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The problem with a lot of these articles is the "advice" given seems so simple. Just buy Google at its IPO and hold it for 20 years. Well, great. If I'd only known Google would blow up as it did. But yes, buy and hold is absolutely the way to go.
Personally my portfolios are made up of a mix of individual stocks and ETFs. I don't have the stomach to go all in on one or few stocks as that could turn out disastrous. I have made some bigger bets on certain stocks like Amazon and Google that have panned out quite well for me and I still haven't touched those shares and won't for the foreseeable future.
sounds like the coffee can portfolio should go with the coffehouse portfolio
Asset Allocation
10% Large Cap Blend
10% Large Cap Value
10% Small Cap Blend
10% Small Cap Value
10% International Stocks
40% Intermediate Bonds
10% REITs
50% between bonds and REIT? No thank you. I don't own any REITs except whatever is lurking in my fund holdings, and I wouldn't even know how to buy a bond.
I'm no youngster at 54, but have enough cash savings and home equity which will be monetized upon retirement, and a pension to go with social security in retirement, so I'm not worried much about diversification into bonds and such. The coffee can stock account (taxable) will remain in stocks, the 401K will roll over to a Fidelity IRA upon retirement, and along with the wife's IRA will remain untouched and growing until they tell us we need to start RMD's.
As some of you know, I invest in individual stocks vs mutual funds and index funds. Many of you feel I am not diversified enough and my stocks are too similar. I read this today on Yahoo News about a man who was recommending Nvidia. His style of investing may not be for everyone, but look at what he did with his money. AMAZING!
“ Just buy it and hold it and don't fret the short term volitility. Time is your friend. I'm 70 years old and opened my first brokerage account in 1975 with USAA when I was 21 years old. Most of what I bought up until the late 80's were mutual funds. At the advent of the internet boom in the 90's I began to trade individual stocks and used Scottrade. During the next 10 years my trading was hit or miss. When my parents passed a few years apart in early 2000 - 2004 I inherited 250k and began investing in stocks for the long term looking forward to retirement in my 60's. I bought GOOG shortly after the IPO in 2004 at $90 a share, still have those shares with an initial investment of $5,000 for 59 shares bought in the 2004 IPO has now turned $321,503. My best investment even after dropping since this August has been AAPL purchased roughly 10K in December 2004 now worth more than 5 million. Others I've bought and held for 20 years are MSFT, CSCO, AVGO, NFLX, and others. If I had sold these the way most of you trade in and out on every dip I would never had a chance at enjoying the wealth I have today. This post is long but the point is if you want the bulk of profit available to you then you need to forget where NVDA will be Monday, next month or next year and be willing to hold it a minimum of 5 years. I said minimum and it would be better if you would to hold 10 - 20 years. You'll make more like that than any job will ever provide. Just buy NVDA and hold it 20 years.”
This is called out of the box thinking. Kudo's.
Would I do this? NO
Would I do it at age 70? NO
But you have shown yourself to have a knack for picking good investments, so if I were you, would I change things? NOPE.
I'm not looking for my investments to be "the best".
I'm a believer that the future performance of the stock market will somewhat mirror the past. Maybe a little better or maybe a little worse.
Market returns have allowed me to reach my financial goals and I believe will continue to do so. So the most effective way to participate in that is through now basically zero cost, tax efficient market ETFs.
Those that buy individual stocks go for it! I proved to myself long ago I stink at it and I'm not gonna try now!!
I hold some individual stocks...which are about 15% of my total portfolio. They provide a nice bump. Everything else are diversified funds, indexes, bond funds, brokered CDs and a little cash as well.
As some of you know, I invest in individual stocks vs mutual funds and index funds. Many of you feel I am not diversified enough and my stocks are too similar. I read this today on Yahoo News about a man who was recommending Nvidia. His style of investing may not be for everyone, but look at what he did with his money. AMAZING!
“ Just buy it and hold it and don't fret the short term volitility. Time is your friend. I'm 70 years old and opened my first brokerage account in 1975 with USAA when I was 21 years old. Most of what I bought up until the late 80's were mutual funds. At the advent of the internet boom in the 90's I began to trade individual stocks and used Scottrade. During the next 10 years my trading was hit or miss. When my parents passed a few years apart in early 2000 - 2004 I inherited 250k and began investing in stocks for the long term looking forward to retirement in my 60's. I bought GOOG shortly after the IPO in 2004 at $90 a share, still have those shares with an initial investment of $5,000 for 59 shares bought in the 2004 IPO has now turned $321,503. My best investment even after dropping since this August has been AAPL purchased roughly 10K in December 2004 now worth more than 5 million. Others I've bought and held for 20 years are MSFT, CSCO, AVGO, NFLX, and others. If I had sold these the way most of you trade in and out on every dip I would never had a chance at enjoying the wealth I have today. This post is long but the point is if you want the bulk of profit available to you then you need to forget where NVDA will be Monday, next month or next year and be willing to hold it a minimum of 5 years. I said minimum and it would be better if you would to hold 10 - 20 years. You'll make more like that than any job will ever provide. Just buy NVDA and hold it 20 years.”
I don't see the guys message as condemning mutual funds as much as simply adhering to a "buy and hold" strategy, which I think most of us already agree on. In fact he never mentions mutual funds.
Individual stocks are risky. You can get lucky, or you can get broke. Every company has a lifespan, just like a human. They may grow, but eventually they die...EVERY company. NVDA will die too, maybe in a few years, maybe in 50. The products become obsolete, they retrench, they start selling assets, they get bought out, and the stock prices start to sink. Learning when that curve occurs is not for amateur's.
You also forget the first rule of investing - the current market price of a stock already reflects all publicly known information about the stock, including in this case future forecasts on technology, politics, trends, internal and external forecasts, etc. These are done by people much smarter than you and I. He benefited from the unknowns in this case. In summary, he got lucky. What mutual funds allow one to do is to mitigate those unknowns, because luck is a fickle lady.
Last edited by Johnny Wadd; 01-09-2024 at 05:21 PM..
I don't see the guys message as condemning mutual funds as much as simply adhering to a "buy and hold" strategy, which I think most of us already agree on. In fact he never mentions mutual funds.
Individual stocks are risky. You can get lucky, or you can get broke. Every company has a lifespan, just like a human. They may grow, but eventually they die...EVERY company. NVDA will die too, maybe in a few years, maybe in 50. The products become obsolete, they retrench, they start selling assets, they get bought out, and the stock prices start to sink. Learning when that curve occurs is not for amateur's.
You also forget the first rule of investing - the current market price of a stock already reflects all publicly known information about the stock, including in this case future forecasts on technology, politics, trends, internal and external forecasts, etc. These are done by people much smarter than you and I. He benefited from the unknowns in this case. In summary, he got lucky. What mutual funds allow one to do is to mitigate those unknowns, because luck is a fickle lady.
Great analysis and advice.
Last edited by organic_donna; 01-09-2024 at 06:07 PM..
The theme here, and in the linked articles, is to let our winners run. Don't get spooked by occasional dips, and don't rebalance.
But it's all predicated on "wisdom" in our original basket of choices. It is assumed that out of some 10-20 stocks, one or two will massively outperform. That outperformance is to be nurtured, by... not tinkering with it. But what if there are zero such winners in one's portfolio? What if my portfolio includes none of the magnificent-seven, or their near-peers, and never did? What if my roster of picks systematically and substantially underperformed the S&P 500, for 50 years?
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