DIY Resources

I do not think any consensus exists here. Many DIYers are market timers and so gamblers, buying for the short term and arguing passionately (with so-called academic citations along with anecdote and historical claims) for such strategies. Many DIYers are not. To me, the authorities are only those that talk about economies for the long run. Well known authors Jeremy Siegel, Robert Shiller, and Ben Graham are in this category. Also, ordinary "old coots," while sometimes seemingly unsophisticated because they (wisely) do not talk with precision about xyz stock or short term market directions, often possess true wisdom that is a result of years of investing. I think this wisdom is not something the younger folks pick up easily. As a result, I tend to give more time considering what my 80+year old millionaire-next-door-type relative and some of the 55+ year-old posters here etc. say.

I agree with Elle's assessment. Investing for the long run and targeting low expenses are two componants of a successful strategy. I tend to read the books about stock picking with an eye toward understanding underlying valuation, and how markets don't always reflect this. Then I use index funds for the bulk of my investing. I find a real issue with valuation infrequently enough to make a few dollars but not enough to build a portfolio around so few stocks, as by definition, these are trades, not long term investments, and even when I jump on them, it's too small a portion of my portfolio to have a large impact either way. Joe

The best resource is a library. You can start with this book

Then you can also read Money Magazine if it is still available. And then read a few dozen books on the topic of investing, but keep in mind that a lot of writers have hidden agendas.

That should get you started.

It is extraordinarily difficult to be a "successful stock picker".

It is not so difficult to 1) avoid financial fads and 2) avoid taking too much risk, defined as a possibility of losing a large amount of money that you cannot recover within your investment horizon.

I find it easier to completely stop focusing on trying to "outperform the markets", and then investing in whatever makes sense and not investing in whatever does not make sense.

Based on this I sat on the sidelines for 8 years with my and my wife's

401k funds. That's so because I felt that stocks in general were not particularly a big bargain, and not worth the 1% expense ratio. The drop of stocks after 9/11 is something that I mainly missed (but bought some). Now I feel that they are a bargain and am 100% invested. (I have other investments that I owned throughout, outside of the retirement plans, and a euro account)

There are other possible investments besides stocks and fixed income, such as rental units and such, which is worth considering. I find them to be a little too much hassle with my family situation.

I am not saying that I know best, only that it makes sense to think for yourself and be reasonably conservative.

One advice that applies to everyone universally, is to avoid taking on too much debt.

i

I am a long term buy and hold and value investor. I use several different resources. I have neither the time nor the skill to properly evaluate a company, so I rely on several services for my stock picks, so long as they adhere to a certain valuation philosophy (discounted cash flow model).

what services do you use, and what has been your experience with each of them?

On Dec 19, 10:52 am, "Gil Faver"

In addition to the many other excellent resources people have mentioned, I would suggest reading about dividend reinvestment plans (DRIPs). A good place tp start would be the books of Charles Carlson, a former finance professor at the University of Chicago, including "No Load Stocks," "Buying Stocks Without a Broker," "Eight Steps to Seven Figures," and "The Individual Investor Revolution," among others. DRIPs are a good choice for long term, buy and hold, DIY investors, and they are not only low expenses, they are virtually NO expenses.

For once, a chance to point to the MIFP-FAQ site!

-Tad

Ben Graham's "Security Analysis" is the seminal work for all following theories and treatises on the subject of stocks and portfolios. Peter Lynch wrote some enlightening books.

The best resource I ever came across was a $278 dollar a year subscription "Long Term Values" published by William O'Neill (sp?) the publishers of Investor's Business Daily and Daily Graphs. Unfortunately, LTV was discontinued several years ago, probably for lack of interest.

The invaluable aspect of LTV was that it graphed earnings per share for the last 15 years. This made it a snap to pick good companies to research. Amongst many other parameters were PE, yield, and a brief summary of the business (grouped by industry). One could quickly get a real sense of what the industry was like, and some were hardly worth looking at. LTV covered more than 3,700 issues, including new issues, so finding promising young companies was easy. But with the proliferation of funds' marketing of the idea that selecting good companies to invest in was incredibly difficult if not impossible and only "for professionals," interest in funds soared and LTV closed shop for lack of interest several years ago. A huge loss for the investment community.

Value Line also covers 15 - 18 years of earnings history, but is limited to 1,700 companies with at least 15 years of history. So finding a Microsoft is out of the question. VL does have different subs such as a mid-cap issue, but those are their selections of a small universe - not the comprehensive coverage of LTV. Also, funds, "private equity", and M&A oriented companies have been buying up companies before they even have a chance to go public, and literally monopolize the IPO and new company market. It's shameful, a restraint of trade, but no one has done anything about it.

I found one internet datbase covering all listed companies, but 1) they want $2,500 hundred a year, and b) it's raw data - no sorting by industry, no graphs. If anyone has a source similar to LTV, I'd be super-interested in it.

For investing, read "The Bogleheads' Guide to Investing". Or read anything by Jack Bogle, William Bernstein, Larry Swedroe or Rick Ferri.

Visit

Read with interest an earlier thread discussing the relative merits of DIY

I use Value Line for their research, but not their stock picks.

-Will

william dot trice at ngc dot com

These pages are really shaping up nicely, Tad.

-Will

william dot trice at ngc dot com

Didn't your 401(k) offer stock mutual funds, possibly index funds, with expense ratios considerably less than 1%? Some index funds have expense ratios of about 0.1% annually.

Sadly, that was not the case and still is not the case. I am very upset about it. I am greatly disappointed that 1% of my money goes to pay money for people who do not add any value. I suspect that this is not an accident and somehow people involved got paid for these choices.

please explain your thinking here. I don't always go by their picks, but I cannot formulate my thinking in this regard.

It's free:

$518

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It's rather more complicated than that. I work on the employer side, and my brother sells retirement plan administration services to companies, so I know this from both sides. We pay fees to the administrator, but we could have this for free if we restricted the choices available to the employees to funds that had higher expenses. This is because the administrator gets a commission from the fund managers. We pay over $1m a year in fees, so this is not chump change. But we are a big company. The 401k deferrals each year top $100m, so the assets under management must be in the billions.

By law the employer cannot profit from the plan, but there is no obligation to pay any expenses if these can be avoided. And whether or not employees involved in the fund selection are receiving kickbacks or other rewards, rather depends on the ethical climate of your company. In our company, taking a free meal from a vendor can get you fired, unless you follow all the disclosure and authorization policies. In my last company, the benefits managers went to conferences on the health and retirement plan providers dime every year. But then the CEO and CFO are now both doing time in Federal prison, so the mood was set from the top.