A sell before buying (and introducing my 401k)   4 comments

Everything has been set up for me to brokerage trade in my 401(k) for awhile now. Now is the time to get it started.

Going forward, I will have the usual strategic portfolio you have seen up until this point, which is my IRA brokerage account (through Interactive Brokers). In addition, I will start tracking my 401(k) portfolio too (which is traded through Fidelity).

My strategy for my 401(k) is simple: Long-term value investing. In simplest terms, it is the Warren Buffett strategy, whereby I am looking for stocks that offer the best value over a holding period of as close to forever as I can find. While I plan to continue reviewing these stocks daily, I will only post the results of my 401(k) on a monthly basis, mostly because of the strategy, but also because it is a bit more of a pain to track the investment results on a daily basis, especially when you consider I am contributing to it weekly. By the way, I also plan to count my employer contributions as “profits”, because they are. It is money I would not have made otherwise, although you are welcome to disagree with me on this.

To get started, I am selling 3 stocks from my strategic portfolio and adding them to my 401(k): Disney (DIS), Google (GOOG), and Silver Wheaton (SLW). One of the keys I am looking for in my 401(k) stocks are dividend-payers, so I can reinvest the dividends, basically to take advantage of compounding interest. Disney and Silver Wheaton are both at the top of their industries, and pay a decent, if not exciting, dividend. On the other hand, Google is really more of a long-term play, since their “dividend plan” is kind of a non-starter for me, although I do hope they eventually pay a real dividend. Regardless, I wouldn’t be surprised if Google outlives me.

Here are the final lines on these from my strategic portfolio:

DIS: -0.23 today, -1.35 overall to $62.50 (-0.37% today, -2.11% overall)–bought at $63.85
GOOG: -12.42 today, +67.99 overall to $868.51 (-1.41% today, +8.49% overall)–bought at $800.52
SLW: -1.30 today, -4.20 overall to $19.07 (-6.38% today, -18.05% overall)–bought at $23.27

Here are the initial purchases for the 401(k), with current weighting versus other stocks (not counting cash remaining):

DIS: bought at $62.77 (37%)
GOOG: bought at $873.31 (51%)
SLW: bought at $19.69 (12%)

I also have my eye on Intel (INTC) for my 401(k). I want to wait and see what it does tomorrow.

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Posted June 24, 2013 by edmcgon in 401(k), Portfolio Moves

4 responses to “A sell before buying (and introducing my 401k)

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  1. Cool! Couple questions as I’m curious.

    Planned number of holdings?
    What do you expect your average holding period will be?
    Will you plan to time the market or just add to your existing holdings on a monthly/yearly basis?

    • M,
      I would like to limit my holdings to no more than 10 across both portfolios. Right now, I have 10 in both. This is a guideline more than an absolute rule, but I put it there because more than 10 makes it tough to keep track.

      For my IRA, I expect my holding period to be short to mid-term, with a few holdings like NNVC that might last a few years. For the 401(k), I expect the holding period to average no less than 5 years. If I am still holding these stocks when I retire, I did well. 😉

      In the 401(k), I may time my additions to existing holdings, with the exception of dividends which I plan to reinvest immediately if possible. The rest of the time, if I am sitting on large quantities of cash, I may find a suitable cash-equivalent investment to put them in temporarily.

  2. In all the years I had a 401K my only choices were mutual funds/ETFs. And I even sort of considered myself lucky in the choices.
    There were probably 20 choices max, but most it was a good selection.

    I considered myself lucky because I saw plans where the choices were “conservative”, “medium”, “high risk”. (A person was asking my advice of what to invest in, and showed my this, it was from a hospital).

    I’m not really sure given the average American’s experience or amount of time they can put into, if being able really trade, is a plus or a minus.

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