Investing in individual shares

arnoldy

The OCF does not include a whole host of costs including dealing costs and stamp duty. As I don't deal too much I'm pretty competitive there. Certainly my dealing costs are <0.1%


In terms of the OCF my OCF is 0.006% - the platform fee - 10 times less than a Vanguard tracker.

seacaitch

See this post here:

https://forums.moneysavingexpert.com/discussion/comment/76286731#Comment_76286731

Re performance vs. any vaguely relevant indexes, I "outperformed" by > an order of magnitude, but (a) the opportunity set was good and (b) all the planets fortuitously aligned for me.

back_and_forth

arnoldy wrote: »

The OCF does not include a whole host of costs including dealing costs and stamp duty. As I don't deal too much I'm pretty competitive there. Certainly my dealing costs are <0.1%

In terms of the OCF my OCF is 0.006% - the platform fee - 10 times less than a Vanguard tracker.

Trading costs aren't included in the OCF, but will be very low for a capitalization-weighted tracker.

What are your annual costs for stamp duty & bid-offer spread (as percentage of portfolio value)? Add those to your dealing commissions & platform fees, and that gives your total costs (or all the ones I can think of right now).

A FTSE 100 or FTSE 250 tracker might still beat you on total costs. For the tracker, that's literal OCF + (unknown but very small) trading costs + platform fees. Trackers may also generate extra revenue by lending out stock, which can offset some of their costs.

Or you might still be ahead of the tracker on total costs. But you can't be that far ahead. I don't think cost-cutting is any longer a very good reason for buying individual shares.

tin586

Interesting thread!

My ISA is overwhelmingly in ETF trackers and investment trusts, but I dabble at the edges in individual stocks.

Why? I find it interesting and there’s probably an element of ego as well, in seeing how I do against the ‘professionals’. And maybe the thrill of the ‘gamble’ (more interesting than ‘fantasy football’!), but it’s money I can afford to lose. I’m not far off 50 and will have a defined benefit pension payable from 60.

Criteria in very broad terms: no start-ups; no AIM Oilers; U.K. companies only; some sort of profit/cashflow track record; debt not excessive/acceptable coverage ratio; share price seems irrationally depressed and there seems a way for it to recover (‘value investing’ in a sense).

Successes:
Whitbread
Unilever
Tate & Lyle
Reckitt Benckiser

Feeling the pain:
Burford Capital
Gooch & Housego
(both AIM!)

Ongoing:
ITV
GSK

With my individual shares I monitor them on an ongoing basis.

iglad

Who has the time to research all the companies, not I, which is why I pay my fund managers to do it for me.

eskbanker

arnoldy wrote: »

The OCF does not include a whole host of costs including dealing costs and stamp duty. As I don't deal too much I'm pretty competitive there. Certainly my dealing costs are <0.1%


In terms of the OCF my OCF is 0.006% - the platform fee - 10 times less than a Vanguard tracker.

Your point that I was replying to was specifically about ongoing (non-platform) fees for fund management ("I don’t like giving 1-1.5% (HALF of my dividend income!!) for someone else to buy UK stocks I could easily buy myself") as platform fees obviously apply to both shares and funds, unlike stamp duty, which only relates to share purchases. Actual directly-paid dealing costs (as opposed to transaction costs within funds) obviously vary according to trading pattern and chosen platform but by definition will typically be incurred more frequently for a diversified share portfolio than funds.

Anyway, I'm not trying to claim that funds are necessarily cheaper than buying shares individually, just highlighting how ridiculous it is to distort the comparison by asserting that funds involve 1-1.5% management costs!

Seabee42

I do have some individual shares, but I am slowly moving away from this and the main reason is setting the when you sell criteria.


The buy criteria is easier somewhat i.e. companies with a long term "moat".

Sailtheworld

I used to be 100% individual shares and all FTSE100 /250. I'm now c100% ETF trackers (All World / UK All Share / UK Gilts).

I was massive overweighted to the UK and just a few individual stocks. I also didn't have the mentality for individual shares and was always trading. I now have better diversification and an individual stock risk of close to zero.

Having three large ETF holdings has also reduced my temptation to trade (not to zero but it's a work in progress) and I waste far less headspace. Did OK with individual stocks but when I reviewed how much I'd made vs the time and effort I realised (for me) it just wasn't worth it.

abz88

Flobberchops wrote: »

I'm really in no position to give an informed answer but it seems to me that the risks of individual stocks are overstated (Coca Cola, Microsoft, et al aren't going bust any time soon) and the security of funds is similarly debatable (Woodford!).

Its this sort of advise that causes people to loss significant amounts of money, including their retirement funds!

I used to work for General Electric (Oil and Gas division in Aberdeen). When I started their share price was circa mid-$30s and they were thought of as a safe bet by numerous institutional investors (never mind individuals), the CEO at the time was Jeff Immelt and everything was all going well according to him. Fast forward two years later and the stock price was down at $10, they were being investigated by the SEC and DOJ, Immelt had been pushed out and so had his successor and continues to struggle with massive unknown liabilities sitting in its Capital division.

Enron was another stock that was deemed bullet proof for a while...

There is a reason Warren Buffet now advises to invest in index funds instead of individual shares https://www.cnbc.com/2019/02/25/buffett-remains-bullish-on-index-fund-investing.html

If Berkshire Hathaway's chief stock pickers can't beat and index fund (which will also have a lot smaller fees!), what makes you think you can?

abz88

tin586 wrote: »

Interesting thread!

My ISA is overwhelmingly in ETF trackers and investment trusts, but I dabble at the edges in individual stocks.

Why? I find it interesting.

When it comes to individual shares, this is the best attitude (in my opinion), as you have said its money you can afford to lose and it sounds more like a hobby than anything else. Given the performance of ETF trackers vs managed funds (see Warren Buffets bets), I can't see why an individual investor would go this way other than as a hobby and because they enjoy it.