Originally posted by: IHateMyJob2004
Originally posted by: iversonyin
Originally posted by: PAB
Again, people are ignoring the risk factor here. I buy GOOG for last 3 years, I beat the market hands down right? Of course on an absolute basis, what about standard deviation of your portfolio, what about extra time spending on it?
For most common folks that has work and family, a set of allocated risk adjust portfolio of passive index funds is the way to go.
Again, I disagree. Passive index funds follow and/or trail the market. I've got a good blend of actively managed funds and I have beaten the S&P for the same timespan by a good margin. I have higher highs and I have higher lows. I took a hit in February but it wasnt falling off a cliff.
I review fund performance quarterly and I make adjustments. Theres no reason why someone with a family or a life cant spend 12 hours a year (three hours a quarter) adjusting their portfolio of managed money.
You pay higher fees for those portfolios. Once again, you forgotten about RISK. You never mention what kind of risk you are taking.
What is the standard deviation of your portfolios?! What is the beta?
YOU NEVER ADDRESS THAT. Keep saying that you "beat" S&P doesn't help. You obviously doesn't account for risk.
"Yea I have a blend of active manage portfolios that beat S&P last 3 years"- risk adjusted? fee adjusted? How about 10-20 years RISK and FEE adjusted?
Even Warren Buffet and Peter Lynch suggest that for most average joes, index funds is the way to go.
I'm not saying you shouldn't try find managers that can actively manage and beat the market. But the odd is 3-5%. So why bother spending time to find that 3-5% of managers when you can settle for market return?
Some fund managers are worth their weight. Remember ... you need a popular well established manager in a fund that is probably going to end up as a closed end fund.
I go after indivudal stocks. I wish I could brag about gains ... but I can't (yet). But I don't care.
Lessons from 7 years of investing
1) trading can be profitable. You make bigger gain in good times, but bigger losses in bad. And the while commissions/taxes thing is an issue.
2) buy/hold: I've held some very good companies for a long time and they've done nothing. To the point of aggravation. One MRK can kill you (like it did me to a small extent)
3) indexes are a good middle ground. They are the best thing going for hte average investor that does not want to
actively follow their portolio.
In my perosnal experience, I am content with buy/hold. I am happy with the ever growing dividends I get (did I post my list of holds in this thread?). The icing on the cake though is the gains I make via options. Stock prices will go up over hte long term. If I make a 3% yield and another 10%+ via options ... I'm doing quite alright
The current market conditions though, I want ot pull my hair out.
EDIT:
http://finance.yahoo.com/q?s=WM,BAC,PFE...,TJX,JNJ,LLTC,CAT,C,FRE,MAS,SLM,GD&d=s
Goi to share price history and look at the dividend historys. The share price has to follow or eventually they would have 100%+ yields. In the mean time, the dividends can be re-invested

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Even though you are an unsufferable jackass in other threads, I can agree with you in this one.
I'm slowing the trading this month waiting for ATI to report on the 25th. I agree with the higher highs and lower lows, but everyone needs trailing stops.
Buy/Hold was used for MANY years by full service brokers because if they reccomend you to trade a given position a number of times, their comissions (Back in the days when WRAP didnt exist it was not uncommon to spend $100-300 to make a trade) would eat up most, if not all profits and dig into principal. With a $300 comission and 50% going to the indivudual broker's paycheck, you can see how soliciting 2-3 trades a week could be very profitable for he/she in the long run.
This practice is now frowned upon by the SEC and they will investigate accusations of churning by brokers.
Again, I will reiterate. Buy and hold is BUY AND LOSE. It takes intelligence out of the equation and by nature of the namesake believes that you can make money with almost anything and a long enough timespan. Its wrong. Its unholy. It will cost you in the long run.
Everyone should know options. They manage risk so much better than you ever could, and I've got a hedge against my ATI position right now. If it goes up, I make money if it goes down I make less money. Managed risk is the only kind of risk that a lot of people can tolerate.