Silly Stock Market Question

[Overkill]

I am clueless about the stock market, so please forgive my naivety and incorrect use of terms.

Don and others, how much value, if any, is there in the (ignorant?) belief that some of the worst performing stocks in the present can become the most profitable in the future?

Surely there are pros and cons to such a strategy, and I am sure it would be relatively easy to research this, but is there any valid stock market reason to assert that, given 100 badly-performing stocks and 100 well-performing stocks, the 100 badly-performing stocks will perform better (overall, in the aggregate) over a certain period of time in the future than the 100 currently well-performing stocks?

For example, I recently read about a particular bitcoin currency that 'tanked' (my word) and was now worth really very, very little. I realize bitcoin currency is highly speculative, so bitcoin currency may not be a good example, but would, for example, buying $100 worth of each of the 10 worst performing bitcoin currencies (like the above-mentioned one that tanked recently) today be necessarily foolish?

I had been thinking of this concept and then read something that I believe seemed to support an example of how some of the worst stocks 'rebounded.'

I guess the above can be asked about professional sports as well.

Any thoughts?

[Praxis]

There is no value to that belief. Stock are valued based on what the market expects them to be worth. If they're valued at a low price, it's because the market expects them to maintain their low value. There is no reason to think that the 100 badly performing stocks will perform better than 100 well-performing ones.

[grnmax]

Overkill-
Look up "Dogs of the Dow". The idea is that poor performers during the year get unnecessarily punished further due to tax selling. My memory is that the worst ones generally gain around 10% in the first 4-6 weeks of the new year. But you really have to hold your nose with some of them.

As far as a general cheap = good value (especially with cryptos), no.

[ZeeBabar]

My new, recent and only financial advisor (Edward Jones), has a chart in her office of stock performances over the last 100 years. It shows stocks rising generally with a few dips but currently at the highest Its been. She says I have been way too conservative with so much money in fixed income type Money Market and CD’s, that I should look to put at least 50% in stocks. She points to the chart and says to not worry about daily, monthly or annual dips.

I have never trusted “financial advisors”, don’t know if I should. I finally picked one this year after visiting a few that all tried to suggest Zi get into life time ban nudities. Don’t know if Zi did th3 right thing.

[Midwest Player]

My new, recent and only financial advisor (Edward Jones), has a chart in her office of stock performances over the last 100 years. It shows stocks rising generally with a few dips but currently at the highest Its been. She says I have been way too conservative with so much money in fixed income type Money Market and CD’s, that I should look to put at least 50% in stocks. She points to the chart and says to not worry about daily, monthly or annual dips.

I have never trusted “financial advisors”, don’t know if I should. I finally picked one this year after visiting a few that all tried to suggest Zi get into life time ban nudities. Don’t know if Zi did th3 right thing.

Zee, at your age I would not go 50% in stocks. I do think you should have stock investments, but a 60% to 40% ratio would be better. Probably go the mutual fund route.

[DSchles]

My new, recent and only financial advisor (Edward Jones), has a chart in her office of stock performances over the last 100 years. It shows stocks rising generally with a few dips but currently at the highest Its been. She says I have been way too conservative with so much money in fixed income type Money Market and CD’s, that I should look to put at least 50% in stocks. She points to the chart and says to not worry about daily, monthly or annual dips.

I have never trusted “financial advisors”, don’t know if I should. I finally picked one this year after visiting a few that all tried to suggest Zi get into life time ban nudities. Don’t know if Zi did th3 right thing.

Not sure of your age, but I seem to recall 70-72? If so, agree that 50% is much too aggressive. Financial advisers don't care at all about you personally. They care about making recommendations (like stocks and stock funds) that will generate the most commissions for them. It's unfortunate, but it's true. Ask yours how he/she gets paid.

In any event, an age-old rule of thumb is to invest a percentage in stocks that equals 100 minus your age. So, for you (and me!), 30% would be much more like it.

Don

[21forme]

I agree with Don (surprise!) Also, never trust a woman named Edward. Who knows, she may be related to your buddy Colin

[ZeeBabar]

Not sure of your age, but I seem to recall 70-72? If so, agree that 50% is much too aggressive. Financial advisers don't care at all about you personally. They care about making recommendations (like stocks and stock funds) that will generate the most commissions for them. It's unfortunate, but it's true. Ask yours how he/she gets paid.

In any event, an age-old rule of thumb is to invest a percentage in stocks that equals 100 minus your age. So, for you (and me!), 30% would be much more like it.

Don

Thanks, entering my 71st. Year. The problem is that I just dont have enough saved up. I had 5 different employers where I had 401 and 403k’s totaling about $300k. I tried rolling it over into one account at Edward Jones.

They dont charge by the trade, I pay them $1200+ per year, they help invest.

[DSchles]

They dont charge by the trade, I pay them $1200+ per year, they help invest.

Probably $1,200 too much! What are they doing for you that you can't do for yourself?

Don

[Dog Hand]

<snip>all tried to suggest Zi get into life time ban nudities.<snip>

So you'd have to be clothed for the rest of your life? What kind of a happy ending is that??? ;-)

Dog Hand

[Midwest Player]

Zee, are you aware at your age you have to take minimum distributions from your 401(k). Are they advising you on this. If they are not tell them to go to hell and get somebody else. It is easy to figure out yourself. Here is link to worksheet. https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf So in the year you are 71 you are going to have to withdraw about $11,321 assuming a 401(k)balance of $300,000.

PS. Just because you withdraw it doesn't mean you have to spend it.

[Midwest Player]

Zee, I should mention I have two brokerage accounts. One of them is with Ed Jones who I'm not too happy with, and the other one is with Schwab. I'm eventually going to close the account with Ed Jones as all that is in it is a bunch of CD's and a money market account. Any stock transactions I do with Schwab. However, when I first started investing years ago the only brokerage account in the area was Ed Jones. Now days with the internet and a telephone everything can be accomplished without ever having to see somebody in person.

[Banker]

The age of minimum distribution was just raised by new Trump's tax law that was just passed (no politics). Not sure the new age but few years past 70.