Investing in stocks (broker managed?)

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Jthamilton

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Okie182
Ive been wanting to diversify a little and reallocate some cash in the Energy Sector (for long term) I'm interested in the most cost effective means to do this . We all see the e-trades and Edward Jones but I'm pretty skeptical about these. Anyone have any experience with other services?

I have used a financial planner in past but didn't really appreciate when I saw his black shiny mercedes, suspenders and Wolf of Wall Street appearance. The warm fuzzy feeling just wasn't there when I had to go through his secretary and schedule appt to visit with him early in the game. Thankfully this was before I had a pot to **** in, so his loss.
 
I worked for Ameritrade back in 1999-2004. I've used them as well as my current employer's brokerage service (I work for one of the big banks). I have no clue what there is to be skeptical about... I would not hesitate to invest with Ameritrade, E-trade, Schwab, etc. They're regulated out the wazoo. I trust them more than I would trust a full service broker.
 
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Jthamilton said:
Ive been wanting to diversify a little and reallocate some cash in the Energy Sector (for long term) I'm interested in the most cost effective means to do this . We all see the e-trades and Edward Jones but I'm pretty skeptical about these. Anyone have any experience with other services?

I have used a financial planner in past but didn't really appreciate when I saw his black shiny mercedes, suspenders and Wolf of Wall Street appearance. The warm fuzzy feeling just wasn't there when I had to go through his secretary and schedule appt to visit with him early in the game. Thankfully this was before I had a pot to **** in, so his loss.
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You just have to find the right one. I made the mistake of keeping with someone after my divorce form my ex wife, who I thought had a fiduciary duty to me. Wrong....lost a lot of $$ in 2007/2008 and then found out he did not change my beneficiary to my trust until I nearly died in 2008 (seriously was given 24 hours to live). The rest of my $$ would have gone to the ex and not the kids. Ohh....did I mention he is married to the ex wife's cousin? I changed pretty darn fast after that where my new broker visited me in the hospital to start the new account.
 
Couple of issues here.

Bit of background: Etrade and Edward Jones are different beasts. Etrade is a discount/online broker that will execute your trades for you. But, you have to tell them what the trades are. "I want to buy 100 shares of Exxon at $xxx.xx".

Edward Jones (and merril Lynch, and other "full cost" stock brokers are Salesmen that pretend to be financial advisors and will meet with you, pretend to listen to your story, and then "recommend" you buy "300 shares of Galactic Oil Company" and then place the trade for you, on your behalf, charge a high commission, then call you in 3 weeks and tel yo that you need to sell the Galactic Oil Company and buy Oceanic Oil Company as they just discovered an important new oil basin.

What you don't know, is that the reason they were peddling the Galactic is they were underwriting additional shares, so the commission was higher if they got you to buy it. Then, they talked you into selling Galactic, which got them another commission. Then buying Oceanic got them another commission.


The Full Cost brokers have a conflict in that what makes him the most money is not in your best interest. They get compensated better for certain investments that aren't good for you.

The online and discount brokers get compensated on executing YOuR idea, as efficiently as possible. They are on your side, as opposed to the FullCost brokers.


The second half of the story is you have to figure out how to get your ideas. And, the options are to pay the guy you didn't like with the fancy Mercedes, or, find someone else that you do like, or subscribe to newsletters, or, learn to do your own research and read everything out there.

If you are going to need someone to "advise" you, you will have to pay for that service, one way or the other. That guy deserves a Mercedes if he is good.

Cheapest way, and likely the best, is to find no-load mutual funds that will meet your objectives and open an account at Charles Schwab or Fidelity to implelemt. Be diversified, hold multiple funds, and, you can find "energy sector" mutual funds and ETFs that will accomplish your goals.
 
I have series 7 and series 3 license. Send me your money, I'll help you out ! You want to diversify into energy ? Here's a few excellent recommendations all with good dividends and few that you can even write covered calls on as well :
ARP
SDRL
CZZ
CVX
KMP
SEP

Good Luck !
 
Art VanDelay said:
I have series 7 and series 3 license. Send me your money, I'll help you out ! You want to diversify into energy ? Here's a few excellent recommendations all with good dividends and few that you can even write covered calls on as well :
ARP
SDRL
CZZ
CVX
KMP
SEP

Good Luck !
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Covered calls = where you trade the upside for a small$ and retain all the downside.
 
I'm an Ameritrade customer, and about a year ago I invested quite a bit with Amerivest. They manage my portfolio for me, and they don't get commission based on trades, they get a percentage of what they earn for me. They made me a little over 20% in 2013, so I'm not complaining! The don't invest in stocks, though, they invest purely in ETF's...at least the one I'm in does. $25k minimum to start.
 
JoseCuervo said:
Covered calls = where you trade the upside for a small$ and retain all the downside.
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Only if you buy stocks that you don't intend to keep. Never buy a stock just for writing a covered call. That's how people get into trouble.;)
 
darrell said:
I'm an Ameritrade customer, and about a year ago I invested quite a bit with Amerivest. They manage my portfolio for me, and they don't get commission based on trades, they get a percentage of what they earn for me. They made me a little over 20% in 2013, so I'm not complaining! The don't invest in stocks, though, they invest purely in ETF's...at least the one I'm in does. $25k minimum to start.
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Sounds interesting! Researching this morning has Optionsxpress by Charles Schwab as a good option. Others getting good reviews by an independent source are Scottrade and Tradeking. I will also do some ETFs along with large cap stocks.
 
darrell said:
I'm an Ameritrade customer, and about a year ago I invested quite a bit with Amerivest. They manage my portfolio for me, and they don't get commission based on trades, they get a percentage of what they earn for me. They made me a little over 20% in 2013, so I'm not complaining! The don't invest in stocks, though, they invest purely in ETF's...at least the one I'm in does. $25k minimum to start.
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" Standard & Poor's 500 stock index since 1997. The closely tracked benchmark index rose 29.6%, a mega-move that will be reflected in much fatter "

There is part of the issue with paying someone, as they severely underperformed the market, and charged you for that service. If you just put your money in an SP500 ETF with almost zero in fees, and made 50% higher return.
 
I have been with Schwab since 2000, and could not say enough good things about it. I've also been down the full service side, and I'm not impressed.

You can execute your own trades on line with Schwab for a pretty low trade cost (less than $10), but you also get your own investment advisor. You can actually walk into a Schwab office and meet with him or her if you'd like. The nice part is that part of their compensation includes the size of your portfolio, but they get no compensation for trading that happens in your account. Their only interest is in helping you grow. And if you don't want to use the advisor, no sweat. They may call you twice a year to make sure all is going well, but no high pressure whatsoever.
 
Art VanDelay said:
Only if you buy stocks that you don't intend to keep. Never buy a stock just for writing a covered call. That's how people get into trouble.;)
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That makes no sense.

Why would you buy stocks you don't intend to keep?

And, secondly, if you write a covered call, and the stock goes up, you don't get the increase in value, as you sold that "option" to participate in the upside to someone else. Stock is a winner and goes up, the other guy gets it and gets rich, stock is a loser, you get to keep it and the loss.
 
Jthamilton said:
Sounds interesting! Researching this morning has Optionsxpress by Charles Schwab as a good option. Others getting good reviews by an independent source are Scottrade and Tradeking. I will also do some ETFs along with large cap stocks.
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If you are not a "sophisticated" investor, you might be better served by staying away from option strategies and trades. (In fact, you have to "prove" some investment knowledge before you can trade options.)

Charles Schwab will do a great job giving you access to the trades, investments (stocks, bonds, mutual funds, ETFs), and, if you need, access to advisors that will help you with your goals.
 
JoseCuervo said:
That makes no sense.

Why would you buy stocks you don't intend to keep?

And, secondly, if you write a covered call, and the stock goes up, you don't get the increase in value, as you sold that "option" to participate in the upside to someone else. Stock is a winner and goes up, the other guy gets it and gets rich, stock is a loser, you get to keep it and the loss.
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Some people actually have been known to buy a stock just so they can write covered calls on it - these are the ones I'm alluding to.

If the stock goes up and gets called away you keep the premium AND the appreciation in the share price, assuming that your cost basis is less than the strike price which is the only way that I write my covered calls.

I think what you're getting hung up on is stocks that make ridiculous and radical moves in a day. This is not a strategy for those kinds of stocks.

Something like 70% of calls expire worthless. Why not be the "house" instead of the "gambler" ? If the strike price is out of the money and above your cost basis I really don't see how you're going to get crushed too badly.
 
Art VanDelay said:
. Some people actually have been known to buy a stock just so they can write covered calls on it - these are the ones I'm alluding to.
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But, that is exactly what you were encouraging the OP to do, gave him a list do names and then told him he could write covered calls against some of them. Now, it turns out, that might not be a good idea, according to you.



Art VanDelay said:
If the stock goes up and gets called away you keep the premium AND the appreciation in the share price, assuming that your cost basis is less than the strike price which is the only way that I write my covered calls.
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And, what do you do with stocks that your cost basis is less than the strike price? Or current price? Likely, you hold on to them, resulting in your portfolio being filled with losers while the winners all got taken away from you when the other party exercised. A recipe for underperforming the market, substantially.


Art VanDelay said:
I think what you're getting hung up on is stocks that make ridiculous and radical moves in a day. This is not a strategy for those kinds of stocks.
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Nope, the option market is VERY efficient in pricing. Stocks that make ridiculous moves in one day have high premiums, stocks that barely move have very low option premiums. The guys on the options floor are much smarter than you are, and they can exploit inefficient pricing very quickly. If your covered call strategy is for stocks that don't make major moves, then you are essentially hoping your stocks don't appreciate, so yo can collect the little premium.



Art VanDelay said:
Something like 70% of calls expire worthless. Why not be the "house" instead of the "gambler" ? If the strike price is out of the money and above your cost basis I really don't see how you're going to get crushed too badly.
Click to expand...

Well, if "70% of calls expire worthless" why wouldn't you just write a whole bunch of naked calls and allow the 70% to cover the 30% that don't? That is what a "house" does, they know they will get beat by the "gambler" once in awhile, but the built in edge stays to their advantage.

And, if the strike price is too far out of the money, and the stock has low volatility, the premium will be very low. And, if the stock moves up, it will get called away from you, if the stock stays flat, you collected the small premium. If the stock goes down, you got the small premium, but you now have an asset worth less than what you paid for it.
 
teejayevans said:
Vanguard index funds
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I use Vanguard and Schwab along with TIAA/CREF. Vanguard is doing well. Schwab is okay but most of my investments there are restricted because they are tied to my employment. TIAA/CREF has recovered from it's extremely poor performance in 08. I keep threatening to move those funds...
 
When I had a broker managing my investments, I found that the overall performance was worse than when I just did my own research and bought mutual funds. So I fired him and put the money in a TD Ameritrade account. So far I've been happy. I've also had good luck with Fidelity.

Remember that the people who work in that sector and are successful will be able to afford a nice new Mercedes. That's not a bad thing. They may also fly a Cirrus. I knew a guy who had both.
 
Clark1961 said:
I use Vanguard and Schwab along with TIAA/CREF. Vanguard is doing well. Schwab is okay but most of my investments there are restricted because they are tied to my employment. TIAA/CREF has recovered from it's extremely poor performance in 08. I keep threatening to move those funds...
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Don't feel bad, they all did poorly in 2008. That was when the market was crashing and John McCain infamously said the fundamentals of our economy are strong. Everybody got killed that year, except for those who were short mortgage backed securities.

The real measure is how did you funds do vs. some benchmark index (usually the SP500)? If you aren't doing as well, and you are paying for advice that lags the Index, then you might want to rethink.

The other thing you point out is the effort/difficulty moving accounts and investments. 6 years after the 2008 performance you were unhappy with, you are still "threatening". It is a pain in the ass to move accounts around. If you can establish your account with someone like Schwab, then you have all the access to the investments you need, including Fidelity and Vanguard funds and other investments you might want.
 
Ted DuPuis said:
When I had a broker managing my investments, I found that the overall performance was worse than when I just did my own research and bought mutual funds. So I fired him and put the money in a TD Ameritrade account. So far I've been happy. I've also had good luck with Fidelity.

Remember that the people who work in that sector and are successful will be able to afford a nice new Mercedes. That's not a bad thing. They may also fly a Cirrus. I knew a guy who had both.
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Exactly, there you have it. A portfolio of mutual funds held at a discount broker. You get cheap trades/executions, access to lots of funds that meet your objectives, and much lower costs for management fees. You still pay a bit as the mutual funds have expenses with fund managers, marketing, etc..etc.... But, as a percent of your assets, much lower than many other channels of advice.

And, not sure I want somebody managing my investments if they can't afford a. Mercedes and a Cirrus. If the guy can only drive a 1982 Chevy Citation and a ratted out c-150, I am not sure how he makes me rich without being smart enough to make himself rich????
 
I've used Scottrade for years without a problem. I can't see why anyone would chose to pay for a traditional broker.
 
Since you've already identified the sector you want, energy, just buy an ETF for that sector. There are several, so choose one that has low fees. That would be VDE. It's an ETF run by Vanguard.

In general, an ETF is better for the non-sophisticated investor than individual stocks.

Like any ETF you buy it like a stock from any broker. If you don't already have a broker, choose any discount broker. Ameritrade, Fidelity, e-trade, whatever. Just check their fees for stock commissions and any fees for inactivity before opening an account. Then place the order there.

It would be crazy to buy it from a full-service broker. That would just add lots of fees.

If you already know what an ETF is, and how to place a trade at a discount broker, good. If not, just ask.
 
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It's corrupt as can be take your hard earned money and invest in something else he'll even just hold it in some physicist gold don't bother with stocks


Sent from my iPhone using Tapatalk
 
I would probably only use someone who was willing to take a piece of my action [I make money YOU make money] over investing in an S&P 500 index fund. I can do it fairly consistently [lost zero principal during the melt down] but your average sales person [thats what brokers are - sales force of the company] sucks at it, and 95% will refuse to work on a shared gains basis.
 
comanchepilot said:
I would probably only use someone who was willing to take a piece of my action [I make money YOU make money] over investing in an S&P 500 index fund. I can do it fairly consistently [lost zero principal during the melt down] but your average sales person [thats what brokers are - sales force of the company] sucks at it, and 95% will refuse to work on a shared gains basis.
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What were you invested in during the melt down that lost zero principal?


Lots of hedge fund guys will do it on a percent of profit basis. Very common.





marcoseddi said:
It's corrupt as can be take your hard earned money and invest in something else he'll even just hold it in some physicist gold don't bother with stocks


Sent from my iPhone using Tapatalk
Click to expand...



What?
 
Jthamilton said:
Ive been wanting to diversify a little and reallocate some cash in the Energy Sector (for long term) I'm interested in the most cost effective means to do this . We all see the e-trades and Edward Jones but I'm pretty skeptical about these. Anyone have any experience with other services?

I have used a financial planner in the past but didn't really appreciate when I saw his black shiny mercedes, suspenders and Wolf of Wall Street appearance. The warm fuzzy feeling just wasn't there when I had to go through his secretary and schedule appt to visit with him early in the game. Thankfully this was before I had a pot to **** in, so his loss.
Click to expand...

I too was concerned about what the financial planners made off my money. I tried managing my portfolio but the time and stress were just too much. Finally I came to realize it is not about how much THEY make, it is about how much THEY MAKE FOR ME! When I started to focus on the bottom line what happened in between became much less important. Find a good financial adviser with a proven track record you feel comfortable with and have your best interests in mind then establish a relationship. I started small and let them prove themselves......... last year my net after all expenses was +35%. If you can do that yourself, save the fees, you should be in the business.
 
JoseCuervo said:
Don't feel bad, they all did poorly in 2008. That was when the market was crashing and John McCain infamously said the fundamentals of our economy are strong. Everybody got killed that year, except for those who were short mortgage backed securities.

The real measure is how did you funds do vs. some benchmark index (usually the SP500)? If you aren't doing as well, and you are paying for advice that lags the Index, then you might want to rethink.

The other thing you point out is the effort/difficulty moving accounts and investments. 6 years after the 2008 performance you were unhappy with, you are still "threatening". It is a pain in the ass to move accounts around. If you can establish your account with someone like Schwab, then you have all the access to the investments you need, including Fidelity and Vanguard funds and other investments you might want.
Click to expand...

You're funny. Moving is easy - Schwab will do everything. Trust is another matter entirely. Diversification is another topic.

Anyway, get off your high horse and get to work. Matching the market is easy. Out-performing is the goal...
 
Clark1961 said:
You're funny. Moving is easy - Schwab will do everything. Trust is another matter entirely. Diversification is another topic.

Anyway, get off your high horse and get to work. Matching the market is easy. Out-performing is the goal...
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Yes, Schwab will do all the heavy lifting, but for some reason, 6 years later, you still haven't moved. Brokerage accounts are "sticky" and people tend to stay at the same brokerage firm for quite some time.

And, often times, when you do attempt to transfer, there is always that one fund or asset that the new broker doesn't accept. Then you have to sell the investment, or leave it at the old broker, or transfer it somewhere else. Listed equities are easy to move, proprietary mutual funds are more difficult, and many "exotic" investments sold by full service brokers are impossible to transfer.

As for a "high horse", I can't see where advising somebody to buy no-load mutual funds and ETFs at a discount broker is much of a "high horse" strategy. That is a pretty basic, and, likely the most efficient, strategy the OP can employ.

Out-performing the market is easy, also. The market rewards for risk taken, and if you want extra return, you will have to take extra,risk. Less diversification, more timing, rotating sectors, etc. All items that take time, knowledge, and expertise.

If you really want the simple way to outperform, and you are smarter than everyone else, just make all your transactions in a Margin Account and use leverage to grow your portfolio. Eazzzy-peeezzzy in a market like last year with 30% index returns and incredibly low margin loan rates. Printing money.
 
I've done fairly well over the years in both common stocks and mutual funds.

Fairly conservative. Basically buy and hold - unless the fundamentals change.

I think chart reading and technical analysis are akin to voodoo, but that's another discussion.

Options have their place, but are often used to speculate, not invest. I don't mess with them.

I found this book an excellent primer on stock investing:

one-up-on-wall-street.jpg
 
If i want to get long i sell naked puts - which has the exact same risk curve as covered call. Once i get exercised i buy a put - think insurance. When/if the stock moves up to support roll up the put. Then sell the call at a higher strike. Works like a charm.
 
Meant to say resistance but im sure u figured that.
 
Tdameritrade with TOS platform and interactive are great. But if you ever want Portfolio Margin IB wins hands down.
 
I've used almost all the discount brokers that have been mentioned here. IB (interactive brokers) is great for serious traders who are also experienced, and trade actively. Not so great for somebody who buys just a few names or index funds and then holds them long term, which is exactly what most retail investors should do, as recommended by Warren Buffett. I use IB, but I would not recommend it to a typical retail investor like any of my family members.
 
Noheat makes a great point. Ib portfolio rates are so good i use them. Their platform isnt so great. I honestly "work my positions" on TOS then enter them on ib...
 
We use Scottrade and have been very happy with their local service and overall fees.
 
My girlfriend is a licensed Investment Advisor and would be happy to answer any questions you may have. She has been licensed for 16 years or so and has been in the industry for 20. Currently licensed in Texas but getting licensed in other states is not an issue. She can also do life insurance and medicare suppliments. Message me if you would like to talk to her. Costs ya nothing and no obligation. She has series 7 and 63.

Joe
 
The urge when investing is to hire an expert so things are managed correctly. It turns out that this is pretty hard to do, though. Advice you find will be to find someone to do this for a fixed fee per year rather than someone paid on a percentage basis, but trying to find one can be hard. I found one (cousin of a friend of mine who has done well for him), but his American Greed lifestyle with Ferraris and Lambos scared me.

So I learned to invest on my own and have had a wonderful experience. Of course, I've got an MBA and most of a MAcc (enough to be comfortable reading financial statements) so I feel competent with the numbers, and I've got the sort of constitution that allows me to double-down (or triple down) when the market moves against me and I'm confident in my investment thesis.

Nobody cares about your financial future more than you do. You have no conflicts of interest. You understand your needs better than anyone. The problems doing this are two, as I see it:
  • It's very easy to get caught up in the greed/fear herd mentality that everyone else falls in to. I know a number of people who cashed out their investments after the 2008 crash and only started thinking about reinvesting after the S&P was making new highs again. They're doing the opposite of "buy low and sell high," but emotionally they're doing what feels right. What feels right will get you in trouble.
  • Doing this right requires time. It's a second job for me, which works. If you can't invest the time, then maybe this isn't the best option for you.

If investing in individual stocks isn't for you (and it's not for most), then there's a good argument to be made for buying indexes and rebalancing them on occasion. There's lots of information if you're willing to do some searches (start with boglehead, or read a book by Jack Bogle.)

Finding a solid investment advisor is hard. They're apparently out there, but we couldn't find any within a 3 hour drive. Even if you find one, you won't learn as much as you will if you manage your investments yourself.
 
I've played around in the market but slowly came to the same conclusion as the Oracle of Omaha:

Mr. Buffett draws the same conclusion about index funds in his recent annual letter to shareholders of Berkshire Hathaway, of which he is chairman. At 83, he writes that he has given the following explicit instructions for the money that he is bequeathing in a trust for his wife: “Put 10 percent of the cash in short-term government bonds and 90 percent in a very low-cost S.&P. 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.”​

http://nyti.ms/1ehgkkN
 
Jthamilton said:
Ive been wanting to diversify a little and reallocate some cash in the Energy Sector (for long term) I'm interested in the most cost effective means to do this . We all see the e-trades and Edward Jones but I'm pretty skeptical about these. Anyone have any experience with other services?
Click to expand...

Most cost effective would be with Vanguard. They charge no commissions to trade Vanguard ETFs, (fine print says the first 25 trades in any calendar year, though), and their ETF fees are pretty much lowest in the biz.

https://personal.vanguard.com/us/whatweoffer/stocksbondscds/feescommissions

VDE is the ticker for their energy sector ETF 0.14% fee.

https://personal.vanguard.com/us/funds/etf
https://personal.vanguard.com/us/funds/etf/all?assetclass=ss&assetclass=ss
 
darrell said:
I'm an Ameritrade customer, and about a year ago I invested quite a bit with Amerivest. They manage my portfolio for me, and they don't get commission based on trades, they get a percentage of what they earn for me. They made me a little over 20% in 2013, so I'm not complaining! The don't invest in stocks, though, they invest purely in ETF's...at least the one I'm in does. $25k minimum to start.
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JoseCuervo said:
" Standard & Poor's 500 stock index since 1997. The closely tracked benchmark index rose 29.6%, a mega-move that will be reflected in much fatter "

There is part of the issue with paying someone, as they severely underperformed the market, and charged you for that service. If you just put your money in an SP500 ETF with almost zero in fees, and made 50% higher return.
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To be fair, Darrell didn't say what his asset allocation was. Anybody who had a sane stock/bond allocation and wasn't 100% in equities last year looked like an idiot. ;)

http://www.ritholtz.com/blog/2013/08/asset-class-returns-2/

https://investment.prudential.com/util/common/get?file=1D065355D2CC360385257B7D00536F8A
 
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