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Started By
Message
Single stock risk?
Posted on 7/20/23 at 8:15 pm
Posted on 7/20/23 at 8:15 pm
Is there an age where you’d consider trying to reduce single stock risk?
For me, I’ve held many positions for decades. The fluctuations did not bother me bc I was reinvesting dividends, dollar cost averaging, etc.
When do you begin to think about a more ETF based portfolio to mitigate single stock risk?
For me, I’ve held many positions for decades. The fluctuations did not bother me bc I was reinvesting dividends, dollar cost averaging, etc.
When do you begin to think about a more ETF based portfolio to mitigate single stock risk?
This post was edited on 7/20/23 at 8:24 pm
6
Posted on 7/20/23 at 8:43 pm to makersmark1
That’s a good question. IMO, it has a lot to do with ones overall investment portfolio (or net worth) and how that’s allocated. Also, is the person in a situation where periodic stock sales would funding a good portion of their retirement? In any case, if you’re heavy in equities (stocks or ETFs), you have to assess how a severe market downturn might affect your retirement situation or lifestyle.
Posted on 7/20/23 at 8:51 pm to makersmark1
quote:
Is there an age where you’d consider trying to reduce single stock risk?
I actually do both. Own stocks like amzn and etfs like SVOL.
Posted on 7/21/23 at 7:52 am to Jjdoc
I’ve ripped the bandaid off.
Portfolio is getting more aligned with age and situation.
Portfolio is getting more aligned with age and situation.
Posted on 7/21/23 at 8:40 am to makersmark1
I do individual stocks in my play money account but would never hold an individual stock in my retirement accounts. Too much risk with a single stock with a buy and hold strategy.
Posted on 7/21/23 at 8:51 am to Drizzt
quote:this for the most part
I do individual stocks in my play money account but would never hold an individual stock in my retirement accounts. Too much risk with a single stock with a buy and hold strategy.
Although I do hold a couple single stock in my retirement account, but when it comes a time I'm not interested in keeping up with the earnings and news of those individual stocks, I'd move it all over to a fund
Posted on 7/22/23 at 11:45 am to makersmark1
Should go by time horizon, not age.
If you're 100 years old but your plan is to leave your portfolio to your grandchildren and great-grandchildren, invest as if you're still young.
Individual stocks aren't a huge risk as long as you diversify.
If you're 100 years old but your plan is to leave your portfolio to your grandchildren and great-grandchildren, invest as if you're still young.
Individual stocks aren't a huge risk as long as you diversify.
Posted on 7/22/23 at 12:16 pm to Bestbank Tiger
Depending on the stock you've obviously got to watch for threats from a changes in technology or consumer tastes.
Google is a great example. It looked like a rock solid long-term investment a year ago until ChatGPT showed up. Whether it or something like it takes a big bite out of Google's revenue is yet to be seen but technology can render business models obsolete with the pace of change we've seen over the last 25 years.
I'm not a big dividend fan. If the company is buying back shares, then great, but if not you're somewhat treading water by reinvesting dividends because shares have to be issued to everybody DRIPping and dividend stocks may not show the growth of non-dividend paying stocks, although when you buy a stock in a market cycle can obviously have a big effect on returns depending on time horizons.
Google is a great example. It looked like a rock solid long-term investment a year ago until ChatGPT showed up. Whether it or something like it takes a big bite out of Google's revenue is yet to be seen but technology can render business models obsolete with the pace of change we've seen over the last 25 years.
I'm not a big dividend fan. If the company is buying back shares, then great, but if not you're somewhat treading water by reinvesting dividends because shares have to be issued to everybody DRIPping and dividend stocks may not show the growth of non-dividend paying stocks, although when you buy a stock in a market cycle can obviously have a big effect on returns depending on time horizons.
Posted on 7/22/23 at 12:52 pm to makersmark1
I own zero single stocks. No reason to for the strategy I deploy. I don’t have enough conviction on a single stock to want ti have that much exposure in a single place.
Posted on 7/22/23 at 1:53 pm to Jjdoc
quote:
Own stocks like amzn and etfs like SVOL.
My brokage doesnt even let me buy SVOL or any weed stocks/ETF's.
Posted on 7/22/23 at 1:59 pm to FLObserver
Mine basically only allows covered calls and married puts in my IRA but TQQQ and UPRO don't raise an eyebrow.
Can't even do LEAPS.
Can't even do LEAPS.
This post was edited on 7/22/23 at 2:01 pm
Posted on 7/22/23 at 2:51 pm to Bestbank Tiger
quote:
Should go by time horizon, not age.
The main account I’m pruning is that of an aging parent.
The account is there to pay living expenses. Age is 80 so I sort of look at it as a spending/withdrawal phase. There MUST be money there to withdraw. Even decent companies can lose a pretty good portion of their value in an average year at some point.
I usually buy dips for my account. Loaded up on Exxon in the 40s a few years ago, but I have decades to get a position right.
Posted on 7/22/23 at 4:41 pm to FLObserver
I own mutual funds, ETFs and roughly 20 individual stocks. It's not for everyone but it's something that I enjoy doing.
Posted on 7/24/23 at 8:36 am to makersmark1
Almost always. I do it like another poster above by holding them in my play account and using funds/etfs in my retirement accounts. My play account is probably 20% the dollars of my retirement account. Have had many winners in my play account. I still diversify. How risky have stocks like Apple, Walmart, Amazon, Home Depot, Waste Mgmt, ... been? Not very. Pick very successful companies if you want to minimize risk.
Posted on 7/24/23 at 9:13 am to FLObserver
quote:
My brokage doesnt even let me buy SVOL
Wow. Which brokerage is that?
Posted on 7/24/23 at 9:17 am to BuckyCheese
quote:
Mine basically only allows covered calls and married puts in my IRA
Can’t speak to your particular brokerage, but most allow those and also spreads, or any sort of “defined risk” options trading. Could have something to do with your approval level. Not sure. But you may want to look into that.
Posted on 7/24/23 at 11:04 am to Jag_Warrior
Covered calls and married puts are all they allow on IRA's and 401's.
On other accounts you can get approval for everything as far as options go but not on custodial.
I found it odd but my money guy says they are very conservative. Ameriprise btw.
You wouldn't want to day trade options with them anyway as their fees are high. I use them as I know the guy and they are in the same building as my office so convenience is high. And, not looking to do a lot of little trades anyway.
On other accounts you can get approval for everything as far as options go but not on custodial.
I found it odd but my money guy says they are very conservative. Ameriprise btw.
You wouldn't want to day trade options with them anyway as their fees are high. I use them as I know the guy and they are in the same building as my office so convenience is high. And, not looking to do a lot of little trades anyway.
Posted on 7/24/23 at 7:13 pm to BuckyCheese
Gotcha. That’s understandable.
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