Gyroscopic Investing

This is a few years old but is an interesting read. Makes a good argument for just picking a portfolio of stocks and never selling for at least 10 years instead of even buying index funds which trade quite often.


http://web.archive.org/web/201707130351 ... tfolio.pdf

Total market funds dont trade. If you randomly pick a basket of stocks you get a value tilt because you dont get seduced by growth stories. Now that everyones talking about value, dunno if it'll continue to outperform.

like my baseball card collection... once everyone saved the cards instead of putting them in the spokes of our bikes the value diminished big time and they were barely worth collecting anymore going forward

I liked the idea behind the article. That was (kind of) the way I initially started investing back in 2009-2011, as I've said on here before. I got the Magic Formula book by Greenblatt (a book on value investing) and used it. But part of the method was to sell the investments after a year and re-run the screen to find the new ones; I didn't like that part at all.

The screen was a kind of "cigarette butt" finder, à la Buffet or Graham. Funny enough, one of the first "stocks" (I didn't know what was what back then) I bought using the cigarette butt finder was VTI. Following the instructions in the book, I sold it after a year.

Things that are old become new again....

I like some of the points, but the author spends way too much time talking about how smart people can beat the market. Well, Jack Bogle and Harry Browne were both pretty smart, and they both conceded that they couldn't beat the market despite having careers in finance. In contrast, when it comes to the market, I'm pretty dumb. That's because I need to focus my attention on other things. What chance do I have?

I do agree that minimizing transactions is very key - especially in taxable - and that fund turnover can be problematic. So I am going for buy and hold stocks in taxable. You can argue with how I pick them, but I'm using a combination of "Buffet's favorites" and dividend stocks. So far, it's been working well enough. In aggregate they do about as well as the market funds, and throw off 100% qualified dividends with no unwanted capital gains or ordinary dividends. Works for me. No opportunities to tax loss harvest yet, but that will happen at some point.

sophie wrote: ↑Fri Feb 21, 2020 8:00 am ...

So I am going for buy and hold stocks in taxable. You can argue with how I pick them, but I'm using a combination of "Buffet's favorites" and dividend stocks.

Dividend stocks - I only wish we had a thread on that.

dualstow wrote: ↑Fri Feb 21, 2020 8:22 am

sophie wrote: ↑Fri Feb 21, 2020 8:00 am ...

So I am going for buy and hold stocks in taxable. You can argue with how I pick them, but I'm using a combination of "Buffet's favorites" and dividend stocks.

Dividend stocks - I only wish we had a thread on that.

They're worthless, says I. Anybody who's not an idiot hates dividend stocks. Companies actually distributing profits to owners is anathema to the point of being in business. Or something. :-)

Xan, you are so right.

Xan wrote: ↑Fri Feb 21, 2020 8:33 am

dualstow wrote: ↑Fri Feb 21, 2020 8:22 am

sophie wrote: ↑Fri Feb 21, 2020 8:00 am ...

So I am going for buy and hold stocks in taxable. You can argue with how I pick them, but I'm using a combination of "Buffet's favorites" and dividend stocks.

Dividend stocks - I only wish we had a thread on that.

They're worthless, says I. Anybody who's not an idiot hates dividend stocks. Companies actually distributing profits to owners is anathema to the point of being in business. Or something. :-)

Really?

The income generated by stock index funds is not much less than average dividend stocks (about 2%) - and their tax treatment is worse because a chunk of that are ordinary dividends. It ends up being close to a draw. I'm not really going for high payouts, but I am looking for companies with a long track record of increasing dividends. i.e. way to make sure there are no Enrons among them.

Other than this though, haven't thought too much about it. Told you I'm a "dumb" investor, what's why I was attracted to the PP in the first place.

sophie wrote: ↑Sat Feb 22, 2020 10:10 am

Xan wrote: ↑Fri Feb 21, 2020 8:33 am

dualstow wrote: ↑Fri Feb 21, 2020 8:22 am

sophie wrote: ↑Fri Feb 21, 2020 8:00 am ...

So I am going for buy and hold stocks in taxable. You can argue with how I pick them, but I'm using a combination of "Buffet's favorites" and dividend stocks.

Dividend stocks - I only wish we had a thread on that.

They're worthless, says I. Anybody who's not an idiot hates dividend stocks. Companies actually distributing profits to owners is anathema to the point of being in business. Or something. :-)

Really?

The income generated by stock index funds is not much less than average dividend stocks (about 2%) - and their tax treatment is worse because a chunk of that are ordinary dividends. It ends up being close to a draw. I'm not really going for high payouts, but I am looking for companies with a long track record of increasing dividends. i.e. way to make sure there are no Enrons among them.

Other than this though, haven't thought too much about it. Told you I'm a "dumb" investor, what's why I was attracted to the PP in the first place.

Sorry, no, not really. Just echoing some of the criticisms that dividends have recently received around here.

I'm such a coffee addict that any portfolio that has the word "coffee" in it automatically gets my attention.

Remember Bill Schultheis and his Coffee House portfolio? I didn't even think it was that special, but every time I saw a reference I had to fire up my coffee machine and grab a pastry.

Smith1776 wrote: ↑Sat Feb 22, 2020 2:52 pm I'm such a coffee addict that any portfolio that has the word "coffee" in it automatically gets my attention.

Remember Bill Schultheis and his Coffee House portfolio? I didn't even think it was that special, but every time I saw a reference I had to fire up my coffee machine and grab a pastry.

Mmm, the Pastry Portfolio.

Creamy stocks and treasury notes with a flaky crust of gold.