Deciding it it's worth it to buy long-term individual stocks

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inbox788
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Re: Deciding it it's worth it to buy long-term individual stocks

Post by inbox788 »

arcticpineapplecorp. wrote: Sat Apr 10, 2021 7:51 pm
inbox788 wrote: Sat Apr 10, 2021 1:17 pm
arcticpineapplecorp. wrote: Sat Apr 10, 2021 10:50 am4. if the motley fool's are so good at picking stocks then how come their mutual funds aren't so hot?
Sorry if my attempt at humor fell flat.

Although there may be one, I don't see the connection between the Motley Fool Advisory Company ( https://www.fool.com/ ) and the Asset Management that runs FOOLX fund ( https://www.mfamfunds.com/about.html ).
there is:

Image
inbox788 wrote: Sat Apr 10, 2021 1:17 pm These are the 20 best-performing stocks of the past decade, and some of them will surprise you
https://www.marketwatch.com/story/these ... 2019-12-09 ]
yes, but that doesn't help us now. You can't get those returns unless you have a time machine.
That doesn’t link it to the advisory. Only that they use the same name. I believe they’re different entities. And again, the fund is not related to the discussion of skyrocketing stocks, even if there were a relationship. OP isn’t interested in diversified active funds, only in investing in a tiny few individual stocks.

The point is finding the stocks that grew 10x in last 5 years is not a trivial task, and those that have done well is a good lead to identifying only some of them. (Any one know the top 10 performing SP500 stocks in the last 5 years or an online resource to help?) Even without a time machine, which we have in Google finance and other sources. And it’s much harder finding the ones for the next 20 years. Nowhere near “easy” or “low risk”.
jajlrajrf
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Re: Deciding it it's worth it to buy long-term individual stocks

Post by jajlrajrf »

Gabelli2020 wrote: Fri Apr 09, 2021 7:26 pm. Now, my capital gains liability makes it impossible to convert to indexes now.
It most certainly does not! I see this mindset all the time and it just doesn’t make any sense to me at all. I’m imagining a store owner complaining about having a great quarter because it make their sales taxes go up.

I mean, I get that you don’t want to pay the taxes. Nobody wants to pay taxes. But you’d owe those gains on any investment that appreciated. Go ahead and sell, pay the taxes, and rebalance into index funds (if being in index funds is what you actually want.) The taxes are just part of the cost of doing business.

The only reason I can think to not do this is something along the lines of “I’m planning on dying in the next year and my heirs will get a stepped up cost basis on the individual stocks.”
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nps
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Re: Deciding it it's worth it to buy long-term individual stocks

Post by nps »

jajlrajrf wrote: Sun Apr 11, 2021 12:34 am
Gabelli2020 wrote: Fri Apr 09, 2021 7:26 pm. Now, my capital gains liability makes it impossible to convert to indexes now.
It most certainly does not! I see this mindset all the time and it just doesn’t make any sense to me at all. I’m imagining a store owner complaining about having a great quarter because it make their sales taxes go up.

I mean, I get that you don’t want to pay the taxes. Nobody wants to pay taxes. But you’d owe those gains on any investment that appreciated. Go ahead and sell, pay the taxes, and rebalance into index funds (if being in index funds is what you actually want.) The taxes are just part of the cost of doing business.

The only reason I can think to not do this is something along the lines of “I’m planning on dying in the next year and my heirs will get a stepped up cost basis on the individual stocks.”
Well, there is the less dramatic "I'm planning on realizing a lower income at some point and I can sell then without paying tax on long term capital gains."
jajlrajrf
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Re: Deciding it it's worth it to buy long-term individual stocks

Post by jajlrajrf »

nps wrote: Sun Apr 11, 2021 5:46 am Well, there is the less dramatic "I'm planning on realizing a lower income at some point and I can sell then without paying tax on long term capital gains."
OK, but let’s acknowledge that a reasonable description of that less-dramatic statement is “I think I can time the market” which is generally false.
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nedsaid
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Re: Deciding it it's worth it to buy long-term individual stocks

Post by nedsaid »

invester123 wrote: Thu Apr 08, 2021 6:59 pm Nearly all of investments are in index funds. I have a tiny # of safe long term holds like AAPL. Nothing high risk. Is it even worth it to continue buying shares in AAPL, for example? I feel as though the $ might be better spent just continuing with whole market funds and taking advantage of compound interest.

Let's make up some numbers and say we have 200k in VTSAX and 20k in AAPL. Even if AAPL outperforms the market significantly, the amount my $ will grow will only be a drop in the bucket. So why not just forget about AAPL and continue contributing to VTSAX? How do you guys go about investing in long term low risk individual stocks?
I have invested in individual stocks since 1988 and have had some success with it. I have just about matched the Vanguard Value Index over rolling 15 year periods. Sometimes I beat it a bit and sometimes I trail it a bit. Not bad considering that I use a Value oriented approach to picking stocks.

So it can be done but the odds are not with you. Most individuals why try stock picking trail the broad market averages by about 4% a year. Seeing that I am tracking the Value Index, I am probably trailing the S&P 500 and Total Stock Market Indexes by 1.5% to 2% a year. Not bad. My stocks have performed about as one would expect.

Problem is, is this worth the effort? Why not just hold the indexes? I could have just held the Vanguard Value Index instead of my individual stocks and achieved about the same result. No trips to the Public Library to pour over ValueLine, Barron's, Forbes, The Wall Street Journal, and other financial publications. No back strain from hauling those annual reports to the recycle bin. No voting the proxy statements.

Investing successfully in individual stocks can be done, has been done but it isn't a very efficient way to invest.
A fool and his money are good for business.
inbox788
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Re: Deciding it it's worth it to buy long-term individual stocks

Post by inbox788 »

Trying to answer this question is turning out to be a lot more work than I thought, but I finally found an online tool to help a little more.

What were the top 10 performing SP500 stocks in the last 5 years?

Other than AMD, NVDA and TSLA, any ideas? Sure, I could look up each of the 500 stocks using Google Finance and sort it, but I'm not going to do that. And the only thing I know for sure is that they're the highest performing ones I've found so far and Tesla wasn't in the SP500 at the beginning of the period. I can't imagine them not being at the top, but haven't proven it exhaustively.

Getting performance results for the component stocks in the SP500 for more than 1 year or YTD has been challenging but the Ally TradeKing does "5-Year Price Performance (%). https://research.tradeking.com/research ... reener.asp

It found 338 matches more than 1000% and 129 matches more than 3000% (so 209 results between 10x and 30x). There are many problems with the list generated (penny stocks, not on major exchanges, mistaken names, etc.; Zoom Technologies ZTNO poped up on the list was likely confused with ZM), but it's a start. Sorting them by market cap, candidates like SQ, MTCH, RNG, TDOC, ETSY can be cross-matched to the SP500 but I didn't find any of these top performers in the index.

Code: Select all

Tesla Inc	TSLA	649.8 B	NASDAQ	Consumer Durables	Motor Vehicles	Buy | Sell
NVIDIA Corp	NVDA	357.1 B	NASDAQ	Electronic Technology	Semiconductors	Buy | Sell
Square Inc	SQ	119.0 B	NYSE	Technology Services	Information Technology Services	Buy | Sell
Advanced Micro Devices Inc	AMD	100.5 B	NASDAQ	Electronic Technology	Semiconductors	Buy | Sell
Match Group Inc	MTCH	38.3 B	NASDAQ	Technology Services	Internet Software/Services	Buy | Sell
Grayscale Bitcoin Trust (BTC)	GBTC	34.4 B		Miscellaneous	Investment Trusts/Mutual Funds	Buy | Sell
RingCentral Inc	RNG	28.7 B	NYSE	Technology Services	Packaged Software	Buy | Sell
Teladoc Inc	TDOC	28.0 B	NYSE	Health Services	Hospital/Nursing Management	Buy | Sell
ETSY Inc	ETSY	27.6 B	NASDAQ	Commercial Services	Miscellaneous Commercial Services	Buy | Sell
HubSpot Inc	HUBS	23.9 B	NYSE	Technology Services	Information Technology Services	Buy | Sell
Paycom Software Inc	PAYC	22.9 B	NYSE	Technology Services	Packaged Software	Buy | Sell
Chun Can Capital Group	CNCN	21.6 B		Electronic Technology	Computer Communications	Buy | Sell
Exact Sciences Corp	EXAS	21.2 B	NASDAQ	Health Technology	Biotechnology	Buy | Sell
Enphase Energy Inc	ENPH	20.5 B	NASDAQ	Electronic Technology	Semiconductors	Buy | Sell
Plug Power Inc	PLUG	16.2 B	NASDAQ	Electronic Technology	Electronic Components	Buy | Sell
Restoration Hardware Holdings Inc	RH	12.9 B	NYSE	Retail Trade	Specialty Stores	Buy | Sell
Chegg Inc	CHGG	12.6 B	NYSE	Commercial Services	Miscellaneous Commercial Services	Buy | Sell
ProShares UltraPro QQQ	TQQQ	12.5 B	NASDAQ	Miscellaneous	Investment Trusts/Mutual Funds	Buy | Sell
Five9 Inc	FIVN	11.6 B	NASDAQ	Technology Services	Information Technology Services	Buy | Sell
Digital Turbine Inc	APPS	7.8 B	NASDAQ	Technology Services	Internet Software/Services	Buy | Sell
Freshpet Inc	FRPT	7.6 B	NASDAQ	Consumer Non-Durables	Food: Specialty/Candy	Buy | Sell
Fate Therapeutics Inc	FATE	7.3 B	NASDAQ	Health Technology	Biotechnology	Buy | Sell
Arrowhead Pharmaceuticals Inc	ARWR	6.5 B	NASDAQ	Health Technology	Biotechnology	Buy | Sell
eXp World Holdings Inc	EXPI	6.0 B	NASDAQ	Finance	Financial Conglomerates	Buy | Sell
STAAR Surgical Co	STAA	5.4 B	NASDAQ	Health Technology	Medical Specialties	Buy | Sell


Name	Symbol	Market Cap	Exchange	Sector	Industry	Trade
Direxion Daily Semiconductor Bull 3X Shares	SOXL	5.2 B		Miscellaneous	Investment Trusts/Mutual Funds	Buy | Sell
Appfolio Inc	APPF	4.9 B	NASDAQ	Technology Services	Information Technology Services	Buy | Sell
Riot Blockchain Inc	RIOT	4.2 B	NASDAQ	Finance	Financial Conglomerates	Buy | Sell
Celsius Holdings Inc	CELH	3.9 B	NASDAQ	Consumer Non-Durables	Beverages: Non-Alcoholic	Buy | Sell
CareDx Inc	CDNA	3.7 B	NASDAQ	Health Technology	Medical Specialties	Buy | Sell
ChemoCentryx Inc	CCXI	3.4 B	NASDAQ	Health Technology	Biotechnology	Buy | Sell
Vericel Corp	VCEL	2.7 B	NASDAQ	Health Technology	Medical Specialties	Buy | Sell
America Great Health	AAGH	2.6 B		Transportation	Other Transportation	Buy | Sell
Ameresco Inc	AMRC	2.5 B	NYSE	Industrial Services	Engineering & Construction	Buy | Sell
Cryoport Inc	CYRX	2.4 B	NASDAQ	Transportation	Air Freight/Couriers	Buy | Sell
Ultra Clean Holdings Inc	UCTT	2.2 B	NASDAQ	Electronic Technology	Semiconductors	Buy | Sell
Direxion Daily Technology Bull 3X Shares	TECL	2.2 B		Miscellaneous	Investment Trusts/Mutual Funds	Buy | Sell
Madrigal Pharmaceuticals Inc	MDGL	1.9 B	NASDAQ	Health Technology	Pharmaceuticals: Other	Buy | Sell
PAR Technology Corp	PAR	1.8 B	NYSE	Electronic Technology	Electronic Equipment/Instruments	Buy | Sell
Xpel Inc	XPEL	1.6 B	NASDAQ	Consumer Durables	Automotive Aftermarket	Buy | Sell
Glucose Health Inc	GLUC	1.6 B		Health Technology	Pharmaceuticals: Generic	Buy | Sell
Lantheus Holdings Inc	LNTH	1.4 B	NASDAQ	Health Technology	Medical Specialties	Buy | Sell
Fastbase Inc	FBSE	1.2 B		Technology Services	Packaged Software	Buy | Sell
BioLife Solutions Inc	BLFS	1.2 B	NASDAQ	Health Technology	Medical Specialties	Buy | Sell
OPTIMIZERx Corp	OPRX	829.4 M	NASDAQ	Technology Services	Data Processing Services	Buy | Sell
Semler Scientific Inc	SMLR	731.3 M		Health Technology	Medical Specialties	Buy | Sell
Joint Corp	JYNT	726.8 M	NASDAQ	Health Services	Hospital/Nursing Management	Buy | Sell
Aemetis Inc	AMTX	707.3 M	NASDAQ	Process Industries	Chemicals: Specialty	Buy | Sell
Sollensys Corp	SOLS	586.2 M		Technology Services	Data Processing Services	Buy | Sell
Labor Smart Inc	LTNC	550.3 M		Commercial Services	Personnel Services	Buy | Sell
cbs2002
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Re: Deciding it it's worth it to buy long-term individual stocks

Post by cbs2002 »

nisiprius wrote: Fri Apr 09, 2021 9:36 am
cbs2002 wrote: Fri Apr 09, 2021 8:26 am...We have one individual stock that is sort of a "legacy" brought into our household many years ago. It's crushed it over the last 20 years and is now about 4% of our portfolio even after making a few sales over the years. I feel I understand the fundamentals and also know that it could get cut in half in a month, like it did in March 2020. I'm OK with that but have no desire to add more. Probably should just sell it.

Also been burned hard on one that dropped like a stone while I had my head in the sand. Never again....
Forgive the hard question, but during the exact period of time when you held both stocks, did you personally make more money in those two stocks together than you would have made if you had invested it in the total stock market (or S&P 500)? Did the outperformance in the good stock fully overcome the underperformance in the bad one?
Good question. In this case the good stock more than made up for the dog and total returns of the two beat the SP500. I got lucky.
bg5
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Re: Deciding it it's worth it to buy long-term individual stocks

Post by bg5 »

I own some individual stocks that I plan to hold onto basically forever. They include

Apple
Nvdia
Docusign
Roku
Square
Paypal
Draftkings
Penn Gaming
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