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Financial Planning / Foolish 401(k)s
|Subject: Re: Roth 401K-brokers that allow individual stoc||Date: 8/20/2013 6:04 PM|
|Author: joelcorley||Number: 25116 of 25899|
aj485 has already covered most of it...
You wrote, Instead of being vague about the stocks I have now, and your wondering about my abilities to pick decent ones, I only have Tesla Motors and Amazon stock right now. I know, I know, it's not diverse but $5,000 won't buy much when it comes to aggressive companies. Today, combined, they are at a 12% gain. They have been as high as over 20% on some days (Tesla by itself has been over 30%). The market is down some right now though.
Seriously? I mean those are great companies. But those are not the basis of a great portfolio. In a nutshell, you are speculating and you need more diversification. I would say you're taking a lot of risk here; but to be fair it's only $5,000. And while Telsa might go away as quickly as it came, Amazon will probably be around for a while so it's not quite as risky as Tesla, longer term.
A great portfolio requires a long-term commitment, a strategy that addresses changes in the market, earnings, growth and diversification among other things. You can certainly get that from a handful of individual stocks. But it's less time consuming to use index funds, which is why I recommend them.
And just because you are beating the market TODAY does not mean your picks will beat the market TOMORROW.
Finally, if the market is down, it may be a buying opportunity... Buy low... Think about that.
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