I lean toward index investing as that is what I glean from the academic research.  However, I'm not an index purest as I need to add a few individual stocks in order to pull down the overall risk of the portfolio with some low correlation equities.  I call it a Mosaic approach to investing and I don't think the process is all that easy to duplicate as I am still learning.

Lowell,

You and Dan beat me up for dealing only in individual stocks.  Yet, both of you have a few individual stocks.  It appears you want it both ways.  Or maybe it is that I cannot pick the stocks. (G)

Bob

Bob

You and Dan beat me up for dealing only in individual stocks.  Yet, both of you have a few individual stocks.  It appears you want it both ways.  Or maybe it is that I cannot pick the stocks. (G)

It certainly was not my attention to suggest I was beating you up. 

Yes I have a considerable number of stocks, something over 50 the last time I counted. For the most part they are US stocks with minimal exceptions such as BP.   However there are certain asset classes in which I do not feel comfortable in selecting individual stocks and thus I use ETFs to participate in these asset classes.  I think it important to participate in these asset classes since they are expected to grow faster than the developed economies and in addition offer diversification.  For example I desire to participate in asset classes such as US Small Cap Value, Emerging Markets, International REITs, Commodities, etc. I view countries like Indonesia and Vietnam as having desirable demographics and growth potential but I have no idea of which individual stocks to buy to participate in this opportunity. Thus I invest in the IDX and VNM ETFs to participate.

Thus I ask you two questions:

1) Do you choose to participate in any asset classes in which you are not comfortable in selecting individual stocks?

2) If the answer is yes how do you participate with other than ETF s or funds?  If no why not?

Dan  

Lowell,
In the Mosaic approach, is it possible to use one or more S&P sector ETF's (e.g., Vanguard sector ETF's) instead of individual stocks to decrease overall risk?

I ask this because choosing individual stocks, IMO, requires much more skill than choosing sectors. I don't have sufficient skill to choose individual stocks.

Stan Slater

I do wish you and other ETFers the best.

Okay and thank you for the best wishes.

I'll be satisfied with my small dividend checks. (G)

I do believe dividend yielding stocks will gain in favor over the next several years as we migrate into the new norm.  Thus dividend yields will become a larger part of one's returns when the economy and stocks grow at a slower rate.  Some stocks in my dividend arisocrats portfolio are ABT, AFL, JNJ, MDT and PEP.

As Nancy mentions there are many ETFs that also provide meaningful dividends..  Here are a few I hold with the yields based upon the last 12 months; DGS 5.1%, IDV 3.8%, VNQ 5.5% and VWO 3.0%.  These may sound low but if the typical stock grows in the 5-6% range I anticipate, dividend ields could once again become king.

I do admit estimating the future yield of an ETF is more difficult than a stock especially in this environment.

Of course the wild card with high yielding stocks or ETFs is what will they be taxed at in 2010 and beyond?

Dan

You can receive dividends from ETFs too, some not so small.  I get montly dividends from BND (over 4%) and BSV (3%).  EWA, IDV and VIG pay decent dividends.  I'm sure others can tell you about other dividend paying ETFs.

Nancy,

How do you get the dividends?  Is each stock that gives a dividend then sent to you?  How is x-dividend computed as it surely is different for the stocks.  Can you reinvest the dividends or must you take the check?

Bob