You mentioned that you are retired… I’m curious, do you have a separate portfolio of “safe“ stocks? Your current portfolio posted on this board only contains seven or eight stocks, and they are all quite aggressive with superior returns. But I was wondering if you have a separate portfolio of less aggressive, safer stocks…
I received the above question in an off-board email. I responded as follows:
Sorry, I have all my investing money in the portfolio on the board. but that’s what I do because I’ve been doing it for many years, I’m confident in it, and I know it works for me. You should do what you are comfortable with, not follow me.
By the way, the S&P has finally gotten positive for the year and the Dow is still negative. My portfolio is up 119% (more than doubled). By what crazy criteria do you consider companies that have CONTINUED to grow at rapid rates in the middle of an economic downturn less safe than the standard stocks?
Today is an example with, as of when I started typing this, all the market averages are slightly down and my portfolio is up over 3%, with the individual stocks being up 1.3% to 6.2%. How are the market stocks “safer”???
Most equate volatility with risk. They couldn’t handle their portfolio falling 30% in the course of 2 months for no real reason as yours did from July to October of last year. It doesn’t matter if the portfolio is up 80% on the year. Whether because they start spending the money they don’t actually have or because they just can’t stomach the loss, it results in emotional distress and panic selling. At least when all the stocks drop at the same time as everyone else’s, like in March of this year, they can commiserate with others and just accept it as an act of whatever deity they choose to believe in.
I think it certainly helps to have either so much money in the portfolio that even a huge fall wouldn’t cause any real financial hardship, or otherwise not relying on that money for survival (in a retirement account for instance). It’s easier to see things as percentages rather than real dollars. I’m relatively early in my career and feel comfortable that I can find a job if needed, but have been able to go from figuring out whether the $10 commission was worth a trade to much larger real numbers, yet at the same time still see my portfolio as percentages so it hasn’t changed how I invest.
Others will say the results are just luck. You clearly have a much longer track record but even then they will say you’re just a statistical anomaly or an oracle and that regular people can’t do it. They’ll point to articles talking about how even rich fund managers with entire staffs dedicated to researching companies can’t beat the index. I’ve had my own doubts, and spent a lot of time learning different investing styles, from dividends to indexing to “hidden gems”. Ultimately I came to many of the same conclusions as this board, that growth is what really drives long term price appreciation. I do think you have an extraordinary ability to pick up on certain things but I think even someone with average financial literacy could achieve much better returns than the market using the same concepts.
Unless a person has billions $ to invest, for small investors like us with sub-million to a few million dollars to invest, it’s a good idea to invest in small cap fast growing companies to achieve maximum ROI. There’s the law of diminishing return in investing. The bigger the company the harder for it to grow rapidly. A good example is Berkshire Hathaway. They are having trouble finding fast growing but sufficiently large company to invest in. BRK future expected return will converge to the mean, getting close to index return of 10% per year. BRK is not going to get 20% per year return in the next few decades.
Wow. “a few million dollars to invest” is considered small?
What am I doing here??
enph - It sounds to me like you are in exactly the right place. Those who have larger portfolios may well be those with the most experience and insight and obviously success, and they are willing to share with and advise everyone including beginners and those with the smallest portfolios. The way to develop a multimillion dollar portfolio is to start anywhere and to follow sound principles for an extended period.
Growing a a portfolio at compound rates a good deal less than some here have achieved will result in a 7 figure portfolio by the time one retires. I began to follow this board less than a year ago. In the past year my portfolio is up over 100%. But if you imagine compounding at 25% -35% over 20 years or more even a small stake will grow enough to justify your reading this board. For sure.
>> for small investors like us with sub-million to a few million dollars to invest
Wow. “a few million dollars to invest” is considered small?
What am I doing here??
More anecdotal evidence from me… I haven’t broken seven figures yet, but as of August 1st I’m up nearly 400% since I started following this board in 2016. As a small potatoes dude I continue to be amazed & respectfully skeptical of my results. There has always been some port overlap, but I’m not merely echoing Saul (or anyone else’s) moves.
Read the knowledge base, read Saul & others’ monthly summaries. Learn to make your own choices and to build and manage a concentrated portfolio by keeping up to date with news and earnings reports and the discussions here.
The dollar amount matters less than the lessons you’ll learn. The percentages compound smaller port balances too.
I can’t possibly thank Saul and TMF for providing the platform enough.
Small potatoes here as well, but I know my friend is all about ‘safe’, dividend heavy stocks. He’s still in the red this year (We’re Canadian–he’s heavy Canadian banks & utilities) whereas I have some of those, but a larger % of my portfolio is tech or ‘risky’ stocks and I’m up over 20% despite those ‘safe’ stocks deeply in the red…
SHOP
SQ
TTD
FSLY
CRWD
WELL.TO
are my biggest winners with
BNS
RY
BMO
my losers. Thankfully those winners make up a larger % of my portfolio than the losers! I also thank the community here for a wealth of knowledge!
For the person who asked Saul about whether he has a portfolio of “safe” stocks and other newcomers who find a portfolio of only 7 or 8 a bit daunting, there was a discussion earlier this year about converting your portfolio gradually.
Reading some of those posts may help those who aren’t ready to devote their entire portfolio to one similar to those shared on this board.
As the posts discuss, even a partial conversion can make a big difference.
Just a side-note in case not everyone was tongue-in-cheek about the comment that a few million is small: The point is that institutional investors, for which a few million is absolutely tiny, can not invest in small companies without taking such a large stake that they have to file intent and take a serious interest or just buy the company. Just searching “Warren Buffet can’t buy small caps” yielded this quote:https://cabotwealth.com/daily/small-cap-stocks/small-cap-sto…
Elephants or Mosquitoes He said, “If I was running $1 million today, or $10 million for that matter, I’d be fully invested … It’s a huge structural advantage not to have a lot of money … The universe I can’t play in has become more attractive than the universe I can play in. I have to look for elephants. It may be that the elephants are not as attractive as the mosquitoes. But that is the universe I must live in.”
Buffett was saying he can’t buy small-cap stocks (the mosquitoes) because he has too much money. He would move the stock too much. He must “look for elephants,” which are, of course, the large caps. …
Well done Saul! And thanks for sharing your knowledge! A lot of folks I know would just keep this knowledge to themselves and keep crushing the market.
So to the rest of us normal folks, even if we are starting “small”, keep investing, keep learning, keep studying, and you too might have a nice nest-egg in a few years. Maybe not as nice as Saul’s, but nice nonetheless.
Everyone starts somewhere. But this board has served many many people well. And it has created a place where people of all stripes have chimed in with their accounting, technical expertise and real live world experiences from their own small businesses to some who have had C-suite level experience. And it has created some life changing results for board members. It is the best in crowd sourced investing and has created many off shoot boards that also discuss investment theme’s not right for this board. And all of it started with Saul. So sit back, open your mind to learning about investing and get ready for the ride of your life (hopefully in a good way). That is the hope of all who are here to share and learn. May the wind always be at your back.
"Beyond that I thought I was doing really well to be able to scrape together something a bit north of $70K to invest in mostly Fool stocks… uh, I mean companies :-)… since the first of March (before most of the crash). That is up about 35 percent since the first of March, which I thought was pretty good until I started reading this board.
So when I read that “a few million” is considered small, and that many (most?) of these TMF premium-premium services (the ones a step up from SA/RB) expect an investment of $50K each, bare-minimum… kinda depressing…"
Perspective
Don’t compare up - compare down.
"If you have food in your fridge, clothes on your back, a roof over your head and a place to sleep, you are richer than 75 percent of the world.
If you have money in your bank, your wallet, and some spare change, you are among 8 percent of the world’s wealthy.
If you have never experienced the danger of battle, the agony of imprisonment or torture or the horrible pangs of starvation, you are luckier than 500 million people alive and suffering.
If you can read this message, you are more fortunate than 3 billion people in the world who cannot read at all.”
You might be among the world’s most wealthy if…YOUR COFFEE COSTS AS MUCH AS MANY PEOPLE SPEND IN A WHOLE DAY. More than a third of people on earth live on less than $2 a day. 1.2 billion live on less than $1.25.
(Note - I did not fact check these stats, but I think you get the picture. If you have $70k+, you are a rich person.)
