Recently, I have developed a passion for talking to people about buying too big of a position in one or two individual stocks. This is why, today, I want to talk to you about over-investing in “quality stocks.” For illustrative purposes, I will be talking about certain stocks. However, I am not recommending or favoring one over another.
The other day I met a gentleman who has a portfolio he manages himself. He said something to me that resonated with me about how you should stick with quality stocks and things will probably work out.
I asked him what he was talking about and he said that he had JPMorgan stock for a few years and it was languishing in the low $80s before he sold the position because of frustration that his portfolio was not going where he wanted it to. Today JPMorgan's stock is over $110.
This goes back to a previous piece I did about how over-investing in one security can skew your actions. If only he had 2% to 3% of his account in JPMorgan, he would have probably left it alone.
This leads me to the term “quality stock.” A lot of times when stocks are at a 52-week high or are running strong, they will become anointed as a “must-own,” “quality-stock,” or even “blue chip stock.” It is done all the time in the media and probably by people in my business as well when they are talking to clients.
I think that when they use those terms, they're trying to give you a sense of comfort not to be afraid of the stock, sort of like a sales pitch. When someone tells you to buy this type of stock and just hold it, you get some comfort.
When I started in this business in 1995, one stock that was like this was General Electric. Back then it was the “blue chip stock” that did everything right. They had investments in many different industries including healthcare, appliances, aviation, etc., and each year the stock price increased.
That particular stock, however, has been a horrible performer over the last 15 or 20 years. It is no longer in the Dow Jones Industrial Average.
If you go into something that is a “quality stock” at the time, you should know that they do not tell you when it is not a “quality stock” anymore. And, it might be too late.
To me, saying something is a “quality stock” or a “blue chip stock” is sort of a cop-out. All good companies, when they are riding high, give people this false sense of security that nothing can go wrong. We see it all the time where a company is doing well and a news story comes out with a scandal, a CEO problem, or the trends in their business change and that stock ceases to be a “quality stock.”
So, when you buy individual stocks, remember: do not over-invest in one. When you are buying that stock you are buying based on the earnings and business trends that are coming to you in the future. If a stock is at a 52-week high today, and it is a name-brand company, that tells you nothing about what is going to happen in the future, but instead where it has been.
If you have any additional questions, please feel free to reach out to me. I look forward to speaking with you about your financial future.
Since I started my career in 1995 as a man in his mid-20s I have learned a lot. Back then, my quest was to try and find ways to make money in the stock market. I read nearly a hundred books, subscribed to newsletters, and watched financial shows on television in the hopes of trying to find the secret to making money.
Looking back on those 23+ years, now I know that it doesn't exist. Many of you have probably tried this over the years with mounting frustration. You should know that no matter how many shows you watch or how many offers you see from "investment geniuses" on the internet, you are not going to make money doing this.
The faster you learn this lesson, the more you can increase your odds of success—that is what this game is all about. This is about winning, making money, and growing your portfolio by avoiding large mistakes.
Lesson No. 2 is to avoid overinvestment. Many people come across “can't-miss” investment opportunities throughout their life in the form of real estate, collectibles, stocks, etc., and want to invest more. If you only have $5,000 to $10,000 to invest, do not spend $30,000 to $40,000. With the larger amount, your net worth will actually fluctuate just as the investment fluctuates. At the end of the day, you will either end up selling it or having anxiety.
Additionally, when you invest, stay away from investing in one idea. Retirement success comes from sticking to a strategy that removes emotion and allows you to stay on the path.
If you would like to know more, please feel free to contact me. I would be happy to talk to you about your financial goals.
I’m sure you’re aware that defined benefit pension plans are seemingly a thing of the past for most of us. To recap, a defined benefit pension plan is a pension that pays you off in retirement from your current employer.
This means that most of us will be on our own to build and manage our own pensions. To do this, you have to determine when you want to retire, how much savings you want to accumulate during your working years, and how long that money will last during your retirement.
The impetus to start thinking about retirement sometimes depends on where you’re at in life. If you’re in your late 50s or older, you’ve probably already started to quantify what retirement looks like for you. If you’re in your 30s or 40s, you should start to schedule what your retirement will look like.
To give you a guideline of what to accumulate, consider this: Here in Long Island, the average 70-year-old person accumulates roughly $1.5 to $2 million worth of savings, and living expenses generally run from $75,000 to $100,000 per year.
Before you get to retirement, though, you need to calculate the three factors I mentioned above. If you put all of them into a financial planning tool, you’ll know what you need to do each year to stay on track for retirement.
Most of my younger clients, or those who are in their mid-30s or mid-40s, typically ask me what to do first in terms of planning for retirement. If this is the case for you, your first step should be to prioritize, put a plan in writing, and make some checkpoints that will help you analyze where you’re at and where you need to be.
Once you do this, you’ll be on your way to achieving your goal of retirement.
If you have any other questions about building a retirement plan or you have any other financial needs I can help you with, don’t hesitate to reach out to me. I’d be happy to speak with you.
In the last couple of months I’ve had many conversations with clients about the recent turbulence in the stock market. It seems like headlines these days can come out of nowhere and cause the market to sell off.
Today these headlines seem to be centered around tariffs, potential trade wars, and rising interest rates. These headlines can make people question their investment plans—but should we actually be reacting to these headlines this way?"
As you’ll see in the video above, I’ve included a chart showing a market summary for the S&P 500 from 2009 until now. Within the chart, you will notice a few shaded areas indicating periods of volatility in the market. This includes a six-month period in 2010, a 10-month period in 2011, and a 14-month period from 2015 to 2016. Now, with those periods in mind, I’d like to ask two questions: Can you remember which headlines caused those bouts of volatility? And did you react?
As investors, we’ve got to come to grips with what our true risk tolerance is. This isn’t something you simply fill out a form to determine; you’ve got to truly understand what you can withstand regarding volatility in your portfolio. Of course, someday we’ll see a true tough economy and a bear market. There might even be a significant geopolitical crisis. These things can and will produce market volatility. So, before they do, understand what you can withstand.
But remember that we’ve come back from these kinds of things before. If you think about it, the leading companies of today weren’t even around 15 or 20 years ago. New technologies always emerge.
So my message is this: Volatility isn’t new. You’ve got to know yourself in terms of risk tolerance. While the market is at or near all-time highs, now may be a great time to review your situation so that you can withstand potential adverse market changes.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon
Just got off the phone with a client age 59 who wanted to come in and review his allocation towards the stock market. He has his investments in a few different locations and doesn’t know what his overall allocation is. He said “at 59 years old, I could very well be at 80% stocks now and I think that is too high.”
When was the last time you reviewed your asset allocation for all your investment accounts?
I’m talking about your current 401k and older 401k’s from previous jobs, your IRA’s, Roth IRA’s, and traditional brokerage accounts.
In times of rising stock markets complacency can set in and whereas you were initially comfortable to have 65% of your investments in the stock market, now, due to rising markets you could be at 75%.
Each year I recommend you review your allocation and rebalance your portfolio towards your target allocation.
*Diversification and asset allocation do not ensure a profit or protect against a loss. Keep in mind that there is no assurance that any strategy will ultimately be successful or profitable nor protect against a loss.
As this is my maiden blog post, I wanted to take the opportunity to welcome you to my site- My name is Frank Iryami, I am a financial advisor with Raymond James based in Syosset, NY – I have been a financial advisor for more than 22 years.
I’m going to use this blog in the future to explain how I deal with various client issues that come up throughout the course of my days and weeks, in the hopes that some of the topics I'll address are your concerns and maybe I can help you plow through and move forward.
The way I see my role as a financial advisor is to very simply help you build your savings so that you can live the life you want. Most of us today have to build our own nest egg that will be able to outlive us. Employer provided pensions rarely exist. As your financial advisor a lot of my time and energy goes towards helping clients stay on track; Helping you ignore the noise of the day and sticking to our agreed upon plan.
Here is my view of what I cannot do (nor do I think any financial advisor can promise to do) - We cannot predict the movements of the stock market, we cannot predict the course of interest rates, we do not know when the economy will slump or surge, and we do not know how the markets will respond to various geopolitical events. There are many in our industry that waste a considerable amount of time and energy trying to do all of these, in my opinion you don’t need to know the answers to these questions to build your nest egg.
In order to build your nest egg and real wealth, you need a long term view:
Trying to get rich quick is not a good way to build wealth either, like buying real estate coming out of foreclosure, unless of course, you have a certain competency in that. Knowing your financial strengths and weaknesses is key to building wealth.
An example of knowing your strengths: I have never bought real estate with the hopes of trying to make money. I am sure it can be done, I just know that I don’t have the right knowledge or experience in that area. So, I just stay away from it. I won’t get lured into a real estate deal unless I completely understand how it works and quite frankly, I will probably turn away from it because I have my hands full doing what I know how to do. This may seem like common sense, and it is, but I have seen people lose money by trying something. Sometimes they dig a very large hole that can take many years to climb out of.
Time is your friend in building wealth. The more time you have working for you, the better the chances of building a larger nest egg to fund the life of your dreams.
*The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Frank Iryami and not necessarily those of RJFS or Raymond James.
A Note from frank...
I’m going to use this blog in the future to explain how I deal with various client issues that come up throughout the course of my days and weeks, in the hopes that some of their concerns and questions are your concerns and maybe I can help you plow through and move forward. READ MORE