"You should have $10,000 in index funds before picking individual stocks"

Posted by ArteSuave116 on February 07, 2017 (11:57AM)

I heard Jim Cramer say this yesterday in a video. What are your thoughts? Agree? Disagree?

Posted by made to trade on February 07, 2017 (03:29PM)

frankly i don't think you should pick individual stocks unless you are trained in financial statement analysis.

if you are not, i think that you should be in index funds as well

Posted by spshapiro on February 08, 2017 (07:42AM)

The reason for waiting until you accumulate a certain amount of capital before investing in single stocks is that you are likely to put too much into one or two investments, and if you guess wrong, you blow the greater portion of your portfolio. The specific number is of little relevance; it is important to diversify. That is one of the greater merits to index funds; they are by nature diversified (depending on the index picked.)

What is of more importance here is, how much experience you have, and how much time and energy you have to put into this effort. It is far better to use index funds than to not invest at all, but I have always preferred to construct my own balanced portfolio rather than leave that to others.

Posted by BayouSteve on February 09, 2017 (05:23PM)

I have taken quite a few spankings in the market trading it myself plus my advisor but also have enjoyed better growth overall than with diversified ETFs and the like. However I have recently taken the stance that I can't keep track of everything I have to keep track of effectively. 

I have started to take distributions from my traditional IRA and doing a conversion into my Roth IRA which I have at Zacks and it is managed into a wide range of ETFs and their fees are miniscule. I just check in from time to time to see whats going on. You kinda get a feel for their investment advice month to month. Just started so it remains to be seen how they do. 

Posted by ncmike on February 10, 2017 (12:53PM)

If you were to invest 25K today 02-10-2017 in the market and you want to hold only 5 stocks for about 4 years during this Pres. term, what would you buy?

Posted by BayouSteve on February 10, 2017 (04:28PM)

Mining/Oil and Gas, high tech manufacturing, digital media, financials, Steel or cement companies. I have all of those but steel but I know production is up for that building product. 

Posted by the penguin on February 11, 2017 (12:17AM)

The statement taken in isolation is silly.  Cramer is a paid CNBC talking head who is a former hedge fund market manipulator.

Any statement in this business regarding strategy that is said with certainty can easily be shown to be false.  But if you view it with a narrow enough lens, it can seem true.

Playing the market and flipping a coin have stunning statistical parallels, the biggest difference being how much you gain or lose is not a binary event.   You can never know the future, you can only learn what happened, and why, and apply those lessons going forward.

Never stop learning, never take anything at face value, and make your own decisions.

Posted by Azzanadra on February 14, 2017 (02:51PM)

I've heard Cramer say that. He also said unless you do investing all day every day, you should never own more than a dozen to 20 or so stocks, because it's too much data to keep track of. Maybe that's true from an analytical standpoint. But as a buy & hold, low tax strategy investor, that level of detail wouldn't benefit me much post purchase. Perhaps there is one "All in one" ETF that checks all the boxes AND has low fees, but factors like stocks with good dividend appreciation or opportune sector exposures make me want to pick some of my own basket I'm well past that dozen or so recommendation, but the promo offer on trade commission let me diversify better than I otherwise could, short on funds. The plan is to add to those foothold positions whenever there's an intangible panic. 5 months in, so far so good

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