If you think "you're playing against a stacked deck.", does that mean you shouldn't even touch index funds? Because that's just a basket of stocks which, according to you, are all rigged against you.theac wrote: ↑Sun Jan 16, 2022 8:00 pmOh I agree, and also that index funds is the way to go.gougou wrote: ↑Sun Jan 16, 2022 11:31 amThe lesson is “been in business like forever” or “12% dividend yield” isn’t a good enough criteria to pick stocks. I think you’ll do well with your index funds. But my experiment is ongoing and we’ll see how it goes for the next 10 or 20 years.theac wrote: ↑Sat Jan 15, 2022 11:53 pm
I wasn't going comment in this topic, but your short and sweet answer hooked me in!
In the early 2000s I decided to give stocks a shot, so spent A LOT of time researching stuff, "thinking" I was learning something, and finally decided to start lightly, with an experiment.
Decided on 4 "dependable" and well-establish stocks at $2,000 each:
Citibank--long time in the business
Peabody Energy BTU--long time in the business, largest coal miner in the world, US or somewhere (I don't remember)
DOW Chemical--long time in the business, like "forever"
Conoco-Philips--Oil Refinery, been around "forever"
Anyway, Citibank went to zero (bankrupt), washed its hands of the stock holders (but kept their money) and are back in "business"
BTU, eventually went to zero also, total loss for stock holders, back in business
DOW Chemical, eventually dropped, and for a long time the $2k hung around $700 or $800 range, and just figured I'd let that experiment also run its way down to zero, but it "miraculously" recovered and sold it a year or two ago for like $2,200 (don't remember).
Conoco-Philips, I think that too ended up a bit above the $2k when I sold a year or two ago
So I feel I learned a lot from that "experiment!"
But soon after I started this experiment in the early 2000s, since all 4 of the above stocks were up as high as $3,000 for a time (and paying dividends) I bought a couple of more stocks:
SJT (Nat Gas Trust) I think I put $2,000 into it, and it was paying a monthly dividend of like 12% and also went up in value per share (for a while). Still have it today, and a year or 2 ago it was at like $2 a share, and I was just laughing it off and waiting for zero, but the paramedics arrive, and got its pulse going .
It's at $7.27 so a bit over $1k now and dividend which was next to nothing, and even at zero for a short time, but up to like $20 a month now IIRC (don't even really care).
Then got 100 shares of Microsoft (in 2005) at about $27. For years was flat, paying a small dividend, and I just let it ride. A few years back it started coming to life, and about a year ago I "got scared" by its sudden rise and decided I better get rid of it before it turns around. Sold it for like $170 a share. Then watched it continue to rise, so dropped it from my Yahoo Homepage portfolio, just to avoid a case of the "I shoulda." Just had a look, it's at $310, but has been up to $350. Still, at least it helped make up for the losses of Citibank etc so that's good. (I know, the pandemic had been good for some tech stocks, and I got rid of it during that time).
SLV (Silver) Also in the early 2000s got 300 shares at $10. It eventually skyrocketed later so sold it at $28, then watched it go to like $48, then fall like a rock and decided I better buy back in "a little" at $28, then a bit more at low $20s, then at like $16?
So I'm at about break-even on that right now IIRC, about $6,200, roughly the house money I got when I sold the original shares at $28.
Oh, one day soon after I sold at $28 and it's shooting way up now, talking to a friend I told him the whole story, he thought I did great and at least made a profit (plus no taxes in a ROTH) but I didn't really feel so great about it. Still, could have been a lot worse.
TGP (Nat Gas Transport) I think I put $3k in that, was paying a great quarterly dividend for a long time, cut back for a while, and is back up with pretty good dividend. It's at like $5,800 now, and I believe there was a time it was up much more than that, like $12k or $13k I forget now. I think it was 200 shares at $15 when I got it, and have reinvested the Div at times, and other times just taken as cash. So more than $5,800 I guess.
Anyway, what "I" learned from stocks, "They're not for me."
Stick to Mutual Funds, and actually, I don't even care to be "an investor" anymore.
I'm happy with "low stress" boring old bonds, and if I get negative return, hey I sleep fine every night (and not under a bridge), whatever I want is in my fridge, nobody knocks at my door saying I owe them money, life is good.
I'm comfortable with my pension, will get SS in the near future. Haven't taken because what to do with the money? Just more numbers on a computer screen. And my portfolio is just "insurance" or a cushion, just in case.
For those who are into stocks, whether individual or in a fund, to each his own.
I really don't have the stomach for it (nor the interest) anymore.
But it was an interesting experience!
And if I had to pick between individual stocks and diversified low-cost funds,
it's definitely the funds.
P.S. Opps, forgot to mention the Gold Funds I still have:
In early 2000s put $3k into TGVBX (I think, has changed), and was later as high as $13k, but is down at about $7k or $8k now.
In 2008 put $5k into USAA (IIRC) gold fund, was down for a long time, is a bit above the $5k now.
As you can see, it's a fairly long story so didn't really want to bore anyone with it, or take up too much thread-space, but there it is.
That's why I ended my post with, if I was going to invest in the market, it would be with diversified low-cost funds. (I accidentally left out "INDEX" but that's what I meant to say).
I remember when I had first started researching mutual funds in the early 2000s, before I knew about Vanguard and Index Funds. I was looking at Dodge and Cox and other names I don't even remember, comparing their holdings etc., and man, compared to Vanguard they had ridiculous fees. Glad I never went down that road. Usually the more complicated something is made, the more traps to fall into.
So a simple 3 fund portfolio is all you really need.
I forget the name, "Coffeehouse Portfolio" or some such name.
Or even just Total Stock Market and Total Bond Market Indexes will do.
To me, the lesson was "you're playing against a stacked deck."
Especially with individual stocks.
And regardless of how good it looks today,
or how good it has looked for the last 100 years,
or how good you think it's going to be tomorrow,
it's all still gambling--just a matter of degrees.
And you never know ANYTHING for sure.
And it doesn't help that the laws, such as bankruptcy,
are set up to their advantage, not yours.
I'm just glad my "experiment" was done with small money.
I'm sure a lot of people lost big money when Citibank and Peabody went to zero.
Or rather, when they "rebooted."
And since the shareholders were just kept in the RAM memory,
with the reboot, "poof," your gone!
While what was once your money, stays safely in the hard drive, for them.
Your individual stock experiment may have done better than you think. It looks like you may have beaten the market with that 10-bagger MSFT even though two other stocks went to zero and most other stocks were just average. And that's without a clear strategy, or at least you are not explaining your strategy clearly.
I mean I've seen enough people lost money on individual stocks and swear to never touch individual stocks. You sound like one of them. But if you lost money on real estate do you swear to never own real estate? If you start a business and that failed do you swear to never start another business? Or if you lost money on index funds do you swear to never touch index funds? There are people who learn from their mistakes and do consistently well in entrepreneurship. There are also people who consistently make money in real estate and stock investing.
If you don't have a strategy, then the index fund strategy is a pretty good strategy for you. It's probably a good strategy for most people who either couldn't or never bothered to figure out why they lost money. You'll stay invested and earn some average market return. And hopefully you don't sell out at the bottom and swear to never touch it again.
But for many people, they'll gamble on a good opportunity in life. If you get a good risk/reward then gambling is worth it with reasonable risk management. The gamble could be a startup business or some individual stocks. It will highly depend on the skill of the individual investor and very few will be successful, but those who are successful are usually very successful.