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Senior Contributor

retirement subject cont. diversifaction

Unpopular here but I will make the case that near everyone should be building an equity portfolio for diversification and participation. Sure many have had bad experiences with stks because they bought into to fluky ideas or bought some high yields stks that by its yield, YELLED trouble. And it is too easy for many to avoid stks until the mkt is up several yrs back to back and then they buy?

 

Reality is corporations corral labor, mgmt resources of humans, and science/tech resources that are advancing daily and along with $$$$ resources, produce most of what we consume and live in, the 15 trillion $ economy that is out the door. Quality stks rise and rise over time with the economy and with their ever increasing success.

 

What to own, limit yourself to stks with solid businesses with advantages. IE food processors, ins cos, better banks, many other categories. Look at ROE, return on equity, higher ROE says they have edge. 10+ s/b 15-20+. Next take your buy list and when that sector gets hit or that stk or the whole mkt, gets hit, buy. IE pay 1.5 Xs book for a 20% normalized ROE. You are hopefully investing at ~13% earnings yields. If your local bank isn’t too dull and you can own some for 10Xs eps with a 4%+ div, own some.  Key is don’t own to much of anyone one stk, because when you do, you are tempted to sell it up 50% or sell it, the weight feels to heavy, in a bear mkt.

 

Look to have 7-12 stks, add in bear mkts, have div reinvested and hope to advance at ~10-15% over time. You are participating in the US economy, diversified away from agriculture only. And let it build.   VS farm assets it hard to suggest a %, but building to 25% of your asset base, is reasonable and risk adverse. Reality is on an overall basis, no equities is far high risk than, none.

 

Comments?  

3 Replies
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Senior Contributor

Re: retirement subject cont. diversifaction

So are you saying we should be doing our own investing as opposed to dumping money into mutual funds. How do you feel about 401k through a off the farm job.
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Honored Advisor

Re: retirement subject cont. diversifaction

I will just say...for a supposedly intelligent person, I have stunk at the stock market. We have still got some good-producing munis and are a tad into REITS; but, I got out of equities, just in time to miss the last spikes, as usual. I understand land management and natural resources management, can hire the right rental agent to screen rental tenants and deal with their BS. I even grasp more than I would like to bout heavy minerals mining.

I have a lifetime of hog farming experience, and 20 years coming up in contract production. We dabbled in direct, value-added ag a decade ago, and figured out it wasn't really for us. I do not like dealing with people as much as pigs....

In my opinion, this is better for our family...do what we know, hire good advisors for what we do not. I will never look ay my home as an " investment". It is " shelter".

Mike says on occasion, " If we cannot make it, who do you know that can?" We also know how to live with next to nothing, which we did starting out.

Much of what we are actually spending today is laying down infrastructure for a low-input lifestyle in retirement. I think people focus too much on the Number that supports present levels of spending, when there are so many variables in the equation, manipulating any or a few of them results a whole different need determination down the road. More than one way to skin this cat...

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Senior Contributor

Re: retirement subject cont. diversifaction

There are no good advisors.

Few have any real talent. If you show up and invest with Mr XYZ in a bear mkt, you do well and think

he is smatrt, If you show up and hapepn in in a wild bull, you do poorly and blame him.

 

Yes vs mutual funds, work up a list over time. Things taht seems to hve edge and haave grown over time.

Then tehre is no mgmt, no judgement past buying you own. 

 

FAST, symbol is an example.

A Hershey foods. 

 

Keep it simple.

 

Mgmt isn't for real, as if someoenthinks XYZ uindustry will be harmed  but no oine else knows> ?

Theme is use general critria and buy to won. Bear tht risk.

In outters tend to lose. 

 

40?? sure, though for employees, probably they need to use mutual funds,

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