10-08-2014, 04:59 PM
(10-08-2014, 11:14 AM)Dividend Watcher Wrote:(10-08-2014, 10:56 AM)Joey Batz Wrote: Does anybody recommend investing in an ETF or two as a hedge against their ability to pick dividend stocks?
Not me. The years of management fees and limited visibility and control argue against it for me. Surely you could come up with a list of 30 companies that, if held for the long term such as the next 20 years, will do just fine. I could come up with a list of 10 without even thinking about it.
Now, if you just wanted to buy a couple ETF's and ignore your portfolio for the rest of your life, then maybe that's the way to go. Just because an ETF holds potentially hundreds of stocks doesn't mean you're buying safety nor a reliable dividend stream.
Nah, you've pretty much got a point there. ETF's may be diversified, but I would say they're too diversified. As much as that sounds like blasphemy, there are so many stocks in every fund out there that I wouldn't buy individually. I have recommended ETF's and index funds to a friend of mine who knows absolutely nothing about investing, has no time to learn, and would rather put money in and just have it grow over the decades.
The closest thing to a mutual fund that I would consider putting my money into (even though it doesn't pay a dividend) is Berkshire Hathaway's B shares, mainly for exposure to businesses that you can't directly own through the stock exchange (Geico, Benjamin Moore, Dairy Queen, and Fruit of the Loom come to mind). And even there I'm debating if I'm wasting my time and money or not.
The ETF idea was just a hedge against, well, myself. I'm rapidly learning, but I'm still in the learning phase nonetheless.