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Newbie | I'm thinking of investing in stocks, is it a good idea to invest in same stocks as mutual fund holdings? |
Hi,
I'm a full-time employee and can not spend too much time on stock-research. Since Mutual Funds spend time and research in picking stocks, is it a good idea to invest in the same stock picked by most funds. For example, funds f1 f2 f3 commonly picked stock S1, is stock S1 a good one to invest in?
Thanks
--Parti |
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Jeff the drummer
 |
Picking any single stock to invest in based on a mutual fund's holdings is not sound practice. |
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bob g
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the key to investing in general is allocation of your funds and diverifying. This way when an investment, or stock, is going down there is another type of investment vehicle to go up, counteract it and keep your overall portfolio making a steady profit. This thought process would discourage you from investing in the same stocks as the ones in your mutual funds. if they went up, you'd be in great shape, but if they went down, you be losing in both your mutual fund and your individual investment. seems more risk than its worth. stick to safer investmnet vehicles if u lakc the time for stock research, fixed income etc. |
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lynn
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No, if I wouldn't invest in the same stocks as the mutual funds I hold. That would be like duplicating your investments. It's better to spread out the risk. Of course, S1 is just a small portion of the mutual fund's holdings - but to best allocate you want to avoid duplication. If you have a mutual fund that invests in small cap companies then you could choose to put other dollars into (as example) mid cap utility companies. This is just an example to show that half of your research is done just by knowing what your mutual fund invests in. Once you know what it is are investing in you can set a stock screener, with your other criteria, and be done in minutes. |
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slavaret2
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Institutional sponsorship can work for or against you. If a fund is building a position in a new stock, it is generally safe to front run them. If, on the other hand, they've had it for a while and are reducing the exposure, you may be buying from them and will end up going against the tide and/or holding the bag.
Another drawback is the delay between a mutual fund's buying/selling and reporting. |
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Jose
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There is a good web site called FundMojo which is based on the concept you talked about to systematically generate most covered stocks from top funds cross various sectors or by mutual fund rating, it is worthwhile to take a look and see if this strategy works. I have found some good stocks through this. |
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kearneyconsulting
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If you cannot spend much time doing stock research, then I suggest that you invest in exchange traded funds (ETF) that meet your criteria. Yahoo Finance is a good place to go to learn about ETF's and investing in general.
As for your specific question, some successful investors have tried the method that you suggest but have said that the method is only a good starting place for research. However, mutual funds necessarily buy stock in large companies and you would be better served to find smaller companies that could do well over time.
The sites for the Motley Fool, Yahoo Finance, Investors Business Daily and Zacks are places to do research.
Good luck. |
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Jadeson
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I have done what u mentioned before. It doesnt work all the time. However, use this method as a means of shortlisting some of your stocks, then do further due diligence. There's no shortcut to trading the markets. |
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derobake
 |
Not really. Mutual funds contain only systematic risk, therefore eliminating the effects of stock selection. A mutual fund's risk and return depends only on the type of stocks it holds (e.g. large-cap, small-cap, value or growth, foreign or domestic, etc) NOT the specific stocks it picks.
The best way to invest if you have little time is to use a fund-of-funds which will diversify your money into several other underlying funds. You get exposure to a wide variety of stocks and bonds in just one fund. Check out the LifeStyle and Target-date retirement funds from www.vanguard.com or www.fidelity.com. These two firms have a wide selection of low cost funds.
For more info on investing, check out my free downloadable book at http://www.invest-for-retirement.com |
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sailaway459
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OH MY. I just happen to be trying to find an answer to a clitch in my e-mail when I saw your question. I have been an investor for 35 years and have helped my kids put together portfolios. Do not know your age, but here is good advice. Start out and stay with high dividend paying stocks. Also, try and diversify among your trust and funds. Mining, energy, real estate. If you can, income average by putting a little money into you stock funds and trust regularly. Here are a couple of really good ones, plus a great stock. CXW is a company that builds private prisons. A super winner, look it up. 10K put in 5 years ago would be 66K today. I am not a big individual stock player, but his one is golden. For the most part, buy a little of these big dividvend paying stocks. A A V, B I F, and P G H. If you are a young man, this advice will make you a rich man someday. Took me years and a lot of different folio mgrs. to learn the power of High Dividend paying stocks. You need to do your on research on these, but you will find them to be solid gold. Good luck and remember to add a little more cash to them every month or as often as you can. Plus, brokers only make money when you trade, so beware of there advice. I did not start doing well with investing until I got rid of my brokers....After you make your first million, send me an e-mail and I will ask that you send a token of appreciation to my favorite charity...... |
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delerben
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www.stocksrus.instantecom.net
The best site I have found on the web. |
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