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View Full Version : Economics Are there such things as long term safe bet stocks?


Jenson71
08-12-2011, 11:42 PM
I inherited a chunk of money recently, and I would like to put the money in some stocks, a sort of low-risk, low-reward deal. Are there any recommendations? I am also considering putting it into a CD and transferring it every few months or whatever the rules are on that.

KCTitus
08-13-2011, 12:01 AM
Gold/Silver

BIG_DADDY
08-13-2011, 12:45 AM
So let me get this straight, you're coming here for investment advice? My only question is is this real money, if that makes sense.

Garcia Bronco
08-13-2011, 08:02 AM
Yes. The entire market is that way. If you are not in it, you're are losing money.

Garcia Bronco
08-13-2011, 08:05 AM
Go talk to a financial advisor. Ask friends who they trust in your local area. That FA will help you balance out your portfolio with low to high risk stuff.

redsurfer11
08-13-2011, 08:07 AM
I inherited a chunk of money recently, and I would like to put the money in some stocks, a sort of low-risk, low-reward deal. Are there any recommendations? I am also considering putting it into a CD and transferring it every few months or whatever the rules are on that.


Diversify. Split money between different stocks. One of each type of stock. Retail, Banking, Real Estate, Pharma,Tech, Foods, Oil and Defense. If one of the stock dives, you can get out without destroying your portfolio. Only a small % should got to metals 10%. Pick stocks with decent dividends. Do your homework on all of them. Now is a good time to get in the market. Good Luck.

petegz28
08-13-2011, 08:08 AM
I inherited a chunk of money recently, and I would like to put the money in some stocks, a sort of low-risk, low-reward deal. Are there any recommendations? I am also considering putting it into a CD and transferring it every few months or whatever the rules are on that.

McDonald's, Coke, Yum Brands..things like that. Steady companies, large, dividend paying, international exposure, won't go out of business tomorrow and won't need bailouts. You won't make dick on a CD. Look inkto a large-cap value mutual fund if you want diversification. Take some of the money and put it in TIPS (Treasury Inflation Protected Securities)

patteeu
08-13-2011, 09:23 AM
Or you could just put your money in an index fund that tracks the entire stock market or a subset of it (S&P 500, Russell 2000, etc.), if you're in it for the long haul and can weather the fluctuations caused by things that scare the market like the Obama presidency.

BIG_DADDY
08-13-2011, 11:18 AM
If you have less than 500k Market Riders is a great way to go. You will save yourself a ton in broker fees and others costs and it will give you a decent diversified portfolio using static indexing. IF you have more than 500k then there is a whole bunch of stuff you need to be considering.You also will have outgrown this investment style.

http://www.marketriders.com/

Taco John
08-13-2011, 12:48 PM
http://www.google.com/finance?q=LON:SAFE

NaptownChief
08-13-2011, 12:51 PM
Gold/Silver


With the run up in their prices I wouldn't consider them "safe" long term bets. People look at them like they used to look at real estate before the 2008 melt down. But just like real estate or anything else that makes a crazy run up it can fall down just as quick.

I can't even tell you how many of my California clients that would tell me about how sure of a thing it was to buy their expensive homes in California. "when it comes to land they aren't making any more, ha ha ha...". That didn't work out too well for them after 08.

Everything has risk, just some things less than others but the term "safe bet" and equities shouldn't ever be used together. Even the best ran companies that will go on and have another 100 years of business success still doesn't mean you can't buy in when they are over-valued and cause you to lose money even over a long term like 10 to 15 years.

Stewie
08-13-2011, 01:02 PM
With the run up in their prices I wouldn't consider them "safe" long term bets. People look at them like they used to look at real estate before the 2008 melt down. But just like real estate or anything else that makes a crazy run up it can fall down just as quick.

I can't even tell you how many of my California clients that would tell me about how sure of a thing it was to buy their expensive homes in California. "when it comes to land they aren't making any more, ha ha ha...". That didn't work out too well for them after 08.

Everything has risk, just some things less than others but the term "safe bet" and equities shouldn't ever be used together. Even the best ran companies that will go on and have another 100 years of business success still doesn't mean you can't buy in when they are over-valued and cause you to lose money even over a long term like 10 to 15 years.

I would not compare gold to real estate. Nothing in the world's economics has changed to cause a dive in gold prices. Will it be volatile? Yes. Will it surpass $2500 as JPM just predicted? Yes. It's been written in stone for months and months.

Gold prices, the price you see posted daily, is driven by big big money. It's not driven by someone taking out a loan for a house (real estate debacle). It's certainly not driven by Joe Blow buying/selling gold.

I've posted on here about gold since it was <$600 and was told it was a bubble back then.

Gold is being bought by sovereign nations and central banks in large quantities. That's the market.

HonestChieffan
08-13-2011, 03:02 PM
I inherited a chunk of money recently, and I would like to put the money in some stocks, a sort of low-risk, low-reward deal. Are there any recommendations? I am also considering putting it into a CD and transferring it every few months or whatever the rules are on that.

If I were you I would do whatever KCNative says. That guy has almost as many answers as you do.

KC native
08-13-2011, 03:43 PM
If I were you I would do whatever KCNative says. That guy has almost as many answers as you do.

Make sure you brush your teeth when you finish sucking my dick.

KC native
08-13-2011, 04:00 PM
Avoid Financial Advisors like the plague. All they care about is the sell. They won't dedicate any time to your portfolio. Hell, most of them aren't even allowed to give real advice. They usually sell what the company makes them sell.

It's easy to get some good mutual funds that will manage your money well and take a lot of time involved with investment management off. So look at opening an account with Ameritrade, E-trade, Fidelity, or Schwab so you have the most possible choices.

Also, when investing, it is important to separate asset classes and pay attention to their correlations. Take the time and learn how the different asset classes behave.

A good breakdown of what should be in your portfolio (if you use funds which is what I would recommend for someone who doesn't have a lot of time to do proper investment research) would look like this:

1. Large Cap Growth fund
2. Large Cap Value Fund
3. Mid-Cap fund (either growth, value, blend, or both. Some asset managers don't like a mid cap carve out. I think that's a folly. Mid Caps are more stable than smalls and offer greater returns that large caps usually).
4. International Equity funds. (This is going to be driven by risk tolerance but in today's investment landscape, I consider them highly important. Slice them similar to domestic equities: large cap, small cap, geographic location).
5. Small Cap fund. (Smalls are necessary for big gains. Although, when they flounder, they really suck. These are more a strategic, "get in before the economy takes off" type of play)
6. Bond funds (at your age, I would skip them but if you want a really conservative investment approach, add US debt and for diversification add a World Bond fund).
7. Real asset fund(s). Gold, real estate, etc.

Now the % of those funds relative to the others in your portfolio will drive your risk profile.

A good portfolio is dynamic. Rebalancing among your asset classes should be done at least annually, preferably you'll do it once something has a huge run and you can bank some profits and move it to somewhere that has a better upside potential.

petegz28
08-13-2011, 04:02 PM
Avoid Financial Advisors like the plague. All they care about is the sell. They won't dedicate any time to your portfolio. Hell, most of them aren't even allowed to give real advice. They usually sell what the company makes them sell.

It's easy to get some good mutual funds that will manage your money well and take a lot of time involved with investment management off. So look at opening an account with Ameritrade, E-trade, Fidelity, or Schwab so you have the most possible choices.

Also, when investing, it is important to separate asset classes and pay attention to their correlations. Take the time and learn how the different asset classes behave.

A good breakdown of what should be in your portfolio (if you use funds which is what I would recommend for someone who doesn't have a lot of time to do proper investment research) would look like this:

1. Large Cap Growth fund
2. Large Cap Value Fund
3. Mid-Cap fund (either growth, value, blend, or both. Some asset managers don't like a mid cap carve out. I think that's a folly. Mid Caps are more stable than smalls and offer greater returns that large caps usually).
4. International Equity funds. (This is going to be driven by risk tolerance but in today's investment landscape, I consider them highly important. Slice them similar to domestic equities: large cap, small cap, geographic location).
5. Small Cap fund. (Smalls are necessary for big gains. Although, when they flounder, they really suck. These are more a strategic, "get in before the economy takes off" type of play)
6. Bond funds (at your age, I would skip them but if you want a really conservative investment approach, add US debt and for diversification add a World Bond fund).
7. Real asset fund(s). Gold, real estate, etc.

Now the % of those funds relative to the others in your portfolio will drive your risk profile.

A good portfolio is dynamic. Rebalancing among your asset classes should be done at least annually, preferably you'll do it once something has a huge run and you can bank some profits and move it to somewhere that has a better upside potential.

That's all fine except he said he wanted low-risk and low-reward. Which means large caps and bonds. I think some people fall in love with over-diversification. Typically I would agree with you but based on what he said he wanted he needs to stay away from 3/4 of what you listed.

ChiefaRoo
08-13-2011, 05:32 PM
Why in the World would a young guy want low risk, low reward? It's a foolish premise.

The facts are right now it's hard to make money in the market but if you are getting in I'd suggest blue chip companies outside of tech.

Boeing - you should of bought last Tuesday but it's still good with a decent dividend
Altria - Smoking and more smoking and a big dividend
Annaly Capital Mgmt - Mortgage REIT with US back stop and the FED's guarantee of not raising rates Big ole' dividend

If you had balls you'd buy MGM at $11.50 or so and wait for it to blow up

Jenson71
08-13-2011, 06:10 PM
So let me get this straight, you're coming here for investment advice? My only question is is this real money, if that makes sense.

It's not much money. It's not worth paying an adviser.

Jenson71
08-13-2011, 06:15 PM
If you had balls you'd buy MGM at $11.50 or so and wait for it to blow up

Why do you think that will happen?

KC native
08-13-2011, 09:20 PM
That's all fine except he said he wanted low-risk and low-reward. Which means large caps and bonds. I think some people fall in love with over-diversification. Typically I would agree with you but based on what he said he wanted he needs to stay away from 3/4 of what you listed.

Low risk and low reward at his age is really not the best course. His small amount of money will stay a small amount. Also, different people have different definitions of low risk. To me, a portfolio consisting of funds that cover those different asset classes is more low risk than just staying in large caps and bonds.

I agree with you about over-diversification, however at one of my previous jobs I had help configure our portfolios so I saw the huge advantage of portfolios set up this way. The standard deviation of returns, as well as alpha, were much higher using all these asset classes. The key to diversification is the correlation amongst the asset classes. Also, rebalancing is a big determinant in the amount of alpha generated.

KC native
08-13-2011, 09:22 PM
Also, it should be noted that just because the base portfolio has all these asset classes, they can be adjusted where if something has a bad outlook you can drop that class and either keep it in cash or redeploy it to something else.

petegz28
08-13-2011, 10:47 PM
Low risk and low reward at his age is really not the best course. His small amount of money will stay a small amount. Also, different people have different definitions of low risk. To me, a portfolio consisting of funds that cover those different asset classes is more low risk than just staying in large caps and bonds.

I agree with you about over-diversification, however at one of my previous jobs I had help configure our portfolios so I saw the huge advantage of portfolios set up this way. The standard deviation of returns, as well as alpha, were much higher using all these asset classes. The key to diversification is the correlation amongst the asset classes. Also, rebalancing is a big determinant in the amount of alpha generated.

I agree but if low risk-low reward is what makes him sleep well at night then...

I agree he is young enough he should be in small and mid-caps but if it is going to keep him awake at night then it isn't worth it.

petegz28
08-13-2011, 10:50 PM
The best thing to do in my opinion is to read some books on the market and understand what it is, how it works and get a better understanding of the asset classes. Then you will make a more informed decision on what it is you want to do with your money. And the one thing I would strongly advise is stay away from the CNBC's and Bloombergs. They cater to the very active and professional trader and will have your emotions so wound up in the day-day market action that you will lose sight of your long term goals.

banyon
08-14-2011, 10:00 AM
If you had balls you'd buy MGM at $11.50 or so and wait for it to blow up

Where should I set my OTM Call strike?

banyon
08-14-2011, 10:21 AM
McDonald's, Coke, Yum Brands..things like that. Steady companies, large, dividend paying, international exposure, won't go out of business tomorrow and won't need bailouts. You won't make dick on a CD. Look inkto a large-cap value mutual fund if you want diversification. Take some of the money and put it in TIPS (Treasury Inflation Protected Securities)

Strangely, I most agree with Pete's post in this thread.

You don't want to buy an index like patteeu suggests, because then you won't get the benefit of compounding dividends. (Some Index ETF's have a small dividend, but this is usually eaten up or smaller because they take out their management fees).

Also, bear in mind, nothing is completely safe, not even McD's and Coke. Look at the Dow Jones Industrial average from 80 years ago.

http://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average

September 14, 1929
Allied Chemical
General Foods (formerly Postum Incorporated)
Paramount Publix
American Can
General Motors Corporation
Radio Corporation
American Smelting
General Railway Signal
Sears Roebuck & Company
American Sugar
Goodrich
Standard Oil (NJ)
American Tobacco B
International Harvester Texas Company
Atlantic Refining
International Nickel
Texas Gulf Sulphur
Bethlehem Steel
Mack Truck
Union Carbide
Chrysler
Nash Motors
U.S. Steel
Curtiss-Wright *
National Cash Register
Westinghouse Electric
General Electric Company
North American
Woolworth

Now, 80 years ago those all seemed safe too, but only Standard Oil (NJ) (now ExxonMobil) and GE remain Dow 30 components.

Also, I have a TIPS at 3.6% I bought in April when I thought we might have trouble in the next couple of months and it's been one of my best performers.

HonestChieffan
08-14-2011, 02:55 PM
That's all fine except he said he wanted low-risk and low-reward. Which means large caps and bonds. I think some people fall in love with over-diversification. Typically I would agree with you but based on what he said he wanted he needs to stay away from 3/4 of what you listed.

That was predictable.

HonestChieffan
08-14-2011, 03:04 PM
Low risk and low reward at his age is really not the best course. His small amount of money will stay a small amount. Also, different people have different definitions of low risk. To me, a portfolio consisting of funds that cover those different asset classes is more low risk than just staying in large caps and bonds.

I agree with you about over-diversification, however at one of my previous jobs I had help configure our portfolios so I saw the huge advantage of portfolios set up this way. The standard deviation of returns, as well as alpha, were much higher using all these asset classes. The key to diversification is the correlation amongst the asset classes. Also, rebalancing is a big determinant in the amount of alpha generated.

How do you know what his risk comfort level is? You don't. His age has nothing to do with his comfort level. Only Jenson knows what that is. He may well have a desire for safety till he is out of law school and then take a bit more risk. It is money he inherited and may not want to go higher risk till he knows more.

For a guy who took a broadside at advisors, you dive right in like an advisor. That tells me to avoid anything you say like the plague.

Run Jenson run. Figure out what you want the money to do. I can give you the name of very successful young (32) CFP who can guide you in the right direction. He is close enough to your age to relate well and is managing a ton of money from rich old bastards like me who are quite happy with his efforts. Beware of people who have all the answers.

KC native
08-14-2011, 03:07 PM
How do you know what his risk comfort level is? You don't. His age has nothing to do with his comfort level. Only Jenson knows what that is. He may well have a desire for safety till he is out of law school and then take a bit more risk. It is money he inherited and may not want to go higher risk till he knows more.

For a guy who took a broadside at advisors, you dive right in like an advisor. That tells me to avoid anything you say like the plague.

Run Jenson run. Figure out what you want the money to do. I can give you the name of very successful young (32) CFP who can guide you in the right direction. He is close enough to your age to relate well and is managing a ton of money from rich old bastards like me who are quite happy with his efforts. Beware of people who have all the answers.

You are fucking retarded. Did you miss the post where I said people have different definitions of risk huh?

CFP is a fucking garbage certification. But, go ahead and recommend that Jenson pay an additional fee to someone to sell him shit that he could very easily do himself. Those annual fees have no impact on investment performance. :rolleyes:

HonestChieffan
08-14-2011, 03:17 PM
You are ****ing retarded. Did you miss the post where I said people have different definitions of risk huh?

CFP is a ****ing garbage certification. But, go ahead and recommend that Jenson pay an additional fee to someone to sell him shit that he could very easily do himself. Those annual fees have no impact on investment performance. :rolleyes:

Yes, I am retarded. Semi-retired and self employed in a successful second career at 58 retarded.

Fee? You are a dipstick. Go back to the mailroom and get things ready for Monday morning you loon.

Jenson.....ignore this crackpot. If you are sincerely interested in someone who will give you some advise, let me know. There wont be a fee involved. Nor will you have to deal with some mailroom expert running about with his usual name calling.

KC native
08-14-2011, 03:36 PM
Yes, I am retarded. Semi-retired and self employed in a successful second career at 58 retarded.

Fee? You are a dipstick. Go back to the mailroom and get things ready for Monday morning you loon.

Jenson.....ignore this crackpot. If you are sincerely interested in someone who will give you some advise, let me know. There wont be a fee involved. Nor will you have to deal with some mailroom expert running about with his usual name calling.

Really? There won't be a fee? So, how does this CFP get paid? Does he work for free?

If he goes through your cfp (which are a dime a dozen anyway), he'll either pay a hefty front end load (where he'll be married to his portfolio for awhile so he can recoup his commision), or he'll be stuck paying a fee based on assets.

HonestChieffan
08-14-2011, 03:41 PM
Really? There won't be a fee? So, how does this CFP get paid? Does he work for free?

If he goes through your cfp (which are a dime a dozen anyway), he'll either pay a hefty front end load (where he'll be married to his portfolio for awhile so he can recoup his commision), or he'll be stuck paying a fee based on assets.

I think I know better than you do what Mr Jenson will get and what he will pay. God you are a fucking piece of work.

Back to the mailroom.

petegz28
08-14-2011, 04:31 PM
You are ****ing retarded. Did you miss the post where I said people have different definitions of risk huh?

CFP is a ****ing garbage certification. But, go ahead and recommend that Jenson pay an additional fee to someone to sell him shit that he could very easily do himself. Those annual fees have no impact on investment performance. :rolleyes:

I have to agree that the CFP certification isn't worth the paper it is printed on in most cases. Every CFP I have ever talked too has been, imo, as ignorant of the market as a 5th grader.My wife has a CFP, it's her money, and every time I talk to the guy I leave shaking my head at how little he knows about stuff.

Jut the other week I called him and told him to dump her small caps and move them into TIPS because the market was going to tank. This was after the initial downgrade fiasco, I am talking about when it really started taking it on the chin. He swore the only ones saying the market was heading lower were the technicians (which I am). He said "if you're asking me for a recommendataion right now I don't have one". I told him I am not asking you to do anything but move her money where I told you to move it.

I spent 30 minutes educating him on the $, the Swiss Franc, the Yen, QE 3 possibilities and the lack of capital being invested into this country. All he could say was there was "trillions of $'s in cash sitting on the sidelines andin corporate bank accounts". I told him that is exactly right and when they start investing it then we will talk about things again, until then, it's cash sitting in a bank account. Flipping moron.

Stewie
08-14-2011, 04:54 PM
Invest in Diamonds after the market takes another dump. Not the jewel, but the Exchange Traded Fund under the ticker symbol "DIA". Politicians are very sensitive to the DOW and pump money in to make it look like everything is rosy.

You can also look at VIX. It's the volatility index of the S&P 500. Volatility is going to be high in the foreseeable future.

patteeu
08-14-2011, 05:13 PM
You are ****ing retarded. Did you miss the post where I said people have different definitions of risk huh?

FWIW, I thought your advice was reasonable.

petegz28
08-14-2011, 05:20 PM
Invest in Diamonds after the market takes another dump. Not the jewel, but the Exchange Traded Fund under the ticker symbol "DIA". Politicians are very sensitive to the DOW and pump money in to make it look like everything is rosy.

You can also look at VIX. It's the volatility index of the S&P 500. Volatility is going to be high in the foreseeable future.

Both of those are very high risk and you know it..ROFL

KC native
08-14-2011, 05:37 PM
You can also look at VIX. It's the volatility index of the S&P 500. Volatility is going to be high in the foreseeable future.

If you're not a pro, stay away from the vix. When I worked for the discount broker, I can't tell you how many pissed off option traders I had because the VIX options didn't respond how they thought they would.

KC native
08-14-2011, 05:39 PM
I have to agree that the CFP certification isn't worth the paper it is printed on in most cases. Every CFP I have ever talked too has been, imo, as ignorant of the market as a 5th grader.My wife has a CFP, it's her money, and every time I talk to the guy I leave shaking my head at how little he knows about stuff.

Jut the other week I called him and told him to dump her small caps and move them into TIPS because the market was going to tank. This was after the initial downgrade fiasco, I am talking about when it really started taking it on the chin. He swore the only ones saying the market was heading lower were the technicians (which I am). He said "if you're asking me for a recommendataion right now I don't have one". I told him I am not asking you to do anything but move her money where I told you to move it.

I spent 30 minutes educating him on the $, the Swiss Franc, the Yen, QE 3 possibilities and the lack of capital being invested into this country. All he could say was there was "trillions of $'s in cash sitting on the sidelines andin corporate bank accounts". I told him that is exactly right and when they start investing it then we will talk about things again, until then, it's cash sitting in a bank account. Flipping moron.

They get the CFP designation because it makes it easier for them to sell life insurance. It's all part of the sell.

I hate to break it to those that believe their advisor (CFP type advisor) doesn't look at your portfolio but maybe twice a year. They sure as fuck will never recommend you sell and go to cash for awhile.