What percentage of your assets do you own/trade in individual stocks? Its not inherently wrong, but you need to research and work and decide if its worth your time. I own mostly individual stocks in my taxable account, but I keep this activity to less than 20% of my portfolio.
Here are the returns below now that I've had the account for five full years. Last year was a good year, but I'm still not significantly above the S&P on a five year basis.
My Account
1-Year 3-Year 5-Year
+24.18% +14.62% +17.14%
S&P 500® Index
1 Year 3-Year 5-Year
+11.96% +8.87% +14.66%
Wow, those are some impressive returns! I'm really just starting at this stock picking stuff. Is that all done off of realized gains? Single stock picks with a general strategy?
Only about 30k play money heading in to this. 200k other money in the 401k, IRAs and some after tax is all tied to the VTSAX or equivalent. That actually sounds like too much fun money as it is..
Worth my time? Hmm, I wouldn't put a price on my time for reading a book. I have moments of spare time at work. I could read news articles, comment on forums (oh..) or check out stocks. Would you say that if I wanted big gains that I should take this seriously and dedicate serious hours in to analyzing earnings reports? That would definitely require dedicated hours of time.
I'll be real: I'm a Canadian who just started investing last year and I stock pick from the TSX and index the S&P 500 and International Indices.
I just was never much a fan of the Canadian indices. Very energy and financials heavy.
It probably will change going forward - the amount of time and research it takes before making a purchase is becoming overwhelming.
Foolish? Probably as last year I did not beat the TSX's amazing return.
But boy oh boy, it can be fun.
I hear ya, it can be super fun to follow along. Although I'm afraid that I might be falling in to the anchoring bias at times: "I paid $75 for this two weeks ago, so of course it's going to bounce back up!" I can definitely understand wanting to spread the money out so it's not all focused in particular sectors, especially ones that might be heavily disrupted under the wrong conditions.
Shor,
I'm totally sympathetic. Active trading and stock picking can be fun, and you seem to be enjoying it!
I often play a bit of texas hold em at my local casino. I really like playing poker and I seem to make a pretty reliable $25/hr on average. Sure, sometimes probability kicks me into a big losing hand, or I just don't play well enough. Meh.
I think the same rules apply to all this fun stuff:
- only do it with a tiny % of your 'stach and even then the remaining 'stach should be sufficient for all your foreseeable needs. This is obviously not an activity for the rent money.
- keep track of your performace against a benchmark. Be honest with yourself. Decide how much underperformace is worth the entertainment element, and if it gets worse than that, stop.
- if you get a string of losses, don't double down or take more and more 'play money' from the 'stach.
- have a strategy, not just blind gambling
Good luck! Over the short term there is a significant chance you will be able to beat the market. Enjoy the ride and keep sharing - that way we get some vicarious pleasure for free.
Thanks Mr Mark. I'm pretty sure, at this point in time, I am definitely relying on dumb luck, a good amount of the stache is tied to the market, and I'm not gambling with the rent money, but it's still rolling the dice on factors outside my control.
I heard that for people that are actually good at it, gambling on cards is definitely profitable, and free drinks to boot! ;)
I don't know where my underperformance limit is, that is definitely a bad thing, as right now, there's nothing concrete to keep the fun money separate from the serious money. I might throw more money after bad trades if the cash happens to be available. My plan going forward is to abstain from funding the fun money account any further this year, all extra cash will only go to index funds.
I will keep the sharing going for your pleasure:
Checked my phone about 5 times an hour today. Yesterday QCOM was up just a nudge to 56.85,(with options mostly cancelling out the difference)
and today it opened down, down 2.85, lower than I had started the position at.
Here are my positions @ purchase price: new price(total difference)
QCOM 100 @ $54.91: $54.05 (-86)
2x Mar 50 P @ $1.03: $0.78 (-50)
-1x Jan 65 C @ $2.26: $1.96 (+30)
Transaction costs: $-30
Well, it looks like today we are down about -$136 in total. The only way those puts will help at all is if the stock drops even further, generally they won't gain a lot of value unless the underlying price trades closer to the strike anyway. As it is, they would only really be worth selling below $51.50.
"Thoughts: if the market sees a huge drop for a stock, then that is probably not the best day to be buying puts with such high volatility priced in." is what I am thinking right now. But thinking back to the day of purchase, the stock had already dropped 12.5%!!! overnight, if it continued to drop further through the day, I would have been kicking myself for not buying the puts and trying to be "smart"
Meanwhile my Smuggy friend "John" is smugly texting me about his awesome Netflix pick of 2016. Damn you John! Dan you and your smuggy face!
I still have at least a month of price bouncing before we see if we want to take further action here.