As I have been doing some spring cleaning and weeding out and more importantly reselecting a new list of funds and stocks .. more so stocks, I will outline the process and data here. IT would be decidedly bad formatted or un-formatted but you would be able to pick up the gist.
First up the less interesting thing - the mutual funds and ETFs. This was fairly dominated by the big ones such as Fidelity and Vanguards and T.R.Price in the past. Now that I have more or less consolidated with Vanguard and some ishares ETFs, Vanguard pretty much will remain the core. Any data out there, the graphs with google finance or morningstar or any other charts pretty much point to the obvious conclusion that has been mirrored by lot of big names. The conclusion is that it is better off for a retail investor to hold on to the index funds or just do basic trading and re-balancing in them. Really there is nothing more to it or nothing that my experience in Finance as well as education in it has yielded. Part of the reason could also be that the index funds such as VTI periodically auto-rebalance themselves due to index changes or changes in weights of the constituents. Besides the graphs of several years point to this as a core strategy. Any back testing pretty much point to this. Add to that the human emotions and variables, I am pretty much doubling down on this as core holdings. Next to cash or treasuries, this is pretty much as safe and defensive and more offense-as-a-defense strategy as it gets.
Do you also want to hold some active funds .. just in case? In the past, FCNTX is the only fidelity fund and I am done with the rest of them. Vanguard has some good VWELX and balanced funds. I will stick with the vanguard ones here too. And no go with the rest.
That is pretty much it on the mutual funds and the ETF side. ETF in particular is interesting. I had good experience with them in the past when I put on various ETFs sectors in 2009 and booked some decent profits in 2010 thru 2011. I was convinced then that 2012 or 2013 could be a doom waiting to happen. But that is a timing problem and how to best deal with a rising market or how much to hold on too and so on .. that is a topic for a different day.
To the more interesting basket of stocks. Now stocks have different buckets in them. Dividend buckets such as REITS or utilities .. I think we can keep them on the side and subject to a different philosophy. Here we can simply divy them up into as many big stocks as possible and allot only to the very big ones. The ones from NY or NJ or OH or CA are so big in size that the chances of them going under are pretty minimal given the regulations maze that they operate under and the fact that they are being held by some of the biggest instituational investors as well as pension funds.
As mentioned earlier, some of the criterias that I had kept changing over time. Dividend was a big one and so was sheer performance once upon a time. Some constant criterias were percentage of institutional investors - the higher the better as these guys more or less do their homework well. Fidelity in particular gives a pretty fantastic research tool ( bar none .. and leaves Vanguard way behind, TRP is a good second though I have not tried others but TD Ameritrade is decent too and so could be the likes of ETrade or TradeKing) which actually lists down the names of the institutional holders and the percentage that they hold of a particular stock as well as the changes over time. Pretty neat actually and a seriously handy tool and information set for people who are a bit more involved in trading and researching stocks. Given long time duration, beta is not that much of a draw. PE could be a slight thing to consider among other things. Remaining things more or less are out of the window though I do keep an eye of the location of headquarters, board of directors, number of employees and current dividend yield.
From the past, I culled out this list:
NASDAQ:WFM NASDAQ:COST NYSE:TGT NYSE:WMT NYSE:HOT NASDAQ:MSFT NASDAQ:GOOG NASDAQ:AAPL NYSE:RHT NYSE:V NYSE:MA NYSE:WAG NYSE:CVS NYSE:HD NYSE:LOW NYSE:AXP NYSE:COF NYSE:DIS NYSE:GE NYSE:BBY NYSE:CI NYSE:EAT NASDAQ:NFLX NYSE:HOG NASDAQ:CMCSA NYSE:XEL NYSE:PEG NYSE:DPS NYSE:KO NYSE:PEP NYSE:TJX NYSE:AEO NYSE:PFE NYSE:MRK NYSE:T NYSE:VZ NYSE:MCD NYSE:JPM NYSE:DD NYSE:DPZ CVE:FO NYSE:RSG NYSE:CVX NYSE:XOM NYSE:BA NYSE:CAT NYSE:UTX NYSE:IBM NASDAQ:DTV NASDAQ:AKAM NASDAQ:ADBE NASDAQ:AMZN NASDAQ:BBBY NASDAQ:BIIB NASDAQ:CHKP NASDAQ:GILD NASDAQ:SPLS NASDAQ:SBUX NYSE:WFC NYSE:MMM NYSE:ABT NYSE:ALL NYSE:MET NYSE:BMY NYSE:ETR NYSE:EXC NYSE:PM NYSE:MO NYSE:JNJ NYSE:LLY NYSE:ANTM NYSE:AET NYSE:BSX NYSE:DE NYSE:AEP NYSE:ED NYSE:D NYSE:DUK NYSE:FDX NYSE:UPS NYSE:LUV NYSE:AWK NYSE:BKS NYSE:YUM NYSE:TM
Add to this, the jcp/macy/kohls/garmin/JWN and so on .. all of which I have decided to stop investing in.
Another criteria that I had was not to bother if the size of the company is say less than a 5 billion range or maybe 10 billion range in similarly peer sized industry.That weeded out a lot of companies. While having an scillinating dining experience gives me an overdrive to invest in those companies, I think the food industry is too crowded though it is predictable. But I might keep them to ETF list too. I mean, I am interested in the DIN, EAT, MCD, YUM, DPZ, SBUX and so on .. and I think a lot of them are tech companies as well as food companies. So I am a bit interested in them and want to hold them. But I think strictly speaking, if the criteria were that "not to pay attention to these things over a long period of time", then these stocks dont make the cut. Because they fluctuate at times. Companies like Chipotle are relatively new but they fluctuate very wildly.
Just like Netflix in the video sector or the Directv or Dish TV and so on. To be clear, many of them have a sure shot role in a "zing" list but maybe I would just put them in this list and not really put them always in the core list. I dont want to be too reactive with such stocks.
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