Quote for the Day - - John Maynard Keynes

[Scooterd]

"As times goes on, I get more and more convinced that the right method of investment is to put large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think one limit’s one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.”- John Maynard Keynes -  (August 15, 1934 letter to F. C. Scott)

- Scoot

The Older I get, the more selective I have become with what's in my DG Investment Portfolio.  I too would rather have 4 Shiny Quarters than 100 dull pennies.

[mrw11g]

(12-10-2021, 06:59 PM)Scooterd Wrote:  I too would rather have 4 Shiny Quarters than 100 dull pennies.

This ^^^^

[fenders53]

Considerable (but respectful) differences of opinion on this forum. We have a lot of members that own 50 or more stocks. I have tried both methods and gravitated towards a smaller number of high quality holdings. Unfortunately I started doing this in earnest only a year ago and quality is expensive. The market long ago taught me that paying just any price is a huge mistake. Time will provide opportunities.

The problem with owning 50-100 stocks is you don't really know what you own if you have a day job. It's nearly impossible. If you are fortunate you will accidentally achieve mediocrity.

[ken-do-nim]

This also gets back to the position sizes discussion. I came up with this a while back for my port:

$1 - $500 watch position
$501 - $1000 starter position
$1001 - $2499 junior position
$2500 - $4999 moderate position
$5000 - $7499 full position
$7500 - $9999 large position
$10000 - $19999 major position
$20000+ principal position

(Obviously if your port's overall size is much higher than mine, adjust the numbers accordingly)

It's not just about the flat number of stocks you own, I think it's about how many are at each tier. The higher the tier, the more you have to know about their financial health. For instance, I have 33 stocks, but out of that, 12 are at Junior or less, and another 8 are Moderate. So only 13 are larger investments.

[fenders53]

(12-11-2021, 07:50 AM)ken-do-nim Wrote: This also gets back to the position sizes discussion.  I came up with this a while back for my port:

$1 - $500  watch position
$501 - $1000 starter position
$1001 - $2499 junior position
$2500 - $4999 moderate position
$5000 - $7499 full position
$7500 - $9999 large position
$10000 - $19999 major position
$20000+ principal position

(Obviously if your port's overall size is much higher than mine, adjust the numbers accordingly)

It's not just about the flat number of stocks you own, I think it's about how many are at each tier.  The higher the tier, the more you have to know about their financial health.  For instance, I have 33 stocks, but out of that, 12 are at Junior or less, and another 8 are Moderate.  So only 13 are larger investments.

Yes, position size matters a lot.  I also maintain a few "watch" size positions.  It's usually because I know I have not properly researched them enough to "throw down" yet, or I am just plain afraid of them so there is no real conviction.  I'm not sure I know a single person with 50-100 stocks that is matching a SPY index fund over the past say five years.  They aren't hurting anyone but it's just a stock collecting hobby at that point.  Cherry picking a bunch of high dividend stocks is another matter if you actually need the income soon.   At this point in my life I only need to compete with SPY on a risk adjusted basis.  If I can get 75% of the return with 50% of the risk I'm OK with that.  15 years ago I was better served to match the market average. 

I enjoy threads like this.

[cemanuel]

(12-11-2021, 05:08 AM)fenders53 Wrote: Considerable (but respectful) differences of opinion on this forum.  We have a lot of members that own 50 or more stocks.  I have tried both methods and gravitated towards a smaller number of high quality holdings.  Unfortunately I started doing this in earnest only a year ago and quality is expensive.  The market long ago taught me that paying just any price is a huge mistake. Time will provide opportunities.  

The problem with owning 50-100 stocks is you don't really know what you own if you have a day job.  It's nearly impossible.  If you are fortunate you will accidentally achieve mediocrity.

There's a poster on SA, Roseknows, who has a portfolio of close to 100 and does very well with it. I'm sure not going to criticize her for that. I just don't know how she does it. And I've been doing well enough that I'm not going to work to figure it out.

There are people who make that work. I maxed out at, I think, 34 myself and have trimmed that back to 30 as I approach retirement. 

Lots of ways to make money in the market. More important to be good at what you decide to do than to try emulating someone else if things don't fit.

[cemanuel]

(12-11-2021, 07:50 AM)ken-do-nim Wrote: This also gets back to the position sizes discussion.  I came up with this a while back for my port:

$1 - $500  watch position
$501 - $1000 starter position
$1001 - $2499 junior position
$2500 - $4999 moderate position
$5000 - $7499 full position
$7500 - $9999 large position
$10000 - $19999 major position
$20000+ principal position

(Obviously if your port's overall size is much higher than mine, adjust the numbers accordingly)

It's not just about the flat number of stocks you own, I think it's about how many are at each tier.  The higher the tier, the more you have to know about their financial health.  For instance, I have 33 stocks, but out of that, 12 are at Junior or less, and another 8 are Moderate.  So only 13 are larger investments.

A little different but same general principle. When I started I set $5k as my standard transaction size, mainly to take fees mostly out of the equation in impacting my returns. Once Fidelity dropped fees I decided to stick with $5k as an initial buy size but add whenever I had accumulated $1k in dividends.

The reason is that I have a watch list of probably 80 stocks and until last March ran quarterly screens to set/adjust my target price (and add/remove companies). If I added every time something dropped to an attractive price while I held $1k, I was afraid I'd end up with a LOT of tiny positions. I spend as much time tracking my "onesies" - companies I have just the one buy of - as something I have a full position in (5% of portfolio, calculated using purchase price, not current value). I'd likely do the same if I have only $1,000 in something.

In fact, over the last few months I got rid of the four onesies I had. I was initially going to retire in 2022, not 2021. By moving things up a year and starting to accumulate cash I didn't have time to build the positions - all were first bought in late 2020 or early 2021. As small as they were - and the fact that IMO they were solid but not fantastic stocks - I decided it wasn't worth my time to track them.

The IRA rollover will not be as much as my total received from my property sales, but will be well more than any single buy was. So with that amount of capital available at one time I'm going with $10k as my standard initial buy figure. Plus I've already determined that $5k is too small of a position size to mess with. Though there is the Roth which is tiny and every position is $5k or less . . . Hoping most Roth positions will end up being duplicated in the IRA to get them up to size. If not, I'll have more selling to do.

[fenders53]

(12-11-2021, 09:26 AM)cemanuel Wrote:

(12-11-2021, 05:08 AM)fenders53 Wrote: Considerable (but respectful) differences of opinion on this forum.  We have a lot of members that own 50 or more stocks.  I have tried both methods and gravitated towards a smaller number of high quality holdings.  Unfortunately I started doing this in earnest only a year ago and quality is expensive.  The market long ago taught me that paying just any price is a huge mistake. Time will provide opportunities.  

The problem with owning 50-100 stocks is you don't really know what you own if you have a day job.  It's nearly impossible.  If you are fortunate you will accidentally achieve mediocrity.

There's a poster on SA, Roseknows, who has a portfolio of close to 100 and does very well with it. I'm sure not going to criticize her for that. I just don't know how she does it. And I've been doing well enough that I'm not going to work to figure it out.

There are people who make that work. I maxed out at, I think, 34 myself and have trimmed that back to 30 as I approach retirement. 

Lots of ways to make money in the market. More important to be good at what you decide to do than to try emulating someone else if things don't fit.

She either puts the extreme time in or she is lucky.  Anything can happen in the short-term.  I am close to beating the SPY this year.  My portfolio is quite conservative.  I own a lot of UTEs, solar and some oil.  UTEs and solar have been mostly flat but some buy the dip and and trim the rips and look, I'm an expert this year.  I am certain my mileage will vary going forward as I am risk averse.

My hero Peter Lynch beat the SPY for a decade  owning over 100 stocks when he ran Magellan.  He also had a team of researchers keeping an eye on the fundamentals.  His record has not been matched often.  Maybe never.

[cemanuel]

(12-11-2021, 09:45 AM)fenders53 Wrote:

(12-11-2021, 09:26 AM)cemanuel Wrote:

(12-11-2021, 05:08 AM)fenders53 Wrote: Considerable (but respectful) differences of opinion on this forum.  We have a lot of members that own 50 or more stocks.  I have tried both methods and gravitated towards a smaller number of high quality holdings.  Unfortunately I started doing this in earnest only a year ago and quality is expensive.  The market long ago taught me that paying just any price is a huge mistake. Time will provide opportunities.  

The problem with owning 50-100 stocks is you don't really know what you own if you have a day job.  It's nearly impossible.  If you are fortunate you will accidentally achieve mediocrity.

There's a poster on SA, Roseknows, who has a portfolio of close to 100 and does very well with it. I'm sure not going to criticize her for that. I just don't know how she does it. And I've been doing well enough that I'm not going to work to figure it out.

There are people who make that work. I maxed out at, I think, 34 myself and have trimmed that back to 30 as I approach retirement. 

Lots of ways to make money in the market. More important to be good at what you decide to do than to try emulating someone else if things don't fit.

She either puts the extreme time in or she is lucky.  Anything can happen in the short-term.  I am close to beating the SPY this year.  My portfolio is quite conservative.  I own a lot of UTEs, solar and some oil.  UTEs and solar have been mostly flat but some buy the dip and and trim the rips and look, I'm an expert this year.  I am certain my mileage will vary going forward as I am risk averse.

My hero Peter Lynch beat the SPY for a decade  owning over 100 stocks when he ran Magellan.  He also had a team of researchers keeping an eye on the fundamentals.  His record has not been matched often.  Maybe never.

She's been doing it since I've been on SA, over 4 years. Beats the market and maintains from a 4.5% to a 4.7% overall yield. Very open about her moves. There's another author, Investment Pancake, who keeps about a hundred companies. But Rose provides more details in her articles.

Once you get what you want "built" maintenance takes much less time, if you pick the right company and don't want to be a frequent trader. My first year or so I suspect I averaged 20 hours/week. At least 1-2 hours per day on workdays and a minimum of a half day on weekends, often more. Now it's closer to a couple of hours except when I do a screen or dig into buying a new company. Most of that is looking over the week's ERs of companies I own and reading call transcripts. I don't count what I call social investing on discussion boards such as this part of that time though. Some may. Same for my writing a blog post on SA.

[fenders53]

(12-11-2021, 09:57 AM)cemanuel Wrote:

(12-11-2021, 09:45 AM)fenders53 Wrote:

(12-11-2021, 09:26 AM)cemanuel Wrote:

(12-11-2021, 05:08 AM)fenders53 Wrote: Considerable (but respectful) differences of opinion on this forum.  We have a lot of members that own 50 or more stocks.  I have tried both methods and gravitated towards a smaller number of high quality holdings.  Unfortunately I started doing this in earnest only a year ago and quality is expensive.  The market long ago taught me that paying just any price is a huge mistake. Time will provide opportunities.  

The problem with owning 50-100 stocks is you don't really know what you own if you have a day job.  It's nearly impossible.  If you are fortunate you will accidentally achieve mediocrity.

There's a poster on SA, Roseknows, who has a portfolio of close to 100 and does very well with it. I'm sure not going to criticize her for that. I just don't know how she does it. And I've been doing well enough that I'm not going to work to figure it out.

There are people who make that work. I maxed out at, I think, 34 myself and have trimmed that back to 30 as I approach retirement. 

Lots of ways to make money in the market. More important to be good at what you decide to do than to try emulating someone else if things don't fit.

She either puts the extreme time in or she is lucky.  Anything can happen in the short-term.  I am close to beating the SPY this year.  My portfolio is quite conservative.  I own a lot of UTEs, solar and some oil.  UTEs and solar have been mostly flat but some buy the dip and and trim the rips and look, I'm an expert this year.  I am certain my mileage will vary going forward as I am risk averse.

My hero Peter Lynch beat the SPY for a decade  owning over 100 stocks when he ran Magellan.  He also had a team of researchers keeping an eye on the fundamentals.  His record has not been matched often.  Maybe never.

She's been doing it since I've been on SA, over 4 years. Beats the market and maintains from a 4.5% to a 4.7% overall yield. Very open about her moves. There's another author, Investment Pancake, who keeps about a hundred companies. But Rose provides more details in her articles.

Once you get what you want "built" maintenance takes much less time, if you pick the right company and don't want to be a frequent trader. My first year or so I suspect I averaged 20 hours/week. At least 1-2 hours per day on workdays and a minimum of a half day on weekends, often more. Now it's closer to a couple of hours except when I do a screen or dig into buying a new company. Most of that is looking over the week's ERs of companies I own and reading call transcripts. I don't count what I call social investing on discussion boards such as this part of that time though. Some may. Same for my writing a blog post on SA.

Many, dare I say most, do consider hanging out on social media sites as research.  I do get some of my initial ideas there for sure.  I know who Rosenow is and enjoy her posts.  I'll dig a little deeper and check out her investment account info shares.  If it was easy professional portfolio managers would do it with their staffs.  I don't have a staff unfortunately.  At the end of the day I don't have 100 great investing ideas.  25 is hard enough.

[Christinebitg]

IMO, there's a place for different kinds of investments in my overall holdings.

I hold some VOO, Vanguard's S&P 500 ETF. That's mostly in the set-it-and-forget-it area. I track the dividends from it and dutifully record them.

And I have positions in individual companies.

And then there are the covered-call-writing positions, which require much more active management. I don't have any open options right now, but there are some stocks that I'm waiting for them to go back up. I can be patient while I'm waiting for a price where I'm willing to sell.

[EricL]

Keep in mind that the originally posted comment was made in 1934 before the internet and online brokerages. It is MUCH easier to learn about and know a company now than it was 85 years ago. Research reports that used to cost $100's of dollars are now available free with your brokerage account. It's also much cheaper to own stock now than it was back then. With zero transaction costs and no account fees, there's no hurdle to owning many companies at little cost.

Personally, I like owning a wide breadth of companies across many sectors. With 1000's of stocks to choose from across 11 sectors, even owning 100 stocks can be done while still owning quality companies. I own roughly 80 companies across three portfolios, and I think casting a wide net has allowed me to own winning stocks that I'd have missed otherwise if I held a concentrated portfolio.

Some of my best stocks like NVDA, TTD, LOW, UNH, BLK, SQ, ETSY, TSCO, ZTS, SHOP, FB, DLR, AVGO were bought long after I built my original 50 stock portfolio. Had I stayed concentrated and not spread out to other ideas, I'd have missed out on some nice gains.

That said, I can see why people concentrate their holdings on what they are comfortable and familiar with.

I can see whittling down names when nearing retirement like Fenders is doing now, but for someone in their 20's, 30's, 40's, I think it's good to cast a wide net and try to find some home runs. It only takes one or two big winners to make a difference in a portfolio.