One Stock Portfolio

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Topic Author
ZenZero
Posts: 69
Joined: Tue Jun 22, 2021 7:41 pm

One Stock Portfolio

Post by ZenZero »

Hi Friends,

This is my first post. I just created account on the Bogleheads forum to ask this question which is on my mind for a long time now. I am a huge fan of Jack Bogle and Warren Buffett. So, here are my thoughts/question on One Stock Portfolio:

Over the years, I tried less successfully (in comparison to S&P 500) to pick and invest in individual stocks. Then I realized that it is very difficult to truly understand and continuously monitor each company even in a portfolio of 10-15 stocks. Really great investment ideas are hard to come by. So, why not invest only in your the best idea that you understand better than anybody else? The argument against this and for a 10-15 stocks portfolio is the importance of diversification. So, that got me thinking if I have a way to ONLY invest in my best investment idea and still can achieve diversification, then why would I invest in the second best idea? The answer was simple...buy your best idea in the same proportion as you would in your typical diversified portfolio and put rest of the money in S&P 500 index fund. That way you can think like investor (S&P 500 index fund) and like a virtual entrepreneur by studying/monitoring your best idea like a hawk! You can continue to study other ideas and when a better idea that what your currently own comes along, you can switch your stock. But you are only allowed to invest in one stock at a time and the rest of the money will be in index fund. That way you will bring a tremendous focus to the game. It is a slightly different version of Warren Buffet's idea that the best way to invest is to think of a lifetime investment card. Every time you make an investment your card is marked. Once you have made 20 investments, that's it, you can't make anymore. What I am saying is you are allowed to punch only one hole at any given time.

Long story short, why not have a one stock portfolio for concentration and S&P 500 for diversification at the same time...best of both the worlds. Staying away from your second and third best ideas. Imagine if you knew in advance with 100% certainty that Amazon is your best idea, why would you invest in your second best idea such as "Walmart", etc. The problem is you don't know that in advance, so you diversify, but what's the best way than index to take care of diversification? What do you think? What are the cons in my naive thinking?
Notsobad
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Re: One Stock Portfolio

Post by Notsobad »

I am not interested in placing more than 5% of my invested capital into one company. And even it is MY best idea, I know very little compared to the professional investors. I don’t want to spend the time or do i have the expertise to know if my one stock is still a sound investment, and at only 5%, how much time should I spend on it?

So I don’t and diversify.
Topic Author
ZenZero
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Joined: Tue Jun 22, 2021 7:41 pm

Re: One Stock Portfolio

Post by ZenZero »

Notsobad wrote: Tue Jun 22, 2021 8:56 pm I am not interested in placing more than 5% of my invested capital into one company. And even it is MY best idea, I know very little compared to the professional investors. I don’t want to spend the time or do i have the expertise to know if my one stock is still a sound investment, and at only 5%, how much time should I spend on it?

So I don’t and diversify.
Okay, so why not invest 5% in your best idea and diversify 95% in S&P 500 index? What's the reasoning behind investing in the second and third best ideas? If you only own one stock, then you will study it like you life depends on it and over time, understand it better than any professional out there. Because they are studying 20 different ideas, and you are studying only one. If one student takes 6 classes in a semester and studies for 20 hours a week, but another student who takes only one course, and still studies 20 hours a week, then it is likely the second student will know much more about his subject.

On the plus side, if your best idea truly turns out to be the next Amazon, then over time that one stock itself has a potential to become majority of your wealth!
Da5id
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Re: One Stock Portfolio

Post by Da5id »

ZenZero wrote: Tue Jun 22, 2021 8:06 pm So, why not invest only in your the best idea that you understand better than anybody else?
Because, alas, you are almost certainly wrong in that belief. Assuming you only have public knowledge (i.e. this isn't some form of illegal insider trading), why assume you know more about a company and its prospects than the professionals working in the field at hedge/mutual funds? And history has shown that they don't know much either...
z3r0c00l
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Re: One Stock Portfolio

Post by z3r0c00l »

I could probably live with BRK as my only holding, far from ideal. Anything else would be a hard no, I would rather not invest in stocks at all than have to invest all in just one stock no matter how blue chip or solid my research is. Work way too hard, too long to earn this money and I won't gamble it on stock picking.

A serious question: do you really think any of us are capable of figuring something out that billion dollar hedge funds, with huge teams of experts and super computers, can't? The only chance we have of winning at the stock picking game is by sheer luck. It is a gamble, and frankly I like to gamble on things where the odds are known ahead of time.
70% Global Stocks / 30% Bonds
dh
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Re: One Stock Portfolio

Post by dh »

I also lean into having a diversified portfolio of stocks as well. Yet it wasn't how I grew up. My father spent his entire working career for a energy company. His entire portfolio was invested in his company from 1954 to his retirement in 1993 (they offered a dollar for a dollar match). When he retired he rolled over his portfolio into a Rollover IRA (dad worked with a professional at Edward Jones who was always trying to get my dad to diversify). My dad didn't like the idea of diversity, but eventually spread out the total over 5 companies (Exxon, Johnson & Johnson, Procter & Gamble, Microsoft, and Boeing). I would be freaked out with that portfolio, but dad "has more money than he will ever need" (his words). When I asked him why he didn't spread out his risk more, his response shocked me: "I wish I would have just put everything into Procter & Gamble." :shock:

I wonder if the view of just a few stocks (or just one - yikes!) was more common of people in his generation (he was born in the 30s).
Topic Author
ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

z3r0c00l wrote: Tue Jun 22, 2021 9:11 pm I could probably live with BRK as my only holding, far from ideal. Anything else would be a hard no, I would rather not invest in stocks at all than have to invest all in just one stock no matter how blue chip or solid my research is. Work way too hard, too long to earn this money and I won't gamble it on stock picking.
No, you won't be investing in ONLY one stock. You would be investing in that ONE stock and 500 other stocks through S&P 500. Isn't that enough diversification? If that one stock doesn't work out, your performance will still match S&P 500. But if that works out, then you will be extraordinarily rich. And you have a choice to change that idea after holding it for some time with continuous study, new insights, etc., your realize that your initial analysis was wrong.

If you are not at all confident in your analysis, then also the question is why by bunch of stocks? Why not go 100% index?

I am trying to find if there is any logic at all in having more than one stock in your portfolio?
Topic Author
ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

dh wrote: Tue Jun 22, 2021 9:18 pm I also lean into having a diversified portfolio of stocks as well. Yet it wasn't how I grew up. My father spent his entire working career for a energy company. His entire portfolio was invested in his company from 1954 to his retirement in 1993 (they offered a dollar for a dollar match). When he retired he rolled over his portfolio into a Rollover IRA (dad worked with a professional at Edward Jones who was always trying to get my dad to diversify). My dad didn't like the idea of diversity, but eventually spread out the total over 5 companies (Exxon, Johnson & Johnson, Procter & Gamble, Microsoft, and Boeing). I would be freaked out with that portfolio, but dad "has more money than he will ever need" (his words). When I asked him why he didn't spread out his risk more, his response shocked me: "I wish I would have just put everything into Procter & Gamble." :shock:

I wonder if the view of just a few stocks (or just one - yikes!) was more common of people in his generation (he was born in the 30s).
Your dad was a smart man!

It is ironic that people feel psychologically safer with a portfolio 20-30 stocks than just one stock portfolio (with 500 other stocks in an index fund to diversify).
Normchad
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Re: One Stock Portfolio

Post by Normchad »

Well, I know it wouldn’t work out for me.

If you told me on Jan 1 2020, that we would have a global pandemic, that would kill millions, and shut down economies all over the world. If I knew that ahead of time, being the smart guy that I am, I would have plowed my money into Pfizer! What could be better. They were going to invent the life saving vaccine. The world would need billions of doses. Governments the world over would foot the bill to buy all those doses. Huge demand for a life saving vaccine, few competitors, and somebody else paying for it all. I can’t imagine a better situation to be in!

And I would have been completely wrong. I think Pfizer is up only a tiny bit since Jan 1 2020.

On the other hand, Zoom kicked butt. I’m still not sure why. The market seemed to already be saturated with equivalent products from established vendors. Microsoft, Cisco, gotomeetimg, etc. Why Zoom? I have no,idea.

I just don’t think it matters how smart you are, or how smart you think you are……
mikejuss
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Re: One Stock Portfolio

Post by mikejuss »

ZenZero wrote: Tue Jun 22, 2021 9:08 pm
Notsobad wrote: Tue Jun 22, 2021 8:56 pm I am not interested in placing more than 5% of my invested capital into one company. And even it is MY best idea, I know very little compared to the professional investors. I don’t want to spend the time or do i have the expertise to know if my one stock is still a sound investment, and at only 5%, how much time should I spend on it?

So I don’t and diversify.
Okay, so why not invest 5% in your best idea and diversify 95% in S&P 500 index? What's the reasoning behind investing in the second and third best ideas? If you only own one stock, then you will study it like you life depends on it and over time, understand it better than any professional out there. Because they are studying 20 different ideas, and you are studying only one. If one student takes 6 classes in a semester and studies for 20 hours a week, but another student who takes only one course, and still studies 20 hours a week, then it is likely the second student will know much more about his subject.

On the plus side, if your best idea truly turns out to be the next Amazon, then over time that one stock itself has a potential to become majority of your wealth!
That's 5% bet is not going to move the needle in a meaningful way, but if you want to do it for fun, go ahead.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Topic Author
ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

Da5id wrote: Tue Jun 22, 2021 9:10 pm
ZenZero wrote: Tue Jun 22, 2021 8:06 pm So, why not invest only in your the best idea that you understand better than anybody else?
Because, alas, you are almost certainly wrong in that belief. Assuming you only have public knowledge (i.e. this isn't some form of illegal insider trading), why assume you know more about a company and its prospects than the professionals working in the field at hedge/mutual funds? And history has shown that they don't know much either...
No, you may not understand it better than professionals in the beginning. But if you continue to study it day in day out, slowly but surely your understanding will increase, and you will eventually figure out if that is really a great idea or not. When you are allowed to punch only one hole, you will think long and hard, you will be forced to compare Amazon, Google, Microsoft, NVDA, etc. If you invest in Google, you won't be allowed to invest in Microsoft, so on and so forth (you can only own them through index). You won't take that decision lightly then.

When you are allowed to buy bunch of stocks simultaneously, then you are not forced to study it hard enough, and that's the problem in my opinion.
Da5id
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Re: One Stock Portfolio

Post by Da5id »

ZenZero wrote: Tue Jun 22, 2021 9:43 pm
Da5id wrote: Tue Jun 22, 2021 9:10 pm
ZenZero wrote: Tue Jun 22, 2021 8:06 pm So, why not invest only in your the best idea that you understand better than anybody else?
Because, alas, you are almost certainly wrong in that belief. Assuming you only have public knowledge (i.e. this isn't some form of illegal insider trading), why assume you know more about a company and its prospects than the professionals working in the field at hedge/mutual funds? And history has shown that they don't know much either...
No, you may not understand it better than professionals in the beginning. But if you continue to study it day in day out, slowly but surely your understanding will increase, and you will eventually figure out if that is really a great idea or not. When you are allowed to punch only one hole, you will think long and hard, you will be forced to compare Amazon, Google, Microsoft, NVDA, etc. If you invest in Google, you won't be allowed to invest in Microsoft, so on and so forth (you can only own them through index). You won't take that decision lightly then.

When you are allowed to buy bunch of stocks simultaneously, then you are not forced to study it hard enough, and that's the problem in my opinion.
I believe you to be wrong. However you sound unshakably convinced, so good luck with that.
Topic Author
ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

mikejuss wrote: Tue Jun 22, 2021 9:41 pm
ZenZero wrote: Tue Jun 22, 2021 9:08 pm
Notsobad wrote: Tue Jun 22, 2021 8:56 pm I am not interested in placing more than 5% of my invested capital into one company. And even it is MY best idea, I know very little compared to the professional investors. I don’t want to spend the time or do i have the expertise to know if my one stock is still a sound investment, and at only 5%, how much time should I spend on it?

So I don’t and diversify.
Okay, so why not invest 5% in your best idea and diversify 95% in S&P 500 index? What's the reasoning behind investing in the second and third best ideas? If you only own one stock, then you will study it like you life depends on it and over time, understand it better than any professional out there. Because they are studying 20 different ideas, and you are studying only one. If one student takes 6 classes in a semester and studies for 20 hours a week, but another student who takes only one course, and still studies 20 hours a week, then it is likely the second student will know much more about his subject.

On the plus side, if your best idea truly turns out to be the next Amazon, then over time that one stock itself has a potential to become majority of your wealth!
That's 5% bet is not going to move the needle in a meaningful way, but if you want to do it for fun, go ahead.
Okay, I get it. But do you think having a portfolio of 10-15 stocks instead of owning an index will move the needle? The main questions...is there a rational logic to own the second best idea over index. If you don't want to hold individual stocks at all, then that's fine and a respectable thing to do. There is no dilemma there. But if you at all trying to own individual stocks, why go with bunch of half-studied ideas?
Normchad
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Re: One Stock Portfolio

Post by Normchad »

ZenZero wrote: Tue Jun 22, 2021 9:43 pm
Da5id wrote: Tue Jun 22, 2021 9:10 pm
ZenZero wrote: Tue Jun 22, 2021 8:06 pm So, why not invest only in your the best idea that you understand better than anybody else?
Because, alas, you are almost certainly wrong in that belief. Assuming you only have public knowledge (i.e. this isn't some form of illegal insider trading), why assume you know more about a company and its prospects than the professionals working in the field at hedge/mutual funds? And history has shown that they don't know much either...
No, you may not understand it better than professionals in the beginning. But if you continue to study it day in day out, slowly but surely your understanding will increase, and you will eventually figure out if that is really a great idea or not. When you are allowed to punch only one hole, you will think long and hard, you will be forced to compare Amazon, Google, Microsoft, NVDA, etc. If you invest in Google, you won't be allowed to invest in Microsoft, so on and so forth (you can only own them through index). You won't take that decision lightly then.

When you are allowed to buy bunch of stocks simultaneously, then you are not forced to study it hard enough, and that's the problem in my opinion.
Understanding it isn’t enough. You also have to understand all its competitors. And you have to understand all the alternatives that currently exist, and may exist in the future. And you have to understand how the market is going to react to it. And you still need a ton of luck to be right. Suppose Bezos died early in in the Amazon story. The world would be very different now…..
mikejuss
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Re: One Stock Portfolio

Post by mikejuss »

ZenZero wrote: Tue Jun 22, 2021 9:47 pm
mikejuss wrote: Tue Jun 22, 2021 9:41 pm
ZenZero wrote: Tue Jun 22, 2021 9:08 pm
Notsobad wrote: Tue Jun 22, 2021 8:56 pm I am not interested in placing more than 5% of my invested capital into one company. And even it is MY best idea, I know very little compared to the professional investors. I don’t want to spend the time or do i have the expertise to know if my one stock is still a sound investment, and at only 5%, how much time should I spend on it?

So I don’t and diversify.
Okay, so why not invest 5% in your best idea and diversify 95% in S&P 500 index? What's the reasoning behind investing in the second and third best ideas? If you only own one stock, then you will study it like you life depends on it and over time, understand it better than any professional out there. Because they are studying 20 different ideas, and you are studying only one. If one student takes 6 classes in a semester and studies for 20 hours a week, but another student who takes only one course, and still studies 20 hours a week, then it is likely the second student will know much more about his subject.

On the plus side, if your best idea truly turns out to be the next Amazon, then over time that one stock itself has a potential to become majority of your wealth!
That's 5% bet is not going to move the needle in a meaningful way, but if you want to do it for fun, go ahead.
Okay, I get it. But do you think having a portfolio of 10-15 stocks instead of owning an index will move the needle? The main questions...is there a rational logic to own the second best idea over index. If you don't want to hold individual stocks at all, then that's fine and a respectable thing to do. There is no dilemma there. But if you at all trying to own individual stocks, why go with bunch of half-studied ideas?
Make bets, have fun--but keep it to no more than 5% of your portfolio. You are not going to beat the market. You can accept this now, or after you've lost money.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Topic Author
ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

Normchad wrote: Tue Jun 22, 2021 9:48 pm
Understanding it isn’t enough. You also have to understand all its competitors. And you have to understand all the alternatives that currently exist, and may exist in the future. And you have to understand how the market is going to react to it. And you still need a ton of luck to be right. Suppose Bezos died early in in the Amazon story. The world would be very different now…..
Exactly! There is a lot goes into understanding all aspects of any company. Now imagine doing that analysis for 15-20 companies in your portfolio. That would be virtually impossible.

If Bezos dies, you still have the option to switch your best idea. After all, your are monitoring it like a hawk. And even if you don't switch, assuming 5% weightage to that idea, you will still roughly match the index performance with rest of your money in the index.
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firebirdparts
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Re: One Stock Portfolio

Post by firebirdparts »

I had an opportunity, and I guess I've had more than one, to become a one stock millionaire by investing everything with the company I work for. I do in fact have non-public information on this one company. After Enron, of course, I didn't ever feel like doing that.
This time is the same
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

mikejuss wrote: Tue Jun 22, 2021 9:53 pm
Make bets, have fun--but keep it to no more than 5% of your portfolio. You are not going to beat the market. You can accept this now, or after you've lost money.
Thank you, I understand what you are saying and I have no disagreement with people inclined towards 100% indexing. My question is for people who do both (individual stock picking as well as indexing). Which portfolio out of the two, "One stock + Index" OR " A portfolio of 15-20 stocks + index" will perform better? If you say the second portfolio, then I would like to understand the rationale behind it.
mikejuss
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Re: One Stock Portfolio

Post by mikejuss »

ZenZero wrote: Tue Jun 22, 2021 10:09 pm
mikejuss wrote: Tue Jun 22, 2021 9:53 pm
Make bets, have fun--but keep it to no more than 5% of your portfolio. You are not going to beat the market. You can accept this now, or after you've lost money.
Thank you, I understand what you are saying and I have no disagreement with people inclined towards 100% indexing. My question is for people who do both (individual stock picking as well as indexing). Which portfolio out of the two, "One stock + Index" OR " A portfolio of 15-20 stocks + index" will perform better? If you say the second portfolio, then I would like to understand the rationale behind it.
But why are you trying to pick stocks in the first place?
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
mikejuss
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Re: One Stock Portfolio

Post by mikejuss »

ZenZero wrote: Tue Jun 22, 2021 10:09 pm
mikejuss wrote: Tue Jun 22, 2021 9:53 pm
Make bets, have fun--but keep it to no more than 5% of your portfolio. You are not going to beat the market. You can accept this now, or after you've lost money.
Thank you, I understand what you are saying and I have no disagreement with people inclined towards 100% indexing. My question is for people who do both (individual stock picking as well as indexing). Which portfolio out of the two, "One stock + Index" OR " A portfolio of 15-20 stocks + index" will perform better? If you say the second portfolio, then I would like to understand the rationale behind it.
But why are you trying to pick stocks in the first place?
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
venkman
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Re: One Stock Portfolio

Post by venkman »

ZenZero wrote: Tue Jun 22, 2021 9:08 pm Okay, so why not invest 5% in your best idea and diversify 95% in S&P 500 index? What's the reasoning behind investing in the second and third best ideas? If you only own one stock, then you will study it like you life depends on it and over time, understand it better than any professional out there.
Why would I invest so much of my time into something that will have a relatively small effect on my overall portfolio?
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gwe67
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Re: One Stock Portfolio

Post by gwe67 »

What you're proposing is an active management tilt, which is proven not to work.

Studying one stock and "watching it like a hawk" is time wasted that you won't get back, with no return on investment.

Tax inefficiency will drain you as well.

Read the wiki, and my signature.
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

mikejuss wrote: Tue Jun 22, 2021 10:11 pm
But why are you trying to pick stocks in the first place?
Good question! No, I am not trying to pick stocks. I am actually narrowing down my portfolio of "15-20 stocks +index" which did okay in the past, but may not have beaten the pure index. I am trying to go full indexing with only one stock on the side to satisfy my intellectual curiosity. With my full time job, married life, kids, etc., I realized that I have no time to study 15-20 different companies. It was an act of hubris to own so many companies and think that I can outsmart professionals. Now onwards, I am going to devote my entire time to only one idea that may or may not change over time. 5% may not move the needle, but if that idea proves worthy over time, I may not be averse to increase my allocation to that idea.
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

gwe67 wrote: Tue Jun 22, 2021 10:15 pm What you're proposing is an active management tilt, which is proven not to work.

Studying one stock and "watching it like a hawk" is time wasted that you won't get back, with no return on investment.

Tax inefficiency will drain you as well.

Read the wiki, and my signature.
If I have to pick one idea, I won't pick that idea until I am convinced that it is worthy of holding onto for at least next 10-20 years. If you can find and hold onto one good growing business (with a capacity to reinvest all its retained earnings in future growth opportunities with high return on investment) for a long time, then that's the most tax efficient thing you can do. I am not talking about changing your idea every quarter. If you have to change your idea every quarter, then what good idea is that and in that case, you better go 100% indexing.
mikejuss
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Re: One Stock Portfolio

Post by mikejuss »

ZenZero wrote: Tue Jun 22, 2021 10:24 pm
mikejuss wrote: Tue Jun 22, 2021 10:11 pm
But why are you trying to pick stocks in the first place?
Good question! No, I am not trying to pick stocks. I am actually narrowing down my portfolio of "15-20 stocks +index" which did okay in the past, but may not have beaten the pure index. I am trying to go full indexing with only one stock on the side to satisfy my intellectual curiosity. With my full time job, married life, kids, etc., I realized that I have no time to study 15-20 different companies. It was an act of hubris to own so many companies and think that I can outsmart professionals. Now onwards, I am going to devote my entire time to only one idea that may or may not change over time. 5% may not move the needle, but if that idea proves worthy over time, I may not be averse to increase my allocation to that idea.
So...what stock are you picking? :twisted:
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

Normchad wrote: Tue Jun 22, 2021 9:38 pm Well, I know it wouldn’t work out for me.

If you told me on Jan 1 2020, that we would have a global pandemic, that would kill millions, and shut down economies all over the world. If I knew that ahead of time, being the smart guy that I am, I would have plowed my money into Pfizer! What could be better. They were going to invent the life saving vaccine. The world would need billions of doses. Governments the world over would foot the bill to buy all those doses. Huge demand for a life saving vaccine, few competitors, and somebody else paying for it all. I can’t imagine a better situation to be in!

And I would have been completely wrong. I think Pfizer is up only a tiny bit since Jan 1 2020.

On the other hand, Zoom kicked butt. I’m still not sure why. The market seemed to already be saturated with equivalent products from established vendors. Microsoft, Cisco, gotomeetimg, etc. Why Zoom? I have no,idea.

I just don’t think it matters how smart you are, or how smart you think you are……
You gave some good examples. Regarding Pfizer, even if you knew about the pandemic and this new vaccine, you would have to also study several other things to understand its impact on Pfizer's profits. Then you would have known that Pfizer has to share its profit with the German company BioNTech who actually invented the vaccine. Also, Pfizer is a big company with large revenue base. The incremental revenue generated by the new vaccine may not move the needle for Pfizer's profits much because of its sheer size. Versus if you would have looked at a smaller company such as Moderna, you would see that this new vaccine is going to move the needle for them in a big way. And indeed, the stock indeed went up by more than ten fold.

The bottom line is it is very difficult to truly understand a business. And I don't know how people with bloated stock portfolios understand every single thing they own. They don't!
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anon_investor
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Re: One Stock Portfolio

Post by anon_investor »

mikejuss wrote: Tue Jun 22, 2021 10:57 pm
ZenZero wrote: Tue Jun 22, 2021 10:24 pm
mikejuss wrote: Tue Jun 22, 2021 10:11 pm
But why are you trying to pick stocks in the first place?
Good question! No, I am not trying to pick stocks. I am actually narrowing down my portfolio of "15-20 stocks +index" which did okay in the past, but may not have beaten the pure index. I am trying to go full indexing with only one stock on the side to satisfy my intellectual curiosity. With my full time job, married life, kids, etc., I realized that I have no time to study 15-20 different companies. It was an act of hubris to own so many companies and think that I can outsmart professionals. Now onwards, I am going to devote my entire time to only one idea that may or may not change over time. 5% may not move the needle, but if that idea proves worthy over time, I may not be averse to increase my allocation to that idea.
So...what stock are you picking? :twisted:
I want to know too! :twisted:
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

mikejuss wrote: Tue Jun 22, 2021 10:57 pm So...what stock are you picking? :twisted:
That's a million dollar question you asked. :D Right now my eyes are on good old General Motors. I am holding bunch of stock since $20 per share and have studied it for a long time. It's a one-time bankrupt and very hated company. But I think the future is bright. You can see my investment thesis in this video presentation by the company

https://www.youtube.com/watch?v=CLaX3ZSKwaw

I am watching closely if the company is following up this big talk with real action on the ground! This is not a stock recommendation to anybody. If company doesn't deliver what it is promising in next 1-2 years, then I will be onto my next best idea. And I deserve the right to be wrong on this one. :happy
mikejuss
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Re: One Stock Portfolio

Post by mikejuss »

ZenZero wrote: Tue Jun 22, 2021 11:15 pm
mikejuss wrote: Tue Jun 22, 2021 10:57 pm So...what stock are you picking? :twisted:
That's a million dollar question you asked. :D Right now my eyes are on good old General Motors. I am holding bunch of stock since $20 per share and have studied it for a long time. It's a one-time bankrupt and very hated company. But I think the future is bright. You can see my investment thesis in this video presentation by the company

https://www.youtube.com/watch?v=CLaX3ZSKwaw

I am watching closely if the company is following up this big talk with real action on the ground! This is not a stock recommendation to anybody. If company doesn't deliver what it is promising in next 1-2 years, then I will be onto my next best idea. And I deserve the right to be wrong on this one. :happy
Time will tell. Good luck. And don't spend more money on it than you're willing to lose.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

mikejuss wrote: Tue Jun 22, 2021 11:27 pm
Time will tell. Good luck. And don't spend more money on it than you're willing to lose.
It was a small position when I bought it for $20 a share (with $100,000 investment) when the entire world was closing last year. Now it has become a big position with close to $300,000 value. I haven't sold a single share and not in any hurry. My approach towards the company management is, "Trust but verify".
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1789
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Re: One Stock Portfolio

Post by 1789 »

I think you are in the right direction. My comments are below

1) You dont need SP500 to diversify
2) You dont need 15-20 stock portfolio to diversify
3) You dont need to diversify anything, only IF YOU ARE GOOD at this job. Probably maximum 2-3 stocks should be more than enough to construct the portfolio and het wealthy, As mentioned the only condition is you have to be really good at it.

But please don’t play games like putting 5% or 10% of portfolio in individual stocks. Thats waste of time. In order to win big, you need to play big.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
anoop
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Re: One Stock Portfolio

Post by anoop »

Normchad wrote: Tue Jun 22, 2021 9:38 pm Why Zoom? I have no,idea.
Zoom was targeting everyone from corporations to individuals and they were able to successfully cater to all. Webex was tired and old and Cisco was just milking it. Zoom's success woke them up and I think they have started investing in that again. Microsoft Teams is not there yet. Does gotomeeting scale?

Zoom really does have secret sauce. Their team is ex-Webex so they know all the problems and how to address them. Their security was questionable initially, but they have addressed that too. They are sort of the whatsapp of web conferencing. That's what everyone thinks of when they need to have a video conference.
Ari
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Re: One Stock Portfolio

Post by Ari »

This conversation is a bit surreal. Seems everyone is talking past each other. OP is arguing for owning one stock rather than 15-20, but almost nobody here does that. The vast majority of Bogleheads are pure indexers, and the ones who have single stocks mostly own them because they bought them before they came to the Bogleheads and selling them today would incur taxes. Almost nobody is analyzing individual complanies here.

OP, there’s little point in arguing against owning 15-20 stocks. The baseline here is 100% indexing.
All in, all the time.
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dogagility
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Re: One Stock Portfolio

Post by dogagility »

ZenZero wrote: Tue Jun 22, 2021 9:21 pm No, you won't be investing in ONLY one stock. You would be investing in that ONE stock and 500 other stocks through S&P 500. Isn't that enough diversification? If that one stock doesn't work out, your performance will still match S&P 500. But if that works out, then you will be extraordinarily rich. And you have a choice to change that idea after holding it for some time with continuous study, new insights, etc., your realize that your initial analysis was wrong.
(blue) What percentage of your portfolio will you allocate to that one stock and the SP500?

(red) Sounds like market timing coupled with a spice of performance chasing to me.
Make sure you check out my list of certifications. The list is short, and there aren't any. - Eric 0. from SMA
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

After reading last few posts, I decided to perform a thought experiment. I created two hypothetical portfolios with some assumptions:
  • The first portfolio is pure S&P 500 index and let's say it is going to give you average 10% annual return. If you invest $100 in it, that invest will become $984.97 in 25 years
  • The second portfolio is $95 (95%) S&P 500 index and $5 (5%) single stock best idea. Now imagine the worst case scenario...your best idea goes to zero and index gives annual 10%. Then your final amount after 25 years will be $935.72.
  • Now imagine the best case scenario....your best idea gives you 20% return annually and index gives you 10%. In 25 years, your final amount will be $1,333.20. And your initially 5% best idea will eventually become 29.81% of your portfolio. Not a chump change!
So, why not be pure indexers and at the same time have some little fun on the side? If you are wrong, you will still roughly match index. If you are right, it will change your life! :happy

Your 15-20 stocks portfolio will never give you that outperformance. It will always behave like index by virtue of diversification.
Last edited by ZenZero on Wed Jun 23, 2021 7:01 am, edited 2 times in total.
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

dogagility wrote: Wed Jun 23, 2021 5:08 am (red) Sounds like market timing coupled with a spice of performance chasing to me.
You can create one more rule then. Not only you can buy only one stock at any given time, but also once you buy it, you will not be allowed to sale it for two years. The idea is to act in a very disciplined way. It is like buying a house. Once you buy it, you can't get rid of it that easily. And that's why you don't make that decision lightly. Buying a business should be no different.
langlands
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Re: One Stock Portfolio

Post by langlands »

ZenZero wrote: Wed Jun 23, 2021 6:40 am After reading last few posts, I decided to perform a thought experiment. I created two hypothetical portfolios with some assumptions:
  • The first portfolio is pure S&P 500 index and let's say it is going to give you average 10% annual return. If you invest $100 in it, that invest will become $984.97 in 25 years
  • The second portfolio is $95 (95%) S&P 500 index and $5 (5%) single stock best idea. Now imagine the worst case scenario...your best idea goes to zero and index gives annual 10%. Then your final amount after 25 years will be $935.72.
  • Now imagine the best case scenario....your best idea gives you 20% return annually and index gives you 10%. In 25 years, your final amount will be $1,333.20. And your initially 5% best idea will eventually become 29.81% of your portfolio. Not a chump change!
So, why not be pure indexers and at the same time have some little fun on the side? If you are wrong, you will still roughly match index. If you are right, it will change your life! :happy

Your 15-20 stocks portfolio will never give you that outperformance. It will always behave like index by virtue of diversification.
Is this a once in a life time thing? What I mean is you say "the worst case scenario" is that your best idea goes to zero. Does this mean you'll never buy an individual stock again? What happens if you see another great idea? If you do put money in another idea, your loss then is not bound by the 5% loss.

Regarding your last paragraph, I'm confused why you have that notion since you seem to be aware of Warren Buffett and his historic outperformance using a 15-20 stock portfolio.
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David Jay
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Re: One Stock Portfolio

Post by David Jay »

ZenZero wrote: Wed Jun 23, 2021 6:45 amYou can create one more rule then. Not only you can buy only one stock at any given time, but also once you buy it, you will not be allowed to sale it for two years. The idea is to act in a very disciplined way. It is like buying a house. Once you buy it, you can't get rid of it that easily. And that's why you don't make that decision lightly. Buying a business should be no different.
One more rule to put some chains on the “enemy in the mirror” - never add new money to your “fun money”, 5% now and never again add that account.

If you put new money in every time you move from stock-to-stock (which you have allowed yourself to do every 2 years - you must be young if you think 2 years is a long time), you could really hurt your long term portfolio.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
Da5id
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Re: One Stock Portfolio

Post by Da5id »

Another risk of this approach is that you will (by luck IMO) succeed in the the first few years. And come to believe that you are indeed the next coming of Warren Buffett in his early years. This belief/impression may last longer than your outperformance by some time...
fwellimort
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Re: One Stock Portfolio

Post by fwellimort »

To OP, diversification is protection against ignorance.
Diversification indeed makes no sense if you know everything about the company and truly believe in it.
Kelly Criterion is a scientific gambling method for diversification on single stocks if you are absolutely sure about those stocks (though impractical in real life cause there's no way to know probability of success of many companies ahead of time).

There are some nice readings/videos over this.
I recommend going through Li Lu and Nick Sleep videos/letters. There's some fascinating thought processes out there for those who are fully confident with managing their own portfolios with single stocks.
https://igyfoundation.org.uk/wp-content ... tters_.pdf

Just note the level of research some of these investors have done has been far more than the average investor.
I highly recommend reading through that letter for you to get a better sense of the amount of work required to potentially beat the market.
Hint: It looks like two full time jobs in and of itself in the early years. That's a lot of time you will never get back.

And I believe Li Lu in one of his video lectures explicitly stated, when he invests in a company, he does so after researching to the point that he is confident that 'he knows more about the company than anyone else including even the management'.

It's really inspiring to learn from the minds of these investors.
I definitely do believe the average investor can beat the market but the amount of work that will be entailed seems more than another full time job at the start.
It's really a poor deal to beat the market by say 2% CAVG long term when you have to put an extra 45+ hours a week the first few years followed by 500+ hours a year afterwards.
Opportunity costs really don't favor individual stock picking.

Anyways, I have single stocks myself too with my play money. I leave my 401k to index funds but I really am curious how I would fare vs the market return. I've also experimented with all sorts of financial instruments and learnt many lessons from it (I learnt that I have the worst luck out of my peer group when dealing with products such as calls/puts and that my greatest winners have been from traditional buy/sell).
I currently hold BABA, MSFT, GOOGL, AMD. BABA I acquired the past few days (willing to take political risk) and it was after evidencing Amazon (US), Samsung (Korea), etc. in my life and believing China with eventually grow its own super tech giants.
I don't do anywhere near the amount of research as the top investors. Instead, I honestly go buy after a very simple 'I like the product' after glimpsing through the balance sheets + the goods/services the company provides. Very hand wavy.
My serious money at end of day though is currently in index funds (I am fortunate to have enough wealth to retire within a decade and I'm only 24 currently [and have no plans to retire for a long time]). I plan to slowly shift myself more to single stocks as I study more finance on my free time. However, I can 'afford' to do this because I already have enough to actually retire in some low cost country today.

For the average investor (which honestly includes me), I really think the 'optimal solution' is to hold all investments in index funds.

But ya, to your thoughts, 1 stock portfolio makes a lot of sense if you know everything about the company + sector + competitions.
But to get that level of conviction, you really need to know the company inside out.
Look at AMZN for instance. If you didn't know much about the company, then you would have really been tested during the financial crisis whether to sell or not (a lot of 'major' figures shorted AMZN).
And look at MSFT. MSFT seemed stagnant for a decade (to be fair, it did have nice dividend %). Underperforming markets for long periods of time is not fun to hold.
One of the biggest difficulty individual investors face is holding through extended time (multitude of years) of underperformance (relative to the market).

At end of day, in the short term, markets tend to be a voting machine but in the long term, markets tend to be a weighing machine.
Stock prices tend to increase proportionate to the increase in the company's growth.
But this does not happen right away. You have to be willing to stomach underperformance for many years (sometimes even over a decade).
And the worst is, what if you are wrong? There's no redo in investing (at least to my knowledge).
And even after all your research, you still need to have some luck. No one would have imagined world wars, financial crisis, global pandemic, etc..

That said, I also agree with Mohnish Pabrai on one thing:
If you have 10 great companies that you know will 10+x, then even if you are only right 3 out of the 10 times, you will be much further ahead.
So to put faith in 1 stock, you need to be absolutely sure. I don't think the average person knows everything about a company to have such conviction.

Also, while my long term stock picking (my incredible success has been this year with day trading GME/AMC/BB but that's another story. That's just pure gambling) has done quite well, I would like to point out I have horrible luck.
Each time I bought the stocks, the stock price fell the following days/months. AMD which has triple digit % returns was honestly more to me being too lazy to check than anything else. Inactivity helps. With single stocks, you have to be indifferent to market swings in the short term. And markets will test you if you bought in a whim and don't have much conviction.
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

fwellimort wrote: Wed Jun 23, 2021 1:07 pm To OP, diversification is protection against ignorance.
Diversification indeed makes no sense if you know everything about the company and truly believe in it.
Kelly Criterion is a scientific gambling method for diversification on single stocks if you are absolutely sure about those stocks (though impractical in real life cause there's no way to know probability of success of many companies ahead of time).

There are some nice readings/videos over this.
I recommend going through Li Lu and Nick Sleep videos/letters. There's some fascinating thought processes out there for those who are fully confident with managing their own portfolios with single stocks.
https://igyfoundation.org.uk/wp-content ... tters_.pdf

Just note the level of research some of these investors have done has been far more than the average investor.
I highly recommend reading through that letter for you to get a better sense of the amount of work required to potentially beat the market.
Hint: It looks like two full time jobs in and of itself in the early years. That's a lot of time you will never get back.

And I believe Li Lu in one of his video lectures explicitly stated, when he invests in a company, he does so after researching to the point that he is confident that 'he knows more about the company than anyone else including even the management'.

It's really inspiring to learn from the minds of these investors.
I definitely do believe the average investor can beat the market but the amount of work that will be entailed seems more than another full time job at the start.
It's really a poor deal to beat the market by say 2% CAVG long term when you have to put an extra 45+ hours a week the first few years followed by 500+ hours a year afterwards.
Opportunity costs really don't favor individual stock picking.

Anyways, I have single stocks myself too with my play money. I leave my 401k to index funds but I really am curious how I would fare vs the market return. I've also experimented with all sorts of financial instruments and learnt many lessons from it (I learnt that I have the worst luck out of my peer group when dealing with products such as calls/puts and that my greatest winners have been from traditional buy/sell).
I currently hold BABA, MSFT, GOOGL, AMD. BABA I acquired the past few days (willing to take political risk) and it was after evidencing Amazon (US), Samsung (Korea), etc. in my life and believing China with eventually grow its own super tech giants.
I don't do anywhere near the amount of research as the top investors. Instead, I honestly go buy after a very simple 'I like the product' after glimpsing through the balance sheets + the goods/services the company provides. Very hand wavy.
My serious money at end of day though is currently in index funds (I am fortunate to have enough wealth to retire within a decade and I'm only 24 currently [and have no plans to retire for a long time]). I plan to slowly shift myself more to single stocks as I study more finance on my free time. However, I can 'afford' to do this because I already have enough to actually retire in some low cost country today.

For the average investor (which honestly includes me), I really think the 'optimal solution' is to hold all investments in index funds.

But ya, to your thoughts, 1 stock portfolio makes a lot of sense if you know everything about the company + sector + competitions.
But to get that level of conviction, you really need to know the company inside out.
Look at AMZN for instance. If you didn't know much about the company, then you would have really been tested during the financial crisis whether to sell or not (a lot of 'major' figures shorted AMZN).
And look at MSFT. MSFT seemed stagnant for a decade (to be fair, it did have nice dividend %). Underperforming markets for long periods of time is not fun to hold.
One of the biggest difficulty individual investors face is holding through extended time (multitude of years) of underperformance (relative to the market).

At end of day, in the short term, markets tend to be a voting machine but in the long term, markets tend to be a weighing machine.
Stock prices tend to increase proportionate to the increase in the company's growth.
But this does not happen right away. You have to be willing to stomach underperformance for many years (sometimes even over a decade).
And the worst is, what if you are wrong? There's no redo in investing (at least to my knowledge).
And even after all your research, you still need to have some luck. No one would have imagined world wars, financial crisis, global pandemic, etc..

That said, I also agree with Mohnish Pabrai on one thing:
If you have 10 great companies that you know will 10+x, then even if you are only right 3 out of the 10 times, you will be much further ahead.
So to put faith in 1 stock, you need to be absolutely sure. I don't think the average person knows everything about a company to have such conviction.

Also, while my long term stock picking (my incredible success has been this year with day trading GME/AMC/BB but that's another story. That's just pure gambling) has done quite well, I would like to point out I have horrible luck.
Each time I bought the stocks, the stock price fell the following days/months. AMD which has triple digit % returns was honestly more to me being too lazy to check than anything else. Inactivity helps. With single stocks, you have to be indifferent to market swings in the short term. And markets will test you if you bought in a whim and don't have much conviction.
fwellimort, thank you for writing such an in-depth response. Yes, I have read Nick Sleep's Nomad Investment partnership annual letters after Mohnish Pabrai mentioned them in one of his talks. You have a lot going on in your portfolio! And your are right...investing literally becomes your second job if you decide to do it seriously, but it can be very rewarding at the same time. I read a lot, but take very few actions these days. I still own 14-15 stocks in addition to index, but trying to narrow it down to one stock with most of the money safely invested in index! Good luck with your investing journey!
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

David Jay wrote: Wed Jun 23, 2021 12:32 pm
One more rule to put some chains on the “enemy in the mirror” - never add new money to your “fun money”, 5% now and never again add that account.

If you put new money in every time you move from stock-to-stock (which you have allowed yourself to do every 2 years - you must be young if you think 2 years is a long time), you could really hurt your long term portfolio.
David, I completely agree with you. Also, I didn't mean to change my investments every 2 year. Ideally, your best investment idea should be such that you don't have to sell it for the rest of your life. I firmly believe that Bill Gates would have be even more richer had he not sold much of his Microsoft stock and diversified his money in bunch of different stocks through his investment company, Cascade Investment. Microsoft was his single best idea and he should remained 100% in that One Stock Portfolio!
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

langlands wrote: Wed Jun 23, 2021 11:35 am Is this a once in a life time thing? What I mean is you say "the worst case scenario" is that your best idea goes to zero. Does this mean you'll never buy an individual stock again? What happens if you see another great idea? If you do put money in another idea, your loss then is not bound by the 5% loss.

Regarding your last paragraph, I'm confused why you have that notion since you seem to be aware of Warren Buffett and his historic outperformance using a 15-20 stock portfolio.
Yes, it has to be a once in a life-time thing. It's one thing that your best idea didn't work out, and it's completely different thing that you stupidly stuck with it all the time while it was slowly going to zero. That should never happen if your initial and then on-going analysis is strong. If your best idea goes to zero, then business analysis is not your cup of thea and you should humbly accept that and stay with the index.

Only way you can replace your original stock is if you found even better idea. Then you can sell your first idea and buy this new idea with the money from the sale of the first idea. You are now allowed to take money from your index bucket. That would be cheating!
DanFFA
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Re: One Stock Portfolio

Post by DanFFA »

Here's a highly relevant video on the S&P 500 by Benjamin Felix, specifically regarding why you probably do not want to invest all your capital into it alone for diversification purposes, or even for expected future returns. :
https://www.youtube.com/watch?v=RR7e1Y-HJxQ

Additionally, this video is extremely relevant regarding the idea of investing in a 'single stock portfolio': https://youtu.be/AecvTErBQY8

Unless you somehow can correctly predict one stock within the 4% of stocks that explains the return of all stocks in the US and do so consistently as the stocks within that 4% change overtime...
...yeah, your odds are pretty slim. You might even be better off holding bonds than stock-picking in the long term.
MadAsgardian
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Re: One Stock Portfolio

Post by MadAsgardian »

ZenZero wrote: Tue Jun 22, 2021 8:06 pm Long story short, why not have a one stock portfolio for concentration and S&P 500 for diversification at the same time...best of both the worlds. Staying away from your second and third best ideas. Imagine if you knew in advance with 100% certainty that Amazon is your best idea, why would you invest in your second best idea such as "Walmart", etc.
You say you're a fan of both Bogle and Buffet, are you sure? You should read what Buffet recently said about the uncertainty of individual stocks over long periods of time: https://www.cnbc.com/2021/05/01/this-is ... eting.html
jrbdmb
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Re: One Stock Portfolio

Post by jrbdmb »

ZenZero wrote: Tue Jun 22, 2021 9:28 pm
dh wrote: Tue Jun 22, 2021 9:18 pm I also lean into having a diversified portfolio of stocks as well. Yet it wasn't how I grew up. My father spent his entire working career for a energy company. His entire portfolio was invested in his company from 1954 to his retirement in 1993 (they offered a dollar for a dollar match). When he retired he rolled over his portfolio into a Rollover IRA (dad worked with a professional at Edward Jones who was always trying to get my dad to diversify). My dad didn't like the idea of diversity, but eventually spread out the total over 5 companies (Exxon, Johnson & Johnson, Procter & Gamble, Microsoft, and Boeing). I would be freaked out with that portfolio, but dad "has more money than he will ever need" (his words). When I asked him why he didn't spread out his risk more, his response shocked me: "I wish I would have just put everything into Procter & Gamble." :shock:

I wonder if the view of just a few stocks (or just one - yikes!) was more common of people in his generation (he was born in the 30s).
Your dad was a smart man!

It is ironic that people feel psychologically safer with a portfolio 20-30 stocks than just one stock portfolio (with 500 other stocks in an index fund to diversify).
You might want to look up the history of Enron, where employees (who supposedly knew more about the company than anyone). A lot of smart people lost their entire retirement savings following the accounting scandal uncovered in 2001.
ososnilknarf
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Re: One Stock Portfolio

Post by ososnilknarf »

What happens when you spend all of your time investigating a company and come to the conclusion it is NOT the best one. Come to think of it how do you even come to that conclusion without putting an equal amount of effort studying every other company out there? I don't think you could ever get to the point where you've chosen a single company without studying many, many companies so it kind of kills your thesis that you could spend all of your time on a single company.
And then, even if you believe you've found the one and you become the #1 most informed person about that company in the universe, it can still tank because of, you know, no one knows the future.
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ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

MadAsgardian wrote: Wed Jun 23, 2021 2:49 pm You say you're a fan of both Bogle and Buffet, are you sure? You should read what Buffet recently said about the uncertainty of individual stocks over long periods of time: https://www.cnbc.com/2021/05/01/this-is ... eting.html
Yes, I am a fan of Buffett. I watched the entire Berkshire Annual meeting which this CNBC article is referring to. Thirty years ago, it was Japan, now it is America, and 30 years from now the market can be dominated by Chinese companies? Who knows? That's why I am going to select a diversified portfolio of 501 companies (1 owned separately + 500 others through index). I don't see any inconsistency there. I am not betting my entire life on one stock. If I go down with my 501 stocks, entire America goes down with me. And then we have far bigger problems to worry about.
muffins14
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Location: New York

Re: One Stock Portfolio

Post by muffins14 »

This seems like a waste of time. Here are 3 better things to do that likely have the same if not better expected portfolio value

1) invest all in VT and invest your free time from not extensively study stocks into volunteer work
2) invest all in VT and invest your free time from not extensively study stocks into getting better at your job + getting promotions
3) choose 1 stock at random from the S&P 500 and then invest all the rest in VT and invest your free time from not extensively study stocks into a fun new hobby
Crom laughs at your Four Winds
Topic Author
ZenZero
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Re: One Stock Portfolio

Post by ZenZero »

DanFFA wrote: Wed Jun 23, 2021 2:32 pm Here's a highly relevant video on the S&P 500 by Benjamin Felix, specifically regarding why you probably do not want to invest all your capital into it alone for diversification purposes, or even for expected future returns. :
https://www.youtube.com/watch?v=RR7e1Y-HJxQ

Additionally, this video is extremely relevant regarding the idea of investing in a 'single stock portfolio': https://youtu.be/AecvTErBQY8

Unless you somehow can correctly predict one stock within the 4% of stocks that explains the return of all stocks in the US and do so consistently as the stocks within that 4% change overtime...
...yeah, your odds are pretty slim. You might even be better off holding bonds than stock-picking in the long term.
Thank you for sharing that. I have watched lots and lots of Ben Felix videos in the past. And I respect his views because he backs them up with lot of academic research. But imagine, if you ever get a chance to meet Mr. Buffett in person and you ask him advice to become rich, and then he gives it to you. Would you listen to him or not? Afterall, he is the best person of our generation in this field. Well he has spoken! He said in his 2013 annual letter,

"My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers"

He also backed up his advice with his famous 10 year bet with hedge fund managers using only S&P 500 index fund and he own. So, I am going to listen to him for good or bad and do exactly what he suggested with just one additional stock on the side to satisfy my intellectual curiosity. In fact, if you consider "S&P 500" as a single company, then that itself would be the single best idea of our lifetime.
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