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Hey Guys, I'm a new Fool and subscriber. I've done a lot of reading here and elsewhere. I manage my personal brokerage account at Fidelity because its where my job keeps our 403b. I have bought some stocks and ETFs in the past but now that I get recommendations from the Fool, I'm confused. Analysis Paralysis. Now I have a few of questions.

What's the best way to use the Fool Stock Advisor? When I find a stock that has been researched and vetted, how do I know how much to buy?
Recommendations come out regularly, am I supposed keep changing out the stocks in my portfolio to be in line with the latest recommendations?

Can a person have too many different stocks? What's a good number? If I were to get a $2000 bonus, should I buy more shares of stocks I already own or should buy new recommended stocks?

Thanks for any advice.

BONUS QUESTION.

I have a 403b account at my main job and a TSP account from my military job. Are the contribution limits cumulative of both plans or per plan?
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Hi, Nadine. I'll try to help.

First, if you are a subscriber to Stock Advisor, please be aware this is a public discussion board. Your service has proprietary boards that can be found by selecting the service from the My Services menu at the top of this page, then selecting the Community tab.

The rest of these I will speak using general non-service-specific terms.

There is no single way to use the premium services. An advisory service like Stock Advisor recommends more companies than one Fool can possibly own. My personal suggestion (and note that I am not offering investing advice) is to look first at the Best Buy Now recommendations that are also Starter Stock companies, followed by the remaining Best Buy Now recommendations, and then the remaining Starter Stock companies. This will help you build a solid SA portfolio.

On the question of how many stocks to own, I'm the wrong person to ask. If you look at my Disclosure link below, you'll see I own over 100 positions. I've been at it for 20+ years though. But first, I want you to not think of it in terms of owning stocks but investing in companies. And the question I think you should ask yourself is how many companies can I reasonably follow, to be able to remember what they do, how they do it, and what their growth strategy is.

Tom and David Gardner often recommend a Fool own at least 15-20 positions in order to achieve decent diversification, but that can be a goal if you are starting with limited cash, and it's not a maximum if you want to expand your portfolio further.

As to whether you add onto an existing position or open a new one, I would encourage you to build a Buy Watchlist in which you identify companies in which you have high conviction and would buy or add to if and when the market offers a discount opportunity. Then when that opportunity comes along, like this past week for many companies, you are all set and ready to go.

I am not an expert on 403b and TSP accounts, but I believe they are indepenent of each other. I would encourage you to go to the 401k discussion board for advice and ask for AJ85:

http://boards.fool.com/foolish-401ks-100160.aspx

Fuskie
Who thanks you for your service to our country...

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Ticker Guide: The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME), MongoDB (MDB), Trip Advisor (TRIP), Vivendi SA (VIVHY), Mimecast (MIME), DHX Media (DHXM), Royce Micro Capital Trust (RMT)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)
Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx#Condu...
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I agree with Fuskie. It can be difficult to know whether to buy more of a stock you own or something else.

If you include all the stocks you own in your watch list, you can then judge them all equally. The current price target can be a guide, but services like Value Line also rate their timeliness.

With growth stocks you always want to know if a stock is fully valued or even over valued. Price target gives you an indication. Of course price targets get revised from time to time usually based on stock potential and recent developments.

As to how many to own, much depends on how much time you have. 8 to 10 lets you keep up with the news, earnings reports, conference calls etc. That makes it easier to know when its time to sell.
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"Can a person have too many different stocks? What's a good number? If I were to get a $2000 bonus, should I buy more shares of stocks I already own or should buy new recommended stocks?"

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Generally, a person should understand how any company whose stock you own generates earnings
and what risks are involved in that company. As such, there is a limit to how much you
can follow. Reading and understanding company literature can take a large amount of time -
add to that market and research which can become quite technical - and you find difficulty
in regularly following multiple industries or markets. Add in foreign businesses and you
find yourself in the midst of a thundering herd of bison with what might be lions,
hyenas or deer running just over the rise or in a dip.

Also, the more stocks you hold a position in, the closer you come to this or that
ETF or mutual fund or average - and the less benefit you see from an individual company.

Howie52
Enjoy the learning experience.
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Thanks for the great advice. Since I’m so early in the process, I’ll start with recommended starter stocks. Admittedly, I haven’t been following each company closely because I trust the recommendations here. I guess I need to be a little more discerning and hands on.
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There are some who jump on the recommendations as soon as they are published, but I would encourage Fools to at least take the time to read the full recommendation analysis and make sure they understand the analysis and agree with the conclusions.

Fuskie
Who if you really want to do your own research, you can also check out other Fool opinions on CAPs and join the discussion with your fellow Fools on the company's discussion board...

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Ticker Guide: The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME), MongoDB (MDB), Trip Advisor (TRIP), Vivendi SA (VIVHY), Mimecast (MIME), DHX Media (DHXM), Royce Micro Capital Trust (RMT)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)
Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx#Condu...
Call to Action: If you like this or any other post, Rec it. Better yet, reply to it. Even better, start your own thread. This is YOUR TMF Community!
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I invested exclusively in stocks through the 1990s. It turns out I confused a rising stock market with my own investing skill. As you know we are currently more than 10 years from the bottom of the Great Recession. That is only one month short of the longest economic expansion in the history of America.

With almost 50 years of market exposure, I have found a few things that work for me. My suggestion for you is for sure invest in equities as opposed to fixed income, but do so in a way that minimizes risk for the next few years. (Risk is the possibility the value of your investments will decrease in value - not the possibility of loosing money. Loosing money happens when you buy high and sell low.)

Check and see if Fidelity has a dummy or test account function. Make your investments there to see how well you do until we are through the next recession. For your actual money, stick that in an S&P500 index fund that reinvests all distributions. When you are doing this, make dummy account investments on the same day and in the same dollar amounts as your S&P500 investments. Most investors do not start with a diversified stock portfolio - and I urge you to handle your dummy account as you would with real money. This will expose you to different kinds of risk.

Personally I invest in mutual funds. I have only 10 funds, one of which is a money market fund. I do this because I have decided there are two things required to beat the market that I don't have. I do not have access to more and better information than the likes of Schwab, Vanguard, Fidelity and Harvard's endowment. Also I don't have the skill sets and computer programs to analyze companies.
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It turns out I confused a rising stock market with my own investing skill.

Indeed, when the markets are doing well, many stock picking systems work very well. The real test is how they do in a down market.

CAPs is another way to test your stock picking ability. Once you pick 7 stocks, CAPs rates your performance every day vs the averages. A positive score means you are beating the market average.

It's ok to start picking your own stocks once you can consistently beat the averages. Until then, its better to rely on others stock picking.
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Paul wrote It's ok to start picking your own stocks once you can consistently beat the averages. Until then, its better to rely on others stock picking.

Beating a rising market is very simple - just invest in stocks with greater risk. I did that. There are ETF whose goal is to exceed the S&P500 by a factor of 2.0 -- invest in those stocks in a rising market and you can easily pronounce yourself a genius.
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nadine874,

Welcome to TMF!

You wrote, Can a person have too many different stocks? What's a good number? If I were to get a $2000 bonus, should I buy more shares of stocks I already own or should buy new recommended stocks?

Personally I'd recommend adding to a good, low-cost index fund or ETF. Trying to pick the next big thing is usually a fool's errand - though I suppose it has some educational value. Picking a core asset mix and sticking to it should be the basis of most investor portfolios.

Also, BONUS QUESTION.

I have a 403b account at my main job and a TSP account from my military job. Are the contribution limits cumulative of both plans or per plan?


It's a combined limit. See: https://www.irs.gov/retirement-plans/how-much-salary-can-you...

There is a penalty if you exceed the elective deferral limit. Any excess must be reported as part of your income for that year, if you have not managed to get one of your employers to make a corrective distribution by April 15th. For pre-tax contributions, this results in you paying taxes both for the contribution and for the withdrawal, as the excess contribution establishes no cost basis in the account.

Note #1: This might not be a big deal if your contributions are all Roth, since those are already reported as part of your income.

Note #2: Employers are required to keep track of your contributions to plans under their control and prevent excess contributions in those plans. But once an excess contribution has made its way into the plan and you've paid the "double taxation", the contribution gets treated like any other in the plan.

- Joel
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