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Thread: Do you ever buy individual stocks?

  1. #1
    Senior Member jp1's Avatar
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    Do you ever buy individual stocks?

    One of my coworkers is always talking about individual stocks that he buys because he thinks he’s going to hit a home run often enough to beat the market. I don’t care enough about his financial health to actually monitor how well his stock picks do, not do I ask him for the details of when he bought/sold to see if he actually succeeds overall. It’s not really my business and I am satisfied with the index funds that I put my money in so I just don’t care that much.

    Once in a while though I have thought to myself ‘JP, because of this specific thing going on in the world what would be a good investment?’ And then tossed a modest amount of money at it figuring if I win big then Yahtzee and if not it was money I was ok losing.

    The last time I did this was back in January of 2020 when the first news of covid was hitting. Medical testing seemed to be a logical choice to succeed. So I put a little bit into labcorp. For a long time it lagged what I expected, barely keeping pace with the overall market, but not ridiculously. Then I stopped paying attention. Today I checked and it’s up 67% compared to my purchase price at the end of January 2020. A little better than market average but not amazing. There must be a lot of incompetence in management there for them to have missed this opportunity to have major growth. Either way I am going to sell tomorrow and pay the long term capital gains on it and call it a win. Probably not enough of a win to offset all the times where playing like this didn’t work out but oh well. I can put the profit towards mortgage principal and move on with my life.

  2. #2
    Senior Member bae's Avatar
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    I do, but not in the "I've got a crazy good idea about this particular stock" sense. More in the "I need this, or something like it, to cover this particular point in the model" sense when doing my portfolio construction.

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    Senior Member iris lilies's Avatar
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    We don’t buy them in the sense that you mean. We do kind of unfortunately own $142,000 worth of company stock in a company DH worked for 25 years ago.The stock has done well, but it is a pain to deal with because we own the actual stock certificates or whatever they’re called. It is an employee owned company. We’ve already sold quite a lot of that stock but still have this amount left in it.

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    Senior Member Rogar's Avatar
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    I used to be in an investment club. We met every couple of months, contributed a reasonable small amount each, and developed a portfolio of stocks. They were mostly fun stocks or with with some degree of educated speculation (if that's not a contradiction of terms). The meetings involved food and beverages and socializing. A couple of year ago so many had moved out of town that we cashed out. It satisfied the speculation my urges. I otherwise think buying individual stocks without developing a diverse portfolio is a roll of the dice. I still get the occasional urge to carve out a small amount to gamble on something that is interesting sort of as hobby, but would just as soon avoid complicating taxes and paperwork, or thinking about money that much for that matter.

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    Senior Member iris lilies's Avatar
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    Quote Originally Posted by Rogar View Post
    I used to be in an investment club. We met every couple of months, contributed a reasonable small amount each, and developed a portfolio of stocks. They were mostly fun stocks or with with some degree of educated speculation (if that's not a contradiction of terms). The meetings involved food and beverages and socializing. A couple of year ago so many had moved out of town that we cashed out. It satisfied the speculation my urges. I otherwise think buying individual stocks without developing a diverse portfolio is a roll of the dice. I still get the occasional urge to carve out a small amount to gamble on something that is interesting sort of as hobby, but would just as soon avoid complicating taxes and paperwork, or thinking about money that much for that matter.
    oh I forgot! Yes DH is part of an investment club but the money we have in those stocks is only $5,600. As I think about it, that amount doesn’t seem to change much from year to year so my guess is that stocks are not doing very well.? I don’t know. The whole point of that investment club is to pick stocks and buy small amounts of them.
    Last edited by iris lilies; 8-24-21 at 8:35am.

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    I have not, but there have been a couple times I came close. Once was when a friends company was going to be listed, but that didn't happen (One of his suppliers went bankrupt, owing them 12 million, then the domino's fell).

    The other time, a relative tried to get me interested in Pink Sheets. For those that don't know, it is penny stocks. Their view was because of a story I told them. I have a friend who sells annuities for another friends bank, and they had a client come in to get one after an estate find. They sold AOL stock at its height, that was bought as penny stock. My relative thought that the change you toss in a jar, could be used for that and you had better odds with that then the lottery. (you might, but I am not a gambler. I always put it towards the CC or Christmas money)

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    Senior Member jp1's Avatar
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    Reading everyone’s responses I’m reminded of my uncle. His father had left him a small amount of some random stock. Dad, who actually invested in stocks and tracked his investments carefully, tracked uncle’s stock for years and years. Something happened at the company of uncle’s father’s stocks that caused them to rocket up to like 3x what they had been worth.(rumors of a buyout or whatever) Dad informed uncle and advised ‘SELL NOW’. Uncle resounded with ‘I don’t know. Dad left this stock for me…’. A month later the stock price collapsed back to mean and dad stopped following it.

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    Quote Originally Posted by jp1 View Post
    Do you ever buy individual stocks?
    Yes, all the time.

    Most of my money is in a Roth IRA. You deposit money you've already paid income tax on, but all the money you take out is tax free. It's great if you intend to let your money stay in there a long time and grow tax free. But if you're close to retirement and intend to cash out the account as soon as you retire, you lose most of the tax advantage.

    The rest of my investments are in a small taxable brokerage account, because all money you contribute to a Roth has to come from current wages and I'm retired. Basically my taxable account lets me put my surplus cash into the stock market and take it back out as needed while the money in my Roth sits there month after month growing tax free and available if a real emergency happens.

    I've mentioned https://www.bogleheads.org/wiki/Lazy_portfolios and similar subjects previously on SLF. My advice to would-be investors hoping to strike it rich is always the same: "If you don't enjoy the game, the only way to win is by not playing." Low-fee Lazy Portfolios are a less risky lower-effort lower-stress way to invest than buying individual stocks, unless you intend to buy a mixture of Dividend Aristocrats with above-average dividends and then keep those shares for a very long time.

    My portfolios are mostly a mix of big solid companies that pay a big dependable dividend. I average more than 3% per year in dividends on those stocks, plus any capital gains, and in most cases I hold them pretty much forever to collect the dividends. It rarely pays to trade in and out of stocks in this category.

    I also have some speculative stocks and some growth (I hope) stocks that don't pay dividends, but I tend to buy them as option spreads because of the increased leverage. Options and Option Spreads require more knowledge than buying stock shares, and more tolerance for volatility, but they are fun and profitable...except when you make a mistake or something weird happens. Weeks like that you can lose your whole investment in a few days. That's why I'm not describing my option methods here (IOW I'm covering my a$$)

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    Just for fun, this is what my real portfolio looks like. When someone brags about how much money they've made on some wonder stock, always ask them how much they lost on other stocks.

    This chart comes with 4 important caveats:
    1) This chart only shows capital gains/loses between 1/1/2021 and 8/23/2021.
    2) It doesn't include any of the dividends I receive, only capital gains/losses. I get $3000 to $4000 of dividends each year.
    3) Most of these positions were bought before 1/1/2021, so their total capital gain/loss may be significantly different from the amount shown on this chart.
    4) Because the market fluctuates and some of my positions include Options or Option Spreads, the market value of my portfolio can rise or fall $2000-$4000 in less than a week, so this is just an illustrative snapshot, not investment advice or comprehensive data.



  10. #10
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    Yes, I buy individual stocks as part of my diversified portfolio. I also buys etfs and cefs, bonds and cds. Almost all of my individual stocks are dividend stocks.

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