A Stock Advisor portfolio compared to S&P 500, NASDAQ, and Dow Jones, since inception (02/08/2022)
Just because you’re a day trader doesn’t mean you shouldn’t also be investing for the long term. I, like many professionals, have a 401k, IRA, and self-managed brokerage account. The self-managed also happens to be the account I day trade in. You might not know that when you keep your funds in cash (provided you have 25k in a margin account) most brokerages will give you 4x leverage with which to day trade. When your money is invested, however, that comes down to 2x leverage. Not bad considering you can keep a well diversified portfolio for the long haul, and use the brokerage firm’s money to play with every day.
For a year or so, I’ve considered subscribing to a premium service from The Motley Fool called Stock Advisor. Stock Advisor provides subscribers with two new stock picks each month, 10 best buy now stocks which they refer to as timely stocks, and 10 foundational stock recommendations for new and experienced investors. You also get access to their community and investing resources. On their about page they say their purpose is “…to make the world smarter, happier, and richer.” Their investing philosophy prioritizes buying and holding quality stocks for long periods of time, and they generally recommend holding for at least 5 years. They lay it out in simple steps:
- Buy 25 or more companies recommended by The Motley Fool over time
- Hold those recommended stocks for 5 years or more
- Invest new money regularly
- Hold through market volatility
- Let your portfolio’s winners keep winning
- Target long-term returns
This is clearly a smart approach to investing and follows the classic age old advice of diversify, add, and hold. There are countless resources that go in depth on dollar cost averaging, so I wont go into that here. Instead, I’m going to share with you my progress. The fact is, I got into day trading because I hate investing. I don’t like thinking about companies profits, P/E ratios, etc. It’s a terrible bore and I’d much rather spend my time playing music and cooking. My long term positions, until recently, have been entirely invested in broad index ETF’s. This week, I sold all of those positions, created a fairly aggressive asset allocation (see table below), and bought a portfolio of 25 of their recommended assets. I also automated a script to pull the daily P/L percentage of my Stock Advisor portfolio, the S&P 500, NASDAQ, and Dow Jones Industrial Average, and add the cumulative result to the table at the top of the page. While I’d love to share with you the stocks that I bought, it wouldn’t be the right thing to do. You’ll just have to get your own subscription! Good luck everyone, and I wish you the very best that life has to offer!
My Asset Allocation
|Stocks, US Large Cap||27%|
|Stocks, US Mid Cap||9%|
|Stocks, US Small Cap||14%|
|ETF’s, Total US Stock Mkt.||14%|
|ETF’s, Total Intern. Stock Mkt.||5%|