MOETF == MyOwnETF i.e. my own portfolio of U.S. stocks
Due to tcost, I don’t bother to compute the percentage weight, biggest gainer/losers, sector weighting,,,
— ETF .. is the main benchmark and competitor to MOETF.
ETF seems to be popular among mt cohort. I guess up to 10% of my peers have an ETF-only (or ETF-mostly) portfolio. In my defense of stock-picking, here are my first j4:
- convictions .. I have a view about hundreds of stocks or specific sectors. ETF doesn’t let me act on my views.
- Similarly, commission charges also prevent me from acting on my views, so am lucky to have the commission-free platforms.
- percentage .. I can, and often do, increase (buy) or decrease (sell, rare) the percentage weight of each name
- stocks: learn fast, though the learning is possibly superficial. In index investing, there’s no active learning, no knowledge I can gain and share with my family and friends. When my hand-picked bets work well, I feel the “kick”. This is a kinda positive feedback
- stock picking is classic recreational investing, where (unrealized) PnL is sometimes not the #1 ROTI
- constituents .. I can see the constituent names more easily. With ETF it’s harder so I won’t bother to find the answer.
- .. flipside: distraction. See buy-n-forget→ sleep]peace, focus@work
me: “Look at my portfolio return!”
them: “But my SPY has even better return”
I accept that. However, in defense of MOETF I will raise my finger and point at other financial advantages, beyond that return:
- MOETF has better dividend yield than most indices. I can handpick stocks with high CDY (above 9%). No such CDY in any ETF.
- xjl crunch in a downturn … if and when I need to liquidate some, I could choose which stock to liquidate, as some are more profitable, or more distressed, or with more potential. Impossible with ETF. In contrast, between 5 ETFs, I’m less likely to find one “above water”. See also my blogpost on bluechips are more dependable.
— drawbacks… tcost is the key drawback and part of most items below. However, as recreational investing, roti is measured by an unconventional yardstick.
- dividend monitoring is too complicated
- some names have a very high unit price, so I must use fractional share.. market order only
- pre-clearance exempted for real ETF
Employer may say “Are you too busy trading on the sideline”? My defense:
- my trading activity is mostly during U.S. hours
- small trades, quick due diligence
- many decisions and analyses (even the money) were from family members. However, my browsing history in office is recorded, possibly not investigated. Better search at home.
- Some pre-clearances didn’t lead to actual transactions
— Matt of OC was the first to suggest the strategy to buy entire stock market. According to him, over a longer horizon (like 10Y?) the overall market always go up. I think it’s true in U.S. market, not true in the China or Japan or European stock markets. When I asked further, I think he said at least buy the entire U.S. stock market.