Recency,Dividends,Individual Stocks

Research on Safe Withdrawal Rates

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unclemick
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Location: LA till Katrina, now MO

Recency,Dividends,Individual Stocks

Post by unclemick »

The recent 15 yr runs - broke one of my old saws - my mental 4% dividend breakpoint.

Another related queston - over the last twenty years or so, I've seen curves comparing when the number of individual stocks owned makes your portfolio behave like an index - usually the S&P 500 nowadays.

I've seen numbers as low as 8 stocks capturing more than 80% of the behavior. 15-20, 25-30, also pops up a lot. Bernstein's 15 Stock Diversification Myth got a lot of response on the other board a while back. I've seen articles to the effect owning individual stocks in 'some # ' gives you an 'expense free mutual fund'.

I gots 40 DRIP dividend stocks not particularly diversified, not equal weight ($ or share wise), bought at different times over 15 years.

So - should I bother to look for a benchmark index? What would it be? What could it tell me? I suspect - but don't really know - that I'm sensitive to general interest rate movements - move than the general market. Is my optimum holding 8 stocks, 15, 30 for a dividend strategy?

BTY - I also don't rebalance.
Mike
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Post by Mike »

What could it tell me?
Comparing your portfolio's performance to bench marks can tell you if you should continue as is, or abandon your strategy and just buy a low cost mutual fund. Some people can do a good job buying individual stocks, and some can't.
JWR1945
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Post by JWR1945 »

unclemick wrote:So - should I bother to look for a benchmark index? What would it be? What could it tell me? I suspect - but don't really know - that I'm sensitive to general interest rate movements - move than the general market. Is my optimum holding 8 stocks, 15, 30 for a dividend strategy?

BTY - I also don't rebalance.
1) No. Make your own.
2) Something to meet your own needs and objectives.
3) The key is knowing what you want it to tell you.
4) Holding more companies reduces the effect of bad news from any single company. David Dreman and several others would suggest having as many as you can tolerate. [Owning too many companies can become a bookkeeping nightmare.] John Bogle suggested holding 15 carefully selected stocks. A lot of it has to do with how attractive each individual holding looks. Stop when you find yourself buying inferior merchandise, possibly sooner.
5) I don't know why you would want to rebalance. It can help in certain circumstances, but it can hurt a whole lot in others. I suspect that if you had two or three companies that had grown so much as to dominate your portfolio, you would do something similar to rebalancing BUT as a special case, not as a routine procedure.

I can see merit in having unclemick's standards for meeting unclemick's needs, which would require unclemick to set his own goals and their priorities. It might be fun. Or it might be a chore.

BTW, factors such as entertainment and satisfying male hormones need to be included in any standard.

Have fun.

John R.
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