By David Enna, Tipswatch.com
After writing my memorial to financial guru Bob Brinker last week, I thought it would be interesting to look back at my individual stock investments over the years, or at least the ones I am still holding.
Back in 1999, I will admit to being caught up in the stock-trading mania of the time, purchasing stocks like Oracle, AT&T Corp., Broadcom, 3M, Waste Management, Gillette, Phillip Morris, Eli Lilly, etc., etc. I no longer hold any of those stocks. I made profits on some, lost money on some. Trading that often was a bad idea.
After the year 2000, and especially after I retired in 2016, I started to concentrate my holdings in low-cost, quality index ETFs, such as Vanguard Total Stock Market (VTI), Vanguard Total International (VXUS), Vanguard Dividend Appreciation (VIG) and Vanguard Small-Cap Value (VBR). When stocks I held went down enough to minimize capital gains, I sold them and reallocated to these funds.
So today my wife and I own very few individual stocks. Most of the remaining holdings have high capital gains and would best be donated to charity or simply held to … whenever. But how well have these stocks actually performed? That was the question I wanted to answer.
This chart shows every individual stock we currently own, with one exception. The only new holding is Element Solutions Inc. (ESI) which I bought (for some reason) in July 2024. Right now it is down slightly from the purchase price.
The key thing to note here is that the Vanguard Total Stock Market ETF has had an annual total return of 13.63% over the last 15 years, which is better than every one of my longer-term holdings other than Lowe’s Corp., which has returned 18.36%.
On the other hand, my two shorter-term holdings, NVDA and UNH, have done better than the total stock market’s return of 13.72% over the last 5 years.
Why Nvidia?
I am a big fan of computer video games (mostly ones involving dragons) and back in late 2018 Nvidia was producing the highest-quality graphic processing units (GPUs) for gaming. Its stock was tumbling at the time so I bought some. I didn’t pay much attention to the stock until …. 1) the cryptocurrency craze of 2020, when Nvidia chips were highly coveted for crypto mining, and then 2) this year’s artificial intelligence craze, which we are still enduring.
So today the stock is up a ridiculous 3,100%, despite declining sharply in recent weeks. In the past couple years I have sold off about 4 times my original investment, so I am comfortable just holding. NVDA is not my typical investment. There is only one thing to say: I got lucky. Thank the dragons.
The bigger lesson
The stocks I currently own are my “winners” with large capital gains and therefore not attractive to sell. Across the years, there have been plenty of losers and mediocre holdings I’ve sold and then moved proceeds into index funds.
The easy conclusion is that I would have been much better off investing in the total stock market instead of making bets on individual stocks, even with the happy accident of buying Nvidia at just the right time.
Bob Brinker would agree.
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Interesting article – there is a lesson to be learned here, although it is hard to resist playing around with stock-picking in a small brokerage account! For me it’s a way to reward myself for putting 25% of my income into my 401(k)’s boring, low-fee funds… Who knows, maybe I’ll be the next Warren Buffet 🙂
Even the most fervent Bogelhead deserves to take a flier once in a while. I like how this post takes a well-deserved victory lap, while still highlighting how low-cost index investing is still the best strategy in general. Thanks for sharing.
I, too, listened to Bob Brinker every weekend. Thank you for your blog
about him and the link to his obituary.
I would be interested in your annual /total /return (which would
include distributions) than price return. Have you thought about
calculating that?
Thanks for all the wonderful information you provide.
The total returns for each stock listed in the chart include distributions, but aren’t exactly my returns (which weren’t exactly 15 years of holding). Vanguard and Fidelity estimate my 10-year annualized rate of return for all accounts at about 7%, which makes sense because of our conservative allocations.
30x return, not bad. This is why single stocks for their lottery like potential won’t go away. $10k would have turned into $300K. Interestingly index funds are the same with only a few winners causing nearly all the returns from the index. One study showed only 4% of stocks beat t bills. With an index the winners are hidden so you don’t have to make any buy/sell decisions, just hold.
Good for you that you didn’t sell after a 3 or 4x return. Probably easier to hold when it is a small amount. If you had $100k in 2018 harder to hold it to turn into 3 million and not sell after the first or second doubling.
As a Money Talk listener and MarkeTimer subscriber from the 70’s, I too have shared similar investment experiences and conclusions. I don’t play the ponies but still enjoy small ball trading hunches and the stocks de jour–but only at the margins of my Brinker-like “critical mass” portfolio.
I no longer have my Tresaury Direct account, GNMA mutual funds or Iomega stock; but in retirement, I have a new guru, David Enna, expertly guiding my portfolio’s defense. I have avoided the sharks and now need your inflation repellent to stay in “the land of critical mass”.
Thank you David for remembering Bob Brinker and thank you for your excellent TIPSWatch posts.
I am not a guru, for sure. I learn things every day from readers. Thanks for supporting the site.
Some people, including Robert Shiller, think stocks are highly overvalued. https://www.wsj.com/finance/investing/markets-are-way-out-of-line-with-reality-according-to-these-measures-1209f9fb?st=ams1jkno6s7a6t4&reflink=desktopwebshare_permalink
It is a legitimate concern. Back in March I wrote about my personal strategy of rebalancing when my desired stock allocation (which is just 35%) gets out of whack: https://tipswatch.com/2024/03/10/attention-investors-is-it-time-to-rebalance/
Naive Question: How is the “adjusted price/share” computed?
The “adjusted price” reflects later stock splits. Almost all of these stocks have split in the years I have owned them.
Interesting article. It caused me to go back through my taxable portfolio and look at the vintage of my investments. I don’t own any individual stocks in my taxable portfolio as I moved out of that “phase” after the tech crash at the turn of century.
2000-2003-MDY, IWN, IWM, IWD, FXAIX
2012-VB, VBR, VONV
2020 VEU
2022 DFAI
As a Fidelity customer, I would have paid a penalty to invest in the Vanguard Index Funds, but the IShares products served their purpose. Fidelity provide the S&P 500 product. In 2012, Vanguard started selling ETF’s so I purchased these to balance out my small cap, value tilt.
I have a similar portfolio and made the same observations. Fortunately, I started following John Bogle ideas about 15 years ago. Having spent all my professional life in IT, I must confess that I still get tempted to buy individual stocks though I have not done, so far, a single stock trade (buy or sell) this year. I was simply lucky to have bought Nvidia at the right time in 2022 and had the smarts to hold it and now plan to hold it, at least, for the next 4-5 years. AI is hardly in its second innings. As always, great to see your posts, espcially when it confirms that even I may be doing something right.