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How to Find an Investment Mentor?


bsned2
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Hi all,

 

OK.  I've been lurking on this board for a while, and I find it very valuable.  So thank you to all of you.

 

I'm 59, coming to the Value Investing game way too late.  But I hope to live many more years and I have money in the market, albeit in big dumb blue-chips like Home Depot.  So I'm trying to teach myself.  I've read many of the recommended books.  I'm starting to create my own excel spreadsheets to make calculations from quarterly/annual reports.

 

I'm sure I can stumble through and teach myself, but it could take me a while.  What I lack, and what I really want, is someone who knows what they are doing who can look over my shoulder and tell me what I'm doing wrong.  A retiree in my area maybe?  I'd even be willing to pay for that advice.  Not much though ha ha.

 

Of course what money I have is with a brokerage firm (Raymond James) and I really like my guy there.  But he's not really an investment guru, he's a manager.  And he doesn't have the time anyway.

 

Anybody have any advice?  I'm not in a major metro area (I live near Palm Springs) and I don't think there is any real investment club out here.

 

Thanks.  I'll keep plugging way regardless.

 

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I would recommend reading, Reading, and then some more READING.

 

What/where would I read?  I would bring a laptop with me to the local library.  Get the Value Lines 1st thing.  Then go to the periodicals.  Get the WSJ, Forbes, Fortune, local business magazines and then start reading.  When you are reading a story of a company, say GE, look it up in the ValueLine.  Look at the company performance over time and where they are now, and what projections are.

 

Spend a couple of hours doing this.  Do it a couple/few times a week.  Do it for a few years and you'll gather quite a knowledge of companies and current trends.

 

I would also join different clubs on the interwebs.  This is a good place to start, but there are others.  The microcapclub and Value Investors Club are two other good websites.

 

When you are at home/driving/walking, listen to investing/business podcasts in the background.

 

Finally, perhaps the best thing of all, is the contacts that you will make and the ideas that you will trade/learn of.  If you can find some interesting insights, others will reciprocate and over time you will do well.

 

I have a small circle of investors that I've met on the interweb...all of them very educated, very accomplished businessmen/investors.  From time to time, I trade ideas and information with them.  Mind you, only the top ideas are traded.  That has been one of my very best ways to get information!

 

Good luck!

 

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Might not be what you want to hear,

but it might well save you a small fortune ....

 

At 59, you're too old.

It will take at least 3-5 years of intense reading, the cost of at least a university/college course or two, and tuition (losses while learning); you will be approaching 64 by the time you know anything. Assuming no major 'senior moments' until 75-80; there will be maybe 10-15 years of runway at best. Is picking stocks really what you want to be doing in retirement?

 

Index funds, not individual stocks/bonds

Tuition/learning time is a lot shorter, and your decisions are limited to just recognizing when to enter/exit specific sectors. As every boat rises/falls with the tide; all you need do is be able to recognize when the tide is going in/out, and know what a sturdy boat looks like.

 

Look at starting/buying into a business, not investing.

For most retirees the issue is what are going to do with your time. For business people it is often better to buy a minority stake in an existing business, and treat it as a 'working hobby'. Typical businesses are breweries, patisseries, inn keeping, etc.; the skill-sets, work load and financial risk is spread over multiple partners, and you're in the business primarily for 'fun' versus profit maximization. The long-term pay-off is increased longevity, better health, and better quality of life - by keeping both mind/body active.

 

Good luck!

 

SD

 

 

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I agree with SD.

 

The vast majority of professional investors fail to the beat the index before fees (and even fewer beat it after fees and taxes). Indexing is the best way for 90%+ of people.

 

Most people are not successful at investing unless one has a huge passion. Even then, most of those fail. Look at how many value managers that were rock stars from 2000-2010 and now suck. I've averaged about 7% above the market over the past 10 years and I still index part of my investments. I'd like to think it was due to skill but it could just be luck.

 

The Raymond James guy is probably just a salesman.

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I disagree, you are never too old to learn.

 

Fully agree but in this case I'd add life cycle cash flow / portfolio management.

 

The OP must consider income needs / sources & plan investments / draw downs accordingly.

 

I'm slowly changing my risk tolerance & trying to stagger runways in buckets (today is funky mixed metaphor day...)

 

edit: easier said than done.

 

---

 

Kudos to the BRK Letters recommendation.

 

Should also examine ability to be patient vs trader mentality.

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Is picking stocks really what you want to be doing in retirement?

 

That is the key question. It's safe to say that >90% of individual investors would be much much better of just indexing (or passive investing). If you want to take part of your portfolio and use it as a hobby, that is a different matter. Just be aware it can be a very expensive hobby.

 

You are also nearing the point where most people stop adding to their investment portfolio. So if you have a diversified portfolio of "dumb blue chips" like HD, one option would be to just hold onto the existing portfolio. There is no reason to believe that you, Vanguard, or Raymond James can do better than your existing portfolio.

 

Investing is one of those rare activities where there is very little correlation between effort and results.

 

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I disagree, you are never too old to learn.

 

+1

 

Great thing about investing is that your  knowledge compounds over time and we are not talking about 85 years old here. You have plenty of time and also if you are really curious then you can learn a lot.

 

Pick any simple business, it doesn't have to be great. You can pick something depending on your background.. Imagine that you inherited it. Now try to understand everything about the business. How it makes money, return on invested capital, reinvestment opportunities, quality of management and anything comes in your mind.

 

It may take you couple of months, but you will learn a great deal about industry as well. To understand business, you will be reading up on their competition.

 

Once you are done, pick a  second company. Get the ball rolling. Do all this if you are very curious and find it interesting.

 

Good luck!

 

 

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I disagree with others on this thread.  This is how I would think about your situation.  While someone who is in his late 50s may not have much to add for his wealth over time, maybe he wants to leave a bigger inheritance to his family and be able to pay for his grand kids' college education etc.  So there maybe other financial reasons over time.  Maybe the OP wants to leave some money to a charity.  After all, Warren Buffet did make 99% of his wealth after he turn 50 or something.  The power of compounding is real.  The key question is really "do you really enjoy this?"  There are also other considerations at your age where you want security of income.  So the nature of your portfolio needs to have a different mix between income and appreciation.  If your objective is to simply compound wealth and beat the younger guys, it's probably not the right mindset.  If your objective is to learn, enjoy the process, and get better, I think it is very healthy and may prevent Alzheimer/dementia etc.  People take up golf and other hobbies in retirement, but this could be very rewarding for you.  If I were OP, I would take a hard look at myself and ask "what are my skillsets and what does my rolodex look like?"

 

If OP has 40 years working in specialty chemicals distribution and has a network of people that can reach out, there is a very good case to make for him to contribute his time and network to help a fund or manager in return for mentoring. wink wink. Just being on this board likely puts you in rare territory.  So look at your career and look at your work contacts and think about what industry knowledge you can offer.  Look up publicly traded companies in your sector and check 13F filings.  If they are sub $1 bn companies that you know well and have opinions of in terms of profitability, long term earnings power, the ability to earn a return on capital, and the various players involved, you can create tremendous value add.  Frankly, I want more 59 year old guys/gals in my Rolodex that I can call quickly and get their views on various topics. 

 

You can PM me if you want and we can do a quick chat about ways we maybe able to work together.  I have to be honest and upfront that if there aren't a whole of industry knowledge or contact, it will be difficult as "time" is the most expensive COG in the investment business.  Maybe you have 40 years of experience as an administrator in a school district and you are thinking what value add can I provide.  Well, I would like someone on my Rolodex who I can call when I want to understand how a school district admin thinks about buying educational subscription services. 

 

Take a step back and think about this dynamic and have some fun with it.  The most important question to ask is "will you enjoy this" and please please please have the right ratio of low risk income (perhaps an oxymoron in itself) and higher risk equity exposure in your portfolio.  Our runway and risk tolerance is justifiably different.  Heck, my own risk tolerance has changed slightly since my mid 20s. 

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I could be totally wrong but I think the probability of under performing the market (and probably dramatically) are significantly higher than outperforming (let alone by a large amount).

 

If you do decide to go down this road, I'd earmark a significant chunk to low cost index funds. If you outperform over, let's say 5 years, add more. If you under perform, it would probably be best to use your time doing something else. I would say no more than 5%-10% of your assets to manage in individual stocks on your own.

 

This game is a very hard game to play. Granted, these guys are managing billions but Buffett and his hand selected managers have underperformed the S&P 500.

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While someone who is in his late 50s may not have much to add for his wealth over time, maybe he wants to leave a bigger inheritance to his family and be able to pay for his grand kids' college education etc.  So there maybe other financial reasons over time.

 

Yes, but the other question is whether someone who is 59 and looking for an investment mentor is likely to compound money faster by investing in individual stocks or by investing passively. The base rate is very poor. According to Dalbar, the average fund investor earns about 5% per annum versus 10% for S&P 500. In the OP's case, keeping his current portfolio might be the optimal strategy (especially if he has capital gains in a taxable account).

 

The best general advice is just buy the S&P 500 and get a different hobby.

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Just to add to this ...

 

Almost all retirees will tell you that retirement is 3 stages; 'go-go' years, 'go-slow' years, and 'no-go' (god's waiting room) years.

Look up an actuarial table, determine when you're supposed to 'croak', and work back to today. 90 - maybe 3-5 'no-go' - maybe 5-8 'go-slow' - 65 (age at retirement); suggests 12-17 years of 'go go' retirement at best - that's it.  Your real investment 'capital' is that time, and it's to you to get the most out of it.

 

Lots of ways you can do this, but it really helps to have a 'plan' first.

 

SD

 

 

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In the absence of anyone else, I volunteer to mentor you. We can start....right now!

 

"Drop and give me twenty DCFs!"

 

"What would Buffett say!? He would say that model is a pile of hot garbage!"

 

"Ben Graham would be disgusted if he knew that this is what value investing has become!"

 

"Even Munger can see that's poor work, and he's nearly blind!"

 

 

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A few comments:

 

1. As several posters suggested above, I would first focus on self studying and learning by doing (with a small portfolio).  Without that background and experience you will most likely have trouble identifying who is a good mentor for you and who is not.  This is important because picking the wrong guy for this job could be disastrous for your finances.

 

2. The other posters are right that most people will not outperform the S&P over the long haul.  But I’m not sure if that means “put everything in VOO and forget about investing” is the right thing to do.  It might be, but my guess is that it is not.  If you’re retired your financial goals are probably more about minimizing the chances of running out of money while you withdraw $x per year as opposed to getting the highest possible CAGR over a 20 year horizon.  That probably means there’s a place for bond-like instruments in your portfolio.  But which instruments, exactly, and how much of your financial wealth should you allocate toward them given where interest rates, stock valuations, etc, currently stand?  You probably won’t have a good answer to these questions without actually studying and thinking about this stuff — which goes back to point 1.

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Guest cherzeca

do you have friends who also share your interest?  if so start an investment club where you assign to each member a stock rec to be written up and present to the club at (say monthly) meetings.  each member can invest or not on own, but you can experience the lesson of writing down and presenting your analysis, and fielding questions and criticisms.  you can even cater the meetings and have the guy who was voted the best presentation at last meeting not pay for tab. something like this can incentivize members to try to up their analysis game.

 

you mentioned wanting a mentor, but maybe you just need feedback/pushback/encouragement from peers

 

 

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It may be more efficient to start the conversation with the amount of assets you have first. The answer would be completely different if you have 20M vs 1M.  :)

BTW, never trust your broker! To be successful, you have to be completely independent and do all the research and call all shots by yourself. I have not seen one successful investor who made it by listening to his broker.

Therefore, the first step for you, if you really want to be in stocks right now, is to move brokerage to a discount broker to lower your cost. Fidelity is a good one because you can ask them to sweep your cash to their government obligation fund, which invests in 3 month treasury bills and pay 2% a year, and their commission per trade is low too.

If you have a bigger account, you may consider interactive brokers.

 

After you tell us the amount of money you have, I'll try to think of other advice for you.

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Might not be what you want to hear,

but it might well save you a small fortune ....

 

At 59, you're too old.

It will take at least 3-5 years of intense reading, the cost of at least a university/college course or two, and tuition (losses while learning); you will be approaching 64 by the time you know anything. Assuming no major 'senior moments' until 75-80; there will be maybe 10-15 years of runway at best. Is picking stocks really what you want to be doing in retirement?

 

Index funds, not individual stocks/bonds

Tuition/learning time is a lot shorter, and your decisions are limited to just recognizing when to enter/exit specific sectors. As every boat rises/falls with the tide; all you need do is be able to recognize when the tide is going in/out, and know what a sturdy boat looks like.

 

Look at starting/buying into a business, not investing.

For most retirees the issue is what are going to do with your time. For business people it is often better to buy a minority stake in an existing business, and treat it as a 'working hobby'. Typical businesses are breweries, patisseries, inn keeping, etc.; the skill-sets, work load and financial risk is spread over multiple partners, and you're in the business primarily for 'fun' versus profit maximization. The long-term pay-off is increased longevity, better health, and better quality of life - by keeping both mind/body active.

 

Good luck!

 

SD

 

I agree. It will take a lot of time to build knowledge and experience. Using 10,000 hrs as an example to become a "good" investor, it might take years. 

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Hi all,

 

OK.  I've been lurking on this board for a while, and I find it very valuable.  So thank you to all of you.

 

I'm 59, coming to the Value Investing game way too late.  But I hope to live many more years and I have money in the market, albeit in big dumb blue-chips like Home Depot.  So I'm trying to teach myself.  I've read many of the recommended books.  I'm starting to create my own excel spreadsheets to make calculations from quarterly/annual reports.

 

I'm sure I can stumble through and teach myself, but it could take me a while.  What I lack, and what I really want, is someone who knows what they are doing who can look over my shoulder and tell me what I'm doing wrong.  A retiree in my area maybe?  I'd even be willing to pay for that advice.  Not much though ha ha.

 

Of course what money I have is with a brokerage firm (Raymond James) and I really like my guy there.  But he's not really an investment guru, he's a manager.  And he doesn't have the time anyway.

 

Anybody have any advice?  I'm not in a major metro area (I live near Palm Springs) and I don't think there is any real investment club out here.

 

Thanks.  I'll keep plugging way regardless.

 

Your love of learning and seeking a mentor is to be applauded. Feedback and reflection along with the growth mindset can set a great example for your next generation as well. Please know that a lot of the advice is meant to alert you to limit permanent capital loss that can and likely will happen in the course of learning - and it may be the best peer mentoring advice one can get (speaking from experience). Finding a mentor in your desired investment philosophy and circle of competence eventually will definitely help.

 

I've been unable to find a good mentor yet as well, but happy to share what I've learnt from my mistakes as a peer (please feel free to DM me if you'd like). I started learning active investing in 2015 at age 39 studying a course on Value investing as part of my MBA - the professor who took the course Anurag Sharma has a nice book called Book of Value if you want to read it - I can't recommend it enough especially the first part. Guy Spier's The Education of a Value Investor also communicates in a story format the mistakes he made early on. Peter Lynch makes it sound too easy, beware of chasing shiny objects. Usually an early good outcome gets you hooked to the field. Most, myself included, make a lot of mistakes early on chasing fairy tales or doubling down on well studied but capital losing bets - one thing that really helped me out is limiting my investable capital account to a separate 10% of portfolio for pre-defined 3 years (think of it as an apprenticeship period). If not for this, I'd be broke and depressed by now, no kidding. You learn so much from your own mistakes. I haven't figured out an answer to the mentor part yet (my developing circle of competence is healthcare and biotech investing), but short of that writing down your thesis and value drivers, even blogging or creating a thread on a forum are helpful tips to putting your thoughts out there and getting peer feedback. Start with an area where you have a circle of competence or would love to develop it, and work on an idea in depth for a week or two to understand the industry, the story and business model, the valuation, the risks, the competitors, the management and their incentives, the headwinds and tailwinds all the companies in the industry are facing, and finally the catalysts and your expectations.

 

Being very clear about your goals is the starting point as many have noted. This will help you chart a path in keeping with these goals. And look out for "value" ways of developing yourself - if one of my goals is to enable the next generation in understanding and building wealth to fulfill their needs and desires and contribute to the good of society, then the time I spend teaching my little kids about money is one of the most valuable rewards for my learning actively about personal finance and investing. This makes the journey a lot more fun and sometimes even better than the results we are all looking for - heads you win, tails you don't lose much.

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I don't think this guy is serious. After so many posts and 3 days, he is not replying to anyone. I think he is just trying to find time to entertain himself by doing value investing. If that's the case, he definitely should stop.

There is a famous quote from a great investor Ed Seykota: "Everybody gets what they wanted in the market". If this guy's primary objective is to be entertained, he will get that, but not money.

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