Just a thought; I am a COP long and a retiree. I have a number of 401k plans to help me in my retirement years. But I have noticed that these 401k plans are limited to mutual funds,and their are various different funds; large/medium/small caps, value funds, growth funds, index funds etal...........
All of these funds have good stocks in them, but generally all of these funds have stocks that have performed poorly over the years and continue to do so. Many of the stocks in these mutual funds pay no dividends, so the annual divvy payout from these funds is below normal. So I tried a different approach.
I transferred all of the funds from one of my 401k plans into a tax deferred IRA rollover plan and created my own Energy/Railroad ETF. I decided to invest only in large cap stocks that pay at least 3% dividends anually and up to 5%. These stocks include OXY, APA, BP, ESV, COP, MRO, CSX, and NSC (I did include one stock, SD, that paid no divvy because it was low in price and has good potential)).
Therefore, I have created my own energy/transportation mutual fund/ETF that only has the stocks in it that I want. I believe that it will outperform the usual mutual funds because of the good dividend payments, because of the good/hand chosen stocks, and because I believe that energy/railroads will do well in the long run.
Just a thought.
All of the posts on this string are great! I would add only one comment, do not forget diversification.
I made a lot of money on mutual funds that I had in an ira account (precious metals and energy), but I now have individual stocks and some ETFs. All pay dividends @4% or higher with 2 exceptions INTL @3.5% and ALU @0% my spec play.
This is a great thread. Many of the thoughts expressed here are covered in Common Stocks and Uncommon Profits (Phillip A Fisher). Also Warren Buffett’s annual letter to investors has discussed “helpers” on more than one occasion. For those who haven’t read it “helpers” are people who, for a fee of course, are willing to help you make money.
I think most of the people who have posted on this thread share a common philosophy. We never planned to get rich quick we just wanted to get rich. We were well pleased to do it over time.
The interesting thing to me is how cable TV encourages the very conduct people like Fisher, Graham and Buffett discourage. To people like us “Fast Money” and a bunch of talk about should we hold our stock through the weekend has, at best, entertainment value.
Investing is very hard but it isn’t really very complicated. The missing ingredient for the majority of people is patience. Cable TV exploits that..shame on them.
Great post. I create my own funds also and hold many of the same stocks . Might I offer a piece of advise that I use...
sell the covered call on your stocks to increase your returns. Most fund/ETF managers can't, or refuse to do this. I pick a strike price, usually a LEAP of 2013/2014 that is 20% higher than what I purchased the stock at. I.E. buy COP @
55 and sell the 65 call of 14 @ about $1.70. This gives you a 3% return on your investment immediately. Stock gets called @ 65 in Jan 14...you have 18$ price appreciation plus the 3% option return i.e. 21% ROI in an 18 month period.
That's the way to do it. I worked for a brokerage firm as a programmer. Their "brokers" always hype mutual funds because they get regularly occurring kickbacks called a "12b(1) fee" from the mutual fund company. Every year the broker will get a percent of the earnings of those funds instead of you! That comes right out YOUR pocket. Plus, the mutual fund takes a huge yearly cut, anywhere from two to five percent or so. Once you paid the purchasing fee ($7 in my case) you owe nothing else when you buy a stock straight up. You get 100% of its growth and dividend. So, you're doing it the right way. You should do that with all your money.
One investment option available in 401k's, that I do not believe is available in an IRA, are the STABLE VALUE funds optional in most 401k's. These are very safe AND are paying a ROR much higher than Money mkts and CD's....I think currently COP's is about 2.75% annually.
I did the same thing several years ago and it has worked very well for me. I doubt that you or I are better stock pickers than professional fund managers but we have one hugh advantage over them. Specifically we are not forced to sell when stocks are cheap. They are because during market declines people tend to panic and sell equity funds forcing managers to sell the stocks they would rather be buying. As a result, the overwhelming majority of mutual funds underperform the market over time. We, on the other hand, have no such obligation. Our investments will go down in bad markets BUT we can hold and use dividends to add to our positions when prices are low. Panic is a beautful thing for us but not for fund managers!!
I have moved all of my former 401k plans into IRA self directed. Must say have made more money than ever expected and far more than ever dealing with a self serving broker.
Am long on energy stocks as well they pay a handsome dividend and everyone has to have their product/services. Combined with significant other: AEP, DUK, COP, (sold PSX), KMP (I know it is down)!!
Of course have other holdings to make the portfolio(s) diversified.
And to the Cramer bashers along with the remarks on him and COP. It made me very angry. But......
he has CEOs on the program, and you can take his advice or leave his advice. I prefer to listen to him and do pickup some education not necessarily stock picks. If you act on only his advice it is your fault. But the education is good and sometimes he talks about the stocks we own. Another perspective.
Self directed for us has been good to us! Made money in up/down markets.
Everyone jumps on Cramer: however, the show is actually quite useful because he does get some CEO's from really good companies to come on. I am especially interested in those that represent companies that I own shares in. Yes, I know he does ask some leading questions, but it gives an investor a point to start from. There are a number of companies that I own whose CEO's have appeared on the show.
The other thing is that the show has less influence than you might think. For example on 6/14 the show had 194K eye balls compared to 1749K for Bret Baier in the 6PM time slot. At 11PM there are only 81K. Very small impact when you think about it.
Actually, there is a great advantage to the deferred 401k plan funds, and that's a company match, usually about 4%. Over a lifetime of working, that can work out to be a great deal of money. Also, for traditional 401k plans, when you retire, you can take out as little as you need, for retirement purposes until you reach the age of 70 1/2. This will enable you to minimize your taxes on the amount you take out.
Don't minimize the advantages of either the Roth, the traditional 401k, or the self directed IRA. Weigh the advantages of all your options.
My wife and I have all of our former 410K money in self directed IRA's, both traditional and Roth. We had some money in a Roth that was in funds and swapped to self directed. I have a more diverse portfolio; However, almost all stocks pay good dividends and we are skewed toward energy including Gas & Electric Utilities and pipelines (no MLPs). I have invested in individual stocks for 40 years and have also tried funds.
In 2001 I got burned, because all funds that did not have tech stocks did not do well for years in the middle of the tech run up. So as a result funds jamed as many tech stocks in them as possible and they all got killed in the tech bust. I cashed out all the funds and went back to individual stocks. Over the last 10 years I have done really well. In 2008 - 2009 I hit a little speed bump, but had taken a lot of money off the table over the preceding few years and put the money into CD's for 5 years getting 5% average. I also sold the riskiest stocks and had cash avaialable for the 2009 bottom. The good stocks I held went down, but they still threw off dividends giving me more money to reinvest.
I have a good friend who is also retired and worked for a bank. We research the stocks together and then invest. There are always going to be some stocks that are losers, this is not some fool proof thing; however, we are doing far better than the averages and most pros.
I also own COP & NSC and have CHRW in the trans area instead of a 2nd railroad. Utes & Pipelines. MDU, NFG, OGE, VVC, WEC, ENB & SE. Also like drillers CVX, ECA & KOG.
Good for you. Through experience and your desire to take control of your own financial well being, you have learned how to take care of your financial investments, better than mutual funds can.
I am sure that you will do well over time, disregarding tech bubbles, or blips like 2008-2009, when everything went south.
It is good to see that others can take responsibility for their financial success and invest where they want to invest. Good luck.