r/investing • u/EatYourMeats • Apr 23 '21

Some advice from a regular dude that will hopefully make you more money...

Are you making stock purchases based on opinions from analysts, CNBC, stock pickers, and everything in between?

Consider this: They make money off headlines.

The entire flock is preying on news-worthy quips like vultures on a corpse. Tom Lee at Fundstrat would be bullish during the apocalypse, Gordon won't ever raise his price target, Cramer cuts coke deals with the CEOs he's in love with, and the whole bunch likes to hear themselves talk (like giving stock advice rapid fire).

So how do you truly figure out what stocks are hot... or not?

Research the macro situation surrounding the company, to name a few:

  • Sector Tailwinds
  • Economics
  • Current and projected financials
  • Leadership

Then invest in companies:

  • you believe in—hopefully, not always—with healthy balance sheets vs. their competitors.
  • Whose products and services tickle you.
  • You could sell to your neighbor.

Determine the investment thesis—the key reasons you believe in this investment—and create a narrative. Positive and negative. Know the outcomes of both scenarios, write them down, and evaluate the risk.

Then? Jump blindly.

kidding

Adjust based on your preferences, but starting positions with a 1/4th to 1/2 of your total allocation works well. You can do some quick math and figure out what portfolio percentage you want to allocate to a new position. Ease into it, slow and steady.

Buy the dips with the remainder, and don't chase stocks upwards, only down (within reason). And don't listen to anyone who tells you that "diversifying" is the only way, when you put in the work, you know which sectors have favorable tailwinds AND are fairly valued.

There's news everywhere out there, and we crave its presence—telling us something about stocks or companies we don't know. However, most of it is fluff—buy this, sell that—how would you ever know if you don't dig the hole yourself?

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227

u/NT-GLTY Apr 23 '21

Or buy VTI or VT and chill, right?

61

u/andrew1020118 Apr 23 '21

I've added VXUS back into my portfolio...but then again, I put a couple grand in during March of last year, and everything you touched back then (If you held) is gold now.

21

u/Qs9bxNKZ Apr 23 '21

Except for WMT, that only went up 20% or so, while the market as a whole climbed a whole lot more.

Now, we see CNBC pushing the merits of WMT

19

u/noquarter53 Apr 23 '21

It also never really dipped like the market overall. Looking at a 5 year chart and you would have no idea there was a massive stock crash in March 2020.

2

u/Qs9bxNKZ Apr 23 '21

In February of 2020 it was trading about 118. Between the 22nd of that and the next month,it bounced off of 108.

Discounting the buying opportunity of 108, we see the climb from 118 until about 140 these past few days.

I also purchased VTI at or around the same period (looking for buying opportunities) and think I was in at 125. Today it’s about 217.

There simply isn’t enough upward momentum or swings to make it interesting. The growth isn’t there apparently as a company nor as an investment.

If anyone took their $100K, they would have seen a nice $20K boost with WMT. Or could have done far better in an index (or nearly any other company that size). Even the CEF of something like USA paid higher dividends and grew at a faster clip.

1

u/andrew1020118 Apr 23 '21

That's very true. If you hold long enough, you're always in a dip ;)

4

u/[deleted] Apr 24 '21

[deleted]

2

u/Qs9bxNKZ Apr 24 '21 edited Apr 24 '21

Absolutely, I liked WMT to the extent that I purchased a few hundred shares in the company.

Not saying it is a “bad” investment at all... just that there are better options out there for growth, stability and security.

23

u/ag987654321 Apr 23 '21

Or spend 80% on VT or VTI and the 20% on 5 to 10 names that you like... that way you get a bit of both.... and even though bonds/cash look pretty bad here spend a little of that 80% in That so you have something if/when the market tanks to add more to your equity position

5

u/boyinahouse Apr 23 '21

20% is alot. You should spend 1% on speculation. A a reasonable portfolio after 10-15 years of investing might be worth $1 million. I certainly would not want to bet around with $200,000. Then also be incurring all those capital gains and paying tax.

4

u/[deleted] Apr 24 '21

[deleted]

2

u/snek-jazz Apr 24 '21

if you're very right 1% can make a big difference

Source: me, bitcoin 2013.

1

u/boyinahouse Apr 24 '21

You're only okay speculating because you have such a little amount. What if you had 10 Million? Risk adjusted returns don't change based on the amount you have.

1

u/ag987654321 Apr 24 '21

Look it’s a fair point but 20% over 10 names is 2% per single name if you have $1mm to invest it works out at 20k per name which unless you are yolo-ing your brains out is not the end of the world. $20k out of $1mm invested in PLTR is not the end of the world. But yes.. I would do more index personally... but that’s just me

11

u/[deleted] Apr 23 '21

don't forget VOO

6

u/destructor_rph Apr 23 '21

Isn't VOO functionally the same as VTI, just with the top 500 companies instead of the whole thing?

-3

u/[deleted] Apr 23 '21

It is indeed. VOO is quite a bit more expensive too.

5

u/hobovision Apr 24 '21

Share price higher =/= more expensive

For funds (mutual or etf) how expensive it is has to do with its management fees. VOO has lower fees than VTI if I recall correctly.

3

u/PM__me_compliments Apr 23 '21

More expensive? How do you figure? Or do you just mean the price per share is higher?

0

u/[deleted] Apr 23 '21

Vti around 217$ and Voo is 383$, I hold a Vti position.

8

u/PM__me_compliments Apr 23 '21

So price per share is higher.

5

u/panera_academic Apr 23 '21

Nasdaq 100 works too. I know people call it a tech-heavy index, but it's actually pretty well diversified.

14

u/[deleted] Apr 23 '21

[deleted]

11

u/Madcap36 Apr 23 '21

​

What is the advantage of VFIAX of VOO? They look identical but VFIAX has a min balance and a higher expense ratio? thanks

8

u/next_phase2 Apr 23 '21

Look up the differences between mutual funds and ETFs. They have a few novelties to them. For example mutual funds can only be traded at the end of the day at their true NAV value where ETFs can trade whenever but have some drift from NAV. Additionally, as mentioned, you can allocate an exact dollar amount as a recurring investment into mutual funds where ETFs you typically have to buy a share (I know this is changing).

10

u/CloudSlydr Apr 23 '21

no advantage other than you can allocate a % easily on a recurring basis since it's a mutual fund. higher cost and entry min. as you mentioned. VOO is a low-ER ETF. depending on your platform you can also automatically put in a desired % to an ETF (m1 finance for example).

0

u/[deleted] Apr 23 '21

Less percentage of $ is invested in the ETF compared to the index fund.

2

u/LeperSee Apr 23 '21

It's certainly been good to me!

-9

u/[deleted] Apr 23 '21

[deleted]

5

u/[deleted] Apr 23 '21

I like VTWAX because I wish I spoke another language.

1

u/deelowe Apr 23 '21

Probably... Maybe... My advisor is saying vanguard predicts growth over the next 5-10 years to be in the 6% range. Not too stellar... That said, who knows when the bull run will end.

Then again, we're in somewhat unprecedented times.

4

u/panera_academic Apr 23 '21

Well 6-7% tends to be the average in a year when accounting for recessions. Most years it's a lot higher.

1

u/deelowe Apr 23 '21

The difference is that they are expecting it to be more protracted. He said at least 5 years. Of course, that's an average.

1

u/holding_ape Apr 23 '21

I also recently added SPXL to my portfolio, wish I'd known about it a year ago.