Post by: Phantom Warrior on April 29, 2006, 05:38:55 AM
I'm looking for good long term picks, not something I can buy, wait for a quick jump and then dump for a fast buck. I'm not sure what of think of individual stocks as a strategic choice, but it's something I'd like to get into a little bit. For educational puposes, if nothing else.
McDonalds is my first choice. I worked for them for a number of years and they are a company I'm interested in owning a part of. I also think they are stable and have a sound business plan. Beyond that, I'm looking at stocks like Coca-Cola, Texas Instruments, Microsoft, Apple, and others.
I'd like to get into no more than one to three stocks (including McDonalds). What stocks have you found to be reasonably profitable and been glad you bought?
I'm aware that stocks should be just a part of my financial planning. I'm already socking away money into mutual funds and putting 10% of my paycheck into TSP. Yes, the money I'm putting into stocks is money I can afford to lose.
Post by: 280plus on April 29, 2006, 07:32:02 AM
Post by: Telperion on April 29, 2006, 08:31:48 AM
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UTX has always been a good performer for me.
orQuote
McDonalds is my first choice. I worked for them for a number of years and they are a company I'm interested in owning a part of. I also think they are stable and have a sound business plan.
This is just wonderful but not very helpful. Will UTX continue to perform (and outperform the market), and why? Why is MCD stable and what is their business plan? Stockpicking isn't about one-sentence justifications. Read some works by successful stockpickers like Peter Lynch and Warren Buffett and understand how they think about stocks. When you find a stock you like, pretend like you are giving a presentation to one of these guys on why they should buy it. Anticipate the kind of questions that they'll ask. You could even make it a real presentation. Deliver it to the most hardcase analytical person you know, and see if they're ready to open their checkbook by the end.
Post by: French G. on April 29, 2006, 09:52:41 AM
), a popular stock much like a popular lady may have recieved to much attention from others to give you much future performance once you get in. And finally with both there is the bad break-up when reality sets in. I will freely admit I have no formal education in finance. I have about $4700 in play money right now in stocks. I have quite the chunk of real estate equity and TSP for safer investments. I find stocks in many ways, mostly reading financial news. I start to get interested when a large American company takes it in the shorts on quarterly earnings. Or a large company gets sued. Basically I am a vulture, looking to pick up stocks others don't want, yet that they will want in the future. Any time I get interested in a stock I write it down, what got me interested, and I watch it for awhile, even if I don't have money to buy. Stock watching helps confirm my decision making process, I am getting pretty mad at myself, all the stocks I should have bought 2 years ago are raging now. That helps me have confidence in me. So, back to relationships, know thyself. How you like to buy, your goals, fears, tolerance for risk and worry. I read something the other day that says most investors fear loss twice as much as they get pleasure from gain, so a 20% loss will influence their stock decision making way more than a 20% gain. So, they hold losers, and sell winners. Decide your loss limit before you buy. Evaluate a loser, is it time to sell, or is it temporary and time to buy more?
Example, I have bought Intel for a few years, right now my average cost is about $25 a share. Trading at $20 right now. I think it is going to go pretty strong this fall, so I am holding, wish I could buy more.
I recently did some remodeling to the portfolio,
Bought GNA yesterday at $10, solid bet based on earnings and sales, a young public trading history, I am somewhat speculating on the next earnings report, but if it drops I'll buy more.
Freeing up cash to buy TLM, I think it is going to tear thing up the next few months. Oil that doesn't come from the sandbox, what is not to like? A departure for me, the stock is not out of favor right now, but with favorable analyst recommendations aplenty, oil stocks doing well, oil not getting any cheaper, an earnings report in two weeks and a 3 for 1 split in a month I think the time is now.
I sit on a small position of Sherwin williams, SHW. I impulse bought $500 of it the day a lawsuit went against them, I was up 20% in a week and remain there once people saw how dumb the lawsuit was and punitive damages were denied. (I have bought and sold Merck recently too, and may buy again. I love lawsuits). The more I look at SHW's historical performance I want to buy more. Solid, unexciting company, they make money, and paint on the side apparently.
Another good bad news move was Du-pont, DD, I bought some when it was depressed by Katrina based worries, A great stock for buy and hold, I will probably buy back in the near future.
Did similar in and outs on LXK and NOC, based on bad news, got some good money and in NOC's case dividends along the way, got out.
Those make up for some bad moves, such as holding Home Depot in 2003 at $21 a share and cashing out at $25 because I had to pay bills. Don't do that, have extra money for stocks, extra savings for when the car breaks. HD now trading $39-40. Looking at the 5 year chart, damn did I ever buy at the right time, Jan 2003 to be exact. Doh!
Most of my bad stuff has been that, selling too soon because I needed money in the real world. That is like having to buy baby formula with your poker chips. All in all I am up about 5% for my stock investing life, not too bad for my self taught stock market school. I am now transitioning my plan where I reinvest earnings from my quick moves(1-6 months, not day-trading) into long term picks. Preferably once again big american companies with a good DIVIDEND, in an online account that has free dividend reinvsetment. I will continue to spend some of my money on short term buy and sell, I learn a fair amount doing it and it suits me since it apparently is more legal than online poker and blackjack. Same basic principles for me on the short term deal, are the odds in your favor(solid company, likely to rebound), can I afford to lose my bet(Scared money makes no money).
What I am trying to learn now is more chart reading, I read the earnings filings now of anything i am interested in, I am also trying to start looking at Price/Book ratios and Price?Sales ratios as a gauge. Not ignoring P/E, just looking at it less. I am also trying to learn to use stock screeners to find potential buys.
So, in the end, don't date your buddy's girlfriend. Anything I may know or think I know, or like means squat to you. Any recommendation, look it over yourseld, decide what is right for you, learn from your mistakes and keep a journal. And have fun!
Post by: Art Eatman on April 29, 2006, 10:15:16 AM
Commodiity companies are the preferred sector.
All these companies are up since their entry in 2004, 2005 and 2006, with "buy" recommendations: Bunge Limited; Kennametal; Valero; Peabody Energy Corp. Easy enough to check them out via Google and do your own due diligence.
Valero (oil company) was already pretty much vertically integrated, and they're now buying into mom'n'pop filling stations along I-10...
Art
Post by: Phantom Warrior on April 29, 2006, 10:37:44 AM
Post by: Telperion on April 29, 2006, 11:14:02 AM
Institutional ownership was low, meaning the mutual fund managers hadn't found out about this stock yet. Only 2 or 3 analysts were paying attention to the earnings, and none of them bothered to write a report. As a plus, the company (even their name) was boring. They run pawn shops and paycheck advance services -- where's the excitement in that? This was beginning to shape up like a real opportunity: a way to get in before Wall Street did.
I did some more research over the next couple of weeks and was convinced this company was serving a market that many others were not and had an excellent opportunity to grow. I did have some questions, so I called up the company and asked to speak with investor relations. The guy who answered my call introduced himself and his name sounded familar. I looked down at the company's financial report and see his name; I was speaking to the president of the company. We chatted for about 15 minutes and I was pleased with the answers. The next day I placed my first order.
Since then (about 3 years ago), the stock has split twice, going up nearly 400%. The mutual fund pros now own a much larger chunk of the company, and six analysts are watching the stock and writing reports. Now I just wish I had more to invest back then.
Post by: 280plus on April 29, 2006, 11:40:01 AM
Post by: French G. on April 29, 2006, 02:02:37 PM
280, I certainly wasn't picking on you with UTX. If you bought in '98 you should be happy.
On an unrelated tangent, would anyone want to buy Google now? I would have at the IPO, and I may after the big crash, but it sure is out of hand to my mind.
You mentioned Microsoft. A pretty unexciting(read safe) stock in a range of 23.5 to 30 for the last 3 years. It loses 10-15% on bad news and quickly recovers. As it was off $3 friday on earnings and forecasts it may be time to buy soon. But hey, I am a vulture, I am trying to decide when to buy some Ford.
Post by: 280plus on April 29, 2006, 04:31:54 PM
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280, I certainly wasn't picking on you with UTX. If you bought in '98 you should be happy.
I know, it was tele's comment I was taking exceptiuon to. Not a whole LOT of exception mind you but I just want to make sure people know I'm not pulling that one out of my nethers, if you know what I mean... And YES!! I'm pretty happy with it.
Post by: The Rabbi on April 29, 2006, 04:46:40 PM
Post by: Justin on April 29, 2006, 08:03:56 PM
Find a professional who can help you flesh out your long-term financial goals.
The ROTH IRA is your friend. It allows you to invest $4,000/year tax free. (The hitch being that you can't take it out before retirement without getting nailed by taxes.)
Go to your bank, or through your chosen investment person to set up an automatic monthly deduction that gets put directly into your portfolio. That way you don't even miss the money.
Be prepared to wait. It will take a few years for things to get rolling to the point where compounding interest starts to become noticeable.
Post by: Phantom Warrior on April 30, 2006, 02:03:21 AM
Post by: French G. on April 30, 2006, 03:33:37 AM
Still a day to register. I find it interesting that since the start 4 April I am up only 11% in value but I am right now in the top 6% in the rankings. Not a snowball's chance in hell of winning, but if I make it to the leaderboard I'd be happy. If I am up 11% and ranked where I am, I figure maybe 20% are break even or better. Lots of crash and burn, which is to be expected in balls to the wall speculation.
Post by: The Rabbi on April 30, 2006, 06:55:43 AM
Quote from: Justin
If you're looking for good, long-term performance in a conservative investment, consider looking at mutual funds.
Find a professional who can help you flesh out your long-term financial goals.
The ROTH IRA is your friend. It allows you to invest $4,000/year tax free. (The hitch being that you can't take it out before retirement without getting nailed by taxes.)
Go to your bank, or through your chosen investment person to set up an automatic monthly deduction that gets put directly into your portfolio. That way you don't even miss the money.
Be prepared to wait. It will take a few years for things to get rolling to the point where compounding interest starts to become noticeable.
In addition to being terrible advice this is also not strictly correct.Find a professional who can help you flesh out your long-term financial goals.
The ROTH IRA is your friend. It allows you to invest $4,000/year tax free. (The hitch being that you can't take it out before retirement without getting nailed by taxes.)
Go to your bank, or through your chosen investment person to set up an automatic monthly deduction that gets put directly into your portfolio. That way you don't even miss the money.
Be prepared to wait. It will take a few years for things to get rolling to the point where compounding interest starts to become noticeable.
The standard IRA allows you to contribute and deduct the contributions and any increase in value is not taxed. The account is taxed as income when you withdraw it, which can be at age 58 1/2 or something.
The Roth IRA does not allow you to deduct the contribution but it does allow the account to grow tax free and withdrawls are also not taxed. Apparently you can also withdraw your original contribution without penalty from the Roth.
So do you want to pay taxes now or 30 years from now?
On the other part, why would you want to turn your money over to a complete stranger?
Post by: Art Eatman on April 30, 2006, 08:15:12 AM
Anyhow, certain sectors move up or down with various trends. Right now, I wouldn't buy into REITs. I'm more optimistic about a long-term bull market in commodities, although any recession would flatten the curve somewhat. But it'll be a while before the supply will catch up with the demand.
Trying to figure out what ALL sectors will do is a career. I tend to focus on a couple of sectors and get in and out as seems appropriate.
We have an aging population. Thus, well-run nursing-home companies will grow. So will those companies that make old folks' diapers. And, the pharmaceuticals that sell into the old folks' market. Not glamorous, but remunerative over the long haul.
, Art
Post by: brimic on April 30, 2006, 02:01:53 PM
I have become very disillusioned with mutual funds because of this. Another option might be to set up a dividend reinvestment plan (DRIP), but with the ease of internet brokerage accounts, it might be easier just to buy the stock outright yourself.
Post by: Justin on April 30, 2006, 03:31:24 PM
Quote
In addition to being terrible advice this is also not strictly correct.The standard IRA allows you to contribute and deduct the contributions and any increase in value is not taxed. The account is taxed as income when you withdraw it, which can be at age 58 1/2 or something.
The Roth IRA does not allow you to deduct the contribution but it does allow the account to grow tax free and withdrawls are also not taxed. Apparently you can also withdraw your original contribution without penalty from the Roth.
So do you want to pay taxes now or 30 years from now?
Whoops. I was wrong about the Roth IRA. I done gots 'em cornfused.The Roth IRA does not allow you to deduct the contribution but it does allow the account to grow tax free and withdrawls are also not taxed. Apparently you can also withdraw your original contribution without penalty from the Roth.
So do you want to pay taxes now or 30 years from now?
Quote
On the other part, why would you want to turn your money over to a complete stranger?
1) My stock broker isn't a stranger. I know who he is and where his office is. I even know where he lives.2) He gets off on watching the stock market and making it generate money for his clients. In the same way that I get a nice little rush of endorphins when I shoot an X, he gets one when he makes a good move in the market.
because
3) In the free market, it behooves a stock broker to know what he's doing, lest his clientelle take their money and move on to somebody who is more competent, or just open an online trading account.
Post by: ...has left the building. on April 30, 2006, 06:10:42 PM
Post by: ...has left the building. on April 30, 2006, 06:17:46 PM
5) No one, and I mean NO ONE, is as talented as The Rabbi.
Post by: Justin on April 30, 2006, 08:00:48 PM
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5) No one, and I mean NO ONE, is as talented as The Rabbi.
*smacks forehead*Right!
I'm such an Idiot!
Tina, come get your food!
Post by: Art Eatman on May 01, 2006, 03:18:33 AM
There are index funds as well as stock funds. All manner of options as to what to look at.
Still, nobody ever got hurt real bad by living frugally and saving some money, regardless of interest rates. It's just that nowadays, folks believe all that TV BS about deserving it now. Instant gratification and all that crap.
But don't anybody ever listen to me. That would be foolish. I'm so damned dumb I didn't retire until I was 45 years old...
, Art
Post by: The Rabbi on May 01, 2006, 03:26:03 AM
Quote from: Daniel Flory
4) Not everyone has the desire/skill/time/etc. to watch their market investments properly.
Not everyone has the desire/skill/time to do whatever. But there are two kinds of people: those with assets and those without assets. Someone can choose to not have sufficient assets for his retirement and so on. But why anyone would voluntarily choose that is beyond me. Since people's biggest fear, so I understand, is not having enough money, especially in retirement, maybe you can explain with your superior insight why they would then voluntarily take steps guaranteeing them that outcome.
Post by: 280plus on May 01, 2006, 03:32:13 AM
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I'm so damned dumb I didn't retire until I was 45 years old...
Yea. what took you so long? 
Post by: garrettwc on May 01, 2006, 07:36:55 AM
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I'm so damned dumb I didn't retire until I was 45 years old...
I only have a couple of years to go. I better hurry up and get dumb faster I wish
Post by: K Frame on May 01, 2006, 09:13:48 AM
If it tanks, however...
Sigh, I don't even want to think about it.
Post by: Justin on May 01, 2006, 10:58:39 AM
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Since people's biggest fear, so I understand, is not having enough money, especially in retirement, maybe you can explain with your superior insight why they would then voluntarily take steps guaranteeing them that outcome.
Perhaps you'd care to explain why going to the trouble to hire a financial advisor and have him/her judiciously invest on behalf of yourself is no different than choosing not to invest at all and go blow the money on a plasma screen and 27 inch rims.Rabbi, how much time do you spend on an average day researching stocks and keeping tabs on the market?
Post by: The Rabbi on May 01, 2006, 12:13:17 PM
Quote from: Justin
Quote
Since people's biggest fear, so I understand, is not having enough money, especially in retirement, maybe you can explain with your superior insight why they would then voluntarily take steps guaranteeing them that outcome.
Perhaps you'd care to explain why going to the trouble to hire a financial advisor and have him/her judiciously invest on behalf of yourself is no different than choosing not to invest at all and go blow the money on a plasma screen and 27 inch rims.Quote from: Justin
Rabbi, how much time do you spend on an average day researching stocks and keeping tabs on the market?
I am not sure why that matters. In fact it is several hours a day. But a person could be a much better investor spending even 5 hours a week learning and researching.
Post by: ...has left the building. on May 01, 2006, 01:34:41 PM
Quote from: The Rabbi
Quote from: Daniel Flory
4) Not everyone has the desire/skill/time/etc. to watch their market investments properly.
Not everyone has the desire/skill/time to do whatever. But there are two kinds of people: those with assets and those without assets. Someone can choose to not have sufficient assets for his retirement and so on. But why anyone would voluntarily choose that is beyond me. Since people's biggest fear, so I understand, is not having enough money, especially in retirement, maybe you can explain with your superior insight why they would then voluntarily take steps guaranteeing them that outcome.Post by: ...has left the building. on May 01, 2006, 01:36:34 PM
Quote from: Justin
Quote
5) No one, and I mean NO ONE, is as talented as The Rabbi.
*smacks forehead*Right!
I'm such an Idiot!
Tina, come get your food!
Post by: Justin on May 01, 2006, 02:05:15 PM
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I thought the only people who quoted that movie were emos who wanted to look cool to their friends.
That's preposterous. Everybody knows emos aren't cool. Even emos.
Post by: Justin on May 01, 2006, 02:08:47 PM
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I wouldnt say that at all. When you buy a plasma screen TV and rims you are actually getting what you were promised. If there is a problem with those products you can usually bring it back and get a full refund. If your adviser gives you lousy advice and you buy a stock that loses money, will he give you your money back?
So, Rabbilicious, what you're saying is that no one with a financial advisor has ever made money?Now, it could be argued that if I invested as wisely as a financial advisor, I would come out ahead because I wouldn't be paying him to do the job.
But I guess that maybe you never figured out that some people don't want to do that and don't mind paying the extra cost, especially if it means delegating a job to someone who is eager to do it, rather than doing it halfassed on their own.
But I guess that when I'm on the street in my retirement years, begging for change and food, you'll be able to spare a dollar or two, since you're Mr. Bigshot Moneybags.
Post by: ...has left the building. on May 01, 2006, 02:09:53 PM
Quote from: Justin
Quote
I thought the only people who quoted that movie were emos who wanted to look cool to their friends.
That's preposterous. Everybody knows emos aren't cool. Even emos.Post by: ...has left the building. on May 01, 2006, 02:12:18 PM
Quote from: Justin
But I guess that when I'm on the street in my retirement years, begging for change and food, you'll be able to spare a dollar or two, since you're Mr. Bigshot Moneybags.
Hey dude I'm first! I'm guessing that you're in your mid 40's because you're old enough to be a miser but not old enough to have a brush with death (which cuts way down on the ahole-dom, even online). You talk about rental properties, stocks, IRAs, and all that with fairly solid knowledge. Using my clientele as a yardstick I'd say the Rabbi is worth at least $25M...
...you're worth at least that right Uncle Pennybags?
Post by: Justin on May 01, 2006, 02:15:03 PM
But then he'd realize that he'd have to become what he hates, and he'd be all "Screw that, yo!"
And it would make Chuck Norris cry for the first time in his life.
Post by: ...has left the building. on May 01, 2006, 02:17:26 PM
Quote from: Justin
Dude, I bet that, if the Rabbi wasn't already rich beyond the Wildest Dreams of Han Solo, he would think about being a financial advisor to people, in order to help them grow their wealth, and to get wealthy himself.
But then he'd realize that he'd have to become what he hates, and he'd be all "Screw that, yo!"
And it would make Chuck Norris cry for the first time in his life.
Then he would bottle Chuck's Tears (TM) and sell it to cure cancer, being the savvy businessman that he is.
But then he'd realize that he'd have to become what he hates, and he'd be all "Screw that, yo!"
And it would make Chuck Norris cry for the first time in his life.
Post by: Justin on May 01, 2006, 02:19:48 PM
Quote
Forget Napoleon Dynamite, this thread makes me want to cut myself and listen to The Cure.
I wish my lawn would listen to The Cure and then cut itself.
Post by: brimic on May 01, 2006, 02:23:48 PM
Post by: ...has left the building. on May 01, 2006, 02:29:30 PM
Quote from: brimic
Jeez keep ripping a guy for having an opinion.
It isn't the opinion, it is the attitude.Quote
If you want to talk about emotional intelligence, how much time of your week is wasted on mindless crap when you could be educating yourself on securing your future?
I don't understand what planning for the future has to do with emotional intelligence.
Post by: Justin on May 01, 2006, 03:11:34 PM
I don't watch sitcoms or ballgames. Not to say I don't waste time in other ways, but I'm also preoccupied with several other important things in my life as well.
Post by: The Rabbi on May 01, 2006, 03:38:03 PM
Quote from: Justin
Quote
I wouldnt say that at all. When you buy a plasma screen TV and rims you are actually getting what you were promised. If there is a problem with those products you can usually bring it back and get a full refund. If your adviser gives you lousy advice and you buy a stock that loses money, will he give you your money back?
So, Rabbilicious, what you're saying is that no one with a financial advisor has ever made money?Now, it could be argued that if I invested as wisely as a financial advisor, I would come out ahead because I wouldn't be paying him to do the job.
But I guess that maybe you never figured out that some people don't want to do that and don't mind paying the extra cost, especially if it means delegating a job to someone who is eager to do it, rather than doing it halfassed on their own.
But I guess that when I'm on the street in my retirement years, begging for change and food, you'll be able to spare a dollar or two, since you're Mr. Bigshot Moneybags.
Some people don't care about anything other than the here and now. That doesnt make it right. Some people won't spend 40 minutes a day 3 times a week on exercise even though they are overweight with high blood pressure and bad cholesterol readings. Reminding them that strokes are pretty debilitating is useless since they would rather spend the time drinking beer and watching NASCAR or spouting their worthless opinions on THR. The only word for such people is stupid. And you can't fix stupid.
Similarly, no one manages your money as well as you can. Are there good advisors out there? Sure. But for every good one there are probably a zillion clowns and losers and separating them is tough. And if someone doesn't bother to get a financial education it isnt tough--it is impossible.
But maybe you are better off letting someone else manage it. Maybe you shouldn't learn basic principles of investing so you can tell the difference between preferred stock and livestock.
More to the point: from 1998 to 2003 millions of investors lost trillions of dollars listening to advisors, either stock brokers or mutual fund managers. The record of such managers is appalling, whether we are talking about '98 to 2003 or 1987 or 1973. They charge high fees and deliver sub-standard product. The industry has periodic insider trading scandals and other mismanagement issues and has had them for as long as I can remember, which is over 30 years. The vast majority of investors either lose money outright or have results which are sub-par. So blithely turning over your hard-earned dollars to someone who is a self-proclaimed genius seems just a little risky.
How does your advisor make his living? Is he a professional investor or a salesman? How much money did he personally make in the market last year, last two years, last five years? And what do you think he will answer when you ask these questions? Do you think it is rude to ask someone who holds himself out as an expert whether he follows his own advice and what his track record is? I dont. I think those are excellent questions.
If you want to see a real expert look at Buffett and Berkshire-Hathaway. He has made billions of dollars for his investors but most of his wealth is also in the company. If your advisor is on a par with Buffett then you are in great shape. But there arent too many like him around.
Post by: 280plus on May 01, 2006, 04:44:08 PM
Post by: Art Eatman on May 02, 2006, 04:25:37 AM
You don't even have to use only one or the other company, for that matter.
And Google is not very expensive, if you want to check out what some broker is telling you. You can quickly find out if he's sharp or is merely wanting to churn an account.
One place where for sure I'll agree with The Rabbi: Too many people want the here-and-now instant gratification to ever have enough disposable income with which to invest. I'll do a one-man standing ovation on that.
As for spouting off at THR, I've come to strongly believe, "The less that is known, the stronger the opinion."
, Art
Post by: garrettwc on May 02, 2006, 06:40:27 AM
One thing I have figured out re: financial advisors/brokers/whatever you call them. Most of them have no money. They are mortgaged to the hilt with payments on the trendy condo in the right 'hood, the BMW, and the credit card bill for all their designrer suits. They're about 1 paycheck away from the cheese line because they have spent it all on impressing you.
Their income is not from their investments, but from the commissions they get selling you all manner of things. Sort of like a used car salesman. You ever give a car dealer $30 grand of your hard earned greenbacks without checking the product out for yourself? Then why on earth would you give the same amount of money to a guy who has little or no net worth who says he can make you rich?
Post by: Justin on May 04, 2006, 01:56:46 PM
Quote
Reminding them that strokes are pretty debilitating is useless since they would rather spend the time drinking beer and watching NASCAR or spouting their worthless opinions on THR.
And some of us can't even spout our opinions on THR.Quote
More to the point: from 1998 to 2003 millions of investors lost trillions of dollars listening to advisors, either stock brokers or mutual fund managers. The record of such managers is appalling, whether we are talking about '98 to 2003 or 1987 or 1973.
You imply that individual investors came out of that ok. Uh, no. Nearly everybody took a dive when the tech market fell. Before that market, I recall seeing tons of ads on television touting how easy and simple it is for you to sign up with XYZ online stock trading website and do it all yourself. Don't see much of that any more. Even the current Scott Trade ads phrase it in terms of "trading is difficult, but you can do it." That hardly measures up to the ads in the 1990's where they made it look like anyone could do all their own trading on line and it was a license to print money.Quote
The vast majority of investors either lose money outright or have results which are sub-par.
Source please. Also, define sub-par.Quote
So blithely turning over your hard-earned dollars to someone who is a self-proclaimed genius seems just a little risky.
I am neither blithe nor is my broker a self-proclaimed genius. We both tend to be rather conservative in investment strategies. (Him a touch more than me.)Quote
How does your advisor make his living? Is he a professional investor or a salesman? How much money did he personally make in the market last year, last two years, last five years? And what do you think he will answer when you ask these questions? Do you think it is rude to ask someone who holds himself out as an expert whether he follows his own advice and what his track record is?
Dude, I do happen to know most of that info, and were I to ask on the other, he'd provide it.Quote
Do your own due diligence before sticking any money anywhere.
Of course. And I'll admit to following most of the funds that I'm invested in on a semi-regular basis. In addition to being on the lookout for new funds or stocks that hold promise.Quote
Too many people want the here-and-now instant gratification to ever have enough disposable income with which to invest. I'll do a one-man standing ovation on that.
Of course. Bonsai Tree, not Kudzu.
Post by: The Rabbi on May 04, 2006, 02:06:20 PM
Quote from: Justin
I love how Rabbicide's responses to me are all phrased as completely black-and-white, either-or choices. I have a financial manager, therefore I must not know anything about basic investing, etc. Cracks me up.
Justin, the purpose of the discussion is to help people take control of their finances and ways for them to begin educating themselves. If your advisor is wonderful then that's great. But for people without access to wonderful advisors the answer is to learn about investing to become a better investor and not be at the mercy of some self-proclaimed professional or the advertising machine that the financial world is filled with.And Justin, it is not about you.
Post by: Justin on May 04, 2006, 02:14:37 PM
Quote
Justin, the purpose of the discussion is to help people take control of their finances and ways for them to begin educating themselves. If your advisor is wonderful then that's great. But for people without access to wonderful advisors the answer is to learn about investing to become a better investor and not be at the mercy of some self-proclaimed professional or the advertising machine that the financial world is filled with.
Indeed. And there's more than one way to do it. That's been my contention all along, which you have continually derided. At no point did I say one should just hand their hard-earned ducats over to anyone who claims to be a financial expert. It's something that one should be careful about, but there are good advisors out there.Quote
And Justin, it is not about you.
Don't be preposterous! It's all about me.
Post by: The Rabbi on May 05, 2006, 06:00:13 AM
You wrote:
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If you're looking for good, long-term performance in a conservative investment, consider looking at mutual funds.
Find a professional who can help you flesh out your long-term financial goals.
That doesnt look like advocating "more than one way to do it" to me.Find a professional who can help you flesh out your long-term financial goals.
My advice was:
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The best investment is in yourself. Buy good books and periodicals about companies and investing.
That doesnt look like deriding anyone's contention, except those who give the kind of advice you did.For educational purposes I'll put this one on the table.
In 1996 Fidelity's Magellan Fund was considered one of the best, if not the best fund. It was conservative and had a great track record under the legendary Peter Lynch. It was recommended by probably 3/4s of all investment advisors. If someone had taken your advice and invested in the fund "for the long term" (and ten years sounds pretty long to me), guess what? His returns would have been sub-par:
http://quicktake.morningstar.com/Fund/TotalReturns.asp?Country=USA&Symbol=FMAGX
What is sub-par? It is not exceeding what he could have gotten elsewhere with less risk. In this case that would have been buying an index fund in the S&P 500. If someone had followed your advice and thrown $10k at Magellan in '96 he would have today about $22,000. If he had put it in the index fund he would have closer to $25k. And I do not think that counts fees and expenses. Anyone interested in fees and expenses should go to the SEC website where they have a calculator and you can see what they do to return.
Doing this for both Magellan and a typical index fund I find that the index fund with less than 1% expense ratio (which is about the norm) would return over $6,000 more than Magellan with its 3% expense ratio. That is assuming they have the same rate of return. In fact, Magellan trailed the S&P 500 over those 10 years so your result would be even worse. If you were to add in fees for an advisor the results for Magellan will be even worse.
This is why my advice was to spend time (and maybe money) reading books and articles on investing. That is the best investment of all. Yes, Justin, even for you.
Post by: ...has left the building. on May 05, 2006, 03:11:14 PM
Post by: Justin on May 05, 2006, 10:31:29 PM
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In 1996 Fidelity's Magellan Fund was considered one of the best, if not the best fund. It was conservative and had a great track record under the legendary Peter Lynch. It was recommended by probably 3/4s of all investment advisors. If someone had taken your advice and invested in the fund "for the long term" (and ten years sounds pretty long to me), guess what?
1) So you cherry picked one mutual fund that has had a non-stellar return, during a point in time when the stockmarket, as a whole, was not doing well over the intermediate term and that's an indictment of all investing via mutual funds? Ten years isn't a long term investment by any standards that I'm aware of. In fact, if you only have ten years before needing to cash out, then you'd be far better off going with something that's more aggressive. If I were a less trusting individual, I'd suspect that you were being deliberately disingenuous.
Nice straw man, chief.
2) Where did I ever advocate investing in the Magellan Fund? Please, feel free to post a hyperlink to a post by me on this forum, or anywhere else on the internet where I sing the praises of the Magellan fund.
3) But what if one were to invest in, oh, I dunno, perhaps the Munder Small Cap
Well, I'll be damned. 12.5% return, and it beat the S&P 500 in what would be considered a short-term hold.
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That doesnt look like advocating "more than one way to do it" to me.
Hey, if it works for you, that's just fantastic. In fact, I've already said the equivalent of that several times in this thread. Am I going to advocate what has worked for me? Sure. But, as I already stated, that doesn't mean it's the only way.You, on the other hand, have made numerous condescending posts that vascillate wildly between stating that anyone can do this and that the average person doesn't know what they're doing. Yet, you sneer at Joe Average who is willing to admit that he's smart enough to know what he doesn't know and seek out someone who does know more than himself.
Post by: Justin on May 05, 2006, 10:41:37 PM
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You are constantly drilling the idea that most people make terrible investors so it makes me wonder if you're kicking ass or just hiding behind index funds and a copy of Random Walk.
Chuck Norris doesn't take random walks when investing in index funds. He takes well-placed spin-kicks and steals that index fund's lunch money.
Post by: Justin on May 05, 2006, 10:43:00 PM
Post by: Justin on May 05, 2006, 11:15:16 PM
Now, I fully expect that the Rabbster and I could sit here and dig up mutual funds that have performed well vs. ones that haven't in order to make our points. Ultimately, though, that's just jerk-off fodder, because anyone can go back and look at a graph from the past ten years and come out looking like Mr. Smartguy. But that ultimately doesn't get us anywhere, because how something performed in the past isn't going to tell you how it will do in the future.
Also, I'll note that The Rabbi says that one should "buy books and study" but doesn't give any recommendations as to title or author.
*Of course, there is no guarantee of this. But then, if the fund were to drop below the standard growth rate for the S&P, it would be wise to sell it.
Post by: Bogie on May 06, 2006, 01:44:50 AM
1) Don't lose the customer's money (important)
2) Make the customer money (if they don't, they tend to go hungry)
3) Keep it spread around, so that the activity will average out
You cannot adequately spread a small portfolio. I suspect that a next timing spot for major US terrorist activity will be when our market tops again. Remember 9/12 trading? We're still not back to 9/11.
Post by: Bogie on May 06, 2006, 01:50:33 AM
Remember - Looking back at the past 10 years, you have some monster dips. Look for fund managers/groups that have managed to ride 'em out. My sister (who uses the guy I use) missed getting hit by the dot com dump, Enron, and 9/11... I like that...
Post by: Justin on May 06, 2006, 11:53:04 AM
Post by: The Rabbi on May 06, 2006, 05:23:45 PM
Quote from: Justin
3) But what if one were to invest in, oh, I dunno, perhaps the Munder Small Cap
Well, I'll be damned. 12.5% return, and it beat the S&P 500 in what would be considered a short-term hold.
Justin, I do believe you could screw up a wet dream.Well, I'll be damned. 12.5% return, and it beat the S&P 500 in what would be considered a short-term hold.
First, I never said you advocated investing in Magellan. Show me a post where I said you wrote that. I picked Magellan because it is the largest, best known fund and one that was touted by the pros.
More to the point here, 12.5% on the Munder Small cap sounds pretty good. And it did beat the S&P 500. Unfortunately (for you) that 12.5% is for 2006 only, as your own data show. Can you read a bar chart?
Further, you have to compare a fund to its benchmark, not necessarily the S&P 500. In this case the Munder Fund's benchmark is not S&P 500 but the Russell 2000 Value. Had you bothered to read Munder's site you would have seen this. You also would have seen that they admit they failed to beat the benchmark, even during the limited duration of 2006 (which isnt half over).
See here:http://www.munder.com/funds/commentarydetail/0,1319,MS0yNC0xLTEtMS00,00.html
Further, if you had bought the iShares Russell 2000 Value (an index fund) you would have been up 14.14% for YTD. And the iShares have an expense ratio of .2% while Munder seems to charge over 5% for an upfront fee and I couldnt find their expense ratio otherwise, but I'll bet it is more than .2%.
You complain I dont name any books. I have done so in plenty of posts. But just to recap:
-Rich Dad/Poor Dad. An easy book to start with
-A Random Walk Down Wall St. A good book although I dont agree with what he says
-The Intelligent Investor by Ben Graham, Warren Buffett's teacher and a classic book
-What Works on Wall St. A very good book if you skip the real technical parts. I learned a lot here.
-Any book on Warren Buffett, the most succesful investor in history.
-12 Mistakes You Have To Avoid, by Jonathan Clements (I might have the title wrong). A very good book by a WSJ columnist.
-The WAll St Journal. Every day. Esp Jonathan Clements' columns
-The Economist
And i am sure there are plenty of others. Some are good, some suck. But you can learn something from all of them.
Post by: Justin on May 07, 2006, 08:58:26 PM
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First, I never said you advocated investing in Magellan.
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If someone had followed your advice and thrown $10k at Magellan in '96 he would have today about $22,000.
I'm sorry, but saying "if someone had followed your advice and thrown $10K at Magellan" is tantamount to putting words in my mouth.Munder charges a 1.3% expense ratio, and a 5.5% sales charge which is not unreasonable*, and has traditionally, over the long term, outperformed the Russell 2000 Value. The question then becomes a matter of whether, in the long term, and including the fees, it has a higher return on investment than the Russell: 18.5% vs. 15.26% over five years. Even including a 1.3% expense ratio that knocks it down to 17.2% it has still historically outperformed The Russell. (I'm not sure that this would be a completely fair assertion to make, but I'm assuming it at least offers a rough guide.)
And hey, if the Munder drops below it's benchmark for any appreciable amount of time then you sell it.
*5.5% equates to $550 on a $10,000 investment.
Post by: The Rabbi on May 08, 2006, 03:41:29 AM
"If someone had followed your advice" i.e. to invest in mutual funds.
"And thrown $10k into Magellan" which would have been following your general advice although the specific example is mine.
Anyway, for someone hung up on long term, the Munder Fund has only been open less than 10 years. And over that time has beat the index by about 3%. That isnt great given the 5.5% load (which you term "not unreasonable"). Further there are cap gains taxes to consider and the index will be much friendlier to that.
But hey, if you like actively managed funds then go for it. I love when investors pour money into things like that. I love when they trade hard assets for rapidly depreciating toys and turn their money over to some guy because they don't have time to learn about it.
Post by: Justin on May 08, 2006, 05:24:24 AM
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And over that time has beat the index by about 3%.
Yeah, just a lame little 3%.Let me throw that into a compounding interest calculator here...
Current Principle: $9,450.00 (I'm being fair, and excluding the 5.5% they charge to get in the door.)
Annual Additions: 0 (For the sake of argument, we'll make it simple and just assume a single invested lump sum.)
Years to Grow: 20 (Arbitrary, but on the side of longish-term.)
Interest Rate: 17.2% (18.5%-1.3%)
Future value: $225,935.28
Now, here are the numbers for the index:
Current Principle: $10,000.00 (I'm being fair, and excluding the 5.5% they charge to get in the door.)
Annual Additions: 0 (For the sake of argument, we'll make it simple and just assume a single invested lump sum.)
Years to Grow: 20 (Arbitrary, but on the side of longish-term.)
Interest Rate: 15.26%
Future value: $171,227.02
The law of compounding interest speaks loud and clear to me.