Can Stocks Outperform an ETF?

It’s been awhile since I talked about stocks. What happened?!?! Oh yeah, life happened. But after re-reading a great guest post on accountability leading to success, I figure I need to be accountable for my latest stock moves and challenge.

Mutual Funds: Diversified, Simple, and Less Risk

For years, I’ve been a mutual fund guy. Nothing to write home about, but I was relatively happy with my performance. Lately, with things turning around, I started to re-evaluate my portfolio. Can I squeeze a little more if I handpicked a few top performers? I understood the risk and taking on more volatility, but I figure I always need to improve myself and my game. So here it goes.

Exit Strategies

Any time you deal with any investment, you should have an exit strategy. Some of your moves will go against you, and you need to minimize losses when it does. All my trades have an additional stop loss order of 8% (CANSLIM) under my first buy order. I am also using INO.com’s Trend Analysis to guide me as well.

Let’s Get It On!

With $10,000 in my trading account, I will have a head to head battle, with myself! Half of the funds will be used to trade QLD, an exchange traded fund that doubles the performance of the Nasdaq-100 Index. I am most familiar with the tech sector so I chose this fund to try and keep up with the high fliers and to stick with what I know. Keep in mind, if the market goes up, I’ll be in good shape, but if the market goes south, this fund will also double the losses of the Nasdaq-100. The second half of the funds will be divided amongst three stocks that I follow. On one hand, I will be trading in and out of QLD. On the other hand, I will take new stock positions as I see fit, but will always try to have a maximum of three stocks, to keep things simple. Currently I am holding Apple, Chipotle, and Priceline.

Stock Market Iron Chef

Many times I looked at past performance of stocks and ETF’s, but my assessment never stuck because I had no skin in the game. Putting it out there and making myself accountable to my readers, I hope to improve my own portfolio management and performance. This challenge will go on for a year, with occasional updates along the way. Enjoy the challenge from the sidelines and feel free to chime in with your nuggets of wisdom. Finally, I will see which cuisine reigns supreme!

What has performed better for you? Stocks or ETF’s?

Blog Carnivals

Maximize Your Business Travel was featured in the Totally Money Blog Carnival Valentine’s Edition hosted at Saving Money Today.

John Chow Guest Post Pain was featured in the Totally Money Blog Carnival Presidential Quotes Edition hosted at Fat Guy Skinny Wallet.

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25 Responses

  1. MoneyCone says:

    You have an interesting play there with QLD Buck!

    My best has been AAPL. But then I invested in it long before it was the darling of investors!

    • Buck Inspire says:

      Nice move with AAPL. Funny, through the years I just watched it keep on trucking. iPods and iPhones kept selling like hot cakes and I thought it was too high. I jumped in before the iPad launch only to get taken out by the Flash Crash!!! 🙁 Finally shook that off and went back in. Are you a long term or short term trader?

      • MoneyCone says:

        Unlike most I did not invest in Apple because of iPods. I invested solely due to the potential I saw in their MacBooks. This was even before their switch to Intel chips.

        Of course at that time I never imagined the spectacular growth Apple has shown! But I invested with my gut. Didn’t do any analysis. I was still licking the wounds after the dotcom crash and I think this was the only stock in there at that time! Almost completely withdrew from the markets like others! (Hey I was young!)

        I am a long term trader, but I do speculate every now and then. I bought Baidu even though I have no faith in them and sold them for a cool profit.

        But I don’t do these often, nor do I blog about them! Market timings are always dangerous!

        • Buck Inspire says:

          Wow you saw the potential in their MacBooks? Impressive. I use one now and it is pretty sweet. Never imagined Apple would eclipse Microsoft one day! Great or lucky call, I’m sure you’ll take it. I was in Baidu for bit, too. I got out too early. Never imagined that one would split 10 times and still keep on going. You win some, you lose some! 🙂

  2. Peace n prosperity Buckinspire, I come to your website often but I am usually a lurker. I decided I’d finally post a comment for post saying how much I love visiting your blog as I think your writing is both exciting and helpful. Keep your blog up-to-date and you have a visitor for life, glad to meet you,thanks.

  3. Squirrelers says:

    I’ve been a mutual fund guy, and they have performed fine for me. That said, it would be fun to have an experiment where I took equal sums of money, invested in stocks exclusively in one, and mutual funds exclusively in the other. I would bet on the funds return, after fees/taxes/time invested, to be better. Perhaps on a larger scale it could be worth it? Anyway, it might be fun to try out a test.

  4. krantcents says:

    My portfolio is mostly mutual funds, some stocks and 2 ETFs. My asset allocation is fairly broad because of my age and how close I am to retirement. I would rather have steady growth versus a lot of growth.

    • Buck Inspire says:

      Sounds like you have a solid and logical game plan. 🙂 Too bad we didn’t know what we know now back then… Since you are close to retirement, do you find yourself scaling back into less volatile investments?

      • krantcents says:

        No! I am in a unique situation because my wife and I will have Social Security at the max (age 70) plus a reasonable pension/medical. Therefore my 403B, Roth IRA and IRA can be somewhat aggressive. As I get really close (1-2 years away), I will increase dividend funds portion (I think). All this could change over the next 6 years.

  5. 101 Centavos says:

    It would be hard to compare in my portfolio, since I have only a few mutual funds and ETFs, and they’re fairly specialized, like a hard currency fund and the inverse interest rate fund. The gold fund though has done nicely, but not as well as some of the individual equities.

  6. I’m more of a mutual fund guy too. I have around 10 individual stocks in play and that’s about it. In 2010, the stocks killed the ETF/mutual funds.
    I don’t religiously keep track of the VS performance though. I really should do that.

    Keep us updated.

    • Buck Inspire says:

      Congrats on your portfolio. If you know your stocks killed the funds, I think you’re in good shape. For me, I was very wishy washy. “I guess stocks did better. Oh this time, the funds might be safer, etc.” Just wanted more measureable reasons to go one way or the other. We’ll see how it goes! 🙂

  7. Aloysa says:

    When I get to the point of investing I will go with mutual funds. But I am not there yet.

    I like your new design a lot! So much easier to read. Love it!

    • Buck Inspire says:

      Mutual funds are a nice starting point. Not as risky as stocks, but should in theory give you better performance than a savings account or money markets. Glad you like the design. I finally caved to public opinion. Yeah I’m enjoying it, too. 🙂

  8. Good luck with your challenge Buck, you did well in picking a sector you are familiar with for ur investing.

    PS. I love your new design!

  9. Thanks for vital detailed description on the topic and I do believe mutual funds portfolio needs to be thoroughly checked for the feasibility of each of the schemes in your portfolio and analysis of your both return & risk parameter.

  1. February 27, 2011

    […] Buck Inspire with an experience Can Stocks Outperform an ETF? […]

  2. March 16, 2013

    […] Can Stocks Outperform an ETF? at Buck Inspired. Buck is having a competition between individual stocks and ETF to see who reign supreme. I can’t wait to see if he’ll win. […]

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