Mutual funds vs Stocks

[Scallywag]

For the very aggressive investor with a nearly 30 year investment horizon would you recommend an aggressive mutual fund (such as POAGX) or would you recommend an aggressive growth stock (like NFLX) ?

The intent is to create a large capital that can be tapped into for a monthly income for another (projected) 50 years after that.

Thanks .

[Jluke]

Do you think Netflix will be around in 30 years? Let alone 80 years (30+50)?

low cost index fund might be the way to go.

[Scallywag]

Those were examples of current investments that could be used to grow a large capital in 30 years' time that could then be reinvested to generate a decent income for someone for 50 more years, if this person didn't have to worry about housing or medical insurance.

Sorry I wasn't clear in my OP.

[disneysteve]

would you recommend an aggressive mutual fund (such as POAGX) or would you recommend an aggressive growth stock (like NFLX) ?.

I wouldn't do either.

I absolutely wouldn't do a single stock in any company, and especially not a tech stock. Who knows if that company will still be around 30 years or even 5 or 10 years from now.

And I wouldn't do a relatively expensive mutual fund. I'd do low cost index funds or commission-free ETFs.

[Jluke]

Those were examples of current investments that could be used to grow a large capital in 30 years' time that could then be reinvested to generate a decent income for someone for 50 more years, if this person didn't have to worry about housing or medical insurance.

Sorry I wasn't clear in my OP.

Thanks for the clarification.

Do you think Netflix will be around for 30 years?

If I could find a stock, or group of stocks, that would outperform and really increase in value then I would do it. Like me holding Google, Apple and Sirius XM since I purchased a few shares over the 2004-2008 timeframe.

I've made some money but not life changing. Now the hard part is when to sell these winners.

[Scallywag]

Thanks for the clarification.

Do you think Netflix will be around for 30 years?

If I could find a stock, or group of stocks, that would outperform and really increase in value then I would do it. Like me holding Google, Apple and Sirius XM since I purchased a few shares over the 2004-2008 timeframe.

I've made some money but not life changing. Now the hard part is when to sell these winners.

i am an active investor and do a "stock checkup" once a year to rebalance my portfolio. I have held on to some stocks for years and some I have sold to either reinvest in the "gold" stocks or to purchase new growth stocks.

The entire investment portfolio held in the stock market will be liquidated on my spouse's 75th birthday and reinvested in income producing products instead - such as high yield municipal bonds or treasury bills, CDs etc. My whole goal is to grow our portfolio so that my disabled son has an income for life. I don't expect whoever takes over his guardianship to invest his capital in the stock market and this is specified in our wills / living trust.

So, to summarize, my intention is to be an aggressive and active investor until my 60s and then in the next 15 years start converting high risk / aggressive investments into stable "bond type" holdings that could generate a lifetime income for my son.

[disneysteve]

The entire investment portfolio held in the stock market will be liquidated on my spouse's 75th birthday and reinvested in income producing products instead - such as high yield municipal bonds or treasury bills, CDs etc. My whole goal is to grow our portfolio so that my disabled son has an income for life. I don't expect whoever takes over his guardianship to invest his capital in the stock market and this is specified in our wills / living trust.

I'm not sure that I'd agree with that stipulation. If you want the money to last 50 years, you're going to need some principal growth over time. Rather than saying no stocks at all, a better plan may be to cap the percentage that can be invested for growth. Maybe 20 or 30% or whatever number you feel is appropriate. If you go all income-producing, the buying power is going to steadily erode and after 20 or 30 years, the amount of income it is generating won't be keeping up with higher expenses.

[james.hendrickson]

Some value investors do really well with picking individual stocks. Obviously people like Bill Graham and Warren Buffet come to mind, but when you take a closer look at it, there are plenty of lesser known, but still successful value investing/stock picking types who have done very well with a long term buy and hold strategy.

I just heard about a guy named Stephen Jarislowsky, who is a legendary stock picker in Canada.

If you want to pick individual stocks, it might make sense to think about what people like Jarislowsky are doing and see if there are any applicable lessons for your own investing.

Here is his wikipedia page.

Here is a fun podcast with the guy - he's got some great stories about doing counter-intelligence in post world war II Japan.

[cypher1]

I also second low cost index funds through Vanguard, Fidelity, Schwab, etc. While I personally do more Total Stock Market index funds, have you considered more small-cap or passive healthcare funds to add? Although I understand they still may not be as aggressive to your liking.

[snafu]

I do Bank ETF, like Pharma ETF as the medical community are pushing more pills, more expensive pills...

[bjl584]

You can successfully trade individual stocks if you stay on top of it. It is definitely not a passive way to invest. Most people would rather set it and forget it.

[Scallywag]

I am not a passive investor at all ! I define myself as an aggressive bargain hunter who reads the financial dailies and follows the market every day. I need to be very aggressive because I am trying to generate an income from these holdings for 50 years after my spouse and I have passed on for someone who may never be able to be gainfully employed at all.

I buy very large stocks 1 share at a time. Yes, people have laughed at me for buying 1 share of AMZN here, a share of GOOG there, 1 share of PCLN (now BKNG) on a dip now and then etc.

Every penny left over after paying our monthly bills gets pumped into the market. I am not a "shopoholic" but I am obsessed with securing my son's financial future. So yes I am willing and able to be a hands on investor if that is what will help me amass a fortune for him.

[james.hendrickson]

I am not a passive investor at all ! I define myself as an aggressive bargain hunter who reads the financial dailies and follows the market every day. I need to be very aggressive because I am trying to generate an income from these holdings for 50 years after my spouse and I have passed on for someone who may never be able to be gainfully employed at all.

I buy very large stocks 1 share at a time. Yes, people have laughed at me for buying 1 share of AMZN here, a share of GOOG there, 1 share of PCLN (now BKNG) on a dip now and then etc.

Every penny left over after paying our monthly bills gets pumped into the market. I am not a "shopoholic" but I am obsessed with securing my son's financial future. So yes I am willing and able to be a hands on investor if that is what will help me amass a fortune for him.

Scallywag - well in general you pay more for equity when you buy smaller amounts (like anything), but congrats on moving forward. A lot of people simple never get into stocks at all.

[Tabs]

I completely agree with the concensus that to try to predict the future of any stock-- especially with a 30 year time frame, and with a tech company even-- is borderlining somewhere between impossible and madness. The basic advice here is simple: Don't do it.

To give some context, roughly 30 or so years ago, Microsoft had only just started establishing dominance into this exciting new market called the "Home Computer" (with their admittedly impressive MS-DOS 3.30). Think about it. Back then, the home internet that we know and use so casually today didn't exist yet (TCP/IP and UDP did exist back then-- also VAX for nostalgia nerds out there-- but most still functioned under the original intended use within the academic/military realm). No Netflix. No home internet. Not even Windows as we know it existed yet. (Yes, I am aware of the first Macintosh, and for that matter, MS-DOS had mouse drivers and GUIs using custom ASCII as icons that existed back then. I am trying to keep this simple.) So, look at how far technology has come in that 30 year span. It's staggering. I can't even begin to imagine what technology is going to look like 30 years from now.

For the sake of conversation though, I still enjoy the occasional good shaking of my Magic stock market 8-ball. With that in mind, here are a few observations about Netflix:

* I think you said you wanted to build an income portfolio? If so, Netflix doesn't pay any dividend yield.

* Will they pay anytime in the future? Most unlikely. The reason why is because the traditional media groups that control most of Netflix's content have largely pulled out, in favor of their own (such as Hulu, HBO Go, CBS All Access, and the upcoming Disney streaming). This forced Netflix into taking on huge risks, spending huge sums of capital into creating their own original programmings, or at least revised adaptations. Thank goodness it's working out so far, because personally, I really do like Netflix, and would love to see them succeed and wrest control from the other traditional media groups that are trying to pull us back into that traditional cable TV models where they have greater control over what we watch with not just programming, but also commercials as well.

* I believe that conventional programming will also have contend against the rising new juggernaut that is video social media. We're talking Twitch to Youtube to even Chinese powerhouses like Tencent and TikTok. Yes, TikTok. Yes, they are Chinese. I don't know if anybody else is noticing this, but as it is already, they are roundly beating us in terms of app technology, and I honestly believe that they even have a good chance of taking over the US market sometime in the foreseeable future. Personally, I would NOT like to see them succeed, knowing how they operate politically, and the dystopian way they handle big data, but as we speak right now, they are already trying very hard to gain dominance into the US market.

And before you say that I am comparing apples and oranges, just remember that when the Writer's guild went on strike, a lot of enduring shows created from then, such as America's Got Talent and Survivor Island, was based on more of like that reality-styled programming. A style that can and is being replicated from social media stars (called Influencers) that are building full time careers out of it. In the end, it's all about eyeball numbers, and the media landscape has gotten very fractious and varied.

* Don't forget the real elephant in the room too: Amazon.

So do I think that Netflix will still be around 30 years from now? I personally hope so, but I honestly have no idea. So far, I think the managemenet is doing a very good job, but they remain under a lot of financial pressure, and new competition seems to be popping up all over the place.

But if you wish to buy Netflix still, for at least the short and perhaps the mid term, Ithink they'll still be around by then. Personally, I recommend to set a buy order, at a value price that you would consider is a reasonable bargain, within a time frame you deem reasonable. If it doesn't go through, you lose nothing. If it does go through, then you know that at least you bought it at a price that you had already deemed was a good bargain.

[james.hendrickson]

I think an important caveat here is that its hard for humans to predict the future. Its entirely possible that an AI may be developed in the future that is an extremely efficient stock picker. Machines by nature don't have emotion and can't get emotionally involved in a particular stock or investing philosophy. So while its hard to predict the future now, it doesn't mean that it can't be done at a later date.