The #1 Reason Single Stocks Are Dangerous
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- Опубліковано 6 тра 2018
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100k/year this man is in a better position that most people in the world.
I knew a guy who retired in 1974 at the age of sixty with a pension of just over 30K a year. That was good money in those days and he had made a lot of money. But he spent money as it came in and he had a lot of debt on his real estate. 74 was the beginning of seven years of stagflation. In that seven years his purchasing power dropped by half and interest rates really rose. He never did get out of debt. In his 70's he would sit and cry and tell stories about how much money he used to make. None of his money problems were money problems, he just never grew up enough to spend less than he made.
“Diversification is protection from ignorance” - Warren Buffet
iggyandangus Warren also only owns one stock
@@collinbracey2950 thats totally wrong.
Just google it and you will see he owns many single stocks.
Diversification helps the stock market. They want to diversify did you ask yourself why?
@@collinbracey2950 He has 60% of his portfolio in one stock that he understands very well and comes out on top because of it.
He also said diversification is for amateurs
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Did nobody notice that he's 61, retired, and still has a mortgage? Yes, this guy has other problems than his GE stock halving in value.
I'm retired and have a mortgage, I don't think its a problem, so why should you?
Exactly what I was thinking. Also he could of sold his stock before it crashed. Not a good example Dave.
Don’t put all your eggs in one basket. Pretty basic knowledge you learn that in investing 101
That's not the problem. All eggs in one basket is the problem.
@@Wootjogga basic knowledge that no high school in America provides.
I'm a big believer in Dave. His stuff helped my family big time in 2020. But investing in single growth stocks is NOT the same as this example. This is an example of a guy owning ONE SINGLE STOCK. Singular. This guy did go to the race track and put all his money on one single horse. Most single stock investors (at least most good ones) research like crazy to determine which are the top horses in the race. Then they put money on all those horses. Its comparing apples to motorcycles.
Are you saying that he would have done better if he invested in GE, but also Starbucks, Amazon, Apple, General Mills, etc? Like if he bought multiple single stocks. Making sure I understand.
@@IWantToMature85 I'm saying that when you invest in multiple single stocks that you have done your personal research in, and when you're invest into multiple singles, it's kind of like assembling your own index fund. You might do terribly, but no index fund will go to zero.
Overall I'm saying, Dave is the man. Love him. But this specific example is not the norm for most people who invest in single stocks.
Dave's guideline of having no more than 10% of your net worth in any single stock seems like a good rule of thumb.
@UlfilasNZ he makes it sound like he wants people to put their entire savings whether it's retirement or something else into some type of investment like mutual funds. That doesn't sound smart. You ehould put a specific amount of it in there.
@@IWantToMature85 I agree with Dave Ramsey.
1. Pay off your mortgage before you retire
2. Never put all your retirement eggs in one basket
3. $85,000/year pension + his and his wife's Social Security + $110,000 nest egg and can't live on that???
Plus he still gets dividend from his shares of stock.
From you to me which human being puts all of its money in one stock?
@@karlalan3806 you'd be surprised
@@itrthho ... Uh... you might want to check the news on GE... token dividend only now
George McGovern GE lowered their dividend payout to only $0.01/share during their financial woes, but I’d hang onto the stock and wait it out. They’ve made changes as a company and IMHO, have a good longterm outlook if you’re willing to wait 5-10+ years.
1) When you invest in single stocks you don't literally invest in ONE stock. You need to diversify.
2) as you near retirement you should begin to transition a significant portion of your net worth in less risky investments.
3) single stock investing is worthwhile if you're willing to do the work. That stock didn't drop 50% overnight. He watched it drop for months or years. He could have sold it and taken the cash, sold it and bought mini bonds, or bought a CD, or bought 5-15 dividend stocks...so many options to prevent this
Good grief, I have never considered that people thought what you said in #1. But, you're right, undoubtedly. I'm not the brightest bulb in the box but I can believe there are people who would interpret 'single stocks' to mean a single company's stock. Good grief.
No risk no reward , Bigger the risk bigger the reward 🤔 obviously it's not smart to put all your money in one single stock. You have to be diversify your portfolio 👌
INVESTING HUSTLER - Stocks and money making videos I see you all over UA-cam haha
But in this case the risk was unnecessary, he could have diversified among several similarly performing stocks with the same gains and less risk.
I have mutual funds and ETFs that have returned north of 10% on average in the past 15 years. I'm perfectly fine with my portfolio. I wish you the best of providence with yours though.
Stocks are all the same though. If the market is bad then all stocks are falling so even a diversified portfolio won't protect you. You should have some invested in stocks and then some in crypto. Also, if you aren't using leverage then you're wasting potential.
INVESTING HUSTLER - Stocks Money Entertainment diversify portfolio is a bad advice. It's what people that don't know how to invest do. If that's your strategy, you are better off just investing in an index fund.
Mutual funds are made up of multiple blue chip stocks. We don’t buy one single stock, we buy multiple well researched stocks.....
Your statement is incorrect it depends on the mutual fund NOT all mutual funds are made up of blue chip stocks
I own about 100 individual stocks, I’ve done far better than the Dow average
Is that for everyone though? How much research has to be done to select one single stock?
Thats really great. I invested in total a little under 1500 and more than doubled my $$ on stocks I truly believe are still only going up and are barely anywhere near where they will be in years. Long term is the 💰
Yea i owe 200 stocks and I’m getting a divorce
Me too. If I listened to Dave about stocks I’d be a whole lot poorer.
And the Dow has done good the past year , so great job !
I own 17 different stocks. And three of these are hedge funds that pay dividends. My portfolio has outperformed index. Even if it didn't I would prefer it because of the cash flow it creates. I am aiming to own 20-25 stocks which will be enough diversification for me.
You can diversify and still come out ahead with many different plans. Often people say you won't beat the index, but you can still get close (either slightly above or below).
single stocks are dangerous for this reason obviously, that's why you don't do what this guy did an only own one stock. This is an easily avoidable thing if you're trying to invest in single stocks.....
Investing in individual stocks is how many investors find great companies at a good price. Value investing is about taking advantage of those opportunities.
Just be smart and don't bet the farm on one stock. Do your research and stay diversified.
There's an infinite number of companies. The likelihood of finding that Apple or Google before they became Apple or Google is like finding a needle in a haystack. You have to be very lucky or be in-the-know to discover those companies.
Sure, and if I bet on every number on the roulette wheel, I end up losing in the long run.
gimpinmypants or you can just invest in Google/apple/Amazon. If you invest in any of this stock since 2015, you'll have 2-3x more $$$. Large companies still have a lot of potential to grow.
Bought Netflix in 2015 for $90 a share, now it's trading at $400.
I think he is suggesting to look at micro trends within an economy. Not every industry expands. Some decline. This advice makes you your own fund manager.
@@LuckyDuckie115 Just because the companies increased net revenue yoy for that period doesn't mean they will continue to do so in the future.
One thing that is funny about this video is that I'm currently buying a lot of GE, 75% of my portfolio consists of GE because it's at a rock bottom price and the fundamentals are better than the stock price is petting on
If you buy one stock it might lose.
If you're under 30 I recommend buying single stocks, if you want to personally learn about buying single stocks and build a portfolio by hand. It's risky, and Dave's advice to buy mutual funds is sage advice.
I'm just starting to learn and that's the reason I recommend buying single stocks to people my age (28) and younger.
If you're 35 or older I recommend you not listen to anyone that isn't a millionaire.
Bad advice
Terrible advice
@@luisfernando5998 don't listen to me. Listen to rich people.
The most stupid advice ever.. a person who’s a millionaire could inherited the money or won the lottery.. and lost it all..
I buy only single stocks in my investments. But Dave is 100% right about this. The average person should not do individuals. In order to pick an individual you need to look at the balance sheet, the income statement, the revenue history, the dividend history, you need to make a reasonable judgment about the future of the company, and lastly and very important you must make sure you understand the concept of valuation and don't pay too much for the stock. Most people don't do (or even understand how to do) these things. They invest on gut feelings and shallow advice from their uncle. Buy stock mutual funds people! Health care industry funds have the highest long term returns.
You also need to have a very good understanding of the risks and the opportunities that exist within the individual companies that you are invested in. It can take me a week to do all of the work needed on a company before I put it on my investment watch-list much less buy the stock and I still have my fair share of investment losses.
etucker5007 even with that you still don’t know what could happen.
I just use a service like motley fool stock adviser and allocate a percentage of my entire portfolio to each of their picks. meaning if they say buy ZM Stock, I will at most invest 5% of my entire portfolio in that stock.
How quickly those revenues and value ratios can change at a whim's notice!
Did this man invest his ENTIRE retirement in GE stock? If so, I don't onow why one would do that? I like your advice about investing not too much.
Nobody, who knows anything about investing would say it is a good idea to own 1 stock. As you said, this is an example of why you need to diversify. You can diversify while owning individual stocks. It is called a portfolio. It is inaccurate for and disingenuous for you to suggest that people shouldn't own individual stocks. What this is an example of is why you shouldn't just buy one stock. In fact an financial advisor worth his salt would tell you that you should diversify among asset classes.
Also you construing trading with investing. They are two totally different things. Trading is moving in and out of stocks and it is more risky. That is not investing.
The problem isn’t that he bought into single stocks. The problem is that he bought ONE single stock. He should have bought 20-30 of well researched single stocks. Duh. Dave gets paid to push mutual funds.
There is nothing wrong with investing in single stocks if you know what you are doing, but I have a collection of mutual funds that have out performed the S & P 500 index. There is more than one way to invest. Anyone who regularly puts 15% of their income into good equity mutual funds over a 30 year period (or less if they are investing a lot) will retire wealthy. Dave has also told people to make sure a stock is no more than 10% of their portfolio if they choose to invest in single stocks. So, he is not completely hostile toward single stocks.
How are they doing now?
@@GhostTraderz They are down about as much as the market is (if you include my growth funds into the average). If you count my bonds, I've lost a little less than 3/4 of what the market has lost.
Jason L. Petersen I was referring to single stocks.
Jason L. Petersen what fund is it?
I personally like picking stocks. I like etfs too. But picking a good company and keeping an eye on its financials and the economy can make better returns if your diligent. But yes there are risks so keeping serious money in etfs is smart.
Alex D I like individual stock, index funds and real estate
Alex D what are some hot stocks u would suggest, im 24 and new to stocks?
ivan d right now i like mastercard better than visa. (MA)
Alex D I have visa If I buy MasterCard, is the too many cards stocks?
john l APPLE AND AMD
With the covid 19 right now making your portfolio with single stocks might be the way to go. Companys that are temporarely down wont be when this is done. Its a no brainer.
UGNA 27 I’ll be purchasing numerous of single stocks in a few weeks or even a month. I can’t time it at the low peak however I’ll be putting money into stocks that hopefully we can’t do without. Lumber, construction companies, real estate, cleaner products companies, amazon and perhaps google. Not sure yet and still it’s a learning process for me and my husband. Hopefully putting in over $1,000 would help when I retire however I won’t be doing that for another at least 25 years.
Soooooooo buy 20-30 stocks...diversification. The best thing you can do to protect yourself is learn to evaluate fundamentals of a business.
The only barrier I see with anybody having a diversified single stocks portfolio is time. All the research that has to go into researching companies might be a problem if someone already has a busy life. But it's doable. Although I would say that busy person might want to have 3 - 5 single stocks at least with a mutual fund for safe measure.
so if youre over retirement age, you cant get mutual funds without getting cap gains when funds are bought and sold within teh fund.
right?
according to my ELP investor
1. For retirement diversify or at least have several sources of passive income streams not tied each assume you own rental property or you run own business. This could be also be index funds or even better is low cost ETFs that match the market.
2. In your taxable account, you can invest in individual stocks if you believe in some companies with the intention of long term investing. If you do this, you won't panic sell your retire.
i agree he shouldn't have put it in all one stock, but having a well-rounded portfolio should get you where you want as well vs mutual funds
I have two accounts. One is in mutual funds entirely and the other all in stocks. During times like these with the market down due to coronavirus I am seeing my account with mutual funds perform much worse then my individual stock account ( which I put together carefully with diversification)
Exactly why the only time I invest is in the tech sector, since that’s what my business is, that’s the world I’m involved in and watch those companies extremely close...EVEN then I don’t look at that money as an emergency fund, or savings. It’s specifically play
I'm 28 and choked on my chips when this fool said he couldn't live off 100k LOL
This title is misleading, it's not that you shouldn't invest in single stocks, you shouldn't put all your money into ONE stock. You can easily diversify your own portfolio by buying multiple S&P 500 companies.
I agree, HOWEVER I own a bundle of single stocks and a bundle of mutual funds with Edward Jones......I bought bother sets at the bottom of the corona crash.... guess which one has made me more money?? The mutual funds have.
@@madarchermoto4955 I completely agree that Mutual Funds are the best way to go. I'm just saying that "putting all your eggs in one basket" is different from buying single stocks lol Mutual Funds are basically the best way to diversify, but you can definitely avoid "putting all eggs in one basket" while still investing in single stocks.
Mm very enlightening. Gonna remember this.
You are correct-my broker told me the same thing you are teaching!
Stocks are good as long as you have at least 2 from each sector and good stuff like JNJ and PEP.
If you work for a company, you are very much exposed to their financial future without owning a single stock of theirs.
Completely agree with Dave on this.
Growth mutual funds only? Should one ignore blended or value mutual funds?
I just got my first set of RSUs at my company and definitely plan to sell and diversify once those puppies are fully vested.
Yeah, I was wondering about that pension. A pension that my generation will never see because that doesn't exist any more. Sounds like the guy was a hard worker but just didn't do the work needed on his personal finances.
The guy can't live on $85k a year? I take care of a family of 4 with $50k. I think his problems are less to do with the bad investing and more to do with his lack of good financial planning and a budget. Even if he was in a high cost of living area... $85k can't do it? wow.
His wife was disabled that can cost over 50k by itself.
Don't retire with a mortgage.
I diversify it all myself instead of buying into a mutual fund I have several shares in several companies
If this man was put into a rough patch by devaluation of 170k value in his stocks but has an 85k yearly pension, the stock was hardly his issue...didnt save into a retirement account and probably living above his means all those years.
I'd guess that the 85k is his pension plus his and his wife's social security. No way his pension is 85k unless he was im management, since private company pensions are usually about half of the employee's yearly income at retirement.
Great advice, single stocks are fun to play with if you’re in to it but not if your using money you can’t afford to loose
The less you put into a single stock shouldn't hurt you though, right?
Your advice "is good for all" advice.. it's solid. You put your money where your mouth is. I feel ya. Putting all of your money in one stock is a bad idea... However, investing in multiple companies isn't a problem and you can do very well using a good strategy.
I love broad market index ETF funds, I own few single stocks a very small percentage less than 3%. mainly most of my investments are going into ETF. And REIT ETF's
is it smart to build a portfolio with one company that offers a nice dividend. then use the earnings to diversify my portfolio over time or continue to invest in that company if its doing well?
He has not lost any money. He will only lose if he sells. If he holds the shares they could recover & then sell. GE was in dire straits 10 years ago, however the company is in much better shape now & a recovery is very very probable
Most of my investments are in individual stocks, but i own shares in over 100 different companies, and always rebalancing People that don’t have the money to buy that many individual companies, mutual funds and etf’s are great investments.
What happened to his pension. He can’t live off 85k a year.
We are living nice and comfy on about 70k. Even built a brand new house in retirement.
Christine C probably spends it all. Never learned how to live below his means.
That was my question too! 85k pension is pretty decent to not have to work anymore!
Christine C I can live in California off $85k a year...
He's a caretaker for his disabled spouse, I wonder if that's playing into it...
Ummmm.... doesn’t this go back to “don’t invest in anything you don’t understand”? He should have sold his stock and invested in other things. Also sounds like he wasn’t tracking the health of his company. It’s more neglect than anything, imo.
You can buy single stocks and still diversify, you can also hedge the risk using ETFs which are diversified stocks.
I disagree on his theory of mutual funds instead of equities You need both in your portfolio
@Donald Goose or cryptocurrencies or baseball cards or statues of budda, or Beatle collectables ETC ETC, What does that have to with the statement I made?,
Rather than investing in mutual funds, wouldn't it be better to buy the underlying assets within a mutual fund (or at least their biggest positions)? Couldn't we then get roughly the same returns as the mutual funds but without the risk? I don't understand why this wouldn't be a good strategy
85,000 pension and he needs to work, obviously he wasn’t very good with money if he relied on GE’s stock....GE was tanking long before he retired...
I used to be a contractor at GE about five years ago. The way they tripped over dollars to save pennies make me wonder how this company could be profitable. No way I would keep GE shares if I was in that guys situation. It was realllllly obvious to me, it should have been beyond obvious for this guy.
Its 2023 and the stock is doing well now.
I work in France where we have something equivalent to 401k except that the money is invested in the company's stocks after it is matched to a certain amount then blocked til retirement. What would you advise in that situation?
My job in America is like that, my work invests in themselves, but every year or so I open the account and sell it all for a diversified large cap fund. That might be an option, otherwise I wouldn't put in more than a few % to get their full match because it is risky.
Dave good video as always. How do I invest on mutual funds?
I think that you have to meet with a broker.
A rule I find interesting about stock is if the amount in % of your portfolio in stocks should be 100 minus your age.
That way the more younger you are the more you can afford to loose and when you are at 60, you are suposed to have around 40% of your portfolio in stocks, greatly lowering the risk.
It's not a rule brother it's just bad advice. I want my portfolio "at risk" my entire life because I want my wealth to always be growing.
@@user-fp8xc8lf3f yeah but a 70 what's the point?
It Would be sad to get a crash at the end of a successful investing career
If you owned a single stock, approx $30,000 and cashed it out, where would you put it? Reinvest into mutual funds? You can't add at all to retirement due to the yearly contribution limit, correct?
I max out my ESPP which is definitely considered a single stock but I also don't even think about that money as pay (except when considering percentage contributions to my retirement funds). If it does well, great. If not, oh well. I have risked little.
I invested in many (about 60) individual dividend and growth stocks (for long term hold) during the pandemic market crash when excellent companies were around 70% below there 52 week high. If it crashes again I will buy more. You can do it be smart and patient.
Buying stocks at those March prices was a once in a lifetime opportunity. Congrats
DWAC and CFVI are the answer.
The retiree did say he cares for a disabled wife. That can be very expensive. Might explain his budget woes.
Martine I've bought some GE stock......but slowly....right now its slowly picking up.....but it's a small percentage of my investment portfolio
Disability check pays for disability.
Dave is right,, dont fight wisdom people..
I disagree. Find growth STOCKS that you believe in for the next 40 years. But DO NOT put all or most of retirement money in an IRA or one stock. That’s dumb. You don’t have to have a mutual fund to diversify
ECONOOM: As requested, here's a short list of stocks that pay monthly. The market values presented are from the market close on 1-5-2021.
Armour Realestate, ARR, $10.62/ share, dividend $.10/share.
Realty Income, O, $60.16/share, dividend $.23/share.
Stag Industrial, STAG, $30.35/share, dividend $.12/share.
Main Street Capital, MAIN, $31.30/share, dividend $.205/share
Dybex Capital, DX, $17.35/share, dividends $.13/share.
Dollar cost average DIA (tracks Dow Jones), VOO or SPY (tracks S&P), and QQQ (tracks nasdaq). Never sell. Continue to buy assets during good and bad times. Buy and hold long term and you cannot go wrong. Of course make sure you are following dave's baby steps too.
Couldn't agree more. I have been a full time trader for 5 years now and have never bought a single stock.....
Yeah okay. Keep buying mutual funds that average 7-10 PERCENT a year😂😂😂😂. Mutual funds is not a good choice for low income individuals. If you make 20k a year 7-10 percent is nothing when you can only invest 10k-5k a year.
respect to this guy i look up to him but i disagree with this. you can do research on single stocks and do very well with them with much less effort then you think,
Just an FYI, I am invested in TSLA for about 3 years. I started with $60K and now our investment totals $1.5M USD. Here I just proved you wrong. :D but I do agree on don't invest in anything you don't know. Sounds like David Ramsey doesn't know much about the revolution and transition to sustainable energy...
I love stocks that yield quarterly dividends
There are stocks out there that pay monthly.
@@markmyjak7739 Which one??
@@SegOurWay Reality Income, reinvest each monthly dividend.
@@SegOurWay most dividend funds pay monthly. SDIV, SPHD
tl;dr time to buy GE stocks
I remember at&t, Verizon, tanking? Merger? Approx 2000? Obviously, i don't remember well lol. But - that wasn't good for a lot of people
Nonsense, if you have $280K buys a portfolio yourself. Don’t pay management fee to someone else and do it yourself. Look for stocks with a good balance sheet with a good cash/short term debt ratio. A good (forward) Price/Earnings ratio preferably a nice dividend yield and companies that don’t pay all of or more of the profits in dividends.
That guy’s main problem is poor money management. Not losing half of his money in GE stocks. There’s no reason he can’t still live very well on the money and income he has left if he’ll learn how to manage his money effectively.
How can a guy with an $85,000 pension plus Social Security need a job? WOW!!!
The pensions are most likely being restructured because GE can’t afford to pay them. Sad part is a lot of companies when share prices fall can’t borrow money at same rates or issue stock as investors have lost confidence.
When your Outgo exceeds your Income, your Upkeep will be your DownFall!
I’m seventy years old no savings have money coming from social security & a small pension don’t know what to do need the best investment to get into
You can diversify and still own individual stocks. I don’t think your example proves that individual stock are a bad idea as long as you diversify.
Exactly.
Berkshire Hathaway. Is similar to and ETF in the way it performs
That's outrageous. I could live off of $20K a year and still travel.
Over diversification has killed me. Someone's portfolio should really have only between 10-20 companies. They should be well researched though.
Agreed. This idea that you need to diversify to the 10th degree is so counterintuitive to me as a stock picker who puts heavy research into every stock I buy. I'm not going to buy 50 companies just for diversification purposes if I'm 100% in belief of 10-15 strong companies. To diversify for diversifications sake is ridiculous, at that point you'd be better off buying an ETF or Mutual Fund and walking away. Sure, don't put all your money in ONE stock, but if you really believe in a company, I think it's fine to have up to 20% of your portfolio, maybe even a little more, in a single stock (assuming it's a solid company with good prospects and not a spec play) and then spread the money out in the other 10-15 stocks as you see fit based on risk and future prospects.
@@pllsabtvdfan 20% is a bit too high for me. My absolute limit is 5% in any one company.
why would i invest in a mutual fund if I can pick out the top companies inside it. It is dumb to invest in bad companies.
He said the guy must also be collecting social security to augment his 85k GE pension. Not at 61 yrs old.
Yea it's a little more to this story.
BIGBOSS JC yea like at that age still has a mortgage payment
gambling problem
Nothing wrong with investing in individual stocks if you diversify and don’t get attached. Too many people get over concentrated in individual holdings and think it will never go bad. People get greedy and let individual holdings get too large. If you are willing to do the work or you have an advisor they can be fine. Most diy people should stay away from them though.
I feel like single stocks can just be something fun you do with a very very small part of your portfolio after you have a solid base in mutual funds.
Eastern MA is quite an expensive area. My guess is their home skyrocketed in value over the last few decades and they kept on tapping that home equity, and now here they are, with a (likely) large mortgage. just speculation on my part, but would explain why he is worried about living off his still substantial income and needing to job hunt.
Sell and move to a cheaper area. Not rocket science.
Maybe. Depends on many factors.
do GE not pay a dividend this whole time?
They still pay a dividend. However GE's dividend was cut by half. From $0.24 to $0.12 a share.
My chart only goes back to 1985, so GE has been increasing dividends about 6-7% annually up until 2009. 24 years of compounding dividend growth.
24 * 7%=168% increase in dividend yield. Not even taking into account years before 1985.
They cut it as Brianna says by 50% but he should have save/invested the dividends, once he retired, to diversify his one stock portfolio.
@@briannacc3983 The stock dropped in half...soooo.
What I love is that people keep selling GE, when they are still making revenue, and when they cut back on worthless money draining company divisions they will actually make more revenue...
This is the time to buy GE, but most people will wait for it to double and expect the same result
haha - just finished watching this segment where Dave says don't buy individual stocks, then right afterwards, I get an ad for a stock picking scheme that will make me rich... LOL!
I have friends that are comfortable with owning a divested portfolio of stocks and bonds and their hobby is watching their money. I have other friends (myself included) that have financial advisors that they trust that manage their money, and only pay attention on quarterly updates. You need an advisor you trust, but verify that he / she is treating you well or else do it yourself.
One question for self investors; you may be great now, but as you mentally slip in old age, you need to have a plan where your older self doesn't lose the farm.
Reason number 1 why (some) stocks aren't risky:
Dividends, especially growing dividends.
If the business didn't had profits and a safe outlook they wouldn't be paying them at an increasing rate, think about that. Besides, the payment of dividends can be reinvested to the most profitable stock in your portfolio so you'd be constantly rebalancing it and you wouldn't be losing the liquidity that dividends provide (unless you want to).
For all this I'm 100% in favor of a dividend growth investment strategy and I try to learn from the best.
@Amusis I'm talking about dividend growth investing (DGI), not traditional dividend investing. There is a notable difference there. The dividend growth investor reads the statements very carefully in order to ensure both liquidity and a growing yield and it is one of the first type of investors who notices any problem at fundamental level because of this. In other words, the quality requirements of the type of stock the DGI investor is looking for keeps us from ending up like this man and his GE stock because at the first sign that something is fishy at a fundamental level we notice it immrdiately and just leave.
@@enricmm85 You're talking about a highly skilled investor who is willing to devote a significant part of his time researching these stocks. The average American can't figure out how to spend less money so they can even have money to invest. For the general investor, mutual funds are the safe play.
Nno
I own a bundle of single stocks and a bundle of mutual funds with Edward Jones......I bought both sets at the bottom of the corona crash.... guess which one has made me more money?? The mutual funds have, by almost double ..... Ramsey is correct
That all depends on which stocks you invested in. Ha. Glad you are on track.
Yea...I made 80% investing in Boeing/airline stocks.
Buy tech & buy often!!
S&P index fund has served me well over the years. The only single-company stock I own is an employer stock plan (RSU) which I sell immediately every time it vests. Holding employer stock is even more risky than holding any other single-company stock, as your salary (or pension in this guy's case) depends on the same company. If the company goes bankrupt you lose everything.
Mutual funds are garbage. Really suspect he keep recommending them. Love the guy but fund managers eat away your returns on fees that could compound themselves....
Most people don't have the financial savvy nor the time to be really invested in investing. Mutual funds are your plumber and electrician, they take care of business on your behalf when you don't know enough about plumbing, or electricity, or investing.
Now, you can diversify with single stocks, too, but if you don't have the time, mutual funds do a good job, for a price. Mutual funds are therefore more accessible to everyone. BTW, I have both, also because I like to own a part in some businesses, no matter their course, but these are very limited.
Dave gets a royalty off of referred customers to those mutual fund advisors.
Owning a single stock is stupid but owning 30 or 40 good companies gives you the majority of the diversification that mutual funds do. Most won’t or can’t manage 40 stocks. A good broker can.
To be fair coulda sold GE. Decline didn’t happen overnight like Enron. If you invest in stocks you must know what’s going on with the company otherwise invest in index/mutual/ or ETFs. Investing in stocks isn’t hard it takes effort, time, and a strong stomach
Don’t just buy one stock. If you’re going to buy individual stock shares, and there’s nothing wrong with that at all, just spread out your choices in company shares. Don’t treat it like a horse race.
It's ok but would only invest maybe 10% of your money in individual stocks and with alot of research. Most of your money should be in mutual funds or index funds.
There are plenty single stocks are are worth it. I’ve had a large TSLA position for years. Amazing returns.
TSLA has been on the verge of bankrupcy for years, its not because it finally paid off it wasn't a stupid investisment initially.
Yeah I’m gonna err on the side of Dave Ramsey for my investment advice
I too am a multi-millionaire and my portfolio has 6 stocks. These are businesses and I research and study fundamentals. Never watch the price. If the business faulters because of poor mgt, competition etc, only then would I sell.. If you are calling Ramsey for advice buy a Vanguard index.
This is pretty short sighted and to compare buying stocks to betting on horse racing is very narrow minded Dave. Stock is pretty simple. Your buying a piece of the company. If you feel like the company you bought is now threatened and doesn’t have the same traits that made it great then just sell your stance. If you bought just coke cola for the last 50 Years and that’s all you bought, you would be a investing genius. Your buying a piece of a company, that’s what it gets down to. Comparing that to horse racing is some hill billy statement
The takeaway from this story: Now is a great time to buy GE stock!!