Any stock investors here?

[Geronimo]

I think it's worth mentioning why people dump bonds when interest rates rise. If you buy a bond a 4%, it's fixed. If the prevailing rate rises to 5% your 4% bond is not attractive to anyone. Pretty simple, but most people don't understand why bonds have been so popular the last 10+ years and now everyone wants to run away from them.

 

[kryptonitewine]

I have a mix of stocks, mutuals and ETF's. Most have been recovering however there is talk of another bubble forming. Not going to stop me from Investing but won't be surprised to see a correction. Fortunately I have a long time before I retire, 20 years give or take. That's assuming I ever retire, not the sit around type of guy.

 

[novalou]

I think it's worth mentioning why people dump bonds when interest rates rise. If you buy a bond a 4%, it's fixed. If the prevailing rate rises to 5% your 4% bond is not attractive to anyone. Pretty simple, but most people don't understand why bonds have been so popular the last 10+ years and now everyone wants to run away from them.

Bonds are pretty complicated. If you are holding long term bonds, as interest rates rise, their value will decline. Short term bonds hold their value better in a rising interest rate market.

Corporate bonds pay better yields, but carry more risk.

With the credit fallout a few years ago, people are realizing they are not truly "safe" investments.

You have to know the credit worthiness of the bond issuer, the rate and term, and how long you are willing to hold onto it.

 

[Geronimo]

Bonds are pretty complicated.

Yeah you have to understand yield (especially yield to maturity) which is way too complex for me to describe. Most people just buy solid bond funds like PIMCO total return (which are down ~0.8% YTD).

When you could be looking at 25%+ gains in stocks (30% for the best index funds) then even a 10% gain looks weak.

 

[jamesngalveston]

Its funny no one invest in real properties...but no mistake.
you have a huge upfront investment so it makes it harder to play the game.

 

[Geronimo]

There's a lot of work associated with real estate, too. Buying a mutual fund is as easy as a few mouse clicks and forget about it.

 

[sour_grapes]

Its funny no one invest in real properties...but no mistake.
you have a huge upfront investment so it makes it harder to play the game.

I do treat real estate as a separate asset class. I get my exposure to it only through REITs and TIAA-CREF's real estate fund. I have thought about buying a property to rent, but just cannot convince myself that I want to be a landlord!

Moreover, the areas of my city where I wouldn't mind being a landlord have, of course, a puny capitalization rate. Areas where the cap rate is high are daunting places to be a landlord.

 

[boozehound]

I started investing in stocks in 2009 when everything was crashing. My dad started me buyn mutual funds when I was young thru his advisor. I was really interested in stocks and wanted to buy them on my own. I opened an account and bought the big company's. CAT, GE, Ford, Bank of America (which I was really nervous about), and 3M. I also bought a couple small stocks that I knew nothing about and that's were I went wrong. A couple of those did come back but others didn't. I have sold off on most of the big ones and toke a good profit. It's hard to get back in when everything's so high now. I tryn to find good penny stocks that will run. Stocks are a lot like winemaking. You have to be patient with the product to get rewarded well. Sometimes it's hard to stick it out and you think it's over but things can change fast and the reward is well worth it!!!

 

[BernardSmith]

I guess I really don't understand the stock market. For every "investor" who thinks is now a good time to sell another "investor" must be willing to buy but since neither the seller nor the buyer actually want the stock at least one of the two must be wrong. My sense is that unless you are a gambler, passively managed index stocks probably are most likely to make most money for most people. But that said, as an expat Scot I have to say that privatizing retirement -requiring Joe Public to invest their money for retirement seems to work best for corporations and royally screws the worker who depends on such funds to live.

 

[novalou]

I guess I really don't understand the stock market. For every "investor" who thinks is now a good time to sell another "investor" must be willing to buy but since neither the seller nor the buyer actually want the stock at least one of the two must be wrong. My sense is that unless you are a gambler, passively managed index stocks probably are most likely to make most money for most people. But that said, as an expat Scot I have to say that privatizing retirement -requiring Joe Public to invest their money for retirement seems to work best for corporations and royally screws the worker who depends on such funds to live.

This is why good mutual funds are best for most of us. The fund managers have the resources to do all the research. It also gives you diversification.

The key is to find a fund manager with a good track record and a fund that is "no load". This means front or back loaded.

 

[sour_grapes]

My sense is that unless you are a gambler, passively managed index stocks probably are most likely to make most money for most people.

Hear hear!

But that said, as an expat Scot I have to say that privatizing retirement -requiring Joe Public to invest their money for retirement seems to work best for corporations and royally screws the worker who depends on such funds to live.

I agree. A decade or so ago, I realized I "didn't know nuttin' " about investing for retirement. So I threw myself into it, pored through books, websites, forums, and even read a lot of original literature. I came up with a plan I was happy with, and which requires very little yearly maintenance. So, after spending that all that time years ago, I no longer pay much attention to it now.

But I can't help thinking -- what a waste! Why should everyone have to spend the time/effort to figure this out? And what about the ones who don't or can't?

 

[Snafflebit]

There are a lot more knowledgeable investors on this board than I anticipated! Buying passive managed mutual funds or ETFs is the best and simplest choice for the typical person planning on building a retirement. But I believe there is room for individual stocks, MLPs, REITs. Where I have seen friends run into trouble with buying individual stocks is when their choice is based on "I like a product made by X" or "my brother in law recommended X" or "Company X makes high tech stuff and that must be good" etc. etc. This type of selection is not much different than putting all your roulette chips on Red and thus stock selection gets called gambling. If a person is willing to do some basic research and review stock ideas with other like minded people, the cream does rise to the top and odds get stacked in your favor. There are no guarantees but the results are usually a lot better than gambling. But, one must do research. I also do risk-defined trades with options to generate income. Not exactly Jack Bogle like but my retirement funds are solidly in low fee mutual funds, to prevent me from getting too clever and blowing up my chances at living comfortably in my old age.

 

[sour_grapes]

I agree with most of what you said. I am a little torn: I believe in the weak version of the Efficient Market Hypothesis, and it appears that maybe you don't (although you act in an overall prudent matter, and are more likely to generate a little extra moolah than to get killed). However, I fully acknowledge that it is people like you, who put themselves out there, who are responsible for the veracity of the weak version of the Efficient Market Hypothesis!

 

[wineforfun]

All index funds, keep costs low, diversify, make a personal investment policy statement, set it and forget it, stay the course.

Excellent advice and advice I adhere to. If you invest in mutual funds, definitely use the index funds. Fees are typically 1/4 to 1/10 that of traditional mutual funds.

Along with index funds, I now mostly have invested in Dow dividend paying stocks with at least a 3.0% dividend. Going after mostly companies/products that are always needed or always going to be used, ie: consumer goods, communication, drugs, etc.

 

[Geronimo]

So if you had to pick ONE fund and put it all in, which would you choose?

For me it's Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

With expenses at 0.05% and market leading index fund performance, it's the clear winner!

 

[wineforfun]

So if you had to pick ONE fund and put it all in, which would you choose?

For me it's Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

With expenses at 0.05% and market leading index fund performance, it's the clear winner!

Personally, I would never put everything in to one stock or fund. But to play along, I would say you have a good one there. Very nice expense at .05%.

 

[sour_grapes]

So if you had to pick ONE fund and put it all in, which would you choose?

For me it's Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

With expenses at 0.05% and market leading index fund performance, it's the clear winner!

A fine choice! The only other contender I can think of is Vanguard's Total World Stock Index (VTWSX), to get exposure to non-US markets in the same fund. However, it does not appear they have Admiral Shares yet, so the ER is 0.35%.

I am very lucky to have access to very, very low-cost funds in my work's retirement plans (most ERs are 0.02 to 0.15). I have calculated the weighted average of my ERs to be 0.15. Ironically, Vanguard, which is where I have my Roth IRA, is the biggest drag on my ER! (This is because I don't have access to institutional shares there, and I use my IRA to get exposure to some sectors that have inherently high costs.)

 

[Turock]

My best advice is to stay diversified. I retired in 2000 and made it thru all the market downturns without having to go back to work. Invest while you're young and while time is on your side. The time to worry about retiring is the first DAY of your first job. Those years fly by quickly.

I stated investing that way at 21 and retired at age 50. Every year, I invested 25% of my gross wages. Just keep at it and make wise decisions--not emotional decisions. Getting rich is a turtle's race.

 

[Boatboy24]

Turock,

Your words should be hammered into every college student in this nation. My father gave me very similar advice and I took several years to start following it. Had I listened to him early on, I'd be a millionaire in my early 40's. Instead, I'm trying to make up for lost time. I got a relatively early start, but lost 8 or 9 years of "serious" investing in my 401k. Still in good shape, relative to many, but I could be much better off.

I hope I can convince my two boys to start earlier than I did.

 

[sour_grapes]

Getting rich is a turtle's race.

This. (and this text is just to reach the 10-character limit).