If you had $500,000 to put in stocks, what would you put it in-also stock stories!

[Vesayen]

Entering in a stock market game on another message board I post on.....want your advice on what I should buy and why


My stock story which made me 279 dollars

Remember earlier in the year when martha stewart was getting hammered?

I waited for the stock to go as low as I thought it would get as I figured it would bounce back.........I was right by the time I sold after broker fees I had a 279 dollar profit-yey heh!

[SlowwHand]

I'd open a Cat House in waters off the coast from South Padre.

[monolith94]

I'd invest in silver!

[Urban Ranger]

I tend to short stocks if I can.

[Ted Striker]

Buy natural gas companies. This was the recommendation of an expert on the Wall Street Journal show today.

Natural gas is at an all time low in supply and is expected to stay that way for at least 5 years.

[Urban Ranger]

Since this is a game, see if you can short on the index futures of Fortune 500.

[JohnT]

Betcha didn't expect an actual answer to this question. But I got one!

I actually sent the following asset allocations out last week to affix my investment options due to a minimum $500k inheritence I'm to receive. Tis rather a nice thing, being able to bottom feed the market. The portfolio is to be re-invested in full until my minimum retirement age of 60 (25 years from now).

I split up my allocations 60/40 equities/bonds, but I am actually more exposed to corporate America due to that 60% of my bonds are in corporate bonds.

There are a few obvious trends here: I'm heavily invested in Vanguard funds, and I'm heavily invested in index funds, leaving only 1 managed fund in my portfolio - but note, it has the largest chunk of cash going to it. The Vanguard thing is simple - over 95% of funds underachieve the market... except for index funds, which just match it. Obviously, for those of us who do not want to get an MBA in corporate finance, the thing to do is buy a variety of index funds and be happy with merely achieving market returns. Vanguard funds because a., they're the king of index funds, and b., they are cheap, cheap, cheap! The VFINX fund, for example, has an expense ratio of .18%, whereas most fund "advice" columns say you should lower it to a "mere" 1%... for a fund that is 95% guaranteed to do worse than the market index for that funds category. Tsk, tsk - these people ought to be ashamed of themselves.

:climbs off soapbox, gets back on topic:

I am going to rebalance this portfolio once a year, selling those assets that have appreciated and buying more of those that have depreciated. For example, I have a 20/80 split between asset A and asset B. In the space of one year, asset A has increased to 25% of my portfolio, while B is down to 75%. I would then sell my excess A and buy up B to re-achieve that 20/80 split.

This is a slightly risk-averse portfolio that is designed to match the market, not beat it. I am rather exposed if the market has another long neutral period, where it doesn't appreciate considerably for another 10-15 years, but that's why I put 40% in bonds and my largest stock holding is a managed fund by one of the more stable groups in America.

So, here it is: How I invested $500,000 in todays market.

Equity Allocation: 60%

Fund Name, symbol, percentage of total portfolio, percentage of allocation (equity or bond) type:
Vanguard 500 Fund Index, VFINX, 18%, 30%
Vanguard Emerging Mkts Stock Index, VEIEX, 6%, 10%
Dodge and Cox Stock, DODGX, 30%, 50%
Vanguard Small Cap Value Index, VISVX, 6%, 10%

Bond Allocation: 40%
Vanguard Short Term Bond Index, VBISX, 8%, 20%
Vanguard Intermediate Term Bond Index, VBIIX, 8%, 20%
Vanguard Short Term Corporate, VFSTX, 24%, 60%

[Urban Ranger]

Originally posted by JohnT
Betcha didn't expect an actual answer to this question. But I got one!

What's wrong with shorting index futures? Actually, it's more like betting the market will go down overall.

[JohnT]

Originally posted by Urban Ranger
What's wrong with shorting index futures? Actually, it's more like betting the market will go down overall.

Because:

1. It is not a viable long-term portfolio strategy.

2. It wasn't a serious answer to the question - I truly doubt that if you had $500,000 to invest you would put it all on S&P or NASDAQ shorts.

[Urban Ranger]

It's not a long term strategy, but he's only doing it for a game, a short term thing.

If I really have half a million, I would probably short an actual stock instead of the index, but that's a different case.

[JohnT]

I don't know if I would short anything... I'm sure there are some stocks that decline, but it's no longer the sure thing that it was back in 2000. Nasdaq is down 75%, the S&P is down, what, 20-25%? Seems to me the smarter thing to do is buy stocks that aren't worth anything today... do you really think Ford is going to languish forever at $7? Freakin K-Mart is down to $.12/share - take a $20, buy a hundred shares, and spend the rest on lunch.

The point is: by shorting you will be doing what everybody else is doing, and that is never a good thing.

Otoh, betting on the long-term growth of the US economy is a likelier winner given that our country's population is going to double in the next century at a rate almost equal to the globes growth rate.

[Ted Striker]

Ya but don't just buy it because it's cheap.

K-Mart for instance, make sure they are still afloat.

[Urban Ranger]

You need to do a lot of homework if you want to hold a stock long term though. How did Ford look in the last ten years? Is the current gloom just an exception?

As for NASDAQ, the company that looks any good is probably Intel, followed by AMD.

[JohnT]

Ted - You don't make money when you sell, but when you buy.

[JohnT]

Originally posted by Urban Ranger
You need to do a lot of homework if you want to hold a stock long term though. How did Ford look in the last ten years? Is the current gloom just an exception?

As for NASDAQ, the company that looks any good is probably Intel, followed by AMD.

Precisely, which is why I'm not investing in any stocks, just stock index funds. I mentioned K Mart and Ford from the top of my head... though I do think that Ford is a good buy, K Mart will likely result in you losing that $12. But it's worth a shot - after all, it can't get any lower.