My 20 Stocks....Any thing I should change?

[ayamaguc]

Reduce fees at all costs. If you are investing $1000/month (good for you-- a solid start), then paying $960/year in fees? What!? That's like playing low LHE with a 10% rake. Outrageous high online rake is 5% right now. You're paying 8% in fees. Almost impossible to win.

Continue to educate yourself. Others have made good points about indexes and such.


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Delta: If the hedge funds get cash on their stock then so do the other stockholders.

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The fact that the OP has the same chance as hedge funds to get paid on what is basically a longshot option is irrelevant. A large fund can afford to invest 0.1% or 0.25% of assets in something that might return 10x, 20x, or 50x on the small small small chance it pays off. The OP is putting 5% there, on what is not an investment, but a spec./gambling play.

[Evan]

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I could of made a paragraph reasoning for or against each one of those 20 stocks. That would have made for a nice novel, that no one would have read. Instead I shrunk it into what I though was good or bad.

My biggest point was he owns way too many stocks. He needs to cut down to 10, starting with dumping Ford cause the AMerican car market sucks and Delta because the price of fuel is way too high.

I agree Disney and GE do a lot of different things, but they also share a bunch. If I wanted a diversified potfolio and was downgrading the amount of different stocks I own, I would go with one or the other.

Cisco and Microsoft are different, but they are both tech, I dont like owning 2 companies in the same industry.

Like I said, just my 2 cents. I like a diversified portfolio, if you dont, then by all means buy whatever stock makes you money. There is money to be made both ways.

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I don't believe you like a diversified portoflio if you (a) believe 20 stocks is "way" too many or (b) don't want two companies in the same industry, especially when defined as broadly as "tech" where Microsoft and Cisco are comps.

[Evan]

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The fact that the OP has the same chance as hedge funds to get paid on what is basically a longshot option is irrelevant. A large fund can afford to invest 0.1% or 0.25% of assets in something that might return 10x, 20x, or 50x on the small small small chance it pays off. The OP is putting 5% there, on what is not an investment, but a spec./gambling play.

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Completely valid point. This, however, does not make Delta "a waste" in my opinion.

[Big Steve]

Thank you for all the replies!!! As some of you may know I was injured on the job back in 2000. I won a settlement from this. I also was in a head on car accident on a road that the Department of Tranportation had not painted lines and had taken down signs and had not put up any warning signs. I won a settlement from this. I am 32 now and Buddhist. I mention the Buddhism because I have simplified my life in ways others could not imagine. I now work in the Grand Canyon. The money sucks but I did not take the job for the money. I took it to break a destructive path (stress, liquor, major spending habits, etc.) that I was on in Mississippi, and to center myself on what really matters to me...ME! I want to retire at 50. So I only have 17.5 years to go.

I do not pay utilities. I live in Company housing. My Rent is $16 a week, my food is $3.25 a meal, and it is all payroll deductable. My only 2 Bills are Qwest for my phone, DSL, and cell; and my car insurance. I have a 2006 Toyota FJ Cruiser that I paid cash for after trading in my 2004 Toyota Prius.

My only bad spending habit that I am slowly breaking is cigarettes...Salem Light 100s $6.37 a pack in Arizona [img]/images/graemlins/shocked.gif[/img] [img]/images/graemlins/shocked.gif[/img] [img]/images/graemlins/shocked.gif[/img] My hobby is Stamp Collecting this can get expensive as well.

I know there is money to be made in the stock market. I am trying to break the old ME habit of being too stubborn. I am a Leo born in the year of the Tiger so yeah I am stubborn.

I am an avid reader but I am a Kinesthetic-Visual learner. I need to see it and do it. Reading text book type information bores the [censored] out of me. However, if I am going to be serious and $1K a month is pretty damn serious, I need to start reading about the stock market more. My basic knowledge of the Stock Market is what I have read on Fool.com This is where I found ShareBuilder as well. But so far as most of you have pointed out I have wasted $12K like throwing darts at underinflated balloon at a side show carnival trying to pop the one with the biggest prize.

What book(s) would you recommend for me to read to get a better understanding of....

#1 Index Funds
#2 Stocks
#3 Money Management
#4 Residual Income (for when I retire)
#5 Setting up a Trust to be used for Self-Identifing Gay/Lesbian/Bisexual/Transgender college scholarship funds (for when I am dead...Unless by some miricle I am able to get married and adopt an asian kid and name him Disney j/k [img]/images/graemlins/smile.gif[/img] )
#6 Anything else you think I should read.

Big Steve [img]/images/graemlins/cool.gif[/img]

[Tiltaniac]

Dont worry about your performance from last year, learn from your mistakes and continue to improve.

Stocks I would consider holding or possibly buying more:

MSFT
WMT
BAC
XOM
JNJ

That does not mean I would sell the other stocks. most of the stocks you listed appear to be high risk high growth stocks.

What I would do every month with new money:

open up a vanguard or fidelity account and put my money into index funds. fidelity may have higher minimum deposit requirements while vangaurd may have a slightly higher expense ratio. If you do not have enough for the minimum, save up for a month or two to purchase an index fund.

For moderate risk I would diversify as follows:
30% large cap. total market ( vanguard:VTSMX , fidel:FSTMX )
20% international
15% balanced
10% emerging market
10% small cap
5% REIT
10% total bond market
or CDs or buy your own Tbills/Tbonds

vanguard or fidelity people are happy to help you out at no charge. you can keep on putting in money into the index funds at no charge. There may be a small minimum for buying more of a fund like $50 to $300.

even consider investing in preallocated funds:
vanguard 2045 retirement

cnn money best 70 funds 2007 http://money.cnn.com/magazines/money.../actively.html

bloomberg market rates http://www.bloomberg.com/markets/rates/

If i wanted to buy individual stocks i would try to minimize transaction fees. For example, If I were to invest $500 into WMT, $500 into KO, and $500 into MSFT each month for the next 3 month I would instead, buy $1500 of WMT one month, $1500 of KO the next month and $1500 of MSFT the third month.

If you want to keep your buying expense ratio below 0.50% then you will have to buy in chunks of greater than $800. Selling stocks on sharebuilder may be expensive and were not included in the expense ratio because I am assuming that they are long term investments and selling all or half of the stock will be almost negligible. The index funds listed in money 70 have low expense ratios (0.10% to 0.50%). That is a large advantage in that aspect.

if you havent already read the intelligent investor w/ commentary i would highly recommend it.

[Evan]

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most of the stocks you listed appear to be high risk high growth stocks.

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This is an absolutely baffling sentiment.

The average valueline beta of the 19 stocks he listed is 1.1. Riskier than the market I suppose, but hardly what I would call a "high risk" group of stocks. Even if you don't think beta is a great metric of risk that ought to present at least the beginnings of a case against these (mostly fortune 50 companies) being high risk.

They're also not terribly high growth. Average expected EPS growth for the next 5 years is 14%.


All this data is taken from damodaran.com

[blindside]

i will second the recommendation of intelligent investor by ben graham...

[Tiltaniac]

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most of the stocks you listed appear to be high risk high growth stocks.

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This is an absolutely baffling sentiment.

The average valueline beta of the 19 stocks he listed is 1.1. Riskier than the market I suppose, but hardly what I would call a "high risk" group of stocks. Even if you don't think beta is a great metric of risk that ought to present at least the beginnings of a case against these (mostly fortune 50 companies) being high risk.

They're also not terribly high growth. Average expected EPS growth for the next 5 years is 14%.


All this data is taken from damodaran.com

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let me retract that statement. also, i did not mean to make a generalization about the portfolio as a whole, just that some of the stocks appear to have high risk and high growth. i noticed that some of my beta estimates were higher than historical beta. i did not find the betas on damodaran.com.

it also appeared as if many of the stocks were in the technology sector, although they may be uncorrelated.

Taking an weighted avg of the betas is the correct way to calculate the portfolio beta or was that just an easy way to get an estimate? i always thought the calculation was more intensive than that.

[Evan]

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Taking an weighted avg of the betas is the correct way to calculate the portfolio beta or was that just an easy way to get an estimate? i always thought the calculation was more intensive than that.

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Weighted average is the way to do it.

[Chapter7]

Add some REITs such as SLG, AVB or ESS. Add some small caps such as WCG, ANGN, or NUAN