Investing 102

[mdprovee]

I had purchased Apple and Google at the same time. Both at around $600. Google is definately making up for my Apple.

[GregWeld]

This is why investing is so interesting -- and is so variable. I would tell a young guy (younger) to invest in some Google or Apple or similar type stock if they were so inclined.... For "retirees" like me -- they're non-starters because you're just depending on the growth in capital. Then in order to get any "income" out of them you have to sell... selling creates tax issues (short term or long term capital gains).


I'm glad you guys own some. I cashed out of my Apple when my wife retired 3 or so years ago and we then switched all of our investments to create income. I still love tracking these kinds of stocks though. I just don't buy them.

[Sieg]

These are the emails I enjoy receiving at 5 am:

Indices Price Performance for Stated Period
Market Benchmarks 3rd Quarter, 2013 1 Year 3 Year
Large-Cap Stocks +4.69 +16.72 +13.79
Small-Cap Stocks +10.21 +30.06 +18.29
International Stocks +11.56 +23.77 +8.47

Fixed Income Benchmarks (Treasury Yields as of 09/30/2013)
5-Year US Treasury Note +1.39
10-Year US Treasury Note +2.64
30-Year US Treasury Note +3.69

[GregWeld]

You should only really gloat IF your portfolio BEAT those benchmarks.... otherwise - you're just "average". HAHAHAHAHAHAHAHAHAHAHA



This last three years the stock market has been like shooting fish in a barrel. Which actually kind of worries me. Things have a way of seeking their natural levels (or averages). But then I fall back on the fact that even if the share price s drop - my annual income shouldn't. And for those reinvesting the dividends that means they're buying more shares so in the long run that would be a good thing.

[Tony_SS]

Don't look now but Bitcoin is $200.... RUN! lol.

I suspect manipulation again - since the fall of Silk Road did not bring it down, they are inflating to price to try and crash it like they did before. My personal theory there.

Pass the popcorn...it'll be fun to watch what happens to the price. Knowing BTC users, they aren't going to be cashing out anytime soon, if ever.

[GregWeld]

Here's what I love to see when I wake up in the AM..... HAHAHAHAHAHAHAHA









10/21/2013
as of
10/20/2013 BPT B P PRUDHOE BAY RLTY TR ROYALTY TRUST
type: ORD DIV - CASH
$17,343.45
10/10/2013 MO ALTRIA GROUP INC
type: QUALIFIED DIV
$9,600.00
10/07/2013 HYG ISHARES TRUST IBOXX $ HIGH YIELD CORP
type: ORD DIV - CASH
$2,223.86
10/03/2013 Buy 500 CVX CHEVRON CORPORATION
Details $118.41 -$59,213.95 $8.95
10/01/2013 KO COCA COLA COMPANY
type: QUALIFIED DIV
$2,800.00

[Sieg]

10/10/2013 MO ALTRIA GROUP INC type: QUALIFIED DIV $51.73

http://www.acurazine.com/forums/images/smilies/finger.gif..... HAHAHAHAHAHAHAHA


:idea: How bout you loan me a few of your positions for a couple years :whistling:

[96z28ss]

10/10/2013 MO ALTRIA GROUP INC type: QUALIFIED DIV $51.73

http://www.acurazine.com/forums/images/smilies/finger.gif..... HAHAHAHAHAHAHAHA


:idea: How bout you loan me a few of your positions for a couple years :whistling:

Funny I was just going to ask the same thing. Big difference in his quartely dividend.
my MO was only $97.56

[GregWeld]

:idea: How bout you loan me a few of your positions for a couple years :whistling:




I'm really busy right now... let me get back to ya.....

[toy71camaro]

Bah. My MO Div: $17.14 :ohsnap: :newbie:

[GregWeld]

30 years ago that's about all I got too.....



Look what you have to look forward to! :D

[toy71camaro]

yeah... we all gotta start somewhere. :)

I do have just a tad over 30 years before I retire anyway. I gots some time.

[Vegas69]

:D How do you guys sleep at night investing in a company like that?

[GregWeld]

:D How do you guys sleep at night investing in a company like that?



So seriously -- Gwen and I HATE HATE HATE smoking.... it's just a disgusting habit. And of course - as many know here - I haven't had a drink for 29 years now.... (quit at 31 and just turned 60 -- oh yeah - I quit smoking at 21 and took up drinking!). We're in europe and EVERYONE there smokes --- and she starts bitching about it... and all I said was "honey -- you should hope they KEEP smoking 'cause they paid for your trip!"


HAHAHAHAHAHAHA

[Vegas69]

It was on my buy list and Kelli talked me out of it this round. We both hate it with a passion as well.

[Sieg]

Haters will hate and profit takers will take. :D

[CRCRFT78]

I just noticed in my portfolio that holdings with dividend reinvestment position programs have some listed as Long and others listed as Short. Anyone have a quick explanation as to why this is. I plan on looking into this but I'm standing on the freeway dodging traffic working.

[GregWeld]

Haters will hate and profit takers will take. :D




I used to subscribe to the statement "nobody ever went broke taking a profit".... but then I realized that now I have the cash -- but now need to invest it - which usually meant just buying some other stock which has also already gained in share price. Now I have to pay taxes on the gain - and I've raised my cost basis.

I've learned to "trim" rather than just sell.... which means -- let's say I have 1000 shares @ cost basis of $50 a share.... it's now $60 a share which means I have 10K gain. IF I need the cash for something -- I'll sell just 100 shares and hold the 900. I don't do this very often - and usually reserve those trimmings for when I have a really outsized gain... and have my eye on some other investment *use for the cash gain*.


What I've "learned" is that I feel better long term about my NET WORTH growing --- and NOT paying taxes --- and just collecting the income and living within my means and only spending the income rather than the income and the "gains". Taking the gain only felt good temporarily - kinda like a drug addict - then there was the downer that came afterwards which was the tax due - and the "stress" of having to buy some other investment with it. Now I pretty much just let it ride.

[GregWeld]

It was on my buy list and Kelli talked me out of it this round. We both hate it with a passion as well.




When I was in "sales" ---- there were customers I couldn't stand but had to work with anyway. I justified it mentally by thinking that there's one way to get even with them - and that was to sell them something. Made it all mo beta.


People are going to smoke - and they're going to drink - so I might as well make money off them. It's called "laughing all the way to the bank".

[96z28ss]

:D How do you guys sleep at night investing in a company like that?

Its like gun stocks also.
I bought RGR at $55 and all the teachers union pension funds started dumping it cause of the mass shootings. Its value dropped to $40 I bought more on the way down. All while collecting some nice dividends. Now its $67.
I hope those teachers unions bought JCpenny.

[sik68]

If you want to peer into the mind of Warren Buffet this evening, here's a pretty cool "memo" (19 pages) he wrote to the Washington Post CEO in 1975. Re: Pension Plans.

http://finance.fortune.cnn.com/2013/08/15/warren-buffett-katharine-graham-letter/

Direct link to download the memo in pdf:
http://www.scribd.com/document_downloads/160301289?extension=pdf&from=embed&source=embed

Enjoy!

[glassman]

When I was in "sales" ---- there were customers I couldn't stand but had to work with anyway. I justified it mentally by thinking that there's one way to get even with them - and that was to sell them something. Made it all mo beta.


People are going to smoke - and they're going to drink - so I might as well make money off them. It's called "laughing all the way to the bank".

Greg, that is a great way to put it. I have customers that i DONT like, but, the price is reflected in it. Good way too look at the stocks...

[Vegas69]

I completely agree and almost wrote something similar. It's their life and choice. I'm certainly not fanning the flames, you taking advantage of an opportunity. I did read that the number of smokers are diminishing some, that was also a factor.

[GregWeld]

I completely agree and almost wrote something similar. It's their life and choice. I'm certainly not fanning the flames, you taking advantage of an opportunity. I did read that the number of smokers are diminishing some, that was also a factor.



So without "pitching" a particular stock -- as this is NOT what this thread should turn into...


I hold Altria (MO) because they're terbacky AND booze... Great brands in both. In fact I added 3000 shares this morning - and now hold 23,000 shares. :>)

[96z28ss]

I completely agree and almost wrote something similar. It's their life and choice. I'm certainly not fanning the flames, you taking advantage of an opportunity. I did read that the number of smokers are diminishing some, that was also a factor.

I had the same concern you did, why invest in something that people are aware of the cancer risks and less people are smoking and more are quiting.

Full disclosure: I did learn about MO through this thread and Greg bringing it up a few times. He always mentioned it as a tobacco company.

So I did some research. www.altria.com I looked around hit the ABOUT tab.
hit the investor tab. They own smokless tobacco companies, Cigar company, and they own Wineries that I have spent thousands of dollars with (Robyn is a wino).
The wineries really made it that more attractive for me. They also have a ventures side of the company that looks to buy other companies. In the future it could aquire some e-cigarettes, or more booze. So I bought some.

I do recommend researching the company as much as you can and make a somewhat educated purchase, no one can predict what will happen in the future but if you do some homework upfront it may pay you back in the future.

[GregWeld]

I do recommend researching the company as much as you can and make a somewhat educated purchase, no one can predict what will happen in the future but if you do some homework upfront it may pay you back in the future.





This is all part of UNDERSTANDING what you own and WHY.... Which helps you when the chips are down and you're struggling with "what to do".

Nobody cares when the market is flying....

The worry about "the market" and your investments begins when you're dying the death of a 1000 cuts... and your portfolio starts to sound like a punctured tire. THAT is when (you need to KNOW BEFORE THIS HAPPENS) you must have faith in the names you've chosen to invest in.

That is also why I don't think ANYONE should buy anything because someone else told them about it. Hot stock tip or not... KNOW what you buy. There's 10's of 1000's of companies out there -- you only need to know 20 of them at most. Being comfortable with them will save you from bailing out at the bottom (the old buy high and sell low syndrome). It might also help you to continue to buy in down markets === which for me === is how I've made real money.

Be careful of course -- of buying more of a company "just because it's down" -- make sure there isn't a fundamental reason why it's down, first.

[Vegas69]

I saw your email today Greg and has actually logged onto their site and checked out all the branches last week. Your email has more info and I'll take a look when I'm ready to buy more.

Why did so many of my stocks end up down today when the dow went up? Are people selling? I'm as green as they come.

[GregWeld]

I saw your email today Greg and has actually logged onto their site and checked out all the branches last week. Your email has more info and I'll take a look when I'm ready to buy more.

Why did so many of my stocks end up down today when the dow went up? Are people selling? I'm as green as they come.




Well.... who knows. Some days I see the market is down - and my account is positive -- some times it's the opposite... There's just now telling why on any given day some shares are up and some are down. When you think you have it all figured out --- somebody on wall street pulls the rug out from under you.


Remember too -- that particularly with DIVIDEND paying stocks -- the day they go "EX" dividend or pay the dividend (which is the pay date not the EX date) they'll go down the amount they paid out.

[GregWeld]

So here's an explanation of "EX" date and "PAYABLE DATE" -- because they're different.

The "EX" date is the date on which anyone that owns the shares on that DATE is going to be paid the dividend on the Pay date.

You can sell the shares the next day and still pick up the dividend -- or you can buy the shares the day before (maybe even the day of but don't count on it) and get the dividend.

Some "TRADERS" do nothing but try to buy shares - pick up the dividend - and move on.



A typical news release showing the EX and PAY dates -- I happen to own these shares.






The Board of Directors of National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, declared a quarterly dividend of 40.5 cents per share payable November 15, 2013 to common shareholders of record on October 31, 2013. National Retail Properties is one of only four publicly traded REITs and 102 publicly traded companies in America to have increased annual dividends for 24 or more consecutive years.

[GregWeld]

Apple "earnings" declined this quarter compared to the year ago quarter… now for anyone that pays attention to anything -- was that a DOH moment?

When you sell a lot of stuff - and the ASP (average selling price) is LESS - doesn't it make sense that then your numbers might suffer.

This is why I say it's so easy to invest -- if you pay the least amount of attention to your investments and just give normal fundamentals a thought.

If you went into a store that USED to be swamped with people -- and YOU noticed the last couple of times you went in there were LESS people… maybe that should be a clue you'd think about. Or -- is the inventory at the store you buy all your hardware at - shoddy and missing and crap is laying in the aisles? Then maybe that's a hunch things aren't being run so well.

Here's one - if you used to eat at some place all the time and EVERYONE was talking about the same place - and you noticed you've not been back there for months and nobody is talking about it any more -- what would you think their business might be like?


UH HUH…. pretty simple.

Now - I don't smoke and I don't drink and I don't often eat at McDonalds. But I pay attention to these things via news articles - in other words - if I see an article about those things - I read it! I want to know what people are thinking and saying and how they're reacting.

If I'm not interested -- then I should sell those investments and buy some where I have some connection and want to pay attention to them.

You wouldn't buy a rental house and then never drive by it - or bother to check the neighborhood would you?

[GregWeld]

I'm not RECOMMENDING it…. I'm just saying this for Investing 102.


NOW maybe it's time to start to take a small bite out of Facebook (FB). It's wild as far as a P/E @184 X's earnings… but they have now shown they have a mobile strategy and more importantly - they can monetize it.

For those young 'un's out there -- that have a grand or so to play with in their accounts… maybe it's time to look at this for a growth play.

[96z28ss]

I'm not RECOMMENDING it…. I'm just saying this for Investing 102.


NOW maybe it's time to start to take a small bite out of Facebook (FB). It's wild as far as a P/E @184 X's earnings… but they have now shown they have a mobile strategy and more importantly - they can monetize it.

For those young 'un's out there -- that have a grand or so to play with in their accounts… maybe it's time to look at this for a growth play.


Already started to nibble at it got 16 @ $32.15, and then again 12 @ $26.75

[GregWeld]

Nice way to average down Bob. That's good investing 102 right there!


If you loved it enough to buy at $33 -- and fundamentally nothing has changed and it's now at $26 -- why wouldn't you buy more! So good for you.

The way I look at those is that it has a new average cost of "X" (lower than your original cost) and now it has to move LESS to get me back to even.


Did I ever write about the $93,000 loss I took doing that?? Okay - that was extreme - and stupid - because there was a fundamental reason the stock was headed south… and I chose to ignore the info. My bad!

[96z28ss]

Nice way to average down Bob. That's good investing 102 right there!


If you loved it enough to buy at $33 -- and fundamentally nothing has changed and it's now at $26 -- why wouldn't you buy more! So good for you.

The way I look at those is that it has a new average cost of "X" (lower than your original cost) and now it has to move LESS to get me back to even.


Did I ever write about the $93,000 loss I took doing that?? Okay - that was extreme - and stupid - because there was a fundamental reason the stock was headed south… and I chose to ignore the info. My bad!

You told me about it, but probably didn't write about it.

My cost average is $29.83

[Sieg]

Just about pulled the trigger on FB this morning at $47.05......it was swinging between 47-48 in the first 30 minutes of trading.........couldn't get comfortable..........

Symbol
FB
Last
51.415
Change
+2.405 (+4.91%)
Bid
51.41
Ask
51.42
High
51.42
Low
46.50
Volume
163,870,160
Time (ET)
1:07:25 PM

:bang: :bang:

[GregWeld]

I'm not buying it - don't use the product - and it doesn't fit my "dividend payers only" strategy (given my retirement status) and personally I think "social media" is something that can turn on a dime - as I've seen my own family switch from one to something else. That kind of fickleness bothers me… BUT FB seems to have quite the audience -- and actually seems to have evolved from teenie boppers to more main stream - especially given people like yourself using it. "More mature" users tend not to switch around…












Just about pulled the trigger on FB this morning at $47.05......it was swinging between 47-48 in the first 30 minutes of trading.........couldn't get comfortable..........

Symbol
FB
Last
51.415
Change
+2.405 (+4.91%)
Bid
51.41
Ask
51.42
High
51.42
Low
46.50
Volume
163,870,160
Time (ET)
1:07:25 PM

:bang: :bang:

[96z28ss]

I'm not buying it - don't use the product - and it doesn't fit my "dividend payers only" strategy (given my retirement status) and personally I think "social media" is something that can turn on a dime - as I've seen my own family switch from one to something else. That kind of fickleness bothers me… BUT FB seems to have quite the audience -- and actually seems to have evolved from teenie boppers to more main stream - especially given people like yourself using it. "More mature" users tend not to switch around…

the teens aren't as interested in facebook, cause they like the picture sharing more. Its the "look at me" generation. They will eventually join facebook when they go to college and move away to keep up with friends.

I wonder who owns instagram... oh yeah Facebook does. wait till the adds start popping up on instagram, more revenue for FB.

[GregWeld]

Maybe Jody could float an IPO for Lateral-G…..



I still just don't get the whole social media market --- and then I think about the time I spend on here - and all the SOCIAL stuff done here etc --- so then I get it.

Instagram has been the only way I could get any up to date info on my '33 build. I still don't understand how to use it -- and have killed off a couple things I was following because it's just info overload but I have really enjoyed seeing my car getting painted almost in real time.


YES --- KIDS THESE DAYS ARE THE MOST NARCISSISTIC GROUP EVER IN THE HISTORY OF THE UNIVERSE. I follow my own kids on Instagram -- and I'm embarrassed of the content they post… the pics of shoes - and cars - and watches and drinks and oh my…. But they ALL seem to post this kind of crappola. They have no money - they have no real hobbies they can indulge themselves in YET…. so they have to post whatever it is that turns 'em on at the moment I guess.

[camcojb]

Maybe Jody could float an IPO for Lateral-G…..



there 'ya go!!!!!!!!!! :D

[sik68]

My fellow Schwab-ers have probably seen that they're really pushing their "ThomasPartners" dividend growth strategy lately. It's a portfolio of only stocks with a strong dividend history. Thanks to the SEC, portfolios are public information...so I wanted to take a peek into what they are holding so I can start doing research for my 2014 purchases.

The attached photos is my markup of the ThomasPartners list. I put a "-" next to the stocks I have in common with them, and "circled" the names of the stocks I am going to research for a potential buy.

http://i207.photobucket.com/albums/bb128/thre11phan/a_zpscd6e57a1.jpg

http://i207.photobucket.com/albums/bb128/thre11phan/b_zps8fe64608.jpg

Happy Halloween! :bur2:

[GregWeld]

That would be a really well rounded group of investments Steven… Kudos to you in what you have already and what you plan to add.


See! This really isn't difficult is it. That list contains 100 names = too many to hold unless you've got a couple BILLION…. 20 to 25 for a normal person is a good base. Too many and you can't keep track -- too few (okay to start with) and you don't have enough diversity. And when you hold the best of the best - you sleep well at night even in down markets. And that's the place you need to get to. The rest will take care of itself.

[Vince@Meanstreets]

another nice thing is the dividends are redistributed....nice and easy. :thumbsup:

[GregWeld]

Tesla (TSLA) seems to be one of these other "priced to perfection" lessons. This is why at my stage of life I DO NOT buy these kinds of stocks. Yet for the younger guys with time on their side and the desire… sometimes "events" like this in a stock are the opportunity to get in.

Nobody should buy stocks like these unless they really really understand and acknowledge that they are very high risk. They can have very high rewards - and or they can blow up before your very eyes. If you don't have the capital (whatever that number is) and you don't have the stomach to ride these kinds of stocks (wild ponies really) then stay out of them. If you DO have - just remember "buyer beware".



Right now -- it's more fun to be at SEMA… and not watching the stock market - and that's why I invest the way I do - and just get the dividends. :>)

[im4u2nvss]

Greg, I want to thank you for the time, effort and knowledge that you have put into this thread! I am a 31 year old who has made plenty of mistakes over the years with my investments and have been trying to change my way of thinking. Keep it up, you are my financial hero!:king:

[Vince@Meanstreets]

Tesla (TSLA) seems to be one of these other "priced to perfection" lessons. This is why at my stage of life I DO NOT buy these kinds of stocks. Yet for the younger guys with time on their side and the desire… sometimes "events" like this in a stock are the opportunity to get in.

Nobody should buy stocks like these unless they really really understand and acknowledge that they are very high risk. They can have very high rewards - and or they can blow up before your very eyes. If you don't have the capital (whatever that number is) and you don't have the stomach to ride these kinds of stocks (wild ponies really) then stay out of them. If you DO have - just remember "buyer beware".



Right now -- it's more fun to be at SEMA… and not watching the stock market - and that's why I invest the way I do - and just get the dividends. :>)

thats the difference between an investor and a day trader

[Vegas69]

Tesla fell off the table. I'll be interested to see how it plays out. I don't have much love for Elon Musk combined with no dealer support....

[Vince@Meanstreets]

Tesla fell off the table. I'll be interested to see how it plays out. I don't have much love for Elon Musk combined with no dealer support....

I havent heard anything negative besides the new car fire due to a collision. maybe he bought another rocket?

[glassman]

wow. Twitter with quite an IPO.

People that use this product really seem to like it. Me, dunno, dont use it so didnt make a buck on this one.

edit, ummm CNN said it went up 75% today, i just heard other wise on the CBS news. Too confusing. Always double check your sources?

[toy71camaro]

I've just started using twitter. its actually a really great interaction tool.

That being said. I didn't have the money to gamble. LOL

The initial IPO i think was $28. that's what the initial people got. But I read the first sale on the "open market" was for around $48. So unless you got the inside scoop on the IPO price, you didn't make out like a bandit. yet, anyway. Only time will tell.

however, they haven't been profitable. So like Facebook, I'm curious to see what they do to become profitable. Obviously Ad's, but they've got to figure something out that doesn't overwhelm the user base with nonsense adds and drive people away too.

[Vince@Meanstreets]

I've just started using twitter. its actually a really great interaction tool.

That being said. I didn't have the money to gamble. LOL

The initial IPO i think was $28. that's what the initial people got. But I read the first sale on the "open market" was for around $48. So unless you got the inside scoop on the IPO price, you didn't make out like a bandit. yet, anyway. Only time will tell.

however, they haven't been profitable. So like Facebook, I'm curious to see what they do to become profitable. Obviously Ad's, but they've got to figure something out that doesn't overwhelm the user base with nonsense adds and drive people away too.

exactly....not a good investment till they start making money. You'd think people would have learned from the Faceplant fiasco.

[glassman]

Thats my number 1 b$tch with Tech stocks. While you can make bank, you just cant see which ones are a "valued" product to their clients.

The only way i see social media companies turning a profit is with ads, maybe there is another form of revenue we cant see.. But if there is, does it pencil out with the investors, i dont know....

[GregWeld]

I'm on the road enjoying the hell out of myself. And posting from a iPad sucks. But I found an article on what are Warren Buffets favorite 10 stocks. The reason for the post? See any "gambling" in any of these names? This is the 1st or 2nd richest guy in America! He got there by investing not gambling.


http://www.usatoday.com/story/money/markets/2013/11/17/warren-buffett-s-10-favorite-stocks/3614505/

[Rod P]

IBM looks like a gamble at -5% ytd

[Vince@Meanstreets]

IBM looks like a gamble at -5% ytd

-5% with 68.1 Million shares I'm willing to bet he didn't see a change in dividend payout. On top if it's an automatic reinvestment with stock buys he is getting bargin stock. Next year it might be back up 12% YTD

[GregWeld]

IBM looks like a gamble at -5% ytd

-5% with 68.1 Million shares I'm willing to bet he didn't see a change in dividend payout. On top if it's an automatic reinvestment with stock buys he is getting bargin stock. Next year it might be back up 12% YTD


Always refer to the long term charts... Lower on the left? Higher on the right?

In 2009 iBM was $80.00 - yesterday it was $183.00 - down 5% "this period" or up $100 in 4 years?


If you have 10 names in your portfolio a couple will be "under performers" and one or two might be responsible for all of your account gain. The account gain in total is what you're shooting for.

Like an autocross.... If you run 10 times... You might hit cones once in awhile but if you win overall... That's what counts.

[GregWeld]

Just to be sure. I don't love IBM. The low 2% is the main reason and the volatility in this name (like a yoyo!) is what keeps me out of it, but overall
It's been a moneymaker for those willing to stick with it.

[GregWeld]

I bought 500 shares of Twitter (TWTR) today....



So here's why I post this info. Just because someone else does doesn't mean you should. I can afford to take a very small position in a name like this. Think about the relative size of what 500 shares of a name is for me - when a typical position is 10,000 or 20,000 or 50,000 shares. If you're just building up your retirement account build a nice big base FIRST, then once you have $100K plus earning some dividends... Now you could "afford" to take on a risk like this. And you keep that risk really small in relation to your overall financial health!

Tiptoe first! I expect this name to be cut in half at some point and if it gets hit like that I'll buy another 500 and then that's it. Not another single share. If it doubles I'll take out my investment and let the house money ride. Period. It's gambling. But for me it's like gambling one dollar and then walking away. Don't get caught up in trying to make the big score.

[Rod P]

was 500 the IPO limit or are you just tip-toeing:G-Dub: ....I don't know anything about this investment stuff :EmoteClueless: but I try anything once :confused18:, there was that one time I had mescal in Mexico....thank god i didn't end up in jail, that wasn't a good idea

[gearheads78]

Well almost three weeks ago I found this thread and am up to page 300. I have learned sooo much. I'll be back in a day or two and join you guys in the present. It was really interesting reading through the thread about "future" events that have already happened.

[GregWeld]

was 500 the IPO limit or are you just tip-toeing:G-Dub: ....I don't know anything about this investment stuff :EmoteClueless: but I try anything once :confused18:, there was that one time I had mescal in Mexico....thank god i didn't end up in jail, that wasn't a good idea







The 500 was just the random amount I chose to buy.




Mescal in Mexico! Now that's a gamble!

[GregWeld]

Well almost three weeks ago I found this thread and am up to page 300. I have learned sooo much. I'll be back in a day or two and join you guys in the present. It was really interesting reading through the thread about "future" events that have already happened.




Okay! Just wow! That's a lot of info to take in!


Welcome! Did you find anything of any value?


Hahahaha

[ErikLS2]

I bought 500 shares of Twitter (TWTR) today....



So here's why I post this info. Just because someone else does doesn't mean you should. I can afford to take a very small position in a name like this. Think about the relative size of what 500 shares of a name is for me - when a typical position is 10,000 or 20,000 or 50,000 shares. If you're just building up your retirement account build a nice big base FIRST, then once you have $100K plus earning some dividends... Now you could "afford" to take on a risk like this. And you keep that risk really small in relation to your overall financial health!

Tiptoe first! I expect this name to be cut in half at some point and if it gets hit like that I'll buy another 500 and then that's it. Not another single share. If it doubles I'll take out my investment and let the house money ride. Period. It's gambling. But for me it's like gambling one dollar and then walking away. Don't get caught up in trying to make the big score.

Thinking about a similar move on GOGO, they are setting up all the in-flight wi-fi, texting, electronic device usage. Something like 8 or 9 of the 10 biggest airlines are using them. Of course, no earnings yet, putting it all back in the business but I would think it's only a matter of time before you can get full internet on a plane ride and these guys seem like the ones that will bring it to you. Sounds like worth risking a SMALL portion of what I have on.

[gearheads78]

Well I'm done. I want to go back and read at lot of the links posted along the way but I just finished reading the last post here.

After reading all this I so wish I had started following this thread 2 years ago when it started. I would be in a much better position riding this wave up.

My 401Ks are all up but its time to really take control. I'm 40 (almost 41) years old and really disapointed in myself. I started learning about finances and retirement in my late 20's but never really did anything about it. Family and life got in the way and I realize i've wasted 12 years I could have been building a real retirement.

I've been thinking alot about this latley and finding this thread has really awaken me.

Thanks to all my fellow car buddies that have contributed to this thread!!

Also a really special thanks to GW for the information to share. I have listened to a lot of talk radio and finance shows for years but the (investing for dummies) way you explain things makes it so must eaisier for me to understand.

[gearheads78]

So this thread does a great job of talking about long term and I have a pretty good idea of what I am going to do but what about short to medium term. Where should I put money instead of .002% I get in my saving account. I've been paying about 2000-2500 a month on credit card debt and am down to 2 payments to zero on that balance.

Ive got about 20K in old company 401k money. I will be rolling that to a IRA "Investing 102" account but I need to start socking away as much as I can for a new house / shop and my 54 build. I was going to dive right in the the 54' but its going on hold a little while I get in a better financial position. I just don't want to wake up and be 60 and never built it. Its the build I've had in my head for years.

My current house was fine with me and the wife and my the wife and daughter but now with 2 yo twins added we are just going to run out of room in a short few years.

Where should I put money I will need 2-4 years from now?

[toy71camaro]

Welcome to the thread! lots to soak in huh? lol.


As for your question of where to put the money in short term (less than 5 years), i would just put it away in a money market/higher yield savings. You're going to need that money, and don't want to risk it being on the downside when that time comes. (Capital One pays like .75%, Ally a little more, check around. bankrate.com may help).

I'd work hard on my 3-6 month emergency fund after you get that CC Debt cleared out. That money sits in a savings/money market account. NEVER to be touched unless an emergency arises. Thats your "when Murphy calls" backup plan. then look at saving money for that next upgrade (house, 54 build, etc). Make a monthly budget and stick to it. you wont realize how much money you've been piddling away on things over the years. It'll open your eyes.

If your into reading more, check out Total Money Makeover from Dave Ramsey, and Richest Man in Babylon. Both great financial books. Once you get that process down you can focus on turning your money into working for you.

[gearheads78]

Thanks Albert,

I have read the Total Money Makeover and listened to his show for a couple years when I had a job that let me listen to the radio all day.

I was trucking along pretty good on my debt snowball for what income I had to work with and 3 and a half years ago my 2nd daughter died at birth. I had all the medical bills from that pile up and I was so down in the dumps my pays went down a lot. I work as a service writer and its 100% commission. If I'm not on my a game then pay falls off the map.

Well a year later we were blessed with a son and daughter but the girl had to stay in NICU for about 10 days. I was not even through paying for the bills the the year before when those hit. Even with insurance there was a large chunk. I did payment plans as much as I could but we also started letting the card balances go up. I was pretty under water for a while.

I got my head on strait at work and have been busting my ass so I'm down to the last $4500.00

I don't have to have new cars. I drive a beater $2000.00 car daily for the last 4 years and I have a 12 year old Dodge 2500 diesel for when I need to haul.

I do have 2 car payments but only one is a falling asset the other is a 69 Camaro I could sell any time for 10K more than I paid. The other is the wifes 12' Camaro ( Dave would scold me on that one:buttkick: )

[toy71camaro]

Man.. Sorry to hear about your loss. Thats a tough one. Then to have one of the twins stuck in NICU. I bet that was scary. But sounded like you handled it pretty well. You just gotta be strong during those times, and not sorry so much about the debt. That'll come back later. (always, right? lol).

Glad to hear now that your digging in your boots and hitting it hard. Knock out that list little bit and get that emergency fund stored up so you dont have to stress (man, i never realized how much of a stress relief it was to have one!!). Then you can get focused on being the best dad, and putting some money aside for the future and that build!! Looking forward to hearing your success stories!!

If there's anything I can do to help you along with your journey, let me know! This is all about learning here. I've been on this thread about a year now and have grown tremendously. Taken control of my entire finances (401k too) and its doing very well! (Granted, so has the market in total, LOL). But, learning what this is about, and how to apply it, is the important part. I'm no great investor, but I am good at managing my money, and running numbers. I'll help as best as I can!

[Tony_SS]

Anyone looked at Bitcoin lately? $762 each!

The boom came after the US govt officially gave it its blessing and said they would not be regulating it. Crazy.

Unless there is some sort of massive conspiracy going on, I think it has proven itself in the market. $100 was a bargain not long ago!

[gearheads78]

Anyone looked at Bitcoin lately? $762 each!

The boom came after the US govt officially gave it its blessing and said they would not be regulating it. Crazy.

Unless there is some sort of massive conspiracy going on, I think it has proven itself in the market. $100 was a bargain not long ago!

Had I known about it early on I would have tossed a few bucks in for the heck of it and let it ride. No way in hell I would touch it now.

[toy71camaro]

Anyone looked at Bitcoin lately? $762 each!

The boom came after the US govt officially gave it its blessing and said they would not be regulating it. Crazy.

Unless there is some sort of massive conspiracy going on, I think it has proven itself in the market. $100 was a bargain not long ago!

Did you gamble on some?

I didnt. I dont have the extra coin to be gambler, yet. ;) :newbie: :G-Dub:

[Tony_SS]

Did you gamble on some?

I didnt. I dont have the extra coin to be gambler, yet. ;) :newbie: :G-Dub:

I bought some when they were less than $100... I cashed alot out in silver but I kept a little for when they will be worth one million dollars each. lol

[gearheads78]

OK now I want to go back to the begining and read some of the links.

I have a question about this one

http://money.cnn.com/magazines/moneymag/bestfunds/index.html

It lists those funds YTD and 5 year. Does the 5yr mean average per year or total 5 year return? Some of those funds say 5years around 12-15% which seems like a lot but if thats total does that mean they are only averaging 2-3% at year? :(

[ErikLS2]

Every time you see a time period like 5 or 10 year return it's the average per year over that time frame, unless it's identified as a cumulative return. Usually, but not always, the bulk of the positive return was in one or two years during that time period. You could earn much higher than that if you were in for a shorter time period but the RIGHT time period. But, there is no way to know or predict that time period. With the exception of getting dividends it only matters when you buy and when you sell, what happens in between doesn't matter.

Another thing to be careful of with these mutual fund annual averages is that you would have had to be in the fund the entire year to actually realize that return since the bulk of the return comes on just several of the best days that year. I read a study one time that the average investor is far below these average returns because they get in once they hear it's doing good which is generally AFTER it's done doing good. Somewhere in this thread I posted a chart showing just how quickly your return dwindles as you miss more and more of the best days in the market in any given year. I go back to my first post in this entire thread, the key is buy low, sell high, with much more focus on buy low which psychologically is the hardest thing to do.

Go back and look how well you would have done if you had the balls to put everything you could muster in at the bottom in March 2009 when everyone was saying the stock market is doomed never to return.

[GregWeld]

OK now I want to go back to the begining and read some of the links.

I have a question about this one

http://money.cnn.com/magazines/moneymag/bestfunds/index.html

It lists those funds YTD and 5 year. Does the 5yr mean average per year or total 5 year return? Some of those funds say 5years around 12-15% which seems like a lot but if thats total does that mean they are only averaging 2-3% at year? :(



Since 1962 the average return on big cap stock market is 9.62%…. thus the saying that you average 10% annual average returns in the stock market. But there's a CAVEAT! You can be UP 30% one year and down 40% the next year. This is why you can't put money in the market that you're planning on needing in the "short term". Because for certain - the market will be down when you absolutely must have the money. Long term - it's the best place in the world to be invested. But short term - you can get creamed.

If you're saving to buy a house… I would split my investments and savings putting perhaps 60% in the market -- and keeping 40% in liquid CD's or some other "certain" capital return. That way you could take advantage of POSSIBLY getting some growth in your capital - but you wouldn't have to depend on perfect returns when the time comes that you want to make your downpayment. You could end up with 100% of what you need just from the 60% you invested in the market -- but you could also come up short and either be forced to wait or forced to sell in a down market. Or you could use the 40% cash you saved and just figure out some other combination to make your down.

[GregWeld]

Now let's discuss the mutual fund list you referred to.


#1 --- all 3 and 5 year "returns" are going to be skewed heavily on the up side because we're coming off near depression like lows! It's easy to show big 3 and 5 year returns IF -- you were in at the bottom and that's your comp.


#2 --- If you've read this thread -- you'd understand that you can build your own mini mutual fund (if you have 25K or more to invest) and skip the fees etc which affect your return.


#3 --- People are naturally drawn towards large numbers and tend to invest in Mutual Funds with the largest returns "lately". History is not a guarantee of future performance. In other words the funds that show the largest returns today may be under performers going forward. For example. They might be heavily invested in Financials -- which went way south in '08 and '09 and have made huge comebacks… or they may be invested in home builders and ditto - they've made big comebacks. SO ----- You need to really look behind the curtain of any mutual fund to see what they're invested in and then think about whether or not that set of investments has seen their best days -- or is there room to expand going forward.

[GregWeld]

Anyone looked at Bitcoin lately? $762 each!

The boom came after the US govt officially gave it its blessing and said they would not be regulating it. Crazy.

Unless there is some sort of massive conspiracy going on, I think it has proven itself in the market. $100 was a bargain not long ago!




Do you remember when GOLD was "going to $2,000 an ounce?? I do… was just a few months ago…


The problem is not things going UP -- the problem is when the chi t hits the fan and things go DOWN and they go down far faster than they go up!


I have no problems with someone that wants to buy BitCoins -- or buy FaceBook - or whatever else they want to buy. But for INVESTING 102 -- there are appropriate investments or not appropriate investments… Lots of people made great money flipping houses -- lots of my friends got very rich during the "dot com" era… I personally got rich in "tech" -- a couple of times. But like I always say --- better lucky than smart. You (anyone) are lucky if they can catch a wave - ride it - and get off and ride into the sunset. MOST DO NOT… they catch the wave and it slams their ass on the beach.

If someone has plenty of extra money (whatever level that is for each person) and wants to play with this kind of stuff -- GREAT! But for MOST it's not appropriate and once burned they're twice shy and then they get to retirement age and have zippola. This thread is about how to lift people off their asses and have them actually have a nice retirement.

[SSLance]

Hello, my name is "Disillusioned Investor",

I'm part of what I have heard referred to as an investor of the lost decade, only my lost decade lasted 15 years. I started investing in the stock market in 1997, and finally pulled the plug and went to 100% cash in the fall of 2011. I'm 47, my wife is 52, we don't have any kids, are debt free except for our mortgage (12 years left on a 2.9% 15 year fixed note) , and have a decent amount in our IRA and Roth IRA accounts and a nice nest egg in a taxable investment account. We were in mostly conservative asset classes for the early part and the late part of that period and got aggressive with equities during other periods. We gained most of our investment funds from additions, not growth, but we had times where we made a lot of money in the market, and we've had times (at least three) where we've lost our arse in the market. For a while my adviser was trying to build my wife and I a "dividend paying" asset base much like what Greg talks about in this thread. We also had a fairly large chunk in High Yield muni bond funds in late 2008...which while they kept their dividends in check, lost 35-40% of their net asset value.

We didn't bail then...like so many people did. We doubled down and got very aggressive and early 2009 treated us very well. By the end of 2009 we were on the plus side again and went back to the dividend paying plan that was directed by my adviser (A Merrill Lynch guy that I really like and trust).

My problem with that plan was the hunk just wasn't big enough to create the kind of income needed in retirement and the changes made chasing dividends often resulted in asset value losses. I can see the merit in that sort of a plan, I'm just not sure it fits our needs at this time.

Here's the deal, I'm in asset preservation mode. I'm winding down my working career, I don't want to have to go back and make what I have again if I loose it. Between our retirement accounts, real estate holdings, cash value life insurance, and cash in our investment accounts...we are pretty sure we can make do and retire (or slow way down anyway) very soon and spend the next 10-15 years really enjoying ourselves without going crazy. The hardest part will be accessing what's in the retirement accounts before we reach 59.5 years of age...and keeping what is in all of the investment accounts keeping up with inflation.

My partner is in his 70s and we've discussed this many times. I tell him how much I've enjoyed being out of the market and not having to worry about the next big drop. He's the polar opposite...when he's been out of the market for timing purposes, he can't sleep worrying that he's missing the next big bull market.

Being disillusioned like I am, I really have a hard time trusting the market anymore. I firmly believe that the institutional investors build opportunities into the market for themselves...and the rest of us are along for the ride. There have been WAY too many times the market has had a run like crazy for no reason...and just as many times where things have tanked when the fundamentals were there and even though one was doing everything they were supposed to, they lost their arse anyway. I don't like that feeling of no control anymore.

The reason I've been following this thread, and reading Greg's (and others) investment advise...is to try to find some sort of happy medium out there. I like Greg's theory of buying what you know...that makes a LOT of sense, especially since buying on fundamentals has been such a bust over my investing career. Don't get me wrong, I've made a LOT of money in the market...I've just lost a ton of money in the market more times than I feel I should have as well. I guess I'm a recovering investor...the time off has been very healing for me. Maybe I'll get back in some how, some way...maybe I won't.

I have enjoyed reading this thread though...and will continue to do so.

\Disillusioned investor...out...

[GregWeld]

Lance ----


You only loose money when you SELL… So what I'm saying is -- you're either into the wrong investments -- or you tend to pull the plug at the wrong time.

The reason I'm saying this - #1 - MANY people read these threads… so when I write - I write for "others" not just a single response…

The reason I preach investing the way I do - is that this is INVESTING 102 -- a beginners thread… it's not a "I have millions and do all manor of investing" thread. So buying what you know - understand - and TRUST to be there long term is to keep people from freaking out and selling at a loss when things aren't going so well. Rather - what they should be doing is putting steady money to work on a constant basis… which will have them adding more shares when prices are lower…

There's no way for anyone to respond to your post… because the details just aren't there - and they don't need to be and I'm not asking for them. Rather - what I'm seeing is a "boom and bust" investor (face value - without the details). Happy as a clam when the market is up -- poo faced when the market is normal or down. THAT is a sure fired way to loose your ass. My guess is that if you looked back at your actual stock investments - when you bought them - and did some quick calculations had you HELD them and reinvested the dividends - rather than going to cash or moving in and out… that you'd be far richer now.

Now --- another thing is in my humble (not really) opinion is that you're very near sighted. You're not ready for retirement -- or can't retire like you'd like to - and you've stopped investing because you're "nearing" retirement. REALLY? You going to die shortly? Or do you plan to live until what age? If you add the time until you can access your funds - 59.5 years old - and when you plan to be 6 feet under -- say another 30 years (89.5 ain't that old anymore!) seems to me you'll have a very very long horizon for the market to work for you and keep working for you.

See that's the problem -- INFLATION -- I've already been retired for 22 years (or 23 - I forget) -- and I'm just 60 -- and I plan to live a very good long time - and I plan to spend more as I age because there's a whole lot of stuff I've yet to do. Therefore my investments are paying me to play now - and growing over time - with rising dividend payouts - and capital growth… I DO NOT PLAN to suck. I PLAN to live well and keep it that way. Will my net worth go up and down over the next 30 years? Hell yes! Will my dividend payouts keep coming and keep me in the lifestyle to which I'm accustom? Yes - unless there's something like the zombie apocalypse which I can't control.

So --- I think your SALESMAN (called a broker) is making more money than you are moving you in and out of the market - and selling you inappropriate investments - and then calling you up and selling (churning) your accounts when it's easy to play on your fears.

Bonds are terrible investments and are only used as a small portion of your funds and should be used as TAX FREE MUNI'S when you already have a very high taxable income. Not sure why a guy would put a retirement account in bonds - except they don't really know much about investments… If you owned the bonds as TAX FREE MUNI'S to get current income without the additional income tax - then that is a different story… but we don't know your actual situation. IF you'd held the bonds until maturity - you would not have lost a single dime.. and you'd have been collecting the interest. Bonds shouldn't be bought for capital appreciation - they should only be bought for INCOME and "safety" IF == BIG IF == You plan to hold until maturity. BONDS SUCK OTHERWISE.

So here's my advice - and I'm not being critical nor am I making fun of you or anything of the kind….

I think you need to rethink your investment approach - and take charge of your own investments WHEN you think you can approach investing as what it is - INVESTING. When you understand that capital appreciation happens over time - and that at times you may be going backwards - but that over time you'll have gains. And when you understand that a balanced investment portfolio isn't a get rich quick scheme… and that the market doesn't go straight up day after day… and most importantly - that you understand your personal investing weaknesses. If you are the type that tends to panic at the least amount of "capital loss" (even if they're not realized) - then maybe no investment is suitable for you. But I believe that people can LEARN to change their ways and conquer their fears If they can learn to buy great companies and trust that over time they will be fine.

Learn that (let's just pick a company and make some sh t up) CHEVRON will go up and will go down - but that they pay you 3% every 3 months… and that even when the stock you bought at $120 is now at $100 - it's still paying you 3%…. and that you really don't have a loss unless you're stupid enough to sell… and that if you owned 100 shares at $120 and bought 100 more at $100 you'd now have 200 shares at $110… and you'd be making 4% because the dividend is being paid in dollars not percentages… and then 5 years go by and Chevron is trading at $130 and now paying 4% (on the current $130 price!) which raises your actual dividend to about 6% because your 3% calculation was based on the rate paid at the time you bought it. Period. When they raise the dividend - it's a raise and if you want to know what you're making in real terms you'd just have to do a bit of simple math.


In other words --- Chevron (CVX)in 2004 was paying 36.5 cent per share per quarter --- and today they are paying $1.00 per share per quarter. So if you'd bought and held back in 2004 -- and paid a whopping $47.70 per share -- and now you're 10 years later and they're paying you $4.00 a year to own their stock - that's almost 10% on your cost basis… and that's if you'd never re-invested the dividends (which everyone should be doing unless they're already retired!). Oh yeah -- and let's not forget that capital appreciation you're worried about --- it's (Chevron) only 237% over the last 10 years.

I don't know -- it all seems so boring to me…. but then again -- I'm just retired and running my race cars and building new hot rods and traveling all over the place in my Semi…

Yes - now I'm being a smart ass…. but it's also factual. Just saying'. Maybe you're broker ain't so smart after all.

[SSLance]

Oh trust me Greg, you aren't telling me anything I haven't already heard before. I know that you started this thread to help newbies understand and get acquainted with investing in the market, but I can't help wonder if it can't help disillusioned investors as well.

I've tracked all of my investments in Quicken and I haven't put Quicken back on my home laptop since it's hard drive crashed last summer. When I get to work tomorrow I can give you some examples of equities that worked out well for us over the years and some that didn't even though I held them much longer than I should have. The tax free munis were not in my retirement accounts, they were in the taxable accounts and yes, they were used more to keep taxable income low than capital appreciation. They were supposed to be the "safe" investment for my more liquid assets. :bang: Dollar cost averaging, keeping on buying even during the 3 different bust periods we've been through, was really what saved us. I understand that theory very well, just as much as dividend reinvestment which we've also always done. Problem comes when there's no more income coming in to keep on pouring into the market during the down years.

My FA is not a pump and dump type of guy and if we moved in and out of certain stocks or asset classes at the wrong times, it was more likely at my doing than his. I'd say over all we were about 50/50 on moves working out, half real good, half bad timing, but there were other factors involved as well in those moves, not just trying to market time.

About 1 year after I cashed out, I plugged into a spreadsheet all of the investments I held at the time and updated the share prices. This would have been approximately August 2011 - August 2012. The total appreciation was about $10,000 and about half of that was in Apple, which I would have probably sold before then as it had had a huge run up during that period. I realize that dividends wouldn't have been included in that calculation but the dividends were pretty small scale on the grand scheme. I just used this exercise to try to see what I missed. I came away from the exercise thinking that the extra sleep I gained during the same time period more than made up for the gains I missed out on.

I think mentally, if I'm going to get back into the market, I'm going to have to ease back in and only with a set percentage of the overall. When I was in before, I had 90% or so of my liquid assets invested. It's very unnerving when your business is taking a dive and at the same time your net worth is taking a dive as the market crashes. Tie into that some untimely deaths of friends and family members at near the same time and it makes one step back and reevaluate exactly what is most important.

My wife and I have spent the last 20 some years working our tails off and saving and scrimping and making smart financial decisions at the cost of personal enjoyment. Everyone has to decide for themselves when enough is enough, and I don't know that anyone will ever really know. I know this though, I'm going to stop chasing every last dollar I can and start taking the time to spend with those I love and enjoying day to day. If I have to adjust my life style in order to accomplish that, I'm okay with that. I spent a lot of years with nothing, so I know how to live on very little if necessary.

I do realize that I need to do something to keep up with inflation though, and that's what I'm trying to figure out how to do while preserving capital at the same time.

Please don't take my posts here as an anti-Greg investment theory stance, I don't mean that in anyway whatsoever. I'm intrigued by the way you describe your investing and am thankful that you are so willing to share it with others. Much like Ron has helped me dial in the tuning on my car, I think it is very cool that you give back your knowledge free of charge to anyone that will listen. I'm just trying to figure out if there is a way to make it apply to my personal situation comfortably.

[GregWeld]

Lance --

I never took your post as anti anything… only that you were relating your personal investing experience and that you were gun shy by your own admission.

My response was to put into perspective what I SPECULATED may have brought you to your disillusionment with investing. I've heard 'em all before… I have many friends that have lost everything they got lucky (Microsoft millionaires as well as other "self made" friends) and made… only to plow into markets and investments they never understood.

#1 rule of investing -- Never buy into anything you don't really really understand. That means the tax implications for your particular situation. That means the losses. It means the economic conditions that might affect your investment over time, etc.

SO HERE'S THE TAKEAWAY FOR YOU PERSONALLY….


Go back and look at the names we've discussed here… and do a bit of research on when you might have purchased them (in other words - when you were putting money to work - not that you actually purchased these names) and get the charts working for you…. and see what you could have had in income from dividends -- and how much capital growth you'd have had with a buy and hold strategy.

I don't think there's a single looser - over time - in the names we've tossed out in the last 300 some odd posts. There are INAPPROPRIATE names for many people -- and I've always put in that caveat! High yield bonds - JNK - HYG - and Annaly Capital Management (NLY) are not buy and hold investments!! I've said this 100 times… and these are the types of investments that I mean when I say - you must UNDERSTAND your investments. They get killed in a rising interest rate environment!

With a well blended portfolio of dividend paying investments -- a guy should be able to get about 5% dividend (using current rates/investment costs)… which means it takes ONE MILLION DOLLARS -- to make $50,000 (Fifty thousand dollars) per year in "income". That will be taxed at 20% -- so a NET spendable income of $40,000….. not much is it! But here's the kicker -- you should also be almost debt free at retirement - and you should also be collecting Social Security (maybe 2K a month?) AND your capital should appreciate "on average" over time around 8 or 9%. That means about every 3rd year or so - you should be able to pull out 100K and use that to take the family to Hawaii -- or pay cash for a new car -- or "toy" -- or just to raise your standard of living - or do a small remodel. By the time a guy hits mid 70's -- he should just be kicking back and playing golf and shouldn't have any worries what-so-ever.

I don't care what people invest in… but they need to invest… they need to do realistic math… they need to understand that it's their debt that's killing them financially…and that TIME is the great multiplier of money… and that they can't afford to gamble. They need to INVEST, not gamble, in order to make up for lost time. Buying a lottery ticket isn't the answer to a comfortable retirement. Being a forward looking thinker and making a plan, and sticking to it. and understanding TIME - including time spent in retirement is the key. It's never too late to start…

By the way -- I'm not a guy that thinks "diversification" is the key to any of this. In all my investing life - I've never seen that work the way it's supposed to. In other words -- when the market sucks - so does real estate - so does your business you were counting on… when it's good - they're all good… when it's bad… they're all bad. THAT IS WHY WE NEED INCOME -- so you don't have to sell to get money to live on when things SUCK! If you're counting on the rental income each and every month to survive - the renter will stiff you and move in the middle of the night and steal all the appliances… or the roof needs repair - or the place needs paint… or the neighborhood goes to hell and the rental is half what you expected. Stocks will always be down IF you MUST sell to get some money. Your business will be in a depression when it's time to retire… But if you own the building - there's rental income… if you're invested in stocks that pay you to own them - then you have income - If you're paying attention to your investments - then you would have sold the house in the ****ty neighborhood and would have bought a duplex in a better neighborhood… and you wouldn't have spent every last nickel it created - because you'd KNOW that it's going to need paint - and a roof - and remodeling once in awhile. So what I'm saying is -- INVESTING is about a way of life -- of paying attention -- understanding -- planning -- not boxing yourself into a corner. It's not about getting lucky… it's about being smart, and diligent, and desire.

[SSLance]

With a well blended portfolio of dividend paying investments -- a guy should be able to get about 5% dividend (using current rates/investment costs)… which means it takes ONE MILLION DOLLARS -- to make $50,000 (Fifty thousand dollars) per year in "income". That will be taxed at 20% -- so a NET spendable income of $40,000….. not much is it! But here's the kicker -- you should also be almost debt free at retirement - and you should also be collecting Social Security (maybe 2K a month?) AND your capital should appreciate "on average" over time around 8 or 9%.



Again, just being devil's advocate here...but here's a look at this same scenario from my current view. Remember, I have no kids and our siblings have no kids...so no heirs at all to worry about leaving anything to.

Given that, say I take that same million dollars and put it in a CD or likewise investment and pull the same $50,000 a year out of it. That's 20 years minimum of cash flow without taking a single bit of risk. I'll be 67 years old by then, the wife even older and I'll be tired of enjoying my money by then as I've had the last 20 years of freedom with no worries.

BTW, my average ROI for the 15 years I was in the market, 4.5% before taxes. Were there mistakes made, sure...but there were also 3 major corrections during that 15 year period, none of them caused by any actions of mine. And we had plenty of good years as well with well more than 8-9% appreciation. My investment life timing has just sucked.

Like I said in my first post, the investor's lost decade.

I'm an accountant by nature, so I realize that one can make numbers spin just about anyway one wants to given different scenarios. You can make things appear rosier and I can make them appear worse, just by juggling things around. I'm trying to not play that game.

I really am trying to figure out a method by which I can keep up with inflation while incurring minimal risk at the same time. It's almost like I need to look at this as if I was already 67 years old yet I can't pull money out of my IRAs for another 12 years or so without a 10% penalty.

Keep in mind, we have other assets and incomes in place already as well. I'm mainly concerned about the hunk we have in our retirement accounts and taxable investment accounts.

I realize my situation is different and if you'd rather not discuss it in this thread, I understand. I have pretty much exhausted the normal people I would talk to things like this about and welcome a different perspective. I believe that things are different after 2008 and with no signs of QE ending anytime soon, I don't believe anyone knows what is coming around the bend. I do like to talk about it with those that are participating though.

[GregWeld]

Again, just being devil's advocate here...but here's a look at this same scenario from my current view. Remember, I have no kids and our siblings have no kids...so no heirs at all to worry about leaving anything to.

Given that, say I take that same million dollars and put it in a CD or likewise investment and pull the same $50,000 a year out of it. That's 20 years minimum of cash flow without taking a single bit of risk. I'll be 67 years old by then, the wife even older and I'll be tired of enjoying my money by then as I've had the last 20 years of freedom with no worries.

BTW, my average ROI for the 15 years I was in the market, 4.5% before taxes. Were there mistakes made, sure...but there were also 3 major corrections during that 15 year period, none of them caused by any actions of mine. And we had plenty of good years as well with well more than 8-9% appreciation. My investment life timing has just sucked.

Like I said in my first post, the investor's lost decade.

I'm an accountant by nature, so I realize that one can make numbers spin just about anyway one wants to given different scenarios. You can make things appear rosier and I can make them appear worse, just by juggling things around. I'm trying to not play that game.

I really am trying to figure out a method by which I can keep up with inflation while incurring minimal risk at the same time. It's almost like I need to look at this as if I was already 67 years old yet I can't pull money out of my IRAs for another 12 years or so without a 10% penalty.

Keep in mind, we have other assets and incomes in place already as well. I'm mainly concerned about the hunk we have in our retirement accounts and taxable investment accounts.

I realize my situation is different and if you'd rather not discuss it in this thread, I understand. I have pretty much exhausted the normal people I would talk to things like this about and welcome a different perspective. I believe that things are different after 2008 and with no signs of QE ending anytime soon, I don't believe anyone knows what is coming around the bend. I do like to talk about it with those that are participating though.





Ordinarily I wouldn't say this -- but I have to be honest -- mostly because other people read this stuff and are trying to learn from this thread…

Some folks just plan to fail. I think I have a good understanding of why your investment plan hasn't worked out well for you.

[GregWeld]

Lance --


You'd do well by starting at page #1 --- and take a few pages per night --- and try to absorb some of the "info" that's been posted here. This entire thread is about how to THINK - What kinds of questions you should ask about your personal requirements etc…. it's never been about "Dear Abby - what should I personally do with my money". It's not about what stock to buy, despite many stocks used for examples. It's a beginners thread about "investing" in general. And while there are specific questions which require some discussion… Nobody can tell anyone else what's the right way or thing for them to invest in. Todd likes housing - another guy loves Tech - somebody else is young - and someone else is 5 years from retiring. What you will learn is that there are just some fundamentals here. Real basic stuff - that works "in general" - in good markets and bad.

Investing isn't about QE ending today or tomorrow - it isn't about what's going to happen in the future that nobody can predict…. that's why it's about a long term strategy that over time will have people INVEST in great companies - that pay them dividends - that buys more shares - that pays them ever more dividends and builds their nest egg with compounding. There are different strategies discussed for taxable vs non taxable accounts… again depending on the availability etc to the individual.

For investing principals in general - there should be no distinction between accounts or types of accounts --- a person's financial health and retirement depends on ALL OF THEIR RESOURCES…. combined. There's no separation when you're trying to figure out if you have enough to retire… there's just some basic principals about what types of investments are appropriate for a taxable account vs a non-taxable (or rather, tax deferred account - i.e., muni bonds shouldn't be inside an IRA/ROTH etc).

I think that for the people who have read and actually followed this thread and acted on their accounts… that it has for the most part - been productive for them. People are eager to learn and discuss investing "in general" and then act as they see fit for themselves. It's just not a Dear Abbey please help me thread and I'm not going to engage in that type of discussion.

[GregWeld]

Lance ---


Here's one more "lesson"… about long term "stock market" returns. Note that you said you went to cash in 2011… that means you missed 10% return in 2012. The compounding is done in spikes… up 10 -- down 5 -- up 6 -- down 4 -- down 3 -- up 9. If you're out in the up markets -- then you've completely missed the "total" return for the period. That's why market timing doesn't work. It only works to make you feel good when you can walk around saying "I got out of the market before "X"…. The problem is that you'll also miss out on the next leg up. Investing is about feeling CONFIDENT that over time you're doing what you should be doing. That means then that you have to be invested in stuff that you can be confident in. Whatever that is. If you're not a good stock picker - most are not - then the least a guy should do is go with the best name in a category and trust that they're well run and will be around when you need them. It's not rocket science. A guy doesn't even have to be very smart. It's enough just to know the names of the best run companies and let time do it's thing. It's when people try to out smart the market that they get crushed.





Average Stock Market Return per year: Last 5, 10, 20 ... Years
The long-term, more than 100-year performance: Since 1900 (end-of-year 1899), through 2012, I estimate the average total return/year of the DJIA (Dow Jones Industrial Average) was approximately 9.4% -- 4.8% in price appreciation, plus approx 4.6% in dividends. (Some numbers may not add up due to rounding.)
Since 1929 (year-end 1928 -- i.e., before the crash), through 2012, the return was 8.8% (4.6%, plus 4.2%) [note: see The 1929 Stock Market Crash]
Since end-of-year 1932 (i.e., after the crash): 11.1% (7.0%, plus 4.2%)
The average annual stock market return for the past twenty-five calendar years (since 1987) was 10.6% (7.9%, plus 2.7%) The market was up over 40% before the October 19, "Black Monday," crash. After a significant recovery, the Dow actually closed up 6% for the year.
Stock market returns for the last 20 years (since 1992): 9.6% (7.1%, plus 2.4%) In the middle of one of the longest bull markets in history. [see below for additional 20-year periods]
Returns since 1999 (13 years) -- the dot-com bubble year-end peak: 3.4% (1.0%, plus 2.4%).
Returns for the last 10 years (since 2002): 7.2% (4.6%, plus 2.6%) Year-end trough after the dot-com bubble. [see below for additional 10-year periods]
For the last 5 years (since 2007), 2.6% (-0.2%, plus 2.8%) Year-end peak of housing bubble.
Since 2008 year-end trough after the housing bubble: 13.4% (10.5%, plus 2.9%)
For 2012 the stock market (Dow/DJIA) total return was 10.1% (7.3% plus 2.9%)
2012 year-end dividend yield was 2.7%

[GregWeld]

As long as I'm on a roll….. Some folks think real estate is a "sure fired" investment…. so let's compare the ups and downs of the stock market vs the housing market!!





Stock market last 100 years…. Oh to be certain there are periods of not much growth -- thus the dividend!!! Get paid to wait!!




http://i919.photobucket.com/albums/ad33/gregweld/Fun%20Fotos/file-50.jpg (http://s919.photobucket.com/user/gregweld/media/Fun%20Fotos/file-50.jpg.html)







And then the sure fired long term investment in housing….. the last 100 years…






http://i919.photobucket.com/albums/ad33/gregweld/Fun%20Fotos/file-49.png (http://s919.photobucket.com/user/gregweld/media/Fun%20Fotos/file-49.png.html)

[GregWeld]

And not to be left out -- the 100 year chart of BOND yields vs the yield on equities….


BONDS YIELDS IN BLUE…. EQUITIES IN RED. 56 years of equities beating the bonds and 56 years of bonds beating equities. The difference will be is GROWTH in capital - which this chart does not attempt to show.






http://i919.photobucket.com/albums/ad33/gregweld/Fun%20Fotos/file-51.png (http://s919.photobucket.com/user/gregweld/media/Fun%20Fotos/file-51.png.html)

[GregWeld]

Now let's do the MOST REVEALING comparison….. REMEMBER that this is a comparison of what just one hundred dollars would be worth…. a lousy 100 bucks…



LOOK AT THE COMPOUNDED RETURN COLUMN!!!! That's where there is a serious ass kicking being done ---


Not to count out the AVERAGES shown by dated periods at the bottom of the page.


Sorry - I could not paste this page as a picture - so you'll just have to click the link!




http://pages.stern.nyu.edu/~%20adamodar/New_Home_Page/datafile/histretSP.html

[GregWeld]

For those unwilling to look at the above link…. what it showed was that $100 stinky dollars (a lot of money in 1928) invested in the S&P 500 (a basket of stocks you can now buy - traded as the SPY) - netted you $193,219 in 2012

$100 invested over the same period in Treasury Bills -- netted you a whopping $1971.

$100 invested over the same period in 10 year Treasury bonds netted a whopping $6926

Those are COMPOUNDED VALUES !!!

EVER HEAR ME SAY -- BONDS SUCK??? LOL

Here's the AVERAGE RATE OF RETURN of the S&P 500 over three different periods of time all ending in 2012

1928-2012 11.26%

1962-2012 11.10%

2002-2012 8.71%


Was there historical blow ups during these periods? Hell yes! And you got killed if you sold in those down markets! But if you rode it out - you were richly rewarded compared to the other "SAFE" investments weren't you… and that's my point. The market doesn't go up like an elevator - well actually it does because elevators can stop along the way and so does the market…

The reason I love DIVIDEND stocks is because you can still live during those down periods - because the stocks are still spinning off income! In retirement you're not supposed to draw down your capital… you should be able to live off the income produced. Who knows how long you're going to live in retirement? Who can predict this? If you plan to live 20 years (85 years old?) and you planned to be out of money by then -- well -- dude! You suck! Because it's going to be a pretty nasty time for you when you're 86 and you're out of money!

Anybody here tell me what a car cost 20 years ago? What your property taxes where 20 years ago? What clothes cost back then?

I don't know what they were - but I can tell you for certain that they cost far less then than they do today. So your plan better be for income GROWTH -- or each year you're falling further behind.

My little buddy Pierre is 78 years old -- he just bought a new hot rod project and had a new shop built… so I wouldn't be so quick to say -- "Well - I probably won't be doing much by then". BS!!! I was parked next to a guy at Thunderhill that was 79 years old and he was out there on the track with his Mustang track car!

Again -- my point is -- better plan for success… and plan to live decently… and plan to live and enjoy life FAR LONGER than you may live… because I'd rather go out of this world on the big end than the short end.

Go back to that Chevron dividend just used as an example… they used to pay 36.5 cents per quarter -- now they're paying $1.00 per quarter. I'd say that goes a long ways towards helping me pay my bills in the future because their payout (in this example) is growing.

Now -- a guy can do all kinds of math --- and just using Chevron (a name I just picked for zero reason what so ever) as an example might show that inflation is more than the payout growth of their dividend… OKAY… I'm just trying to make some Investing 102 points here - again - about the way we all need to THINK about our futures - and our investments - and the length of time we're going to have for our investments to do "okay". It's not "I bought X company yesterday and they're down .50 a share today - so I suck as an investor"…. Okay -- maybe you're timing is HORRIBLE… but give those picks some time… And if you've followed along here and bought GREAT COMPANIES… not the ones the store clerk told you was the hot stock of the day… my bet is that 7 of the 10 names you bought will be ahead -- a couple of them WAY ahead - a couple of them just "okay" and a couple will suck. But you will be ahead overall -- nicely -- and your dividend payouts will be more than they were when you bought.

END OF STORY : > )

[toy71camaro]

Just wanted to chime in here and thank Lance and Greg for their recent posts. The explanations on the two sides helps understand the different ways of thought process.

Thanks Fella's.

[GregWeld]

A question was asked of me about "when do I sell"….


That's a swirling bowl of confusion and never can be answered because it all "depends". It depends on whether or not you think the fundamentals of the company have changed - and not to your liking. Therefore - you're no longer CONFIDENT in owning the shares. That would be a sell signal for me.

If you own INTEREST RATE SENSITIVE shares - such as JNK - HYG - NLY…. and you think or see interest rates are going UP -- then that would be a sell signal for those shares that would be taken to the woodshed in that environment.

I don't do --- "I'm down 5% so I should sell". I don't do "the market is down so I'm going to sell everything and get out". I would do that if I thought the world was going to hell in a hand basket… but I don't think that way. To me - that would be akin to saying -- Oh! The Democrats have control of congress so the USofA is down the tubes… or vice versa. The USofA has withstood the test of time.. and will do "fine" over time regardless of who or who isn't running things.

Ditto with the market…. I've just put up charts that show real numbers over long periods of time - to PROVE that over time your investments are going to do just fine.

If you buy weird stuff - and if you don't know what you're doing and just randomly take someones advice to buy such and such because of blah blah blah --- then you'll take what they give you - because you don't know why you own it - and you won't really be connected to the stock in any way other than you bought it. I've never preached that. Conversely what I've said would help you make a buying decision is to buy companies you're familiar with - where you shop - or in an industry you're involved with etc.

Then I've always said to do the chart comparison after you've thought about your choice --- look at the top 3 or 4 names in the same industry and compare their TOTAL RETURN charts -- and their dividends etc. You can pick the loser in the top 5!! If you don't look and do a bit of research. Choosing SEARS just because it's a name you know - will probably not do your portfolio any good. Now -- if you want to bet that they'll make a comeback -- okay that's a different issue. It's not where I'd choose to invest but my point is - everyone needs to know why and what they're buying ---- and if the "bet" doesn't work out - then you also need to be able to sell and move on.

NOBODY is going to get it 100% right! EVER! It doesn't happen. I've never been able to make it happen! And you'll find that the "winners" and "losers" rotate! Your big winner this year may be a drag next year… that doesn't mean you just sell it… you "revisit" it and see why you own it - and how it fits your current portfolio - and is it the same company now as it was then etc. Go back to the charts and compare it's performance against like businesses. Sometimes they march in lock step - sometimes they don't - groups go in and out of favor -- That's why you diversify within your investments! Cars can be hot and housing could be hot this year - or for 2 years -- and then flat line for 3 or 5 years… and something else goes gangbusters.

One thing I try to ask myself is "if I sold this" what else would I be SURE of that is going to be better… sometimes I have that answer and sometimes I don't -- if I don't then I usually tend to just let it ride. Same thing with taking some gains off the table --- if I have a big winner -- then sometimes I'll just trim off some of the gain and reinvest it in something else… There's no hard and fast rule to tell you what to do.

[WSSix]

To further support the hold or long term strategy, as if it needs any more support, is my stake in OXY. Spring 2012 when I bought it it was doing fine but quickly fell and fell hard. I've simply held on to it and while it's not back in the green yet, it's dang close. The dividends it was paying were reinvested of course and those have started to really help me get back to the positive side. I need to go look at it and see if it gets to the point where my initial investment is still down but overall I'm positive because of the dividend payments and their growth. Fun times!

[Vegas69]

Again, just being devil's advocate here...but here's a look at this same scenario from my current view. Remember, I have no kids and our siblings have no kids...so no heirs at all to worry about leaving anything to.

Given that, say I take that same million dollars and put it in a CD or likewise investment and pull the same $50,000 a year out of it. That's 20 years minimum of cash flow without taking a single bit of risk. I'll be 67 years old by then, the wife even older and I'll be tired of enjoying my money by then as I've had the last 20 years of freedom with no worries.

BTW, my average ROI for the 15 years I was in the market, 4.5% before taxes. Were there mistakes made, sure...but there were also 3 major corrections during that 15 year period, none of them caused by any actions of mine. And we had plenty of good years as well with well more than 8-9% appreciation. My investment life timing has just sucked.

Like I said in my first post, the investor's lost decade.

I'm an accountant by nature, so I realize that one can make numbers spin just about anyway one wants to given different scenarios. You can make things appear rosier and I can make them appear worse, just by juggling things around. I'm trying to not play that game.

I really am trying to figure out a method by which I can keep up with inflation while incurring minimal risk at the same time. It's almost like I need to look at this as if I was already 67 years old yet I can't pull money out of my IRAs for another 12 years or so without a 10% penalty.

Keep in mind, we have other assets and incomes in place already as well. I'm mainly concerned about the hunk we have in our retirement accounts and taxable investment accounts.

I realize my situation is different and if you'd rather not discuss it in this thread, I understand. I have pretty much exhausted the normal people I would talk to things like this about and welcome a different perspective. I believe that things are different after 2008 and with no signs of QE ending anytime soon, I don't believe anyone knows what is coming around the bend. I do like to talk about it with those that are participating though.

Not to pick on you but I'd like to add some perspective.

One of life's greatest values is helping others. As you grow older, I hope you find some people and charities that you would be happy to leave your stakes to at the end of the day.

Wouldn't it be great to spend a chunk of your retirement helping others with your time and money? That's one of my long term goals.

I don't see how a CD is going to be a sufficient game plan. Right now you are lucky to get 1%. That's $10,000 on $1,000,000. When interest rates go up, so will the returns on CD's but inflation will kick your butt.

The bottom line is you must put your money to work if you plan to become financially independent. There will be plenty of springs of opportunity, you just have to keep your nose in the wind.

[SSLance]

Net Asset Value…How do we as investors put an actual value on the companies we own, want to own, or want to sell?

I just went through the exercise of updating a financial statement for my partner and something interesting came up. A couple of his business interests are 2 real estate partnerships he bought into in the mid 80s. Of the 9 partnerships he was in at the time, only 2 of them survived. One is a shopping center and the other is a mobile home park.

The shopping center has finally turned the corner and just recently finished paying it’s loan off and the mobile home park is still struggling, but hasn't had a cash call in many years now.

The question came up of how to value the ownership stake in each of these business partnerships on his financial statement. Do you use the cost basis, what the latest partnership balance sheet shows for owner equity, or a multiple of the earnings the partnership pays out each quarter?

Think of the shares of stock each of you have bought in certain companies in the same way. Basically you are in partnerships with the other owners of the company. You have a cost basis in the shares, the stock price dictates the asset value (market value) of the company, and the dividend that is paid out is the income from the company.

The accountant in me wanted to use the balance sheet number, add up the assets, subtract out the liabilities and divide what was left by ownership shares and use that number.

The cost basis really only comes into play after the asset has been sold, used to figure out the tax liability on the sale. It is not typically representative of the net asset value. It is used to figure the total ROI though.

The earnings multiple seemed to be the logical answer. Have any of you ever looked at PE ratios and multiples when trying to put a value on a company you own? Somewhere between 5 and 10 times earnings is considered the “standard” when valuing a privately held company (PE ratios are typically MUCH higher on publicly traded companies). So you take the dividend\distribution said partnership is paying, multiply it by 10, divide by ownership shares and boom, there’s your net asset value…right?

That is what my partner’s financial adviser wanted to use in this instance for the shopping center. It was a justifiable value that looked pretty good on paper too. The thing is, the mobile home park in the scenario above…pays a tiny dividend\distribution. When asked how to put a value on it, the FA said to leave it like it was…using the balance sheet method like I always had in the past. That was a justifiable value just as well, and looked much better on paper than the earnings multiple. The FA has no stake in these assets, he is just helping with the overall picture. The financial statement is prepared to give to the banks that hold notes held by my partner as part of the reporting process. My point is, one can use numbers and how they are arranged to make just about any point they want to on paper.

In reality, what your ownership in this company is really worth…is what someone else is willing to pay for it. In a publicly traded company, the market determines that value. In a privately held company…the only way to tell for sure is to put it up for sale.

In the case of the shopping center mentioned above, the balance sheet shows asset values of close to 8 million dollars. They were paying a dividend\distribution of $800,000 a year before the loan was paid off, now they should be able to pay a dividend\distribution of 1.7 million a year. Ten times earnings would put the company valued at 17 million dollars, right?

Here’s the kicker though. Is the property pumping out great income right now? Sure…after 30 some years of losses, then partial income, then finally getting on the right track and producing…sure it’s paying out good income. Problem is…what do you do with the asset now? If you were to sell the company, the assets are almost completely depreciated…that means the first thing you have to do is recapture all of that depreciation…at regular income tax rates. Then everything above that after your initial cost basis is deducted…is subject to capital gains income tax as well. Not too mention that all of the dividends\distributions that you have been collecting over the past few years have also been taxed as regular income… If one wants to really figure the total ROI over the years accurately, the cost of divesting the asset HAS to be figured into the equation.

So “just don’t sell it” is the answer. Okay, you leave it in the account\trust it is sitting in and you pass away. Anyone check to see what Estate Tax rates are these days? Before that asset gets transferred to your heirs, if the estate is of any size at all, good old Uncle Sam is going to take a fairly significant portion of it. And in most cases, the asset is going to have to be sold at whatever market value is at the time…to raise cash to pay the estate taxes.

My reason for bringing this up in this thread is that it is my belief that one must pay attention to the net asset value of any investment they own. Anything that can affect that value beyond the owners control must be paid attention to by the owner. And there are a lot of things that can affect that net asset value that are beyond the owner’s control.

The 1986 Real Estate tax law changed the way commercial real estate property was depreciated and set that whole industry on it’s ear and affected not only the whole economy, but directly the savings and loan industry and the owners of commercial property across the country. In 2008, the failure of the bond insurance companies (AIG, Lehman, etc) due to involvement in bad CDOs and the resulting meltdown took down the net asset values of everyone’s stock portfolio.

Say one of the good companies you own, good dividend paying company…has trouble making money for a long period for some reason out of their control. See the 2008 recession… Say they have to cut their dividend rate because of cash flow deficits. First thing that happens is their net asset value drops as there are more sellers of the stock than there are buyers. Don’t think for a second that ANY company out there won’t pay attention to their share price dropping and resort to practices that are not in their normal realm to try to prop their share prices back up again. Sometimes these practices work other times they only make things worse (See JCP for one example). You as a shareholder are in the meantime…just along for the ride. You have a choice to make, continue to hold the company even with the reduced dividend rate and hope it comes back, or sell it at a loss and try again with another company. Neither are very good options…and both directly affect the total ROI figure negatively.

Another factor is the “the stock is only worth what someone else is willing to pay for it” scenario. If the large institutional investors decide for whatever reason that the company you own doesn't fit in their portfolio for whatever reason, they can drive the price of a stock down just by flooding the market with sell orders. If there aren't enough other buyers out there to buy up those shares, the law of supply and demand kicks in and the share price goes down. So, what do you do…hold it and hope it turns around? Or sell and cut your losses and try again somewhere else.

I firmly believe that the large institutional investors can drive a market one direction or the other strictly to build opportunities in for them to make more money on the back side. Retail investors are just along for the ride. Don't get me wrong here, this works both ways. I've been on the upside of these deals as well. Sometimes you just catch a wave and ride it...nothing much more fun than when it's going your way. But on paper, neither way makes much sense or is justifiable.

[sik68]

The real estate books I have read stress two important points regarding the issues you raise:

1) Once you're IN to investment real estate, the most effective strategy is to be IN for life. Don't sell the asset unless it's for a like kind exchange. Then you can avoid capital gains taxes and depreciation recapture.

2) You should divide your assets up early among your heirs in trusts, sooner rather than later while the value of the asset is less. The trustees will own the asset from here on out, but you retain control thus keeping the distributions flowing to you.

[GregWeld]

After reading all of this.... I can't for the life of me figure out what your point is.









Net Asset Value…How do we as investors put an actual value on the companies we own, want to own, or want to sell?

I just went through the exercise of updating a financial statement for my partner and something interesting came up. A couple of his business interests are 2 real estate partnerships he bought into in the mid 80s. Of the 9 partnerships he was in at the time, only 2 of them survived. One is a shopping center and the other is a mobile home park.

The shopping center has finally turned the corner and just recently finished paying it’s loan off and the mobile home park is still struggling, but hasn't had a cash call in many years now.

The question came up of how to value the ownership stake in each of these business partnerships on his financial statement. Do you use the cost basis, what the latest partnership balance sheet shows for owner equity, or a multiple of the earnings the partnership pays out each quarter?

Think of the shares of stock each of you have bought in certain companies in the same way. Basically you are in partnerships with the other owners of the company. You have a cost basis in the shares, the stock price dictates the asset value (market value) of the company, and the dividend that is paid out is the income from the company.

The accountant in me wanted to use the balance sheet number, add up the assets, subtract out the liabilities and divide what was left by ownership shares and use that number.

The cost basis really only comes into play after the asset has been sold, used to figure out the tax liability on the sale. It is not typically representative of the net asset value. It is used to figure the total ROI though.

The earnings multiple seemed to be the logical answer. Have any of you ever looked at PE ratios and multiples when trying to put a value on a company you own? Somewhere between 5 and 10 times earnings is considered the “standard” when valuing a privately held company (PE ratios are typically MUCH higher on publicly traded companies). So you take the dividend\distribution said partnership is paying, multiply it by 10, divide by ownership shares and boom, there’s your net asset value…right?

That is what my partner’s financial adviser wanted to use in this instance for the shopping center. It was a justifiable value that looked pretty good on paper too. The thing is, the mobile home park in the scenario above…pays a tiny dividend\distribution. When asked how to put a value on it, the FA said to leave it like it was…using the balance sheet method like I always had in the past. That was a justifiable value just as well, and looked much better on paper than the earnings multiple. The FA has no stake in these assets, he is just helping with the overall picture. The financial statement is prepared to give to the banks that hold notes held by my partner as part of the reporting process. My point is, one can use numbers and how they are arranged to make just about any point they want to on paper.

In reality, what your ownership in this company is really worth…is what someone else is willing to pay for it. In a publicly traded company, the market determines that value. In a privately held company…the only way to tell for sure is to put it up for sale.

In the case of the shopping center mentioned above, the balance sheet shows asset values of close to 8 million dollars. They were paying a dividend\distribution of $800,000 a year before the loan was paid off, now they should be able to pay a dividend\distribution of 1.7 million a year. Ten times earnings would put the company valued at 17 million dollars, right?

Here’s the kicker though. Is the property pumping out great income right now? Sure…after 30 some years of losses, then partial income, then finally getting on the right track and producing…sure it’s paying out good income. Problem is…what do you do with the asset now? If you were to sell the company, the assets are almost completely depreciated…that means the first thing you have to do is recapture all of that depreciation…at regular income tax rates. Then everything above that after your initial cost basis is deducted…is subject to capital gains income tax as well. Not too mention that all of the dividends\distributions that you have been collecting over the past few years have also been taxed as regular income… If one wants to really figure the total ROI over the years accurately, the cost of divesting the asset HAS to be figured into the equation.

So “just don’t sell it” is the answer. Okay, you leave it in the account\trust it is sitting in and you pass away. Anyone check to see what Estate Tax rates are these days? Before that asset gets transferred to your heirs, if the estate is of any size at all, good old Uncle Sam is going to take a fairly significant portion of it. And in most cases, the asset is going to have to be sold at whatever market value is at the time…to raise cash to pay the estate taxes.

My reason for bringing this up in this thread is that it is my belief that one must pay attention to the net asset value of any investment they own. Anything that can affect that value beyond the owners control must be paid attention to by the owner. And there are a lot of things that can affect that net asset value that are beyond the owner’s control.

The 1986 Real Estate tax law changed the way commercial real estate property was depreciated and set that whole industry on it’s ear and affected not only the whole economy, but directly the savings and loan industry and the owners of commercial property across the country. In 2008, the failure of the bond insurance companies (AIG, Lehman, etc) due to involvement in bad CDOs and the resulting meltdown took down the net asset values of everyone’s stock portfolio.

Say one of the good companies you own, good dividend paying company…has trouble making money for a long period for some reason out of their control. See the 2008 recession… Say they have to cut their dividend rate because of cash flow deficits. First thing that happens is their net asset value drops as there are more sellers of the stock than there are buyers. Don’t think for a second that ANY company out there won’t pay attention to their share price dropping and resort to practices that are not in their normal realm to try to prop their share prices back up again. Sometimes these practices work other times they only make things worse (See JCP for one example). You as a shareholder are in the meantime…just along for the ride. You have a choice to make, continue to hold the company even with the reduced dividend rate and hope it comes back, or sell it at a loss and try again with another company. Neither are very good options…and both directly affect the total ROI figure negatively.

Another factor is the “the stock is only worth what someone else is willing to pay for it” scenario. If the large institutional investors decide for whatever reason that the company you own doesn't fit in their portfolio for whatever reason, they can drive the price of a stock down just by flooding the market with sell orders. If there aren't enough other buyers out there to buy up those shares, the law of supply and demand kicks in and the share price goes down. So, what do you do…hold it and hope it turns around? Or sell and cut your losses and try again somewhere else.

I firmly believe that the large institutional investors can drive a market one direction or the other strictly to build opportunities in for them to make more money on the back side. Retail investors are just along for the ride. Don't get me wrong here, this works both ways. I've been on the upside of these deals as well. Sometimes you just catch a wave and ride it...nothing much more fun than when it's going your way. But on paper, neither way makes much sense or is justifiable.

[SSLance]

Maybe it's the accountant in me...but I never go into an investment without looking at what the ramifications will be if or when I decide to get back out of the investment.

I would never go into a simple partnership without a buy\sell agreement in place deciding how to split the partnership up later if things go bad...for instance. Stuff happens...

The point I was trying to make above was that to accurately figure the total return on an investment, the costs of getting out of the investment will eventually need to be calculated in. That's all.

The only two things that are certain in life are death and taxes, one can't be avoided, the other is getting harder and harder to avoid and must be accounted for.

[GregWeld]

You don't invest to figure out taxes. You invest to make money. When you are successful and make some money. You pay taxes.

Here's the deal. You WANT to be in the maximum tax bracket. The more taxes you pay, means the more money you made.

The only people that actually discuss taxes are those that have spent their gains
Without providing for the taxes. That's a separate issue.

My income tax form was 184 pages long last year. I NEVER complain about having to pay taxes.




Maybe it's the accountant in me...but I never go into an investment without looking at what the ramifications will be if or when I decide to get back out of the investment.

I would never go into a simple partnership without a buy\sell agreement in place deciding how to split the partnership up later if things go bad...for instance. Stuff happens...

The point I was trying to make above was that to accurately figure the total return on an investment, the costs of getting out of the investment will eventually need to be calculated in. That's all.

The only two things that are certain in life are death and taxes, one can't be avoided, the other is getting harder and harder to avoid and must be accounted for.

[GregWeld]

Regarding figures....


Old saying is: Figures lie... And liars figure.



Anyone can crunch numbers a bazillion ways. Investing is about buying something that makes you money. Either as a gain long term... Short term... Or pays you income (rent or interest or dividends).

Having inheritance taxes is a good thing... It means your investments made you a millionaire. Get over it. The recipients of your good fortune will be more than happy to get the free net (after taxes) that you left them. You'll be dead and won't give a damn and have little use for the money you made.

Their isn't really an inheritance tax issue for married couples until your net worth exceeds 10 MILLION. If you're that successful. Get over it. You don't really have any problems the attorneys and accountants can't solve.

[Vegas69]

Not investing due to tax consequence is like not exercising/dieting so you don't have to buy new cloths. I call these "Good Problems".

I do agree that you must always look at the REAL numbers and exit strategy to take full advantage.

[glassman]

Not investing due to tax consequence is like not exercising/dieting so you don't have to buy new cloths. I call these "Good Problems".

I do agree that you must always look at the REAL numbers and exit strategy to take full advantage.

Good one Todd. Nothing ventured, nothing gained.

I'm soaking all this in. I'm getting a better and better grip on all this. Got my Schwab account opened up this year and started a pension fund for my employees. At 47, better late than never (although i started at 31 and got bad advice and paid more attention to my company than my "growable" asset/income base).

Greg, i thank you yet again for bring the "complex" down to simplicity. My brain tends to over complicate everything, in other words "KISS" keep it simple stupid...

[SSLance]

I never meant to suggest that one should not invest to make money...just because you'll have to pay taxes on the gain. What I was trying to get at is the result of whatever happens at the end of the investment should be figured into the total ROI.

The other part of my post was in regards to how to figure out the value of an investment, any investment. And what really drives the value of said investment up or down?

I was mistaken on what I was thinking about Estate Taxes. For some reason I forgot that the Tax Act of 2012 extended the 5 million dollar exemption on estates. For a while there it was looking like it was going to revert back to 1 million dollars. That takes Estate Taxes out of the question for the most part.

[gearheads78]

So how do you select your stocks in a market like this?

I have about 20K of dead money in old 401K that I am planning on rolling to to a investing 102 type of IRA but after a solid week of research in my spare time I am lost. Everything I look at has a great 5yr track record. Most are at or close to the all time highs. I know you should not try to time the market but should I try to wait for at lease a little pull back?

I so wish I knew all this 10 years ago. I had a small porfolio owned about 6-7 stocks. I don't even remember what they all were but I do remember having $3000 each in Exxon, Amazon , and Apple :shakehead: I didn't even know what I was doing just coppying from advice from a guy at work. I sold it all in 6 months happy I had made almost a grand.

[GregWeld]

Joe. - there's never the perfect time. And if you've read this thread you'd know about the evil little man that takes the market down 15 minutes after you've just bought. You can count on that happening!!


Here's the real deal though. Take a stock that's been around for awhile. Let's use
Exxon (XOM).... Hit up google finance and explode the chart to max... That squiggly line is a zillion ups and downs... And that big dip there in '08 was this last "Great Recession" ---- that was the time to buy in anyone that can read this lifetime.... But disregard that and what I want you to see is that regardless of when you bought in the last 30 years... It's higher than when you bought. That's the beauty of time - and this time includes the time you're going to spend in retirement! So how many years until you retire.... And then how many years do you plan to live in retirement? If it's more than 5.... Just get in and start collecting dividends.

It's like waiting for the next greatest tv to get bigger and cheaper. If you're waiting for that you're not enjoying watching shows on a killer tv right now... You'd just be missing out.


So how do you select your stocks in a market like this?

I have about 20K of dead money in old 401K that I am planning on rolling to to a investing 102 type of IRA but after a solid week of research in my spare time I am lost. Everything I look at has a great 5yr track record. Most are at or close to the all time highs. I know you should not try to time the market but should I try to wait for at lease a little pull back?

I so wish I knew all this 10 years ago. I had a small porfolio owned about 6-7 stocks. I don't even remember what they all were but I do remember having $3000 each in Exxon, Amazon , and Apple :shakehead: I didn't even know what I was doing just coppying from advice from a guy at work. I sold it all in 6 months happy I had made almost a grand.

[GregWeld]

I never meant to suggest that one should not invest to make money...just because you'll have to pay taxes on the gain. What I was trying to get at is the result of whatever happens at the end of the investment should be figured into the total ROI.

The other part of my post was in regards to how to figure out the value of an investment, any investment. And what really drives the value of said investment up or down?

I was mistaken on what I was thinking about Estate Taxes. For some reason I forgot that the Tax Act of 2012 extended the 5 million dollar exemption on estates. For a while there it was looking like it was going to revert back to 1 million dollars. That takes Estate Taxes out of the question for the most part.



When I read your posts --- what I get from you --- is that you're thinking way too much. You're TRYING to make investing complicated. It is NOT.


10 million for a married couple -- since in most states the "estate" is split evenly right down the middle… each has the ability to do a pass through of 5 million… The problem comes with the total gets passed down to the next generation. And then that's when trusts come into play. Again --- this is NOT complicated and if you have that kind of money then that's what lawyers are for… A person doesn't have to know about it or lay around thinking about it - you just take the issue to the proper people - and they figure it all out and give you some simple options. Most people don't have an inheritance tax issue.


Investing is not about taxes -- it's not about inheritance - it's not complicated… it IS about putting money into investments (whatever that choice is) as early and often as a person can… and allowing time to compound the money. Trying to avoid this - or plan down the road for all the what if's is a complete waste of time. By the time you're rich and living off your investments -- the rules will have changed twice or more anyway…

[SSLance]

you're thinking way too much



100% error free post

OCD is hard to live with, trust me on this. ;)

[GregWeld]

100% error free post

OCD is hard to live with, trust me on this. ;)



By the way -- not picking on you or arguing or anything of the kind --- BUT LOTS AND LOTS of people read these posts…. and what this thread is about is SIMPLICITY in a simple easy to understand investment approach. As people get more money... then... by that time they will understand the "market" and will actually have enough that perhaps they'll be looking to diversify into other types of investments -- other as in -- rental income properties - or stocks etc.
That's an entirely different issue. Most folks aren't there yet… what I'm trying to do is to get them there… without over thinking it… or making it scary… etc.

Some folks that started to soak this all in back when the thread was just beginning (THANKS WSSix for starting it in the first place!!) -- already have seen what this simple easy to understand approach does for them. They've actually even had a couple of "dips" in the market and have also seen that there was no need to "cash out" just because their stocks were down a couple bucks a share… and in fact -- some even added to their positions during the dips -- and now are feeling quite "savvy" having done so!!


I understand where you're coming from Lance…. and everyone has their own situation… there's more to investing than there is to making horsepower… but this thread is about just getting started and learning some real basic "walk before you run" ideas about investing.

If I shared all the investments I'm in -- and all the tax implications - and all the inheritance and trust stuff I've got going on… or we went into detail on every single persons issues --- NOBOBY would get started at all… AND THAT WOULD BE THE BIGGEST MISTAKE OF THEIR LIVES….

[66fury]

wow, i am grateful to have read alot of this thread but i still feel like i dont know the first thing i should do about my situation.i know i need to save and get any money i have to work for me.i am sure alot of readers are in my shoes but how does a 47 yr old guy who has no debt except for a mortgage,married,2 kids(1 getting ready to go off to school and 1 still in diapers,makes 90k+(1 income currently),with no savings possibly figure out a way to get ahead.ive been employed my whole life but can never get ahead.now that im married its impossible to save a dime.i was out of work this yr for the first time in my life when i parted ways with a business partner who screwed me out of 6 yrs of my life with nothin to show for it and i had just enough in savings to get by until i landed a new job.again,i should be thankful i had some money to make it by and i landed a job making 20k more.yippee!!! you would think with no debt it would be easy but it seems any money saved gets taken for some emergency .i guess i should be grateful that i have savings to spend on things like house and auto repairs that are musts but life is running out and the future seems bleak and i dont want to work till im dead.i live a humble life and do not live beyond my means,.i dont drink ,smoke or gamble, so where does it all go?maybe gregweld could offer some advice.

[GregWeld]

wow, i am grateful to have read alot of this thread but i still feel like i dont know the first thing i should do about my situation.i know i need to save and get any money i have to work for me.i am sure alot of readers are in my shoes but how does a 47 yr old guy who has no debt except for a mortgage,married,2 kids(1 getting ready to go off to school and 1 still in diapers,makes 90k+(1 income currently),with no savings possibly figure out a way to get ahead.ive been employed my whole life but can never get ahead.now that im married its impossible to save a dime.i was out of work this yr for the first time in my life when i parted ways with a business partner who screwed me out of 6 yrs of my life with nothin to show for it and i had just enough in savings to get by until i landed a new job.again,i should be thankful i had some money to make it by and i landed a job making 20k more.yippee!!! you would think with no debt it would be easy but it seems any money saved gets taken for some emergency .i guess i should be grateful that i have savings to spend on things like house and auto repairs that are musts but life is running out and the future seems bleak and i dont want to work till im dead.i live a humble life and do not live beyond my means,.i dont drink ,smoke or gamble, so where does it all go?maybe gregweld could offer some advice.



Sorry that there's not much advice to give here… except that if you don't have any left over money each month to SAVE --- then you indeed ARE living above your means. That doesn't come out right --- and isn't meant to embarrass or put you down… but many people make far less and live on far less… (not saying they're saving anything either!).

I do have a best friend -- he and his wife NEVER made 100K COMBINED - and they retired millionaires. They saved 30+% of their salaries beginning with their very first paychecks and never stopped saving. The years went by and the money compounded a few times. They're now enjoying their travel trailer and heading down to sun country like typical snowbirds.

Only since you mentioned my name --- and I realize that I contribute a lot in this thread (as far as post count goes) but I don't do Dear Abbey… I'm not a personal financial planner… I just post in here like I do about cars etc… I help when I can with very general information. Trying to fix your finances so you can save is not something I can do…. BUT there are financial planners that you should seek out and have some discussions with. Many are free of charge for the first visit or two… and perhaps they can take a look at what you've got going on and may offer some insight. :thumbsup:

[SSLance]

When I was a senior in high school, I did COE I think it was called, basically I went to school a half day and worked the other half day. One of the classes I took to be in this program required us to bring our paycheck stubs in and keep a budget accounting for every single cent of that paycheck...for our whole senior year!

Ever since then, I have kept very good track of my finances...and it has been invaluable to our savings. If you don't know exactly where your money is going, you won't know how or where to slow it down.

Not sure if you have ever done a budget 66Fury, or if you keep your finances on your computer...but Quicken is a GREAT tool for this and is pretty cheap and easy to run. I tell people all the time how much this exercise back in high school helped me to manage my finances. Especially when it came time to get "creative" with my bookkeeping if you get my drift... :whistling: Could you imagine telling your high school teacher where every dollar you spent for the whole year went? :_paranoid

[66fury]

thanks for the replies and i didnt mean for anyone to fix my problems. given my situation i was curious to where i could start to build a financial future.i hated to call out gregweld on this,sorry to put you on the spot.i know people live on far less and manage to save more but even living my simple life the everyday things that are daily needs are so damn expensive that im stuck.i know people do it ,i just dont know how.i guess my family could go without food and clothes and we could walk everywhere,turn off a/c ,read by candles and so on and so on but i dont think those are the things that others have done to get ahead.every little bit helps and i do watch every dime as im putting it in the hand of the line of people with their hand out taking it from me.ive worked hard all my life and have nothing in the way of real savings and cant figure how others do it.im not so worried about my future ,i want to make sure i leave something to my 2 yr old before i die.

[glassman]

66, my dad always said "its not what you make, its what you keep". Just take a good look at your and your wifes spending habits and analyze it. Simple. Then a little discipline, and bingo, you'll be on your way. You have 20 years left of working, I too am 47 and am very grateful for what i do have. I look at this as the third quarter of our career, and the clock is ticking. Just start, start somewhere. This is a GREAT thread, one of the best of all time IMO. Gregs advice is simple and too the point, he doesnt have to do this, he does cause he wants us to do better for our quality of life and families. Plus, were all car guys here so we help each other out. Start reading from page 1, and dont be afraid to ask questions. Look at reading the first 200 pages as a homework assignment that will benefit your bride and offspring, not now but later they will reap the rewards........Mike

[GregWeld]

Here's the real issue with budgets…


It doesn't work for Congress, and it doesn't work for individuals. Life gets in the way.


It's why on a monthly basis = your net costs need to be WAY lower than your net income. Savings have to be in buckets --- Emergency (such as a blown tire or collision deductible) -- Rainy day (laid off etc - so 6 months of Net spending) -- Retirement (which is NOT used for Emergency or Rainy days).

The numbers vary because each individual has individual lifestyle needs and income levels. My personal cash level is half a million bucks - less than that and I become uncomfortable. Someone else's might be two thousand.

People have to make CHOICES…. they can spend every dime NOW… and have not a clue how they're going to live later… or they can make a plan and stick to it and live in retirement. IT'S A BALANCE…. NOW vs LATER… if you want later to suck -- then spend now and don't bother to do a thing for later. Later is a long time away -- oh -- but it also lasts a long time… but cable TV is now and I really like football on Sundays so I "need it" now. Okay - but don't plan to watch cable TV later when you have everyday to sit on your butt with nothing to do because you can't afford to do anything.

[toy71camaro]

As mentioned, 66, You need to analyze where every dollar is spent. Also, each month you should be sitting down with the spousal unit and spending each dollar on paper.

Check out Dave Ramsey's "Total Money Makeover" book, and check into a local "Financial Peace University" class. They'll help you "get a grip" on things. Also, check out the book "Richest Man in Babylon". Has some good "methods" just like Ramsey's. Pay yourself first, live on whats left. Otherwise, you'll always be on step behind.

I'm willing to bet there's plenty to save there in that $90k/yr salary. But you've got to know the difference between a "need" and a "want'. What's important vs what is a luxury. And learn to tell the man in the mirror NO. If there isnt enough to save on that 90k, then as Greg mentioned, you're likely living beyond your means (house too big/too expensive, cars financed that are outside your means, toys, etc).

First thing you gotta do is recognize there's a problem. Then set goals and a plan to over come it.

[Vegas69]

I agree with these guys. Set up a spreadsheet with your hard costs and review your last 3 bank statements thoroughly to see where the rest of it is going. I guarantee you can whittle things down. Once you make changes, update your spreadsheet and watch your discretionary income grow. I have mine set up to show my monthly discretionary income after every single expense. I am also a Dave Ramsey fan and have car replacement, clothes, etc. in my spreadsheet.

In addition, I calculate my monthly net worth gain. I do this through real estate principal reduction, rental income, retirement contribution, stocks, and additional savings. I put in depreciation for cars.

Get your Wife and family on board. That is a huge variable with a single income household. How about some type of reward for saving X every so often?

Good luck, it will take some effort and hard work to change things but once they are in effect you will benefit greatly every day.

[GregWeld]

Year end is coming up and coming up FAST….


I see several things coming together here to cause the market some angst…


Portfolio rebalancing is something everyone does at the end of the year… what that means is - the big holders will take some gains off the table - they don't sell out -- but they may take some off the top of their biggest winners…

Conversely - they'll balance that "tax wise" by selling some losers… that way you come in at neutral as far as gains and losses are concerned.

So what? Well -- everyone is "into" the same big winners -- so when you have some big holders selling --- then that takes the prices down… and if they're also selling the losers - that makes your losers go down even more. It's somewhat self fulfilling scenario.

NOW --- if you have RISING interest rates -- then the old saying - "when interest rates are high stocks will die" comes into play. IF interest rates are rising - or are seen to be in a rising mode - then the big holders will start to trim interest rate sensitive stocks -- and suddenly your 3% dividend payer doesn't look so hot -- which it was when rates were at 1 or less percent -- and now you can buy a 10 year treasury (tax free) that's paying 3%…. So you have that going on….


So the bad news COULD BE that we have a declining market through the year end… but much of that depends on the economy coming in with some good numbers -- which is GOOD for the stock market because EARNINGS are the real drivers of stock prices…

What's that all mean to us?? Not a hell of a lot. BIG TRADERS or BIG HOLDERS do things differently than you and I. We don't have customers that are demanding we "beat the market" -- we're just investors. Long term investors… we're not on the hot seat to produce on December 31st…. we're looking at December 31st - 15 or 20 or even 30 years down the road.

Yes -- I have sold some shares with losses and I've added some shares with that cash -- and yes I try to be somewhat tax neutral IF -- BIG IF -- I think I have some stocks that just need to be gone or whatever (I actually held too much "Oil" patch stocks -- with CVX - BPT - NTI - KMP -- so have trimmed a couple). My typical positions approach or exceed 1MM per holding -- so when you add them up -- it's worth it for me to balance out a bit. But most aren't in this position ---- and there's no point in selling a holding if you have less than 10K in it! What you want to see is that 10K doubling over the next 10 years to 20K --- ya can't do that if you're scooping off every time you have a "gain".

Look to ADD to your positions -- not sell them out -- if the fundamentals of the company are the same as when you bought it. Put that bonus check to work so that the $1500 becomes 3000…. or piss away $500 of it and save the grand or whatever.

Don't get distracted by all the "noise". If you get nervous -- go back and look at those longer term charts… Sometimes you just have to have faith. Faith in history - faith in the company - faith in the dividend and the compounding.

[toy71camaro]

. But most aren't in this position ---- and there's no point in selling a holding if you have less than 10K in it! What you want to see is that 10K doubling over the next 10 years to 20K --- ya can't do that if you're scooping off every time you have a "gain".


I was just about to type up that question... on the basis of what should us "small" investors do when we have gains (for example, my $1k purchase last year is sitting at $1.5k with a 50% gain. Do we scoop off the top and redistribute the $500 house money elsewhere, or let it ride).

Looks like you basically answered my question. Let it ride until its a "bigger stake". (or if there is another reason to sell).

But I just wanted to point that out to anyone else that was in the same boat of "what should i do...".

[GregWeld]

I was just about to type up that question... on the basis of what should us "small" investors do when we have gains (for example, my $1k purchase last year is sitting at $1.5k with a 50% gain. Do we scoop off the top and redistribute the $500 house money elsewhere, or let it ride).

Looks like you basically answered my question. Let it ride until its a "bigger stake". (or if there is another reason to sell).

But I just wanted to point that out to anyone else that was in the same boat of "what should i do...".




Here's what happens when you sell your winners…. or sell part of your winners… You have to figure out what else to buy with that money --- and then you're getting less dividend which has a large impact on your compounding.

The GOAL here is to have the dividend buying ever more shares --- averaging in automatically --- and you get some upside capital growth along with it.

If you're constantly taking the paper gains off the table - you miss out on the compounding affect.

Now -- if you have 10K in ONE name ---- which means you should have 100K or more invested -- and you have a gain like the percentages you mentioned -- then to skim off 5K and add another name in the portfolio "might" be worth it. But you always have to be mindful of the compounding…

Now again -- I live off my gains and dividends -- I don't need (yes everyone really needs it) compounding… I need (want) the cash to spend… so I'm always skimming or trimming - or transferring the dividend (I do not reinvest it)… but I'm already retired and that's how I live.

What you're seeing -- which is a beautiful thing - is that you now have a 50% increase in capital -- in just one name!! Shortly it could be 200% or 300% -- and that's how this is ALL SUPPOSED TO WORK!! But it won't get there if you keep selling.

Let those winners ride --- and new money should go to new names -- because the more names you have the more likely you are to pick a few winners… and before long -- those winner are contributing MORE to your retirement plan than you are! Now that's a winning situation! That's what we're after..

[toy71camaro]

Great follow up. Thanks for the detailed explanation. When you put it like that, its obvious. LOL.

I kinda knew that. Thus the reason I never did anything about it. But i wasn't confident that was the right answer.

Next year I should be "back in business" investing. Bought a house at the beginning of this year and it wiped me out. But, my emergency fund is almost done, and then i can start parkin money for retirement and savings (to invest outside of retirement accounts - which i haven't done yet. Thats a whole nother ball game due to the tax aspect that I haven't even started yet). And hopefully with the house this year, I can get something back on taxes to dump in the Roth too. lol

[GregWeld]

As long as we're on "year end" thoughts…. Here's a "notion" that always kills me when I hear it.


A guy is looking over his portfolio -- he has new money to put to work. He AVOIDS buying the stocks that have gone UP…. Why? Because they've gone up!


Really??

So you're unhappy because they did what you want them to do?????? Explain that to me please…


I had said that I bought 500 shares of Twitter (TWTR) and that I would possibly increase this stake to 1000 total shares. I just bought the other 500 this morning. Why now? BECAUSE THEY'VE DONE WHAT I WANTED THEM TO DO --- THEY'VE GONE UP.


If you go back and look at the long term (3 plus years) charts -- You WANT them higher on the right than the left side! So if you use that logic -- then there's no way you're not going to pay more for the new shares than you did the old. (Averaging DOWN is a different story! Not to be confused with just building a position).


If you owned 100 at $40 a share -- and you pay $45 for the 100 new shares -- you still own shares at below the current market trade price. You now own 200 shares at $42.50 and the stock is trading at $45 What's wrong with that??

[bdahlg68]

Absolutely. Never be afraid to buy a stock that has gone up unless it would skew the % of your portfolio in that stock. Call it what you want - dollar cost averaging, averaging in, nibbling - whatever makes you happy - but it is one of the fundamentals of being a successful investor!

As long as we're on "year end" thoughts…. Here's a "notion" that always kills me when I hear it.


A guy is looking over his portfolio -- he has new money to put to work. He AVOIDS buying the stocks that have gone UP…. Why? Because they've gone up!


Really??

So you're unhappy because they did what you want them to do?????? Explain that to me please…


I had said that I bought 500 shares of Twitter (TWTR) and that I would possibly increase this stake to 1000 total shares. I just bought the other 500 this morning. Why now? BECAUSE THEY'VE DONE WHAT I WANTED THEM TO DO --- THEY'VE GONE UP.


If you go back and look at the long term (3 plus years) charts -- You WANT them higher on the right than the left side! So if you use that logic -- then there's no way you're not going to pay more for the new shares than you did the old. (Averaging DOWN is a different story! Not to be confused with just building a position).


If you owned 100 at $40 a share -- and you pay $45 for the 100 new shares -- you still own shares at below the current market trade price. You now own 200 shares at $42.50 and the stock is trading at $45 What's wrong with that??

[SSLance]

I'm sure this was probably covered earlier in the thread, but maybe things have changed since then...and it's something I'm looking at now so why not ask?

Who are you all mostly using for investment accounts these days?

I grew up in the investing world where you either paid hefty commissions on every equity trade or you paid a management fee quarterly to get the free trades. These days with Etrade, TD Ameritrade, and others doing free or very low cost trades...who is the hot ticket to use?

To me, if there were several houses that offered basically the same account fee structure, I'd be interested in the one that has the best\easiest to use research tools built into the online account.

[toy71camaro]

I'm sure this was probably covered earlier in the thread, but maybe things have changed since then...and it's something I'm looking at now so why not ask?

Who are you all mostly using for investment accounts these days?

I grew up in the investing world where you either paid hefty commissions on every equity trade or you paid a management fee quarterly to get the free trades. These days with Etrade, TD Ameritrade, and others doing free or very low cost trades...who is the hot ticket to use?

To me, if there were several houses that offered basically the same account fee structure, I'd be interested in the one that has the best\easiest to use research tools built into the online account.

I use ShareBuilder. I got free $ for signing up with my Costco account. Their Roth IRA accounts are free (ie. no monthly/yearly costs). Same with a regular account. Plus i get Market/Limit Trades at like $5.95. But if i "auto-invest", it will make the Market trade on tuesday for only $2. When i started, i was only doing a hundred bucks here, a hundred there, so $6 was nearly a 6% hit on my newly purchase stock. Thus the happiness for the $2 entry fee. But now i've learned to stick to at least $1k purchases to make it worthwhile.

I also have a Schwab Account. Mentioned earlier in this thread for its great research tools. But i dont have anything invested into that account. I opened it solely (at this point) for research.

[GregWeld]

I have accounts that are pro managed -- and accounts (the one I use here for expamles and showing off) at Schwab… and Fidelity.


I like Schwab because it costs me nothing - has great tools - is easy to use - and I have a branch right down the street if I need a check or to deposit a check. They also have good mobile tools.

One thing I would NEVER do is go with an individual to manage anything I have… the temptation is just too great and the stories are on TV every day… So stick with a commercial brokerage for all your transactions.

[SSLance]

Thanks everyone... I forgot about Schwab, they were one of the first low cost investment accounts to come along if I remember correctly.

I've got all of my current accounts with Merrill. When I was active in the market, I had my larger accounts in the "Unlimited Activity" plan which worked out pretty well. I dropped out of it when I went to cash.

If I start up again, I'd like to do it on my own mainly with stocks and ETFs so I need to find a way to make trades on the cheap. That ain't happening with a Merrill Account these days without being in one of their management plans.

[WSSix]

Vanguard and Fidelity for me. I started Vanguard on my own years ago. Fidelity came about through work and I've simply expanded my use of it from there.

[Sieg]

+1 for Schwab - There website is excellent and their mobile app is very good as well.

[GregWeld]

So with the latest news regarding China's ban on BitCoin.. Let's revisit my "investing 102" reasons for NOT wanting to plug this type of an "investment" or put more value on it other than the gambling hype associated with this type of an investment.


By my latest count -- most on here are relative newbs to investing or are complete investing virgins. Thus the reason for so many pages devoted to breaking down investing in it's simplistic form… i.e., saving some money - putting it to work - making it work for you. Compounding over time and ending up with some real money.


Most of you are just beginning and perhaps most have a main goal of retirement some time in the not too distant future. With a goal like that - gambling isn't the best way to get to that goal.

I'm not against BitCoin one bit (pun?)! I'm really not. If a guy is 20 or 30 something - has a great job - has 100K in his retirement account - isn't in debt up to his eyeballs… and wants to play with 5 or 10K trading BitCoins… I'm fine with that. Maybe a guy can score big and double or triple or quadruple his money and his 5 becomes 20! AWESOME! But what I think is closer to the "Investing 102" reader is that most are not there YET. And what I've spent an awful lot of time on in this thread is to try to get folks to recognize the difference between INVESTING and GAMBLING. To most - gambling means taking some pocket money and going to a casino for the night - if they win big - they buy dinner and have some fun. Sadly - most find out that they don't build these big casinos on the winners of the world. They're built with the losers money. The winners are for show - to suck the life out of the losers.

BitCoin saw a drop on Friday of 20% or more - 30% in some markets. Why? Because the Chinese government banned it. BOOM! 20 or 30% of your "investment" just got blown away. THAT IS WHAT I'M AGAINST! I'm not against the fact that you might get lucky and ride this bad boy to the top.

Here's what happens to many (most) investments like this….it can be flipping houses - in the late 90's it was dot.bomb investing… in Holland years ago it was Tulips… As the "winners" win -- more and more people decide it's time for them to pile on -- driving the price up -- which is a self-fulfilling vacuum sucking more people in driving the price higher - UNTIL - the bottom drops out. Do some folks make a killing?? Hell yes! Do most lose? Yep. The problem is that the only reason the price is going up - is because someone paid more than the last guy did… and as long as that's sustainable - everyone is good… but the minute the selling starts -- people can't get out fast enough. THE REASON FOR THAT is because nobody really wants to own the stuff - they just want the price to go up over what they paid! Thus the gambling part! When you buy - you're just gambling (betting/hoping) that tomorrow the price will be higher. You really own nothing. There's not a nickel of income produced. It's simply that MAYBE the price will go up.

A 20 or 30% overnight price drop is gut wrenching to most folks. Yeah it might go back up - THIS TIME - and when it does - it'll suck some more people in… but when is it the end? Who knows!

Most folks go to the casino and at some point they have a "gain"…. but by the end of the night - most have put all the gain back, including the cash they started with…

[GregWeld]

The questions repeated often in this thread is "win should I buy"? We're talking about people that want to try to pay .50 or 1.00 per share lower than current prices. OR maybe wait for that big 10% drop in the overall market. When you add in the fact that the purchase might be for 50 or 100 shares or less… and you do the math… we're not talking about a huge savings IF they get lucky waiting for the right time to get in. If during their wait, they miss a dividend payment - of .35 a share… we're talking about even less of a "score" by waiting for the best price.

Let's take this week… the market was dripping it's way down… so if a guy was waiting to buy he watches that and thinks -- ah ha! I'm brilliant! Then BOOM Friday we go up 200 points! Now they're all in a panic having "missed" the chance. Don't be that guy.

Steady wins this race… and it's not about the dollar or even two dollars per share price you're going to "make" buying low. That difference pales in comparison to the compounding over time. You're not going to be able to retire next week because you scammed the market for a buck a share this week. Put your money to work whenever you have the amount saved that you want to invest. Over TIME this will average your cost. 20 years from now you'll look back and what you'll see is a brilliant investor that just booked his trip to Hawaii… and paid for it with this months dividend checks. You'll never see the buck you saved by waiting to get in the market.

[GregWeld]

So remembering that when WE (I) or anyone else - mentions a particular stock in this thread -- nobody should take that as an indication to buy or sell. I use them for the investing 102 "thinking cap" --- not as a buy this or sell that.


I mentioned that I was particularly disappointed in my last couple of (INFREQUENT) McDonalds (MCD) visits… and that, in fact, I was selling my shares because I figure I'm just mister Joe Average -- and that if I'm disappointed - perhaps others are as well…

Remember that our goal is to always keep an eye on "fundamentals" and that, to me, doesn't mean I have to comb thru the annual statement looking for some foible… What that means to me is that if I own Home Depot (HD) and I stop going there because they're out of stock - or their prices aren't competitive etc -- then that should be a heads up for me. For me - that is a basic fundamental.

So with McDonalds -- I've tended to stop at a Starbucks (I own it) and get a good cup of coffee and one of their breakfast sandwiches… rather than McDonalds.

BUT --- HERE IS WHY I'M POSTING THIS….


When I check the ONE YEAR TOTAL RETURN on MCD… it's 13.5%… True we've had a strong stock market and a rising tide tends to float all boats. But that's still a pretty dang good total return for what should be a "steady eddie".

My point is -- that just because you "think" one way -- the numbers may in fact prove you wrong. So it's always wise to be diligent about your investments --- think about them --- and do just a modest amount of homework (research) to either confirm or deny your thoughts.

[GregWeld]

Sorry -- I forgot to include some info….


I had bought Starbucks (SBUX) because I like the place… and frequent their stores and buy their coffee for home brewing. Their Total Return for one year - 50.8%

I don't hold much of this - simply because of it's paltry 1.3% dividend… but remember that we have to look at TOTAL RETURN over just the dividend payout === because it's the total return that makes your money grow!!

[Sieg]

Altria Group, Inc. declared a quarterly dividend of $0.48 per share, or $1.92 annualized. The dividend will be payable on January 10, 2014, to stockholders of record on December 23, 2013, with an ex-dividend date of December 19, 2013. The annual yield on the dividend is 5.1 percent.
Ho Ho Ho!

[GregWeld]

And that my friends is how a guy makes his "money for nothing"... <stolen fair and square from the song>

[toy71camaro]

Ho Ho Ho!

Yup! That was a 9% increase over last year (they actually raised it for the 9/12 Ex Div date - 10/10 pay date). Almost a 10% raise. NICE!

That made my Yeild on Cost 6.3% woohoo

[GregWeld]

I'm so proud of you guys. Shows me you're learning how to make money and what it's all about! The daily gyrations don't mean much once they start sending you cash!

[GregWeld]

The guy that wrote this piece for SeekingAlpha must be reading my "blog" here….. HAHAHAHAHAHAHA


Okay -- there's some gobledigook in the middle of this with some charts - I skipped over because my eyes started to lock up… then I jumped over that part and kept on reading..


The big take away --- INVEST in good companies and forget about all the noise…


LANCE -- THIS ONES FOR YOU. Because I think you fit in the permabear camp. Thus costing yourself a chance at getting rich over time.


http://seekingalpha.com/article/1891461-these-3-ideas-can-jeopardize-your-investing-success?source=email_inv_inc_inv_str_1_3&ifp=0

[SSLance]

Perma-bear... lol... I love it. I read it, and I'm soaking it in...

Greg, I read your posts last weekend about MCD and SBUX and in particular how SBUX had a paltry dividend yet the total return was good because the stock price had grown.

I also read your posts back on 12/4 talking about year end market price fluctuations and what causes them.

Both of these scenarios in a way point to my feelings about the market pricing of stocks not really being tied to actual fundamentals or company performance, but more toward the line of supply and demand, what someone is willing to pay for said stock.

Sometimes market supply and demand affects a particular share price in a small way or for a short period, other times in a large way.

I think this is the major stumbling block for me. So many times over the years, I've done something a certain "right way" and been bit because of an outside element affecting a share price...and it has tainted my perspective.

I'm trying to deal with that now...that is why I'm participating in this thread. It's like therapy... ;)

Plus, I just received my $100 fee for each of our Roth IRA accounts. That pissed me off.

And I love hearing the other's success stories...please keep posting them up.

[GregWeld]

I think this is the major stumbling block for me. So many times over the years, I've done something a certain "right way" and been bit because of an outside element affecting a share price...and it has tainted my perspective.




Your stumbling block is that you're trying to make sense of a MARKET over which you have ZERO control.


Once you understand that investing in BEST OF BREED companies --- and the dividends they pay - and that you can get - over time - the dividends and the growth…. and that market fluctuations are just that - fluctuations… you'll become a better investor. HOWEVER -- you can NOT use trader mentality and be an investor. A trader is constantly seeking confirmation for their belief in whether or not the market is going "their way" (because they're betting - they're not INVESTING).

[SSLance]

That is a very astute observation Greg, I like the way you put that.

[GregWeld]

That is a very astute observation Greg, I like the way you put that.

The whole thread is about trying to make sense, and to get people to focus less on the noise and more on the long run. Long run is different than buy it and forget it… be vigilant… but vigilant with a longer term view rather than today - or next month.

When you INVEST in the very best companies --- it starts to take the fear away. I'm not worried about WalMart going out of business… or HomeDepot.. or Coke… or McDonalds. I AM fearful of my investment in FaceBook or Twitter… I don't know what that market looks like next year or the year after that. So I might want to put some play money in something like that - but FIRST I need to have trust in my core investments. When I've established that core -- the Altria type investments --- and those are adding to my savings with their dividend payments -- then I can seek a little higher return from some other more risky assets… Not big risks - but with BALANCE… to raise my overall return. Personally - I place an amount in a British Petroleum Prudhoe Bay Trust (BPT) that pays almost 12% currently… but it's OIL being pumped out of the ground… and they say there's plenty of it… however… it's still risky in my mind - because what if the pipe breaks or the pumps quit or they run out sooner than thought…. But I'm pretty secure with it. If you get my point. An 11.71% dividend raises my cash flow up pretty nicely -- with still sleeping well at night.

Now --- the caveat here - is that this is NOT a stock picking thread -- for that we need to do our own research --- pick our own stocks --- so that we know what and WHY we own them. I'm just tossing out a mindset and a way of thinking about investing. Not showing you or anyone else WHAT they should own. You might love Verizon and I love AT&T…. if you buy AT&T because I do -- that's not good enough --- because the first time AT&T hiccups --- you'll be swearing and kicking the dog and looking for an excuse to dump that POS stock. That's why I say to pick your own -- but pick your own based on the basic premise that you're going to INVEST -- and invest in GREAT COMPANIES rather than trying to hit the jackpot by next week.

People tend to buy when the market is hot and the first time it goes down they're selling (buy high sell low) and THAT is how people loose their asses. They wouldn't do that if they'd just invest in stuff they can trust - good market or bad -- they know they'll be okay.

[gearheads78]

Well I started step 1 this week. I opened an IRA and a ROTH at Schwab. I have to wait until my 401ks are rolled to the new accounts before I can join you guys on the road to retirement not living in a cardboard box.

[GregWeld]

Well I started step 1 this week. I opened an IRA and a ROTH at Schwab. I have to wait until my 401ks are rolled to the new accounts before I can join you guys on the road to retirement not living in a cardboard box.




AWESOME!!!!!!!

[WSSix]

Congrats! Just always make sure any retirement accounts get transferred from institution to institution through wire transfer or check made out to the next institution. NEVER have the money come into your hands when switching accounts. You'll get hit with taxes regardless of intent or how long it's in your hands.

[toy71camaro]

Awesome! Welcome to the crew gearheads78!

[gearheads78]

Yea I made sure. One account will be a direct wire transfer the other will be a check sent from Vangaurd to Schawab.

[GregWeld]

Lance ---


I - once again - am not pitching any stocks… I don't care what people choose to buy.. I just use stocks to make a point -- or for 'teaching' -- which in this case is what I'm trying to do for you.

Go to Google Finance - or some other website and pull up a 3 year chart of Altria (MO)…

What I want you to see is that this is a BORING STOCK --- it's Terbacky and booze… People smoke and drink - it's a sin stock. I don't care about that - I just want to make a living off them…

What I want you to SEE is that in 2011 they paid you .38 a share PER QUARTER to own the shares -- at the time (beginning of 2011) the share price was $25…. Today the share price is $38.10 -- but more importantly - without your having to lift a single finger -- they are now paying .48 per share per quarter.

This is a BORING STOCK -- the grocery store clerk is not talking about how they made a gazillion dollars last year trading it. Your friends aren't talking about it. But if you'd have bought it in January 2011 -- and held it -- your TOTAL RETURN would be 83%

Oh sure -- the guy that was lucky enough to have bought Netflix at the low - would have 300% this year.. but what are the odds that you would have been so lucky? I'll take that rising cash flow -- and the increase in my capital -- and sleep real tight. There's a ton of stocks out there that have done this… this is just one that I own (I own 25,000 shares of it…) and is pretty "typical" of the style/type of investing that I'm talking about as a core holding. People are going to continue to drink and smoke… can't stop that. Might as well make some money off of 'em. :thumbsup:

[SSLance]

Greg,

Just for giggles, I quickly looked back at Altria's 14 year history...and I'm seeing weird results. On yahoo finance, it shows the last split was April 97 3:1 and the share price at time after the split was somewhere around $40.00 (can't get the chart to zoom in for exact price on a date).

Google finance shows the share price was in the $10 range then in Feb 2003 where it jumped up to $37.62. I think the splits are screwed up on that chart.

The yahoo chart of Altria from 1997 to 2013 pretty much mimics my investing history of returns.

Lets say I had 1000 shares of Altria a $35-40 stock in 1997, it looks like MO paid anywhere from $1.00 to $3.00 a share per year during that 14 year period (more during the good times, much less during the bad times).

Two different ways to look at that period, if reinvesting or if taking the money to live off of.

If reinvesting, when it was paying $3.00 per share, you were buying back in at close to $80.00 a share, so you ended up with 37 more shares per year. In the $1.00 per year years, it looked to be about about the same, $1000 at $30 bought you 30 some shares a year. (all VERY rough numbers here mind you).

So for 14 years you added almost 500 shares...at todays $37 = about $18,000 return on $40,000 investment over 14 years... That's about 3% a year is it not? Please correct me if I'm wrong, I'm doing this very rough and very fast.

If you just took the dividend to live off of, in the beginning you made around $1200 a year, in the 2000s it went from $2000-3000 a year, then in 2008 the dividend shrunk back to around $1200 a year, today it would be back to $2000 a year. Figuring the ROI on this method is much more involved and I have to get to work so don't have time for it right now.

I'm not doing this to be pro or con Altria or anything else...this is just how I look at things. If any calculation I did here was wrong, please correct me. I'm not swearing any of it to be gospel as I did it very quickly (and I'm still not sure I trust the numbers as the two charts are very wonky against each other). Still pretty curious results to me though.

On one hand, 3% a year for that period ain't all that bad (if I figured it correctly). As a comparison I did a little over 4% over the same period with my total portfolio. (edit...that isn't an exact comparison as I cashed out in 2011 with a 4+ % ROI when MO was trading at around $26.00 per share) But still nowhere near the 10% a year that some like to use as a benchmark for market investing returns.

I know I know, figures lie and liars figure... ;) wish I had more time to spend on this exercise but I must get to work at my day job to earn my paycheck. You all are gaining on me, and drawing me back in...but maybe an exercise like this will at least help you understand why I still feel a bit tainted by the market. My time in the market was just real REAL bad timing in the grand scheme of things.

If someone corrects my findings above and shines a better light on MO, well...we'll just see. ;)

[GregWeld]

Altria (MO) split off Philip Morris (PM)… in 2008 When you take part of your company and split it off -- the value of the split off is shown in the stock price.


You REALLY need to get over all the analytics --- and learn what's important to making money and analysis never made anyone a dime. I'm really serious here .

What part of TOTAL RETURN don't you understand??

Just using Altria (MO) one year is 19% -- three year is 84% - five year is 240%


Do you really need any more analysis than doubling your money in THREE years or understanding a 240% total return in five??

[GregWeld]

Lance -- While you're busy calculating why you SHOULD NOT be investing -- I'll be out spending the $12,000 dividend check from MO I get in January.

[SSLance]

Altria (MO) split off Philip Morris (PM)… in 2008 When you take part of your company and split it off -- the value of the split off is shown in the stock price.

Well that explains part of the huge share price drop in 2008





You REALLY need to get over all the analytics --- and learn what's important to making money and analysis never made anyone a dime. I'm really serious here .

What part of TOTAL RETURN don't you understand??

Just using Altria (MO) one year is 19% -- three year is 84% - five year is 240%


Do you really need any more analysis than doubling your money in THREE years or understanding a 240% total return in five??



Hey, you are the one that told me to look at the charts, I just chose a different time period than you did is all. ;)

[GregWeld]

Well that explains part of the huge share price drop in 2008

Hey, you are the one that told me to look at the charts, I just chose a different time period than you did is all. ;)



That's true -- I accept full responsibility!


Really though -- you're still doing a lot of "thinking" and detailed accounting… and it's not that complicated… only if you make it that way. What I'm trying to show you is really how SIMPLE it is if you just stick to basics… in other words - did your capital grow and are you getting paid to hold/own the shares. THAT combo needs to have a TOTAL RETURN component --- and all the rest is just plain mumbo jumbo.

[96z28ss]

Lance,
Here is an article for you to read, he also has other good articles.
It started with $10k in 2006 and just kept the reinvesting the dividends.
http://seekingalpha.com/article/444051-retirement-portfolio-for-do-it-yourselfers-a-winning-combination-of-dg-stocks?source=email_portfolio&ifp=0

What you need to focus on is

Best of Breed stock
Dividend payouts
Growth or steady charts 5-10 year
Diversify

that's basically all you need to start, do your homework and buy.
Everything else, your thinking to much sitting on the side lines while everyone else is making :G-Dub:

[Vegas69]

Investments always come down to one thing, timing. You must put yourself in a position to take advantage when the opportunity presents itself. That means you are prepared to ride out the storms when the economy slows, stock market tanks, or the real estate bubble pops. An investment means that you are secure in your position and can wait for greener pastures to liquidate. If you can't, you have made a serious investing mistake due to your expectations. If there is one thing I've learned, almost everything is cyclical including investing. Can you capitalize when the timing is ripe? That's the million dollar question.

Greg always talks about it not being rocket science. It's the basic fundamentals that get you there. A goal and a plan to back it up. A well thought plan....

[GregWeld]

Lance --

November is NOT a great month for dividends -- the normal calendar quarterly months are better -- but I just want to show you some DIVIDENDS… This is from the account I use here for posting. I want to ask you if I care during the day what the share price is…

These are all solid companies - and the dividend is as reliable as clockwork (maybe an atomic clock). If I was re-investing these dividends - think about the amount of shares I'd be purchasing EVERY quarter - and by the end of the year think about not only would my dividends be increasing because I have MORE shares -- many of these companies have increased their payout as well - helping to compound even further.

So while you're busy figuring the percentage return on the current dividend -- what YOU ARE MISSING is that I might have bought these companies 5 or 6 years ago for half what they are trading at today -- and my ACTUAL dividend rate is double or triple the current published percentage. So maybe I paid $25 per share for AT&T back in 2009 when it was paying .41 a share per quarter and now I'm getting .48 per share per quarter. Suddenly the current 5.44% rate as quoted today is actually ME earning 7.68% today. Not bad and if you add in the capital growth.. well then I'm looking pretty good for the boring telco stock investment.






11/29/2013 Qualified Dividend SBUX
STARBUCKS CORP
$260.00
11/27/2013 Cash Dividend NTI
NORTHERN TIER ENERGY LP
$7,440.00
11/15/2013 Cash Dividend NNN
NATIONAL RETAIL PPTYS RE...
$8,100.00
11/14/2013 Cash Dividend KMP
KINDER MORGAN ENERGY LP ...
$13,500.00
11/07/2013 Cash Dividend HYG
ISHARES TRUST IBOXX $ HI…
$4,601.62
11/01/2013 Qualified Dividend T
A T & T INC NEW
$9,000.00
11/12/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$2,961.68



I should add that JNK and HYG dividends are paid MONTHLY not quarterly. But my point is that when you're looking for investments… dividends are not a bad way to go = and over time - they get better and better. Obviously I have some serious share counts in some of these in order to get these types of dividends - but even if a guy retired with 1/10th of what I'm showing here --- and he gets SS on top of this… he can live decently in retirement. Especially if the monthly bills are under control.

[SSLance]

My only reason for posting the analysis of MO Friday was to see what my return might have been back when I was in the market if I had owned MO.

Several have accused me of thinking too much by doing this exercise, but at the same time all suggest that each of us do our own homework and research then decide what to invest on based on said research.

For the record, my FA had me in the "dividend income" plan in the 2006-2008 period, and I understand it very well. What I experienced was in lock step with what MO went through. A stock in their "dividend income" plan would cut it's dividend (for whatever reason) like MO did in 2008 and not only would the share price plummet, but at the same time they'd decide the stock didn't fit the parameters of the plan, so they'd sell it and go into another stock. The net result typically was a capital loss on the sell wiping out the return made up until that point.

I haven't gone back and looked at it since, and I haven't seen where anyone else has corrected my numbers from Friday...but if they are true, how can one NOT include the 3% a year ROI on the stock for the 15 year period in their analysis?

Sure, I agree, the 5 year history numbers look fantastic, but doesn't just about every stock's 5 year chart look great. It's because they start at the bottom. The 10, or 15 year charts look much different... In my opinion one can not claim to disregard "timing the market" yet cherry pick the time periods to show return history of a certain stock or strategy.

Also for the record, I am not using this example as a reason to stay out of the market, I'm using this research as a way to find my own path for investing for the future... I agree with much of what has been said in this thread, one has to be confident and comfortable with the investment choices that are made. Having been there, done that for a significant period of time...I'm now trying to find a new way to be confident and comfortable...

[GregWeld]

only reason for posting the analysis of MO Friday was to see what my return might have been back when I was in the market if I had owned MO.

#1 - MO is a bad choice to use since it not only went thru the Great Recession but it also split off Philip Morris - which you keep forgetting in your analysis… Everyone that owned MO - got a nice chunk of PM in ADDITION to their shares of MO. I'm not wasting my time going back to research and show you how that took place and what that looked like. I don't mean that in a mean spirited way -- but stuff like that takes time… and I'm just not willing to piss away my time trying to show you how wrong you are (about that particular company). In fact - I never read your analysis - nor have I gone back to check on it's facts and figures. I just really don't care. Again - not mean spirited in that statement. I own a ton of that company and it makes money for me every quarter and I'm EXTREMELY HAPPY with that investment over a very long period of time. I - in fact - sold the Philip Morris (PM) shares I picked up because I didn't see a need to own both companies. I used to own Verizon AND AT&T - and likewise did the same there - I sold off Verizon for no other reason than I'm a long term AT&T customer.




Several have accused me of thinking too much by doing this exercise, but at the same time all suggest that each of us do our own homework and research then decide what to invest on based on said research.



I think what you're being "accused of" -- which really isn't what anyone is trying to do -- is trying to show you that you're making "investing" too complicated. It's NOT complicated. A person can make it that way if they choose to… but I'll repeat for all those that read these posts… INVESTING is about buying good stuff - believing thru thick and thin that they own good stuff. And letting TIME compound their money. WE ARE NEVER TALKING ABOUT THE GYRATIONS ALL MARKETS GO THROUGH DURING A TIME PERIOD. We are trying to learn that when looking at a longer term picture - that while HELL YES things go down… And we need to learn to live with that because we as ordinary humans will never foresee that "dip" --- and we'll never be back in the market when it rises. History will teach you that had you done nothing - except to let it ride - that you'll be made whole again and then some. And if you're reinvesting the dividend - you'll come out even better.



the record, my FA had me in the "dividend income" plan in the 2006-2008 period, and I understand it very well. What I experienced was in lock step with what MO went through. A stock in their "dividend income" plan would cut it's dividend (for whatever reason) like MO did in 2008 and not only would the share price plummet, but at the same time they'd decide the stock didn't fit the parameters of the plan, so they'd sell it and go into another stock. The net result typically was a capital loss on the sell wiping out the return made up until that point.


MO spilt off ANOTHER dividend paying stock -- THEY DID NOT CUT THEIR DIVIDEND -- THEY GAVE YOU ANOTHER DIVIDEND PAYER. Let's be factual.

YOU might have had other dividend paying stocks that cut or quit paying their dividend. I did too. But that is why we don't have all our eggs in one basket. If you had kept every investment you owned to the 5% rule - then that "loss" of dividend would have been very very small to your overall portfolio. And my guess is - that if you were actually in the Best of Breed companies that we're taking about investing in… you'd be very very happy with your overall investments right now. But we can't discuss your individual investments since we don't know what they were.



haven't gone back and looked at it since, and I haven't seen where anyone else has corrected my numbers from Friday...but if they are true, how can one NOT include the 3% a year ROI on the stock for the 15 year period in their analysis?



Because nobody is going to waste their time trying to disprove something that nobody cares about. You're MO example was completely flawed by not factoring in the Philip Morris (PM) spilt.



, I agree, the 5 year history numbers look fantastic, but doesn't just about every stock's 5 year chart look great. It's because they start at the bottom. The 10, or 15 year charts look much different... In my opinion one can not claim to disregard "timing the market" yet cherry pick the time periods to show return history of a certain stock or strategy.


Again - you're choosing to argue "semantics" rather than a larger picture view. The point of going back to look at charts is to help choose those companies that have a track record of RISING OVER TIME -- and RECOVERING OVER TIME their share prices. It's "reassurance" rather than hard and pat fact. You're trying to disprove each investment. I choose and have tried to guide the newb investors here - that what we're looking to do is to see that by and large - stocks - over time - go up. They are stair steps to be sure - and we need to realize and acknowledge that - but if overall - you begin to SEE - that over time - prices have advanced - despite the occasional wind sucking periods. Some websites only go back 5 years -- not everyone has the ability to go out and find "since the beginning of time" charts. This is INVESTING 102… it is NOT a primer on how to do every last thing regarding every stock ever in the history of time. Nor is it a primer on how to calculate the very last percentage point during the last 15 years.

It IS a primer on big picture thinking - and trying help people past their fears of something they might not fully understand - or have NEVER understood, i.e., "the stock market" and kinda sorta how investing in it works.




for the record, I am not using this example as a reason to stay out of the market, I'm using this research as a way to find my own path for investing for the future... I agree with much of what has been said in this thread, one has to be confident and comfortable with the investment choices that are made. Having been there, done that for a significant period of time...I'm now trying to find a new way to be confident and comfortable...




Sorry --- I can only read into your posts what I see. And to me - and perhaps others (from reading their posts to you) that staying OUT of the market is exactly the confirmation you're searching for.

What we're all trying to tell you -- is that while you're busy figuring - the rest of us are busy making money. Frankly - nobody gives two hoots if you're in or out… and I personally have given up trying to lead you by the nose. I really want to -- but I'm only going to spend so much time (already past that point) of trying to prove to you that you're "method" is a losing battle and that had you just done what I've tried to show people here… you'd have a different outlook/outcome.

There is absolutely NO QUESTION in my mind - that I will suffer "market losses" -- on paper -- My net investment will most likely not be worth what I paid. BUT I also absolutely know that I own some of the greatest companies in the world (you or anyone else here has only been shown a very small fraction of my personal investments)… and that at 60 years old - I plan to live long enough that those investments will continue to grow and provide for me. I won't have REAL LOSSES because I won't sell them and therefore actually suffer the losses. That's for losers. My plan is to be a winner. To do that - I have to stay with my investments and continue to collect the dividends (called getting paid to wait - what are we waiting for? For the market dip to come back and start going up AGAIN as it has always done).




HERE'S YOUR ANALYSIS HOMEWORK.


Show me that owning a home is "profitable". In other words -- take a house that you paid $X for in 19XX year -- and had a 30 year 5% mortgage - and factor in hard costs of upkeep - and a minor $50K remodel - and property taxes (that's an actual hard cost of carrying that "investment")…

What this will look like is that some times your "investment" was okay - and sometimes it wasn't keeping up with inflation -- and what I will tell you - is that all the time you owned it - and you finally sold it for more than you paid for it (that's way different than actually making a profit on it)… that whatever you sold it for - the new house was also equally inflated. So you traded dollars - you didn't actually come out ahead unless you sold in San Francisco and moved to Minot ND.


I own a couple apartment complexes -- let me assure you there were times when they SUCKED… Rents were down (especially when the banks would give loans to buy a house for free) - and we had to improve them just to keep tenants. BUT these pay for themselves and spin off cash flow (like dividends) and if and ever I get ready to sell -- they'll be worth more than I paid for them. Maybe. And if they just hold steady - then they still pay me every quarter. And the idiots that rent make my mortgage payment -- so what's not to like? Point is -- real estate was a HORRIBLE investment during the great recession. Hey! Maybe that's why I held on to 'em.

[GregWeld]

My post was too long…. so here's the last paragraph.








Think about the market as the NFL -- over time - there are teams that consistently suck -- you might live in that town and be a fan - but dude - your team sucks… always… but you still like football in general. The thing to do in the market is to pick "teams" (stocks) that are consistently DECENT -- not stars today and bottom of the pile next year…. we want to pick stuff that stays in the hunt or are always contenders. Since nobody can predict which team is going to the Superbowl… Lets pick 10 teams that have shown they are always in the hunt. Maybe none of them get to the Super Bowl this year… but maybe we get 3 teams in the playoffs… Hey! I'm okay with that. I need to go back over time to look at their history of W's vs L's… and use that to try to confirm or deny why I might pick them. Is it always 100% correct - hell no. Once in a while some team comes from the depths of despair and kicks everyones butt.. OH WELL…. I'm to looking for 100% perfection on every team - I just want guys that I can stick with even when they suck… 'cause I know in my heart that they'll turn it around (that the ownership - rather than the coach this season - the OWNER has to fire people and get the right mix - so really I'm betting on the ownership). So I'm betting on the MARKET to get it right -- and that will float all my boats… and my job is just to pick a mix of pretty decent stocks I can live with. All the analysis in the world will NEVER get me 100%. Sometimes I might have to dump a team that just can't get it together I'm okay with that. But I need to look longer than just this weeks game.

[GregWeld]

I have to add this thought while my little finnies are typing.


What people have to get their head around is that the market is ALWAYS going to go up and down. But if you have a market like this year - it's up 13% or whatever (I don't honestly know 'cause I don't really give a ****)… and next year it only goes up 5%…. and then it's down 4% and then it's up 9% (the market average over time)… YOU'RE GOING TO BE AHEAD… and if you think about that's just capital gain…. you're up way more than that if you factor in a 5% dividend.


That's why I like to simply look at TOTAL RETURN over time…. It's not any more complicated than that. I want to double my money about every 5 to 7 years… even if I have to suffer a downturn in between. I can only use history as a GUIDE - it's not a guarantee of the future. I just have to have some trust that the future will be SIMILAR to the past.

[GregWeld]

Altria (MO), maker of cigarettes and other tobacco products, shifted all its ownership of Philip Morris International to shareholders. If you owned Altria on March 19, 2008 you were given shares of Philip Morris International on March 28, 2008.Shareholders received one share of Philip Morris International for every share of Altria they owned.



Lance --- Go back and refigure your MO scenario If you'd just bought them the first day they traded as separate companies (because we know those costs and dates).


We know Altria closed at $22.20 on March 31,2008 the first trading day after PM was split off. That day, Philip Morris International closed at $50.58. The value of the two stocks together on that date was $72.78

Today -- the two stocks combined trade for $122.34


In March of 2008 PM paid .46 a quarter -- today it pays .94
In March of 2008 MO paid .32 a quarter -- today it pays .48

So, just quickly -- since 2008 you had a cost basis of $72.78 and you're now picking up a 1.42 per quarter or $5.68 per year. The dividend is now paying you 7.80% based on your cost. AND you have a $49.56 unrealized long term capital gain. That's a 68% capital gain so far.

What part of that is hard to grasp? :lol: :idea:



5 year TOTAL RETURN on PM --- 152%

5 year TOTAL RETURN on MO --- 229%


I don't know - maybe it's just me…. The way I FIGURE IT… it might be part of why I'm sitting pretty and retired and running my race cars and hot rods… (forget that we were LUCKY AS HELL to begin with - I still have to manage that).

[Vortech404]

I transferred a portion of my holdings in my 401k account to more of a self managed account. I purchased 7 stocks. VZ,KMP,PFE,NU,MO,KO,PG.

I went from 0 dividends to $2,000 annually I love seeing the shares climb on there own. Hey you got to start somewhere.All dividends reinvested.

I also opened up a Roth for Me and my wife with Scottrade. I bought a few shares of JNJ in hers and a few CVX in mine. Whats cool with the Scottrade account is that you can buy a totally different stock with the dividends.It doest have to go back into the same stock.Will continue to diversify those.

Also got my brother to switch his account also.His first 3 stocks were KO,KMP,KMB. So this thread has helped my whole family. Thank's for taking the time to get us going.

John

[GregWeld]

I transferred a portion of my holdings in my 401k account to more of a self managed account. I purchased 7 stocks. VZ,KMP,PFE,NU,MO,KO,PG.

I went from 0 dividends to $2,000 annually I love seeing the shares climb on there own. Hey you got to start somewhere.All dividends reinvested.

I also opened up a Roth for Me and my wife with Scottrade. I bought a few shares of JNJ in hers and a few CVX in mine. Whats cool with the Scottrade account is that you can buy a totally different stock with the dividends.It doest have to go back into the same stock.Will continue to diversify those.

Also got my brother to switch his account also.His first 3 stocks were KO,KMP,KMB. So this thread has helped my whole family. Thank's for taking the time to get us going.

John


Great to hear John!!!


Think about that now for a minute! You're now saving $2,000 a year for doing absolutely nothing and if you're saving on top of that === that's going to compound big time!

Send me a postcard from Hawaii when you're there playing golf the week you retire. HAHAHAHAHAHAHAHAHA


I wonder to myself every day if anyone is actually reading, or if they are, are they seeing some success with any of it. So it's heartening to hear that someone is!

[toy71camaro]

I wonder to myself every day if anyone is actually reading, or if they are, are they seeing some success with any of it. So it's heartening to hear that someone is!

I check it multiple times a day. Trust me. I'm reading. Seeing the differences of opinion is actually nice, it re-iterates some of our lessons learned into a new way of saying it.

:)

<the silent one> lol

[glassman]

^^^^^^^^:thumbsup:

[sik68]

I wonder to myself every day if anyone is actually reading, or if they are, are they seeing some success with any of it. So it's heartening to hear that someone is!

I read and learn from every post!

I built a spreadsheet to track my dividend earnings. I also compare it to my monthly expenses... The dividend payouts are only ~5% of my expenses now, but my goal is to always increase that % from here on out.

[GregWeld]

I check it multiple times a day. Trust me. I'm reading. Seeing the differences of opinion is actually nice, it re-iterates some of our lessons learned into a new way of saying it.

:)

<the silent one> lol

^^^^^^^^:thumbsup:




Thanks guys.


I have to tell ya --- that what I've been trying to do -- is to "dumb down" the entire process of thinking about "investments". I run around with some pretty smart people - professionally… Doctors/lawyers/CEO's etc… and they're the WORST investors ever (in the universe) and the reason for that - I've discovered - is that they all try to make too much of it. The Doctor goes to his accountant to try to figure out all manor of "tax" avoidance investments. The lawyer tries to take the opposite side of every issue -- that's his training -- I get it. The CEO's are too busy trying to build their futures with all manor of deferred compensation - and Options and such.. that mostly all depend on the current company doing exceptionally well (i.e., going public).

They all sit at my dinner table and ask me about my investments. And what I keep trying to tell them is that what I concentrate on is MAKING MONEY in a very simple fashion. I don't try to invest to avoid taxes… in fact… I pay a fortune in taxes! Why - because I'm making an even larger fortune on my investments. Taxes are only a small percentage of what I make. To me - the more taxes I pay - the more I've made! And while I understand Options and deferred income -- that's putting all your eggs in one basket - a big no no!
Lawyers are just lucky that they make partner level and never retire so are always on the payroll. They stop "practicing" but are still on the board of their firm etc…

The theme is -- too much thinking and not enough doing… and keeping it simple and making some money. You want to make money in real estate - you can't do that living in the place -- you have to buy INCOME property. You let the tenant pay the mortgage - and give you a bit of cash flow… and down the road it's either all paid for and you pocket the "rent" (which after 20 years is like dividend increases - it should be far higher than when you started!)… I don't care if that's houses - apartments - or commercial property. The premise is the same. Someone else paying your debt - and paying you. OVER TIME this works out real well.

Stocks are the same -- You put your money into great stuff -- get paid while your price grows.. eventually it's paying you nicely -- and or you can sell some when you need to not because you have to. It takes TIME to get to that point - and it takes you putting your money in on a consistent basis…

Some guys invest TOO MUCH --- and then they're forced sellers at the wrong time. When do people get laid off? When business is crappy! When is the market crappy? When business is bad! If you've put every dime into the market -- and you have too much debt service -- and you have no cash… you become a forced seller and lose your butt! So putting too much into the market -- while at the same time having too high of a lifestyle -- can defeat everything you've worked for.

Some guys - my friends - try so hard to talk themselves into so much BS style investments because "they don't pay any taxes" -- or they invest in "annuities" (that is NOT an investment and you'll never convince me otherwise!). What I say to them is -- they want to abdicate their future to someone else rather than taking control -- keeping it real simple -- and just banking the proceeds.

When I show them I make 3 or 4 times what they make - and I don't do anything to earn it…. they're always shocked. Then they always say to me -- ah ha! Now I understand why you're always going to some race somewhere -or some car show - or some trip… YEAH! Because I keep it simple… I have all my money in great stuff that pays me to do nothing. How hard is that? :lol: :lol: :lol:

[GregWeld]

I read and learn from every post!

I built a spreadsheet to track my dividend earnings. I also compare it to my monthly expenses... The dividend payouts are only ~5% of my expenses now, but my goal is to always increase that % from here on out.



AWESOME!


How much time do you have before retirement??

[gearheads78]

I wonder to myself every day if anyone is actually reading, or if they are, are they seeing some success with any of it. So it's heartening to hear that someone is!

I watch this thread and spend my nights reading and learning on seekingalpha now. Its really the only thing other that cars that has ever grabbed this much of my attention.

[sik68]

AWESOME!


How much time do you have before retirement??

I'm 30, and we're on a single income right now as my wife is just finishing up school. once we go dual and move out of SF, that ratio should be much easier to increase.

[gearheads78]

I'm 30, and we're on a single income right now as my wife is just finishing up school. once we go dual and move out of SF, that ratio should be much easier to increase.
Man I wish I knew this stuff at 30 10 years ago. I would be so far ahead of the game right now.

[toy71camaro]

I read and learn from every post!

I built a spreadsheet to track my dividend earnings. I also compare it to my monthly expenses... The dividend payouts are only ~5% of my expenses now, but my goal is to always increase that % from here on out.


Awesome.. I've got spreadsheets tracking my income, expenses and then my retirement account (i dont have any non-retirement investment accounts). I need to add that to my list, to see how much my investments spin off to make up my expenses. I'm a far cry from 5%, Im sure of that. 3/4 of my retirement is still in a 401k that doesnt only sorta pays dividends, but, i cant "see them". Unlike a normal stock, the funds I'm in I dont get really daily updates on their performance. I mean, i can see when the open/close, and my total amount invested in it. But not the # of shares, not when it pays me a dividend (some i have DO pay them), etc.

I should be done with my Emergency fund soon, and can start getting back into investing into my future. My goal is 10% of my income into a non-retirement account and 10% into a retirement account (Roth).

[GregWeld]

I watch this thread and spend my nights reading and learning on seekingalpha now. Its really the only thing other that cars that has ever grabbed this much of my attention.


Investing is part of my daily routine - even though I don't often move money around - meaning - I'm not selling and buying and trying to figure out the next greatest investment - I still LOVE to know what's going on. I think it's like car stuff -- if you're not reading and going to shows etc - you completely miss the TRENDS. I think the reason that it's FUN is that I'm not stressed out about this stock or todays "action". It's more just liking the action but at an arms length.



I'm 30, and we're on a single income right now as my wife is just finishing up school. once we go dual and move out of SF, that ratio should be much easier to increase.


Okay -- so you've got 60 years of growth and dividend collecting.

Somewhere in this monstrosity of a thread… there's real math showing that if you put away 2,000 a year from 21 to 31… and at 31 you stopped adding to your pile -- you'd have a million bucks at retirement. At 31 you need to add MORE than that and you'll have to do that until you retire. Not a big deal - because you're at least reading and learning and planning. Maybe you'll get to retire EARLY. Gotta like that plan!



Man I wish I knew this stuff at 30 10 years ago. I would be so far ahead of the game right now.



Yeah --- as above. TIME is the big deal. I've shown it before but here's a quicky…



2,000 in 7 years is 4,000 in another 7 years is 8,000 in another 7 years is 16,000 in another 7 years is 32,000 in another 7 years is 64,000 ----- but here's the kicker in just another 7 years --- it's 128,000


It's that LAST 7 year period that really made all the difference in the world.

SO if you're starting late (it's never too late!) Then you have to take the years off the beginning. In other words - to get to the 128,000 if you only have 21 years to retirement - you have to put away 32,000 and so on.

Your money quits compounding at retirement - because that's when you switch from money growth - to INCOME to live on. Like me - I save absolutely not one penny -- and some years I might spend more than I make net. But I'm a little different story and have been luckier than most.

[GregWeld]

I should be done with my Emergency fund soon, and can start getting back into investing into my future. My goal is 10% of my income into a non-retirement account and 10% into a retirement account (Roth).



Albert -- that might seem really painful to many folks -- but think about how painful it's going to be if you DON'T do that!


So many play now - thinking they'll somehow take care of everything later.


Like I said to a buddy the other night --- Dude! If it costs you 150K a year to live right now - and you want to live the same in retirement…. that's the income off 3 MILLION DOLLARS! He stared at me like a deer in the headlights. Given that he's 62… I'm thinking he might be in a dark tunnel and there's a train on the other side.

[SSLance]

Altria (MO), maker of cigarettes and other tobacco products, shifted all its ownership of Philip Morris International to shareholders. If you owned Altria on March 19, 2008 you were given shares of Philip Morris International on March 28, 2008.Shareholders received one share of Philip Morris International for every share of Altria they owned.

Lance --- Go back and refigure your MO scenario If you'd just bought them the first day they traded as separate companies (because we know those costs and dates).

We know Altria closed at $22.20 on March 31,2008 the first trading day after PM was split off. That day, Philip Morris International closed at $50.58. The value of the two stocks together on that date was $72.78

Today -- the two stocks combined trade for $122.34

In March of 2008 PM paid .46 a quarter -- today it pays .94
In March of 2008 MO paid .32 a quarter -- today it pays .48

So, just quickly -- since 2008 you had a cost basis of $72.78 and you're now picking up a 1.42 per quarter or $5.68 per year. The dividend is now paying you 7.80% based on your cost. AND you have a $49.56 unrealized long term capital gain. That's a 68% capital gain so far.

What part of that is hard to grasp? :lol: :idea:

5 year TOTAL RETURN on PM --- 152%

5 year TOTAL RETURN on MO --- 229%

I don't know - maybe it's just me…. The way I FIGURE IT… it might be part of why I'm sitting pretty and retired and running my race cars and hot rods… (forget that we were LUCKY AS HELL to begin with - I still have to manage that).


Boom!! Now that wasn't so hard, was it? :waveflag: :D

I figured that MO holders got something out of the spin off, but hadn't looked into exactly what. Looks like those that held onto PM afterwards did pretty well also.

Today should be one of my business's busiest days of the year (hopefully) and this week one of the busiest weeks as well...so I won't have time to look around much this week. I have caught up on reading the thread though and am soaking it all in.

This week will be more about making money the other way though...for me anyway. Keep up the good work everyone, love reading the success stories.

I'm off to pack and ship some Christmas gifts... :cheers:

[GregWeld]

Have a Merry Christmas!


We'll all still be here when you're done shipping stuff!!







Boom!! Now that wasn't so hard, was it? :waveflag: :D

I figured that MO holders got something out of the spin off, but hadn't looked into exactly what. Looks like those that held onto PM afterwards did pretty well also.

Today should be one of my business's busiest days of the year (hopefully) and this week one of the busiest weeks as well...so I won't have time to look around much this week. I have caught up on reading the thread though and am soaking it all in.

This week will be more about making money the other way though...for me anyway. Keep up the good work everyone, love reading the success stories.

I'm off to pack and ship some Christmas gifts... :cheers:

[toy71camaro]

Albert -- that might seem really painful to many folks -- but think about how painful it's going to be if you DON'T do that!


So many play now - thinking they'll somehow take care of everything later.


Like I said to a buddy the other night --- Dude! If it costs you 150K a year to live right now - and you want to live the same in retirement…. that's the income off 3 MILLION DOLLARS! He stared at me like a deer in the headlights. Given that he's 62… I'm thinking he might be in a dark tunnel and there's a train on the other side.

Well, I started fairly early, an old store manager that i worked at when i was 19 suggested i start a 401k ASAP (they'd just changed the laws so i would be eligible). His quote stuck in my mind (every 7 years it doubles, if you start now, think about those extra last 2 doubles you'll get!!). Anyhow... If i'm so lucky as to save $5k a year going forward, investing that and earning 7% rate of return, by the time i'm 65 i "could" have upwards 1.5MM. BUT, I hope to be earning MORE than a measly 7% and contributing MORE than the $5k/yr. :)

[GregWeld]

Well, I started fairly early, an old store manager that i worked at when i was 19 suggested i start a 401k ASAP (they'd just changed the laws so i would be eligible). His quote stuck in my mind (every 7 years it doubles, if you start now, think about those extra last 2 doubles you'll get!!). Anyhow... If i'm so lucky as to save $5k a year going forward, investing that and earning 7% rate of return, by the time i'm 65 i "could" have upwards 1.5MM. BUT, I hope to be earning MORE than a measly 7% and contributing MORE than the $5k/yr. :)



Just know that I'm bowing to you!!!


'Cause that right there is awesomeness!


The reason for setting the bar LOW (the 5% I always use) is so that there is an upside surprise rather than a fudge it factor that is just plain BS. The AVERAGE market is around 9 to 11% -- which at that rate - doubles money every 5 years rather than 7…. but if you count on that and save that way - you'll end up short. Better to end up way better than way short!!

[toy71camaro]

Just know that I'm bowing to you!!!


'Cause that right there is awesomeness!


The reason for setting the bar LOW (the 5% I always use) is so that there is an upside surprise rather than a fudge it factor that is just plain BS. The AVERAGE market is around 9 to 11% -- which at that rate - doubles money every 5 years rather than 7…. but if you count on that and save that way - you'll end up short. Better to end up way better than way short!!


Thanks Greg! I'm learning that I really dig this kinda stuff. lol

[toy71camaro]

On a side note. Today was dividend payday for me and my fellow MCD, KO and ED owners. Woot!

[WSSix]

woot! I got paid today too. :G-Dub:

[96z28ss]

On a side note. Today was dividend payday for me and my fellow MCD, KO and ED owners. Woot!


All ready this month I got paid from F CHD PSX COP OLN ED MCD KO
then on the 19th I'm getting an AIG dividend.

Keep them coming.

[GregWeld]

You guys crack me up!!


Don't ya just love getting money for nuthin'????



Glad this is working out okay for all of you!! Merry Xmas!

[gearheads78]

Everyone read part 1 and part 2

By far the best thing I have seen so far about the type of investing Greg has been beating in to our skulls.

http://seekingalpha.com/article/290289-retirements-4-rule-why-mr-mrs-income-dont-need-it-part-1

[GregWeld]

Everyone read part 1 and part 2

By far the best thing I have seen so far about the type of investing Greg has been beating in to our skulls.

http://seekingalpha.com/article/290289-retirements-4-rule-why-mr-mrs-income-dont-need-it-part-1




GREAT ARTICLE RICHARD!!


And yes -- I probably could have written that myself - EXCEPT for the BONDS portion. I don't think anyone should ever be in bonds. They suck just as bad as mutual funds. They're a fixed rate depreciating investment in my opinion. I let my guy talk me into buying a laddered portfolio of bonds (4MM worth) and I couldn't sleep at night owning them (seriously) - I finally said FT and sold 'em all (for a gain)… I can't tell you how happy I was that day. But I digress.

The key is - and has always been -- INCOME -- and TOTAL RETURN. That's how you get success. While we'd love to be the guy that owned Microsoft from the beginning (us)… That's the lottery way to success… not THE way most (all?) folks are going to be able to retire.


Here's the thing I've kind of avoided discussing -- but it is the elephant in the room… so here goes.


If you're in a situation RIGHT NOW - where you're struggling (REGARDLESS OF INCOME LEVEL) to do everything you want to do and pay all your bills etc…

WHAT DO YOU THINK THAT'S GOING TO LOOK LIKE WHEN YOU'RE 65 AND OUT OF WORK?

So if you're in that position now… then something needs to be done to get yourself financially healthy NOW… so you can start to prepare for later.. 'cause later is coming up pretty dang fast.

In years past - people didn't live as long as they do now. 30 years ago if you had a heart attack - dude! You died! Now? It's no biggie… So living to the late 80's or 90's is really a pretty reasonable expectation. None of us wants to live under a bridge.

I've been retired for over 20 years now… and that article talking about inflation etc -- that's REAL LIFE and there's nothing you can do about it! My first BMW cost $7600 -- that same car now is $60,000. Yeah I can buy something else -- but is that how you want to live or see yourself living? Ya drove a BMW all your life and now you HAVE to buy a YUGO… Not me! I'd rather drive a Chevy ALL OF MY LIFE…. if that's what it takes then that's what it takes. That to me is a better overall life.

Just talkin' here…. the "you" is anyone reading… and if it's "you" - "you" should be scared and taking some actions to better your situation. It doesn't get easier - it gets harder… So just get 'er done!

[GregWeld]

Halfway thru the month…. I maybe can pay my gas bill! Ya think? LOL


12/16/2013
as of
12/15/2013 Qualified Dividend ED
CONSOLIDATED EDISON INC
$3,075.00
12/16/2013 Qualified Dividend KO
COCA COLA COMPANY
$2,800.00
12/10/2013 Qualified Dividend CVX
CHEVRON CORPORATION
$3,500.00
12/10/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,020.24
12/06/2013 Cash Dividend HYG
ISHARES TRUST IBOXX $ HI…
$4,500.14
12/02/2013
as of
12/01/2013 Qualified Dividend WFC
WELLS FARGO & CO NEW
$6,000.00
12/02/2013 Qualified Dividend F
FORD MOTOR COMPANY NEW
$1,500.00

[GregWeld]

As long as I'm posting… again… I know! I know! But I keep having thoughts about stuff and I want to share with you all!



Once again - the caveat! This is NOT a stock recommendation thread nor am I recommending this stock. It's just an EXAMPLE of my way of thinking.


As above (post showing dividends) - it's obvious I own shares of Wells Fargo Bank (WFC) -- which is funny because I don't bank there… I bank with Bank of America (BAC) and usually I try to own stuff that I actually use/shop/buy/know etc. But in this case BAC had (IMHO) too many issues with their lending practices…


Here's the deal -- I was "early" back into a "banking" (financials) investment… because it was obvious to me that the housing issues were being cleared up… and business and housing were picking up… AND part of that point is that I'm paying attention to what I "feel" and read about… and that's all part of investing. You guys are trying to TIME the market by scamming a stock down .50 a share on a sell off day…. I'm trying to be 6 months "early" into an investment IF - big IF - I'm clever enough to see it coming..

Okay - back to my bigger point. I hate low dividend payers --- under 3% just ain't going to get 'er done… and when I bought (scaled into!) WFC -- it paid even less than that! But I didn't buy into it UNTIL IT DID RETURN TO PAYING A DIVIDEND --- and it has a HISTORY of paying a decent dividend - so I'll look back into the Board of Directors and figure that is going to be the history going forward as soon as the Gov let's em -- and they think they can afford it….. BUT what I was really looking for is to be in it LOW --- and have them INCREASE the dividend payout over time -- even though to the NEW BUYER (Current price) that div % might still calc out "low" --- it's rising for me on my cost basis…. AND as they raise the div -- the stock will also rise --- for what?? FOR TOTAL RETURN.


ONE YEAR TOTAL RETURN?? 35%


So can we take "only" earning under 3%……. Well yeah ---- if it works out that the share price is going to make up the difference --- AND you think they'll increase the div over a relatively short amount of time (couple years?).

Again -- just sharing the way I think - and the way I try to keep my hat on when I'm looking around for investments. I'm "fluid" -- that's not TRADING -- but it is trying to stay on top of the market. Because like Crammer says -- there's always a bull market somewhere.

Now - let's be real -- I can write about this NOW because it worked out. But that's what I always tell you guys -- ya don't bet the farm -- you just scale in -- up or down sometimes - and sometimes they work out. Not always - and that's when you need to revisit your "thesis" and be fluid. It's okay to be wrong sometimes.

[mdprovee]

My finance guy, Laura's boss, just told me we are up over 17% for this year. Couldn't have done it with you Greg, thanks.

Now we are concentrating on paying off bills, so we can save more.

[68ZClone]

Thanks Greg for all the help here. Although I don't post much, I keep up with this every couple of days.

BTW - just saw I received a 35% raise from 3M today! Even better, my cost basis is $75.55 (I've owned it since 2007 I think). At the new $0.85/qtr, my return is 4.5% just from the dividend!

I'm using my dividends from this and other positions to create new positions within my portfolio. Currently purchasing Duke Energy (my local utility, so I can keep up with the goings on) and PEP (I like that they have both snacks and beverages). When I establish ~$5,000 per each of these, I'll move on to establishing positions in other companies.

I use Scottrade and they are allowing dividends to be used to purchase any stock commission free within their new Flexible Re-Investment (FRIP) program.

[GregWeld]

My finance guy, Laura's boss, just told me we are up over 17% for this year. Couldn't have done it without you Greg, thanks.

Now we are concentrating on paying off bills, so we can save more.



Ummmmmm….. I fixed it for you…. I think I hope that's what you meant to say. HAHAHAHAHAHAHAHAHAHA

So good to hear BTW!!




Thanks Greg for all the help here. Although I don't post much, I keep up with this every couple of days.

BTW - just saw I received a 35% raise from 3M today! Even better, my cost basis is $75.55 (I've owned it since 2007 I think). At the new $0.85/qtr, my return is 4.5% just from the dividend!

I'm using my dividends from this and other positions to create new positions within my portfolio. Currently purchasing Duke Energy (my local utility, so I can keep up with the goings on) and PEP (I like that they have both snacks and beverages). When I establish ~$5,000 per each of these, I'll move on to establishing positions in other companies.

I use Scottrade and they are allowing dividends to be used to purchase any stock commission free within their new Flexible Re-Investment (FRIP) program.



Thanks for posting up -- because every day I wonder why I'm doing this? Not on a philosophical basis --- but because I wonder… is "anybody listening/reading"?


Then a new guy pops in -- like Lance -- and I go on a mission to help him understand…. or some guys like yourself tell me they're doing okay -- and I think FANTASTIC!! That's why I bare my soul in here!!

[Bryan O]

I wonder why I'm doing this? Not on a philosophical basis --- but because I wonder… is "anybody listening/reading"?

Lots of people listening/reading. :thumbsup:

I'll be paying close attention. We've just had a major change in lifestyle this last year and I've got to pay closer attention to our finances/cash flow now. House is paid off. Cars are paid off. 0 debt!! :hapdance:

~$150,000/yr income & $480K in 401K. From that $150K annual we've got to finance my small business I just started and put 2 kids through college beginning in 2 1/2 years. ~13 working years left for my wife Jean and I've got to get the business off the ground.

I wish you'd start a Small Business 101 thread. :)

[im4u2nvss]

I am so happy for the information in this thread. With a solid 30 working years to go(and for my money to compound), I feel like I have a good chance of success! Reading Investing 102 daily gives me further reason to put my 67 firebird as a "second priority" to saving for the future. A big thanks again!

[GregWeld]

Lots of people listening/reading. :thumbsup:

I'll be paying close attention. We've just had a major change in lifestyle this last year and I've got to pay closer attention to our finances/cash flow now. House is paid off. Cars are paid off. 0 debt!! :hapdance:

~$150,000/yr income & $480K in 401K. From that $150K annual we've got to finance my small business I just started and put 2 kids through college beginning in 2 1/2 years. ~13 working years left for my wife Jean and I've got to get the business off the ground.

I wish you'd start a Small Business 101 thread. :)




Oh man! You're looking fantastic financially dude!

In 13 years -- you have the chance to have that 401K flip over twice -- so hitting the 1.5MM mark for you!

This should maybe be a separate post but here's what I don't want to see you do…



Do not look at that 401K as your "saving grace" - for college or for your new business. Ditto the house equity. YOU don't have all that much more time to work -- and you need this last little bit of time left to have that 401 to be able to provide for you for the next 30 odd years.

If your new business doesn't do what your plans say it should --- don't let it drag you down. All to often people take everything they've worked for and plowed it all back into a small business. EGO makes them do this because they can't separate themselves from "what they've started". A business needs to be self sustaining -- it is not - and never should be - a financial drain. It isn't and never should be "buying yourself a job". Successful business people know (or have learned) when to cut and run. Brings to mind an old adage -- "your first loss is your best lost" --- and what that means is it's far better to just pack up shop and take that first big loss (whatever that is) than it is to add more to it making it an even bigger loss down the road.

And NO I will not start a Business 102 thread -- hahhahahahahaha. There's just way too many variables in that kind of a discussion.

I'll tell you this though -- and it's like this thread. Remember nothing more than the basics. To wit: SALES come first -- without them you have nothing. All of your effort should be on sales. Everything starts there. The warehouse you don't need if you're not selling something for it to exist.

My old partner always said - three things in business are important. Sell it - ship it - get paid for it.

Pretty much sums it up. Everything else you do is nothing more than SUPPORT for the sales that had to come first.



I am so happy for the information in this thread. With a solid 30 working years to go(and for my money to compound), I feel like I have a good chance of success! Reading Investing 102 daily gives me further reason to put my 67 firebird as a "second priority" to saving for the future. A big thanks again!



Thank you -- and by the way -- TOYS should be the LAST item on a list. You can have all the toys you ever wanted once you can afford them. Affording them does not mean at the expense of something more important or more basic. LIVING in retirement is a pretty basic need. It's not a want - it's a need. Do it right and you can have a couple cars to play with and go on trips with when you not only have the time - but the dough.

You can not "save to spend" -- that is not savings -- that is just a pile to spend. That's okay to do AFTER you've funded the retirement account. Then you can SET ASIDE some money for the hobbies and go spend them. Just know that the sooner you fund the retirement -- and it starts on the road to self funding (the dividends start to become more per year than you could have ever saved) -- then you can start to feel free to "indulge".

Do the math…. if you have 25K right now to go buy a car for a "project"… if you put that away instead - in as little as 7 years - it's going to be 50K - and in as little as 14 years it's going to be 100K… and the next flip it's 200K…

You said you have 30 years…. okay --- we have 200K and that took 21 years to get to - the next flip -- inside your 30 year time frame -- takes that to 400K.

Think about that TIME on your side -- 25K became 400K and you didn't do a thing except invest it instead of spend it. Think about now if you had been adding each year just a couple grand to your nest egg - and now you retire with a cool million dollars in CASH (equities actually). Or you're an even better saver and you retire at 55 instead of 65… Now we're talking!

IF I'VE LEARNED ANYTHING about living in retirement -- it's that the only thing I have of any real value - is my TIME. No amount of money can get it back… and each day another day slips away never to be had again. If I sold all the stuff I have I can't buy it back.

[gearheads78]

Reading Investing 102 daily gives me further reason to put my 67 firebird as a "second priority" to saving for the future. A big thanks again!

Don't say that too loud. There will be vendors here wanting to lynch GW. :bigun2: :P

[GregWeld]

Don't say that too loud. There will be vendors here wanting to lynch GW. :bigun2: :P




Well they should thank me - cause in the end you can buy a lot more stuff when you actually have some real money!

I'm a veritable one man economic firestorm with the amount of car related stuff and activities I do each month. LOL


Really though -- this is the truth. You can buy way more stuff when your savings are saving more than you could have on your own. That starts to free up money for the fun stuff.

And I've never said don't buy anything… and I know you're just poking me… I say start to factor in your retirement and ignore it at your own peril is all.

[im4u2nvss]

Thank you -- and by the way -- TOYS should be the LAST item on a list. You can have all the toys you ever wanted once you can afford them. Affording them does not mean at the expense of something more important or more basic. LIVING in retirement is a pretty basic need. It's not a want - it's a need. Do it right and you can have a couple cars to play with and go on trips with when you not only have the time - but the dough.

You can not "save to spend" -- that is not savings -- that is just a pile to spend. That's okay to do AFTER you've funded the retirement account. Then you can SET ASIDE some money for the hobbies and go spend them. Just know that the sooner you fund the retirement -- and it starts on the road to self funding (the dividends start to become more per year than you could have ever saved) -- then you can start to feel free to "indulge".

Do the math…. if you have 25K right now to go buy a car for a "project"… if you put that away instead - in as little as 7 years - it's going to be 50K - and in as little as 14 years it's going to be 100K… and the next flip it's 200K…

You said you have 30 years…. okay --- we have 200K and that took 21 years to get to - the next flip -- inside your 30 year time frame -- takes that to 400K.

Think about that TIME on your side -- 25K became 400K and you didn't do a thing except invest it instead of spend it. Think about now if you had been adding each year just a couple grand to your nest egg - and now you retire with a cool million dollars in CASH (equities actually). Or you're an even better saver and you retire at 55 instead of 65… Now we're talking!

IF I'VE LEARNED ANYTHING about living in retirement -- it's that the only thing I have of any real value - is my TIME. No amount of money can get it back… and each day another day slips away never to be had again. If I sold all the stuff I have I can't buy it back.

I figured as long as I have the project already, whats the hurry on finishing it up if it means holding back my retirement. Like you said, retirement is a "need" firebird is a "want" and with time I will have both.

Extra thanks to you Greg. For someone in your position, to take the time to help all of "us" is an extremely good deed on your part. Kudos to you!

[Vegas69]

IF I'VE LEARNED ANYTHING about living in retirement -- it's that the only thing I have of any real value - is my TIME. No amount of money can get it back… and each day another day slips away never to be had again. If I sold all the stuff I have I can't buy it back.

Wise words my friend. Time is infinitely more valuable than money. We live in America, money is easy.

[sik68]

They announce a QE taper, and the market jumps UP! Just another friendly reminder from Mr. Market that your crystal ball sucks. :lol:

[GregWeld]

They announce a QE taper, and the market jumps UP! Just another friendly reminder from Mr. Market that your crystal ball sucks. :lol:




When you - or anyone - has the market figured out - let me know - we'll go together and make zillions…. 'cause I've been doing this since 1986 and I'll be damned if I can make sense of it!

[JKnight]

Yep...and there's always a loser (relative to today only) amongst the winners. For me it was Ford's (F) announcement of lower margins. Were it not for that, it would have been a heck of a day!!

[GregWeld]

Yep...and there's always a loser (relative to today only) amongst the winners. For me it was Ford's (F) announcement of lower margins. Were it not for that, it would have been a heck of a day!!



I have 20,000 Ford (F) shares… I bought more yesterday. It's a very small holding for me - but still affected my days paper gain.

So here's why --- IF the economy is doing better so much so that the Fed can taper -- then people should be buying more cars. Now if EUROPE would just snap out of their recession (sooner rather than later)… then we'll be clicking on all 8 as they say.


Now -- here's your deal and why I pitch this (as will anyone with experience)… a FORD day like today - is why you have to have DIVERSIFICATION --- and no one stock or investment should be more than 5% of your total invested funds. That way - one "disaster" doesn't kill you. You might not like it - but it doesn't kill you. Today was a good eye opener to see why people press that.

[JKnight]

Yeah, it's definitely one of those deals where nothing in the fundamentals about the company or why I own it has changed, so I'm not going to start worrying. I wish I had more uninvested cash to pick up some shares on sale, but I am heavy enough in the one name as it stands that it might not be prudent anyway.

[GregWeld]

If you guys remember awhile back -- all the talking heads on TV could discuss was the rising price of GOLD -- and all the predictions were for $2000 an ounce etc… One of our readers was HEAVY into the precious metal. I hope he got out at the top. Today it's trading for about half that prediction.


Okay - I can't predict a thing except that usually in the morning I have to get up and go to the bathroom. That's become pretty predictable…. My comment / post here is not about predictions or right or wrong… it's about the basics of what I've been pounding about day in and day out…

THAT IS --- when EVERYONE is talking about something - it's time to RUN FOR THE HILLS -- if you're in whatever they're talking about -- SELL… if you're not in and you're thinking you need to be because everybody but you has made a killing on "it"… DON'T YOU DO IT!

See - my belief is - that we're all just pretty average Joe's. We're not really smart enough to see that gold was going to go from $900 to $1800 in a year… we're not smart enough to have foreseen the complete collapse of housing… we're not smart enough to… well -- you get the point. My belief is - that by the time I've caught on and am finally willing to join the thundering masses… "IT" is all over.

For certain - there are people that are forerunners… Stielow was PT before PT had a definition. There are people that follow precious metals that probably made three fortunes. I know of one guy that SHORTED housing just before it collapsed and they say he made over a billion (with a B) doing so. I really wish 1) that I was that smart and 2) that I had the balls to act on it.

#1 I'm not - and #2 - I don't.

Oh sure… it's EASY when all is going gangbusters to THINK you're brilliant and or "woulda, shoulda, coulda". I absolutely entertained shorting housing at the peak or near it… I knew (felt) it was unsustainable… Housing couldn't possibly double and triple again and again… but would I gamble that I was right about my "prediction" -- hell no. Anyone with a brain could tell this was going to end badly for the lenders (banks) or builders. EVERYONE but me was making money flipping houses - and you could borrow for zero and pay even less per month! LOL It just HAD to be bad!

Ask the guy that has taken a billion (with a B) dollar short on Herbalife (HLF).(a bet that the stock will drop and he can buy it back cheaper than he sold the borrowed stock he "shorted" - in other words he owes whomever he borrowed the shares from. The shares that he borrowed - HE has to go out and buy those shares on the open market and deliver 'em to who he borrowed 'em from. That's what a naked short is.) He calls it (HLF) a pyramid scheme… but the SHARE PRICE has gone up 125% since his short position (so he's LOST an enormous amount of money on his bet so far on paper). Big bet big winner IF his prediction is right - but so far he's a big azz loser…

I figure since I'm Joe average - that I'd be wrong just at the right time…. hahahahaha and the minute I'd unwind my "bet" - then what I had predicted might come to be fact - and I'd have lost. So I just don't try to be a predictor of things.

I'd rather "predict" that I'll get my dividend from Altria (MO) on time… and just be happy with that. But that's about as far out on a limb as I'll go. For me - it's way more fun to go skiing and go play the virtual golf machine - than to try to "win big" sticking my neck out. I'll also predict that all of my stocks will - at some point - go down. It's just a given. I WISH they wouldn't but I know they will. I will also predict that if I do nothing about that - that they'll come back before I'd need to sell them at a loss. Not sure how long that's going to take - but in the meantime the dividends will continue to roll in so I'm all good. I can eat - I can pay my water bill… with that (the dividend) -- while I wait for my prediction of higher prices to come true. Todays big up or todays big down either make me happy or make me sad… but neither really matter all that much. I will predict that they'll continue to go up and down. That's all.


:thumbsup:

[GregWeld]

I was checking up on the latest BitCoin news -- just because... I follow lots of stuff... Whether or not I intend to invest. I just like to follow - ya always learn something.

So I accidentally stumbled on a Forbes article on BitCoin and whether or not it was following a classic "bubble" line. Who knew there was such a thing? I didn't -- so I have to keep reading and found that by golly there is such a thing!


Check it out! Remember what I've said about when EVERYONE is talking about "it"? Well apparently they can actually track that! See the part labeled Media attention in the "Public" time line -- then "Enthusiasm" -- Those are on the way up -- that when I'm saying to run like hell!!! HAHAHAHAHAHAHA




http://i919.photobucket.com/albums/ad33/gregweld/Fun%20Fotos/file-53.png (http://s919.photobucket.com/user/gregweld/media/Fun%20Fotos/file-53.png.html)

[sik68]

I was checking up on the latest BitCoin news -- just because... I follow lots of stuff... Whether or not I intend to invest. I just like to follow - ya always learn something.

So I accidentally stumbled on a Forbes article on BitCoin and whether or not it was following a classic "bubble" line. Who knew there was such a thing? I didn't -- so I have to keep reading and found that by golly there is such a thing!


Check it out! Remember what I've said about when EVERYONE is talking about "it"? Well apparently they can actually track that! See the part labeled Media attention in the "Public" time line -- then "Enthusiasm" -- Those are on the way up -- that when I'm saying to run like hell!!! HAHAHAHAHAHAHA




http://i919.photobucket.com/albums/ad33/gregweld/Fun%20Fotos/file-53.png (http://s919.photobucket.com/user/gregweld/media/Fun%20Fotos/file-53.png.html)

That is an awesome graph... I should set that as my desktop background.

[GregWeld]

The amazing part to me is that there is an actual chart of such events!


Here's the problem with "stuff" like this... and it's exactly the same every time. Most folks don't get in until near the very top. That is when the most people are discussing "it" - and that's when the TV talking heads are all over "it".... and the problem is not making money as "it" is going up --- the problem is nobody knows when "it" is going to blow like a popped balloon. When that happens it comes so suddenly that almost everyone looses. That's when the old turtle catches the hare and continues on to the finish line.

Money - as we all know - is difficult to earn - let alone hang on to. It's difficult to earn and save 10 grand or 30 grand... and it's far far easier to lose that than it is to keep it and have it start making money for you.

This isn't to say we should all only be in Kimberly Clarke... That's not what I'm talking about at all... I'm really just trying to get everyone to be able to recognize the difference between a good solid investment and the next latest "craze" of investment --- and the key element always seems to be the same -- when everyone (tv - magazines - grocery store clerk) is talking about whatever "it" is.

[SSLance]

12/10/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,020.24
12/06/2013 Cash Dividend HYG
ISHARES TRUST IBOXX $ HI…
$4,500.14




Hey Greg,

I'm just curious, if you don't mind sharing, how long have you held these two? And if for a while do you have, or can you easily press a button to get a report on the earnings ROI % on them for a recent time period?

I did very well with some High Yield bond funds for a long time in a certain scenario, then saw them get hammered in the CDO debacle in 2008...so I'm very familiar with how they work. I just haven't paid any attention to them since we sold them and got back into equities in late 2008.

Looking at the charts, these two seem to have leveled off after that period and I'm curious if the returns are pretty much like they were before the debacle or better or worse? 2005-2006 for example we were returning 7.5-8.0% tax free on our muni bond funds.

Don't put a lot of effort into it, only if you can get an easy answer report or something similar.

BTW, I've started a dedicated Google portfolio and am adding symbols to it and looking at data... Baby steps...ya know. ;)

[SSLance]

Might have answered my own question...still finding my way around google finance.


This is according to most recent annual report


Valuation Dividend Operating metrics
Company name Price Change Chg % d | m | y Earnings per share Mkt Cap Dividend Dividend yield Return on investment

JNK SPDR Barclays Cap... 40.58 0.00 0.00% 9.76B 6.09

HYG iShares iBoxx $ H... 93.00 -0.05 -0.05% 9.19 15.54B 6.15 6.13 9.76

[GregWeld]

These are ONLY cash positions never to be thought of as investments. They are just used by me as a place to park cash because for the most part they're relatively stable. And the dividend is paid MONTHLY so I don't have to be in them more than just long enough to pick up the cash.








Might have answered my own question...still finding my way around google finance.


This is according to most recent annual report


Valuation Dividend Operating metrics
Company name Price Change Chg % d | m | y Earnings per share Mkt Cap Dividend Dividend yield Return on investment

JNK SPDR Barclays Cap... 40.58 0.00 0.00% 9.76B 6.09

HYG iShares iBoxx $ H... 93.00 -0.05 -0.05% 9.19 15.54B 6.15 6.13 9.76

[sik68]

Made $27 MORE in dividends than I did last quarter. If I get a $27 raise 4 times a year, I will be rich in no time! :idea:

[SSLance]

These are ONLY cash positions never to be thought of as investments. They are just used by me as a place to park cash because for the most part they're relatively stable. And the dividend is paid MONTHLY so I don't have to be in them more than just long enough to pick up the cash.


See that is interesting to me, They didn't have bond fund ETFs back then...it cost to get in and out of fund positions.

So you dump the dividend income into the bond fund ETFs, collect the monthly dividends in the meantime, and then invest out of them the next time you are ready to buy something else? Do I have that right? Pretty effing crafty I must say.

I'm used to where a typical fund, when going ex-dividend...the share price drops by the comparable amount of the dividend to keep people from trading into and out of the funds just for the dividend pay days.

[GregWeld]

See that is interesting to me, They didn't have bond fund ETFs back then...it cost to get in and out of fund positions.

So you dump the dividend income into the bond fund ETFs, collect the monthly dividends in the meantime, and then invest out of them the next time you are ready to buy something else? Do I have that right? Pretty effing crafty I must say.

I'm used to where a typical fund, when going ex-dividend...the share price drops by the comparable amount of the dividend to keep people from trading into and out of the funds just for the dividend pay days.



That IS NOT why the share price drops -- the share price drops by the amount paid out - no different than your checking account drops when you right a check - the share price must reflect the outgoing cash.


No I do not have anything going into or out of JNK or HYG automatically --- I just always usually have a couple million in cash on hand -- and this is just where I store it until I find another home for it. The dividend paid is better than I can get sweeping the cash into a money market tied into my accounts. So why not get 5 or 6% instead of .025%


I can do things just a bit differently than "most" because of my asset base. If I need the cash to do something - and let's say we're only a week away from collecting that months dividend - I can either wait - or use other cash I have parked elsewhere.

I have warned and warned that these are extremely INTEREST RATE SENSITIVE and should only be used by savvy investors that are keeping a keen eye on what's going on in the market. They're NOT park it and forget it names.

[GregWeld]

Lance,



So I had to go into the account I always use for discussion here on Lat G


For instance -- currently I'm holding 25,000 shares of JNK -- and I have as of today an unrealized gain of about $2,600 --- on top of that I picked up the first of the Decembers dividend payment of $3024.00 (depending on what I held for the EX date at that time)


I like that -- right now I have an unrealized gain -- and in the meantime I'm being paid to sit on it. The trick is not to let the dividend on a name like this lull you into a false sense of security - since this is purely a placeholder - it's not a company that makes products etc -- it's nothing but a JUNK BOND ETF



Now -- on HYG --- I'm currently holding 10,000 shares and I have a unrealized loss of about $2200.... but I also just picked up $4500 for the first of December dividend. HYG is nothing but a high yield CORPORATE BOND ETF... high yield being the key word here -- so their credit quality would be higher than the JNK (JUNK BOND ETF) but still high interest rate risk!

If I blend the two holdings together -- I'm "fine".


I hold these for the previous posted reasons. They ARE NOT INVESTMENTS -- they're just places to park cash which I frequently move in and out depending on whether or not I see something I'd rather own... and if I SELL something -- and don't have my eye on something else to buy --- or the buy sell spins off excess cash - this is where it goes. Real simple.

[GregWeld]

Lance ---


Just for fun -- and because I'm bored right now -- I checked out the REALIZED GAINS and LOSS from JNK YEAR TO DATE and this is what it looks like in this account:


JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
11,100 $449,316.85 $445,003.97
+$4,312.88

+$4,312.88
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
7,400 $299,543.08 $296,669.31
+$2,873.77

+$2,873.77
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
4,000 $161,919.18 $161,120.68
+$798.50

+$798.50
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
4,000 $161,919.18 $161,123.58
+$795.60

+$795.60
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
1,000 $40,479.99 $40,279.89
+$200.10

+$200.10
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
800 $32,383.03 $32,072.36
+$310.67

+$310.67
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
600 $24,288.00 $24,168.54
+$119.46

+$119.46
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
300 $12,144.00 $12,027.13
+$116.87

+$116.87
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
300 $12,144.00 $12,027.13
+$116.87

+$116.87
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
300 $12,144.00 $12,084.27
+$59.73

+$59.73
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
100 $4,047.88 $4,009.05
+$38.83

+$38.83
JNK
SPDR BARCLAYS ETF HIGH Y...
02/08/2013
100 $4,047.88 $4,027.99
+$19.89

+$19.89
JNK
SPDR BARCLAYS ETF HIGH Y...
03/04/2013
5,900 $240,709.34 $235,647.75
+$5,061.59

+$5,061.59
JNK
SPDR BARCLAYS ETF HIGH Y...
03/04/2013
2,300 $93,838.14 $91,862.69
+$1,975.45

+$1,975.45
JNK
SPDR BARCLAYS ETF HIGH Y...
03/04/2013
1,000 $40,799.19 $39,940.30
+$858.89

+$858.89
JNK
SPDR BARCLAYS ETF HIGH Y...
03/04/2013
600 $24,478.91 $23,964.18
+$514.73

+$514.73
JNK
SPDR BARCLAYS ETF HIGH Y...
03/04/2013
200 $8,159.64 $7,988.06
+$171.58

+$171.58
JNK
SPDR BARCLAYS ETF HIGH Y...
04/15/2013
15,760 $648,031.98 $629,448.68
+$18,583.30

+$18,583.30
JNK
SPDR BARCLAYS ETF HIGH Y...
04/15/2013
8,240 $338,818.75 $339,248.17
$0.00

$0.00
Disallowed Loss: $429.42
JNK
SPDR BARCLAYS ETF HIGH Y...
04/15/2013
6,000 $246,742.68 $241,807.64
+$5,017.97

+$5,017.97
Disallowed Loss: $82.93




NOW -- When you add up the above to the DIVIDENDS I've picked up for YEAR TO DATE on this name you'll begin to get a better picture as to WHY I use these to handle cash on a very temporary basis. REMEMBER TOO THAT I WATCH THIS STUFF LIKE A HAWK.... I'm more than just a pretty face! Failure to know what the hell you're doing is not an option!





12/10/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,020.24
11/12/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$2,961.68
10/09/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,027.84
09/11/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,080.21
08/09/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$2,955.30
07/10/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,061.68
05/09/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$8,479.52
04/09/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$4,155.70
03/11/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$6,435.66
02/11/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$12,742.02
01/07/2013 Pr Yr Cash Div JNK
SPDR BARCLAYS ETF HIGH Y...
$12,891.96

[SSLance]

I bet I can guess what the April 15th sale was for... :D


Thanks for posting. I agree that these types of funds should be for a specific use and watched very carefully. They can have pretty attractive yields but are as you say...very interest rate sensitive and also collateralized debt obligation default sensitive...as I found out personally.

I'm still happy with my decision to sell them at the loss and go into equities as that is what brought me back so well in 2009, and will certainly entertain owning at least a portion of them again at some point in the future.

Once I get through this holiday season and things settle down, I intend on opening up some Schwab accounts and getting serious about this.

I'm more and more convinced to do it my way, on my own though...than with my FA like I always have. He won't be happy, but I'm sure he'll get by. ;)

[GregWeld]

I bet I can guess what the April 15th sale was for





Yes.... That would be to fund the ADDITIONAL $800 GRAND in federal income tax due. But like I always say. They get the smaller percentage of the deal and I get to keep the rest. So it's just looked at as they're my partner and they get their cut.

[WSSix]

but I thought the rich don't pay any taxes :lostmarbles:


Well, the end of the year is looming which means that start of next year is right around the corner. Time to max out the Roth again soon. I think what I will do is simply add to the positions I already have(16) versus buy more. I might buy another petroleum company because I'm tired of seeing OXY in the red after nearly 2 years, but I'm going to run the numbers and see where I am with it because I have been collecting decent dividends off of it the whole time too. I'm going to do that with all my positions so I can get a better idea of who is working the best for me.

I'm leaning towards adding more to the stocks that are paying better dividend percentages versus gain percentages. My thoughts are that the dividend is almost guaranteed money where as the gains might not be since the stock price is way more fickle than the dividend payment. Is that an ok way to look at it or should I be more concerned with the overall gain? I consider myself to be more in the growth mode right now. I would think going after the payments would be a more sound growth mode strategy since the payment is almost guaranteed.

Also, do I need to be seeking out just a normal CPA or is there a particular type of CPA I need to find in order to not only answer the questions I have about my investments and the taxes owed, but also do my taxes so I don't end up paying what I shouldn't? I'm thinking I shouldn't have had to pay taxes on my KMP position since it's under my Roth IRA but I don't know and would like to know and be more certain about my taxes. I've got other positions I might be interested in but don't want to get involved without having the proper guidance.
Thanks

[protour73]

Yes.... That would be to fund the ADDITIONAL $800 GRAND in federal income tax due. But like I always say. They get the smaller percentage of the deal and I get to keep the rest. So it's just looked at as they're my partner and they get their cut.I can't even wrap my head around that figure.

:bang: :bang: :confused59: :bang: :bang:

Greg, I don't post in here a lot, but I am a frequent lurker for knowledge, inspiration and ideas, but how much time do YOU spend tending to your portfolio?? It seems like a boatload of time & dedication.

I came into a sizeable (for me) windfall in the last week so I am ready to finally purchased some stock in 2014. Buy it, tend to it, let it sit and not watch it everyday (retirement stuff) so it doesn't drive me crazy.

Your input and others as well, has been a real inspiration, but also extremely helpful. Your unending motto, "Investing isn't complicated as long as you do your homework" has really kept me coming back here, time and time again.

[GregWeld]

This is for EVERYBODY at this time of year - not just you Trey - but since you asked and - it is after all - your thread!


16 stocks (names we'll call 'em) is a pretty good number. I've said before in here - 20 is all your really need... and too many is too much diversification just for the sake of being diversified. So better to just keep the great stuff -- and NOT just buy something "just because". That never works out well. The WalMart family - and Bill Gates et al - got rich pretty much on just ONE name. Right?


Now - here's the tricky part... and this will NEVER work out the way you want it to or the way you think it should.

The laggards (not always losers) are to be looked at for a reason WHY are they lagging? Did you pick a name of the best of the best in a group and everything else around it did better? Or is the entire industry suckolla? OIL right now is sucking wind because the price of crude ain't so hot. They do have overhead to get the crap out of the ground - and obviously - they have better profits when the end prices are higher. Right now their margins are "under pressure".

BUT --- what I want you to think about is what is the FUTURE looking like. Not what DID happen -- that's behind us -- and great stock market gurus want to be IN FRONT OF the "market". So I'd leave my oil patch ride --- it will work out over time unless someone invents a car that runs on water. BUT let's look for a couple names out there that should come into their own with the economy humming along better. So what do you NOT own that you could own (since I don't know what you own and I'm not going to pick for anyone anyway) that should be picking up steam. For example - a year ago I got back into a bank name (Wells Fargo) == it has been in the dumper since the housing debacle -- and I figured the economy picking up would help the banks. Again trying to go for Best of the breed - and JP Morgan has been being pounded by the government - so I'm not going into that one -- but maybe it's starting to come out of that mess and see the light. Remember - we're looking for stuff GOING FORWARD... Great companies can rebound -- after a recall - or after stubbing their toe etc.

I'm not saying go into financials --- I just used that as an example. So think hard - looking at holes in your portfolio -- and see what it is that you're missing and then look to see what those groups/names etc look like.


NOW --- GOING FORWARD --- we all need to be watchful of the LOW dividend payers. They'll get punched in the nose if the interest rates start to become COMPETITIVE. Competitive is always a critical factor. I - and you - want to make a "market" return on our money ---- so if I can buy a bank CD and get 6% --- then that's competition for the 2.8% dividend payer. It's much more complicated than that - but you get the drift.

Don't buy ANYTHING that you think is going to get hurt in the next couple of years because of RISING interest rates. WE ABSOLUTELY KNOW that rates are not going to go down from here. They might hover here - and take a while to move up - but we're not in the prediction game of when etc -- we just have to take a big picture look and say -- EVERYONE is saying rates are going to go up -- so that's a broad general brush stroke that we need to factor in.

I don't own INDUSTRIALS -- because in a down or flat economy - Industrials lag or actually they suck.... Caterpillar just doesn't sell as well when we're not building houses and building buildings etc... but I think we're not too far away from a bust out of that "depression". So IDK -- maybe it's time to look at some of that stuff. My feeling there was that CHINA had to get moving again to really have those pick up some steam. Remember that we're trying to be ahead of the curve if we can.

Go to GOOGLE FINANCE (I use it because I know what's on the page) and scroll down and look at the SECTOR Summary.... a good starting place for research. What makes up each sector - the best names there - start to compare dividend rate - last years percentage - are they a laggard just waiting for their day in the sun?








but I thought the rich don't pay any taxes :lostmarbles:


Well, the end of the year is looming which means that start of next year is right around the corner. Time to max out the Roth again soon. I think what I will do is simply add to the positions I already have(16) versus buy more. I might buy another petroleum company because I'm tired of seeing OXY in the red after nearly 2 years, but I'm going to run the numbers and see where I am with it because I have been collecting decent dividends off of it the whole time too. I'm going to do that with all my positions so I can get a better idea of who is working the best for me.

I'm leaning towards adding more to the stocks that are paying better dividend percentages versus gain percentages. My thoughts are that the dividend is almost guaranteed money where as the gains might not be since the stock price is way more fickle than the dividend payment. Is that an ok way to look at it or should I be more concerned with the overall gain? I consider myself to be more in the growth mode right now. I would think going after the payments would be a more sound growth mode strategy since the payment is almost guaranteed.

Also, do I need to be seeking out just a normal CPA or is there a particular type of CPA I need to find in order to not only answer the questions I have about my investments and the taxes owed, but also do my taxes so I don't end up paying what I shouldn't? I'm thinking I shouldn't have had to pay taxes on my KMP position since it's under my Roth IRA but I don't know and would like to know and be more certain about my taxes. I've got other positions I might be interested in but don't want to get involved without having the proper guidance.
Thanks

[GregWeld]

Almost forgot to answer your question - so redid this to put it at the top.

#1 - I'm retired - and have been for 21 years. My point? What else do I have to do? I can only play just so much.

#2 - Because I don't work - and my family is grown and gone - What else do I have to do?

#3 - I have SIX Saturdays and a Sunday. I know it's Sunday when the big paper comes.

#4 - I spend time reading and listening - and just generally paying attention because I LOVE IT. That does not equate to moving money around all the time - or trying to "game" the market. It's really quite the opposite of that! I can pay attention and spend time doing what I like because I've very secure in knowing what I own and not worrying about it. I'm an early riser -- so CNBC is my fav... and since I'm around all day every day - I can check what's up regularly between posting on Lat-G... LOL

#5 - Being totally serious here. My "money problems" are different than "most" - the sums are larger - and therefore the % of swing up and down begins to be a real number... and I'm not trying as much to grow into retirement as I am trying to raise my standard of living in retirement. Oh yeah - and make sure I can do so for the next 30 years 'cause I plan to live beyond 90.


It (money) truly is "all relative". I really shouldn't even post up figures like that... but I know everyone else finds it "interesting". I was trying to kind of make a couple points - one of which was pretty much directed at Lance.... that I don't worry about INCOME taxes -- because they're just a reflection of what I made. If you make a lot - and that should be the BIG GOAL - then you pay "a lot" -- but wouldn't you LOVE to be there!! That's the goal buddy! Right there! Making some money. Taxes schmaxes... I'm ECSTATIC that I have to pay some!


Glad you picked up some seed money! Now get out there and make it start to work for you!





I can't even wrap my head around that figure.

:bang: :bang: :confused59: :bang: :bang:

Greg, I don't post in here a lot, but I am a frequent lurker for knowledge, inspiration and ideas, but how much time do YOU spend tending to your portfolio?? It seems like a boatload of time & dedication.

I came into a sizeable (for me) windfall in the last week so I am ready to finally purchased some stock in 2014. Buy it, tend to it, let it sit and not watch it everyday (retirement stuff) so it doesn't drive me crazy.

Your input and others as well, has been a real inspiration, but also extremely helpful. Your unending motto, "Investing isn't complicated as long as you do your homework" has really kept me coming back here, time and time again.

[GregWeld]

but I thought the rich don't pay any taxes




That right there is the biggest crock of crap the Democrats try to sell you every election cycle.


ANYONE can go to the IRS website or similar and see that the RICH pay a huge percentage of all the income taxes collected by the shizzle bags in Washington DC.

According to new IRS data, the 1.35 million taxpayers that represent the highest-earning one percent of the Americans who filed federal income tax returns in 2010 earned 18.9% of the total gross income and paid 37.4% of all federal income taxes paid in that year. In contrast, the 128.3 million taxpayers in the bottom 95% of all U.S. taxpayers in 2010 earned 66.2% of gross income and that group paid 40.9% of all taxes paid. In other words, the top 1 percent (1.35 million) of American taxpayers paid almost as much federal income tax in 2010 ($354.8 billion) as the entire bottom 95% of American tax filers ($388.4 billion)

[WSSix]

More people need to be aware of those facts, and before anyone tries to kill me, I was being sarcastic. Unfortunately, it gets clouded with emotions and this illogical fair share crappola. I try to stay away from those type of distractions when looking into stocks since it's about me growing my money regardless of agreement or support. Nice segue, eh? Basically, the stance you have laid out on why you're into Altria even though you don't smoke. I'm not sure I can do it with banking though. I'm actually very upset with the banking industry in this country. But should I care? Does my investment in them really constitute support or is it simply a means to an end and more money for myself? Sometimes, I think I put too much thought into decisions :EmoteClueless:

I have no intentions of selling off my OXY. I'm just thinking I should maybe look into another petro company to expand my stake in that sector. Or, just hold tight on everything and let it ride. KMP isn't doing so well right now either but the dividend sure is nice. I'll crunch some numbers tomorrow and see where it stands. Maybe let the raw numbers guide me instead of trying to over think the decision.

[GregWeld]

More people need to be aware of those facts, and before anyone tries to kill me, I was being sarcastic. Unfortunately, it gets clouded with emotions and this illogical fair share crappola. I try to stay away from those type of distractions when looking into stocks since it's about me growing my money regardless of agreement or support. Nice segue, eh? Basically, the stance you have laid out on why you're into Altria even though you don't smoke. I'm not sure I can do it with banking though. I'm actually very upset with the banking industry in this country. But should I care? Does my investment in them really constitute support or is it simply a means to an end and more money for myself? Sometimes, I think I put too much thought into decisions :EmoteClueless:

I have no intentions of selling off my OXY. I'm just thinking I should maybe look into another petro company to expand my stake in that sector. Or, just hold tight on everything and let it ride. KMP isn't doing so well right now either but the dividend sure is nice. I'll crunch some numbers tomorrow and see where it stands. Maybe let the raw numbers guide me instead of trying to over think the decision.



That was easy to tell.... I just decided I'd respond with that data - because there's a whole of lot people that think rich people just suck and don't pay taxes and that they "run" everything and they're basically just blood sucking idiots.


I'm the most democratic guy on earth - I don't vote that way - but I choose to be very helpful monetarily to those I think are worthy. We won't get into politics.


One of my "pat" answers when people ask me "what I am" - politically -- I tell them I'm a Democratic Republican. Of course they have no clue - so I tell them that the Republicans ALLOW me to earn enough so that I can afford to be democratic. Sadly BOTH parties suck bilge water.


RE: OXY

I can't tell you what you should do. KMP and OXY are "Oil" plays - while not technically in the same biz -- but that's why you want to be diversified. They'll come back - and then something else will suck... but as you pointed out - you'll keep on getting paid - and if your re-investing the dividend - it will continue to just pile up. The story has a happy ending. :thumbsup:

[glassman]

Nice year end banter Greg! keep it comin, lookin, learning, and applying (a little at a time).

Started a pension fund for my employees a couple of months back. May i wish i could tell them to just do this, in fact i do but according to my accountant, "its illegal to advise them, you can get in trouble with the labor board"...so i dont "advise" them. I tell them to look listen and learn.

I have five funds now, i need to transfer three of them into "self directed" ira so i can do more of my own stock dividend paying pics....

[GregWeld]

There's many reason's why I won't tell someone what THEY should do... Everyone on here is different AGE -- they have different INCOMES -- they LIVE in different parts of the country... etc. What it takes to retire in Palm Springs vs Minot ND is completely different. Some may have parents that will leave them with a nice chunk and others (like me) will have had to take care of their parents needs. EVERYONE IS DIFFERENT.


Now - on top of that - I'm trying to teach people how to fish - not catch them a fish.

Even more importantly - I want people to become responsible for their own choices. That way they understand why they picked what they did - and it's THEIR choice not mine. This only comes in to play when things ARE NOT going so well.

This thread was started at about the time where almost any stock you picked was going to go up. We were coming off a pretty severe decline in asset prices so a guy could really do no wrong.... Now we're leveling off a bit and we'll start to see a different kind of market. And more importantly we'll start to TEST the investors strategy and his fortitude for those death by a 1000 cuts kind of markets. The kind were you start to question yourself daily. Maybe that's not on us now - maybe it won't come for a couple more years - but it will come.

What I'm hoping is that by that time - whenever the market turns and starts to go against you - is that people will have seen that this is temporary - it's part and parcel of investing in ANYTHING and that they'll also have nice gains to buffer the fallout. So if a guy is up 40% --- and we have a selloff and it takes 10% off -- BIG WHOOP -- you're still UP... and those dividends are still grinding away.

What I'm really hoping for is that some will also be able to take advantage of an investment opportunity they might have otherwise passed on because of their fears... the fear of losing. Part of investing is to become confident in yourself - not cocky - but confident that you can understand the difference between gambling and investing and that you'll have learned that sometimes stuff fails - so we don't want to go all in. We want to be able to lose and still play another day.

It's early and I'm on my first cup of coffee so hope this makes sense.










Nice year end banter Greg! keep it comin, lookin, learning, and applying (a little at a time).

Started a pension fund for my employees a couple of months back. May i wish i could tell them to just do this, in fact i do but according to my accountant, "its illegal to advise them, you can get in trouble with the labor board"...so i dont "advise" them. I tell them to look listen and learn.

I have five funds now, i need to transfer three of them into "self directed" ira so i can do more of my own stock dividend paying pics....

[GregWeld]

I'm more and more convinced to do it my way, on my own though...than with my FA like I always have. He won't be happy, but I'm sure he'll get by. ;)



My "take" on Financial Advisors or "brokers" etc... is this. They're trying to make a living off what you're trying to make a living off of. The only way they can make a living is to get commissions from transactions. Transaction fees eat into your dough... and fixed fees on a compounded basis can have a HUGE affect over time.

In so many words - THEY need to make a living too... how do THEY do that? They're not free... they also need to eat.. so someone is feeding them. It just isn't going to be me.

In the "old days" -- if a guy was buying tax free munis - in a fixed fee account - and the broker is getting 1 or 2 percent annually - it was okay because back then I might have been getting 8 or 9 percent tax free off them. But when the rates are under 4% and this azzwipe thinks he's going to get 1% ?!?!?!?! HELL NO!!

Now --- if they're not fixed fee -- then they make NOTHING off you unless you buy and sell. They use FEAR to get you to SELL ---- the very stuff they talked you into buying on the last call! WTF is with that? OH YEAH - it's called commission. I don't give a shizzle who you think you are - or how important of a client/friend/buddy you think you are... they have a mortgage to pay too! And when that's due - and they need to generate some income - they're calling with the next hot deal - or a reason why the thing you just bought isn't worth a **** now and you have to sell and buy something else (two commissions).

In other words - just hell no!

If you want to make money over the long run - just buy and do what I've been preaching on here - you don't need anyone to have this make sense to you. And you don't need the lion in the cage over there to feed and take care of. The only guy you have to take care of is YOU.

Trust me - you have no idea how many investment houses court me for my accounts - they take me to lunch - they invite me to seminars - and to private conference rooms with what would be "my team"... Frankly - they could offer to fly me in a private jet and I wouldn't waste my time. For my kind of account EVERYTHING is free! Yeah right -- there is no "free". Somehow somewhere they're making money off my money. Otherwise why would they do it?

What I've found is that they have a "vested interest" in themselves and when push comes to shove - their interest tops mine. No thanks! I'm really not that lame.

[glassman]

Crystal clear bud! What i appriecate about you Greg is you say it in a way that i can understand, so many "pros" that i've talked to cant make it clear. My brain and the way i think, over complicates things. I am a glass tech (glazier) by trade and due to my shoulder (mostly) I have to now be a CEO, one with vision, leadership, discipline, focus and etc.....I have to now read financial statements, create programs and create jobs, growth etc....I HAVE ZERO EXPERIENCE!!!!

But one thing i do know, is hard work merits good results, even if you fail or lose, you've "Given it your all". I'm not leaving anything on the "field".

And my fear is not of losing (as i've lost plenty) its of being financially successful and all that it entails. So keeping it simple (investing) is key for me!! And that, my friend, is what you've brought to the table, on this thread,, for me.

One day i will bring some actual "insight" to this here table, but for now, i dont mind being a student. :thumbsup:

[GregWeld]

I can only hope that I've been somewhat helpful. This thread isn't about every possible point for success... that's still on an individual basis... and success for one is very different than success for another. I like your hard work statement because in America - that's what it's all about. Now this thread is trying to take that hard work - and turn it into something that can be rewarding when you're all done doing hard work! HAHAHAHAHAHA

What's the point if after all that hard work - you end up with nothing? UGH.

Small business is the hardest job EVER.. you have to wear every hat and you're expected to be good at wearing all of them. You have to be able to install a window and you're supposed to know what your accountant is telling you too.

Here's my problem with accountants. They just put the numbers on a page. The numbers are meaningful and I'm not taking anything away from their work... but the accountants can kill your SALES. Because they'll fill your head with what MARGIN (or markup) you need to pay your bills and make a profit. Fine. I get it. But if your margins are "wrong" (too high) - then you won't make many sales and nothing from nothing is nothing. Some small businesses get caught up in not understanding margins and overhead and GSA etc. And they loose sight of what needs to happen FIRST - and that's to make a sale, gain a happy customer, service that sale no matter what - because that's what leads to the next sale and so on.

It would take pages to explain what I'm saying in a more detailed way - but you get the point.




Crystal clear bud! What i appriecate about you Greg is you say it in a way that i can understand, so many "pros" that i've talked to cant make it clear. My brain and the way i think, over complicates things. I am a glass tech (glazier) by trade and due to my shoulder (mostly) I have to now be a CEO, one with vision, leadership, discipline, focus and etc.....I have to now read financial statements, create programs and create jobs, growth etc....I HAVE ZERO EXPERIENCE!!!!

But one thing i do know, is hard work merits good results, even if you fail or lose, you've "Given it your all". I'm not leaving anything on the "field".

And my fear is not of losing (as i've lost plenty) its of being financially successful and all that it entails. So keeping it simple (investing) is key for me!! And that, my friend, is what you've brought to the table, on this thread,, for me.

One day i will bring some actual "insight" to this here table, but for now, i dont mind being a student. :thumbsup:


Sorry for my RANT --- I just have a hard time with "professionals" that always want to tell you all about all the numbers but don't understand that sales have to come first and if you have enough sales - the numbers take care of themselves (unless you're giving the stuff away -- then you end up like Frank @ Prodigy). RANT OVER. LOL

[WSSix]

So I sat down and figured up my percentages for everything I own. My totals for all stocks since I've owned them is

Div Gains 4.76% Capital Gains 8.5% Total Gains 13.67%

Some of the stocks I have only owned a few months. Others, I have owned for 18 months. Should I be looking at all these as a lumped group or should I take into account the fact that a few stocks are only a few months old? Since I went for percentages, I think I have it calculated correctly. After all, we're looking at how much money my money has made. I'm trying to compare it to what my money that's being managed by Fidelity and Vanguard in two different mutual funds is doing. My Fidelity account has a year to date return of 16% where as my Vanguard account is up 25% from March 2012 which is when I bought my first stocks. It looks like I'm getting my butt kicked but I wanted to make sure I did my calculations correctly and my comparison too.

Thanks

[GregWeld]

Well -- first off a comparison has to be apples to apples -- the first half of this year brought most of the gains - the last half has just been "okay" --- so to really compare - you'd have to ONLY compare the stocks that you've owned for the same period of time ----- OR ---- see if the new buys compare IF you'd bought them at the same time as what you're comparing. The fact that you bought them later could be the difference.


Then - you have to see what the comps are against. So let's just say the mutual fund with the big (very nice btw!) gain -- might be mostly "tech" -- or some other sector fund that has done extremely well. Or is it just a general blended "big cap" or "small cap" fund etc. Typically a "sector fund" can outdo a more broad based portfolio IF -- always the big if -- it happens to be in the hot sector for that year. We can't see what you're in - and it's none of our business... so I can't look for you. Just give you some food for thought when you're making head to head comparisons.


I like to look at ALL of my money to really get a feel for how I'm doing overall... so how am I doing in the apartment business - how am I doing in the commercial real estate - how am I doing in stocks etc. Typically I could always find "something" that is weaker than the other THIS TIME --- next time -- that laggard is suddenly pulling the whole wagon. That's why anyone and everyone will stress "diversity" in your investments. RARELY will everything be pumping on all 8 at the same time. We'd like it to be that way - but it's rarely that way.

Now - the other thing - we don't know - is did you reinvest your dividends and are you calculating that correctly. The FUNDS all figure reinvested dividends to get their return or growth calculations.

Another thing I'd ask you to do - is to look at what makes up your funds top 10 holdings -- and see if they just happened to get one or two big hitters out of the whole mix. Let's say they held a big percentage (5% or so) of NetFlix which has been up like 305% year to date.... Dude that will kick ANYONES ass!





So I sat down and figured up my percentages for everything I own. My totals for all stocks since I've owned them is

Div Gains 4.76% Capital Gains 8.5% Total Gains 13.67%

Some of the stocks I have only owned a few months. Others, I have owned for 18 months. Should I be looking at all these as a lumped group or should I take into account the fact that a few stocks are only a few months old? Since I went for percentages, I think I have it calculated correctly. After all, we're looking at how much money my money has made. I'm trying to compare it to what my money that's being managed by Fidelity and Vanguard in two different mutual funds is doing. My Fidelity account has a year to date return of 16% where as my Vanguard account is up 25% from March 2012 which is when I bought my first stocks. It looks like I'm getting my butt kicked but I wanted to make sure I did my calculations correctly and my comparison too.


BTW -- if you'd just have put every dime into the QQQ -- which is the Nasdaq ETF -- you'd be up YTD 32.81% -- which makes your 25% look pee poor! LOL

The SPY -- which is a ETF of the S&P 500 -- is up 27.49%

There are professional fund managers who's income is based on them "beating" some index or another - they have crews of college edumakated calculators - and most don't make it and they're paid MILLIONS... so I think your almost 14% is doing pretty dang good. At that rate - you'll double your money in about 5 years!



Thanks

[WSSix]

Thanks for putting my gains into perspective, Greg. I like the percentages I'm earning, but I also like to make sure I'm not losing out some how.

I'll have to dig to see what my funds are invested in. Both are target retirement funds so there's some blending but I'm not sure of specifics off the top of my head.

I did my calculations as follows:

The Div gains are simply the percent difference between the total cost and what I paid out of pocket.

Capital gains are the percent difference between total cost and current value.

Total gains are percent difference between current value and what I paid out of pocket.

I know both Fidelity and Vanguard are only calculating the capital gains when I look at the individual stocks. How they are calculating the mutual funds, I don't know.

Even though I am reinvesting the dividends and I understand why they consider it a cost, I like to know what all my money has earned. My total gain matters most to me since it is everything that's been earned with the money I took out of pocket.

[GregWeld]

Hey Trey ---


You're all doing way too much work!! Way too much math!!


Okay - let's see if I can explain this.


Go to Google Finance..... call up the stock you want to check out your gain and get the chart set to say One year -- if that's all the longer you've owned it... now look at the top left of the chart... there's DATES there... if you click on the dates you can put in the date you want s -- so let's say SEPT 03, 2013 until todays date... Just change the date in the from box --- leave todays date in the other box alone... hit enter. MOVE YOUR MOUSE OUT OF THE CHART BOX and you'll see the percentage of increase (or if you suck - decrease) and the point gain.

[WSSix]

lol, I know it's overkill but I like seeing it. I check my stocks every week simply for the same reason. To me, it's fun to watch. I'm finally making really good head way(at least I think so) on a major goal in my life and I'm an observer by nature so I just sit back and watch it even though I'm not planning to make any sudden changes.

[GregWeld]

BTW --- If you have a Schwab account -- there's a couple pages in there that will calculate all of this stuff for you... Look under Portfolio Performance and then find the RETURNS tab --- and it will show you various timeframes...


The account I use here (I have FOUR Schwab accounts - So it's easiest to just pick one for consistent use here) for my examples -- is UP Year to date - 22.47%... and it's ONE Year performance (which is just one year back from todays date) is UP 18.75%


Any way you want to look at it -- those numbers (and yours) beats the current bank CD rate - BOND return rate etc...

[SSLance]

I like to look at my numbers too, it's not work for me, it's more like therapy.

One trap I have caught myself doing in Quicken (where I keep all of my investment records) when a dividend is reinvested, is shows as an add on to the cost basis...which is technically correct, but if you are just looking at a portfolio value report with a cost basis and a market value column, both can be going up at the same rate and it looks like you are just spinning your wheels.

You have to run a return on investment report and customize it to show the actual return for the periods and accounts or securities you want to review. This will calculate the ROI on not only the income reinvested but also any additions or subtractions you have made to the account during the set period.

Once you get the hang of running the specific reports, and find the ones you like you can save them and click on them to review any time you want.

[WSSix]

That's basically what I've done with my own simple calculations, Lance. I only have Excel or Open Office's version of excel really so I sit down and crunch the numbers periodically so I can see where my gains are. A few of my stocks have good Dividend Gains but the Capital Gains are not so great bringing everything into the red. I like to know that distinction. I also have one stock that I cannot reinvest the dividend in and I have to treat it differently than the rest when calculating or else it looks like I'm losing money on it when in fact I'm making a small return. Yesterday, I went ahead and set up a spreadsheet book to track everything. It's simple but it works for me.

If I didn't already have the Fidelity and Vanguard accounts, I think I would go with Schwab simply for the tools you've mentioned, Greg. Maybe those same tools are available to me already but I'm not finding them easily. Fidelity's website does a much better job of breaking things down and displaying them than Vanguard's in my opinion. Of course, I am amateur so maybe I'm just not understanding the terms in which the info is displayed.

[SSLance]

I have been using Quicken for years, for both my personal bookkeeping and to track my investment accounts. when I started using it it was still in DOS format if that tells you anything. It really is pretty cheap to buy, super easy to setup and use and works very well.

I'd bet if you bought a copy of Quicken Home and Business, or maybe even just Quicken Premier...in a week you'd kick yourself for not doing it much earlier. It automatically downloads all of your transactions and holdings from your financial institutions so all you have to do is review and accept them and you are done. Then any data you want to look at or see is at your fingertips whenever you want.

If anyone wants to try Quicken out, I know the program inside and out and would be happy to help anyone with initial setup or use of the program.

[GregWeld]

Here's for everyone that wants to figure this stuff out.


ROI = (gain from investment - minus - cost of investment) DIVIDED BY - Cost of investment




Here's a page --- from a website you should all get familiar with.... that will help you with ROI


http://www.investopedia.com/articles/basics/10/guide-to-calculating-roi.asp

[GregWeld]

'Annualized Total Return'

A mutual fund could earn returns varying from 3 to 5% each year and have an annualized total return of 3.995%. On the other hand, a fund could also be much more volatile, losing 3% in one year, earning 12% in another and have an annualized total return of 4.23%. The difference is the first fund would offer steady returns while the second would offer widely fluctuating returns.

Annualized Return = [(1+R1)*(1+R2)...*(1+Rn)] ^ (1/n)

Where R = annual return for a given year

[GregWeld]

The return on any investment, measured over a given period of time, is simply the sum of its capital appreciation and any income generated divided by the original amount of the investment, which is expressed as a percentage. The term applied to this composite calculation is total return.

However, there is a difference in this simple concept as applied to stocks and mutual funds. Unfortunately, a great many mutual fund investors do not seem to have a clear understanding of a fund's total return. The relationships between a fund's net asset value (NAV), yield (income) and capital gains distributions can be confusing. For stock investors, calculating and understanding their total return is relatively easy. By comparing how total return is derived for both stocks and mutual funds, you'll be able to better understand how this measure works for mutual funds.

Stock Total Return
We begin our illustration with a share of XYZ Company that is bought for $30 at the beginning of the year. During the year, its price fluctuates, but it closes the year at $33, which represents a nice percentage return on the investment of 10% ($3/$30).

But, things get even better because XYZ paid an annual dividend of $1 per share. This dividend equals an additional 3.3% return ($1/$30). Adding together the capital appreciation (price increase) of 10% and the income return (dividend) of 3.3% gives us a one-year total return for XYZ Company stock of 13.3%. However, remember that unless you sell XYZ stock, the price appreciation gain remains in the stock price, or is unrealized. (For more on this concept, see What are unrealized gains and losses?)

Fund Total Return
With mutual funds, explaining total return is a bit more complicated. We begin with a share of the ABC Fund, which is purchased at its net asset value (price) of $16 per share. A fund's NAV is derived by dividing the value of its portfolio securities (the fund's assets), less any accrued fees and expenses (the fund's liabilities), by the number of fund shares outstanding.
Here's an illustration of the computation of net asset value for the ABC Fund:

The fund's cash and cash equivalents = $200,000
The fund's stock holdings at market prices:
10,000 shares of Company X @ $50 = $500,000
20,000 shares of Company Y @ $30 = $600,000
50,000 shares of Company Z @ $8 = $400,000

Total market value of stock holdings = $1,500,000

The fund's total assets = $1,700,000
Less the fund's liabilities = $100,000
The fund's tolal net assets = $1,600,000

The fund's total shares outstanding: 100,000

The fund's NAV: $16 ($1,600,000/100,000)




Remember that mutual funds are priced once a day, at the end of the day. Unlike stocks, where prices are moved by the supply and demand forces of the marketplace, fund prices are determined by the value of the underlying securities in the fund.

In our example, ABC is a hybrid stock/bond fund with a growth-income orientation. Apart from capital gains, its individual portfolio holdings will generate dividends and interest. By law, mutual funds must distribute these to the fund's shareholders. ABC's income distribution (its dividends to shareholders) for the year amounted to $1 per share. In addition, the fund's trading activities (the buying and selling of securities) generated a realized capital gain of $3 per share, which ABC also distributed to its shareholders.

The ABC Fund passed along all the earnings and capital appreciation it generated - $4 ($1 in dividend distributions and $3 in a capital gains distribution) to its shareholders for a total return of 25% ($4/$16). Here again, unlike a stock, by paying out all its capital gains, the ABC Fund's price, or NAV, remains at or close to $16. In this scenario, if a fund investor only focused on the movement in ABC's NAV, the results would not look very good. It's even possible for a fund's NAV to decline, but still have good income/capital gain distributions, which will be reflected in a positive total return.

Obviously, a fund's NAV does not tell the whole mutual fund performance story, but its total return does. It captures a fund's changes in NAV, its income distribution and capital gains distribution, which, as a whole, are the true test of fund's return on investment.

[GregWeld]

There's no GOOD Quicken for MAC users.... particularly if you're up to date on the latest OS (Mavericks).

[SSLance]

There's no GOOD Quicken for MAC users.... particularly if you're up to date on the latest OS (Mavericks).


Well, not sure what to say about that... :D

Don't most Apple users setup a Windows partition or something like that so they can run the rest of the good software available out there? ;)

[GregWeld]

Well, not sure what to say about that... :D

Don't most Apple users setup a Windows partition or something like that so they can run the rest of the good software available out there? ;)





My wife - having spent 19 years as a Director at Microsoft (starting in 1984) - won't let me run any of their stuff.

[SSLance]

I hear ya... My Mother in Law wanted to invest in cable TV back in the late 70s but my Father in Law wouldn't let her. Said "nobody will ever pay for TV when they can get it for free"

To this day they still don't have cable TV in the house.

:headscratch:

Anyway, that's a bummer as it really is pretty decent software.

[GregWeld]

I hear ya... My Mother in Law wanted to invest in cable TV back in the late 70s but my Father in Law wouldn't let her. Said "nobody will ever pay for TV when they can get it for free"

To this day they still don't have cable TV in the house.

:headscratch:

Anyway, that's a bummer as it really is pretty decent software.




I tried!


They just only do the Quicken Home and Business for Windows... and their other products are about a year behind OS Mac wise...


I tried running the Mac / Windows thing -- blew it off a couple computers ago - I just don't need the hassle -- and I'm truly a Windows hater. I eff'd with that crap for 25 years - making everyone else's computers run - and fixing settings - and downloading endless "fixes"... NOW -- NO WAY! I open my little Mac up and just use it - and if someone calls and asks how to do "x" - I just say "sorry... don't run that crap anymore so I have no clue". Life is good now. :>)

Think this is now 9 years of running Apple stuff... and while they might not do everything perfectly - they put the FUN back into using a computer for me. Since I don't work - I don't have to open anything I don't effin' feel like! HA!!

[GregWeld]

Another year end (actually you can do this ANYTIME) for you SCHWAB account holders --- if you're in your "positions" page --- Click on "VIEW UNREALIZED GAIN/LOSS" --- just above where it lists your positions there's a "header" there with labels --- if you go to "GAIN" -- right under that there is a $ symbol (default) and % symbol...

Click on the % symbol and it will show you your percentage GAIN (or loss) per name.


That's actually just a quick handy way to see how you're doing.

[toy71camaro]

Lots of great discussion in here from the past couple days (just caught back up).

Like the discussion on checking returns and what not.


Since I'm a geek, and like to look at numbers, I actually setup a Google Docs Excel sheet. I put it my initial purchase of my stocks, and then continue to update each time i get a dividend (with how much the dividend bought, the current stock price, and the total div amount). It then tracks everything else for me...


Current price
The current dividend based off todays price
My Dividend on Cost
My current total return based on the current price
I have it also simulate my 401k returns (since their buried in a fund, all i get is the NAV price, and my total investment amount). So i have it auto-calculate my values based on current NAV, then every few weeks i go and update my total investment amount so its closer to the actual mark (i cant see if/when they pay out anything).


It's quite nice to just open it, let it "load" up all the current values and i can easily see that my Total Return on Altria is 50.8% and its making me a 6.5% dividend on my cost with a current dividend of 5.3%, its up $0.20 today, and it makes up 2.2% of my entire portfolio and is currently worth $X amount.

[GregWeld]

Nicely done Albert!!



I keep most of my stuff on "Numbers" - which is a real simple version of Excel spreadsheet. It's just basic but I'm not all that interested in figuring out my exact percentage of growth and ROI --- what I use it for is to track my dividend income per quarter - and the apartments etc that I own (that's a check every 6 months) and then to break that down so I can see what I earn on a monthly basis. I use Schwab for the majority of my stock activity - and I can go into each account so quickly - and then look at "unrealized/gain - loss" tab and see generally how I'm doing.

I understand fully - that you guys are having fun -- and frankly that you NEED to see your progress and I'm glad to see you all taking an interest. Funny how we want to discuss our last horsepower figure --- but people don't take much interest in what it takes to BUY that horsepower -- which is your money and how it's doing! My feeling has always been that if you have the horsepower in your money column -- then horsepower in your car is the easy part. LOL


Here's another thing I do during "dead periods" -- like this week - when frankly - there's not much going on. It's like the lull before the storm... I sit back and take stock of my overall financial health. The biggest sickness that most of us catch is the SPENDING FLU.... and I'm every bit as guilty of that as the rest of you are. While there maybe a difference in zeros - it's still exactly the same! I have managed to spend a fortune this year - some self inflicted - and some is just "life". It's the "life" part that seems to throw the wrench in your "budgets". I didn't budget for a $20,000 repair on the Lotus - I didn't really budget for the 3 different "breakages" on the Mustang - I really never thought about the monthly tabs coming from building the new house here in Sun Valley - and they are quite large actually! Surprisingly so - since we haven't even stuck a shovel in the ground yet. So where does this come from? CAPITAL. Now - I have ample capital - so it affects me absolutely zero from a living standpoint -- but what I'm using as an example here - is what we really don't want to see... and that is an ON GOING DRAIN on capital. Capital is the hardest part to attain. We need the capital to make us money going forward! If you spend 10K - then that's money that won't be making me money going forward and it's money that's losing the compounding affect. That compounding affect cuts two ways! Less free cash flow is less I have to spend - which means that more comes from capital if I need it -- and then that's a toilet bowl you don't want to be in.

Now for me - I control my spending - in the sense that almost 90% of my income is "FREE" - free in that my bills are basically nothing - so most all my income is just there to piss away. So if I'm "spending too much" - I can just cut back. Next year I won't be building a Brizio car... and next year I hope to sell my Bellevue house and pocket that money (which will just go out the door for the SV house build) and so on. We'll be done with the architects monthly bills - but then again - we'll start with far higher bills being paid to the contractor... I've planned all that part out.

I guess what I'm making a long winded post about --- is that in order to make your money really work for you --- you've got to keep that spending habit in check. Just because you had a good year this year - doesn't mean that's going to go on forever and ever. What happens is that you'll have a "life" expense creep in there -- and that will also be the year that the market sucks... and if you're forced to take out of the market -- then you loose that compounding you were well on your way to grinding out. DON'T YOU DO IT!! Don't you succumb to seeing that savings as an easy way to fix the TEMPORARY issue. The "I'll put it back as soon as I can" doesn't happen! STAY THE COURSE... keep that compounding and those dividends working for you - so later you don't have to work!

RANT OVER --- LOL

[GregWeld]

Well if you can suffer thru that last post --- then we can get on to the fun stuff... which is why I came into the thread in the first place!


Altria (MO) goes "EX" today.... and you'll see that nice .48 a share dividend in your January "stocking".

[GregWeld]

I sure hope some of you own Apple!! I don't -- it's too much money tied up per share to earn too little "income" for me -- but that TOTAL RETURN for the rest of you is pretty darn good over the last 5 years!


Funny -- if you pull up a chart of AAPL you're year to date percentage is ONLY 3% -- but that's the stock market - it goes up and down and sadly you have to have a little suffering with your cake. Today it's eat cake day!

[GregWeld]

Not pitching this stock AT ALL.... just thought it was funny and worth sharing is all. Remember my favorite saying is "better lucky than smart".


I'd bought Twitter (TWTR) and posted it back in November --- I'd bought 500 @ $40.82 and said that my position would be 1000 shares max. Well -- it ran another $4.00 real fast so I jumped on another 500 @ $44.38 giving me my 1000 at roughly $42.50 a share. Then Sieg and I exchanged a couple emails about this ---- with me saying NO WAY I'm sticking to my 1000 shares. Well then the damn thing was running so I bought another 1000 @ $56.91 making my 2000 average cost of $49.75


Some times you just have to get a gut feel and roll with it. Now - obviously this is not a core holding... but I know a stock running when I see one.. and I have the cash and resources to gamble just a bit - so I thought what the hell.

Today it's trading at $66.55 for a nice 33.8% unrealized gain in a month and 5 days...

In the old days I'd have flipped this out already and scooped up 33 GRAND for one month of "trading". Then I'd pay 40% income tax - and then I'd watch the damn thing run to $100 and I'd be buying back in.

I've learned a few things in the last 25 years or so -- and one of them is that sometimes you just have to take a ride. I STRONGLY do not advise this kind of gambling unless you have plenty of extra dough just waiting to be put to work! The minute you take a flier like this and actually PLAN on it going straight up -- it won't -- it'll turn south on you -- and then have your guts churning. So this is just a post because it's worked out THIS TIME.


So to any of you that followed me into this name -- Merry Xmas!


But please don't follow me just because I did something -- you know that's against the rules of logical thinking -- it's gambling at it's very worst... which is great fun when it's going your way -- and it sucks HUGE when it doesn't.

My plan is to sell half if I get to a "double" --- then I will be playing with house money - just like at the casino. If it just holds here for a year - I'd be happy as a clam -- then I'd sell some and only pay 20% long term capital gains tax. In the meantime -- one hint of bad news and I loose my ass... So we'll see.










I bought 500 shares of Twitter (TWTR) today....



So here's why I post this info. Just because someone else does doesn't mean you should. I can afford to take a very small position in a name like this. Think about the relative size of what 500 shares of a name is for me - when a typical position is 10,000 or 20,000 or 50,000 shares. If you're just building up your retirement account build a nice big base FIRST, then once you have $100K plus earning some dividends... Now you could "afford" to take on a risk like this. And you keep that risk really small in relation to your overall financial health!

Tiptoe first! I expect this name to be cut in half at some point and if it gets hit like that I'll buy another 500 and then that's it. Not another single share. If it doubles I'll take out my investment and let the house money ride. Period. It's gambling. But for me it's like gambling one dollar and then walking away. Don't get caught up in trying to make the big score.

[toy71camaro]

I had a much better feeling about Twitter's market than Facebook. But I didnt have the capital to gamble with. lol. I think twitter has a lot more "business" wise than most people realize. I've just started getting a presence on there as part of my Life Coach recommendations and the future of "social currency".

[GregWeld]

I had a much better feeling about Twitter's market than Facebook. But I didnt have the capital to gamble with. lol. I think twitter has a lot more "business" wise than most people realize. I've just started getting a presence on there as part of my Life Coach recommendations and the future of "social currency".



Yeah -- I'm so not a FaceyBook fan... but Twitter I'm following and there's lots of businesses "tweeting" that I pay attention to, and I like Instagram for what it is.

I bought the Twitter stock because Twitter is something I use (I don't tweet - but I follow others) and I like the way it works. But mostly I'm just gambling!