Episode 74: Should You Own Individual Stocks?

Segment 1:

HELLO Lower Alabama! Hello Gulf Coast! Welcome in. Welcome to Coasting in Retirement! Thanks for joining us today, Josh Null here, alongside co-host Michelle Lee Melton-Null, Michelle how are you doing? We are back in Coastal College’s recording studio, beautiful downtown Fairhope, ready to put together another great show for those of you tuning in!

Listeners: Michelle and I are here today to discuss financial topics relevant to those of you in or near retirement, living your best life along our part of the Gulf Coast. Here’s what we’ve got in store for you: First segment – deep dive on our topic of the day. 2nd segment - at about 30 minutes past the hour - “Headlines of the Week”. Then at roughly 50 minutes past the hour, stick around for our 3rd segment, we call it” Josh’s Crystal Ball and Big Mouth”. So buckle up, we’ve got a lot to get to!

Quick background on me for those new to the show. Again, my name is Josh Null, I am a fee-based financial advisor, I hold my FINRA Series 65 securities license, and I am the owner of Gulf Coast Financial Advisors, that is a 100% locally owned, 100% independent investment management and financial planning firm with offices in Fairhope, Orange Beach, and Mobile! You can find more information on me and the team at Gulf Coast Financial Advisors by visiting our website gulfcoastfa.com, or feel free to give us a call at 251-327-2124. If you missed that contact info, get a pen and pad ready because we will repeat our contact info several times throughout the show!

Alright Michelle, for today’s episode we are going to attempt to answer the question - should investor’s hold individual stocks in their retirement accounts? At first blush, this may seem like a no-brainer, but what many investors may not realize is that the majority, if not all, of their investment accounts are held in groups-of-stocks investment vehicles such as mutual funds and exchange traded funds, or ETFs for short. Especially many of you that have most of your retirement assets held in a qualified plan like a 401(k), there’s a pretty good chance that you are mostly invested in what’s called target-date funds, and there’s an even better chance that you may not even have the option to hold individual stocks in your plan. So today were going to talk about the benefits and the risks of allocating some of your portfolio to individual stocks vs having everything in a basket of stocks such as a mutual fund or an ETF.

Let’s start with some basic definitions. Michelle, how would you describe an individual stock? OK, how about a mutual fund? And finally an ETF? Here’s how Gemini AI defines them:

An individual stock is a single share representing partial ownership in one specific company, granting the holder a claim on its assets and earnings, traded on exchanges, and differing from funds by lacking built-in diversification, thus carrying higher risk but also higher potential reward and control.

Mutual funds let you pool your money with other investors to "mutually" buy stocks, bonds, and other investments. They're run by professional money managers who decide which securities to buy (stocks, bonds, etc.) and when to sell them. An investor gets exposure to all the investments in the fund and any income they generate, and mutual funds are offered a wide variety of investment strategies and styles.

An ETF (Exchange-Traded Fund) is a pooled investment fund that holds a collection of assets like stocks, bonds, or commodities, and trades on a stock exchange throughout the day, similar to an individual stock. ETFs offer investors diversification, low costs, and flexibility, allowing them to gain broad market exposure in a single transaction, unlike mutual funds that trade only once daily.

The general idea with holding a mutual fund or an ETF is you get baked in diversification, which means that even in a worse case scenario, all of the individual stocks held inside a fund should not be all loses at the same time. Law of averages if you will. On the flip side of that argument is that it’s unlikely that you’ll have all winners at the same time, so in general, your best performing mutual fund or ETF will still trail the returns of your best individual stocks.

That said, we should re-iterate that all investing involves risk, and having an ALL stock portfolio may not be the best idea for those of you in or near retirement. In fact, at GCFA we almost always hold a variety of ETFs in our portfolios along side what is referred to as a stock sleeve. The problem with holding all individual stocks is that depending on what stocks you hold, you will probably experience much more volatility vs holding ETFs and mutual funds, which tend to level out some of the ups and downs in your portfolio. With that said, we’re here to answer the question of whether you should hold individual stocks or not, so let’s dig in:

The biggest overall argument for holding individual stocks is that given the amount of news-headline volatility and during an environment where we are digesting the effects and benefits of the newfound, revolutionary technology of advanced computing, we've witnessed historically high stock dispersion. What’s that means in English – it means that there have been a lot of stocks that have done really well and a bunch of stocks that have done poorly, creating an environment where professional stock pickers might have an opportunity to produce stronger than average gains.

Holding individual stocks offers benefits like tax efficiency (controlling when to realize gains/losses), potential for higher returns than funds, direct ownership, and dividend income, but requires significant research and carries higher risk if not properly diversified, unlike diversified funds. You gain control over what you own, how long you hold it, and when you sell, which is key for tax strategies like tax-loss harvesting, and you avoid ongoing fund fees.

Key Benefits

Tax Control: You decide when to sell, allowing you to strategically realize gains or losses to offset taxes, something you can't do with funds where gains are distributed.
Tax-Efficient Wealth Transfer: Appreciated stocks can receive a "step-up in cost basis" at death, potentially wiping out capital gains taxes for beneficiaries.
Higher Potential Returns: A single successful stock can significantly outperform the average returns of a diversified fund, offering greater upside.
Direct Ownership & Control: You own a piece of a specific company, aligning your investments with your beliefs and allowing for direct portfolio management.
Dividend Income: Receive direct dividend payments from companies, which can be reinvested or used as income, often at favorable tax rates (qualified dividends).
No Fund Fees: Avoid the ongoing management fees (expense ratios) charged by mutual funds and ETFs.

Considerations (The Flip Side)

Risk: Higher risk due to lack of inherent diversification; a single company's failure can heavily impact your portfolio.
Research Intensive: Requires significant time for company research, monitoring, and industry analysis.
Time-Consuming: More active management needed to monitor individual companies and market trends.

In closing, I think another potential downfall for putting too much emphasis on individual stocks is the speed of investing information being spread across multiple platforms, much of it bad information, and the fact that many stock trading apps such as Robinhood are set up almost like an online casino that may encourage more gambling like trading versus well thought out stock allocations. But the upside to having a stock sleeve in your portfolio assembled by professional money managers is that you have an opportunity to beat the average, to stay ahead of inflation, and potentially super-charge your investment accounts over the long run.

Listeners, if you want to set up a follow up conversation with the team at Gulf Coast Financial Advisors, it’s easy. You can call us at 251-327-2124, or find us on our website gulfcoastfa.com. One our site, click on the blue button in the upper right-hand corner to set up a meeting on my calendar. There are flexible meeting choices for your convenience – it can be as simple as a 15-minute introductory phone call, a 30-minute zoom, or my preference, an in-person meeting at any of our 3 office locations: Downtown Fairhope, Orange Beach just down the road from the Wharf, or in Mobile off Dauphin St and I-65. Reach out to us - we would love to meet you!

Alright folks, coming up next - There’s always a lot going on in the world! Particularly the world of finance, investments and money. Every week we scour the internet for financial articles relevant to those of you in or near retirement, then give you our honest opinion about these headlines. So join us after the break to hear Payton and I discuss this week’s relevant headlines in our “Headlines of the Week” segment. Stay tuned!

Segment 2 - News of the Week:

Welcome back to Coasting in Retirement, your host Josh Null here, alongside co-host Michelle Lee Melton-Null. As we discussed before the break, every week we scour the internet for financial articles that pertain to those of you in or near retirement. Our job, or at least we tell ourselves it is, is to help you all understand how these headlines impact you, especially when it comes to your money! Note – if you want to read our referenced articles yourself, we also include the links in our show transcript, which you can find on our website gulfcoastfa.com under the podcast tab. Now without further adieu, here’s Michelle with the Headlines of the Week!

1. Michelle: For our first headline, we’re looking at a provocative piece called the “BlackRock 2026 Investment Outlook”. They are calling the current stock market a 'Diversification Mirage.' The article argues that for years, investors have been told to just 'buy the index' and relax. But in 2026, with just a handful of AI and energy giants driving nearly 80% of the S&P 500’s returns, holding an index fund means you aren't actually diversified—you’re just heavily concentrated in five companies without realizing it. Josh, the article suggests that in 2026, 'passive' investing is actually a 'passive' risk. Is it time for retirees to ditch the ETFs and go back to owning individual blue-chip stocks where they can actually see what they own?"

Josh: No, not necessarily. Historically the financial services industry has told investors that picking individual stocks was 'too risky.' I would argue because a lot of financial advisors just don’t want to deal with the blowback if their stock choices perform poorly, as opposed to mutual funds and ETFs which, generally speaking, tend to offer less upside but also offer less downside risk. But if you look at the reality in 2026: If you own a standard S&P 500 index fund, you are essentially a tech speculator because so much of that index fund’s value is tied up in high flying tech stocks such as Nvidia and Apple. In fact, the top 5 stocks in the S&P 500 now represent a larger share of the index than at any point in the last 40 years.

When you own the 'index,' you own the good, the bad, and the politically vulnerable. When you pick individual stocks, you have a 'Veto Power.' If a company starts prioritizing politics over profits, or if their dividend growth stalls, you can fire them. You can't fire a company inside an ETF. But sometimes “firing” a stock, i.e. selling it, involves a huge loss.

https://www.blackrock.com/corporate/insights/blackrock-investment-institute/publications/outlook

2. Michelle: Josh, our next headline takes us into the 'Brave New World' of 2026. A recent deep-dive from InvestSuite claims that we have officially moved past the era of 'Chatbots' and entered the age of 'Agentic AI.' The report says that AI in wealth management is no longer just summarizing meetings or answering basic questions—it has become a 'Do-Bot.' These AI agents can now autonomously execute complex workflows, like real-time compliance checks and even initiating portfolio rebalancing without a human ever touching a mouse. The article even uses the phrase: 'Intelligence is becoming too cheap to meter.' Josh, if high-level financial intelligence is now essentially free and automated, what happens to the army of mutual fund managers, brokers, and ETF analysts who used to get paid for that 'expertise'? Are we watching the professional 'extinction' of the middleman?"

Josh: You’re hitting on the 'Great Displacement' of 2026. For the last 30 years, fund managers and brokers have lived behind a curtain of 'secret knowledge.' They charged you a fee because they had the data and you didn't. Well, the curtain is gone. In 2026, an AI can process 50,000 earnings transcripts in the time it takes a human manager to pour a cup of coffee. If your 'advisor' is just a middleman who picks a few mutual funds and emails you once a year, yes, they are obsolete. AI can do that for $20 a month.

But here’s the backed in problem: AI can solve for the math, but it cannot solve for the emotion. When the market drops 15% in three weeks—like we saw in the 'October AI Glitch' last year—a computer is going to give you a logic-based chart. A human advisor is going to talk you off the ledge so you don't sell at the bottom and ruin your retirement. In 2026, you shouldn't pay for 'stock picking'; that’s a commodity now. You should pay for behavioral coaching and strategy. If your broker isn't talking to you about your life, your legacy, and your taxes, you’re paying 'human' prices for 'robot' service."

Agentic AI: Unlike ChatGPT (which just talks), Agentic AI is designed to act—initiating trades, filing compliance reports, and rebalancing portfolios autonomously.

The "Efficiency Gap": KPMG reports that AI is already reducing advisor "prep time" by 50%, potentially allowing one human to manage five times as many clients as they did in 2024.

The "Trust Equation": Recent 2026 surveys show that while 80% of retail investors are comfortable with AI doing their research, less than 30% trust an AI to make the final decision during a market crash.

https://www.investsuite.com/insights/blogs/top-wealth-management-trends-in-2026-the-shift-to-agentic-ai-and-private-markets

3. Michelle: Final article of the day, from one of your favorites, Michael Kitces. The blog is titled “'The Future of Financial Advice”. This article argues that we are entering an era where artificial intelligence and new 'engagement tools' are going to handle the heavy lifting of financial planning—everything from data gathering to building the actual models. The premise is that technology will become a 'commodity,' and the real value of an advisor will move away from picking stocks and toward the 'human experience' and specialized niches. As I was reading through this vision of a tech-enabled future, it sounded a lot like a double-edged sword. Is this technology actually going to give retirees better, more personal care, or is 'reshaping the service model' just a fancy way for the industry to automate the 'human' right out of the room while still charging a premium fee? Are we moving toward better advice, or just a more expensive version of a chatbot?

Josh: We’ve talked a lot about this on a previous episode titled “Your broker is a dinosaur”. This article is right about one thing: the math of financial planning has become a commodity. Between AI and automated software, calculating a safe withdrawal rate or rebalancing a portfolio is now practically free. Wall Street loves this trend because it lets them 'scale.' In plain English, that means they can handle five times as many clients by replacing human conversations with digital dashboards and automated emails. They call it 'high-tech engagement,' but for a retiree in Fairhope or Orange Beach, it often feels like digital ghosting.

The real value of an advisor isn’t the software—it’s the behavioral coaching. A computer can tell you that the market historically recovers from a 20% drop, but a computer can't sit across the table from you, look you in the eye, and talk you off the ledge when you're worried about your legacy.

If your advisor’s 'future of advice' looks like you spending more time with an app than a human being, they aren't improving the service—they’re just increasing their profit margin. My advice? Use the tech to do the boring stuff, but make sure you’re paying for a partner who actually knows your name and your fears, not just your login credentials.

https://www.kitces.com/blog/future-of-financial-advice-technology-trends-value-service-engagement-attia/

Alright folks, coming up next: Josh’s Crystal Ball and Big Mouth. What have been some of my predictions? Have I been right? Was I ever wrong? How wrong? What do I think is going to affect investors in the near future, or maybe the distant future? We talk about all of these things and poke a little fun at my big mouth. Stay tuned!

Segment 3 – Josh’s Crystal Ball and Big Mouth:

Welcome back! Your host Josh Null here, joined by co-host Michelle Lee Melton-Null . So, I am opinionated, I have strong opinions at times, I would say a radio show host that isn’t probably wouldn’t be very interesting to listen to. And I am paid in my profession to offer professional guidance and opinions to my clients, so if I don’t have anything intelligent to say, just replace me with AI. I like making predictions, sometimes I hit the bullseye, sometimes I swing and I miss. Is there any crow to eat? Let’s get at with Josh’s Crystal Ball and Big Mouth and find out.

Michelle: So, would you like to eat a little crow about your prediction that Alabama was going to beat Indiana in the college football playoff, which in fact the Hoosiers beat the Tide like a drum on their way to eventually winning the national title? Josh – yikes. Michelle – ok, let’s pivot to a prediction that actually affects investors. Early last year you stated that investors should be wary of Tesla, at least when it came to being the dominate player in EVs. In 2025, Tesla fell behind Chinese EV maker BYD in overall sales volume and faces regulatory scrutiny over its "Full Self-Driving" tech, not to mention brand damage from CEO Elon Musk's various controversies. There’s also potential loss of vital revenue from regulatory “carbon” credit sales, and many analysts feel that CEO Elon Musk is betting the farm on AI and driverless taxis, but as you and I just saw in Atlanta a few weekends ago, Waymo is already miles ahead of Tesla in this tech, literally. Despite all of this bad news, Tesla’s stock price has remained surprisingly resilient. So, Josh, what’s the future hold for Tesla, and why should investors care?

Josh: Tesla is the 9th highest weighted stock in the S&P 500 at about 2.25% of the overall index value.

Well, listeners, I hope you enjoyed a little peek into how we form our opinions and make predictions. We invite you one last time, if you would like to have a no-pressure, no-obligation conversation about your investing goals and retirement dreams, you can call us at 251-327-2124, or find us through our website gulfcoastfa.com. One our site, click on the blue button in the upper right-hand corner to set up a meeting on my calendar. We have several meeting choices for your convenience – it can be as simple as a 15-minute introductory phone call, all the way to an in-person meeting at any of our 3 office locations. You can find GCFA offices in downtown Fairhope, or Orange Beach off Canal Road, or in Mobile off Dauphin St and I-65. Reach out to us - we would love to meet you!

That’s our show for this week! I want to give a huge thank you to my co-host Michelle, thank you to the producer of the show, Payton Null, thank you to our show sponsor, Providence Partners and Jay Stubbs, thank you to our awesome radio station, FM Talk 106.5 out of Mobile, many thanks to the provider of our show music, local band Sloth Racer, and as always my sincere appreciation for all of your out there that have been listening and joining us on this journey. We would love to be a part of your journey as well! Until we talk again, have a wonderful and productive week. This has been Coasting in Retirement with Josh Null!

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