Friday File: Stops, Nibbles, Pot Updates and a New Watchlist Stock

Real Money Portfolio udpates, plus a new high-yield watchlist stock and some pot and commodity thoughts

By Travis Johnson, Stock Gumshoe, October 4, 2019


The competition for your brokerage account has gotten fierce again, which is great news for investors. There’s no longer any reason to pay brokerage commissions for buying or selling stock… which makes it so much easier for small individual shareholders to be slow and gradual in their portfolio-building, and I think that’s great — don’t buy a full position all at once, but build it up over time… don’t sell it all at once, but take some profits or reduce your exposure over time If you’re not being charged $10 per transaction, that kind of investing becomes a lot more palatable, particularly if you’re a small investor who might prefer to trade in blocks of just a hundred (or few hundred) dollars.

So good job, Schwab and TD Ameritrade and ETrade and Interactive Brokers and Robin Hood and everyone else, thanks for competing for our business (and, if you’re a customer at these no-commission brokerages, always do remember that they’re not providing a charitable gift to you — they’re making money somehow, whether that’s from directing order flow to particular dealers, trying to get you to invest in their ETFs or extend your relationship to other fee-based banking services, or whatever else… some such services have even been ad-supported in the past, so don’t stop paying attention).

Of course, if this “no commission” world encourages you to trade in and out of stocks more often in general as you try to time the market… then it’s bad. The one thing we really know for sure is that action correlates negatively with performance — for most people, the more trading you do by moving in and out of positions or in and out of the market as a whole, the worse your portfolio performs.

But yes, my bias is that I think it’s wise to think of your brokerage account as a portfolio you’re building… hopefully if you’re still working, you’re still putting money into it every week or every month, and as that balance grows you’re investing it into the positions you find most compelling, and if you’re at all like me then zero commissions makes a difference.

Even with my portfolio much larger than it was 20 years ago, I still notice commissions. This week I made small add-on buys of four different stocks, but if we were back in the bad old ...

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