Stocks for 2007

Why those stocks? No matter how young you are "putting all your eggs in one basket" still isn't usually a good idea. You can chase higher returns because time is on your side and still be more diversified in other investments.

Here's a better perspective: Imagine how your portfolio would look today if you had put all your money in enron or lucent a few years ago because you were "young and risky".

Look into ETFs or even no-load Mutual Funds. You can still get a shot at those higher returns you are looking for.

P.S. - I won't say exactly how old I am, but let's just say I was in high school the same time you were (I am now a financial planner). You can be young and risky without being foolish. You should also repost your question on misc.invest.stocks

Good luck!

Why those stocks? No matter how young you are "putting all your eggs in one basket" still isn't usually a good idea. You can chase higher returns because time is on your side and still be more diversified in other investments.

Here's a better perspective: Imagine how your portfolio would look today if you had put all your money in enron or lucent a few years ago because you were "young and risky".

Look into ETFs or even no-load Mutual Funds. You can still get a shot at those higher returns you are looking for.

P.S. - I won't say exactly how old I am, but let's just say I was in high school the same time you were (I am now a financial planner). You can be young and risky without being foolish. You should also repost your question on misc.invest.stocks

Good luck!

I can;t see why not buy some stocks that you like, as long as your overall risk profile is sensible (ie you do not go overboard with quantity).

My stock holdings (about 1/3 of my net worth) are mostly in one stock.

You may be mismanaging your money. You could invest more than 1/3 of your money in a diversified equity mutual fund and obtain a portfolio with the same risk and higher expected returns.

Well, About 1/3 of my net worth is my house, so the remainder is split between cash and stock. The cash is, in turn, split between dollars and euro. So the 1/3 of the net worth that is in stocks, is not an unreasonable amount. That stock I have been buying on and off over the years, and it has done okay, though not spectacularly.

You'll have to decide whether it's reasonable or unreasonable. People will tell you about Enron, etc. I can tell you there was one stock I had that's an excellent company. It generates huge cash flows. Lots of institutional ownership. In one day that stock dropped 30%, all because testing found one of its products was harmful to the users. The name of the that company is Merck.

Fortunately it's a small percentage of my holding. If 1/3 of my net worth was tied up in Merck I'd be up a creek.

You'll have to decide whether it's reasonable or unreasonable. People will tell you about Enron, etc. I can tell you there was one stock I had that's an excellent company. It generates huge cash flows. Lots of institutional ownership. In one day that stock dropped 30%, all because testing found one of its products was harmful to the users. The name of the that company is Merck.

Fortunately it's a small percentage of my holding. If 1/3 of my net worth was tied up in Merck I'd be up a creek.

So, half of your investable funds are in cash and half are in stocks. That's a rather large cash position, but that's your perrogative. One of my partners actually has a client that held a 100% cash position through 2005 and 2006 because he was "positive" the market was going to take a downturn (I laugh every time I think about the guy. He just won't listen).

I am wondering... why the individual stock picks? You are likely taking on a risk that is much higher than other investments that statistically yield similar returns. You said yourself that the returns have not been spectacular. I often see people ge blinded by "lucents" because the returns are great (for a while anyway). But that isn't even the case here.

I am not going to go into details on the math, but diversification is a proven method of reducing unsystematic risk. I recommend learning up on the principles. Hell, just typing "unsystematic risk" into google will probably return a world of info.

Good Luck!

How much money do you have to invest??

Peter, On a similar note, I have a client that I recently acquired that had all of his investable assets tied up in stocks that he had spent years picking and choosing (over $500K). By "picking and choosing" I mean he bought the company that made a product he liked or he could rationalize ("everyone needs healthcare, I'll buy healthsouth. It's guaranteed to go up.") Its was about 6 different stocks.

He owned a large position in pfizer and I was joking with him about having a Merck situation. He said there was no way Pfizer would do something like that. He balked at the idea of liquidating and going to asset allocation ETFs until a week later. That week was early Dec 2006. Look at pfizer's chart. Of course they will recover eventually, but it convinced him that no company is completely immune.

I've always been under the impression that mutual finds have not-so-desirable tax implications and fees. How do ETF's work. Well, I will google it anyway but it would be nice to have a layman's explanation. My assets are mainly real estate based and I would like to get into the stock market in a larger way. So far I have just a few holdings, nothing major really. Im risk averse but will be willing to try out something new. Thanks in advance. ps: My boss has made a killing in the stock market. I try to pick up on tips here and there from him and have done some small investments here and there. So far its ok, not great, but ok. Im not into daytrading and generally prefer stocks that pay decent dividends over time. I could be wrong but Im trying to figure it out as I go along. I also will not go to a brokerage house since I interned for a major one in college and I was contructing pension portfolios and in my opinion, no 21 year old intern should be responsible for managing someones entire pension/401K!!!!!!!

That's not a particularly correct impression. Some do, many don't.

Very much like closed-end mutual funds, except that the right of in-kind redemption prevents the market value and fund NAV from diverging the way they often do with closed-end funds.

yeah - I had LU, and all the other tech stocks, and watched LU tumble from the bubble days of $64 down to $2... Same with CSCO - from $80 to $18

Today - I limit my buys to $5k-$10k per stock or fund. If it splits and goes up - then that's a different problem that I've been wrestling with lately... SBUX, AAPL, CSCO