Facts are:
I have money to spare
I only pay a flat commission fee of $15 per month to trade as much as I want
I want to own all 500 companies of the S&P.
I read alot about overdiversification, however I can put money in that I won't need for the next 10 years or so and to say that the 500 largest corporations in the US will go under in the long run is just ludicrious. Should I go for it?
2007-02-26 08:20:55 · 4 answers · asked by REWJ7 1 in Business & Finance ➔ Investing
As part of a diversified portfolio, the 500 is a good choice. You do not have to buy each of the individual companies. You can purchase SPY which is an index fund that has purchased all of the 500 companies for you. One purchase you get them all. However be adviced that it is not beyond the relm of possibility that several of the 500 might very well go belly up during the next few years. Specifically, I have in mind Ford and GM.
SPY is capitalization weighted. If you would rather invest non-weighted there is RSP which is equal weighted. Better diversification.
Something you should bear in mind is that the 500 is U S companies only. Not too good from a diversification standpoint especially with the dollar looking like a dead duck. There are several index funds indexed to foreign securities and also world securities. A well diversified portfolio would do well to include a healthy partaking of some of these.
ADRD and ADRU and ADRA just to name 3 of many.
Also I have to mention that small cap and mid cap stocks have easily outperformed the 500 during the last 5 years. A diversified portfolio would do well to include these also. Here are a few.
IWM and IWR and IJR and IJH
2007-02-26 08:27:20 · answer #1 · answered by Anonymous · 5⤊ 0⤋
Right now I would sell it short! by using ETFs (eg SPY, IVV ect) :)
If you dont need the money for 10 years I would build a more diversified portfolio then just US stocks. It looks like we may be headed for a bit of a correction-Thus my comment about selling short.. In the long term you should be fine but how much volitility/drawdown will you be willing to accept in the near term?
Stay away from the Daytrading. You won't hear about this in the Fidelity/schwab/etrade ect ads but fact is 92% fail.
Much like Vegas, you may get lucky once, but you will give it all back-and then some- to the "house" It seems like the only people out there telling you daytrading works are the last ones in the industry still charging commissions on each trade!
BTW-I am a professional. 10 yrs in Trading, Portfolio Managment and Investment Advisory.
JMHO-Good luck!
2007-02-26 08:48:17 · answer #2 · answered by tradingbytheforest 1 · 1⤊ 2⤋
Sure you should invest in the SPY....but don't let that be your only investment for the next ten years! There's a world full of astute businessmen and more and more consumers in places like China, Latin America, Eastern Europe.....
Get yourself a " leetle" international or global exposure.Five, six years down the road ..do some comparisons..I'm guessing you'll be happy.
2007-02-26 08:42:16 · answer #3 · answered by jebediabartlett 6 · 1⤊ 0⤋
If you don't have time to reseach and find individual stocks to buy, then yes.
2007-02-26 08:25:29 · answer #4 · answered by zander1331 3 · 0⤊ 0⤋