2million - My Journey to Financial Freedom

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Friday, April 28, 2006

Sold My Bellsouth Holdings

As part of my action plan to improve my returns, I decided to sell my holdings in Bellsouth. With the recent stock price movement from the planned merger with AT&T, I thought it was a good opportunity to move my investment dollars to help round out my portfolio.

While I haven't really posted much details about my stock investment asset allocation, I already know I am underexposed to smallcaps and international asset classes in my portfolio. My plan was to sell the Bellsouth stock and invest the proceeds in a smallcap ETF in my Sharebuilder account.

I had 148.5294 shares of Bellsouth. However 10 shares were in certificate form, the remaining were in my DRIP account. I decided to only sell 138.5294 in my DRIP account because 1) I couldn't readily locate the certificates and 2) the 10 share were a gift from my grandmother. I figured selling off about 93% of my investment was good enough for now.

I mailed my request into the Bellsouth DRIP account administrator to sell the shares and received a check about 10 days later for $4,798.17. The stock sale cost me $21.08 in commissions. I moved this money into my Sharebuilder account and am planning on funding a ETF purchase with it.

ETF Purchase Plan
I plan to invest the money in Vanguard's Extended Market VIPER (VXF). I am a little concerned because I never like to buy anything that is hitting a 52-week high; but at this point I feel making some small asset allocation corrections is more important than timing the market. I decided to dollar cost average in by starting with a $1500 investment and will add the remaining amount into the ETF on any future pullbacks.


  • 1 year ago you would have been hesitant of buying VXF @ $75 because it was a 52 week high...look at it now, almost $100. In other words, you never know what the top will be.

    By Anonymous Anonymous, at 12:58 PM  

  • quick idea...
    etfs = expenses.
    and overdiversification... at least that's how i see it.
    concentrating your holding on a few good stocks can be dangerous, but VERY VERY rewarding + you don't have to deal with the fund bureaucracy.

    By Anonymous Anonymous, at 1:26 PM  

  • have you thought about VTI or IWV for broad exposure? Or, IVV, IJH, IJR and EFA.

    By Anonymous Anonymous, at 10:12 PM  

  • anonymous #2 needs to read "A random walk down wall street", I highly rec. it.

    By Anonymous Anonymous, at 10:13 PM  

  • I am interested in hearing what Anonymous #1 means by "fund bureaucracy"? I am assuming that he/she is referring to the need to manage the fund around the rules, but I am not sure.

    In markets like the one we are in know it is easy to say concentrate on a few stocks and enjoy the ride. The problem is sticking to it when things turn sour. It is much easier to stay the course if one of your stocks is tanking and it is pulling your whole portfolio down significantly. It is all about the emotions...

    By Anonymous Anonymous, at 11:33 PM  

  • an example of what what i meant when i said fund bureaocracy would be when your fund decides that it shouldn't hold x stock, sells and sends you a nice cap gain bill your way when you don't want it. it can be pretty annoying if you are into CEFs.... ETFs will do that once a while, I like picking my own stocks and not having to deal with that.

    By Anonymous Anonymous, at 12:23 PM  

  • I would have a concern with the long run up in small cap stocks over the last few years. To parapharse Bill Miller (refering to commodity funds, which have also ran up alot), "the data showing the returns of small caps won't look so good just after prices have tripled"

    Not that they have tripled, but they have run up a lot already - much better to buy things that are out of favor me thinks.

    By Blogger frankjask, at 12:36 AM  

  • What about the idea of a diversified investment portfolio?
    I think you're doing the right thing by dollar cost averaging into it, if you feel you're at a high point. Maybe you should buy in smaller quantities for a longer period of time?
    A diversified portfolio will always have one of it's leg's outperforming the others. The goal and purpose is not to time the market but to let the allocation model help manage the risk.
    I think if you get to worried if the market is too high, you'll be stuck in the chicken and the egg model. Better to be in the market for the ups and downs than to fail to time it correctly.
    $2m, you may want to consider adding additional ETFs from outside the US, unless you feel that your current holdings are sufficient. Anon #3 was hinting at that by recommending EFA, etc....
    Have a wonderful weekend,

    By Blogger makingourway, at 3:15 AM  

  • Yea I have not heard too much abt VXF. But i have money in VWO ( emerging markets) seems like a good investment and it is pretty diversified with holdings in brazil and india. Im hapyh with it so far. Let me know what you think.
    good luck!

    By Anonymous Anonymous, at 6:37 PM  

  • I just bought IVV and VXF recently at ETrade and it is down 5 and 7 % respectively!! Was that bad timing?

    By Anonymous Anonymous, at 10:36 AM  

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