Investing Thread

[Not A Serious Person]

I don't disagree with you, only not at these levels and not with such a long bull market.

I've been slowly rotating my portfolio to create a synthetic annuity, but I think buying SPY during the next bear pullback is a smart play for a core portion.

What I meant is stock picking is a dead art form. It is impossible to beat the market. So don't try ... buy SPY

https://www.wsj.com/articles/twilight-of-the-stock-pickers-hedge-fund-kings-face-a-reckoning-11572197217

[DegenerateDish]

Is it generally smart to take advantage of employee stock plans?

Yes, it's literally free money. I get a 15% discount at my company. We had a good Q2, and we had ended the previous quarter low. Getting to buy at the low, adding in the 15% discount on top of the low, I made an outstanding profit selling the day the shares entered my account.

[GooooMarquette]

Buy Can All Pet.

[MU82]

What I meant is stock picking is a dead art form. It is impossible to beat the market. So don't try ... buy SPY

https://www.wsj.com/articles/twilight-of-the-stock-pickers-hedge-fund-kings-face-a-reckoning-11572197217

Impossible?

This guy, who is no expert and just a regular dude, has been crushing SPY with the real-money public portfolio he is building in real-time, with every buy he has made documented:

https://dailytradealert.com/2019/10/12/amazing-income-growth-and-market-dominating-total-return-for-our-income-builder-portfolio-2019-q3-review/

Just because hedge fund managers like those in your link -- who do a very unique kind of investing -- haven't been able to beat the market, it doesn't mean you or I can't.

Importantly, though, not every investor has a goal of beating SPY, nor should they.

Some are closing in on retirement and seek to build a reliable, growing income stream -- one that would nicely supplement Social Security (and pensions, if fortune to have them), and give them financial independence without ever having to sell a single share of stock if they don't want to.

For these "dividend growth investing" proponents, owning stock in blue-chip companies that have been raising dividends for decades is more important than beating a benchmark. Interestingly, those who have bought and held "Dividend Aristocrats" for years have outperformed SPY without even having that as a goal.

Having said all that, I would never try to convince somebody not to invest in SPY, especially those who don't want to put in the time necessary to invest in individual stocks. Before getting into stocks, I primarily owned index funds, and they helped me get to where I am today. Those who own SPY also are less likely to trade in and out of the market -- it is this frequent activity that most hurts stock investors.

Oh, and AAPL just had another fine earnings report and is ready to hit ANOTHER all-time high.

[Benny B]

Lots of people Hoopalooping as 82 in this thread.

[TSmith34, Inc.]

Is it generally smart to take advantage of employee stock plans?

Typically you get a 15% discount on the stock price pegged over a certain period (so your discount could be +/- 15% depending on when shares are actually put in your account), so it is generally free money.

Unless all of your net worth is in your employers stock and not diversified (See: Enron, where people were allocating 100% of the 401(k) contributions to company stock) it is a very good deal.

[DegenerateDish]

$WWE getting taken to the woodshed today. (I purposely didn't use a wrestling pun).

[Not A Serious Person]

Impossible?

This guy, who is no expert and just a regular dude, has been crushing SPY with the real-money public portfolio he is building in real-time, with every buy he has made documented:

https://dailytradealert.com/2019/10/12/amazing-income-growth-and-market-dominating-total-return-for-our-income-builder-portfolio-2019-q3-review/

Just because hedge fund managers like those in your link -- who do a very unique kind of investing -- haven't been able to beat the market, it doesn't mean you or I can't.

Importantly, though, not every investor has a goal of beating SPY, nor should they.

Some are closing in on retirement and seek to build a reliable, growing income stream -- one that would nicely supplement Social Security (and pensions, if fortune to have them), and give them financial independence without ever having to sell a single share of stock if they don't want to.

For these "dividend growth investing" proponents, owning stock in blue-chip companies that have been raising dividends for decades is more important than beating a benchmark. Interestingly, those who have bought and held "Dividend Aristocrats" for years have outperformed SPY without even having that as a goal.

Having said all that, I would never try to convince somebody not to invest in SPY, especially those who don't want to put in the time necessary to invest in individual stocks. Before getting into stocks, I primarily owned index funds, and they helped me get to where I am today. Those who own SPY also are less likely to trade in and out of the market -- it is this frequent activity that most hurts stock investors.

Oh, and AAPL just had another fine earnings report and is ready to hit ANOTHER all-time high.

Maybe you are unique and talented and one of the very few that can beat the index through stock picking.

It's like asking Michael Jordan how to be a great player.  Don't bother, I'm not him and he cannot tell me how to be great at basketball.

[GooooMarquette]

Typically you get a 15% discount on the stock price pegged over a certain period (so your discount could be +/- 15% depending on when shares are actually put in your account), so it is generally free money.

Unless all of your net worth is in your employers stock and not diversified (See: Enron, where people were allocating 100% of the 401(k) contributions to company stock) it is a very good deal.

That's definitely the key. My FIL worked for IBM and has all of his retirement tied to them. I've tried to convince him to diversify, but he won't budge. Fortunately, although IBM has taken its hits, it has survived.

[MU82]

Maybe you are unique and talented and one of the very few that can beat the index through stock picking.

But I'm not, and I said as much.

If you actually took a second to look at that portfolio, it's not as if it's filled with crazy speculative stocks that were unearthed by pure genious and that required extreme risk-taking. It's a bunch of "boring" names -- utilities, consumer staples, consumer discretionaries, industrials. It doesn't take genious and risk-taking to invest in McCormick, Pepsi, NextEra, Honeywell and Apple.

Despite Benny's hilarity, there really isn't any hoopaloopin' going on here. I am not bragging at all. In your Smugglesish way, you claimed that nobody can beat SPY, and I simply presented evidence that it happens -- and pretty often.

In my personal portfolio, the key to it happening is that I stopped churning my portfolio. I'd have an even bigger advantage if I hadn't sold so many great companies early on, looking for something better.

Studies determining that "retail investors cannot beat SPY" use averages. The majority don't beat SPY because they churn their portfolio too darn much. They can't sit still. They are always looking for the next hot investment.

Buy-and-hold, dividend-growth investors routinely outperform SPY.

And, one more time, many investors don't have beating SPY as a goal.

[Cheeks]

TSMith, I take it you didn't find evidence of your accusation in the opening of this thread?

[4th and State]

But I'm not, and I said as much.

If you actually took a second to look at that portfolio, it's not as if it's filled with crazy speculative stocks that were unearthed by pure genious and that required extreme risk-taking. It's a bunch of "boring" names -- utilities, consumer staples, consumer discretionaries, industrials. It doesn't take genious and risk-taking to invest in McCormick, Pepsi, NextEra, Honeywell and Apple.

Despite Benny's hilarity, there really isn't any hoopaloopin' going on here. I am not bragging at all. In your Smugglesish way, you claimed that nobody can beat SPY, and I simply presented evidence that it happens -- and pretty often.

In my personal portfolio, the key to it happening is that I stopped churning my portfolio. I'd have an even bigger advantage if I hadn't sold so many great companies early on, looking for something better.

Studies determining that "retail investors cannot beat SPY" use averages. The majority don't beat SPY because they churn their portfolio too darn much. They can't sit still. They are always looking for the next hot investment.

Buy-and-hold, dividend-growth investors routinely outperform SPY.

And, one more time, many investors don't have beating SPY as a goal.

I think his point is the majority of people on this board are better off buying index funds or low cost ETFs (whether that be the S&P 500, Russell 1000 Value, or a low cost Dividend focused ETF) rather than buying individual stocks.

Fantastic time to be retail investor, though, whether buying active products, individual stocks, or indexes.  Pretty much costs nothing to trade anymore.

[MU82]

I think his point is the majority of people on this board are better off buying index funds or low cost ETFs (whether that be the S&P 500, Russell 1000 Value, or a low cost Dividend focused ETF) rather than buying individual stocks.

Fantastic time to be retail investor, though, whether buying active products, individual stocks, or indexes.  Pretty much costs nothing to trade anymore.

And it's a reasonable point, one John Bogle made decades and decades ago. As long as it isn't painted in absolutes "because Smuggles sez nobody can do it."

[JWags85]

I think there are a few issues with "nobody can beat the SPY". Usually it's focusing on the accidental investor, who grabs shares here and there of companies they like or use their products, or they pull out to these 20+ year time frames.  Cause people get smacked all the time on shorter time frames.

I grew up thinking my father was an investing genius. He had a couple stocks he dumped money into in the 80s that grew exponentially. In reality, he was an electrical engineer, he knew integrated circuits and semiconductors, and bought companies whose products he worked with and were great at what they did. He made huge returns on a number of companies over a 10-15 year period, well over the best performing indicies.

That's what I recommend to people. Invest in what you know or become really interested in one sector. Use that for your stock picking.

[Not A Serious Person]

And it's a reasonable point, one John Bogle made decades and decades ago. As long as it isn't painted in absolutes "because Smuggles sez nobody can do it."

Your numbers are terrific.  You should have your own private plane.

You would if you shopped your services to investment management firms in NYC.

[MU82]

Your numbers are terrific.  You should have your own private plane.

You would if you shopped your services to investment management firms in NYC.

Outstanding. I'm ready. Hook me up with one of your buddies, Smuggles.

[MU82]

Here's the first paragraph of an article (not by me or anybody I know) that ran on Seeking Alpha today:

In a number of recent articles, I have been covering strategies that have outperformed since the '07 market peak. Of the eleven factor tilt strategies where these articles have demonstrated the generation of alpha over this period, four strategies have been dividend-focused strategies. Those strategies - the S&P 500 Dividend Aristocrats (NOBL), the S&P 500 Low Volatility High Dividend ETF (SPHD), the Russell 2000 Dividend Growers ETF (SMDV), and the S&P MidCap 400 Dividend Aristocrats (REGL) all posted outperformance in both the stock market drawdown and the subsequent recovery.

The article goes on to say that those who reached for really high yield underperformed.

https://seekingalpha.com/article/4300858-dividend-disconnect?ifp=0&app=1

But the thesis was that four different strategies, all of which are forms of Dividend Growth Investing, have outperformed SPY over the last dozen years, many quite handily.

So the narrative that "nobody can beat SPY" is a silly one. Buy-and-hold(ish) DGI proponents have been outperforming the market for years.

Does that mean they will continue beating the market? Nobody knows that. Not even Smuggles!

[TSmith34, Inc.]

TSMith, I take it you didn't find evidence of your accusation in the opening of this thread?

Yes, see the end of the previous thread.  Then kindly STFU and don't ruin this one.

[TSmith34, Inc.]

And it's a reasonable point, one John Bogle made decades and decades ago. As long as it isn't painted in absolutes "because Smuggles sez nobody can do it."

Buffet has made that point as well.  The vast, vast majority of people do not have the time and expertise to even attempt beating the SPY, which I think is his point. 

[TSmith34, Inc.]

Here's the first paragraph of an article (not by me or anybody I know) that ran on Seeking Alpha today:

In a number of recent articles, I have been covering strategies that have outperformed since the '07 market peak. Of the eleven factor tilt strategies where these articles have demonstrated the generation of alpha over this period, four strategies have been dividend-focused strategies. Those strategies - the S&P 500 Dividend Aristocrats (NOBL), the S&P 500 Low Volatility High Dividend ETF (SPHD), the Russell 2000 Dividend Growers ETF (SMDV), and the S&P MidCap 400 Dividend Aristocrats (REGL) all posted outperformance in both the stock market drawdown and the subsequent recovery.

The article goes on to say that those who reached for really high yield underperformed.

https://seekingalpha.com/article/4300858-dividend-disconnect?ifp=0&app=1

But the thesis was that four different strategies, all of which are forms of Dividend Growth Investing, have outperformed SPY over the last dozen years, many quite handily.

So the narrative that "nobody can beat SPY" is a silly one. Buy-and-hold(ish) DGI proponents have been outperforming the market for years.

Does that mean they will continue beating the market? Nobody knows that. Not even Smuggles!

I do own some SPHD, as well as an international version in EFAV, and SMDV is on my buy list.

In terms of individual names, I really like CVS, though I liked it more at 58 when I was telling everyone to buy it.  They're ahead of pace on their merger synergies it looks like the dividend increases will start again in 12-18 months.

For a speculative stock, ERII.  It took new management to fix them, but their core desalination business is humming and I think the long term shortage of water will continue to drive growth, but the kicker is that they are adapting their pressure exchange technology to other fields and, though much delayed, should actually finally commercialize it for the oil & gas industry in the next 6 months.

For active trading, I been using buy-write strategies on bank stocks, mostly WFC, but also C and BAC.  Successfully capturing dividends, call premiums, and cap gains so far, though right now I've had everything called and am out of the market on this.

[MU82]

Buffet has made that point as well.  The vast, vast majority of people do not have the time and expertise to even attempt beating the SPY, which I think is his point.

And I agree. If only Smuggles had said that instead of: It is impossible to beat the market.

Because it clearly isn't impossible. Which is one reason Buffett and others like him don't invest only in SPY.

I do own some SPHD, as well as an international version in EFAV, and SMDV is on my buy list.

In terms of individual names, I really like CVS, though I liked it more at 58 when I was telling everyone to buy it.  They're ahead of pace on their merger synergies it looks like the dividend increases will start again in 12-18 months.

For a speculative stock, ERII.  It took new management to fix them, but their core desalination business is humming and I think the long term shortage of water will continue to drive growth, but the kicker is that they are adapting their pressure exchange technology to other fields and, though much delayed, should actually finally commercialize it for the oil & gas industry in the next 6 months.

For active trading, I been using buy-write strategies on bank stocks, mostly WFC, but also C and BAC.  Successfully capturing dividends, call premiums, and cap gains so far, though right now I've had everything called and am out of the market on this.

You are pretty hard-core at this stuff, TS, and it sounds like you are comfortable with what you're doing.

I am a very simple, buy-and-hold(ish) investor. I have never done options, never shorted a stock, never hedged with gold, never traded bitcoin, etc. As Clint used to say, "A man's got to know his limitations."

My goal has always been "to have more than enough for my wife and I to live fun, satisfying, financially independent lives until we die." I guess it would be cool to be a bazillionaire also, but it's not gonna happen!

[Dr. Blackheart]

And I agree. If only Smuggles had said that instead of: It is impossible to beat the market.

Because it clearly isn't impossible. Which is one reason Buffett and others like him don't invest only in SPY.

It was pretty easy to beat Warren this year...he would have been much better off in SPY.  The Oracle has lost his touch.

https://finance.yahoo.com/news/buffett-underperformance-splits-investors-ahead-090000291.html

[TSmith34, Inc.]

It was pretty easy to beat Warren this year...he would have been much better off in SPY.  The Oracle has lost his touch.

https://finance.yahoo.com/news/buffett-underperformance-splits-investors-ahead-090000291.html

He said a number of years ago that he didn't think he was going to be able to beat the S&P500 anymore due to the size of BRK.  Small companies and acquisitions that could outperform simply don't make any difference for them, thus he is relegated to buying behemoths so the size of his investable universe is pretty limited.

Now you could say he was sand-bagging or managing expectations, but who knows. Whether he has lost his touch or not (he and Charlie have been letting their Lieutenants make more and more investment decisions), we know one year isn't a very good measuring stick.  Over 5 years BRK is edging the SPY but barely, 54% to 52%.

EDIT: And over 10 years he is lagging 196% to 228%

[MU82]

He said a number of years ago that he didn't think he was going to be able to beat the S&P500 anymore due to the size of BRK.  Small companies and acquisitions that could outperform simply don't make any difference for them, thus he is relegated to buying behemoths so the size of his investable universe is pretty limited.

Now you could say he was sand-bagging or managing expectations, but who knows. Whether he has lost his touch or not (he and Charlie have been letting their Lieutenants make more and more investment decisions), we know one year isn't a very good measuring stick.  Over 5 years BRK is edging the SPY but barely, 54% to 52%.

EDIT: And over 10 years he is lagging 196% to 228%

Yessir, Buffett does appear to be slowing down, and maybe he should sell everything and just buy SPY.

Of course, if he did that, he wouldn't need himself and his underlings to operate Berkshire Hathaway. So don't expect it to happen anytime soon!

And on a subject we discussed not long ago ...

TS, did you notice that ABBV just had a very nice earnings report and hiked its dividend 10%. Even though it has gained in price recently, it's still yielding nearly 6%.

Solid company. I wouldn't make it the centerpiece of my portfolio (and it actually is only about 1% of it), but I like it for the income boost and for the prospect of some good drugs coming into its pipeline.

[TSmith34, Inc.]

Yessir, Buffett does appear to be slowing down, and maybe he should sell everything and just buy SPY.

Of course, if he did that, he wouldn't need himself and his underlings to operate Berkshire Hathaway. So don't expect it to happen anytime soon!

And on a subject we discussed not long ago ...

TS, did you notice that ABBV just had a very nice earnings report and hiked its dividend 10%. Even though it has gained in price recently, it's still yielding nearly 6%.

Solid company. I wouldn't make it the centerpiece of my portfolio (and it actually is only about 1% of it), but I like it for the income boost and for the prospect of some good drugs coming into its pipeline.

Yup, they still have the patent cliff issue a few years down the road but I'm liking my entry price and the dividend.  I started with a small position so it's even less (0.8%) for me but so far so good.  If they execute on the dividend plan my YOC will be 8%+ in a few years.  Might DRIP that but haven't decided yet.