Comments on: Another Big Reason Not to Invest in Individual Stocks http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/ Thu, 18 Mar 2010 17:36:24 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Swamproot http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3709 Swamproot Thu, 20 Dec 2007 16:24:26 +0000 http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3709 I was just saying you should diversify your index funds past the S&P. Have some in there and some in an international index. Some in a Russel 2000 based index. You could certainly do worse than American Funds. They are the only choice I have in the SIMPLE-IRA I have at work and comprise the majority of my own meager assets. However the realization that their front loaded funds start me several percentage points in the hole every month has led me to take more control over my retirement spending "above the match". They are why I opened a Roth IRA at T. Rowe Price and plan on opening a traditional IRA at Vanguard. Plus they are the epitome of style drift. The Growth Fund of America is 20% foreign! But that's not to say I don't have it in my IRA at work. And actually not in spite of the foreign stock within it, but because of it. I was just saying you should diversify your index funds past the S&P. Have some in there and some in an international index. Some in a Russel 2000 based index.

You could certainly do worse than American Funds. They are the only choice I have in the SIMPLE-IRA I have at work and comprise the majority of my own meager assets.

However the realization that their front loaded funds start me several percentage points in the hole every month has led me to take more control over my retirement spending “above the match”. They are why I opened a Roth IRA at T. Rowe Price and plan on opening a traditional IRA at Vanguard.

Plus they are the epitome of style drift. The Growth Fund of America is 20% foreign! But that’s not to say I don’t have it in my IRA at work. And actually not in spite of the foreign stock within it, but because of it.

]]> By: Becky http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3666 Becky Thu, 20 Dec 2007 03:36:28 +0000 http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3666 I'm personally a big fan of American Funds, which are actively managed. They've done really well historically and have low fees for an actively managed fund. I agree, leave the stocks to the pros! I’m personally a big fan of American Funds, which are actively managed. They’ve done really well historically and have low fees for an actively managed fund. I agree, leave the stocks to the pros!

]]> By: mrsmicah http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3655 mrsmicah Wed, 19 Dec 2007 23:18:35 +0000 http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3655 Well, I'm definitely more pro simple indexing myself. But I think it's another important point to those who think they can guess and time the market. Whether it's being in the room when a CEO gets upset (and everyone reacts by selling) or having spend 20 years analyzing the stock, analysts probably have a jump on them. I don't think highly enough of analysts and fund managers to give them my money, but I think they probably know more than I do. I just don't think they're good enough. ;) Well, I’m definitely more pro simple indexing myself. But I think it’s another important point to those who think they can guess and time the market. Whether it’s being in the room when a CEO gets upset (and everyone reacts by selling) or having spend 20 years analyzing the stock, analysts probably have a jump on them.

I don’t think highly enough of analysts and fund managers to give them my money, but I think they probably know more than I do. I just don’t think they’re good enough. ;)

]]> By: Swamproot http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3654 Swamproot Wed, 19 Dec 2007 23:11:24 +0000 http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3654 Personally, I wouldn't put that much stock in a broker "being there" (pun intended). The more I read the more I am convinced that almost any success of active management is an illusion and the lucky result of mere speculation. Knowledgeable and experienced speculation to be sure, but almost always speculation. I would be that for every time Mr. Reingold successfully "read a CEO's body language", he ate four heaping bowls of "Boy, wasn't I just full of shit". IMHO, Your best hope is to find someone WHO WILL PAY YOU millions of dollars to learn about proper asset allocation diversification across non-correlated asset classes. (S&P indexes are mostly only one: Domestic Large-Cap Value, with some Growth thrown in). Where do you find such a person? In the mirror, you'll just have to wait until your sixties to get paid for it. :-) Personally, I wouldn’t put that much stock in a broker “being there” (pun intended). The more I read the more I am convinced that almost any success of active management is an illusion and the lucky result of mere speculation. Knowledgeable and experienced speculation to be sure, but almost always speculation. I would be that for every time Mr. Reingold successfully “read a CEO’s body language”, he ate four heaping bowls of “Boy, wasn’t I just full of shit”.

IMHO, Your best hope is to find someone WHO WILL PAY YOU millions of dollars to learn about proper asset allocation diversification across non-correlated asset classes. (S&P indexes are mostly only one: Domestic Large-Cap Value, with some Growth thrown in).

Where do you find such a person? In the mirror, you’ll just have to wait until your sixties to get paid for it. :-)

]]> By: RacerX http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3646 RacerX Wed, 19 Dec 2007 19:15:42 +0000 http://financefreelancelife.com/2007/12/19/another-big-reason-not-to-invest-in-individual-stocks/#comment-3646 Mrs M, Another great reason to follow an axiom from Warren Buffet, "Invest in what you know!" OR if you don't directly have involvement with an industry, learn about an area you like; Food, hotels, transportation, farming :) Be your own expert. By the time anyone hears the news it is probably factored into the price! It is another reason why I like EFTs. With so many options, you can buy what you know, but spread some risk. Mrs M,

Another great reason to follow an axiom from Warren Buffet, “Invest in what you know!”

OR if you don’t directly have involvement with an industry, learn about an area you like; Food, hotels, transportation, farming :)

Be your own expert. By the time anyone hears the news it is probably factored into the price! It is another reason why I like EFTs. With so many options, you can buy what you know, but spread some risk.

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