptical on WalMart, because it's not totally clear to me that they can sustain international growth.

    Anyone here make any semi-recent moves?
    Just out of curiosity what are your investment goals?

    Is stock picking a hobby for you or do you think you will get a better return then just putting it in mutual funds?

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    My goals are medium/long term capital appreciation, with a secondary goal of generating some income from dividends.

    Most of my non-cash savings is in Vanguard mutual funds in a 401k, so it's effectively locked-away in mutual funds until I'm 65. So my goal with individual stock choices is to build a separate money pile I can tap earlier in my life (home purchases, wedding, etc).

    I do use a few mutual funds, but candidly I want to diversify away from them a bit and possibly make some solid picks with lower fees, fewer restrictions and direct dividend income that I'll probably enjoy having around over the next decade or two.

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    Quote Originally Posted by Dreadnaught View Post
    My goals are medium/long term capital appreciation, with a secondary goal of generating some income from dividends.

    Most of my non-cash savings is in Vanguard mutual funds in a 401k, so it's effectively locked-away in mutual funds until I'm 65. So my goal with individual stock choices is to build a separate money pile I can tap earlier in my life (home purchases, wedding, etc).

    I do use a few mutual funds, but candidly I want to diversify away from them a bit and possibly make some solid picks with lower fees, fewer restrictions and direct dividend income that I'll probably enjoy having around over the next decade or two.
    The reason I ask is because most financial advisers I've read/seen on TV don't suggest picking individual stocks unless you have a lot of dough to play with. Between mutual funds and ETFs you can get all the diversity you need. And unless you are making very large trades, those transaction costs will be more then fees.

    Now don't get me wrong, investing in individual stocks can be fun and exciting. I myself did it with 1k and it was enjoyable following the stocks. I just don't think its a good idea to do with serious money unless you have a lot of it and know what you are doing.

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    Indeed, trying to beat the market tends not to work (that's what I've been saying to Illusions). But you if you do your research you can make some smart, long-term bets in specific areas and perform very well. But that tactic just can't be relied-upon as your primary source of savings and asset growth.

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    Retail investors should never try to time or beat markets. Not that retail investors aren't smart or savvy enough, but that several other market makers or market movers-shakers are competing against the little guy. No way the little guy can can come out ahead, unless you think being the tail of crack-the-whip is exhilarating.

    Sell in May and go away.

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    Quote Originally Posted by Dreadnaught View Post
    ****

    Ag- Shorting gold makes some sense because there is a good chance the price increases are an asset bubble. But why short McDonalds and Google? Both are growing quickly, have solid performance and have made clear signs they intend to expand.
    McDonald's:
    Just look at how far they've grown in profits/stock price, and the expansion potential. Sure they changed their strategy and started offering healthier food, but that can only take you so far. (a 600% increase in stock price over 6 years or so) They have not that much of an advantage over local chains. Furthermore, McDonald's demand peaks when the economy is slow (since it's cheap), and drops off when the economy gets going again.

    Google:
    They are growing via acquisitions, not innovation, and have been for a while. Just like McDonald's, unless they come up with something totally new, there is nowhere left to grow.

    Google, McDonald's, and gold. I don't see anywhere to go but down. Sure, McDonald's is expanding, even in my state in Massachusetts -- because they have cash, not because of sane decision-making. Sure, gold is going up right now because idiot investors think that the US won't raise the debt ceiling and everyone is concerned about inflation, but I think that inflation has already been factored into gold prices several times over. Sure, youtube is popular... but it was popular before.

    You all should give me all your money. I'll take good care of it and I'll only take 10% of the profit...

  23. #23
    Quote Originally Posted by Dreadnaught View Post
    As you may have noticed, S&P lowered its outlook for US debt. This somewhat refreshing bout of honesty sent stocks downward. Knowing full well there's a chance they will go down further, I decided to populate my new IRA with a few picks.
    This is actual total nonsense, but it's not a bad idea to buy stocks on the cheap if you're bullish on the long-term prospects of the economy. Actually, Asian and European markets were down before S&P's news came out, largely due to concerns over Portugal and Spain and some poor global economic indicators. S&P's downgrade wasn't news, and I doubt it had a significant effect on the 'smart money' - Pimco, for example, has been moving out of Treasuries for quite some time now in a very public manner.

    Because I'm building an IRA, I'm focusing my choices on stocks that pay decent dividends, are in industries unlikely to go away and are generally market-leaders in their field. Overall this is not a particularly intensive strategy, but it's meant to be a long-term thing. So today I bought:

    Exxon
    Kraft
    JPMorgan
    WalMart

    I am a bit skeptical on WalMart, because it's not totally clear to me that they can sustain international growth.

    Anyone here make any semi-recent moves?
    I never really understood the logic of trying to outsmart the market. I just buy a handful of index funds for my IRA based on my asset allocation. My wife's 401(k) is a little more limited in its choices, so we stick to the best (and cheapest) funds of the lot. If you just want to weight towards blue chips, there are decent indices for that as well that have minimal costs and are far better diversified than any personal weighting.

    Just my two cents, though. If I was doing it for fun (rather than building a nest egg) I'd probably look at individual choices as well, but I wouldn't go for something like blue chips.

    Okay, I just read the rest of the thread. I guess even though it's in an IRA (I assume a Roth?) you're not considering it your retirement savings. In that case, go ahead. I simply don't have enough extra money to consider investing for fun right now. Most of my investment time horizons are either too short to stomach the volatility of stocks (e.g. for a down payment, that sorta thing) or too long to be able to effective beat an index fund with any reliability.

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    Senior Member GGT's Avatar
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    Sell in May, take profits, and go away.

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    Quote Originally Posted by agamemnus View Post
    McDonald's:
    Just look at how far they've grown in profits/stock price, and the expansion potential. Sure they changed their strategy and started offering healthier food, but that can only take you so far. (a 600% increase in stock price over 6 years or so) They have not that much of an advantage over local chains. Furthermore, McDonald's demand peaks when the economy is slow (since it's cheap), and drops off when the economy gets going again.

    Google:
    They are growing via acquisitions, not innovation, and have been for a while. Just like McDonald's, unless they come up with something totally new, there is nowhere left to grow.

    Google, McDonald's, and gold. I don't see anywhere to go but down. Sure, McDonald's is expanding, even in my state in Massachusetts -- because they have cash, not because of sane decision-making. Sure, gold is going up right now because idiot investors think that the US won't raise the debt ceiling and everyone is concerned about inflation, but I think that inflation has already been factored into gold prices several times over. Sure, youtube is popular... but it was popular before.

    You all should give me all your money. I'll take good care of it and I'll only take 10% of the profit...
    Gotta say I disagree. McDonald's stock price has grown 124% over the past five years, and that's comparable to other players in the space like YUM brands. They have solid margins and have grown in both good and bad economies.

    Google's stock has been flat because it seems like they don't care much about the value of the stock. They provide no guidance, no dividends and no breakdown of revenues. This is why I'm not buying stock. But that doesn't mean there is an underlying strength to their business.

    I remember two quarters ago they said they were making $1 billion from YouTube, $1 billion from mobile ads and growing their overall display ad business very quickly (EG the ads on top of this site). Those revenues aren't coming from acquisitions per se, they are buying technology that isn't earning anything and turning it into cash.


    Quote Originally Posted by wiggin View Post
    I never really understood the logic of trying to outsmart the market. I just buy a handful of index funds for my IRA based on my asset allocation. My wife's 401(k) is a little more limited in its choices, so we stick to the best (and cheapest) funds of the lot. If you just want to weight towards blue chips, there are decent indices for that as well that have minimal costs and are far better diversified than any personal weighting.

    Just my two cents, though. If I was doing it for fun (rather than building a nest egg) I'd probably look at individual choices as well, but I wouldn't go for something like blue chips.

    Okay, I just read the rest of the thread. I guess even though it's in an IRA (I assume a Roth?) you're not considering it your retirement savings. In that case, go ahead. I simply don't have enough extra money to consider investing for fun right now. Most of my investment time horizons are either too short to stomach the volatility of stocks (e.g. for a down payment, that sorta thing) or too long to be able to effective beat an index fund with any reliability.
    I'm not trying to outsmart the market as much as I'm making long-term investments that I think will grow at/slightly-better than the overall market while also providing income.

    In 1985 my grandmother bought my sister about $200 worth of shares of McDonalds. Between dividend reinvestment, splits and capital appreciation the "gift" is now worth something like $19,000. While I agree index funds are great, they can sometimes dilute the value of making a few smart but conservative long-term picks (via fees, rebalancing, etc).

    By no means do I think I'm some sort of stock-picking genius. I believe in index and mutual funds. Most of my money is there. But I like to diversify (or is this reverse-diversify?).

  26. #26
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    Good luck. The stock market hasn't looked like 1985 since....1985. The fundamentals have changed. Buy and hold isn't what it used to be. Not even for blue chips. It's a whole new world, and emerging economies are in play.

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    Sry I got sloppy.. it is 8 years not 6, and it went up to over 600% its March 2003 price if you count the dividends. The stock went down in 1999-2003, generally considered economic good times except for a few crashes here and there... only started recovering for reals in 2006...

    YUM--> kfc, Pizza Hut... fast food, same category, grew less..

    Another thing to look at with these things is P/E. 19.3 for google, 17.3 for Mcd, less for IBM (15) Microsoft (13). Maybe short YUM too as its P/E is 21..

    Intel's P/E is 10... its share price has had no growth in 8+ years. A bargain. This shows at least to me that P/E+share trend is an indicator of how investors expect a stock to behave in the future. They expect Intel to stay where it is and MCD to grow, possibly Google too.
    Last edited by agamemnus; 04-21-2011 at 05:40 AM.

  28. #28
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    I've discovered that one of the methods I was intending to use for buying/selling stocks is called day-trading...

  29. #29
    Quote Originally Posted by Dreadnaught View Post
    I'm not trying to outsmart the market as much as I'm making long-term investments that I think will grow at/slightly-better than the overall market while also providing income.

    In 1985 my grandmother bought my sister about $200 worth of shares of McDonalds. Between dividend reinvestment, splits and capital appreciation the "gift" is now worth something like $19,000. While I agree index funds are great, they can sometimes dilute the value of making a few smart but conservative long-term picks (via fees, rebalancing, etc).
    Why don't you just go for a dividend index and leave it at that, then? You really have no idea what Exxon's position will look like in 25 years given volatility in energy markets, and JPMC's current success may be largely due to Dimon's smart moves, and he's certainly not going to be around for forever.

    I don't know about you, but I like rebalancing since it automatically works out to value investing - buying the stocks in an index that are currently cheap while selling the currently pricy ones. Obviously if you knew which ten stocks would be the best performing over your investment time horizion, that would be a stupid strategy but the fact of the matter is that over such a long time period it's utterly bogus to suggest you know that. If you have a vague idea (you seem to be leaning towards large dividend-paying stocks), there are sectoral index funds that can get you much broader exposure with probably similar long-term returns. Saying you're confident in a few 'smart but conservative' picks really means you think you can guess which large cap dividend paying stock is going to outperform the others over a quarter century. I'm very skeptical of that claim. Warren Buffet can do it, largely due to the intense scrutiny he places his acquisitions under as well as the inside access he gets, but I'm skeptical that an amateur investor can do it just as well.

    I understand your concern about fees, and given a sufficiently large trade in the beginning combined with a long holding period, you can probably beat an no-load index ETF, but the difference is really pretty small for investment periods much less than a century.

    By no means do I think I'm some sort of stock-picking genius. I believe in index and mutual funds. Most of my money is there. But I like to diversify (or is this reverse-diversify?).
    Definitely reverse-diversifying here. That's fine, but you should recognize that you're concentrating your risk in the hopes of marginally higher returns.

    That being said, your picks aren't bad in the sense that dabbling in penny stocks would be. They're probably decent long term investments. I just wouldn't want to wager that those specific picks will do better than their peers over a sufficiently long time period. *shrugs*

    Quote Originally Posted by agamemnus View Post
    Sry I got sloppy.. it is 8 years not 6, and it went up to over 600% its March 2003 price if you count the dividends. The stock went down in 1999-2003, generally considered economic good times except for a few crashes here and there... only started recovering for reals in 2006...

    YUM--> kfc, Pizza Hut... fast food, same category, grew less..

    Another thing to look at with these things is P/E. 19.3 for google, 17.3 for Mcd, less for IBM (15) Microsoft (13). Maybe short YUM too as its P/E is 21..

    Intel's P/E is 10... its share price has had no growth in 8+ years. A bargain. This shows at least to me that P/E+share trend is an indicator of how investors expect a stock to behave in the future. They expect Intel to stay where it is and MCD to grow, possibly Google too.
    Your problem, agamemnus, isn't that in general some of these stocks may be overvalued (though P/E ratios are notoriously misleading, especially in the last year or so) and that gold is clearly in bubble territory. The issue is that you want to short those stocks over the next year. Essentially, you believe you have a crystal ball that tells you the gold bubble will pop in the next 12 months, and that two companies with pretty solid fundamentals will suffer a serious crash (one a mature dividend-paying stock with some decent growth potential; another technology company with a dominant market position and a boatload of cash). I'm not saying there isn't likely to be a correction in all three stocks eventually, but you know the timing to within a year? That's a pretty big gamble.

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    Quote Originally Posted by wiggin View Post
    Your problem, agamemnus, isn't that in general some of these stocks may be overvalued (though P/E ratios are notoriously misleading, especially in the last year or so) and that gold is clearly in bubble territory. The issue is that you want to short those stocks over the next year. Essentially, you believe you have a crystal ball that tells you the gold bubble will pop in the next 12 months, and that two companies with pretty solid fundamentals will suffer a serious crash (one a mature dividend-paying stock with some decent growth potential; another technology company with a dominant market position and a boatload of cash). I'm not saying there isn't likely to be a correction in all three stocks eventually, but you know the timing to within a year? That's a pretty big gamble.
    Yeah it is a gamble. That's why I'd diversify into having 33% McD, 33% goog, and 33% gold short contracts. Further, the stocks only have to crash, not the companies themselves... I don't have any money to try out this strategy myself though, which is why I need your money! :P

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