Before you discovered index funds, what is your “stock picker” story?

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BogleBuddy12
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Before you discovered index funds, what is your “stock picker” story?

Post by BogleBuddy12 »

I’m hoping some Bogleheads can share their stories from prior to them discovering index funds.

-Did you have a large amount of your portfolio in just a couple of stocks?
-Did you hit a downturn and this prompted you to seek out a new way?
-Did you hold a stock that went to zero?

Hopefully for the inexperienced investors browsing this forum, your tale can caution them from thinking they “know better” than the market.

Thanks!
TheHiker
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by TheHiker »

Before I knew about index funds, I tried to build a diversified portfolio of 15 or so individual stocks (which I picked based on fundamentals, but really had no clue what I was doing). None made me rich. Some did OK, some did poorly. Two (FNMA and CIT) went belly up in 2008-2009.
I realized stock picking was harder than I thought. Then I discovered index funds, switched and never looked back.
investorpeter
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by investorpeter »

Stock picking has actually worked out well for me (so far), but I’m switching to all index funds in the near future. Initially stock picking seemed like a disaster, then as I got better in managing the emotions of stock picking and timing, it seemed like a lot of effort for no additional benefit. Then I found Bogleheads, and decided to try both strategies, individual stocks and index funds, and tracked portfolio returns for each. Tracking was key. I didn’t track total portfolio returns earlier in my stock picking days, or I likely would have switched to index funds earlier. That would have been a mistake however because in my case, the later individual stock picks outperformed the index funds for the past 6-7 years. But once retired, I will move everything on the equity side to index funds as soon as prudent taxable capital gain harvesting will allow. Big winners have been MSFT, AAPL, NVDA, and TSLA.

But I’ve had some doozies along the way, mostly in the early internet era. Fortunately, these bad picks occurred when I had relatively little to invest. Here are some examples:
Peapod (PPOD): internet grocer, bought at $11, and then got bought out by a large European grocery chain for $2
Lucent (LU): darling fiber optic stock on late 90s, bought at $80, sold for $5.89
Doubleclick (DCLK): webads, bought by Google, still around, bought at $42, sold at $8.50
LTWC: don’t even remember the name of the company but they provided educational modules online, sort of like an early version of Coursera, bought around $4, sold at 0 (only stock I took a complete loss on)
Realnetworks (RNWK): developed streaming software for music and video, then somehow got into developing games, then turned into a music service, I believe they still exist as a public company with stock in low single digits. They owned Napster at one point and then sold it. CEO was and is Rob Glaser, who was previously at Microsoft. That guy has perseverance, keeping that company alive all these years. I bought my first shares at $31 in 1998, rode it all the way up to $135 just before 2000, and sold my last shares in 2002 for $3.5. I was in and out through the ride however, and ended up making a small profit overall. The value of the lessons learned trading RNWK was priceless.
KInder Morgan (KMI): this was more recent, bought in pre dividend cut, sold after dividend cut. This one taught me a valuable lesson about chasing yields.

Maybe this wasn’t exactly what you were looking for, but that’s my story about stock picking and you asked for it. I fully admit I probably got lucky with the few winners I picked along the way. Really if anything, it wasn’t the picking that mattered, so much as the holding through the ups and downs. Contrary to others, I think picking stocks early in your career when you have little to lose, and lots to learn, is not necessarily a bad thing. But the key is to learn to track your returns if you choose to buy individual stocks, and chances are, if you do that, you will learn that index funds are far better for your portfolio and peace of mind than picking stocks. I certainly don’t wish to continue following individual stocks in retirement as I age, and will be going full Boglehead. To do otherwise, is just tempting fate.
Van
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Van »

I spent lots of hours investigating individual stocks only to conclude after several years that I was a lousy "stock picker". I could not consistently make 3 correct decisions: 1. pick the right stock 2. buy it at the right time 3. sell it at the right time.
Stargazer65
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Stargazer65 »

I dabbled here and there with small amounts of my money. It seemed like I was 50/50 on good picks/bad picks (which is to say I may as well left the money in a savings account). I remember once I put the whole chunk of what I thought I didn't care about and put it on a biotech firm, don't remember the ticker. I tossed and turned in bed for two nights. It was then I realized "Hey, I guess I do care about that money if I'm losing sleep". :idea:

The next day I sold it for a minor loss and got a good night's sleep after that. I haven't bought any single stocks since.
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firebirdparts
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by firebirdparts »

My wife went through a phase of stock picking in the late 1990's, and I was pretty horrified in fact. Her father was into it, and they "discovered" a lot of gems that lost us a lot of money, like Cityscape, a company who made 120% loan-to-value mortgages and specialized in people with bad credit. Seriously, it's not a joke. They did have a way of foreshadowing future global upheavals, I guess.

I guess a decent illustration for me is that I put $2000 in a Roth IRA about the time they were invented, and I bought 50 or 100 shares of AAPL sometime in the late 1990's. I always liked their products. The Ipod was still years away, and they almost went bankrupt multiple times. Had I kept it, I would have had to wait about 8 years for it to start doing anything. Sure wish I'd kept it.
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NiceUnparticularMan
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by NiceUnparticularMan »

It was the tech bubble. My wife had a 401K and we also had a little extra to invest in taxable, and at the time I was into looking at things like star ratings and past performance of actively-managed mutual funds (both inside and outside the 401k). I thought terms like "growth" actually meant the funds in question were expected to grow more. That sort of thing.

My wife's best friend and Maid of Honor was married at the time to one of their mutual friends from business school, and they were all in financial jobs of some sort. He was getting "tips" about tech stocks to buy, and he said he was making great returns. So, he gave us a tip--I forget now the stock--and we invested a bit--I forget now the amount.

Anyway, you can probably guess the rest. Tech crashes, stock goes way down. I think we sold before it hit zero, but we lost most of that investment.

Sidenote: we cashed out the "growth" fund in taxable in order to help provide the down payment for our first house in the summer of 2000. Pure dumb luck--everything was about to fall off a cliff.

Anyway, it wasn't until like 2002-03 that I started actually really learning about basic investing principles and research. Shortly after I discovered the Vanguard Diehards Forum on Morningstar. 2004, we open an IRA for my wife at Vanguard, with an initial investment in VTSMX. And so on.

There have been no more individual stocks (except for company stock via options and restricted stock) since my brief lesson about hot stock tips.
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BogleBuddy12
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by BogleBuddy12 »

These stories, while tough to rehash I’m sure, are eye opening. I have several friends now who are jumping all into the crypto and GameStop/AMC craze. One of my friends has almost 100% of his net worth in Bitcoin. I worry we are going to see another “Dot Com” bubble burst. It seems prices are inflating without the backing of true fundamentals or value.
rich126
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by rich126 »

The title of this thread probably should be changed because for a lot of people there were no index funds or any kind of ETFs in existence when we started investing. The cheapest way to invest were in DRIPs since they usually did not charge stock commissions and allowed dividends to be reinvested w/o any fees. I think Charles Schwab and their $35 commission was considered cheap at that time but with my small portfolio, that was a sizable expense. ETFs mostly came about in the 1990s.

I don't know how accurate this article/blog is but it was interesting to read (maybe common knowledge for many here?)
https://www.getrichslowly.org/history-of-index-funds/
In the January 1960 issue of the Financial Analysts Journal, Edward Renshaw and Paul Feldstein published an article entitled, “The Case for an Unmanaged Investment Company.” The fundamental problem facing individual investors in 1960 was that there were too many mutual-fund companies: over 250 of them. “Given so much choice,” the authors wrote, “it does not seem likely that the inexperienced investor or the person who lacks time and information to supervise his own portfolio will be any better able to choose a better than average portfolio of investment company stocks.”
I started with mutual funds but gradually moved to mostly individual stocks. My main reason for doing so was due to taxes. I got annoyed with capital gain distributions from mutual funds, especially in bad years when the fund lost money but also had capital gain distributions due to selling stocks to pay investors who were bailing out (at the worst possible time in many cases).
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ctfish
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by ctfish »

Beacon power (flywheel energy storage) tripled or so in price during a power outage in August 2002 or 2003. Penny stock made me a few $K. Had no idea about anything.
goblue100
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by goblue100 »

TheHiker wrote: Thu May 20, 2021 12:10 am Before I knew about index funds, I tried to build a diversified portfolio of 15 or so individual stocks (which I picked based on fundamentals, but really had no clue what I was doing). None made me rich. Some did OK, some did poorly. Two (FNMA and CIT) went belly up in 2008-2009.
I realized stock picking was harder than I thought. Then I discovered index funds, switched and never looked back.
This pretty much describes my experience with stock picking. I was not clear in my own mind if I was investor for the long term or a day trader, so I bought and sold depending on how the wind was blowing. I did ok with some, have no idea what my actual return was but I'm pretty sure it lagged the market. I still have a few stocks which I have held for quite a long time, but I am slowly whittling them down. Now that I have stopped trying and I've held most of these stocks for quite a few years I'm doing better, lol.
"Confusion has its cost" - Crosby, Stills and Nash
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F150HD
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by F150HD »

investorpeter wrote: Thu May 20, 2021 2:15 am Lucent (LU): darling fiber optic stock on late 90s, bought at $80, sold for $5.89
Lucent has come up on this board a few times....I too was burned a bit back when.

Had a similar run w/ Nokia (?) years back, finally got rid of it.
NiceUnparticularMan
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by NiceUnparticularMan »

BogleBuddy12 wrote: Thu May 20, 2021 9:11 am These stories, while tough to rehash I’m sure, are eye opening. I have several friends now who are jumping all into the crypto and GameStop/AMC craze. One of my friends has almost 100% of his net worth in Bitcoin. I worry we are going to see another “Dot Com” bubble burst. It seems prices are inflating without the backing of true fundamentals or value.
I definitely think whenever there is a general vibe like, "Everyone is making easy money! You have to get in on this! It doesn't matter if you understand exactly what you are doing, this rising tide will life all our boats!," and so on, there should be huge red flashing lights and warning sirens going off in your mind. It has happened a million times before in financial history, and it ends poorly almost every time, and those who are burned worse are the ones who get in when the mania is near its peak.

I note we could also be talking about speculative real estate investments. If you know what you are doing and want to make it your job, you can maybe do well buying, fixing up, and selling properties.

But if you are getting into it because it seems like everyone you know already is, and they are all making easy money regardless of background or effort, and so on? Again, red flashing lights and sirens.
BruinBones
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by BruinBones »

I the 90’s I was a customer and adopter of Charles Schwab’s concepts. “Invest in what you know” is what he wrote in his book “How to be your own Stock Broker.” So I invested in individual stock of companies that I patronized (Nike, 3M) and familiar companies in the medical industry (Merck. Pfizer). After graduating medical school and a few years of decent returns and dividends, I decided to go after companies that weren’t blue chips. I invested in 2 dot.com startups that I thought were going to revolutionize surgery and nutrition, respectively. Lost about $15k when both dropped virtually to zero during the dot.com crash. I was still well diversified in no load mutual funds at the time, but I was unaware of the exorbitant expense ratio fees that I was paying until years later. I did take a flyer on Google in the early 2000’s and got lucky, but I have since adopted a 3 fund index portfolio.
Multiple mistakes in individual stocks: sector risk, dividend risk, sector bias, startup risk; and losing out to expense ratios in non-index MFs.
jpdion
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by jpdion »

I have never owned an individual stock. However, before working for the Federal government and utilizing the Thrift Savings Plan index funds, I did invest in a couple of mid-cap value funds (for 2 UGMAs). Rolled over 100% of TSP to Vanguard (as did my wife with her ESOP and 401(k)).
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alpenglow
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by alpenglow »

BruinBones wrote: Thu May 20, 2021 10:07 am I the 90’s I was a customer and adopter of Charles Schwab’s concepts. “Invest in what you know” is what he wrote in his book “How to be your own Stock Broker.” So I invested in individual stock of companies that I patronized (Nike, 3M) and familiar companies in the medical industry (Merck. Pfizer). After graduating medical school and a few years of decent returns and dividends, I decided to go after companies that weren’t blue chips. I invested in 2 dot.com startups that I thought were going to revolutionize surgery and nutrition, respectively. Lost about $15k when both dropped virtually to zero during the dot.com crash. I was still well diversified in no load mutual funds at the time, but I was unaware of the exorbitant expense ratio fees that I was paying until years later. I did take a flyer on Google in the early 2000’s and got lucky, but I have since adopted a 3 fund index portfolio.
Multiple mistakes in individual stocks: sector risk, dividend risk, sector bias, startup risk; and losing out to expense ratios in non-index MFs.
That was a big Peter Lynch concept, right?
BalancedJCB19
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by BalancedJCB19 »

I was fortunate in regards that I never went the single stock route. However, before I knew what I was doing, I remember looking at the list of funds in my 401K and put 10% in each because they offered 10 funds. I had no idea what I owned. It wasn't until I started reading about index funds, low costs and asset allocation, that I got on the track I am still on today.

Now at 57, if I had to do it all over again, I would simply put 100% in the S&P or Total Stock Market Index Fund. When I started out I was 60/40 stocks bonds. Way too conservative, but I didn't realize that at the time. Today I'm all in the Vanguard Balanced Index Fund for life where I will stay for the rest of my days on this tiny blue planet.
secondopinion
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by secondopinion »

BogleBuddy12 wrote: Wed May 19, 2021 11:18 pm I’m hoping some Bogleheads can share their stories from prior to them discovering index funds.

-Did you have a large amount of your portfolio in just a couple of stocks?
-Did you hit a downturn and this prompted you to seek out a new way?
-Did you hold a stock that went to zero?

Hopefully for the inexperienced investors browsing this forum, your tale can caution them from thinking they “know better” than the market.

Thanks!
I never "picked" stocks; I invested in them in the past.
  • No. I held about 30 stocks or so. No stock was much larger of a stake than another.
  • I hit downturns and it did nothing to my plans.
  • Never have; those that did I happened to cut fairly early (fundamentals changed). The majority of stocks picked in the past are better off today than at the time of the purchase.
I have never outsmarted the market, but have certain gained my fair share (risk-adjusted) during those days. Out-performance was generally during downturns; under-performance was generally during upturns.

I invest in index funds these days because it is easier for me to do (I still am tactical in my approach).

In short, it was time rather than think index funds are better that caused the switch. I think there is nothing wrong with index funds; I just think that I much rather do my own research if I had the time (which I often do not). I avoid active funds usually because I can do it cheaper and my way; I am not paying someone to play with my money.

Long live index funds and responsible stock investors. It is your money; treat it like a business, and not a game.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
sailaway
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by sailaway »

Even when I purchased single stocks, they were purchased as part of basket (known as Motif). I did well enough that I still own most of them just because they were in the green even last March when I was transferring out of Motif just before they closed down and I don't want to pay the capital gains in our current tax situation. I did start to tax loss harvest once I learned about that. If lower incomes weren't just over the horizon, I might have used the transfer to sell up completely.

There was one thing I still liked about Motif that kept me there even once I started purchasing ETF's: their dividend reinvestment program allowed you to funnel all of your dividends into a single ETF, rather than reinvesting where the dividend came from.
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by lazynovice »

Have never owned an individual stock.

Before index funds, I invested in whatever mutual funds were in my employer 401(k). How I picked those? Their names or categories sounded good and their five year return was higher than others in the line up. Maybe I looked at fees? I doubt it. My AA was whatever the 401(k) told me it should be after filling out their quiz- 80/20 in my 20s and 30s. Not optimal but honestly, we did okay.

For some reason, when I started a taxable account, I figured I needed to understand these things better- the money seemed more real in taxable. I think a Money magazine article led me here, but I am not sure anymore. Could have been a Scott Burns article.
JBTX
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by JBTX »

I had mostly active mutual funds. If I had to guess maybe around 1.0% fee on average. I've only ever owned a couple of individual stocks, in immaterial amounts. Of those instances I roughly broke even or lost money on all of them.
Agapostemon
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Agapostemon »

When I had a small windfall in the mid 1990s, I put it into in Vanguard index funds.

That got me interested in stocks, though, and I started setting aside new savings to invest. I read Tobias, Lynch, Graham, and Malkiel. I picked up magazines, and read online boards. I started buying small lots of individual stock. It didn't take long for me to realize that the better a story the magazines told, the worse the stock would perform. The biggest burns were Solectron and VISX. I even managed to lose money on Microsoft!

I also learned about investment clubs, and the National Association of Investment Clubs, now know as Better Investing. They teach a simple way to analyze the steadiness of a company's growth, and estimate a fair price for the stock. When I started it was still a matter of pen and paper, and going to the library for Value Line. Now I subscribe to their software and Morningstar data feed. I learned to love boring companies that no one talks about. My absolute favorite is Fiserv, which I have held for over 20 years.

Over time, my stocks have outperformed my index funds and ETFs. But it takes time to evaluate companies, find the quality ones, and make a decision to buy. Those buys come after a lot of reading and thinking and second-guessing. Most years I make only a trade or two. Some years I just let them all ride.

As the performance of my index funds has been quite satisfactory, with a LOT less work on my part, I tell most people they should just buy a target date fund and not worry about it.
Laurizas
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Laurizas »

rich126 wrote: Thu May 20, 2021 9:23 am The title of this thread probably should be changed because for a lot of people there were no index funds or any kind of ETFs in existence when we started investing.
Didn't Vanguard introduce index fund in 1976?
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nedsaid
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by nedsaid »

I have owned individual stocks since 1988. A friend of mine went into the brokerage business at a local PaineWebber office. This office had two Money Magazine All-Star Brokers, Bill Blount and Steven Spence, practitioners of the Value discipline. Mr. Blount famously said, "My favorite kind of company if it rolls over and dies will double my money." Other brokers in that office, including my friend, used Blount and Spence's ideas and got their clients into Value oriented stocks. This is where I learned a lot about Value investing.

I took my Bank Certificate of Deposit IRA from First Interstate Bank and took it to my friend. My first stock was AST Research. I made money on that stock and as they say, after that it was off to the races. Kind of ironic that my first stock was a Tech stock. My friend lasted a year and I went on to two successor brokers who got bored with me and moved me on to Broker #4. I followed Broker #4 to two other firms after that.

My most profitable stock was Plum Creek Timber, which was created from Burlington Northern Railroad timber lands. It started as a publicly traded Master Limited Partnership and then became a Timber REIT. The Spotted Owl controversy erupted in the Pacific Northwest during the 1980's and this cut timber harvests from Forest Service lands to 10% of what they were before. This made private timberland very valuable, it took Wall Street a few years to fully appreciate the Spotted Owl story. I made money on other forest product stocks like Great Northern Nekoosa, Willamette Industries, and Weyerhauser as the industry consolidated. I wound up owning both Plum Creek and Weyerhauser stock, the two companies merged with Weyerhauser being the surviving company.

Other successful stories were Fannie Mae and later StanCorp. Had my disasters too like AIG, Lucent, and Nortel. I have posted a lot about the Four Horsemen of Underperformance. Altogether, over rolling 15 year periods, I have about matched the Vanguard Value Index. Sometimes I beat it by a hair, sometimes I trail it a bit. I did better than most individuals trying this but I wasn't the next Peter Lynch either. Not bad.
A fool and his money are good for business.
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by decapod10 »

The first time I started investing was in college right at the Dot com era. It was just a little bit of money, like $2000 or so. Learned about Technical Analysis and things like that. Initially pretty much everything I did turned to gold and did quite well, but eventually I did lose most of it. I think I ended up with $500 or so. I'm not sure if it taught me that stock picking doesn't work per se, but it certainly taught me that stock picking wasn't for me. It takes a lot of work and following markets and worrying about day to day price movements and news, which is fine if it's just "fun money", but not if it's money I need for my retirement. Since then, I've generally been all index funds. I haven't owned an individual stock up until this year, when I put a small amount in some more.. ahem.. "alternative investments". However, despite that I still believe in buy and hold as the best strategy and do not participate in market timing, even with the fun money I believe in buying things with the intention of holding long term. Otherwise, all money needed for retirement remains in a pretty typical BH portfolio with an SCV tilt (US Stock/Intl Stock/ SCV/ US Bond funds).
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Orange_Philosophy »

My rule was:

U.S. Blue Chips where I understood the basic business such that I could imagine what the future might hold for their business.
Must pay at least high 2%ish dividend and be stable or growing
Must be near or below their midpoint for 52 week high/low
P/E under 20
Read a handful of reputable research analyst papers on the company
A short gander at the financials and news for the past year looking for any trends
If all passes muster, then I'd buy a decent stake and sit on it

I did fairly well over time with some of my picks quadrupling while others just lagged along. Overall maybe 12-15% per year in the good years while watching index funds beat me time and time again and me paying taxes on the dividends.

I had about 30 total stocks and a handful of index funds. I now have about 10 stocks left and will probably be out of those immediately at the start of 2022 as I've taken all the cap gains I can stand in my taxable for this year. I'll be in Life strategies or target dates almost exclusively at that point. I'm about 85% of the way there. "Set it and Forget It"
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by ZWorkLess »

Well, my introduction to stock ownership was when my dad gifted me a couple thousand dollars worth of Echostar (Dish satellite TV) in the mid 90s (while I was in my mid 20s). Dad had actually done the engineering that plotted (and licensed) the satellite paths that Echostar wanted for their new TV satellites, so they bought that tiny company and my dad’s shares were converted to Echostar shares. At that time, it was pre•IPO, so he could only sell to a limited number of other stock owners. He was cashing out and gifted me and my brother each relatively tiny portions of his shares before he cashed out the rest.

The stock went crazy in the first years after the IPO, and I cashed most of mine out over a few years, to help support our family while my spouse was in professional school and I was having our first couple babies. I cleared over 100k (basis was 2c/share), paid very low taxes as our income was very low, spent most of it and what I didn’t spend I replaced with SP500 shares in my kids” college funds.

For whatever reason, that windfall on that one stock didn’t at all inspire me to try to stick pick, and I’ve been exclusively an Index Fund investor since then. I guess I am enough of a scientist that I intuitively understand that an anomalous success is not predictive, while the data is clear that on average, low cost index funds are the best option.

And, fwiw, a few people I love dearly were gambling addicts. Observing their lives, I strongly believe the worst things to happen to them were those occasional big wins because those occasional big wins kept them coming back for more punishment. In the end, the house always wins. Same goes with stock picking, imho.
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jazzcat73
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by jazzcat73 »

My grandma told me about stocks and investing when I was young and I got intrigued about the concept. With her help I bought a few units of stock in two local banks (I grew up in Finland). It was maybe 1981 so I got these physical stock certificates. They were ornate and official looking, and I took them to the bank every quarter to have the dividend coupons physically clipped out to cash my dividends. That was so exciting! I went to the bank every day after school to ask the teller how my stocks were doing before I figured out the newspaper listed that stuff.

I tried my hand at stock picking in the 90s when I got my first real job. I tried one of the Motley Fool systems where you pick the four worst performing Dow stocks with the theory that they will rebound. That batch included Kodak and Goodyear Tire and my portfolio tanked. Dabbled in dot cons and lost maybe $8k and called it quits. I realized stock picking isn’t that easy, and mechanical algorithms don’t necessarily work. Stayed off individual stocks since then for the most part.
Big Dog
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Big Dog »

Merrill Lynch Cash Management account paying 17-18%, if I recall. BRK, before it became an A.
Banjoman
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Banjoman »

In the Mid 90s I read about why to invest in what you consume and what you enjoy. I was a NASCAR enthusiast that knew all the big sponsors by car and driver and the tracks they ran on. So I invested in about a dozen of them including Coke, The Big 3, the 3 track owners at the time and such. I did pretty good and doubled my money in a short time only to have to sell everything to clear my name from a child support debt.
After that I put my money in the poor offerings from my employers 401k plans. Then I read about Jack Bogle via a few Paul Merriman articles.
Ever since it has been the Three Fund Portfolio.
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Starfish
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Starfish »

When I was in grad school I decided to start day trading with my 5000$ earned from a summer internship.
After about 1.5 years these were my conclusions:
1. I was 50% ahead (~7500$).
2. I paid a large amount of money on commissions (hundreds, possibly thousands of trades a year at 7$ a trade).
3. Schedule D was a nightmare (no software, I used to do my taxes by hand in pencil, this was first time I used excel).
4. I had periods when I was stressed out, got margin called at least once, had heartburn and bad sleep.
5. I was behind with my work.
6. The CEO from one company I was very invested in was caught with fraud and the stock tanked.

I decided it's not worth it and never did it again. The main thing that did it for me was 6, I realized that it is not possible to predict such events. When I got my first job I invested only in index funds (besides the company stock which was part of the pay).
In the last 5 years I started buying individual stocks too. I did try to keep them as a small percentage of the portfolio but they did much better than my index funds, so now is a little more than I wanted.
TallBoy29er
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by TallBoy29er »

I started my stock picking career w Exodus Communications in 1998 or so. Bought it for about $167 per share (if memory is correct). Luckily I never had to sell....they want bankrupt and I lost my whole investment. 😭😂
goblue100
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by goblue100 »

nedsaid wrote: Thu May 20, 2021 3:30 pm My friend lasted a year and I went on to two successor brokers who got bored with me and moved me on to Broker #4. I followed Broker #4 to two other firms after that.
This reminds of how expensive it was to trade stocks before the internet. My memory isn't the best here, but 100 shares of a $25 stock would cost about $80 to get into and the same to get out of? And that may have been a discount broker, a full service was maybe double that. The good old days, lol.
"Confusion has its cost" - Crosby, Stills and Nash
xxd091
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by xxd091 »

In the U.K. at one time some years ago the Government in order to encourage saving and investment provided a Tax free wrapper called a PEP that could only hold one stock
I was still a undereducated investor starting a long road
I chose Marks&Spencer a prime retailer and my wife chose BP
Both did terribly
The government abandoned the scheme after 2 or 3 years and allowed what ever shares you wished -wrapper called an ISA
A salutary lesson on stock picking for me
Discovered Vanguard Diehards shortly afterwards and have had a index fund portfolio ever since
Now 75 and retired 18 years -successfully thanks to John Bogle
xxd091
dcabler
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by dcabler »

I played with "Dogs of the Dow" for a little while in the early 90's. I still have $0.01 worth of DuPont from that experience due to a roundoff error when I came to my senses and sold everything. Despite saying they would, I couldn't seem to get Schwab to make it go away. At $0.01 is was only worth my time to ask once. :D
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nedsaid
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by nedsaid »

goblue100 wrote: Thu May 20, 2021 8:31 pm
nedsaid wrote: Thu May 20, 2021 3:30 pm My friend lasted a year and I went on to two successor brokers who got bored with me and moved me on to Broker #4. I followed Broker #4 to two other firms after that.
This reminds of how expensive it was to trade stocks before the internet. My memory isn't the best here, but 100 shares of a $25 stock would cost about $80 to get into and the same to get out of? And that may have been a discount broker, a full service was maybe double that. The good old days, lol.
It was 2% to 3% to trade at a full service broker, trading in round lots helped but it was still expensive. So a roundtrip trade was 4% to 6%, hence my reluctance to trade. Another reason Value practitioners liked dividend stocks, the dividends would cover the trading costs. Even though I can trade stocks for free, the biggest cost is incorrect sell/buy decisions, what you buy to replace tends to underperform what you just sold, at least in the shorter term. It seemed that the ratio of incorrect sell/buy decisions outnumbered the correct decisions by a ratio of 2:1 or even 3:1.
A fool and his money are good for business.
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Monster99
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Monster99 »

My cousin was a commodity broker for a agriculture cooperative - beans, corn etc.... I had made what I thought was a large amount of money, about $6K, from the run up of silver in the early 80's (Hunt Brothers) and asked him to buy some stock in a small startup software firm called Microsoft.... he charged me $75, and said that was a discount .... made more money on MSFT then invested in Lucent and pretty much lost 75%.... no more single stock investing after that.
rockstar
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by rockstar »

I heavily invested in MO. I rode it up to 72 and then sold it off when it hit 68. I recently road it up from 43ish to around 50 and sold it off again. This time my holding was about 5% of my total portfolio. Originally, it was nearly 100%.
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GerryL
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by GerryL »

In the early 90s, I knew only that I needed to get my little IRA into stocks (from CDs). I read an article in Consumer Reports about mutual funds. It emphasized the importance of costs but didn't get into index funds. I chose from the list of funds in the article and put my IRA into Dodge & Cox stock fund and then just left it alone as I eventually got a 401k* and then, when became possible, started putting new post-tax $$ into a Roth IRA.

D&C did gangbusters. Even held up during 2008-09. When I retired in 2014, I decided to consolidate everything into index funds at Vanguard and sold it all. Have never looked back to see whether I would have more now if I had left all those $$ under active management in D&C.

* My 401k did not offer index funds until well into my employment.
rich126
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by rich126 »

Laurizas wrote: Thu May 20, 2021 1:10 pm
rich126 wrote: Thu May 20, 2021 9:23 am The title of this thread probably should be changed because for a lot of people there were no index funds or any kind of ETFs in existence when we started investing.
Didn't Vanguard introduce index fund in 1976?
Apparently it did and wasn't well thought of at first. Although it wasn't an ETF but a mutual fund (I think).
At the time, it was heavily derided by competitors as being "un-American" and the fund itself was seen as "Bogle's folly"
https://en.wikipedia.org/wiki/Index_fund
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sls239
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by sls239 »

It wasn't me because I discovered Bogle before I had any money to invest.

The summer between high school and college I had a temp job at Worldcom. It was part of my job to print the stock price every day. Occasionally people would talk about it. They would talk about how they were thinking of exercising their stock options. They were torn because the price was hovering around $85 instead of the $95 it had been at about six months prior.

But I distinctly remember someone telling me they could make $48K if they did it. And I remember saying well that would be hard to turn down. While on the inside my mind was blown at the thought of getting $48K for nothing.

I hope they got their money before it all came crashing down, but I didn't keep in touch.
Dottie57
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Dottie57 »

I started with index funds at age 31 when my employer started a 401k. I didn’t have single stocks until to 2000’s. I bought Apple and 3M. Both made money when I bailed on them. I was tired of following the ups and downs. Index funds are easier for me to ignore.
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Garco
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by Garco »

I called my finance-savvy uncle for advice. He was a natural resources guy and set me up with 3 or 4 funds, including a company that he owned. He had a pretty good rationale for the fund recommendations but as someone who was a wildcat oil guy he was willing to take a lot more risk than I should have taken. But this was basically play money to me; I had a 403b for my core investments. Today I don't have any of the funds he recommended then. Most are no longer existent, including his own.
btraven
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Re: Before you discovered index funds, what is your “stock picker” story?

Post by btraven »

When IRA's first came out, around 1977, a broker convinced me to invest the whole $1,500 in American Motors!
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