[JohnMitchel]

When do you plan on taking the money out? If the answer is "when you retire" then put as much into your company's 401K as they'll match and put the rest in a couple of high-yield index funds (I use Vanguard), then ignore it for twenty to forty years (other than to put in more money once a month or once a year or whatever). If the answer is "in a couple of years" (e.g. if you're planning on buying a house) then switch to lower-but-more-consistent-yield funds. If the answer is "in less than a year" then use a dartboard.

[amagmasia]

Don't chase appreciation.

[SAUNDERSAN]

Malkiel was a big fan of the index funds from what I read...


Yes, which is why I was wondering why you'd be investing in mutual funds after reading his book.

I mean, I only have the no load low cost Vanguard index funds in my portfolio.

[JRixlcvF]

I do what you're doing, Mao. Most of my portfolio is in index funds, but there are a few investments that I make on the side in order to satisfy my curiosity about what strategies work in investing in individual stocks. YMMV, of course, but mostly I've learned that I'm a championship saver, but an average investor.

The good news is that you can approximate an enterprising investor by going 100% with index funds. Even though it doesn't have a discussion of index funds, The Intelligent Investor gives a lot of good advice that is applicable to the general market and thereby index funds. Chapters 8 and 20 are still must reads no matter whether you invest in individual stocks or index funds, though the concept of a margin of safety is a little less insightful when you're talking about index funds.

Another good piece of news is that you can go a little more exotic on the index funds than you can on individual stocks. F.e., you are young and you want to take on more risk by investing in China? You can do so reasonably through index funds, but it would be foolish for a retail investor in the US to invest in individual Chinese stocks. Another example is that if you want to take on more risk than the S&P 500, you can invest in index funds that focus on smaller companies. It would be difficult to invest reasonably in individual small companies.

[pooncophy]

Do you sincerely think you would find it enjoyable to manage your investments and spend serious time doing research? You'll probably end up checking the value of your stocks severel times a day. If yes that's fine, but you might consider doing business with an investment advisor who specializes in assessing mutual funds and then sells you those that best suit your needs. You don't end up paying so much more - the broker's getting a deal on scale.

[DarrenBent]

Checking stocks every day is fun. It makes work more interesting. Especially when you're checking your high-yield CEFs that don't more than 1% per day.

[PHOTOSHOPoem]

It makes work more interesting.

That's what porn is for. I could do that but I have enough porn at home and it's bad when the gatekeeper of content is viewing forbidden content.

(p.s. I look at 4chan at work)

[Phighicle]

Buy and hold is market timing. Which is the hilarious thing about it as a strategy.

[Overlord]

I tend to disagree, which may be because our definitions of "market timing" differ. The times I plan to sell largely revolve around the times when the reasons I bought a stock in the first place are no longer valid. This largely has to do with the fundamental characteristics of a stock. To me, market timing usually revolved around trying to predict when stock/market would take a downturn and to sell beforehand. I don't really care when the stock will take a downturn, I care if a company has fundamentally changed from the time I bought it, no longer making it the same investment (ie: took on a crapload of debt, bought a lot of companies it knows nothing about, etc.).

Seeker, I think I can beat most professional traders. Most people can. It's called an index fund.

It is a semantic issue.