Bear's Portfolio at the end of May

Investment Analysis Clubs Saul’s Investing Discussions
#10

Hi Bear,

My family is down slightly for the year so far, 0.6%. So I am also behind the S&P 500 and I’m not thrilled with that. A few things are helping to take the sting away:

  1. Most of the companies I own pay dividends, netting just about 1% dividend yield, not much but it doesn’t hurt. Some dividends are reinvested.

  2. I am doing some option writing this year to try to make some additional small gains. I am trying out some covered calls in addition to put writing.

  3. Understanding that bad markets happen from time to time. Stocks go up, stocks go down. I’m trying to learn to live in this environment, but my goal is to make positive returns on every 3-year cycle.

  4. A reasonable savings rate and modest household budget. Just makes me feel better.

Some of my recent moves are:
– re buying into a company that I had earlier written off. Doh.
– selling two companies that I thought I could live with but were making me uncomfortable for important reasons - leadership and debt. I decided to swap these for companies that are vetted by the Fool and that I’m more comfortable with.
– selling options for a smidge of income here and there
– I’m keeping a watch list but I’m very hesitant to pull the trigger on anything.

Another big lesson is that I should have bought more in Jan/Feb. Doh! Doh!

I’m not a great stock picker, don’t claim to be one so I rely on lot of help. A LOT of help. I may not always agree with advice 100% but I try to listen very carefully and ask lots of questions and I’m not afraid to ask for help on issues I’m struggling with. I try to find the best teachers I can.

I primarily follow Motley Fool Pro, a great service. I like to read Saul’s board and have one of his stocks in my port right now. This is a fun place to read up, but I’m very slow to make moves. There’s one here I’m interested in but I’m gong to watch it more.

I am also learning to be patient with having a variety of stocks in different sectors, because when some slow, others grow. I’m trying to be more observant of this and feel less reluctant about slower stocks that ballast the port.

Hope that helps, and best of luck with it.
Karen
Ticker Guide: AMTD/PZZA • See my holdings here: http://my.fool.com/profile/CMF_KBecks/info.aspx

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#11

P.S. I’m not mean, I’m truthful. It’s a real pain to try to get back to even after losses, and it’s important to really look at what’s working and what’s not.

I don’t read Saul’s board in detail so I don’t know how much work you have put in to developing your thesis for each stock in your portfolio – why is each stock going to succeed? How is each stock going to deliver results and improve their business? Go deep with these.

When I was a newer investor I bought a lot of stuff that sounded good, but sounding good is easy. Delivering return is not easy.

It’s good that the time horizon is long. There’s time to work out investing style and to afford a few wrinkles in the plans.

Good luck!
Karen
Ticker Guide: AMTD / PZZA • See my holdings here: http://my.fool.com/profile/CMF_KBecks/info.aspx

#12

P.P.S. Is this a speculative account for you or is it money you plan to count on in the future?

#13

It’s good that the time horizon is long. There’s time to work out investing style and to afford a few wrinkles in the plans.

P.P.S. Is this a speculative account for you or is it money you plan to count on in the future?

Very much agree. My portfolio is just 2 accounts: my 401k and a smaller taxable account. Speaking of taxable accounts (and this question is for anyone), do you have to enter each buy or sell on your tax return? That’s what I’ve had to do the past few years. But especially with adds and trims, I am making a lot more buys and sells now, so I could see this becoming annoying.

2) I am doing some option writing this year to try to make some additional small gains. I am trying out some covered calls in addition to put writing.

I have sold a few puts in the past, and at the very least you get a better price on whatever you’re buying. I just didn’t like missing out on the upside. If I want to buy something, it’s usually b/c I see double/triple/etc opportunity, not because I want to make 5% in 6 months or 10% in a year.

Another big lesson is that I should have bought more in Jan/Feb. Doh! Doh!

I assume this lesson is tongue in cheek, as it’s impossible, of course, to time the market. But I hope you bought at least a little on the dip! I’m close to 100% invested, so I don’t really get that chance much. Although I have been known to drain a savings account and deposit it into my brokerage account, or increase my 401k contribution, in bear markets.

I’m not a great stock picker, don’t claim to be one so I rely on lot of help. A LOT of help.

This really stood out to me. You don’t believe you’re a great stock picker, but you believe with help you can beat the S&P? Am I getting that right? Or are you just now trying to learn to pick stocks? I guess that’s where I am. I’m 36, so I have a long investing horizon. If after a couple years I am still getting crushed by the S&P, maybe I chalk this whole experiment up to learning, buy an index fund, and get a new hobby.

How long have you been investing in individual companies? What kind of fraction of your total investments do you invest in individual companies? How have your returns been in previous years?

Bear

#14

Speaking of taxable accounts (and this question is for anyone), do you have to enter each buy or sell on your tax return?

There should be a page you can pull up on your online brokerage account that you can isolate to the prior year closed positions. Print that and then the totals go on the IRS form -short and long term- and you attach a copy of the individual trades.

JT
not a CPA, but my nephew does a good job for me, much easier.

Future Simplified 1040 Form:

How much money did you make in 2030? $________

Send it to the U.S. Treasury

:wink:

#15

Hey Bear - just my 2 cents and IMHO:

“Very much agree. My portfolio is just 2 accounts: my 401k and a smaller taxable account. Speaking of taxable accounts (and this question is for anyone), do you have to enter each buy or sell on your tax return? That’s what I’ve had to do the past few years. But especially with adds and trims, I am making a lot more buys and sells now, so I could see this becoming annoying.”

  1. I am not sure why you would be trading in your 401k? Especially when you say you look for companies with 2x or 3x gains. That’s a tough recipe.

  2. On taxes, you do have to report each buy and sell; and obviously keep track of when you first bought it and average share price. Good news is that, depending on your broker/tax software, it’s all done for you. As example, I use Fidelity and Turbo Tax. And with Fidelity, I can check on gain/loss in December to make decisions based on gains/losses.

Sox

1 Like
#16

Bear

“Speaking of taxable accounts (and this question is for anyone), do you have to enter each buy or sell on your tax return? That’s what I’ve had to do the past few years. But especially with adds and trims, I am making a lot more buys and sells now, so I could see this becoming annoying.”

The answer is yes. You need to have:

  1. Buy Date
  2. Buy amount (net of purchase amount - expenses)
  3. Sell Date
  4. Sell amount (net of sale amount - expenses)

Most brokers have downloads to software like TurboTax, etc.

All brokers should issue a 1099, normally a consolidated form that combines all needed info for the year.

A lot of sales in a taxable account produces additional drag on your returns in particular if they are short-term.

If you have the ability, you might consider getting cash into a Roth, directly if you are eligible or or by making a non-deductible contribution to a traditional IRA followed by a Roth conversion.

We have 1 taxable brokerage account and 4 IRA brokerage accounts, two trad and two Roth. 99% of trading is in the IRA’s.

Something to think about …

On the S&P thing: Comparing a tight portfolio to an index can be a difficult thing. You will invariably have periods of under performance. That is the nature of the beast.

My stats as of 12:47 CDT:
Fri 6/3/2016 Chng: - 0.13%
_Portfolio vs High: - 1.46% (12/2/15)
_YTD Portfolio: 4.43%
_YTD DJI30: 2.07%
_YTD NASDAQ: -1.35%
_YTD SP500: 2.61%
_XIRR since 2005: 20.07%

It will change. It is 46 stocks and 10 ETF’s. If I were to add the withdrawals since our 12/5/15 high, we would be at an all time high again. Have a look at my profile link below. I update it afetr close each night and sometimes on Saturday after interest and dividends are posted.

Remember, when you have a 50% up year, I won’t. I am fine with that. You need to keep your conviction alive. Continually changing horses is often how people lose money.

Gene
All holdings and some stats on my profile page
http://my.fool.com/profile/gdett2/info.aspx

6 Likes
#17

Hi Bear,

• If the taxes are confusing, get help from a CPA, they are worth it.

• I have a sub to Motley Fool options where I have been learning over the past three years. The options are mostly small gains. However, I had a couple long calls (one was Facebook) that totally rocked. They could have also gone to zero, but those recommendations from the service were very very successful. I only use options sparingly, like the sprinkles on the sundae.

• I was scared in Feb. That is OK. I didn’t sell stuff, I just sat. I bought a tiny teeny but but not much. In retrospect it might have been good to venture a little more.

• Yes, I am not a great stock picker. I started picking stocks in 1999. Then I got married and then we started a family and I pretty much checked out of stocks. Came back to the fool in summer 2013 and decided to join up the services. Found a good home at Pro where I like the recommendations and the advisors have a solid track record I can follow along with. I don’t index because I believe that I need to pay attention to what is going on in the markets and I’d like to try to do better than average for my family.

• I hate to tell you but 36 isn’t that young! I’m 46, it goes by fast. Aches and pains! If you were 22 and experimenting with high risk stocks with money from from your summer job, then I wouldn’t worry about you as much.

• Our returns as far as I can tell are meager but positive, around 6%. About 60% of our investment money is in individual stocks, and the rest is in fund-type stuff. I feel like it took us a long time to earn it, I want to be very careful to protect it, and grow it.

Hope that helps,
Karen

2 Likes
#18

Our returns as far as I can tell are meager but positive, around 6%.

Is that total? That’s losing to the S&P by quite a bit, right? Do you feel like you’re getting the hang of it and will get better? If not, wouldn’t an index fund give you better returns?

#19

If you have the ability, you might consider getting cash into a Roth, directly if you are eligible or or by making a non-deductible contribution to a traditional IRA followed by a Roth conversion.

This may be a little optimistic, but I don’t plan to work until I’m 59. Hence, I’ve started investing a little in a taxable account. I do tend to do more buys and sells in the 401k so I don’t have to worry about the tax implications.

Are there any advantages to an IRA (roth or not) over a 401k especially in regard to early retirement? I’ve always seen them as somewhat interchangeable.

#20

“Are there any advantages to an IRA (roth or not) over a 401k especially in regard to early retirement? I’ve always seen them as somewhat interchangeable.”

The biggest liability of most 401(k)s is the limited investment choices.
Many times the mutual funds available are house funds. If you think you can beat most funds, a self directed IRA of either type would give you a much broader choice of stocks and other investment vehicles.

Rob

#21

Bear,

“This may be a little optimistic, but I don’t plan to work until I’m 59. Hence, I’ve started investing a little in a taxable account. I do tend to do more buys and sells in the 401k so I don’t have to worry about the tax implications.”

We went out at 55/54. Taxable accounts can be valuable for that. There are no restrictions for age associated with withdrawals.

By the same token, a Roth can be valuable there also. Contributions can be withdrawn tax/penalty free. The first contribution must be held 5 years prior to taking a distribution. Earnings(growth) can not be taken (in normal circumstances) until 59 1/2. It is all tax free. Also Roth IRA’s are the only tax advantaged account that is exempt from Required Minimum Distributions (RMD) starting in the year you turn 70 1/2.

A taxable account will create some type of taxable event for a sale or dividend payment.

“Are there any advantages to an IRA (roth or not) over a 401k especially in regard to early retirement? I’ve always seen them as somewhat interchangeable.”

401K accounts normally have higher management fees associated with them compared to IRA’s. (Ours have none)

401K’s do offer pre-59 1/2 distributions if you retire from the company.

IRA’s can also be tapped early if you use a SEPP (72t plan) of periodic payments.

That is the basics.

Gene
All holdings and some stats on my profile page
http://my.fool.com/profile/gdett2/info.aspx

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#22

Bear,

I don’t think that is optimistic at all. Should be realistic for most people earning average wage, but, here is the important part, living within their means.

In interest of not straying too far off topic, I recommend checkiing out the FIRE Wannabe board. Also take any advice Gene has to offer.

If I see you over there, I will follow up with.

Kevin

2 Likes
#23

By the same token, a Roth can be valuable there also. Contributions can be withdrawn tax/penalty free.

That is huge. Thank you so much!

This is all great info too:

401K accounts normally have higher management fees associated with them compared to IRA’s. (Ours have none)

401K’s do offer pre-59 1/2 distributions if you retire from the company.

IRA’s can also be tapped early if you use a SEPP (72t plan) of periodic payments.

Thanks again!

#24

Thanks, Kevin. Will do.

#25

That is approximately annualized, and I think that with help and guidance, it will gradually improve over time. I don’t expect overnight improvement, especially as the market is slow and I’m not taking great risks.

Karen

#26

I don’t think it’s actually that bad. Here’s an article that discusses 15 years (and that is close to the amount of time I have been involved with the stock market). I started in '99, tech bubble, oh yeah, that hurt.

http://www.marketwatch.com/story/the-sp-500-index-is-not-you…

#27

Bear

I want to strongly emphasize Gene’s Roth IRA recommendation. The younger you are when you start it, the more valuable it becomes and NO TAXES AT DISTRIBUTION assuming you follow the rules. I made my daughters start Roths early in their teens with the first paychecks they received.

David

2 Likes
#28

In interest of not straying too far off topic, I recommend checkiing out the FIRE Wannabe board. Also take any advice Gene has to offer.

Hey, thanks, Kevin. I started that board years ago. I’m on pace to retire at age 50 and I consider that early.

Of course, I may still work, PT or even FT, as I want to make more money to invest more. I love investing. It’s a great hobby to have.

Fool on,

mazske

All holdings are listed in my profile

2 Likes
#29

I don’t think it’s actually that bad. Here’s an article that discusses 15 years (and that is close to the amount of time I have been involved with the stock market). I started in '99, tech bubble, oh yeah, that hurt.

I started in 1999 also. I didn’t really learn what I was doing until I joined Stock Advisor in 2005. Since 2005, my XIRR is around 15%. It peaked a year or two ago around 20% and my goal is to get it back up to that.

Fool on,

mazske