Contributions by retiree

Greetings. As a member of Stock Advisor, I have accumulated 25+ stocks and have a question about the best way to add funds to my account on a regular basis (in addition to adding recc stocks on an ongoing basis). Should I add the same amount to each stock monthly or base my contributions on how the stocks are doing? Thank-you in advance! Peace.

I don’t think you should base your contributions on “how the stocks are doing”. I’m not sure exactly what you mean by that - and then there’s always the ‘past performance …’ adage. Since you are already retired, I suggest you add the same amount to each monthly to maintain diversification. The other alternative is to add based on your conviction level - but that assumes you have the skills to analyze each of 25 different positions and assign a personal conviction level to each.

Adding to 25 stock positions every month makes for lots of paperwork. I would suggest prioritize them based on their future potential and then do a rotation.

Multiple tiny additions should be avoided. But if the sums are reasonable adding to a fraction of them each month should be ok.

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Thank-you for your reply. Good food for thought.

Paul, that is very good advice and I appreciate it! That certainly sounds like the way to go. Thank-you!

Greg

I would have one question: are you able to monitor 25 companies? My limit is about 10 or so. Usually less. IMHO, it’s dangerous to buy companies you don’t monitor. If something goes wrong, you might not know until it’s too late.

Just my opinion.

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I think OP subscribes to Stock Advisor, and the idea there is that The Motley Fool vets, recommends, and monitors the stocks. MF recommends in that case that the investor own 25 companies.

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I think OP subscribes to Stock Advisor, and the idea there is that The Motley Fool vets, recommends, and monitors the stocks. MF recommends in that case that the investor own 25 companies.

Right 25 stocks hold minimum of 5 years. So with that in mind it really is easy to monitor 25 stocks. If you decide to sell quarter to quarter than 10 stocks would be better but than you better know how to evaluate a company.

Andy

If you’re buying and selling individual stocks, these are the guys you’re competing against.

https://en.wikipedia.org/wiki/Renaissance_Technologies

For more than twenty years, the firm’s Renaissance Technologies hedge fund has employed mathematical models to analyze and execute trades, many of them automated. The firm uses computer-based models to predict price changes in easily traded financial instruments. These models are based on analyzing as much data as can be gathered, then looking for non-random movements to make predictions. Some also attribute the firm’s performance to employing financial signal processing techniques such as pattern recognition. The book The Quants describes the hiring of speech recognition experts, many from IBM, including the current leaders of the firm.

It’s just about impossible for the average investor to beat these guys. That’s why buying and index fund is the safest route.

intercst

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It’s just about impossible for the average investor to beat these guys. That’s why buying and index fund is the safest route.

Sure if you go short term, but the longer you go out the better you do. That is why the Fool recommends at least 5 years. At that length of time quants and mathematical models really don’t work. Who can predict that far out?

Andy

Who can predict that far out?

Andy

===============

Apparently there are some who believe that TMF can.

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Apparently there are some who believe that TMF can.

Only the ones who are ignorant that don’t listen to what TMF is saying, not us, just the other guys.

Andy

It’s just about impossible for the average investor to beat these guys.

Beat them at their own game? I agree, as their game is trading. I’ve never suggested trading to anyone. And thanks for the complement! But investing is not trading; I don’t know or care of I’ve “beaten” such operations. But if we look at the indexes as the definition of average… well, I’ve always knows I was above average, but it is nice to have independent confirmation. :sunglasses:

That’s why buying and index fund is the safest route.

Index funds are my default recommendation to family and friends as there are few decisions to make and the returns aren’t bad. I was in nothing else right up to the time when, already retired, I took control of my investments for the first time. My former employer was changing custodians for their 401k program and I would have had to pick new funds from a new but limited selection. Instead I rolled it into an IRA and signed up for Motley Fool Stock Advisor. With SA, RB, and other MF services I sampled, along with (overwhelmingly important!) their discussion boards both paid and public… to put it simply, it changed my life. My broker shows that over the "life of available data (09/01/2009 through March 2022) my Time-Weighted Rate of Return has been +21.66%. (That is annualized, of course.) Clearly I had the time to put into it. I made plenty of mistakes along the way, but I learned. I admit to be very, very lucky, YMMV, and the future is unknown, even unknowable.

The most important question I have for anyone contemplating investing is whether they have patience. Patience is really my only investing virtue. Sitting on my hands when everything is going crazy is hard, but vital to the MF (and my) approach. For anyone who can’t keep their fingers out of things, well there are always index funds to protect you from yourself. There are few decisions to make and the returns aren’t bad.

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OK … listen up !

RHinCT has it right when he says "Patience is really my only investing virtue."

And there it is … patience. THAT is by far the most important part of investing. I learned that many many years ago and it has served me well.

The other important part of investing, in my view, is NOT trying to BEAT someone or something. I’ve been investing in stocks since 1971 and my returns are just fine. Are they better than S&P? I dunno. Better than RHinCT? I dunno. Better that TMF average? I dunno.

For every $200 I’ve invested, my worth is $1,100. How does that stack up against anyone or anything? I dunno … don’t care. It’s a great return that I’m satisfied with. And PATIENCE has been my partner in this journey.

Rich (haywool) long … still long

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“How does that stack up against anyone or anything? I dunno … don’t care. It’s a great return that I’m satisfied with.”


Agreed.

Investing is not really about trying to beat the returns of other folks - or even the market.
Investing is really about growing the funds available to accomplish your wants and needs.

Howie52
Setting your goals is important.
What are you investing to accomplish?

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The other important part of investing, in my view, is NOT trying to BEAT someone or something. I’ve been investing in stocks since 1971 and my returns are just fine. Are they better than S&P? I dunno. Better than RHinCT? I dunno. Better that TMF average? I dunno.

For every $200 I’ve invested, my worth is $1,100. How does that stack up against anyone or anything? I dunno … don’t care. It’s a great return that I’m satisfied with. And PATIENCE has been my partner in this journey.

Good Lord! They say ignorance is bliss. This is a case in point.

Since 1971 the S&P 500 has turned a $200 investment into $34,800. Have you ever calculated what you’ve lost to fees and commissions? I image you have a very wealthy financial advisor.

intercst

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Investing is not really about trying to beat the returns of other folks - or even the market.
Investing is really about growing the funds available to accomplish your wants and needs.

I completely disagree. Investing should be about optimizing reward risk and reward. Everyone has their own risk profile, but if they aren’t optimizing the returns for that level of risk, well, it’s just plain “foolish”.

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Daryll44 writes,

<<Investing is not really about trying to beat the returns of other folks - or even the market.
Investing is really about growing the funds available to accomplish your wants and needs.>>

I completely disagree. Investing should be about optimizing reward risk and reward. Everyone has their own risk profile, but if they aren’t optimizing the returns for that level of risk, well, it’s just plain “foolish”.

Exactly!

Haywool has accepted the risks of the stock market over the past 51 years and received a much lower investment return than he could have gotten in an FDIC-insured CD. He either has a very happy financial advisor who has hosed him over a lifetime, or he’s been incredibly unlucky in his stock selection. It’s just nuts. And he’s happy about it.

intercst

Since 1971 the S&P 500 has turned a $200 investment into $34,800.

I didn’t read that as having $200 invested in 1971 that became $1100. I read it as $200 contributed over the years is currently worth $1100.

I looked at my tracking spreadsheet, and since I started investing in 2001 (yeah, I’m a young whippersnapper for this board), every $1 I have put in the market is worth about $4 today. Some of those dollars have been in the market for 21 years. But some have only been in the market for 3 days.

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Exactly!

Haywool has accepted the risks of the stock market over the past 51 years and received a much lower investment return than he could have gotten in an FDIC-insured CD. He either has a very happy financial advisor who has hosed him over a lifetime, or he’s been incredibly unlucky in his stock selection. It’s just nuts. And he’s happy about it.

intercst

A more honest/accurate would be if he said that he was happy that he ended up with enough to fund a lifestyle that he’s happy with. That being said, he should be honest enough to note that if he had better understood risk and reward, he would have ended up with a lot more without any additional risk.

I’ve made many financial decisions that turned out to be wrong. And a few big ones that turned out to be right. I’m happy overall, but am honest about my mistakes so I can make better decisions going forward (I hope).

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