My Meager Stock Portfolio: Much Room for Improvement

Here are the contents of my current E*Trade Brokerage taxable account:

20 shares of Microsoft (MSFT) bought at $25.5
35 shares of Intel (INTC) bought at $14
12 shares of Pfizer (PFE) bought at $40
11 shares of Anheuser-Busch (BUD) bought at $43.5
Rest in cash

Overall, my portfolio is about 3-4 years old and is up a grand total of +2.63% in share price and neglecting dividends. Pretty crummy, yes. This portfolio was bought with little concern over P/E ratio, PEG, Alpha, Beta, or much else but the fact that I: use a laptop powered by an Intel Pentium processor using Microsoft Windows, while taking a drug by Pfizer and drinking Budweiser on weekends. Now you see why I need mutual funds?

E*Trade finally processed my worthless security form for my defunct Enron stock (It took them over 25 days), so I can transfer the account out to FreeTrade. E*Trade is going to charge me $60 for the outgoing transfer, and FreeTrade is charging me $25 for the incoming transfer, *sigh*. My other alternative was to sell my four stocks for $22.99 commission each at E*Trade, which would cost $7 more. But this way I can put off selling the stocks until I feel the time is right, and I can pay E*Trade as little as possible.

Oh, I also bought TiVo for a bit at $9.88. Then I regained my senses and sold at $10.34, with a net loss due to commissions. It’s now down to $4.44, yay.

Comments

  1. Peter Lynch recommends to buy stock of the companies you like. It seems you picked great companies, but since you bought 3-4 years ago, it seems you just got stuck with bad timing. But hey, at least you learned a lesson and you haven’t LOST anything!

  2. Have you thought about opening an account with Vanguard? I have an account with them and I love it.
    Good Luck.

  3. Neville – Yes, I am chalking it up to a lesson learnt definitely.

    Sung – Thanks for the comment – I do have an account with Vanguard for my retirement funds. I am also probably going to open up a taxable mutual fund account with them, and keep all my stock trading at FreeTrade.

  4. Since you recognize your need for investing in mutual funds, I would recommend selling your stock at E*trade, cashing out, and investing in mutual funds at FreeTrade. It may cost $7 more, but it may be cheaper than transferring and then selling and reinvesting. Of course, you’d have to weigh FreeTrade’s fees and the tax implications.

    Just a thought,
    erin

  5. Yeah I’m still tentative about trading individual stocks, but I love the idea of free trades. We’ll see, I can always just sell when they get to FreeTrade for free.

  6. You’ve got the right idea, just not the right time frame. These stocks need to be held 15 or twenty years at least.

    Of course those who recommend mutual funds are right, they are a big part of the overall plan.

    All of the companies you mention will be a lot bigger in 25 years than they are now. Another thing – reinvest dividends.

    I purchased 200 shares of 3M at 83 sometime in the mid 1980′s. After two splits and reinvesting dividends (although I didn’t start that until recently, more’s the pity) I have over 830 shares at 83 – and that doesn’t include the Imation spinoff. I figure it’ll split again within the next 5-10 years. If this keeps up, the dividends alone will provide several thousand dollars a year for my retirement; and believe me, when I purchased the stock I had no real concept of the leverage of compounding even though I had a degree in Finance. It’s something you have to see in action. In that area, you have a huge head start on me.

  7. You’ve got the right idea, just not the right time frame. These stocks need to be held 15 or twenty years at least.

    Of course those who recommend mutual funds are right, they are a big part of the overall plan.

    All of the companies you mention will be a lot bigger in 25 years than they are now. Another thing – reinvest dividends.

    I purchased 200 shares of 3M at 83 sometime in the mid 1980′s. After two splits and reinvesting dividends (although I didn’t start that until recently, more’s the pity) I have over 830 shares at 83 – and that doesn’t include the Imation spinoff. I figure it’ll split again within the next 5-10 years. If this keeps up, the dividends alone will provide several thousand dollars a year for my retirement; and believe me, when I purchased the stock I had no real concept of the leverage of compounding even though I had a degree in Finance. It’s something you have to see in action. In that area, you have a huge head start on me.

  8. Thanks for the comments – I agree with many of your points. My concern is, will I be beating the overall market? Tripling my money would be great, but not so great if the market quadrupled in the same time frame. Have you calculated the annualized return of your 3M stock vs. the Wilshire 5000 or S&P 500 for the same time period? I’m just curious. For now, I’m kind of blindly wandering until I learn more.

  9. If you want to beat the market, I think you need to do a lot more research than that. It’s not just about good companies; you have to avoid overpaying for them.

    I say you’re on the right path now. Stick to index funds.

  10. I think you could do worse than a portfolio with these stocks in it but I would say as a start switching to index funds would be great for you. With only $2000 its tough to justify having 4 stocks at 500 each. Of the 4, I like INTC but MSFT, PFE and BUD have got to go. PFE is getting closer to a buy point but still is tough to own here.

    I don’t know your exact financial situation as I haven’t been reading for long but I’d go with $1000 in the IWM (Russell 2000 tracking index) and $1000 in the SPY (S&P 500 index) if I were you. Even weight the small and large cap stocks, you’ll be better off than owning large caps that will struggle to get much larger from here on out.

  11. Thanks for your comments, BA. I agree, my stock picking skills stink. I have all of my IRA and 401k (about $34k worth) in index funds. I haven’t decided what to do about these stocks yet.

Speak Your Mind

*