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Contributor ○○○

Re: Why do investors chose to hold individual stocks in their portfolio?

"I like stocks for another reason too. Not paying taxable gains unexpectedly when a fund company decides to "rebalance". "

Good point, and one I missed earlier in discussing the pros-n-cons of holding individual stocks vs funds.

In a taxable account, when you buy shares of an open end MF, you will likely be 'buying' both realized and unrealized capital gains, meaning you will be taxed twice on some of the dollars you invest. Example: you buy 500 shares of XYZ at $50 per share. But the fund has sold a large holding of stock A that has generated $.25/share in capital gain. But this $.25 is included in the fund's NAV when I bought it, so at the end of the year, I'm going to have $.25/share, or $125, representing part of my basis, returned to me as a capital gain.

And let's say XYZ had $10/share of unrealized gains when I bought it, or 20% of the value of the fund was unrealized gains. Gradually, as those gains are realized, that part of my basis will be taxed to me.

In an IRA this wouldn't matter as securities have no tax basis.

BruceM

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Explorer ○○

Re: Why do investors chose to hold individual stocks in their portfolio?

I bought Visa at its IPO and Apple when it was left for dead.

These two growth stocks netted me incredible gains over the years (still own them) and helped cushion weaker parts of my portfolio.

Am I a genius?  Heck no -- plenty of other foolish buys.  GE when it was "undervalued" -- and then it got EVEN MORE undervalued.

Basin Water before its fraud was revealed (but hey, at least got a few hundred bucks from a settlement).

So plenty of mistakes along the way that has kept me at "about market average."

But I like buying individual stocks, with all its glory and pain. I actually think my attention to stock buying (not trading) keeps me better in tune with the market and more informed on how the other parts of my portfolio are performing.

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?

Over the past three weeks, since the start of this thread, are you, the investor, adding to portfolios or making any changes?

I currently hold BMY, T, PFE. VZ, ABBV, NRGX, BCE, ENB, CVX and PAA. A few of these are trade positions that may be sold and repurchased.

Best to all

Out.

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Participant ○○

Re: Why do investors chose to hold individual stocks in their portfolio?

Majority of my gains are from individual stocks. Most stock mutual funds have not generally performed as per expectation over a market cycle. Even though I invested less than 20% in stocks. 

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Follower ○○○

Re: Why do investors chose to hold individual stocks in their portfolio?

For the most part, I have pretty much hunkered down during this period of volatility. I did purchase 200 shares of CHSCL recently, a preferred stock which I've owned for a number of years and which typically sells at a premium. Most of my portfolio consists of preferred and defensive DG stocks: consumer staples, utilities, telecoms, and healthcare. The bulk of my securities have increased their dividends and none have cut them, yet.  I prefer holding individual stocks because in retirement, they give me a more predictable income stream.

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?

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Explorer ○

Re: Why do investors chose to hold individual stocks in their portfolio?


@outandabout wrote:

ABBV

https://www.zacks.com/stock/news/933433/abbvie-abbv-upgraded-to-strong-buy-heres-what-you-should-kno...


I buy higher than average dividend stocks in an attempt to build up a portfolio where I can live off of the dividends during retirement rather than depending on bond interest, which may never pay enough during my lifetime.

ABBV has been on my watch list.  It needs a lot more research though - does anyone know why their div is so high?  Also, other than the fact that soon to be generic Humera is such a large portion of their revenue/profits, any other big issues with the company?

Perhaps I should start a new thread for ABBV.

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?


@denots wrote:

@outandabout wrote:

ABBV

https://www.zacks.com/stock/news/933433/abbvie-abbv-upgraded-to-strong-buy-heres-what-you-should-kno...


I buy higher than average dividend stocks in an attempt to build up a portfolio where I can live off of the dividends during retirement rather than depending on bond interest, which may never pay enough during my lifetime.

ABBV has been on my watch list.  It needs a lot more research though - does anyone know why their div is so high?  Also, other than the fact that soon to be generic Humera is such a large portion of their revenue/profits, any other big issues with the company?

Perhaps I should start a new thread for ABBV.


This thread should be fine to discuss ABBV or any other stock. The Humera concerns are a concern, but you can find numerous reports that may held when deciding where to invest. I don't intend to buy and hold any stocks for a life time. MFs or ETFs offer a better safety valve in case of dividend cuts or other news that would impact an individual stock position.

I have no problem using a percentage of my portfolio for trading stocks, but there are risk if you don't follow those investments closely.

https://www.suredividend.com/dividend-aristocrats-abbv/

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?

I expect to see plenty of up side in the markets as the threat of the virus winds down. I intend to slowly move into more equities as the economy improves. I just hope the markets don't get ahead of itself (as many thought) several months ago when the Dow hit its high.

Slow and easy for the economy and the markets would be just fine for me. 

Most of my stocks positions are solid and none have yet cut their dividends; the cut, they go!

AT&T has come off $29 in the past week and now sets at $31. As long as it stays above my purchase price I have no concerns. Plus the dividend fit my needs.

Best to all

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?

https://www.msn.com/en-us/money/companies/how-changing-ad-strategy-could-boost-at-t-stock/ar-BB14YwX...

 

Analysts have mixed views on AT&T. Eleven recommend Buy, 14 Hold and two Sell. The 12-month average price target is $36.15.
The stock closed at $30.99 on Tuesday, up 0.19%. Year to date, AT&T is down 20.7%, compared to the S&P 500, which is down 4.46%. The 52-week range is $26.08 to $39.70.
Old school investors are still drawn to the company’s dividend. AT&T has historically paid one of the biggest and most consistent dividends in the stock market. It’s worth noting that rival Verizon pays a comparable dividend. These dividends are a major differentiating factor that separate the telecom giants from other companies.
As a result of the coronavirus pandemic, some companies, including Ford and General Motors, suspended their dividends. But AT&T has not. After the pandemic hit, executives said that they would ensure the financial security of the company, especially the dividend, and they seem to be doing just that.

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?


@outandabout wrote:

https://www.msn.com/en-us/money/companies/how-changing-ad-strategy-could-boost-at-t-stock/ar-BB14YwX...

 

Analysts have mixed views on AT&T. Eleven recommend Buy, 14 Hold and two Sell. The 12-month average price target is $36.15.
The stock closed at $30.99 on Tuesday, up 0.19%. Year to date, AT&T is down 20.7%, compared to the S&P 500, which is down 4.46%. The 52-week range is $26.08 to $39.70.
Old school investors are still drawn to the company’s dividend. AT&T has historically paid one of the biggest and most consistent dividends in the stock market. It’s worth noting that rival Verizon pays a comparable dividend. These dividends are a major differentiating factor that separate the telecom giants from other companies.
As a result of the coronavirus pandemic, some companies, including Ford and General Motors, suspended their dividends. But AT&T has not. After the pandemic hit, executives said that they would ensure the financial security of the company, especially the dividend, and they seem to be doing just that.


Reason SP 500 is only down 4.6% is because 20% of SP 500 market cap consists of 5 FAANG stocks worth $6T. More accurate comparison is to compare 20.7% YTD T decline to the 28% median decline in SP 500 Stocks.

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Explorer ○

Re: Why do investors chose to hold individual stocks in their portfolio?

I've have held and still do hold a lot of individual stocks, partially due I would think because mutual funds weren't very common when I was younger and started investing.  Now that I've put my money with an advisor in anticipation of my wife eventually needing help I've acquired some mutual funds (maybe 30% of total portfolio).  And I must say I miss knowing what is going on with my investments.  I found enjoyment each spring in reading about the companies I was a partial owner of in the annual report,  reading the Chairman's letter (especially Jack Welch and Buffett), learning about their products, markets they were in and where they hoped to go, and being able to vote for or against Board members and resolutions that were proposed each year.  It was also frustrating in reading the reports to see where the best interests of shareholders was not the major concern of the executives with the excessive pay and stock options and other self serving antics.  But at least I had a vote and could make a more informed decision about retaining ownership in a certain company or divesting.

I have invested for the long term in solid companies and been amply rewarded.  Union Pacific since 1956 with a 29,000% gain, HD with a 49,000%  gain with a dividend that has increased by over 130 times from when I retired.  Holdings past and present in Abbott Labs, PG, PFE, 3M and many more mean I'm not worried about taking  4% out of my IRA.  I don't know how much of my good fortune is just dumb luck or the result of not being greedy by trying to maximize every nickel I had, I do feel that I would not be in my present condition if I had relied just on mutual funds to build my nest egg, nor enjoyed the investing experience as much.

Since I started coming to this site I've come to the conclusion that many contributors here are not interested in the companies that make our world go round but rather just the performance of an entity called a mutual fund.  Can't say that is very much fun.  Just my two cents worth.

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?

Good post, Willie.

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?

Great post WillieB1! Bye the way, are you from Atlanta? Reason I ask is there was a famous gorilla at the Atlanta Zoo named "Willie B", years ago. We used to LOVE to visit him when I was younger. Didn't know if that's where you got your "screen name".

I am very similar to you, started investing a LONG time ago before "mutual funds" were the standard operating practice. I have also invested in financially strong companies that have grown over time- ABT/ ABBV, AMGN, APPL, BRK.B, CL, CSCO, DUK, INTC, JNJ, KO, LOW, MRK, MCD, MMM, MSFT, O, PG, PFE, PM, QCOM, SO, T, UN, UNP, UPS, USB, VZ, WMT, WFC, XOM, ect. Now have gradually shifted over to index funds, but still will add to individual stock positions I already hold, if a specific stock sells off. As long as these stocks still grow, and raise their dividends, I will continue to hold them. Many of them cannot be sold due to HUGE (unrealized) capital gains. So we'll let our children sell them when we're gone at stepped up basis. 

Win
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Explorer ○

Re: Why do investors chose to hold individual stocks in their portfolio?

I am from Atlanta since !974 but had forgotten about Willie B at the zoo.  Remember him with the Samsonite suitcases?  Willie B was a childhood nickname.   

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Contributor ○○○

Re: Why do investors chose to hold individual stocks in their portfolio?

WillieB1

As I recall, vaguely, the Zucker Brothers tried to do a skit with Willie B. for the movie Airplane back in 1980 or thereabouts. As I recall the scene they were trying to do was have Willie B. on-loading luggage into the airplane from the baggage trailer, of course with suitcases flying every which way. This was supposed to be going on in the back ground while Captain Over was talking to someone in the foreground. But if memory serves, they didn't get it as Willie B was not very 'directable'.

Do you remember that?

BruceM

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?

I used to love to visit the zoo, he was always a favorite. I also remember the Samsonite commercial, where he was throwing them around. Grew up in the NE Atlanta area- graduated Lakeside HS. Then on to UGA, then Medical School (MCG). 

Win
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Participant ○○

Re: Why do investors chose to hold individual stocks in their portfolio?

When I read "Why do investors choose" line, I recall seeing comedian Jack Benny at a show in Reno many years ago. Jack said he liked to play roulette. Each day he would start out with 6 chips (each $1 -- remember Jack was a famous cheapskate).

His strategy was simple. He would place one chip on the red and one on the black. Most of the time he broke even, and he could go on for hours before he got wiped out.

But there was a payoff to him. He was seen at the table for a long time. He was a PLAYER.  The house management would comp him for drinks and an occasional meal or ticket to a show.

So even though he lost his stake each day, he thought he was a net gainer. (Not saying this ACTUALLY happened; remember Jack was a comedian. But there's something to the idea that people want to be players.)

I sometimes think investors in speculative stocks, in particular small cap stocks, play that game for the side-benefits. Most aren't going to make a lot of money. But they want to feel like PLAYERS. And they can celebrate and brag about their rare big wins, while ignoring the much larger number of times they lost money.

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Participant ○○○

Re: Why do investors chose to hold individual stocks in their portfolio?

I hold FAANG plus MSFT and several stocks in the Dogs of The Dow because it does well.

Gabe

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Frequent Contributor

Re: Why do investors chose to hold individual stocks in their portfolio?

"Why do investors chose to hold individual stocks in their portfolio?"

 

 Excellent question

 

 

Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors

Journal of Finance, Vol. 55, Issue 2

Individual investors who hold common stocks directly pay a tremendous performance penalty for active trading. Of 66,465 households with accounts at a large discount broker during 1991 to 1996, those that traded most earned an annual return of 11.4 percent, while the market returned 17.9 percent. The average household earned an annual return of 16.4 percent, tilted its common stock investment toward high-beta, small, value stocks, and turned over 75 percent of its portfolio annually. Overconfidence can explain high trading levels and the resulting poor performance of individual investors. Our central message is that trading is hazardous to your wealth.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=219830

veni vidi vici vti
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