Investing strategy

[houstonmacbro]

I am getting more into investing and I hear lots of opinions, but wanted to know YOUR opinions about stocks, ETFs, mutual funds, and equities. My question is simple. Are you (those who invest) a buy-and-hold (long term), an in-and-out, or a market timing kind of investor?

I tend to like the approach of buying and holding quality stocks and ETFs that pay nice dividends and increase in value as opposed to trying to time the market and/or dip in and out (of whatever market) frequently.

Thoughts and why?

[TheNiche]

I am getting more into investing and I hear lots of opinions, but wanted to know YOUR opinions about stocks, ETFs, mutual funds, and equities. My question is simple. Are you (those who invest) a buy-and-hold (long term), an in-and-out, or a market timing kind of investor?

I tend to like the approach of buying and holding quality stocks and ETFs that pay nice dividends and increase in value as opposed to trying to time the market and/or dip in and out (of whatever market) frequently.

Thoughts and why?

You've got to invest as per your needs. I don't know how old you are or how soon that you think that you'll be retiring, but that's probably the most important input toward devising an investment strategy. The closer you are to retirement, the less you will probably want to risk your savings. The further you are from retirement, the more that you can play the long-term hold strategy on something risky, then ride out the inevitable bumps in the road in order to get higher long term average annual returns.

Being young, I take the latter approach, but go even further by making sector plays whenever I've picked up on a trend in which I have confidence. I don't day trade...that'd take too much of my time. But take my ExxonMobil buy from 2002 as an example. Once I identified that it would be a good medium-term bet, I placed an interday limit order nightly that was about $0.50 give or take less than the previous day's close. It took a couple of days of price fluctuation, but I picked it up at a good price. I then stuck with it until a little more than a year ago, when I decided that commodity price expectations were potentially unreasonable. So I placed a stop order at $64.00 and sold about 70% of my position in interday trading at a price that was $0.04 shy of what would be the 52-week high for many months to follow. Sweet. I only wish that I'd understood how to research companies better back in 2002. I would've known to go after a less diversified company that was more active in the oil patch and that didn't practice financial hedging. If I'd known that... $$$.

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You mentioned a preference for stocks that pay stable dividends. That works for some investors, but let me tell you what's better than dividends. Stock repurchases. The effect is that the stock price rises to reflect the equivalent value of the dividend, but the rise in stock price isn't taxed as income until you sell it. If you need the regular money, you *could* sell the equivalent value every time that a repurchase is made or you could just hold onto it and sell when you're damned well ready.

Always check the historical financial data. Any stock that looks like it is stable, that doesn't report any unreasonable risks in their 10k, and is signaling stregnth by disbursing cash in various forms (stock repurchases, special dividends, debt buyback, etc.) is probably a safe bet. You'll need more insight, though, if you want to hit the jackpot.

Edited January 19, 2007 by TheNiche

[nmainguy]

I am getting more into investing and I hear lots of opinions, but wanted to know YOUR opinions about stocks, ETFs, mutual funds, and equities. My question is simple. Are you (those who invest) a buy-and-hold (long term), an in-and-out, or a market timing kind of investor?

I tend to like the approach of buying and holding quality stocks and ETFs that pay nice dividends and increase in value as opposed to trying to time the market and/or dip in and out (of whatever market) frequently.

Thoughts and why?

As we've talked about before, we're more inclined to long-term investments such as rental properties, blue chips, T-bills, mutuals and recently a few ETF's. The rentals provide immediate income while the blue chips, mutuals, T-bills and ETF's have shown to be a sound investment for the future. I began investing in revenue producing real estate in my late 30's in anticipation of retirement in my late 40's and have done quite well. Now at 54 my partner and I have a steady income comprised of rental income from wholly owned properties in addition to our stock portfolio, mutuals and T-bills. It's nothing glamorous but it is a conservative and secure income that has yet to fail us.

I suppose my incentive was that I came to hate having people work for me and vise-versa. Now I can concentrate on myself, my partner and family and my art, which may not sell too much but gives me infinite pleasure.

[houstonmacbro]

As we've talked about before, we're more inclined to long-term investments such as rental properties, blue chips, T-bills, mutuals and recently a few ETF's. The rentals provide immediate income while the blue chips, mutuals, T-bills and ETF's have shown to be a sound investment for the future. I began investing in revenue producing real estate in my late 30's in anticipation of retirement in my late 40's and have done quite well. Now at 54 my partner and I have a steady income comprised of rental income from wholly owned properties in addition to our stock portfolio, mutuals and T-bills. It's nothing glamorous but it is a conservative and secure income that has yet to fail us.

I suppose my incentive was that I came to hate having people work for me and vise-versa. Now I can concentrate on myself, my partner and family and my art, which may not sell too much but gives me infinite pleasure.

I am inclined to rental properties too and have been looking and studying (researching) the ways to get into that market. I also tend towards more stable investments as well.

Glad to see your hard work, diligence, and research paying off for you and your partner!

[spiderman]

NMainGuy (and any others who may want chime in)

Do you think investing in rental property is still a good play in today's market? Or has the run-up in property values spoiled the party for newcomers?

If you were going to invest in rental property in today's market, what areas/types of properties would you be looking at?

Thanks

[TJones]

NMainGuy (and any others who may want chime in)

Do you think investing in rental property is still a good play in today's market? Or has the run-up in property values spoiled the party for newcomers?

If you were going to invest in rental property in today's market, what areas/types of properties would you be looking at?

Thanks

Spidey, I would say screw rentals and go for the "flip".

[jm1fd]

Spidey, I would say screw rentals and go for the "flip".

Oh totally...TONS of money to be made flipping...and just like owning rental real estate...it is EASY money.

[spiderman]

Any suggestions on how to get started, are there any areas of town that have the best potential, best ways to find properties to flip, etc.

Are there real estate agents that specialize in selling properties that have a good potential for flipping?

Thanks

[editor]

I am getting more into investing and I hear lots of opinions, but wanted to know YOUR opinions about stocks, ETFs, mutual funds, and equities. My question is simple. Are you (those who invest) a buy-and-hold (long term), an in-and-out, or a market timing kind of investor?

I tend to like the approach of buying and holding quality stocks and ETFs that pay nice dividends and increase in value as opposed to trying to time the market and/or dip in and out (of whatever market) frequently.

Thoughts and why?

I only invest in things I really understand. I don't care how "hot" the tip is, if I don't understand the company and have faith in it, then I don't put my money in it.

That said, in 2006 I had an average 26% return on the stocks I picked. But a particular fund that my 401(k) is in had a return of 72%.

I'm told anything more than 5% is considered very good, so I'm sure all of this won't last long.

[TheNiche]

I'm told anything more than 5% is considered very good, so I'm sure all of this won't last long.

5% isn't "very good" unless you're looking at treasuries, commercial paper, or that sort of thing. Stocks carry too much risk for their average returns to be so low. I think that a long-run real average annual return of 12% is about average.

[houstonmacbro]

5% isn't "very good" unless you're looking at treasuries, commercial paper, or that sort of thing. Stocks carry too much risk for their average returns to be so low. I think that a long-run real average annual return of 12% is about average.

Stocks do carry a lot of risk, but for the small investor who doesn't have tens or hundreds of thousands of dollars what are good alternatives that WILL return 12 - 20 percent and not have tons of risk.

[TheNiche]

Stocks do carry a lot of risk, but for the small investor who doesn't have tens or hundreds of thousands of dollars what are good alternatives that WILL return 12 - 20 percent and not have tons of risk.

In efficient finanacial markets, safe investments with high yields just don't exist.

...fortunately, financial markets are not always efficient. Particular stocks, bonds, and real estate investments may have safe upside potential that has been overlooked by the market. It is up to you to find and evaluate them on your own terms.

[editor]

5% isn't "very good" unless you're looking at treasuries, commercial paper, or that sort of thing. Stocks carry too much risk for their average returns to be so low. I think that a long-run real average annual return of 12% is about average.

I think the 5% figure he quoted me was related somehow to the S&P500. If you can beat the S&P, you're doing well.

Though, I heard on MPR a couple of weeks ago that the striaght Dow was up something like 16% in 2006, and the NASDAQ not far behind. So if you ignored your broker and just invested in the straight Dow you would have done well.

[houstonmacbro]

There are several ETFs that claim to mimic the stock market (S&P) in general and they seem to be doing well. But everything seems to be based on markets that perpetually go up.

We all know that not to be the case.