Investing 102

[GregWeld]

INTERESTING......




5. Millionaires are not necessarily super savers.

You don’t have to sock away 30%, 40%, or 50% of your income to amass $1 million (though that would help get you there faster). In an analysis of 401(k) savers who made less than $150,000 a year and still had more than $1 million in their plans, Fidelity found that those millionaires saved only 14% a year on average.

Their secrets? Save steadily, of course. And let the company do some heavy lifting. Fidelity’s 401(k) millionaires saved 19% on average when employer contributions were included, and 28% of their account balances came from the match. In fact, a new study from the Center for Retirement Research confirms that saving 15% a year for three decades is enough for a comfortable retirement.

6. About 15% of millionaires didn’t bother with a college degree.

Mark Zuckerberg and Bill Gates aren’t the only millionaires without diplomas. Spectrem Group found that 85% of millionaires have college degrees. Another 12% attended college and dropped out. On the other hand, 31% earned an advanced degree.

7. The young generation of millionaires lives lavishly.

Gen X and Y millionaires have had less time to reach seven figures, so not surprisingly they tend to earn far more than their baby boomer millionaire brethren: $677,000 a year on average, vs. $198,000 a year, reports Fidelity. And they tend to act the part to the hilt: 63% of Gen X and Y millionaires own vacation homes (vs. 21% of boomers), 44% own boats (vs. 12% of boomers), 63% belong to country clubs (vs. 15% of boomers), and 38% fly first class (vs. 5% of boomers).

8. Ultra-millionaires love Home Depot.

Where do the wealthy shop? Not where you’d think. About 57% of millionaires worth more than $5 million say they shop at Home Depot all the time, according to the Spectrem Group. Other favorites include Costco, Lowe’s, and Target. Only 8% say they regularly shop at Neiman Marcus.




I drove 4 hours round trip yesterday --- to go to COSTCO....

[SSLance]

Sold my 70 shares of MCD today... What Greg says makes a lot of sense.

I haven't decided what to replace it with yet, but I will soon.

I'm up 9.61% overall since rejoining the market in February and have booked over $1200 just in dividends during that time period...with more to come soon. And I'm still only about 33% invested.

Should I have been putting more in, sure...but at the same time this last little dip didn't bother me in the least. I remember all too well all of the nights spent worrying about dips like that. This time it is different, and I'll continue on with my plan of just putting in what I'm most comfortable with and learning as I go.

[Sieg]

On a similar note, a few years ago I bought both ATT & VZ due to dividend rates. ATT has delivered a 13% gain, VZ 26%. As a satisfied VZ customer I'll be rolling the ATT shares into VZ when the timing is right.

As a current Comcast customer...........there's no way in h*ll I'd buy their stock. :lol:

[GregWeld]

Sold my 70 shares of MCD today... What Greg says makes a lot of sense.

I haven't decided what to replace it with yet, but I will soon.

I'm up 9.61% overall since rejoining the market in February and have booked over $1200 just in dividends during that time period...with more to come soon. And I'm still only about 33% invested.

Should I have been putting more in, sure...but at the same time this last little dip didn't bother me in the least. I remember all too well all of the nights spent worrying about dips like that. This time it is different, and I'll continue on with my plan of just putting in what I'm most comfortable with and learning as I go.






And that's exactly the way you should be doing it Lance!! And good for you on the returns!






On a similar note, a few years ago I bought both ATT & VZ due to dividend rates. ATT has delivered a 13% gain, VZ 26%. As a satisfied VZ customer I'll be rolling the ATT shares into VZ when the timing is right.

As a current Comcast customer...........there's no way in h*ll I'd buy their stock. :lol:





Yes -- I too used to own both... then thought that was dumb. Turns out I'm dumb. But I sleep fine at night knowing T (or VZ) is a good company that will continue to contribute to my retirement bliss.... 13% isn't as good as the 26% but it could have just as easily been the other way around. What I don't like is to see DOWN 1% vs someone else that's doing WAY better!!

[GregWeld]

Found this "calculator" via Seeking Alpha.... it shows the power of compounding.

It's completely hypothetical of course because you wouldn't be using real actual numbers of a particular stock. But it certainly is a powerful "message" when you see the numbers even if you just use the 100 shares at $100 -- leaving all the 5's in place -- but change the number of years to 30... or then change that to 35 etc.

Mostly what it compares though is the power of REINVESTING the dividend versus what I do - which is spend it (But I'm already retired). LOL



http://www.buyupside.com/calculators/dividendreinvestmentdec07.htm

[Vegas69]

Looks like my purchase of Costco was just in time. :thankyou:

[GregWeld]

Looks like my purchase of Costco was just in time. :thankyou:



That's the thing about investing. There's never a good time in anyone's mind. That's the biggest hurdle to get over. Doesn't make any difference if a guy is buying $100 -- $1000 -- $10,000 or a million at a time.... I personally guarantee the stock you picked WILL be lower than your cost basis at some point. Usually 15 minutes after a guy buys. I will also guarantee the shares will be higher right after you sell. It's that long space in-between where the money is made.

The other day I decided to cut my holdings in British Petroleum Prudhoe Bay Trust (BPT) by half... I held 20,000 shares and while it pays a huge dividend percentage -- There's other stuff I want to buy -- and I like to always have pretty substantial cash positions. So I put in a limit sell order at $92 - which was well above the current trades... I put in orders like that and then go do something else. If they get sold fine - if not - the shares are still in my account and we'll try it another day. Of course they sold - and the shares closed the day at $92.50. 50 cents per share @ 10,000 shares is $5,000.... So I left a little on the table. But I don't get caught up in that - because I know I'll never ever get it "right". I just do what I want/need to do. I still had a very nice gain in the shares on top of the outsized dividends collected.

My point -- it takes time to get over "losing" the last nickel of gain.... and it takes time to get your mind right that no matter when you buy - you probably could have waited and bought cheaper. In the long run - it just doesn't matter.
You do get used to it.

Kind of like the housing market. Most must sell to buy another.... we wouldn't buy another if we thought the market was going to hell.. so at some point we must put up a for sale sign -- close a deal - and take the plunge into the next home. We just KNOW that it's going up over time so we're okay with it. I never can figure out why that's okay but stocks are thought of differently.

[Vegas69]

I was just kidding around since you mentioned your trip to Costco.

[GregWeld]

I was just kidding around since you mentioned your trip to Costco.

Still gave me good segue for a good post!


I don't own Costco (COST) because the dividend is just too low for
me... but it's a good well run outfit.

[Vegas69]

I sold off Target and bought Costco. The retail market seems saturated, Costco appears to have somewhat of a niche. I'm not going down there and wasting 3 hours of my Saturday for bulk jalapenos and two cents off gas, but hey, I see value there.

[GregWeld]

I sold off Target and bought Costco. The retail market seems saturated, Costco appears to have somewhat of a niche. I'm not going down there and wasting 3 hours of my Saturday for bulk jalapenos and two cents off gas, but hey, I see value there.



I drove the 2 hours to Twin Falls - specifically to go to Costco to buy a Windows Laptop. ONE item - in and out. Done. LOL I'm a Mac guy - but needed an up to date Windows machine for the AiM SmartyCam I'm setting up in the Lotus (if it works I'll get one for the Mustang too). My point of all this ----- by the time I cruised the aisles I'd blown thru a grand... And that's where they get ya. Everyone that bothers to go there - runs thru all the aisles and finds all manor of stuff they didn't know they needed. I just ASSume that whatever I put on the cart is the best price I'm going to get on that item.

[glassman]

I drove the 2 hours to Twin Falls - specifically to go to Costco to buy a Windows Laptop. ONE item - in and out. Done. LOL I'm a Mac guy - but needed an up to date Windows machine for the AiM SmartyCam I'm setting up in the Lotus (if it works I'll get one for the Mustang too). My point of all this ----- by the time I cruised the aisles I'd blown thru a grand... And that's where they get ya. Everyone that bothers to go there - runs thru all the aisles and finds all manor of stuff they didn't know they needed. I just ASSume that whatever I put on the cart is the best price I'm going to get on that item.

So I can sleep knowing you got enough stock of cheeseballs for said moderator?

[WSSix]

I don't mind of you keep blowing through cash while in COSTCO at all, Greg. :D That one has been a sneaker for me. I got it as a steady eddy since the dividend was so low. Right now, it's going well with capital gains which I was not expecting. More proof that you just have to get in if you want to make money instead of waiting on the sidelines for the "right time".

[GregWeld]

So I can sleep knowing you got enough stock of cheeseballs for said moderator?\






Those take a trip to WalMart..... Specifically - the one right there on I-5 and the 162 turnoff to Thunderhill. $4.99 for the giant plastic jar of artificial delights...






I don't mind of you keep blowing through cash while in COSTCO at all, Greg. :D That one has been a sneaker for me. I got it as a steady eddy since the dividend was so low. Right now, it's going well with capital gains which I was not expecting. More proof that you just have to get in if you want to make money instead of waiting on the sidelines for the "right time".





Good for you Trey!! And yes --- the key is just to forge ahead and get in whenever a guy is ready. Investing just isn't about todays price.... it's about getting invested in the proper KINDS of stocks - and then staying invested and plowing those dividends back in for the compounding affect. Next thing you know - you're happily retired floating in the pool in Maui sipping on a Pina Colada....

Failure to invest - timing the market - buying high and selling low - that will have you retired as a greeter at WalMart or wrapping breakfast sandwiches at McDonalds when you're 70...

The choices people make NOW -- will determine their "fate" later when they can do the least about it. I know which way I'd choose to go.

[GregWeld]

Here's why - IMHO - "P/E" ratios don't matter....

I don't invest in "growth" companies. I simply can't afford the acid stomach that comes with them - and being retired - don't want to be in a situation where the MARKET turns south for a couple years and I have money tied up in stocks with red (underwater investments) that don't pay me to own them. Having said that - you younger guys should be adding GROWTH to your portfolios. You can afford to wait for the market to turn higher after a downturn - you're NOT retired - and you're still earning a living to support yourselves.

I've missed out on a couple doozies this last couple years. Namely FaceBook (FB) and NetFlix (NFLX). The ONE YEAR chart shows FB with 85% growth and NFLX has 73%. Those are big numbers.

Here's the point.

Some folks get all hung up on certain metric such as P/E (Price to Earnings) ratios. And here are two prime examples (as that's all they are!) with huge P/E's - where the P/E just simply doesn't matter. Why? Because what you're investing in is "the future". Investors are betting that these companies have a LOT of growth left. That they're still infants as far as where there businesses are going. Whether that's right or not is another story and we really just don't know that, so any discussion is just guessing. And when you invest in this type of company (huge P/E big growth possibilities) that's all you're doing. You're putting on your thinking cap and asking yourself.... does this COMPANY - not the stock -- have legs? You'll have to separate the STOCK from the COMPANY... as the stock will follow the company. If there's big growth in customers and earnings and eyeballs or whatever it is that the company is measured by... then the stock will follow.

HERES the issue you'll eventually have to deal with as far as the STOCK goes....

IF they "miss" the whisper number - if they miss the projected growth numbers OR if the MARKET turns south --- the air comes out of these kinds of investments far faster than a dividend stock which is supported by the dividend payment percentage - which grows as a percentage as the price of the shares come down. What happens is that a LOT of people bought at far lower prices -- and they'll "lock in" their profits FIRST in these kinds of investments (which means they'll sell these to raise cash FIRST) --- more sellers than buyers and the price comes cascading down. That's the kind of thing someone like me looks for.... that's when I'd be a buyer.... I always have huge cash positions - I don't sell to raise cash - I already have it.... and I know where the price can go and assume they'll still have huge growth potential so if I missed it the first time around MAYBE (big if) I'll get a chance to buy some on sale.

In the meantime -- if you have a double -- so what if it goes down 30% -- it's down 30% from a double!! Good for you if you can stomach that... and if you're young - you should be able to. The hell with P/E's on this kind of stuff - what counts is making MONEY.... and nobody ever paid their bills with P/E...

P/E DOES count on big stable companies! Don't confuse the two types of investments -- one is GROWTH -- another is steady eddy or dividend paying etc. WE'RE talking about big growth type investments here. Monster Energy - NetFlix - FaceBook - Tesla.... NOT GE or MERCK

[toy71camaro]

Greg,

Thanks again for your always insightful posts. I may not post regularly, but I certainly monitor this thread daily and am always learning.

To all who are on here, thank you as well. You're questions, comments, discussions etc have helped me learn a great deal of information in a relatively short period of time.

Me and my future thank you. :)

I do hope I get to meet some of you some day. If you're ever in the California Central Valley, please shoot me a PM and come say Hi.

Albert

[chetly]

So I have another $1000 to throw into the market. Do I put it into one of my curent Tesla, Apple or GoPro or go somewhere else?

[GregWeld]

If you already own Tesla --- I'd split it between Apple and GoPro.... maybe a 70/30 split or 60/40....


Or if you're a real gambler.... 50/50 Twitter and GoPro.

[96z28ss]

I picked some gopro up @ $46.4 then again on the dip @ $38.8. it had a good run today and is at $48.90

[GregWeld]

Interesting study of credit cards vs cash usage.

Personally - I'd be embarrassed that I had to use plastic to pay for something less than $100... LOL - obviously that shows my age group! My wife buys groceries on the Visa while I use the debit card. It all costs the same... I just look at people using plastic for that kind of stuff as people that have no money. Of course that isn't true... it's just the way I grew up. My son sees no need for cash for anything. Got card? Got money! LOL





http://archive.pnj.com/usatoday/article/14701687

[96z28ss]

I used to be the same way use cash for all the small stuff. Now I use plastic for as much as I can. I have credit cards with all the Airlines I use. That way I'm getting some flyer miles with every purchase. I flew to Cabo for $80 and I flew to Dominican Republic for $110.
I few years back I used to have a GM card that I'd used to use the money earned towards vehicles.

[GregWeld]

That's Gwen's theory -- every buck is a mile on the plane....









I used to be the same way use cash for all the small stuff. Now I use plastic for as much as I can. I have credit cards with all the Airlines I use. That way I'm getting some flyer miles with every purchase. I flew to Cabo for $80 and I flew to Dominican Republic for $110.
I few years back I used to have a GM card that I'd used to use the money earned towards vehicles.

[srh3trinity]

I used to be the same way use cash for all the small stuff. Now I use plastic for as much as I can. I have credit cards with all the Airlines I use. That way I'm getting some flyer miles with every purchase. I flew to Cabo for $80 and I flew to Dominican Republic for $110.
I few years back I used to have a GM card that I'd used to use the money earned towards vehicles.

I use plastic as much as possible. I get 1.5% cash back with my current card. I don't keep a balance and I pay off the bill at the end of the month. There are some things that it doesn't make sense to use it for, for instance, I tried to pay my mortgage with a credit card, but they charge a fee that worked out to around 2.5% to do so. The cash back rate didn't justify it.
I use that 1.5% cash back for car parts.

[NOVA]

If you already own Tesla --- I'd split it between Apple and GoPro.... maybe a 70/30 split or 60/40....


Or if you're a real gambler.... 50/50 Twitter and GoPro.

does one buy more if your already in both, what to do what to do.

TSLA at an almost all time high today, hmmm.

as everyone else has mentioned this is an interesting thread, good info.

[captainofiron]

Hey guys, good info on here.

I need some investing advice

I just recently switched jobs, so my old 401k is now just sitting there waiting to get picked at by the companies fees.

My new company offers a nice 401k as well, AND free financial management.

So today I talked to the guy who does all this for us.

He was talking about either rolling my old 401k into my new 401k OR rolling it into an IRA

He suggests the IRA because you can make more choices, thus have a higher potential of making more money.

Im a little leery, as I am more conservative when it comes to money and the fees and such of this type of investment are a little unnerving.

Is this guy giving me good advice? Or is he putting me on a path that HE will make the most money from?

Thanks

[GregWeld]

does one buy more if your already in both, what to do what to do.

TSLA at an almost all time high today, hmmm.

as everyone else has mentioned this is an interesting thread, good info.



It always pisses me off when people get antsy because a stock they own goes up... WTF... isn't that what you want it to do?? Or a hot stock hits a new high... think about this for one minute. This was an IPO.... so every time it goes up after the IPO price - that's pretty much a "new high". Obviously "other" investors are willing to pay more money for the shares... So shouldn't this be GREAT NEWS?!?!?

Stocks setting new highs - and splitting - and setting new highs ---- DUDE!! That's how people become millionaires. I can recall dozens and dozens of stocks that have made people millions for just this very reason. I know a guy that invested 20K in Microsoft and it made him a millionaire. Why? Because it just kept going up. That's a GOOD thing not something that should be looked at with disdain.

[GregWeld]

Hey guys, good info on here.

I need some investing advice

I just recently switched jobs, so my old 401k is now just sitting there waiting to get picked at by the companies fees.

My new company offers a nice 401k as well, AND free financial management.

So today I talked to the guy who does all this for us.

He was talking about either rolling my old 401k into my new 401k OR rolling it into an IRA

He suggests the IRA because you can make more choices, thus have a higher potential of making more money.

Im a little leery, as I am more conservative when it comes to money and the fees and such of this type of investment are a little unnerving.

Is this guy giving me good advice? Or is he putting me on a path that HE will make the most money from?

Thanks



#1 -- You don't tell us much about who "He" is. Is this someone that works for the company and manages the 401K? Who is he?


#2 -- You could have "rolled" your 401K into an IRA immediately after departing the last company and have been running it "self directed". You don't need anyone to run an IRA for you. So there would be no "fees" etc to pick you apart.

#3 -- Nobody can tell you what to do - nobody knows your personal financial situation. Read this thread and learn -- so go back and start at page one.

[GregWeld]

does one buy more if your already in both, what to do what to do.

TSLA at an almost all time high today, hmmm.

as everyone else has mentioned this is an interesting thread, good info.



I forgot to respond to your question about buying more of something that you already hold. Reading this thread will explain the 5% rule. You shouldn't have more than 5% of your total investable funds in any one name. Obviously - this rule is nothing more than a guideline. If you have 10 grand invested and only have 4 names - that would put 25% into each name. When you're just beginning there's no way to keep to that 5% rule. 5% is more for once someone has 100K invested.

BTW --- My other post responding to your TESLA statement about it hitting an all time high... when I say I'm pissed off.... that DOES NOT mean at you for your post. It's a statement about investing in general. And more importantly - there is absolutely NOTHING wrong with the market going up or a stock going up! Nothing. Pull up a chart of the stock market since 1929.... UP is the general direction -- like houses - like inflation - like EVERYTHING - Gas - your electric bill. About the only thing that's gone down is Flat screen TV's and Cell phones. LOL


I've "averaged up" in many many names in the market. It just is a mental thing to buy more when stuff keeps going up. But it's doing EXACTLY what you want it to do!

[captainofiron]

#1 -- You don't tell us much about who "He" is. Is this someone that works for the company and manages the 401K? Who is he?


#2 -- You could have "rolled" your 401K into an IRA immediately after departing the last company and have been running it "self directed". You don't need anyone to run an IRA for you. So there would be no "fees" etc to pick you apart.

#3 -- Nobody can tell you what to do - nobody knows your personal financial situation. Read this thread and learn -- so go back and start at page one.

1), the guy is an private investment guy that handles the companies 401k, he is a part of Baird Financial

2) To be completely honest I am really intimidated by all of this, never having done it, nor knowing anyone who has done it. Hence why I havent touched my old 401k, which is with Fidelity in one of their target date funds. About a month after being hired on, my new company had their 401k review and the investment guy talked to me afterward about possible strategies.

3) thats alot of reading :wow:

haha thanks

[GregWeld]

1), the guy is an private investment guy that handles the companies 401k, he is a part of Baird Financial

2) To be completely honest I am really intimidated by all of this, never having done it, nor knowing anyone who has done it. Hence why I havent touched my old 401k, which is with Fidelity in one of their target date funds. About a month after being hired on, my new company had their 401k review and the investment guy talked to me afterward about possible strategies.

3) thats alot of reading :wow:

haha thanks



1) Baird Financial is a HUGE firm with BILLIONS under management. Don't be afraid of them.

2) Read this thread from start to finish - take your time - and you'll be a lot less intimidated

3) It's YOUR future we're talking about... given the amount of time you have to live in retirement... the 400+ pages of this thread is childs play.

4) You have an obligation to yourself and your family to get a grip on your finances. It's EASY... and more importantly - IT'S THE MOST IMPORTANT THING YOU CAN EVER DO.

Like anything else - we all do things that we start out knowing nothing about. We all manage to educate ourselves about clutches - motors - tires - paint etc. Except that NONE of those are very important. Yet me manage to dive in and get involved.

[captainofiron]

1) Baird Financial is a HUGE firm with BILLIONS under management. Don't be afraid of them.

2) Read this thread from start to finish - take your time - and you'll be a lot less intimidated

3) It's YOUR future we're talking about... given the amount of time you have to live in retirement... the 400+ pages of this thread is childs play.

4) You have an obligation to yourself and your family to get a grip on your finances. It's EASY... and more importantly - IT'S THE MOST IMPORTANT THING YOU CAN EVER DO.

Like anything else - we all do things that we start out knowing nothing about. We all manage to educate ourselves about clutches - motors - tires - paint etc. Except that NONE of those are very important. Yet me manage to dive in and get involved.

Thanks thats good to know on #1
The guy was a real fast talker, reminded me of Wolf on Wall Street and I was really unnerved

I just started reading through the PDF. but its going to take me a while, haha

and just because its appropriate
:G-Dub:
haha

SO with that said, rolling over my old 401k to them in the form of a traditional IRA is a good move?
OR should I roll it into my new companies 401k?

I am leaning more toward the new 401, as they pay the fees and stuff, BUT the more choices and the ability to withdraw from the IRA (even though its penalized) is a very attractive "Pro"

[JKnight]

I would talk to someone about the IRA before you go too far in thinking that there are "fees" issues associated with it. Most discount brokers will set you up an IRA for free and there are no account maintenance charges. You'll pay some amount in commissions whenever you trade, but there are no annual fees for your average rollover IRA (I'm sure there are exceptions to this where someone is charging account fees, but there are plenty that don't).

In fact, your company's current 401k with its' target date funds will actually cost you more than holding stocks in an IRA. For example, look at the OER (Operating Expense Ratio) on the target date funds you're holding in your 401k. Most likely, the OER is somewhere in the range of 0.60%-1.50%. That means that the returns for each fund are being reduced by the OER (fee the fund company charges to pay the portfolio managers, keep the lights on, etc.) with whatever's leftover being reflected as an increase in the fund's price (aka your return for the year).

That OER is being taken every year, so ~1.00% per year. That's a fee! There is no such thing happening in an IRA, well, unless you buy mutual funds in it. So, yeah, you'll pay some amount in commissions to buy your stocks (or whatever you choose) in the IRA, but you shouldn't have to pay anything additional on an annual basis. You can even buy ETFs in the IRA and sometimes that can be done commission free.

[captainofiron]

I would talk to someone about the IRA before you go too far in thinking that there are "fees" issues associated with it. Most discount brokers will set you up an IRA for free and there are no account maintenance charges. You'll pay some amount in commissions whenever you trade, but there are no annual fees for your average rollover IRA (I'm sure there are exceptions to this where someone is charging account fees, but there are plenty that don't).

In fact, your company's current 401k with its' target date funds will actually cost you more than holding stocks in an IRA. For example, look at the OER (Operating Expense Ratio) on the target date funds you're holding in your 401k. Most likely, the OER is somewhere in the range of 0.60%-1.50%. That means that the returns for each fund are being reduced by the OER (fee the fund company charges to pay the portfolio managers, keep the lights on, etc.) with whatever's leftover being reflected as an increase in the fund's price (aka your return for the year).

That OER is being taken every year, so ~1.00% per year. That's a fee! There is no such thing happening in an IRA, well, unless you buy mutual funds in it. So, yeah, you'll pay some amount in commissions to buy your stocks (or whatever you choose) in the IRA, but you shouldn't have to pay anything additional on an annual basis. You can even buy ETFs in the IRA and sometimes that can be done commission free.

Well Im reading this whole thread, and Gregs post are really getting me excited, haha

the OER on mine is .78%

The investment guy I have been talking to here at my new job says that I should go with Mutual Funds since I am young (31)

and suggested some from Blackrock

specifically these
1) http://www.blackrock.com/investing/products/227434/blackrock-energy-resources-institutional-class-fund

2) http://www.blackrock.com/investing/products/227456/blackrock-health-sciences-oppsinst-class-fund

3) http://www.blackrock.com/investing/products/227443/blackrock-global-smallcap-institutional-class-fund

[JKnight]

the OER on mine is .78%

The investment guy I have been talking to here at my new job says that I should go with Mutual Funds since I am young (31)

and suggested some from Blackrock

specifically these

If that's what you're comfortable with, then go for it. It's good that you're talking to a professional and listening to their advice. However, I would have encouraged you to ask a follow-up question of him, "why are mutual funds better suited for a "young" person of my age?". Then you can hopefully learn from his answer, helping you to become more informed about why you're doing what you're doing, or you can find out if he's feeding you a line of bull.

You and I are the same age, so I get where you're coming from. As a young person, you can afford to have stocks rise and fall quite a few times before you need the money. So the logic of using highly-diversified mutual funds for a young person seems a bit odd. For me, I also utilize commission-free ETFs in a rollover IRA because I know that over the course of 40 years of compounding, not losing out on ~1.0% a year in returns due to expenses can make a real difference in the ending balance.

In Greg terms, I would use the commission-free ETFs to "park" cash if you don't have a stock or other investment you're interested in.

As a reminder: we're not telling you what to do, just telling you what we do or how we think about things so you can learn.

[captainofiron]

If that's what you're comfortable with, then go for it. It's good that you're talking to a professional and listening to their advice. However, I would have encouraged you to ask a follow-up question of him, "why are mutual funds better suited for a "young" person of my age?". Then you can hopefully learn from his answer, helping you to become more informed about why you're doing what you're doing, or you can find out if he's feeding you a line of bull.

You and I are the same age, so I get where you're coming from. As a young person, you can afford to have stocks rise and fall quite a few times before you need the money. So the logic of using highly-diversified mutual funds for a young person seems a bit odd. For me, I also utilize commission-free ETFs in a rollover IRA because I know that over the course of 40 years of compounding, not losing out on ~1.0% a year in returns due to expenses can make a real difference in the ending balance.

In Greg terms, I would use the commission-free ETFs to "park" cash if you don't have a stock or other investment you're interested in.

As a reminder: we're not telling you what to do, just telling you what we do or how we think about things so you can learn.

Man, I wish I would have found this thread before I talked to him. I didnt start googling until after I spoke with him, and then I stumbled upon this gem of a thread.

Im curious if he suggested that because I told him I am a more conservative person. That was like the second question he asked me.

I guess the more important thing right now is to get the old 401k rolled over into an IRA, then later on start looking at the commission free ETF that you and Greg are talking about

[GregWeld]

I would suggest you do absolutely NOTHING until you're done reading....


You're only 31 --- and couple more weeks isn't going to kill you right now. Read thru the thread -- go back and re-read parts you don't quite get... it will start to all come together for you. THEN you can come back here with better questions.

Ditch the fast talking bozo --- if you decide to go with them - call them and ask to work with a different representative. NEVER EVER NEVER EVER work with a fast talker. It's way too important for you!!

Don't get caught up in thinking you need to do this or that. Wait until you understand ALL your options! There are income tax implications if you do it WRONG.... and there are many other considerations that will all greatly affect your decisions now and into the future.

When you get a little more comfortable with all these "terms" --- ask what it would look like to roll your 401K over into a ROTH IRA. This may take an accountant to factor in the taxes... but if I was your age (without knowing another single detail about you or your income level) I'd want my money in a ROTH IRA.

[WSSix]

Roth IRA or Roth 401k are fantastic if available to you. I don't really have anything to add that hasn't already been said expect to second the be patient part. I do hope though that someone has mentioned to you that you shouldn't move the old 401k until you have decided on what account to put it in. It must also go directly there meaning under no circumstances should your 401k money come into your hands before going into whatever new retirement account you choose. It must be an institutional transfer or you will get hit with taxes on that 401k money. Good luck. Keeping reading and asking questions.

[GregWeld]

Rather than just add to the post count here - repeating what's been said in the last 400 pages over and over again... I've been holding back waiting for "events" in the market that would be NEW and of possible interest to all of you.

I think the Apple (AAPL) news - both the rise and the fall (yesterday) - and their upcoming events next week give me that opportunity.

Remember that I am never recommending WHAT to do or what to buy or sell. That's not this thread. I just want to use this as an example of a way to THINK.

Here we have a watershed moment which comes along every once in awhile in the market. You have a company that is just kicking butt... The stock recently split 7 for 1 - thus making it more affordable... so I would ASSume that is a good thing. You have a company that makes a TON of money... and is constantly in the news. Mostly all speculative and favorable.

And here's the INVESTING 102 info:

Let's ASSume for a minute that we're holding the name. We know there's a big product launch coming. We know we're going into the 4th quarter - and in RETAIL that's "everything". And all of a sudden the stock gives us a "buying opportunity" (meaning the stock DROPS). What to do?? Do we add to our positions?? Is the stock suddenly "broken"? Should we average down? Should we get in if we're not already owning?

This IS NOT about this stock - this is about a SITUATION - using this stock as a current example.

I own this particular name (5000 shares). I have a nice gain in the name. I've been in EXACTLY this same situation many times in the past with various other names.

I'd call this situation - standing on the railroad tracks. Why? Because you KNOW there's a train coming. You can jump on the train and get a free ride OR you might get run over. Those are the two things you can count on in the stock market. One is going to make you "the smartest guy in the universe" - the other is going to kill you. EITHER WAY --- it's pure gambling. You're betting that you're smart enough and quick enough to step out of the way - grab the handle and swing yourself on board for that big ride up. But if you're not - and you're timing sucks just a little, you are UNDER that train.

When you have so much "anticipation" that something big is going to happen in a name -- don't think that you're the only guy on the planet that is thinking this way. Remember there are TWO SIDES to every transaction --- and that huge anticipation can bring with it - huge disappointment. Think of the basketball game where there's 1 second on the clock - your guy is inbounding and you MUST make this shot to win... sometimes the player sinks the shot... and sometimes they miss and lose. There's jubilation if he makes it - and much head hanging if he doesn't. It's VERY emotional!!

What I'm trying to say - in too many words - don't get caught up in the hype and just throw you're money in the ring by buying (HOPING) that the big event is going to just make you money hand over fist. Lots of times when the hype outstrips the actual fact - the sellers pour in and take the big event into the trash can with the missed shot! Sometimes the big event is even bigger than the hype and the stocks sails off and leaves you wishing you'd tripled your investment (bet).

So before a guy just goes crazy --- THINK ABOUT HOW THIS INVESTMENT FITS YOUR PLAN. Are you buying because it's a name on your list you just want to own for the long term. And here it has dipped a bit - and now's your chance to buy. FINE. That's a PLAN -- that's not gambling. You've been patient - saved up your cash - you wanted to own the name regardless and here's as good an opportunity as any. BUT please don't be indiscriminate. Never invest (gamble) that you're going to buy and it's going to pop UP. You'll only be disappointed if it doesn't - and that plays on your mind in a very negative way. We have enough things to stew over... let's not have it be our long term investments.

20 years ago I'd have doubled down or tripled down on the "big" drop yesterday.... only to now own 2 or 3 times as many shares and watch them go down even harder after the big "earnings news" or the "big event" (that didn't happen)... or the big whatever. I rode the hype and got my azz handed to me many times. Sometimes I scored huge... most times the little man on Wall Street took me to the woodshed - doing exactly the opposite of what I expected (I was just certain!) to happen.

Don't take little moments in time and get all jacked up about 'em. Take the longer view and be patient. Look at any name and ask yourself if you think LONG TERM this is a company I want to own come hell or high water. If that's the case - fire away! But if you're just thinking that now's the perfect time to score big money quickly. Please don't. You'll be sorry more times than you can imagine.

My impulse yesterday was to be a buyer. It's a great company with great products - it's a company whose products my whole family uses... I already own it... and there's the key. I already own it. If it jumps up I get the ride... if it goes down - I have a good position and I'll just hold. But I'm NOT going to just blindly stand in front of that train....because I just can't sleep well knowing I gambled because I just knew the big event was going to make me money. NO! I'll make money if I already own the name (insert any name).

I'm not talking anyone out of buying anything - and I'm not saying to buy... what I'm saying is to UNDERSTAND WHY YOU'RE BUYING or SELLING and to keep the emotion out of the sale or the buy.

[toy71camaro]

Keep emotions out of it.. good point.. a tough one, but a tried and true one.

Thanks Greg.

[captainofiron]

I would suggest you do absolutely NOTHING until you're done reading....


You're only 31 --- and couple more weeks isn't going to kill you right now. Read thru the thread -- go back and re-read parts you don't quite get... it will start to all come together for you. THEN you can come back here with better questions.

Ditch the fast talking bozo --- if you decide to go with them - call them and ask to work with a different representative. NEVER EVER NEVER EVER work with a fast talker. It's way too important for you!!

Don't get caught up in thinking you need to do this or that. Wait until you understand ALL your options! There are income tax implications if you do it WRONG.... and there are many other considerations that will all greatly affect your decisions now and into the future.

When you get a little more comfortable with all these "terms" --- ask what it would look like to roll your 401K over into a ROTH IRA. This may take an accountant to factor in the taxes... but if I was your age (without knowing another single detail about you or your income level) I'd want my money in a ROTH IRA.

Thanks Greg

Im almost halfway done with the thread :headspin:

When I talked to him, I asked if I should consider a Roth IRA. He said no, and I really didnt have anything to challenge back.

Right now things are shifting in my life.

1) I got the new job, where I am earning way more than I used to and now my wife can stay at home

2) We are expecting, baby will be here in December

3) To take the new job we had to move, and currently our house is on sale in a tepid market

4) We have more debt than I am comfortable with, BUT we have a surplus every month. Right now, we only owe on my car, the wife's car and a couple hundred on a no interest jewelery card I got

What I wanted to do is pay off the cars with a snowball, then use that to hit the mortgage on a new house (once ours sells)

We had been doing great prior to buying the house, we had our emergency fund, and were snow balling my wife's old car, but then it got totaled. My paid off car bit the dust a couple months later

In my mind, I should be getting debt free (minus the house) first then start investing (outside of my 401k contributions of course), do you agree?

[toy71camaro]

Thanks Greg

Im almost halfway done with the thread :headspin:

When I talked to him, I asked if I should consider a Roth IRA. He said no, and I really didnt have anything to challenge back.

Right now things are shifting in my life.

1) I got the new job, where I am earning way more than I used to and now my wife can stay at home

2) We are expecting, baby will be here in December

3) To take the new job we had to move, and currently our house is on sale in a tepid market

4) We have more debt than I am comfortable with, BUT we have a surplus every month. Right now, we only owe on my car, the wife's car and a couple hundred on a no interest jewelery card I got

What I wanted to do is pay off the cars with a snowball, then use that to hit the mortgage on a new house (once ours sells)

We had been doing great prior to buying the house, we had our emergency fund, and were snow balling my wife's old car, but then it got totaled. My paid off car bit the dust a couple months later

In my mind, I should be getting debt free (minus the house) first then start investing (outside of my 401k contributions of course), do you agree?

Thats always been a tough topic. Whether or not to snowball the debt vs retirement.

Dave Ramsey says to attack the debt in full force (everything BUT the mortgage), and do NOT contribute to retirement. It should be a "short time" before you're debt free then hit retirement with a full 15% of your income.

The challenge to that is, what if I'm capable of making 7-12% on my investments/retirement while only paying 3% on my auto loans. I still come ahead 4%.

But, i think its more a comfort feeling myself. I hate payments. I hate owing every month on a car payment. So my feelings tell me to pay the damn car off ASAP. Even if it means i'm losing that 4% possible gain (or whatever it is. you never know).

Personally, we just bought a new to us vehicle. Most expensive thing ive ever bought aside from the house. I've got a 3% interest rate on it. We've got the money to still fund my Roth AND pay the normal note on the car. I'm torn at taking that ROTH money i set aside each month and tack it onto the car payment. But, that makes me nervous. LOL. So, as it sits right now, I'm paying the normal note on the car, stashing the ROTH money in a separate account (but NOT directly into my Roth), so I have wiggle room. If for some reason the market goes south and offers a huge buying opportunity, i have that money ready. If not, I'll let it pile until I can just dump it onto the car and be done with it. No clue if thats the best way to go. But it makes me sleep comfortably at night having that "second emergency fund" just for the car.

[captainofiron]

Thats always been a tough topic. Whether or not to snowball the debt vs retirement.

Dave Ramsey says to attack the debt in full force (everything BUT the mortgage), and do NOT contribute to retirement. It should be a "short time" before you're debt free then hit retirement with a full 15% of your income.

The challenge to that is, what if I'm capable of making 7-12% on my investments/retirement while only paying 3% on my auto loans. I still come ahead 4%.

But, i think its more a comfort feeling myself. I hate payments. I hate owing every month on a car payment. So my feelings tell me to pay the damn car off ASAP. Even if it means i'm losing that 4% possible gain (or whatever it is. you never know).

Personally, we just bought a new to us vehicle. Most expensive thing ive ever bought aside from the house. I've got a 3% interest rate on it. We've got the money to still fund my Roth AND pay the normal note on the car. I'm torn at taking that ROTH money i set aside each month and tack it onto the car payment. But, that makes me nervous. LOL. So, as it sits right now, I'm paying the normal note on the car, stashing the ROTH money in a separate account (but NOT directly into my Roth), so I have wiggle room. If for some reason the market goes south and offers a huge buying opportunity, i have that money ready. If not, I'll let it pile until I can just dump it onto the car and be done with it. No clue if thats the best way to go. But it makes me sleep comfortably at night having that "second emergency fund" just for the car.

I had been using a Dave Ramsey-esque approach. We have our monthly budget, and WERE snowballing, but at the same time I had maxed my 401k

we were doing well, but now with the new job and this old 401k, its pushing me into new areas of finances I have never dealt with before

[toy71camaro]

I hear ya. I'm a "Ramsey-esque" follower too. Some stuff I do his way, some stuff I do my way. lol. Like the whole car payment thing.

[glassman]

Just the fact that you guys are young and thinking about this and doing something about this is very very good for you and your future families. Most people these days just dont pay attention (sorta keep their heads in the sand) and they need to cause ya just cant relie on Uncle Sam 30 years from now.

My brother told me "it's not timing the market, it's time in the market".

[68ZClone]

We've often discussed the Dave Ramsey approach at work. We're a bunch of engineers that take joy in maximizing everything, including approaching debt (it's a disease). I think most on this site are like minded.

Our conclusion, the Ramsey approach is geared towards people who are inherently not good with money and is a psychological approach to paying off debt. It is not the most effective (in terms of least amount paid) to pay off debt. However, it's a great motivator for people to see the payment go away.

Conclusion (in my mind), you have to make a decision. Are you the kind of person that will benefit from the psychological approach of eliminating individual payments? If so, the Ramsey approach is the one for you.

However, if you understand the principals of debt and that attacking higher interest (after taxes) debts first is more beneficial to your pocketbook, a modified approach is probably a better option. This allows you to take into account that earning 8% in the market on funds that would only offset debt at 3% is an okay thing.

Again, what motivates you as the individual. For me, it's optimizing. Others (like Greg has pointed out), it's the ability to sleep at night being debt free.

Just my $0.02!

[captainofiron]

Just the fact that you guys are young and thinking about this and doing something about this is very very good for you and your future families. Most people these days just dont pay attention (sorta keep their heads in the sand) and they need to cause ya just cant relie on Uncle Sam 30 years from now.

My brother told me "it's not timing the market, it's time in the market".

thanks for the encouragement, Im just trying to start off on the right foot.

So I finished up reading the entire thread, man that was the most ive ever read on a forum.

And I think I have a plan

1) I drafted an email to the Baird guy, asking him what the base costs of having the IRA with them will be, and what are the costs of the mutual funds he suggested, I also asked him why he suggested not to do a Roth, why he suggested mutual funds

2) my last 401k isnt very big, because my former employer only matched 50% up to 3%, so I was thinking maybe to use half of it to open a Roth, and half in an IRA, that way I would limit my tax liability, but also have that extra bucket of money (with a higher earning potential). I looked and I think Im eligible for one

3) I started writing down the stuff/brands I like and where I shop and started going and looking at their stock. Also I used google finance to "make" a portfolio, as well as a GregWeld portfolio with the stocks he suggested just to compare. I think it would be better than what the Baird guy has suggested.

Finally, a couple questions.

Alot of the earlier posts in here are from 2011-2012. Has anything majorly changed in the financial world that would change some of the theory?

I was thinking maybe to have 1 mutual fund, and then the rest stocks, is that a balanced approach? Or can I achieve the balance with full stocks?

Thanks guys, great thread

[captainofiron]

So the Baird people called me and were all ready to set up the rollover and IRA and were really pushing the mutual funds

I told them what I learned here that I was thinking that the funds work more for the benefit of the fund managers, and I was thinking more about stocks. They didnt agree.

I also asked about why they suggested mutual funds as a good thing for a younger person

the only thing they could answer was because I didnt have a lot of capital to invest so mutual fund would be better.

Basically my old 401k is 20k, I was looking at GregWelds suggestion (http://www.lateral-g.net/forums/showpost.php4?p=389087&postcount=380)

I was thinking to do something similiar

suggestions on my thought process?

[JKnight]

I also asked about why they suggested mutual funds as a good thing for a younger person

the only thing they could answer was because I didnt have a lot of capital to invest so mutual fund would be better.

Basically my old 401k is 20k, I was looking at GregWelds suggestion (http://www.lateral-g.net/forums/showpost.php4?p=389087&postcount=380)


I'm going to keep my comments limited to a part of your post, but I'm hoping Greg or someone else will comment on the "really pushing" aspect of your experience with Baird.

If your goal/preference is to achieve a high level of diversification with your $20k portfolio, then yes, mutual funds will be good for that.

If your goal/preference is to buy a basket of best-of-breed stocks in various industries to achieve a lower (but still significant) degree of diversification, then stocks will be the better way to go.

This $20k from your prior 401(k) isn't likely to represent the lion's share of your retirement savings. Meaning, it's not the end of the world if you don't get this one right the first time, particularly if you learn something along the way. If you'd like to use it to get your feet wet with trading stocks or other investments, then that's something to consider. You might find out that form of investing isn't for you, but you will have learned something. If you'd rather stick the money in mutual funds and check your balance once per quarter to see how it's doing, that's ok too. Really up to your personal preferences.

Investing is not a one-size-fits-all game, so when I hear a company pushing you toward an option and saying, "that's the best way to go", I have to wonder if they are really listening to you, your ideas and your interests. Keep in mind that you can roll those dollars over to any custodian, it doesn't have to be the one your company uses. These are your dollars/employees!!....Jeff steps down from soapbox...

[Flash68]

We've often discussed the Dave Ramsey approach at work. We're a bunch of engineers that take joy in maximizing everything, including approaching debt (it's a disease). I think most on this site are like minded.

Our conclusion, the Ramsey approach is geared towards people who are inherently not good with money and is a psychological approach to paying off debt. It is not the most effective (in terms of least amount paid) to pay off debt. However, it's a great motivator for people to see the payment go away.

Conclusion (in my mind), you have to make a decision. Are you the kind of person that will benefit from the psychological approach of eliminating individual payments? If so, the Ramsey approach is the one for you.

However, if you understand the principals of debt and that attacking higher interest (after taxes) debts first is more beneficial to your pocketbook, a modified approach is probably a better option. This allows you to take into account that earning 8% in the market on funds that would only offset debt at 3% is an okay thing.

Again, what motivates you as the individual. For me, it's optimizing. Others (like Greg has pointed out), it's the ability to sleep at night being debt free.

Just my $0.02!

Great post.

[toy71camaro]

I'm going to keep my comments limited to a part of your post, but I'm hoping Greg or someone else will comment on the "really pushing" aspect of your experience with Baird.

If your goal/preference is to achieve a high level of diversification with your $20k portfolio, then yes, mutual funds will be good for that.

If your goal/preference is to buy a basket of best-of-breed stocks in various industries to achieve a lower degree of diversification, then stocks will be the better way to go.

This $20k from your prior 401(k) isn't likely to represent the lion's share of your retirement savings. Meaning, it's not the end of the world if you don't get this one right the first time, particularly if you learn something along the way. If you'd like to use it to get your feet wet with trading stocks or other investments, then that's something to consider. You might find out that form of investing isn't for you, but you will have learned something. If you'd rather stick the money in mutual funds and check your balance once per quarter to see how it's doing, that's ok too. Really up to your personal preferences.

Investing is not a one-size-fits-all game, so when I hear a company pushing you toward an option and saying, "that's the best way to go", I have to wonder if they are really listening to you, your ideas and your interests. Keep in mind that you can roll those dollars over to any custodian, it doesn't have to be the one your company uses. These are your dollars/employees!!....Jeff steps down from soapbox...


Great points.

I'd be leary of any fast talking pushy people in this scenario. How do these guys get paid? My guess is they take a % off the top.

That's kind of what started my Journey and ended me up in here. I talked to a local rep (that I do some side business/IT consulting for) and he gave me his suggestion. The fee's were like 4% off the top. And the average returns were 7-8%. That got me thinking... I'm only making 8% return, and I'm giving them HALF? Thus i'm only earning 4%? I think I can manage 4% on my own, and anything on top of that is icing on the cake. Talking about this with an old member here (SolarGuy/Mike, hope he's doing OK) and he led me to this thread. At exactly the right time.

I didnt have a huge amount to start with. I couldnt do individual stocks in my 401k, so i basically had to start fresh with a Roth IRA to invest. (I did re-do my 401k after learning here, but I only had certain options to pick from. I just had a better understanding of how/why to pick what i did and not just throwing darts at it).

Am I doing better than the 4%? You betcha. Do i sleep better at night? You betcha. I'm much more comfortable with myself managing my money than relying on someone else who doesnt have my best interest at hand, but just getting their cut of the pie.

Now that doesnt answer about going Stocks Vs Mutual Funds. But, as Greg discussed way back when in the thread you can build your own mutual funds, and NOT have to pay them the fee's. Just make sure you have no more than 5% of your entire nest egg in any one stock. Personally, I bought in $1k increments and am up to about a dozen or so stocks in my own "mini mutual fund". Am I as diversified as a standard mutual fund? No, they're in 50-250 stocks at any given time. But, my best of breed's mini-fund will likely out perform them, as i dont have a bunch of lagging employees pulling my total return down.

[sik68]

On a car, just remember to add the depreciation + finance rate to see what your money will really be worth in the future. That's how I talk myself out of buying a car every time I get tempted by EZ financing.


Anyone down to talk about student loans for a minute? What a crock that government student loans never adjusted with QE and rate-cutting, and banks won't refinance the loans either probably because the Fed won't let them. Fortunately, there are a few private companies popping up that will refinance debts. We are applying to SoFi.com which will cut our average rate from about 7.5% down to hopefully 4%-ish.

I only bring this up because a 4% refi gives us 2 options instead of just 1 at 7.5% (which has been to pay down like banshees):
1) Keep the monthly payments the same to pay down the loan more quickly.
2) Invest the difference in monthly payment into the market.

If you already own a home with equity, I have also read (but have no first hand knowledge) that refinancing your house and using the home equity to pay off BIG student loans (JD, MD, MBA) can also be a smart decision too. Just planting some seeds for the 102'ers to look into.

[GregWeld]

Glad you other guys are beginning to chime in -- and your responses tell me that you've been good students -- more importantly - the responses show me you're all THINKING and understanding that there's no one particular answer. Once you get there... you've got the fire power to actually be independent! That's fantastic!



CapitanofIron...

Mutual funds are generally the "milk toast" of investing. They're the dumbed down version of one size fits all mentality. While I absolutely agree that they are the BEGINNING for many people - as they allow you to just put in 20 or 50 bucks a week... without thinking. SOME savings is better than NO savings... and if the company will match some percentage of yours -- then it's easy and painless... and done automatically.

Here's the ISSUE I have with Mutual Funds once you have enough to do any kind of investing on your own. As stated above -- when you look at what makes up a Mutual Fund... the top ten stocks are usually pulling the wagon - and then there's the other 100 that are the lamest of of the lame.. and they are what drag you down... AND when you add to that - the fund must earn something as they have management costs... then that further cuts into your return.

The entire point of this last 400+ pages is to teach people to think - and to be able to MIMIC a mutual fund on their own. Mutual Funds aren't the magic bullet -- they're the dumb bullet. The go up when the market is going up and they go down when the market goes down. Some of their investments pay a dividend - and most do not. So you own "everything" in their portfolio and when you look at the returns... most are super mediocre.

If you simply take your 20K and buy 10 good names or even 7 good names and have the dividends reinvested... You own your own mutual fund - but your performance will begin to really compound. You'll still go up with the market and down with the market. But as explained here many times. When the market is DOWN the dividends buy MORE shares at lower prices... THAT IS GOOD!! Every share you own pays you a dividend - the more shares you have the more dividends you collect and pretty soon you're on a roll.

Keep reading and keep posting.

[Vegas69]

We've often discussed the Dave Ramsey approach at work. We're a bunch of engineers that take joy in maximizing everything, including approaching debt (it's a disease). I think most on this site are like minded.

Our conclusion, the Ramsey approach is geared towards people who are inherently not good with money and is a psychological approach to paying off debt. It is not the most effective (in terms of least amount paid) to pay off debt. However, it's a great motivator for people to see the payment go away.

Conclusion (in my mind), you have to make a decision. Are you the kind of person that will benefit from the psychological approach of eliminating individual payments? If so, the Ramsey approach is the one for you.

However, if you understand the principals of debt and that attacking higher interest (after taxes) debts first is more beneficial to your pocketbook, a modified approach is probably a better option. This allows you to take into account that earning 8% in the market on funds that would only offset debt at 3% is an okay thing.

Again, what motivates you as the individual. For me, it's optimizing. Others (like Greg has pointed out), it's the ability to sleep at night being debt free.

Just my $0.02!

I'm a Dave Ramsey endorsed local provider and get toe to toe with many of his listeners. There is a wide range that employ his philosophy. Many that are very well off.

To me, it's a simple, workable approach to becoming debt free and financially independent. Most need a simple approach to stick with it and be successful.

I agree that a one size doesn't fit all. I do employ many of Dave's philosophies. Like with any philosophy, you use what makes sense to you and create your own.

[Vortech404]

Anybody have any thoughts on cutting down on my retirement to fund
a million dollar life insurance policy on one of my parents?

A life insurance policy is tax free? Anybody do this as part of a retirement
investment?

later
John

[GregWeld]

Anybody have any thoughts on cutting down on my retirement to fund
a million dollar life insurance policy on one of my parents?

A life insurance policy is tax free? Anybody do this as part of a retirement
investment?

later
John

You'd have to do a lot of math and guessing to see if that would pay off. Yes Life Insurance is tax free... But what it costs per month and for how many years etc is the issue.

[Flash68]

Anyone down to talk about student loans for a minute? What a crock that government student loans never adjusted with QE and rate-cutting, and banks won't refinance the loans either probably because the Fed won't let them. Fortunately, there are a few private companies popping up that will refinance debts. We are applying to SoFi.com which will cut our average rate from about 7.5% down to hopefully 4%-ish.

I only bring this up because a 4% refi gives us 2 options instead of just 1 at 7.5% (which has been to pay down like banshees):
1) Keep the monthly payments the same to pay down the loan more quickly.
2) Invest the difference in monthly payment into the market.

If you already own a home with equity, I have also read (but have no first hand knowledge) that refinancing your house and using the home equity to pay off BIG student loans (JD, MD, MBA) can also be a smart decision too. Just planting some seeds for the 102'ers to look into.

Been working through this with my wife recently and her law school loans. They vary from 3 to 7.9%. I just closed a bigger/better 2nd on my home and was considering that option of paying down the higher loans, but I think I'd rather employ that money elsewhere.

Just for scorekeeping both student loan interest and primary residence mortgage interest are tax deductible, so even though they are a wash in this instance, it is always something to consider when doing your own analysis.

We will also check out SoFi.com as well -- thanks for the link.

[Flash68]

Anybody have any thoughts on cutting down on my retirement to fund
a million dollar life insurance policy on one of my parents?

A life insurance policy is tax free? Anybody do this as part of a retirement
investment?

later
John

Just upped my life insurance recently and did look at the cash value vs term option. Ended up just going with term as I felt the restrictions in the investment options/vehicles were just not wide enough for my liking.

[GregWeld]

Just upped my life insurance recently and did look at the cash value vs term option. Ended up just going with term as I felt the restrictions in the investment options/vehicles were just not wide enough for my liking.

Smart.

Your lovely bride has earnings power... so life insurance should be sufficient to pay off the house (people can also buy a MORTGAGE life insurance that pays off the mortgage upon death), bury your sorry butt, set up college fund for children.

Life insurance is a bet - they're betting you'll not collect - and you don't really want to collect. It's not about leaving your spouse rich. It's about taking the heat off should you meet an untimely demise. And number 1 - it's NEVER a good investment. You'll do far better to invest the "premiums" in dividend paying stocks over the long run.

[Payton King]

I think a level term or a return of premium policy is better to cover a mortgage than "motgage life," which is a decreasing term policy.

There are times when a perment life insurance policy (whole life, universal life, etc) makes perfect sense.

John, not to sound morbid, but I would not want to be sitting around waiting for someone to die so I could collect money. Depending on the age and health, a permanent policy can get pretty expensive.

On the other hand, if you are in an inheritance situation where the estate is cash poor (family land or farm) or large estate where estate taxes are going to be a probem (estate over $5 million), then a permanent policy would work. Normally you would set both of those situations up in an irrevocable insurance trust.

For discussion's sake in this thread, I would be more than happy to run some numbers and post them up here so other people might understand how different types of life insurance works, pros and cons of different policies and how they might fit into a person's financial plan.

Not trying to sell anything here, just trying to educate like our Jedi Master.

[SSLance]

The cash value policy I bought on myself when I turned 21 is to this day the best investment I've ever made. My financial Advisor back then talked me into it as a "Reverse IRA". Basically taking after tax dollars and investing them into a vehicle that grows tax free while protecting my family at the same time. The last premium payment I made took $2,000 and instantly turned it into a little over $8,000...tax free. I took one out on my wife when she was 30 years old and I believe it's $1500 premium eeks out about $4500 worth of cash value right now. I've tried to go back and buy more of the same many times and due to my age, I just can't make the numbers work to my advantage anymore. I'm 47 years old now and it takes right at 10 years just for the cash value to catch back up to premiums paid. My policy passed that limit between years 6 and 7. The trick is to buy these young from good companies, the only one I trust is Northwestern Mutual Life.

[captainofiron]

Glad you other guys are beginning to chime in -- and your responses tell me that you've been good students -- more importantly - the responses show me you're all THINKING and understanding that there's no one particular answer. Once you get there... you've got the fire power to actually be independent! That's fantastic!



CapitanofIron...

Mutual funds are generally the "milk toast" of investing. They're the dumbed down version of one size fits all mentality. While I absolutely agree that they are the BEGINNING for many people - as they allow you to just put in 20 or 50 bucks a week... without thinking. SOME savings is better than NO savings... and if the company will match some percentage of yours -- then it's easy and painless... and done automatically.

Here's the ISSUE I have with Mutual Funds once you have enough to do any kind of investing on your own. As stated above -- when you look at what makes up a Mutual Fund... the top ten stocks are usually pulling the wagon - and then there's the other 100 that are the lamest of of the lame.. and they are what drag you down... AND when you add to that - the fund must earn something as they have management costs... then that further cuts into your return.

The entire point of this last 400+ pages is to teach people to think - and to be able to MIMIC a mutual fund on their own. Mutual Funds aren't the magic bullet -- they're the dumb bullet. The go up when the market is going up and they go down when the market goes down. Some of their investments pay a dividend - and most do not. So you own "everything" in their portfolio and when you look at the returns... most are super mediocre.

If you simply take your 20K and buy 10 good names or even 7 good names and have the dividends reinvested... You own your own mutual fund - but your performance will begin to really compound. You'll still go up with the market and down with the market. But as explained here many times. When the market is DOWN the dividends buy MORE shares at lower prices... THAT IS GOOD!! Every share you own pays you a dividend - the more shares you have the more dividends you collect and pretty soon you're on a roll.

Keep reading and keep posting.

Thanks Greg,

I really appreciate your input as well as the effort you and everyone here have taken to help the investing-layperson gain understanding.

I am now definitely going to roll it over into my own IRA and go with stocks

My wife and I have started writing down some names of stuff we use/like

I even downloaded a mobile app that lets me track stuff, and it even shows the stocks graph over time (max five years)

Now I just need to find a place to open my IRA, I looked and Schwab has some local offices that I need to make an appointment with to sit down and chat.

Im going to do a little more digging, we have about 18 names right now, and I want to look through each of them to narrow them down to the 10 that we will go with.

I will definitely keep posting! :cheering:

[Flash68]

For discussion's sake in this thread, I would be more than happy to run some numbers and post them up here so other people might understand how different types of life insurance works, pros and cons of different policies and how they might fit into a person's financial plan.

Not trying to sell anything here, just trying to educate like our Jedi Master.

I like it Payton. How about a scenario for some $500k policies?

[GregWeld]

Good info Payton!!


Estate taxes are something we've personally worked very hard on... With trusts etc. There is a pass thru of the first 5 million... and blah blah blah. It gets very complicated once you surpass 5 million. And of course - anyone with that kind of net worth should certainly have professional help long before they got to that point.

And yes -- mortgage insurance doesn't really work if your mortgage is down next to nothing... which is what happened to my Dad. I think this all came about back in the day with special programs the government had for GI's.

We used to have a couple big policies... but then they become rather useless if you don't really need them to pay off anything or to help your family. They were term policies and we dropped them quite awhile ago. For us personally - it's like having an IRA... we don't really need "retirement funds". YIPPPPEEEEEEE HAHAHAHAHAHAHAHA




I think a level term or a return of premium policy is better to cover a mortgage than "motgage life," which is a decreasing term policy.

There are times when a perment life insurance policy (whole life, universal life, etc) makes perfect sense.

John, not to sound morbid, but I would not want to be sitting around waiting for someone to die so I could collect money. Depending on the age and health, a permanent policy can get pretty expensive.

On the other hand, if you are in an inheritance situation where the estate is cash poor (family land or farm) or large estate where estate taxes are going to be a probem (estate over $5 million), then a permanent policy would work. Normally you would set both of those situations up in an irrevocable insurance trust.

For discussion's sake in this thread, I would be more than happy to run some numbers and post them up here so other people might understand how different types of life insurance works, pros and cons of different policies and how they might fit into a person's financial plan.

Not trying to sell anything here, just trying to educate like our Jedi Master.

[chetly]

I've been pretty happy with my investment of GoPro and Tesla. I bought GoPro at 40.55 and it ended today 63.52. Bought Tesla at 252.66 and closed at 282.11. Both have been a pretty fast mover, good investments and I'm hoping Tesla will explode once they break ground on their mega factory.

[GregWeld]

I've been pretty happy with my investment of GoPro and Tesla. I bought GoPro at 40.55 and it ended today 63.52. Bought Tesla at 252.66 and closed at 282.11. Both have been a pretty fast mover, good investments and I'm hoping Tesla will explode once they break ground on their mega factory.



Oh hell yeah!



I should have loaded the boat with them... but no dividend... no investment. I have to live off mine.

Great pics and especially for you young guys!!

[Vegas69]

I'd also be interested in the 500k term life info.

[Sieg]

For discussion's sake in this thread, I would be more than happy to run some numbers and post them up here so other people might understand how different types of life insurance works, pros and cons of different policies and how they might fit into a person's financial plan.

Not trying to sell anything here, just trying to educate like our Jedi Master.
Personally I would love to hear it from a 'neutral' source. http://d26ya5yqg8yyvs.cloudfront.net/ear.gif

[captainofiron]

I've been pretty happy with my investment of GoPro and Tesla. I bought GoPro at 40.55 and it ended today 63.52. Bought Tesla at 252.66 and closed at 282.11. Both have been a pretty fast mover, good investments and I'm hoping Tesla will explode once they break ground on their mega factory.

NICE

when Tesla first was about to go public, I had about 5k in my savings, I wanted to buy so bad, but my wife correctly reminded me that it was all our savings at the time, and it would be stupid to risk it....

I showed her the other day what it was at, this was pretty much her reaction when I explained how much we would have made, :confused59:

we need to build 1 of 2 things, a device that lets you see in the future, or a time machine that lets you go back, haha

[captainofiron]

WELL I have taken the plunge.

I talked to fidelity and have rolled it over to one of their IRAs (Im familiar with the website and its free if you keep it with them, as well as trades are $7.98 which is the cheapest I have found)

So in 3 business days, I will be able to start pulling my money out of their mutual fund, and buying names.

I have decided to go with 10 picks and start from there.

I did alot of thinking, stuff along the lines of, what does everybody use that will not change during a recession, and certain stuff popped in my head, paper goods, gasoline, medicine, food. So I started looking around the house and when the wife and I go grocery shopping to see what brands go well.

Anyways, Here are my picks and why, please feel free to critique:


RDS-B Royal Dutch Shell - $82.11 per share, 4.58% div yield, graph: looks up and a little choppy, sector: Basic Materials, Industry: Major Integrated oil Why: I almost always fill up at Shell, Texaco or Valero, Texaco (Chevron) is expensive, and Valero doesnt offer much of a dividend when compared to the others
KO Coca-Cola - $42.17 per share, 2.89% div yield, graph: looks up and somewhat steady, sector: Consumer Goods, Industry: Beverages - Softdrinks Why: I love the stuff, and given the market share and how much Americans consume softdrinks, I dont see this going anywhere
UL Unilever - $43.84 per share, 3.4% div yield, graph: looks up and somewhat steady, sector: Consumer Goods, Industry: Food Why: Almost everything in our bathroom is from Unilever, the soap, shampoo, lotion, BUT I am a little worried about having too many consumer goods items
MO Altria Group - $43.89 per share, 4.74% div yield, graph: looks up and somewhat smooth, sector: Consumer Goods, Industry: TobaccoWhy: I dont smoke, BUT I also have quite a few friends who are hooked, and see so many people puffing away
NNN National Retail Properties - $36.57 per share, 4.60% div yield, graph: looks up and somewhat steady, sector: Financials Industry: Real Estate Why: I rarely see retail space empty
PFE Pfizer - $29.47 per share, 3.53% div yield, graph: looks up and somewhat smooth, sector: Healthcare Industry: Drugs Why: Out of the big name pharma companies that I could think of, this one had the highest dividend
GE General Electric - $26.02 per share, 3.38% div yield, graph: looks up and somewhat smooth, sector: Industrial Industry: Industrial goods Why: Out of the big name industrial companies that I could think of, this one had the highest dividend
TGT Target - $61.99 per share, 3.36% div yield, graph: looks up and choppy, sector: Services Industry: Retail Why: My brother is a pharmacist there, so I get to see usually how busy they are, also I just read that they are increasing their dividend http://seekingalpha.com/news/1975635-target-corporation-declares-0_52-dividend?uprof=45
T AT&T - $34.48 per share, 5.34% div yield, graph: looks up but choppy, sector: Technology Industry: Telecom Services Why: I use ATT and even though they have their problems, I see them as the most stable phone service company and they always seem to snag the exclusive gotta have it phone, as well as almost all the people I know that have company phones are on ATT, also I liked their dividend
ED Con Ed - $56.69 per share, 4.3% div yield, graph: looks up and somewhat smooth, sector: Utilities Industry: Electric Utilities Why: Out of the big name Electric companies that I could think of, this one had the highest dividend. Here in Texas its unregulated, so usually I just go with whoever has the lowest rate, but most of those are little companies that are private


What do you guys think

I was hoping my dividend average would be higher, but this is basically all I could think of

Thanks

[GregWeld]

Don't forget that over time -- you not only get dividends - but you have CAPITAL GROWTH as well.... 2012 the "market" was up 30%.....

Owning big good names like you've selected is what allows you to continue to pound money into them even in a down market. This part is extremely important... the same $500 buys more shares in a down market... they DO recover netting you nice capital gain -- but also they're paying that ever important dividend.

It more "Fun" to own the hot names at any given time... until you're in a down market.. then the hot tend to go cold as a stone and they DO NOT pay dividends and then you sell because you panic out etc.

Investing is mostly MENTAL. You have to be able to buy when everyone else is selling... that's when you make the big bucks. LOL But it's true.

Keep reading - keep posting -- you'd be surprised at how addicting investing is!

[captainofiron]

Don't forget that over time -- you not only get dividends - but you have CAPITAL GROWTH as well.... 2012 the "market" was up 30%.....

Owning big good names like you've selected is what allows you to continue to pound money into them even in a down market. This part is extremely important... the same $500 buys more shares in a down market... they DO recover netting you nice capital gain -- but also they're paying that ever important dividend.

It more "Fun" to own the hot names at any given time... until you're in a down market.. then the hot tend to go cold as a stone and they DO NOT pay dividends and then you sell because you panic out etc.

Investing is mostly MENTAL. You have to be able to buy when everyone else is selling... that's when you make the big bucks. LOL But it's true.

Keep reading - keep posting -- you'd be surprised at how addicting investing is!

yea Im already addicted, haha

I keep playing around with different ideas, and catch myself talking to my wife about, "well what if we invest in this company" or "OH, do you think they are a public company" hahaha

do you think I have too many consumer goods sector items?

thats 3 out of my 10

I was thinking maybe of not buying KO and/OR TGT

and instead picking up UHT or HCP in healthcare or maybe picking up an insurance company, because everyone needs insurance. specifically MCY (I used to have my car insurance with them in college)

[chetly]

I put $50 a week out of my paycheck into a personal hold account at Edwards Jones and when I get to $1000 I make a purchase.

My top 5 right now to purchase next in no particular order, Disney, WalMart, Time Warner, Lockheed Martin and Wells Fargo.

[Flash68]

I put $50 a week out of my paycheck into a personal hold account at Edwards Jones and when I get to $1000 I make a purchase.

My top 5 right now to purchase next in no particular order, Disney, WalMart, Time Warner, Lockheed Martin and Wells Fargo.

I believe you're a fairly young dude, and if that's so, then good job. More younger people need to do things like this and get started early/earlier. :thumbsup:

[chetly]

36, home owner. So yeah, kinda young. Especially when standing next to Mr Weld...

[DBasher]

He may be old but at least he's not tall....wait maybe that doesn't help things.

Chetly I like the idea of the holding account, like most, I spend what I have. I've just recently opened an account for the OT to be dropped into, we'll see if that helps.

Dan

[chetly]

My mother works for Edward Jones, so shes the real driving force behind me saving. Being I get a raise every 6 months, I send a % of that raise to the savings account. I have it set up through work where they send the $50 every pay day. Doesn't take long to build up some cash and its not pre tax so I don't get a penalty if I need to take money out of the account.

[Payton King]

I have not forgot about you guys, trying to find the time to post up something worthy of discussion.

[GregWeld]

I was thinking maybe of not buying KO and/OR TGT

and instead picking up UHT or HCP in healthcare or maybe picking up an insurance company, because everyone needs insurance. specifically MCY (I used to have my car insurance with them in college)



I missed your statement here -- and since the thread isn't about recommending what stock to buy or sell (there are 10's of 1000's of websites that do that daily).... what to think about for YOU... is more important in your decision making.

Be careful of too much consumer retail. Be careful of too much of any "sector". Diversification is important LONG TERM.

Buy what you feel comfortable with... because in the long run - if you're not comfortable with a particular name - you'll sell it when it's down... and kick yourself for buying it. So compare the historical TOTAL RETURN. And compare what you can sleep with thru thick and thin. KNOW that regardless of what companies you pick -- the MARKET will take you up and down over time. The key is not to be shaken out in those down markets and to continue to reinvest the dividends

[GregWeld]

He may be old but at least he's not tall....wait maybe that doesn't help things.

Chetly I like the idea of the holding account, like most, I spend what I have. I've just recently opened an account for the OT to be dropped into, we'll see if that helps.

Dan



The key is to BREAK that habit... which takes some effort. You'll never break that habit unless you are in a position to either scale back -- or going forward - stop spending the increases... and start to invest those instead. Once you actually start to invest - and see the gains and income they can create. Then a person actually becomes MORE addicted to the savings/gains than they are of pissing away every paycheck including future paychecks.

We ALL want "stuff". We want it now... and regardless of income level.. there is never enough. PERIOD. I don't care who you are. The Stuff just becomes more expensive or more of.

The key to this entire thread is not to suddenly wake up and be 62 or 65... and realize your career has come to an end - which means the income that came with it... and now you finally have time on your hands -- but have no money. That must be the sickest feeling EVER... You're now old - useless - unemployable at any meaningful job - and frankly - who wants to still HAVE to work when you're 65+. The only cure for this decease that you KNOW is coming - is to start taking the medicine NOW.

We always wan to put this off.... but the facts are quite clear that all of us is living FAR FAR longer than in the past. We are now living 25 and 30 years past retirement. That's a very very long time to live a sucky cash poor retirement. And with inflation factored in - that time gets worse not better.

$50 a week now doesn't seem like much... but if that grows to $100 a week with raises and bonuses - and then it starts to earn a return and gets some capital growth (total return)... it starts to find some traction...


Here's something I ask people all the time. If it takes you $80K per year to live now ---- and social security is going to pay you $1500 a month in retirement (18K per year). How do you plan to live once you hit 65?? It's a scary question that needs to be dealt with.

[captainofiron]

I missed your statement here -- and since the thread isn't about recommending what stock to buy or sell (there are 10's of 1000's of websites that do that daily).... what to think about for YOU... is more important in your decision making.

Be careful of too much consumer retail. Be careful of too much of any "sector". Diversification is important LONG TERM.

Buy what you feel comfortable with... because in the long run - if you're not comfortable with a particular name - you'll sell it when it's down... and kick yourself for buying it. So compare the historical TOTAL RETURN. And compare what you can sleep with thru thick and thin. KNOW that regardless of what companies you pick -- the MARKET will take you up and down over time. The key is not to be shaken out in those down markets and to continue to reinvest the dividends

So If Im thinking of this and reading it right

I have 10 stocks, I should have all 10 sectors covered, hence why I am a little nervous about having 3 in consumer goods

So I spent a little more time looking around, looking at dividends, and ex-dividend dates

So here are my Hot Picks! haha

Consumer Discretionary I think I am going to jump on Mattel at 4.42 since Christmas is coming up

I like Target and Mcdonalds, but I think Mcdonalds is a little high for me right now, and Im not sure how Target is going to do with their stores in Canada supposedly suffering.

Consumer Staples: MO - Altria Group 4.8% dividend, Im going to wait until 10/10 on their payout to buy so I can see if I can get a little better bargain

Energy: really not sure about this one, but I am going with Shell at 4.79%, I was really tempted by Ensco and offshore drilling company at 6.36%, but Im not sure and think Shell is a safer investment

Financials: UHT Universal Health Realty 5.71% dividend, Im buying this one ASAP because the exdividend date is tomorrow

Health Care: GSK Glaxo Smith Kline: 5.61% dividend

Industrials: GE General Electric 3.40%, I was tempted by Metso 3.44%, they make alot of components for refineries, as well as NASA ground support (when I used them alot) so I am familiar with their stuff and its good quality. But GE is the bigger name with a wider market

Information Technology: Cisco 3.05%
I was tempted by Canon at 3.8% but it looks up overall, but its going down the past couple years, I think Nikon is starting to eat into their market, as well as smart phones having awesome cameras built in nowadays

Materials: BASF 3.73%, I was looking at Dow, but its dividend is 2.77%

Telecommunication Services I am torn here between Vodafone and ATT, I think I am going to just have 2 here

Utilities Con Ed, with 4.43%
I was looking at Dominion Exploration with 5.36% but seems like Con Ed is a "better name"

Finally my "Gamble" Im going to stick 5% in Adidas, they are really down since the beginning of this year, and overall they are up, and I just dont see a global brand like them going away soon

[GregWeld]

So If Im thinking of this and reading it right

I have 10 stocks, I should have all 10 sectors covered, hence why I am a little nervous about having 3 in consumer goods

So I spent a little more time looking around, looking at dividends, and ex-dividend dates

So here are my Hot Picks! haha

Consumer Discretionary I think I am going to jump on Mattel at 4.42 since Christmas is coming up



Not a name I'd invest in -- it's been broken for far too long. No hot kids movies - so no hot Xmas toys...




I like Target and Mcdonalds, but I think Mcdonalds is a little high for me right now, and Im not sure how Target is going to do with their stores in Canada supposedly suffering.




Agree





Consumer Staples: MO - Altria Group 4.8% dividend, Im going to wait until 10/10 on their payout to buy so I can see if I can get a little better bargain





Shows you're thinking. Just don't get "cute" on the dividends etc -- you're buying LONG TERM here - .35 one way or the other isn't important.





Energy: really not sure about this one, but I am going with Shell at 4.79%, I was really tempted by Ensco and offshore drilling company at 6.36%, but Im not sure and think Shell is a safer investment





Shell or Chevron or British Petroleum -- all fine. Remember to COMPARE total returns and go with the ones that have a history of the best total return.




Financials: UHT Universal Health Realty 5.71% dividend, Im buying this one ASAP because the exdividend date is tomorrow




You may get the discounted price "EX" dividend - but you WILL NOT get the dividend. There's many posts here about the length of time you must have bought the stock before the EX date. Brokerages take time to actually register the transaction etc. before you become the real owner. Again -- I wouldn't try to get cute on cutting the dividend dates ex or otherwise. I do this -- but I'm buying 10,000 to 50,000 shares of a name and the dividend going ex or picking up the dividend is real money.... but for most... 35 or 50 cents on 50 or even a 100 shares or more really isn't worth trying to time the market. Just buy when you're ready and you'll do just fine.




Health Care: GSK Glaxo Smith Kline: 5.61% dividend




Good pick. Did you do any comparison work to others in the same category for total returns etc. It's sometimes an eye opener. Never a guarantee but it's just a bit more time and can make a difference or at least educate you.



Industrials: GE General Electric 3.40%, I was tempted by Metso 3.44%, they make alot of components for refineries, as well as NASA ground support (when I used them alot) so I am familiar with their stuff and its good quality. But GE is the bigger name with a wider market




Again -- rather then just go by your own thoughts -- which is fine -- but also look at comparable charts - 10 years - total return - have they split - have they increased the dividend etc. There's lot of interesting stuff you can find just digging around.





Information Technology: Cisco 3.05%
I was tempted by Canon at 3.8% but it looks up overall, but its going down the past couple years, I think Nikon is starting to eat into their market, as well as smart phones having awesome cameras built in nowadays



Canon had some fraudulent accounting and really hurt them. Not sure why you'd lump Canon - Nikon and Cisco in the same realm -- except that perhaps they're technology? IDK - doesn't matter.... Nikon and Canon are RETAIL names whereas Cisco is a giant OEM supplier... But doesn't seem to have the latest greatest chips and technology anymore. Still a great company.






Materials: BASF 3.73%, I was looking at Dow, but its dividend is 2.77%



Again -- it's ALL about total return and security..... so don't forget to compare more than just Dividend percentage.





Telecommunication Services I am torn here between Vodafone and ATT, I think I am going to just have 2 here




I used to own Verizon and AT&T --- then realized it was too much of one kind of tech and held AT&T (I own 40,000 shares) because it's my carrier. Decent dividend - slow capital growth - but I sleep well at night and consider it a "steady eddie".




Utilities Con Ed, with 4.43%
I was looking at Dominion Exploration with 5.36% but seems like Con Ed is a "better name"





This is a sleep well at night name - gives you diversification and they certainly aren't going anywhere and during recessions people still have to pay their power bill.






Finally my "Gamble" Im going to stick 5% in Adidas, they are really down since the beginning of this year, and overall they are up, and I just dont see a global brand like them going away soon





I'd own Nike before Adidas.... but again I'd do some comparison because you want your money to be "safe" and also GROW and you need to get paid to own any of em.






Ordinarily I wouldn't help anyone with picks like this -- but because you're new -- I wanted to give you some things to think about.

[GregWeld]

Captofiron....


I was reminded this morning while watching CNBC just how different TWO stocks in the same business can diverge as far as their stock goes.

Kroger (KR) vs Whole Foods (WFM)--- Kroger is UP 33+% while Whole Foods is DOWN 31+% (using a ONE YEAR chart)

There is a function in Google Finance charts where you can compare charts and it can be eyeopening!


My point is -- that just to pick A single name and hope that what you think about it is spot on -- can be deadly. Poke around a bit - compare and make sure that what YOU think, is the same thing the "MARKET" thinks. I've found that I'm often wrong. The above being a perfect example!

[Sieg]

Here's an interesting article "Your Guide TO The Best And Worst Stocks In The Dow" that list what one could consider to be all good stocks......at least IMO.

http://seekingalpha.com/article/2488955-your-guide-to-the-best-and-worst-stocks-in-the-dow?ifp=0

FWIW - NKE in last place on this list I bought 25 shares in '97, splits left me with 100 shares and 555% gain.

We won't talk about the 100 shares I bought in '76 for $5 and sold when I'd double my money at $10. Life would be much different now if I would have held on to that $500 investment. :bang:

[GregWeld]

FANTASTIC ARTICLE!!!


Easy to read and understand... and really points to what I've been saying here for the last 3 years --- TOTAL RETURN is what is important!! It's not complicated and all the names in this list are companies you know. Just don't limit yourself to these companies only... it's just a comparison to make a point.






Here's an interesting article "Your Guide TO The Best And Worst Stocks In The Dow" that list what one could consider to be all good stocks......at least IMO.

http://seekingalpha.com/article/2488955-your-guide-to-the-best-and-worst-stocks-in-the-dow?ifp=0

FWIW - NKE in last place on this list I bought 25 shares in '97, splits left me with 100 shares and 555% gain.

We won't talk about the 100 shares I bought in '76 for $5 and sold when I'd double my money at $10. Life would be much different now if I would have held on to that $500 investment. :bang:

[captainofiron]

I'd own Nike before Adidas.... but again I'd do some comparison because you want your money to be "safe" and also GROW and you need to get paid to own any of em.

Ordinarily I wouldn't help anyone with picks like this -- but because you're new -- I wanted to give you some things to think about.

Captofiron....

I was reminded this morning while watching CNBC just how different TWO stocks in the same business can diverge as far as their stock goes.

Kroger (KR) vs Whole Foods (WFM)--- Kroger is UP 33+% while Whole Foods is DOWN 31+% (using a ONE YEAR chart)

There is a function in Google Finance charts where you can compare charts and it can be eyeopening!

My point is -- that just to pick A single name and hope that what you think about it is spot on -- can be deadly. Poke around a bit - compare and make sure that what YOU think, is the same thing the "MARKET" thinks. I've found that I'm often wrong. The above being a perfect example!

Thanks I do really appreciate the input.

Im going to go back and look at my picks again, and then see what their total returns and payout are as well as compare their graphs. I started using my google finance but havent really compared stocks side by side like that.

I think I did definitely get caught up in focusing too much on the dividend and the cost of the stock and if the chart was up overall the past 5-10+ years

back to my excel sheel :computer:

[96z28ss]

I took this from Zerohedge.com its an investment website, a lot of what they talk about is way over the head of average people. I'm reading and trying to learn.

The 7-Deadly Investing Sins


Wrath – never get angry; just fix the problem and move on.

Individuals tend to believe that investments that they, or their advisor, make should "always" work out. They don't and they won't. Getting angry about a losing bet only delays taking the appropriate actions to correct it.

"Loss aversion" is the type of thinking that can be very dangerous for investors. The best course of action is to quickly identify problems, accept that investing contains a "risk of loss," correct the issue and move on. As the age-old axiom goes: "Cut losers short and let winners run."



Greed – greed causes more investors to lose more money than at the point of a gun.

The human emotion of "greed" leads to "confirmation bias" where individuals become blinded to contrary evidence leading them to "overstay their welcome."

Individuals regularly fall prey to the notion that if they "sell" a position to realize a "profit" that they may be "missing out" on further gains. This mentality has a long and depressing history of turning unrealized gains into realized losses as the investment eventually plummets back to earth.

It is important to remember that the primary tenant of investing is to "buy low" and "sell high." While this seems completely logical, it is emotionally impossible to achieve. It is "greed" that keeps us from selling high, and "fear" that keeps us from buying low. In the end, we are only left with poor results.



Sloth – don’t be lazy; pay attention to your money because if you don’t – no one else with either.

It is quite amazing that for something that is as important to our lives as our "money" is, how little attention we actually pay to it. Not paying attention to your investments, even if you have an advisor, will lead to poor long term results. Portfolios, like a garden, must be tended to on a regular basis, "prune" by rebalancing the allocation, "weed" by selling losing positions, and "harvest" by taking profits from winners.

If you do not regularly tend to a portfolio, the bounty produced will "rot on the vine" and eventually the weeds will eventually reclaim the garden as if it never existed.



Pride – when things are going good don’t be prideful – pride leads to the fall. You are NOT smarter than the market, and it will "eat you alive" as soon as you think you are.

When it comes to investing, it is important to remember that a "rising tide lifts all boats." The other half of that story is that the opposite in also true. When markets are rising, it seems as if any investment we make works; therefore we start to think that we are "smart investors." However, the reality is that there is a huge difference between being "smart" and just being "along for the ride." Ray Dalio, head of Bridgewater which manages more than $140 billion, summed it up best:

"Betting on any market is like poker, it's a zero-sum game and the deck is stacked against the individual investor in favor of big players like Bridgewater, which has about 1,500 employees. We spend hundreds of millions of dollars on research each year and even then we don't know that we're going to win. However, it's very important for most people to know when not to make a bet because if you're going to come to the poker table you are going to have to beat me."



Lust – lusting after some investment will lead you to overpay for it.

"Chasing performance" is a guaranteed recipe for disaster as an investor. For most, by the time that "performance" is highly visible the bulk of that particular investments cyclical gains are already likely achieved.
Importantly, you can see that investment returns can vary widely from one year to the next. "Lusting" after last year's performance leads to "buying high" which ultimate leads to the second half of the cycle of "selling low."

It is very hard to "buy stuff when no one else wants it" but that is how investing is supposed to work. Importantly, if you are going to "lust," "lust" after your spouse – it is guaranteed to pay much bigger dividends.



Envy – this goes along with Lust and Greed

Being envious of someone else’s investment portfolio, or their returns, will only lead to poor decision-making over time. It is also important to remember that when individuals talk about their investments, they rarely tell you about their losers. "I made a killing with XYZ. You should have bought some" is how the line goes. However, what is often left out is that they lost more than what they gained elsewhere.

Advice is often worth exactly what you pay for it, and sometimes not even that. Do what works for you and be happy with where you are. Everything else is secondary, and only leads to making emotional decisions built around greed and lust which have disastrous long term implications.



Gluttony – never, ever over-indulge. Putting too much into one investment is a recipe for disaster.

There are a few great investors in this world than can make large concentrated bets and live to tell about it. It is also important to know that they can "afford" to be wrong - you can't.

Just like the glutton gorging on a delicious meal – it feels good until it doesn’t, and the damage is often irreversible. History is replete with tales of individuals who had all their money invested in company stock, companies like Enron, Worldcom, Global Crossing; etc. all had huge, fabulous runs and disasterous endings.

Concentrated bets are a great way to make a lot of money in the markets as long as you are "right." The problem with making concentrated bets is the ability to repeat success. More often than not individuals who try simply wind up broke.

[glassman]

This might sound stupid, but apparently Gilligan's Island was based on the seven deadly sins, each character represents one. I googled it, pretty funny.

Good article though.

[GregWeld]

This might sound stupid, but apparently Gilligan's Island was based on the seven deadly sins, each character represents one. I googled it, pretty funny.

Good article though.




You're banned from speaking to me on the Hall of Fame tour. Just pretend you don't know me.

[GregWeld]

That is really a great read.


Not saying that I'm smart -- rather -- I'm going to tell you that if you read this and then go back and read this thread. The very same "advice" is given over and over again right here.

Investing isn't hard - doesn't take "brilliance" - doesn't take much more than $500 to get started - doesn't require gut wrenching decisions. It does take - GETTING STARTED - doing a little homework - patience.

Buy good stuff - don't gamble - diversity the best you can at any given point - keep a heads up - buy more when the market is at it's worst - don't be a trader but do pay attention to fundamental changes and be willing to make adjustments - reinvest the dividends automatically. You will be rewarded over TIME. If your guts tell you to sell - SELL! But then don't sit on your hands - get those employees (funds) back to work!! Funds "on vacation" aren't very productive!

Investing is like a golf swing - the harder you try to swing (gambling and risk) - the deeper you'll be in the woods. You can't win the game on one hole... you have to play until the end. Best game I ever had I never hit anything longer than a 5 iron. 150 off the tee - 150 off the fairway - a chip and run - two putt for a bogey. When I try to birdie - I end up with a snowman.











I took this from Zerohedge.com its an investment website, a lot of what they talk about is way over the head of average people. I'm reading and trying to learn.

The 7-Deadly Investing Sins


Wrath – never get angry; just fix the problem and move on.

Individuals tend to believe that investments that they, or their advisor, make should "always" work out. They don't and they won't. Getting angry about a losing bet only delays taking the appropriate actions to correct it.

"Loss aversion" is the type of thinking that can be very dangerous for investors. The best course of action is to quickly identify problems, accept that investing contains a "risk of loss," correct the issue and move on. As the age-old axiom goes: "Cut losers short and let winners run."



Greed – greed causes more investors to lose more money than at the point of a gun.

The human emotion of "greed" leads to "confirmation bias" where individuals become blinded to contrary evidence leading them to "overstay their welcome."

Individuals regularly fall prey to the notion that if they "sell" a position to realize a "profit" that they may be "missing out" on further gains. This mentality has a long and depressing history of turning unrealized gains into realized losses as the investment eventually plummets back to earth.

It is important to remember that the primary tenant of investing is to "buy low" and "sell high." While this seems completely logical, it is emotionally impossible to achieve. It is "greed" that keeps us from selling high, and "fear" that keeps us from buying low. In the end, we are only left with poor results.



Sloth – don’t be lazy; pay attention to your money because if you don’t – no one else with either.

It is quite amazing that for something that is as important to our lives as our "money" is, how little attention we actually pay to it. Not paying attention to your investments, even if you have an advisor, will lead to poor long term results. Portfolios, like a garden, must be tended to on a regular basis, "prune" by rebalancing the allocation, "weed" by selling losing positions, and "harvest" by taking profits from winners.

If you do not regularly tend to a portfolio, the bounty produced will "rot on the vine" and eventually the weeds will eventually reclaim the garden as if it never existed.



Pride – when things are going good don’t be prideful – pride leads to the fall. You are NOT smarter than the market, and it will "eat you alive" as soon as you think you are.

When it comes to investing, it is important to remember that a "rising tide lifts all boats." The other half of that story is that the opposite in also true. When markets are rising, it seems as if any investment we make works; therefore we start to think that we are "smart investors." However, the reality is that there is a huge difference between being "smart" and just being "along for the ride." Ray Dalio, head of Bridgewater which manages more than $140 billion, summed it up best:

"Betting on any market is like poker, it's a zero-sum game and the deck is stacked against the individual investor in favor of big players like Bridgewater, which has about 1,500 employees. We spend hundreds of millions of dollars on research each year and even then we don't know that we're going to win. However, it's very important for most people to know when not to make a bet because if you're going to come to the poker table you are going to have to beat me."



Lust – lusting after some investment will lead you to overpay for it.

"Chasing performance" is a guaranteed recipe for disaster as an investor. For most, by the time that "performance" is highly visible the bulk of that particular investments cyclical gains are already likely achieved.
Importantly, you can see that investment returns can vary widely from one year to the next. "Lusting" after last year's performance leads to "buying high" which ultimate leads to the second half of the cycle of "selling low."

It is very hard to "buy stuff when no one else wants it" but that is how investing is supposed to work. Importantly, if you are going to "lust," "lust" after your spouse – it is guaranteed to pay much bigger dividends.



Envy – this goes along with Lust and Greed

Being envious of someone else’s investment portfolio, or their returns, will only lead to poor decision-making over time. It is also important to remember that when individuals talk about their investments, they rarely tell you about their losers. "I made a killing with XYZ. You should have bought some" is how the line goes. However, what is often left out is that they lost more than what they gained elsewhere.

Advice is often worth exactly what you pay for it, and sometimes not even that. Do what works for you and be happy with where you are. Everything else is secondary, and only leads to making emotional decisions built around greed and lust which have disastrous long term implications.



Gluttony – never, ever over-indulge. Putting too much into one investment is a recipe for disaster.

There are a few great investors in this world than can make large concentrated bets and live to tell about it. It is also important to know that they can "afford" to be wrong - you can't.

Just like the glutton gorging on a delicious meal – it feels good until it doesn’t, and the damage is often irreversible. History is replete with tales of individuals who had all their money invested in company stock, companies like Enron, Worldcom, Global Crossing; etc. all had huge, fabulous runs and disasterous endings.

Concentrated bets are a great way to make a lot of money in the markets as long as you are "right." The problem with making concentrated bets is the ability to repeat success. More often than not individuals who try simply wind up broke.

[GregWeld]

I'm surprised nobody has asked about Alibaba.... and it's IPO.


Frankly -- I really haven't paid all that much attention to it because I'm "done" playing in the IPO market. That doesn't mean you younger guys shouldn't be playing with some of this stuff.

I thought Alibaba was like Amazon.. or eBay. So I decided to go visit the site. What I found - and I didn't spend more than 4 minutes poking around - is that it seemed to be mostly for business customers not individuals. When I checked on buying some 2" X 60" belts for my Burr King.... I had to buy 1000 of them or 100 of them. I also found "mostly" Chinese suppliers. While you could select which country you wanted as a manufacturer -- there would be 50 Chinese suppliers to 1 or 2 USA.

What I'd really like to know about this company is whether or not USA companies are willing to buy from them (Alibaba) or use them the way the Chinese market has. It will be very interesting to watch.

Remember too -- the STOCK (IPO) is very different from the COMPANY... there is a ton of hype on this IPO. I would "expect" it to be "the IPO" of the year... given it's size and sales etc. And IPO's can be very interesting and fun to play with. Just look at GoPro so far! Wow!

[Sieg]

I looked at an Alibaba home page for the first time Saturday night and my initial impression was blah......

This report contradicts my impression.


By Tim Mullaney
Even for veterans of the tech-IPO scene, the Alibaba deal is an eye-opener. The Chinese e-commerce giant is set to sell $24.3 billion (or more) of stock this week, and there really has never been one like it in the Internet age. Here are five reasons why.
1. This company is profitable like eBay (EBAY) but grows like Amazon.com (AMZN).
For the 15 years I've covered IPOs, there's almost always a choice to make between fast-growing, unprofitable companies and profitable ones with slower growth. Really big deals like Google (GOOG) and Facebook (FB) had both. Alibaba (BABA) is like those, but more so.
Alibaba's sales rose 55% in the fiscal year that ended in March, to $8.46 billion. It grew 46% again in the first quarter of this year. But profit is growing much faster: Last year's $4.02 billion operating profit was up 132%. Before its IPO, Facebook was half the size and its profit margins were narrower, though it grows a bit faster than Alibaba.
The reason for the fat margins is that Alibaba, like eBay, doesn't own the stuff sold on its Web sites. Instead, it takes a cut from sellers who use its platform. Since running the platform is cheap once it achieves scale, gross margins are 71%. Amazon runs about 30%, and eBay is at 68%.
That's why Alibaba's profit grows so much faster than sales. And it's sustainable unless it changes strategy.
2. Chinese Web penetration -- and consumer spending -- are still lower than you may realize.
We know by now that Alibaba's three main Web marketplaces generated $296 billion in gross merchandise sales in the four quarters (eBay did less than $80 billion). The temptation is to assume that this means Alibaba is working in a fully developed market, but it's not.
About 46% of Chinese consumers are connected to the Internet, compared with 82% in the U.S. Chinese consumers' spending comprises 36% of gross domestic product, versus 67% here. And a lower share of Chinese who are online, shop online, than is the case in the West.
All three of those figures will move toward developed world averages. And they will be force multipliers for Alibaba.
3. They make group buying work.
Back in the U.S. Web bubble, Paul Allen funded a group-buying company called Mercata whose CEO told me they would be the biggest e-commerce company in the world. Mercata didn't make group buying work, but Alibaba apparently has.
Group buying aggregates demand for merchants, who in exchange give discounts to people willing to join the group. The closest U.S. parallel to this now is Groupon (GRPN). At Alibaba, the Juhuasuan group-buying market site generated $10.6 billion of gross merchandise sales in the year ending in June. By itself it might be a pretty interesting company, but it's only about 4% of Alibaba.
4. Alibaba is bigger than even established, blue-chip companies.
At its current sales pace, Alibaba will reach the size of U.S. companies like Marriott (MAR), Texas Instruments (TXN) and Nordstrom (JWN) this year. It's bigger than Visa (V). According to Renaissance Capital, at $63 a share it would be the 23rd most-valuable company listed in the U.S., with a $161 billion market value.
That's the reason investment manager Walter Price told MarketWatch's Sital Patel last week that Alibaba was a "mature" company. In a sense, that is true -- Alibaba is no fledgling. But in the normal business usage of "mature" -- a company that already is what it will become, with its primary opportunities already exploited -- Alibaba is anything but.
5. The valuation is surprisingly conservative.
The $66 top of Alibaba's price range values the company at 41 times last fiscal year's earnings. On this year's likely earnings, Alibaba's pre-IPO range supposes about a 25 price-to-earnings ratio. Much lesser Internet companies get much higher multiples. Facebook fetches 48 times earnings.
At $66, this deal is a grown man playing poker online against college kids. A 25 multiple? With a dominant position in an already huge Chinese Internet market that is, at the same time, uniquely underdeveloped? With near-50% operating margins now and economies of scale still waiting to be built? That's why the deal's price will reportedly rise before it closes.
Applying Facebook's P/E, and assuming that Alibaba's 84 cent per share first-quarter profit, inflated by a one-time revaluation of old acquisitions, begets $2.50 for the year, Alibaba's share-price value is $115, plus or minus. Its market value looks like $285 billion, slotting it between Wells Fargo (WFC) and Johnson & Johnson (JNJ)
Sound like a lot? Well, it's a lot of company.
-Tim Mullaney; 415-439-6400; [email protected]

[GregWeld]

Here's my "prediction" on Alibaba....


The "air" will come out of the latest hot stocks --- as the very same people that chase the "hot stocks" will sell their winners (GPRO/TSLA/CMG/AAPL/FB etc) to fund their new buys of Alibaba shares.

It may be an opportunity to buy some shares of these high fliers for you younger guys at a little discount.

[GregWeld]

Here's my "prediction" on Alibaba....


The "air" will come out of the latest hot stocks --- as the very same people that chase the "hot stocks" will sell their winners (GPRO/TSLA/CMG/AAPL/FB etc) to fund their new buys of Alibaba shares.

It may be an opportunity to buy some shares of these high fliers for you younger guys at a little discount.




If you hang around long enough -- you'll learn that there is a "disconnect" between the SHARES and the actual company performance in certain names. There are many categories of shares -- Momentum Stocks -- is just one of them. They go up quickly -- and they go down just as quickly when the new flavor of the week changes.

This does NOT mean that they're not good companies - that there's anything wrong with owning them - that they won't be good long term investments. What it does mean is "don't think you're smart" when you get in and they run to the moon....

The "smart money" gets in - makes 10 or 20 or 40% and they know when to get out and move on. Then they repeat this process. To me - it's "lemming" investing. Everybody wants to be in the latest hot deal. Lots of money to be made in these... what you don't want to be is in the last group to finally get in. Those are the people that loose while the others line their pockets.

Think about housing. The people that bought at the top still haven't recovered... while those that bought at the bottom have made a killing.

[GregWeld]

Here's some startling numbers!!! As in WOW.....




China had 618 million internet users at the end of December 2013, according to China Internet Network Information Center, or CNNIC; that figure was up 9.5% year on year but still represented less than half the national population, showing clear room for growth.

[toy71camaro]

Interesting topics.. I like it. Makes us think. :)

The other half just asked if I was going to do anything with Alibabi, cuz its "supposed to be huge". She's been listening to the news. lol.

My response was basically what we've discussed here:
1. Its a gamble.
2. Everyone's hyping it up = scary.
3. Or do I sit back on Babi, and do a small stake in the "old hot stocks" like mentioned above.
4. It's a gamble.
5. All the options above are a gamble. LOL.

None of them fit my Investing 102 profile. But, would it hurt to gamble a couple hundred bucks and "let it ride" and see what happens? Maybe. It certainly ain't gonna kill me and I'm not gonna lose the farm so to speak.

So, I'm still up in the air on the whole thing. Like with any IPO. I'm not big on gambling. lol.

[GregWeld]

The points I've always tried to make here is not -- DON'T GAMBLE -- this is investing 102... beginner investing.

The KEY is to understand what constitutes gambling versus investing.

Once you understand the difference -- and have some investments -- and you want to gamble just a bit.... at least a guy will know that and go into the purchase with eyes wide open. When it does what you thought it would do = Great! When it doesn't -- understand your bet and get the F out....








Interesting topics.. I like it. Makes us think. :)

The other half just asked if I was going to do anything with Alibabi, cuz its "supposed to be huge". She's been listening to the news. lol.

My response was basically what we've discussed here:
1. Its a gamble.
2. Everyone's hyping it up = scary.
3. Or do I sit back on Babi, and do a small stake in the "old hot stocks" like mentioned above.
4. It's a gamble.
5. All the options above are a gamble. LOL.

None of them fit my Investing 102 profile. But, would it hurt to gamble a couple hundred bucks and "let it ride" and see what happens? Maybe. It certainly ain't gonna kill me and I'm not gonna lose the farm so to speak.

So, I'm still up in the air on the whole thing. Like with any IPO. I'm not big on gambling. lol.

[Sieg]

I'm not big on gambling. lol.
I see I'm not the only one who's inherently unlucky. :sieg: :D

[ironworks]

If you getting in when everyone else is the deal is over.


I bought our house 3 years ago and it has doubled in value in that short time. They couldn't give houses away 3 years ago.

The housing market was so bad Banks boarded up their foreclosures and let them sit for a few years to make some money on them before after everything crashed. Nobody was selling anything.

[GregWeld]

This is a good discussion because of all the recent IPO action... and frankly it also covers any "investment" that would constitute RISK/GAMBLING.


There's many scenarios that would be covered by risk/gambling vs investing.

Let's take Blackberry.... a guy could have gone bottom fishing and bought BBRY down in the $5's... BETTING that it might rise to $6.00 or $6.50

The thing here is to know what you're expectations are -- and have a plan - and know for a fact that you're betting. When it hit's your target, i.e., meets your expectations.... NOW what do you do? You're plan was to skim a quick 20%... do you stick to that and sell -- or now do you feel so smart that you turn your gamble into an investment and hold?

Are you that nimble?

Do you watch the market like a hawk?

Are you able to handle the gut wrenching that goes on if your big bet goes from a gain to a loss?

Did you have the extra cash -- or did you sell a winner to place a bet?

Are you the type that once you've made a bet and it didn't work -- do you make even larger bets trying to make up for the loss?

Once you've made a big score --- are you the type that now abandons INVESTING and turns into a trader?

These are all things most of us can't answer about ourselves until we actually "try". My story here has been to get people to THINK about these things... not to tell someone what or what not to do.

Beginners need to have some success.... and that success is easier and more lasting if they're collecting dividends and seeing some gains regardless of the size... vs losses.

Once a guy has a little cushion and wants to try to make a big quick score -- fire away! I do it all the time - I just don't talk about it here because it's not appropriate and I feel if I mention it - you all will jump in. That's not what I want anyone to do... you need to be comfortable doing these things on your own - not blindly following (lemming?) what everyone else is doing.

[GregWeld]

Personally -- I like to think about what the feelings were when I was broke... it keeps your eye on the ball a little tighter. After having some success -- I never want to experience the broke feeling again. So my RISK taking is a very very small number/percentage. That doesn't mean I'm not taking on some risk now and then. Don't be afraid of it -- but understand it and what fallout you might suffer.

We all go into everything KNOWING we're going to knock the cover off the ball... Trust me -- I've had some HUGE zeros from that. I've also had 1,000's of percents in returns. I wouldn't have the returns at all had I not taken on the risk.

The difference is I'm not playing with the kids college fund - or the emergency fund - or my retirement. Fund those first - when you're satisfied... it's okay to play just a bit.

[GregWeld]

How many of you remember Montgomery Ward? It went away years ago... Now it looks like Sears may be the next old line department store to fold. When I read this headline today.... I thought --- Well.... there's a fundamental change. I wonder how many people have stock in this old line company and they've owned it for 40 or 50 years... and it's possible it goes to zero.

My mother worked at Sears. I used to buy all my tools at Sears. Need a battery? Head for Sears. Need work clothes? Yep - straight to Sears. I remember as a little kid being excited because Grandma would let us go thru the Sears catalog and pick out (scribble? Circle?) everything we wanted for Xmas. I can still picture the pages and pages of the tools... you could buy the 25 pc set or the 1744 pc set complete with tool box. Man I remember dreaming over that bad boy. I still own the very first 3 drawer Craftsman box I bought when I was 13. It holds all my TIG consumables... and it's a little worse for wear... but that box still functions.

Here's my thought for the day. There's winners and losers. There's always going to be winners and losers. Certain parts of town that we remember as the shinning are now places we won't even drive near. Businesses that stumbled and lost their way... Monkey Wards... Sears.... Radio Shack.... Best Buy was almost gone... And there's winners... Amazon? Costco? Many specialty retailers have sprung up that all took a bite out of the "Sears" model. Things change. Be aware of these for investing... you want to be out of the loser and into the winners. Simple changes can power your retirement. Chipotle Mexican Grill vs McDonalds. Is this a fundamental change that lasts? I don't know and I'm not trying to use this post to make a pic one (won?) way or the other... rather I'm saying -- be aware of little changes that begin to add up and affect what you're currently invested in. Look at your investments one by one and examine them and pull your head up and look around you. News? Have you asked yourself - if you were an investor in Sears - when was the last time you shopped there? McDonalds? Did you used to go there once a week and now haven't been for... What? You can't even remember the last time? Is that worthy of paying attention to? Hell yes.

Have your shopping habits changed over the last 20 years? Amazon over Sears? Investing is pretty simple. But you do need to pay attention. Don't be caught owning the crumbling house in the bad side of town just because you were born there.... If the west side is the best side... recognize that and pack your stuff and move. In investing - don't be hidebound. Don't turn in to Grandpa that still holds Sears stock and has no idea that they're maybe the next Monkey Wards.


Just thought of another name that used to be THE STANDARD.... SONY? Used to covet a Sony TV... when was the last time you bought or even looked at - anything made by Sony?

[GregWeld]

I just found another eyeopener... and this is what I'm talking about "powering" your retirement fund... OR NOT!


Run a one year chart of Under Armor (UA) vs LuluLemon (LULU) stock.... I'm not even going to give you the numbers - ya gotta see it to believe it.


You can do this on Google Finance --- pull up the one chart (either company) and then put the other symbol in the "compare" box in the chart... and choose 1Y.

[chichirone]

I just found another eyeopener... and this is what I'm talking about "powering" your retirement fund... OR NOT!


Run a one year chart of Under Armor (UA) vs LuluLemon (LULU) stock.... I'm not even going to give you the numbers - ya gotta see it to believe it.


You can do this on Google Finance --- pull up the one chart (either company) and then put the other symbol in the "compare" box in the chart... and choose 1Y.

Ok, I have been stalking this thread long enough and if I am going to blame GW for making me filthy rich and selling my cars (HA!) I better participate/contribute.

The charts are crazy insightful. 1 year is plus 90% UA vs. -38% LULU...Yoga anybody? Thanks for sharing Greg! Now check the 10yr chart. I'm not going to describe it but "namaste" to LULU.

[GregWeld]

Ok, I have been stalking this thread long enough and if I am going to blame GW for making me filthy rich and selling my cars (HA!) I better participate/contribute.

The charts are crazy insightful. 1 year is plus 90% UA vs. -38% LULU...Yoga anybody? Thanks for sharing Greg! Now check the 10yr chart. I'm not going to describe it but "namaste" to LULU.




Just trying my best Jay!


As you know - 'cause I've said it enough times in the last 400 pages.... the stocks are only used as real life EXAMPLES.... and the points shouldn't be Sell LULU and buy UA.... The points are COMPARE things -- they're not always what you think. Poke around a bit. THINK!! It ain't hard and a guy can always LEARN just by making comparisons and opening their eyes to FACTS rather than "I think" or "somebody said"....


Makes you wish you'd have put 100K into UA 5 years ago instead of a car???? LOL

[chichirone]

Just trying my best Jay!

Makes you wish you'd have put 100K into UA 5 years ago instead of a car???? LOL

OUCH! I appreciate the candor and levity!

So here's our thinking...would love your feedback.

Amy and I have the rainy day fund in place. A years worth of cash on hand. We have invested in actively managed mutual funds for over 15 years, accumulating a 7 digit nest egg for longer term retirement. Our current goal is to generate more cash flow for mid-term money for our bridge years age 40-65. Managed growth over 5/10yr horizons with dividends reinvested is something we are very comfortable with. Your comment on it being a personally managed mutual fund resonates with us.

We have been looking at the following dividend stocks. I'd like to get your feedback on my "analysis" based upon share price and dividend yield. I really want to make sure I am looking at these stocks through the right set of lenses. We do not have a high tolerance for risk so the High-flyers don't interest me too much now, but as we build the portfolio, a TSLA or GPRO will become more attractive.

Symbols that interest us are:
KRFT
COP
XOM
F
PFE
MRK
SMG
T
MDT
KO

Our plan is to invest a portion of our monthly revenue, buy shares with the intent to receive dividends over the next 10 years. I am prioritizing the investments based upon yield percent of share price to get started which seems to be a low "risk" option when I evaluate the 10yr charts. I like your strategy of 5% return on the stock performance, reinvesting the dividend, and then building a portfolio that has 20-25 stocks with no more than 5% of the total invested in any one share. Time for you to tear it apart and push our thinking...I look forward to your response.

[GregWeld]

OUCH! I appreciate the candor and levity!

So here's our thinking...would love your feedback.

Amy and I have the rainy day fund in place. A years worth of cash on hand. We have invested in actively managed mutual funds for over 15 years, accumulating a 7 digit nest egg for longer term retirement. Our current goal is to generate more cash flow for mid-term money for our bridge years age 40-65. Managed growth over 5/10yr horizons with dividends reinvested is something we are very comfortable with. Your comment on it being a personally managed mutual fund resonates with us.

We have been looking at the following dividend stocks. I'd like to get your feedback on my "analysis" based upon share price and dividend yield. I really want to make sure I am looking at these stocks through the right set of lenses. We do not have a high tolerance for risk so the High-flyers don't interest me too much now, but as we build the portfolio, a TSLA or GPRO will become more attractive.

Symbols that interest us are:


KRFT

First off -- I'd deem Kraft a "steady eddie"... boring - low growth - increases the dividend - relatively low dividend percentage... but you can take this one to the bank 20 years from now and never loose a single nights sleep.



COP



Connoco Philips is one of the energy plays... It's another steady eddie - sleep well... 171% 5 year Total Return! Can't beat that with a stick! And you're getting 3.62% dividend!



XOM



I'd make a choice here and either hold COP or XOM but not both. COP has been the stellar grower and pays a far better dividend so I know which one I'd choose just off the stats. EXXon's problems could stem from their issues dealing with the Gulf oil spill and that may have held people back from wanting to own it.



F




Ford is a good recovery story - well run now that Bill Ford isn't at the helm... As long as the economy is perking along Ford should do just fine. Look for them to increase the dividend along the way. Good choice. It's powered by a 5 year Total Return of 142% which when you do the math - compare 142% TR to your SMG's 55%... :>)


PFE



I don't like the drug stocks... I can't keep up with who has the latest greatest next gen coming out. Frankly - I couldn't tell you what company makes what and that is something I can't invest in because if I don't actually know what they're doing -- then I don't understand my investment.


MRK




Merck --- Ditto above. If I had to have a big pharma.... I'd have ONE not both.




SMG




Scotts Miracle Grow - I can't even imagine why you came up with this one.... LOL... unless you work there. Dismal 5 year total return of 53%.... pretty low return - and given that it also pays a smallish dividend -- then you're not getting the growth in capital to offset the small payout. I'd find a better one than this. Even you're above big pharma choice MRK had a 123% 5 Year Total Return... and Pfhizer had a 5 year of 118%

In compounding TOTAL RETURN is everything... and there's just a monumental difference between 100% and 50%...




T



AT&T -- is one of my sleep well stocks -- good dividend -- good well run company - slow growth but I use it to get a good dividend and to make me comfortable. 5 year Total Return 69% not good frankly but it's still kicking' SMG!!




MDT




Medtronic is another one I can't keep up with what it is they do... or who the competition is. If you're a Doctor you probably understand them. I wouldn't own it for that reason --- and mostly because of the under 2% dividend. At least it had a 92% 5 year Total Return --- so the growth in share price offset the measly dividend. The problem I have with under 3% payers -- they don't keep up with inflation and it gets worse when the market sucks... I want my dividends to be enough to make/keep me happy when the market is horrible. 1.8% wouldn't do it for me.




KO





Coke is a good well run company. They pay a near 3% dividend and have a 5 year Total Return of 86% -- which in my book is decent -- and enough growth to cover the under 3% dividend. It's also a sleep well stock.





Our plan is to invest a portion of our monthly revenue, buy shares with the intent to receive dividends over the next 10 years. I am prioritizing the investments based upon yield percent of share price to get started which seems to be a low "risk" option when I evaluate the 10yr charts. I like your strategy of 5% return on the stock performance, reinvesting the dividend, and then building a portfolio that has 20-25 stocks with no more than 5% of the total invested in any one share. Time for you to tear it apart and push our thinking...I look forward to your response.




I think you have too many small dividend payers --- I'd shop for a couple that are 5% and have better TR's that a couple of your picks.

In order to diversify -- try not to double up -- i.e. the COP/XOM and the PFE/MRK...


You're to be commended by the way on your already sizable holdings -- I bow to you.

[chichirone]

I think you have too many small dividend payers --- I'd shop for a couple that are 5% and have better TR's that a couple of your picks.

In order to diversify -- try not to double up -- i.e. the COP/XOM and the PFE/MRK...


You're to be commended by the way on your already sizable holdings -- I bow to you.

Greg, I REALLY appreciate your insight and compliment. This thread is one of the most personally moving reads I've experienced since reading the Millionaire Next Door. Your willingness to share and provide insight to your personal situation, for the benefit to educate others has been incredibly helpful.

The healthcare, med device and pharma stocks are very familiar to me since I've been in the business for almost 20years. Call it my comfort zone. If I read your comments correctly:
1. Select one in the sector and don't duplicate
2. Quit sniffing the fertilizer. HA!
3. Be a little more focused on 5% yield...look for more risk
4. MAKE IT HAPPEN!!!! The first step is to get the Schwab account set up and get rolling.

Your insight is valuable. It is not often that one is wiling to share, educate, and also call bull**** on another's thinking. On another note, is PM and MCO still on your "sleep at night" list? I left these off my list.

[Vegas69]

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.

[GregWeld]

Greg, I REALLY appreciate your insight and compliment. This thread is one of the most personally moving reads I've experienced since reading the Millionaire Next Door. Your willingness to share and provide insight to your personal situation, for the benefit to educate others has been incredibly helpful.

The healthcare, med device and pharma stocks are very familiar to me since I've been in the business for almost 20years. Call it my comfort zone. If I read your comments correctly:
1. Select one in the sector and don't duplicate
2. Quit sniffing the fertilizer. HA!
3. Be a little more focused on 5% yield...look for more risk
4. MAKE IT HAPPEN!!!! The first step is to get the Schwab account set up and get rolling.

Your insight is valuable. It is not often that one is wiling to share, educate, and also call bull**** on another's thinking. On another note, is PM and MCO still on your "sleep at night" list? I left these off my list.



Jay -- Yeah -- I've shared way too much personal info on here -- but figure WTF -- if it gets one person going on the right track - then I've done good. So I throw myself on the sword for all. LOL


I figured you had to be "in the industry" or close to it.... There is LIFE outside of work you know. Drive up and down the street and look at all those viable businesses that are just waiting for you to be a partner with them.

5% dividend doesn't have to come with risk. AT&T pays over 5% and I wouldn't classify it as risky. Altria (MO) pays 4.66% and that's not very risky... so there's plenty out there.

Philip Morse (PM) pays almost 5%... Both MO and PM are sin stocks -- I like MO because of the booze component... I don't smoke or drink -- doesn't keep me from making money off the people that do.

MCO is Moody's (the ratings agency) and I ASSume you meant McDonalds (MCD). I sold MCD awhile ago based on my belief that they're losing the fast food battle... and that the general public they appeal to has shifted to healthier restaurants. Their sales continue to slip -- and that's a "Fundamental" change I can't sleep with. Their down almost 8% in the last 3 months... that's a nasty dip and I'm glad I've moved on. If it paid a dividend - I'd be in Chipotle Mexican Grill (CMG) versus MCD. CMG is growing and MCD is shrinking.

[68Cuda]

Greg - it will take me a while to catch up on reading all the posts. Good stuff what I have read so far!

Give the rest of you guys some encouragement! My current employer allows us to put up to 90% of our 401 into a "self directed" brokerage. I consolidated all my previous employers accounts and put as much as my finances or the company allows into the account each year. So about 60% of my total savings are sitting in this account as of now. The neat part is that ALL the gains in this account are not taxed until later, so the growth is not hampered. I also put away as much as they let me into our HSA, once I reach a set amount they will also let me self manage the investments in that one. The HSA is really neat in that the money both in and out are tax free. I also expect that health care costs down the road are not going to be lower, so money saved there will probably get used. I have not reached a critical mass on the HSA yet, maybe at some point I will slow down on funding that one.

OK, back to the "self directed" account. Currently has ABT, BMY, CAG, INTC, JNJ, KMB, MO, MRK, NUE, RDSA, VZ, PG, and WM. INTC I picked up 2 years ago, the rest I have had longer. They are all DRIP... Dividend Reinvestment. Between these and my other holdings the average rate of return since I opened the account in August 2006 is about 21%. My investment strategy is similar to the "Dogs of the Dow" strategy (has its own web page), my "secret" is that I do not limit myself to this list or just the Dow index. Other than that, it is dumb simple. When I have some cash, the "Dogs" web page is where I start my search. Must be mid to large cap, must be growing, must be a company that I believe is sound in principal and direction, and then I look for a period where magically that stock is inexplicably priced on the low side. Some of the stocks listed I bought when the dividend rate was 4-5%, I don't recall buying any under 4%.

Oh, my other rule is a personal one. I participate in the company ESPP (employee stock purchase program), but I sell it immediately when I get it and move the money elsewhere. I hold $0 in company stock. I have too much already invested emotionally in the place, I do not need the stock performance souring my mood. Besides, as good as they are, they do not meet my stock picking criteria, the dividend is too low.

I used to have NLY and a few other similar investments in my E-Trade account... returns were great but it was kind of scary, I got out. Went back to the simple stuff I am not inclined to look at so much.

[GregWeld]

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.



So many of the companies we own nowadays are already "international". So I don't go looking for a pure international play. 20 years ago you needed to own some foreign company stocks -- but the big best of breed guys are almost all doing business in other countries. Frankly I can't think of many countries where I'd want to own their stocks. Europe is a welfare entity... Spain? Japan hasn't had a good economy for 20 years.... If you want China - buy McDonalds - Coke - Apple... and I don't want to own anything I can't pronounce. Germany is just now slipping into a possible recession...

The other way I think is about stuff like KMI/KMP/KMR.... they own the Pipes...Everyone needs to get their stuff from point A to point B... so I don't try to pick the one guy that's going to win that battle -- when they ALL have use KMP pipes...

Ditto oil --- I'd prefer to own the infrastructure plays (the pipes/storage). Versus the guys that have to drill - risk capital to find more - or have to play the pricing game. THEY ALL have to use the pipes so I invest in pipes. :>)

Again -- this is just something more to think about rather than BUY THIS or DON'T BUY that.... which isn't the way I like to do this thread.

[68Cuda]

Ditto oil --- I'd prefer to own the infrastructure plays (the pipes/storage). Versus the guys that have to drill - risk capital to find more - or have to play the pricing game. THEY ALL have to use the pipes so I invest in pipes. :>)
.

I once looked into the tanker business as an investment, really good returns, but some risk obviously considering your investment vehicle is literally a vehicle... and you hope that it stays afloat, also in the literal sense. There were some that had crazy returns where you were literally buying shares of ONE ship.

[GregWeld]

I once looked into the tanker business as an investment, really good returns, but some risk obviously considering your investment vehicle is literally a vehicle... and you hope that it stays afloat, also in the literal sense. There were some that had crazy returns where you were literally buying shares of ONE ship.



I have tankers ---- KMI owns Oil Tankers (under the KMP umbrella which is being converted to KMI shares).... and I own Dry Goods ships via Navios Marine Partners LP (NMM). They own 33 dry goods ships. I like to mix the high dividend payers in with the steady eddies and frankly my holdings allow me to do this and still sleep at night. However - I keep the percentage invested in the high div payers to a far lower amount. For instance I own just shy of half a million dollars each worth of NMM (25,000 shares) and NLY (40,000 shares).... versus 1.5 to 2MM in my more "normal" names like an AT&T or a MO or BPT etc. Although I recently halved my holdings in BPT it's still a large holding.

I usually refrain from mentioning too many of my holdings because I don't want people to think - well WELD has that so I should too! That would be the completely 100% opposite of what I would like to see from this thread. Don't own what I own and why I own it.... own what YOU want to own and what YOU understand. I mention when I don't own something because I don't understand it. There is NOTHING wrong with admitting you don't understand something therefore you avoid investing in "it". That's as it should be!

[68Cuda]

I have tankers ---- KMI owns Oil Tankers (under the KMP umbrella which is being converted to KMI shares).... and I own Dry Goods ships via Navios Marine Partners LP (NMM). They own 33 dry goods ships. I like to mix the high dividend payers in with the steady eddies and frankly my holdings allow me to do this and still sleep at night. However - I keep the percentage invested in the high div payers to a far lower amount. For instance I own just shy of half a million dollars each worth of NMM (25,000 shares) and NLY (40,000 shares).... versus 1.5 to 2MM in my more "normal" names like an AT&T or a MO or BPT etc. Although I recently halved my holdings in BPT it's still a large holding.

I usually refrain from mentioning too many of my holdings because I don't want people to think - well WELD has that so I should too! That would be the completely 100% opposite of what I would like to see from this thread. Don't own what I own and why I own it.... own what YOU want to own and what YOU understand. I mention when I don't own something because I don't understand it. There is NOTHING wrong with admitting you don't understand something therefore you avoid investing in "it". That's as it should be!

Well I definitely do not have your resources! Therefore I will stay on the conservative side, thank you very much! I felt the tanker thing had a little much risk for my blood and I did not feel comfortable because I did not fully understand it - so I stayed away. Even though I am a much smaller fish, or relatively speaking, maybe a minnow, I share the same thought process in that I WILL NOT invest in something I do not understand. Thanks for being so open and forthcoming.

[96z28ss]

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.

Now that CVS isn't going to sell cigarettes which I heard was 2 billion in sales a year. That might make the company not hits its numbers, sending the value down.

[Vegas69]

I did read that and it very well could play out. Personally, I like the decision.

Thanks for the input Greg.

[GregWeld]

Well I definitely do not have your resources! Therefore I will stay on the conservative side, thank you very much! I felt the tanker thing had a little much risk for my blood and I did not feel comfortable because I did not fully understand it - so I stayed away. Even though I am a much smaller fish, or relatively speaking, maybe a minnow, I share the same thought process in that I WILL NOT invest in something I do not understand. Thanks for being so open and forthcoming.



Michael.... the whole thread is about a WAY TO THINK -- not about who has what. I throw in my real life stuff because it's the only way to separate what "I" do to use as an example - versus the way I want people to look at their own accounts. I'm not brilliant and I'm not a brilliant writer. I can use real life stuff - keeping it honest and real - and let people take the information and use it for how it fits for them.

Investing - and writing about it on here (the only place I do) - is to help my friends. The problems with investing in general is that nobody wants to talk about it. You ever remember your Dad sitting you down and saying -- hey Son! I make 5,000 a month and I'm saving 500 a month for my retirement and 350 a month for your college... and here's where it is and how my returns are going.

The reason I mention real numbers in here - is one - for full disclosure - and two - because I want to show real actual relativity.

There are people on this forum that have to save for a set of tires - and there's guys on here with 30 collector cars... and everything in-between. Earnings power and savings and the price of a guys house or his car - is really totally not relevant here - because many of us have been on here for years. We all know each other. Many of us are friends well beyond this forum etc. What you will find out here is that we're all here for each other. Whether that's borrowing a tool or meeting for coffee - or lending ideas - expertise - or just giving each other crap. If I can help my friends with their retirement... then that's what I'm going to do. It's been very rewarding for me personally to see and hear the stories of success.

Nobody is a minnow.... because if you're in here reading and discussing - then you're a somebody in my book. The people that are in this thread give a **** about their future and the future of their family... and they're doing the very best they can. You don't have to own a AA/FC to go and participate in the drag races... If you're there - then you're a drag racer and the people around you will welcome you. Ditto here.



Now that CVS isn't going to sell cigarettes which I heard was 2 billion in sales a year. That might make the company not hits its numbers, sending the value down.



For investing 102 -- I'll toss this in. Your point is a good one -- EXCEPT -- this move was well telegraphed. The "market" - which is really controlled by the large institutional players.. would have already "priced this in". I think cigs are a very low margin business and the actual cost of handling them - accounting for all the taxes - keeping them "safe" in the retail space as well as at the warehouse... has costs not associated with normal merchandise. My guess is - if they were killing it (is that a pun?) with cigs - they'd have a far different view. Money - in business - trumps just about everything. And the CFO etc and the BOD (Board of Directors) I'm sure has looked at the effect to the bottom line for months before the decision was made.

Having said all of that.... it remains to be seen if they loose customers to WalMart or some other competitor. A guy might stop for smokes and buy a lighter -- or shampoo - or his cough medicine (LOL). So your statement is very valid in that the real affect is yet to be known. As such - I agree with you - I'd avoid it for at least 2 full quarters. Why stand on the tracks just to see if a train is really going to come or not.... when you can stand to the side and have no worries?

[GregWeld]

Now -- Since I'm on a roll this morning...


Let's not forget what the STOCK MARKET really is. It's a MARKET. PERIOD. At the end of the day -- for a stock to rise - more people must want to own it than want to sell it. End of story.

There are "popular stocks" -- no different than the popular girl in high school... everyone wanted to (use your imagination)... She had no problems finding a date. Stocks are the same way. The ones everyone wants to own are the easy ones.

In the end however -- it's about people and people are fickle.... and we're lemmings... if housing is hot - we all want to be in housing. If gold is hot we all want gold. When these things go "cold" (like when the hot chick shows up with a cold sore)... then "nobody" wants them and the price drops.

Some times - if you're lucky - the fact that you hit on the cold sore chick - and the sore goes away - she loves you for life and you're rewarded. Some times that cold sore is just the beginning of a far "lower" (get it) problem that isn't readily visible. Let's call this -- trying to catch a falling knife. If you're lucky you get the handle... if not - you get sliced and diced. I prefer not to play that game. It's gut wrenching - it's gambling - it works and you're a hero - it doesn't work and you're a zero.

Alibaba is on everyones target.... This is not only THE HOT CHICK - This is the hot chick that puts out! And it seems that people want in and don't want to get out. i.e, people want to hold it. That means the price SHOULD go up. I'm hearing on CNBC that most of the shares offered are going to institutional investors rather than retail customers ala (get it?) FaceBook (FB). People EXPECTED FB to double or triple on the first day and their plans were to get in and get out. A one night stand. The difference that I'm sensing is that people want to marry Alibaba for a far longer term and that can only be good for the shares.

ME? I'll wait and see.... but you young guys... this may be something that goes viral and It wouldn't hurt you to put $500 or $1000 into play. IF you do that -- be prepared for "whatever". Understand your expectations and your reactions if your expectations aren't met.

[GregWeld]

I would also suggest that you look at some real estate companies..... not only do they spin off decent dividends - it adds to your diversity. I personally own NNN - but have also owned O... and I'm not recommending either of them -- I'm just saying I think you need more diversity and some better dividends.


O

NNN

BXP










OUCH! I appreciate the candor and levity!

So here's our thinking...would love your feedback.

Amy and I have the rainy day fund in place. A years worth of cash on hand. We have invested in actively managed mutual funds for over 15 years, accumulating a 7 digit nest egg for longer term retirement. Our current goal is to generate more cash flow for mid-term money for our bridge years age 40-65. Managed growth over 5/10yr horizons with dividends reinvested is something we are very comfortable with. Your comment on it being a personally managed mutual fund resonates with us.

We have been looking at the following dividend stocks. I'd like to get your feedback on my "analysis" based upon share price and dividend yield. I really want to make sure I am looking at these stocks through the right set of lenses. We do not have a high tolerance for risk so the High-flyers don't interest me too much now, but as we build the portfolio, a TSLA or GPRO will become more attractive.

Symbols that interest us are:
KRFT
COP
XOM
F
PFE
MRK
SMG
T
MDT
KO

Our plan is to invest a portion of our monthly revenue, buy shares with the intent to receive dividends over the next 10 years. I am prioritizing the investments based upon yield percent of share price to get started which seems to be a low "risk" option when I evaluate the 10yr charts. I like your strategy of 5% return on the stock performance, reinvesting the dividend, and then building a portfolio that has 20-25 stocks with no more than 5% of the total invested in any one share. Time for you to tear it apart and push our thinking...I look forward to your response.

[sebtarta]

Greg please send me a PM with your Paypal address, amazon wishlist or something so I can send a present to you for all your help here. Be it with beer, ONE racing glove, something! I have been reading here since I posted back then about MNKD. I have learned a lot.

[GregWeld]

Greg please send me a PM with your Paypal address, amazon wishlist or something so I can send a present to you for all your help here. Be it with beer, ONE racing glove, something! I have been reading here since I posted back then about MNKD. I have learned a lot.




What?!?!?!


You finally learn about chicks with cold sores?? LOL

[toy71camaro]

LMAO. Some great discussions here the past couple days. I love it. I could read, talk, learn, BS about this stuff ALL day. hahaha.

[toy71camaro]

Question from us "Young guys" (I still consider myself young. LOL)

If we were to "gamble" on something like Alibaba, or GoPro, etc. Which account would be best to do this in? A Personal Brokerage account or within a ROTH IRA?

I'm guessing a PB account. If it fizzles out it could be counted as a loss. But then again, if it goes to the moon, it wont be taxed in the ROTH, but then its also tied up for another 30 years... heh.

I'm not sure that even a question we can really answer.. But maybe just discuss and we'll have to weigh our own options individually.

[dhutton]

Now -- Since I'm on a roll this morning...


Let's not forget what the STOCK MARKET really is. It's a MARKET. PERIOD. At the end of the day -- for a stock to rise - more people must want to own it than want to sell it. End of story.

There are "popular stocks" -- no different than the popular girl in high school... everyone wanted to (use your imagination)... She had no problems finding a date. Stocks are the same way. The ones everyone wants to own are the easy ones.

In the end however -- it's about people and people are fickle.... and we're lemmings... if housing is hot - we all want to be in housing. If gold is hot we all want gold. When these things go "cold" (like when the hot chick shows up with a cold sore)... then "nobody" wants them and the price drops.

Some times - if you're lucky - the fact that you hit on the cold sore chick - and the sore goes away - she loves you for life and you're rewarded. Some times that cold sore is just the beginning of a far "lower" (get it) problem that isn't readily visible. Let's call this -- trying to catch a falling knife. If you're lucky you get the handle... if not - you get sliced and diced. I prefer not to play that game. It's gut wrenching - it's gambling - it works and you're a hero - it doesn't work and you're a zero.

Alibaba is on everyones target.... This is not only THE HOT CHICK - This is the hot chick that puts out! And it seems that people want in and don't want to get out. i.e, people want to hold it. That means the price SHOULD go up. I'm hearing on CNBC that most of the shares offered are going to institutional investors rather than retail customers ala (get it?) FaceBook (FB). People EXPECTED FB to double or triple on the first day and their plans were to get in and get out. A one night stand. The difference that I'm sensing is that people want to marry Alibaba for a far longer term and that can only be good for the shares.

ME? I'll wait and see.... but you young guys... this may be something that goes viral and It wouldn't hurt you to put $500 or $1000 into play. IF you do that -- be prepared for "whatever". Understand your expectations and your reactions if your expectations aren't met.

That right there is classic. I forwarded this to a few guys here at work who are always chasing the latest hot stock/chick.

Thanks Greg,
Don

[bigtyme1]

Okay -- only because Tracy said I had to chime in -- I will do as I'm told. :D


So -- this answer is one that I say to you -- well.... it all "depends". So without writing a book -- let's take a real BASIC look at savings.

A person needs to think of savings as various BUCKETS of money.

A bucket of money needs to be for "emergencies" -- and this bucket - just like the other buckets we'll get to - needs to be 'adjusted' to meet the needs of the owner. I don't need an emergency bucket. I have plenty of money. Most need some kind of "quick and easy to get to money" -- that needs to be taken care of first. Whether it's $500 or $5000... is up to you. This really needs to be funded by the people that can afford it the least - i.e., the guy with maxed out credit cards!

Another bucket is the retirement bucket.... you seem to be working on that. BTW -- Don't be afraid to put more into this bucket. You do not need to be limited to the 15% you're doing at work. The only thing you're doing to fund more than your limits is that you're putting in AFTER TAX money. Dude - when you retire - and you're all set for life - you won't give a damn what you're living on - the point is that you will have it! So max your workplace and then see if you qualify for a ROTH IRA... which is after tax savings that comes OUT tax free...

THEN -- you really asked about INVESTMENTS.... again - this depends - real estate is ILLIQUID... so unless you have a bunch of dough and are just looking to diversify - fugedaboudit. If you want some liquidity -- with GROWTH in your capital - and get paid to "wait" - get yourself a Schwab account - or some other discount broker - and buy yourself some big cap dividend paying stocks. The rule of investing is to never put more than 5% of your TOTAL INVESTABLE MONEY (all of your investable money not just what's in this particular account!) into ONE investment. That way - if you lost it all (all of one investment) you're not hurt. Pigs get fat - hogs get slaughtered. Ask the builders that loaded up on dirt before the real estate crash - because they ain't makin' any more of it they'd tell ya! Dumbasses...

I'd buy STOCKS for dividend AND growth... so look at a CHART of any company you're interested in... see that over the LONG RUN (like 10 years) the chart is lower on the left and rises as it goes to the right! Forget about the dips in 07/08 - every stock you look at will have that. But lets look at Kinder Morgan Partners - NYSE symbol KMP - there is a nice chart... AND it pays 5.86% (based on todays price) which is $1.16 per share per quarter. So if you bought 50 shares - every 3 months you'd get a dividend of $58 (you're getting paid to wait - you're waiting for the share price to appreciate!). Yeah I own it.

I'd also look at AT&T (symbol T) - pays about 6% dividend. Is "steady" price wise. Great place to park money and be relatively sure it's going to still be there - good market or bad. Again - you get paid to wait. Yeah I own it.

So that's what I'd be doing. Diversify - don't buy TWO oil stocks -- buy ONE - Then get a consumer food stock -- Coke (KO) or Pepsi (PEP) or McDonalds (MCD). Funny -- people laugh when I tell 'em to buy McDonalds -- the stock is UP 125% in the last 5 years! AND you get a .61 a share per quarter dividend! So here's the deal -- it's what I ALWAYS look for.... if they don't pay a dividend - I'm not a buyer - and if the dividend is "low" (like MCD's is) then I want the growth to be there.... I'll take STEADY (AT&T) but then I want a higher dividend. Does that make sense?

Then --- DO NOT GET CAUGHT UP IN TRADING - DO NOT PANIC - DO NOT LISTEN TO THE GROCERY STORE CLERK TELLING YOU ABOUT THEIR LATEST BIG MARKET HIT.... RUN AWAY from those people! DO NOT BUY GOLD... IF THEY MAKE A TV SHOW ABOUT SOMETHING (House flipping?) RUN FOR THE HILLS... DO NOT INVEST IN IT. YOU'RE ALREADY TOO LATE!

There is no get rich quick scheme. Steady Eddy whens the race. LONG TERM is not 15 minutes. Buy good quality big names that you know and understand - with good charts and good dividends. Then sit back and laugh at the losers when they're broke and you're not.


Oh -- and make sure you check the little box when you buy "REINVEST THE DIVIDEND". That way every time they pay you - they buy more of their stock automatically for you - more shares - more dividends - which buy more shares which pay more dividends...

If you buy a stock and it's value DOUBLES (just an example) then sell the "gain" and buy something else. Nobody ever went broke taking a profit. It helps you to diversify - and keeps each investment in that 5% bracket.

There's a lot more to it -- and more details etc - but them's the basics. Stay thirsty my friend!

:cheers:


wow Greg, I learned more from this post then my own broker tells me. My issue is I don't trust the brokers. I always feel they have a hidden agenda. Thanks for sharing :thumbsup: :thumbsup:

[chichirone]

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.

Thanks Todd. CVS is an interesting pick as they recently acquired a home infusion/home care business which aligns them to the entire patient pathway once discharged from the hospital. Their growth over the past 10 years is 254%. Their model is also creating a network of "doc in the box" locations across the US. Patients/consumers can go get a flu shot, advil for their headache or knee pain, their blood pressure medicine, a prescription from the on call physician assigned to the location for their sinus infection filled in 20 mins or less, a cold compress for their back pain and a pint of Ben & Jerry's to "help" with the healing in less time than hanging out in the waiting room trying to see the family practitioner, or God forbid go to the ER and wait for 3 hours just to be told you need a prescription for an antibiotic to treat your sinus infection. My only concern was the dividend yield and the uncertainty of Obamacare. They have had a good run but are they (and other healthcare stocks, specifically Rx companies) at a bubble.

Per Greg's suggestion to look for higher yields, I have been looking at healthcare specific REITs such as Healthcare REIT (HCN), Ventas (VTR) as an alternative to the drug dealers and manufacturers. The baby boomers you mention will have to go someplace as they age and assisted living, nursing homes, SNIF's, and senior care facilities will be a key component of elderly care over the next 20 years. Medical offices are popping up all over the place. ER clinics, CareNows and minute clinics are popping up in every neighborhood their is even the slightest level of population density. Look at HCN and VTR's chart. 10 yr gains of 80% and 120% growth, plus at or around 5% dividend yield. It's not the growth scale of CVS, and the buy in is close to peak, even tho they are somewhat depressed the past year, but one thing is for sure...we are not getting any younger. The demands on healthcare will continue to be a need as long as humans are on this planet. And, they are looking to expand across the ponds. India and China are target rich environments for these companies. 3 to 5 times the population in the US with massive demand for infrastructure. Not saying its the right strategy, but an alternative to consider. CVS is more of a steady eddie performer with lower yield, and the REITs diversify without having to physically buy a building.

Greg and Todd, thanks for the guidance to look for closer to 5% yields and think about my "comfort zone" a little differently. It was your nudge Greg, that made me research my strategy a bit differently the past couple days versus going in with all "sleep well at night" stocks I proposed on my list. Now tell me if I'm crazy or if this type of diversification is more aligned to your guidance from previous responses!

[GregWeld]

Nobody can have the right answer for this question because it all depends.

As you pointed out - if it goes to the moon and makes you a millionaire -- then inside the ROTH would be the best place!

But some people don't have ROTH IRA's --- and some don't have self directed 401's etc.

FORGET ABOUT TAXES... they don't count. Making money counts. If you make some - you pay taxes - be happy about that. Dead serious here. I don't do ANYTHING because it might have a possible taxable event. I do things to just make as much money as humanly possible. They get a small percentage -- I keep the rest!




Question from us "Young guys" (I still consider myself young. LOL)

If we were to "gamble" on something like Alibaba, or GoPro, etc. Which account would be best to do this in? A Personal Brokerage account or within a ROTH IRA?

I'm guessing a PB account. If it fizzles out it could be counted as a loss. But then again, if it goes to the moon, it wont be taxed in the ROTH, but then its also tied up for another 30 years... heh.

I'm not sure that even a question we can really answer.. But maybe just discuss and we'll have to weigh our own options individually.

[GregWeld]

Dumbass! Now you only have 450 more pages to read!! You'll then fire your sorry ass broker... and make yourself some money without him/her.


Love ya buddy! See ya at SEMA????








wow Greg, I learned more from this post then my own broker tells me. My issue is I don't trust the brokers. I always feel they have a hidden agenda. Thanks for sharing :thumbsup: :thumbsup:

[chichirone]

Jay -- Yeah -- I've shared way too much personal info on here -- but figure WTF -- if it gets one person going on the right track - then I've done good. So I throw myself on the sword for all. LOL


I figured you had to be "in the industry" or close to it.... There is LIFE outside of work you know. Drive up and down the street and look at all those viable businesses that are just waiting for you to be a partner with them.

5% dividend doesn't have to come with risk. AT&T pays over 5% and I wouldn't classify it as risky. Altria (MO) pays 4.66% and that's not very risky... so there's plenty out there.

Philip Morse (PM) pays almost 5%... Both MO and PM are sin stocks -- I like MO because of the booze component... I don't smoke or drink -- doesn't keep me from making money off the people that do.

MCO is Moody's (the ratings agency) and I ASSume you meant McDonalds (MCD). I sold MCD awhile ago based on my belief that they're losing the fast food battle... and that the general public they appeal to has shifted to healthier restaurants. Their sales continue to slip -- and that's a "Fundamental" change I can't sleep with. Their down almost 8% in the last 3 months... that's a nasty dip and I'm glad I've moved on. If it paid a dividend - I'd be in Chipotle Mexican Grill (CMG) versus MCD. CMG is growing and MCD is shrinking.

Greg, thank you for your sword diving and WTF attitude. LOL! I've read nearly all 400+ pages in this thread and you continually share personal stories, opinions, ways to think differently. It's sincere counsel to get others on a track, and I don't mean the kind we all love to drive on. (BTW, you do a darn good job of that for us as well.)

Healthcare/Med Devices is what I know. Thinking back to your other posts, look at what you eat, where you shop, what you buy, and what you consume. I can't remember the last time I went to Sears so I don't own it. I drink Coke products which is why we like KO vs Pepsi and own it. You have made me realize I need to take the blinders off and look beyond what I work on and expand the horizon to research and identify alternative ways to generate wealth, demonstrated by T, low growth, well run and good payer.

MCO should have been MCD. Good ASSumption. Like Sears, I cannot recall the last time I stepped foot in a McD's. No wonder I sort of missed on that one, especially when we eat at Chipotle with more frequency than I care to admit. Just reinforces your point to reflect on your consumption behaviors. This is a really good learning point if one is just starting out.

What's your opinion of chasing 2-3 high growth stocks, not a fad stock, but one that has a shorter growth chart, is a little less mature like GPRO than the likes of T or COP as a part of a start up portfolio? Reason I ask, would a little higher risk tolerance on growth make sense to balance the "sleep well at night" buys? I believe I know the answer but am not 100% sure so that is the reason for the question.

[chichirone]

Now -- Since I'm on a roll this morning...


Let's not forget what the STOCK MARKET really is. It's a MARKET. PERIOD. At the end of the day -- for a stock to rise - more people must want to own it than want to sell it. End of story.

There are "popular stocks" -- no different than the popular girl in high school... everyone wanted to (use your imagination)... She had no problems finding a date. Stocks are the same way. The ones everyone wants to own are the easy ones.

In the end however -- it's about people and people are fickle.... and we're lemmings... if housing is hot - we all want to be in housing. If gold is hot we all want gold. When these things go "cold" (like when the hot chick shows up with a cold sore)... then "nobody" wants them and the price drops.

Some times - if you're lucky - the fact that you hit on the cold sore chick - and the sore goes away - she loves you for life and you're rewarded. Some times that cold sore is just the beginning of a far "lower" (get it) problem that isn't readily visible. Let's call this -- trying to catch a falling knife. If you're lucky you get the handle... if not - you get sliced and diced. I prefer not to play that game. It's gut wrenching - it's gambling - it works and you're a hero - it doesn't work and you're a zero.

Alibaba is on everyones target.... This is not only THE HOT CHICK - This is the hot chick that puts out! And it seems that people want in and don't want to get out. i.e, people want to hold it. That means the price SHOULD go up. I'm hearing on CNBC that most of the shares offered are going to institutional investors rather than retail customers ala (get it?) FaceBook (FB). People EXPECTED FB to double or triple on the first day and their plans were to get in and get out. A one night stand. The difference that I'm sensing is that people want to marry Alibaba for a far longer term and that can only be good for the shares.

ME? I'll wait and see.... but you young guys... this may be something that goes viral and It wouldn't hurt you to put $500 or $1000 into play. IF you do that -- be prepared for "whatever". Understand your expectations and your reactions if your expectations aren't met.

Holy crap! This is hysterical! I'm reading this on a plane from SEA to DFW LMAO and dude next to me is wondering what the heck is so funny. Both cracking up at your "roll". Might be the best "investing" advice ever...HA!HA!

[chichirone]

I would also suggest that you look at some real estate companies..... not only do they spin off decent dividends - it adds to your diversity. I personally own NNN - but have also owned O... and I'm not recommending either of them -- I'm just saying I think you need more diversity and some better dividends.


O

NNN

BXP

Going to school on these. If you had an opportunity to invest in shares of a commercial real estate LLC or buy real estate shares publicly shared, which would be more attractive to you? Better question may be, what attributes would you look at if considering a commercial real estate LLC that is being organized to buy a single location or land development project?

[CamaroMike]

Looks like BABA is going to be set at $68 I believe. Lets do some gambling without going to vegas! lol

[GregWeld]

Going to school on these. If you had an opportunity to invest in shares of a commercial real estate LLC or buy real estate shares publicly shared, which would be more attractive to you? Better question may be, what attributes would you look at if considering a commercial real estate LLC that is being organized to buy a single location or land development project?



Single entities always assume more risk. Then you're really investing with the management -- which is fine if you know them and their history of bringing successful developments to market. I've been investing with a guy in apartment buildings for 20+ years and every one of them has a been a total score. My biggest fear is if he dies... Then what? I really have never asked him.. and maybe I should.

Smaller money --- more LIQUID --- as in way way way more liquid is a publicly traded REIT such as the ones I mentioned earlier "O" and "NNN" as well as many others. You can sell with a click of the mouse. Not so in LLC's where you're a minor partner and really have ZERO control as an investor.

If you have tons of money -- don't have any need for it (as in see it go to zero) and have no immediate (5 to 10 years) need for the cash for "other stuff" -- then LLC's have some nice tax benefits such as depreciation etc that work pretty well... and if there's cash flow (interest)... and the upside of a sale and return of principal down the road - they can be real corkers! I was in a 344 unit class A apartment complex in Tucson that was dead money for 4 years - until it was sold to convert to condos - and returned 117%. I'll take a double in 4 years every day if I could get it. But for 4 years before then I was kicking myself for having ever looked at the deal.

So the criteria for these two commercial real estate investments is:

Do you want liquidity and relative safety with a dividend but no tax benefit or
Do you tie up your money (Illiquid) and increase risk (single entity) with a tax benefit... and a possibility much larger total return out to an unknown date.

I own both types... but I have no liquidity issues either... 20 years ago I knew I was gambling (I was 40 and not 60+) - and it worked out well. I've since invested with the same guy in several apartment complexes but I would NOT invest like this with anyone else if he should quit business or whatever. In my mind - I'm not investing in an apartment... I'm investing in him with and I get his considerable skills.

Good question by the way.

[GregWeld]

Looks like BABA is going to be set at $68 I believe. Lets do some gambling without going to vegas! lol




ALABAMA FOR ALIBABA!! You go girl!! LOL

[CamaroMike]

ALABAMA FOR ALIBABA!! You go girl!! LOL

:theresa: Go BABA! :lmao:

[Woody]

Going to school on these. If you had an opportunity to invest in shares of a commercial real estate LLC or buy real estate shares publicly shared, which would be more attractive to you? Better question may be, what attributes would you look at if considering a commercial real estate LLC that is being organized to buy a single location or land development project?

One thing to watch out for with REITS is that they are very interest rate sensitive. If you believe we are going into a rising interest rate environment you could expect lower share prices. The last few weeks is a pretty good example. As the 10-year yield has risen, most REITs share prices have declined.

[WSSix]

good article IMO

http://online.wsj.com/articles/dont-be-lulled-by-the-stock-markets-smooth-ride-1411140558

[toy71camaro]

I went to make a "gamble" purchase (had a couple items in mind. Baba was one)... :confused59:

But, I just couldn't pull the trigger.:shakehead: Knowing full well on how many other choices I have that wouldn't be a "gamble" and still go up. lol.

Edit... i went ahead and gambled. Its a very small % of my retirement. and part of it came from some employees that werent performing anyway. :)

[Vince@Meanstreets]

Set my trigger at $89 at 7 am and went to work. I guess my money is safe for a few days.

[toy71camaro]

If nothing else, at least its a little excitement in the midst of all the steady eddies just working away like clockwork. :)

More excitement than throwing it all down on red! lol

[GregWeld]

One thing to watch out for with REITS is that they are very interest rate sensitive. If you believe we are going into a rising interest rate environment you could expect lower share prices. The last few weeks is a pretty good example. As the 10-year yield has risen, most REITs share prices have declined.




I've warned here many times - that when interest rates rise - stocks die. Of course this is over simplification... but it's very very interrelated and must be given some measure of attention. However... if you went in and out of stocks over every interest rate move - you'd just be losing time and again so that's really a dumb strategy. The better strategy is that NEW MONEY would go into a higher yielding "whatever". Let's say tax free bond rates hit 6%... then that's where you'd put some new money to work. The problem with bonds is that they don't come with the compounded growth that stocks do over time... and generally -- if it's s dividend paying stock - the price action (taking the share price lower) is supported by the dividend -- so when you buy new shares at lower prices - your yield (dividend percentage) has risen... so you get a new blended rate of yield.

This is when things can get complicated --- but that's also usually easily explained = normally foreseen - and discussed when these thing occur.

[GregWeld]

I wish I didn't have to start a post with these kinds of statements - but here it goes again. I'm only using this stock as an EXAMPLE. I'm not saying anyone should buy / sell / or hold it. It's just a current example for Investing 102.


FUNDAMENTAL CHANGES in a company - or bad news about a company - affects it's SHARE PRICE. You must pay attention to this kind of stuff -- and if possible - try to be "EARLY" in your decision making process. You don't want to be the last guy stampeding to the door when someone yells FIRE...


McDonalds (MCD) HAS BEEN a fantastic money maker for investors for many years. It's had steady growth - it pays a nice dividend - it's a name that everyone loved and trusted. In other words - it was a stellar investment you could count on. History can help GUIDE us in making investing decisions. What else do we have to go on? Your gut feelings - your basic knowledge - and a little research for historical facts and figures... there really isn't anything else. We certainly don't have crystal balls.... or do we??

Hmmmmmmmm......


You've read me preaching about buying companies you understand - the ones that perhaps make products you use... or where you buy gas - or lumber - or tires... whatever. Remember - this is BASIC INVESTING.... so if you're a beginner with "X" amount of dollars to invest. Might as well start out with a name or couple of names you know. McDonalds fits this bill perfectly. That's a good way to begin - or even add to your portfolio. BUT this is only the beginning - it does not let you off the hook for being DILIGENT about your money. IF you're not diligent about your investments... who do you think is going to be? Me? Hell no! Not my job to write daily about what I think <even though I do sometimes>. It's YOUR JOB to pay attention. So with that in mind here's why I write today.


A few months back - maybe even a year or so ago -- I wrote that I was considering selling my McDonalds stake. I don't eat there any more - and when I did / do - it was very disappointing. The food was cold - or not prepared well... the stores seemed to be dirtier than they used to be... Many times I could not understand the employee taking my order (I F'n HATE THAT - this is AMERICA where we speak ENGLISH).... I cut them some slack because historically this was a good company and we had "history" together and it was a base holding of mine. However - I tend to run around the country a bit... and it didn't seem to matter where I was - the stores had the very same slow service - dirty floors or tables - poor food quality. THIS IS A FUNDAMENTAL CHANGE... and I needed to listen to what my guts were telling me. CUT AND RUN. I wrote here that I was selling my stake. I'd had enough --- and more importantly maybe I WAS LOOKING INTO THE CRYSTAL BALL. My brain seems to function just fine (relatively)... and if I'm not a happy customer - perhaps other customers are feeling the same way. Eventually this will affect the sales - which affects the share price!! DOH!! Not rocket science.

Sure enough -- we begin to get reports of same store sales declines... This info only serves to reinforce my crystal ball prediction. That doesn't make me smart - that just tells me what I thought might happen - is happening.


If you always go to Lowe's (LOW) and you suddenly think - WTF this store has turned to crap I can't find what I want - and you get in your car and drive to Home Depot (HD) and you're suddenly happy.... and you own LOW... maybe you better switch it up. Maybe it's your cellphone provider... Verizon (VZ) vs AT&T (T). There's a zillion examples I could drag out here.... Are you an Apple (AAPL) fanboi? Suddenly you find yourself buying a Microsoft (MSFT) laptop instead and loving it. Better pay attention to that if you own APPL shares.

So today I wake up to find this article.... which prompted this post. Now news organizations are writing about "my" feelings. That can't be good.


http://www.usatoday.com/story/money/business/2014/09/20/five-reasons-mcdonalds-is-falling-apart/15908697/



THE ONLY POINT HERE IS THAT YOU SHOULD BE A PRETTY DECENT JUDGE FOR WHAT'S GOING ON.... and this works particularly well if you're buying companies you know and understand and use. If you used to shop on eBay daily and you find you haven't shopped their in months -- stop and listen to that!! It's telling you something you should be aware of - particularly if you own the shares!! USE THIS TO YOUR ADVANTAGE don't toss this valuable info
aside. Use your guts and your brains to help you! We're not always right - but sometimes we can sorta be right - and sometimes we're dead wrong - but it's the only thing we have going for us. In investing - we only need to be right a little more than half the time.


++++++++++++++++++++++++++++++++++



Okay then -- that brings up another opportunity. Buying the turnaround. This really isn't INVESTING 102... but I'm adding the info anyway.


Let's say you were so brilliant that you sold your McDonalds (MCD) - I have to chuckle at myself here... and you've been out for awhile. Now let's begin to continue to pay attention to the share prices and the news. There may be a buying opportunity when they get low enough and the management starts to right the ship!! Then you'd want to be "early" and try to dribble back in to the shares as they begin to find their footing again. Nobody knows when a company is going to teeter --- or if they can save it --- how long that takes -- what that looks like.... but it's my job to manage my money (employees) and I've got to be constantly on the lookout for opportunity. Sometimes I get it wrong.... and that's why I don't go whole hog into anything. I SCALE IN or even scale out if you're unsure. I've usually lost the most money when I was 100% positive I was so right I couldn't possibly be wrong.... <Buzzer>

[glassman]

So true, so true. i'm optimistacally long on MCD, (its "sentimental" to my wife, her first job and a lot of quality relationships came out of it). But its a very small part of my/our portfolio.
#5 of that ariticle was spot on (well they all were) when "whats next" for the company? what to do? Little pressure for the CEO

Its easy for us to understand MCD, but the more complex stocks like tech and biotech i'm effin lost. Can't even go with a gut on those.

But like you (Greg) said "BE DILIGENT" and watch, some things can happen like a theif in the night.

on a side note, speakin of English, why do they print the DMV booklets (here in commufornia) in eight languages but the roadsigns in one? :topic:

[GregWeld]

I found this to be interesting and worth reading and making note of what's being said.


http://www.forbes.com/sites/eamonnfingleton/2014/09/21/say-no-to-jack-mas-alibubble/


I made a killing during the dot.com era.... I'd buy half a million of Microsoft/Dell/Intel/Cisco/Juniper.... in the morning - before noon I was playing golf after flipping them out up .50 or a buck a share...

The only thing that bailed me out was paying cash for a house built in 1923 and gutting it and doing a year long remodel... using the cash that I was flipping over and over. So I was busy doing the remodel and quit trading during the end of that period. Otherwise - my guess is I'd have lost half or more in a manor of weeks.

It all seemed so easy! Every day - every thing went up... but people weren't buying companies - they were just buying hype... and there were more buyers than sellers. Ultimately the above names became real companies and have made money -- but I can give you a list of fly by night dot.coms that were nothing - made nothing - and only counted "eyeballs". POOF! They're gone.

I don't think Alibaba is a nothing.... and I'm not choosing a side here - don't own it - probably won't for no other reason than I prefer income over a "maybe" --- in the meantime - a maybe can make millions --- we'll see how it all plays out.

[SSLance]

We got lucky like that back then as well Greg. We had a defined benefit pension plan through our company (2 officers, 3 employees total at the time) and were very aggressive with the contributions and investments during the boom. We made so much money inside the plan that our actuary told us that any more money made in the plan would all go to Uncle Sam, so we sold everything and went into bonds, right before the bottom fell out.

Sometimes it IS better to be lucky than good.

[GregWeld]

My favorite saying! "Better lucky, than smart!"


Lots of people are extremely smart and never lucky... and some really smart folks are just unlucky. We all should do our best to put ourselves in a position to GET LUCKY. If you don't ever try - then you're doomed to fail.

A buddy of mine is ultra conservative -- always in bonds for 35 years... an ardent, serious saver. While he's done very conservatively well for himself... He COULD HAVE put that bond money into dividend paying stocks - even half of what he saved - and he'd be living the life. He's smart and diligent but he's never been smart enough to do the work required to see that his investments weren't always in his best interest. A tax free return of 3 and 4% but zero growth in his capital always cost him total return. He WOULD HAVE BEEN REALLY LUCKY had he put himself into the Coke's and McDonalds and Mercks of the world years ago... He's always telling me how lucky I am... and I ask him - did I put myself in a position to get lucky? Is it really luck at all? Must be 'cause I'm not real smart.

[chichirone]

When I began reading this Investing 102 thread, I started doing research on dividends to better understand the investment tool.

Here is a link that explains the basics of dividend stocks. I wanted to share. It may be helpful to someone else looking to get started.

http://www.investopedia.com/articles/basics/04/072304.asp

All the talk about "luck" reminded me of a saying, "99% of luck is preparation."

[GregWeld]

Okay -- So here we go.... Alibaba (BABA) is down today rather than continuing to go up...

My point here is not to discuss any particular stock - but to use 'em for examples.

So if you were a buyer (at any price) of BABA.... and this morning it's headed south... how are your guts when you look at your account? Do you REALLY know anything about the company? Do you really understand the price/value... or is this a pure speculative buy based on nothing more than the hype? The answers are easy when it's going up... they're not so easily answered when you're losing value/money.

YES -- this is only one day.... and that's not my point. My point is -- are you truly ready mentally and financially to "gamble".... That's something nobody can answer until they're doing it. Some love it - most people I know don't. Pay attention to your response to yourself... and if nothing else - learn from it.

[Sieg]

Door #1 - Alibaba

Door #2 - Alibooboo

Door #3 - Aliboomboom

:popcorn2:

[GregWeld]

Door #1 - Alibaba

Door #2 - Alibooboo

Door #3 - Aliboomboom

:popcorn2:




Well that's a prediction I wouldn't presume to know. And the reason I say that is because if you were an IPO buyer of Microsoft (MSFT) in 1986 -- the chart will show you an UNDERWATER stock for a couple years!! So the reason for my post was more about teaching/questioning as an investor --- ARE YOU WILLING TO SUFFER?? How much?? How LONG? Can you really stand the heat?? You may be rewarded or you may not. Nobody knows. If a person is willing to buy these types of "investments" -- they NEED to know themselves and whether or not they can handle the stress that comes with them. That was my point. Nothing more - nothing less.

[JKnight]

We also have to wonder, how much of the decline today is profit-taking by those that got shares at, or just above, the IPO price? I'm not defending the stock, couldn't care less about it, but that would be an explanation that could make today's movement "seem" like more of a buying opportunity than a sign of impending doom.

Edit: Upon further review...it looks like the banks issued more shares. So the decline is likely created by the dilution of the additional shares. Greg's point still holds true though, for whatever fundamental reason, how willing are you to stomach these day-to-day swings?

[GregWeld]

We also have to wonder, how much of the decline today is profit-taking by those that got shares at, or just above, the IPO price? I'm not defending the stock, couldn't care less about it, but that would be an explanation that could make today's movement "seem" like more of a buying opportunity than a sign of impending doom.

Edit: Upon further review...it looks like the banks issued more shares. So the decline is likely created by the dilution of the additional shares. Greg's point still holds true though, for whatever fundamental reason, how willing are you to stomach these day-to-day swings?







Totally agree Jeff.

[glassman]

Greg, speaking of this Alibaba stock.

Question #1, whats the difference with a foreign stock and a foreign market like say the Nikkei (did i spell that right?)

#2 so would Coke do a public stock overseas, like on the nikkei?

Or is it a global ipo and i'm not quite understanding the flow of money?


thanx, Mike

[GregWeld]

After reading this TWICE -- I still have no idea what you're asking.








Greg, speaking of this Alibaba stock.

Question #1, whats the difference with a foreign stock and a foreign market like say the Nikkei (did i spell that right?)

#2 so would Coke do a public stock overseas, like on the nikkei?

Or is it a global ipo and i'm not quite understanding the flow of money?


thanx, Mike

[Sieg]

It will be interesting to see the impact of war on the market.

Strategic portfolio adjustments in times of war?

Opportunities?

[JasonElvisHeard]

I've been following the Alibaba Group Holding Ltd IPO and have mixed feelings about it.

I want to see how things play out after the lockup. But, interesting about this specific IPO is that about 1/3 of the pre-shares were not "restricted" for lockup, weather or not this will create a stir... well that will have to be seen.

I've never been a fan of IPO hype, I want to see how things sit once the lockup is over and we see the stock hopefully mellow out. If earnings are going to move forward with what is predicted then investing after the lockup will still provide at least a few "baggers" if you are planning a long term hold on the stocks.

Greg, thoughts on the un-restricted shares of the lockup?

Jason

[glassman]

After reading this TWICE -- I still have no idea what you're asking.

I guess the Dow, Nikkei, Nasdaq are all just measurement/averageing devices. My question was/is, How is the "Alibaba" traded? i guess the same goes for Sony, Toyota etc...I've nver really thought about it before.

Who handles the purchase of the actual stock? A bank?, if this is waaaay back in the thread, well, i guess i'll reread...

Sorry for not being clear, my brain's weird.

[sebtarta]

YES -- this is only one day.... and that's not my point. My point is -- are you truly ready mentally and financially to "gamble".... That's something nobody can answer until they're doing it. Some love it - most people I know don't. Pay attention to your response to yourself... and if nothing else - learn from it.

I agree on this. A few months back I bought shares for a company at $7.60 today they are hovering around at $6. I put $5k, for some it might no be much, but for me it is. Am I about to jump out the window because of it? Nope. I have learned to be patient at this "gambling" hobby.

[Woody]

I guess the Dow, Nikkei, Nasdaq are all just measurement/averageing devices. My question was/is, How is the "Alibaba" traded? i guess the same goes for Sony, Toyota etc...I've nver really thought about it before.

Who handles the purchase of the actual stock? A bank?, if this is waaaay back in the thread, well, i guess i'll reread...

Sorry for not being clear, my brain's weird.

Alibaba is traded on the New York Stock Exchange. It is traded just like any other stock listed on the New York Stock Exchange. The Nikkei is an index which is made up of top 225 Japanese Stocks on the Tokyo Stock Exchange.

[GregWeld]

I guess the Dow, Nikkei, Nasdaq are all just measurement/averaging devices. My question was/is, How is the "Alibaba" traded? i guess the same goes for Sony, Toyota etc...I've never really thought about it before.

Who handles the purchase of the actual stock? A bank?, if this is waaaay back in the thread, well, i guess i'll reread...

Sorry for not being clear, my brain's weird.




The DOW -- is a "weighted average" of 30 stocks... each having a divisor assigned to it's stock that accounts for when stocks pay dividends or splits etc.

The Nikkei is the Japanese stock market - Actually called the Tokyo Stock Exchange - and is their "average" similar to our DOW.

The NASDAQ is ONE stock market here - the other is the NYSE aka: The New York Stock Exchange.

It used to be that the NASDAQ was electronically handled trades -- and the NYSE was actual people or "Designated Market Makers" and "Floor Brokers" that were on the floor handling trades... Now days there are fewer seats on the NYSE and many of the trades are done electronically - but there are still Market Makers... and Floor Brokers that represent the members on the floor. There are also what's known as Liquidity Providers that are members of the NYSE... and now you're getting complicated.

Your actual "trade" is handled by a "cleaning house" much the way a bank clears a check. The biggest I think is known as ICE (Intercontinental Exchange) - which owns the NYSE and the Euronext. You place your trade via a brokerage which is really much like a bank -- it has your money... the trade is either done electronically or via a market maker -- and then the actual paperwork behind the scenes is handled by a cleaning house.

NO MATTER WHAT though -- YOU own the share you buy. Even if the exchange was blown up (god forbid) or your brokerage went broke (hope that's not why they're called BROKErages). The shares are yours not anyone else's. The big boys are just facilitators.

[glassman]

You've answered my question wonderfully. Precisely the answer i was looking for even when not quite asked properly. Thanx

[GregWeld]

You've answered my question wonderfully. Precisely the answer i was looking for even when not quite asked properly. Thanx



Good! Because I still have no F'n idea what you were asking!


LOL

[GregWeld]

I stole this directly from Motley Fool.... it states what I've tried to state here before... Predictions are a fools business. Ask Ballmer (the EX CEO of Microsoft) about what he thought and said about the iPhone. An Idiots statement.



Steve Ballmer QUOTE:
“Five hundred dollars? Fully subsidized? With a plan?” Ballmer chuckles in the way that only Ballmer chuckles. “That is the most expensive phone in the world. And it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine.”


You think he wishes his EX company sold anywhere near 10 million of something in a weekend??


Now for a better "quote"....


If we want to plan for the future, we must predict in some capacity. But, to extend a theme proffered in last month's introduction, how do we think about predictions in such a hard-to-predict world?

Partly, we can't: The simplest way — and, if our investing track record says anything, the most safely profitable way — is to seek stocks that require fewer predictions; companies whose pasts most tend to approximate their futures. No complicated series of contingencies needs to play out for most Income Investor stocks to succeed.

[Sieg]

As a Microsoft shareholder I was seriously upset to hear of Steve's departure.






:lmao: :lmao: :lmao: :lmao: :lmao:


After all, in '99 I had 80 shares @ a $93 avg cost. Look what he did for me! :D

Thankfully a couple splits and buying 100 shares in '13 @ $27 got me back in the green. :sieg:

[ErikLS2]

NO MATTER WHAT though -- YOU own the share you buy. Even if the exchange was blown up (god forbid) or your brokerage went broke (hope that's not why they're called BROKErages). The shares are yours not anyone else's. The big boys are just facilitators.

It's a little tricky with BABA shares, and a bit more risky. Don't ask me to explain it but they're called Variable Interest Entities (VIE). Copied this from wsj.com:

The bigger concern is that, because China's government restricts foreign ownership of Chinese assets, Alibaba shareholders won't actually own the company. Instead, through a so-called variable interest entity (VIE), they will only own shares in a shell company with a contractual claim on Alibaba's profits. Many Western-listed Chinese firms get around Beijing's foreign-ownership rules this way. But Beijing could close this loophole at any time, and it gives shareholders limited recourse against abuses by company founders.

VIE "contracts are only binding and enforceable if Chinese courts are willing to uphold them," warned Congress's U.S.-China Economic and Security Review Commission in June. "For U.S. investors, a major risk is that the Chinese shareholder . . . will steal the entity, ignoring the legal arrangements on which the system is based."

***
As it happens, the most notorious VIE controversy involves Alibaba and Mr. Ma, who in 2011 separated Alipay from the rest of the company without board approval. He said Chinese regulations required him to make the move, but it infuriated Alibaba's minority owners Yahoo YHOO +1.03% and Softbank. 9984.TO -4.24% While a settlement was negotiated, trust between the company and investors was damaged.

Alibaba is thus a microcosm of today's Chinese economy: Hundreds of millions of consumers and businesses are benefiting from rising opportunity, but the commanding heights remain opaque, politicized and shaky. Caveat investor.

[GregWeld]

Yes Erik --- Alibaba is COMPLETELY different. I think Mike *Glassman* was asking about stocks in general so I responded that way.


Alibaba "investors" (are they, or are they gambling) are really just investing in paper - they own nothing. That doesn't mean they can't make a ton of money over time if the SHARES (paper) continue to go up. I look at those things like this --- if I bought Ford (F) and it went to zero... I wouldn't have any chance of recovery - it would just turn into wallpaper. So I don't really get too caught up in the legal aspects. If you do - that might hold you back from making some money. A loss will be a loss... and a gain will be a gain.... regardless of the silliness of the investment.

On the opening day -- there was 25 BILLION dollars on that bet. WOW! Just WOW!









It's a little tricky with BABA shares, and a bit more risky. Don't ask me to explain it but they're called Variable Interest Entities (VIE). Copied this from wsj.com:

The bigger concern is that, because China's government restricts foreign ownership of Chinese assets, Alibaba shareholders won't actually own the company. Instead, through a so-called variable interest entity (VIE), they will only own shares in a shell company with a contractual claim on Alibaba's profits. Many Western-listed Chinese firms get around Beijing's foreign-ownership rules this way. But Beijing could close this loophole at any time, and it gives shareholders limited recourse against abuses by company founders.

VIE "contracts are only binding and enforceable if Chinese courts are willing to uphold them," warned Congress's U.S.-China Economic and Security Review Commission in June. "For U.S. investors, a major risk is that the Chinese shareholder . . . will steal the entity, ignoring the legal arrangements on which the system is based."

***
As it happens, the most notorious VIE controversy involves Alibaba and Mr. Ma, who in 2011 separated Alipay from the rest of the company without board approval. He said Chinese regulations required him to make the move, but it infuriated Alibaba's minority owners Yahoo YHOO +1.03% and Softbank. 9984.TO -4.24% While a settlement was negotiated, trust between the company and investors was damaged.

Alibaba is thus a microcosm of today's Chinese economy: Hundreds of millions of consumers and businesses are benefiting from rising opportunity, but the commanding heights remain opaque, politicized and shaky. Caveat investor.

[GregWeld]

As a Microsoft shareholder I was seriously upset to hear of Steve's departure.






:lmao: :lmao: :lmao: :lmao: :lmao:


After all, in '99 I had 80 shares @ a $93 avg cost. Look what he did for me! :D

Thankfully a couple splits and buying 100 shares in '13 @ $27 got me back in the green. :sieg:




The ONLY reason it's green right now is because he was replaced. I believe pushed out... because of the repeat of another OS that is needing major revision and is managing to further piss customers (enterprise customers) off. He was a failure at phones - a failure in the tablet market - and produced a series of bad software (mistakes) as well as made a fool of himself (thus the company) repeatedly.... "the monkey dance".... "Screw Janet Reno"... the iPhone comments stated earlier.

The most interesting thing I can point a person to is to go to Google Finance and pull up a chart of MSFT -- click on ALL so it shows the history of the stock dating to 1986... (My wife started there in 1984) and see the PEAK in 1999. That was when Bill Gates announced Ballmer would be CEO. It then stumbled along until they announced his departure.

Having said all of the above -- had you bought the IPO.... You'd be up 46,000 PERCENT. Every dollar you invested would now be worth $46,000. $10 (ten dollars) would be worth half a million... $1,000 would be worth 4.6 MILLION.

That story is what pushes people into IPO's to this very day. Everyone wants to be in the next MSFT.

[glassman]

my peabrain cant even comprehend 46,000%. Wow. And that was just before the time Lynch wrote "one up on wallstreet" where he was sayin "you hit true pay dirt if your stock is up ten fold". But i guess that is "tech" stocks (*that i dont know) vs stocks i do know/see/recognize (oil, consumables, entertainment )

Great stuff the last few pages.

[JasonElvisHeard]

anyone been following "blockbuster video" lately... now (ELEKTRA*:Mexico)?

I started looking into it since Feb. Although Blockbuster crumbled here in the US the last 3 quarters in 2013 it posted 118M in profit from mexico operations while under the ownership of Dish.

Since the acquisition (ELEKTRA*:Mexico) has been rising lately... this could be a possible "bagger" in the works. The first few months after the acquisition the stock fumbled a little, but now it looks like they have figured out how to capitalize on the recently acquired brand and we may see some serious earnings in the near future. It will be interesting to see the earnings after the next quarter.

I know its a random curve ball but I have been taught to look everywhere haha.

[GregWeld]

I've been poking around trying to figure out where I need to put some money to work and get some yield... which triggered something in my pea brain that might want to be brought up for this thread.

That wouldn't be the above post about some failed stock that now trades in Mexico... LOL

I like to buy on "DIPS"... and today we have a dip. Is this the dip I'm waiting for to get me excited? Just NO.... While down 200 points on the DOW seems like a "WOW"... it just isn't. It was 10 years ago --- and the number seems "large" - but it's NOT on a percentage basis. Down 200 points on the DOW is barely over 1 PERCENT.

In money -- everything is about PERCENTAGES. Doesn't matter if you make 1 dollar -- as long as that was on a 10 dollar investment - you made 10%... HUGE.... 1 Percent... come on.... 10 cents on 10 dollars. Not enough to move the needle.

So ---- While I say I'm poking around.... and I have some serious cash to put to work... I'll wait. IF the market is heading for "correction" territory... then that's in that 10% vicinity. THAT get's me excited... because it raises my yield... and it CAN snap back and recover that 10% down move - making me seem really smart... If it stays down - so what? My yield is good... I didn't pay "UP" and then have to wait for it to recover... and if it goes down beyond the 10% -- I'm a lot closer to where it goes than I am had I paid "full price". Think of it as NORDSTROM'S just did the whole store at 10% off... you'd be happy as hell to go shopping. If the 10% didn't lure you into the store -- next month they might go to 15% off.... you should be happy once more - go grab that sweater you passed on at the last trip! Now you're glad you waited. If they didn't go to 15% off ----- and they go back to full price.... it's okay - you didn't need the sweater that badly anyway. There will be more sales in the future.

That doesn't mean you should be frozen in place. YOU ARE NEVER EVER GOING TO GET THE VERY BEST PRICE - on either the buy side OR the sell side... ain't going to happen. Get over it. Buy when you're ready - start collecting those dividends and 5 years from now you'll look like the smartest guy in the entire Universe.

[JasonElvisHeard]

That wouldn't be the above post about some failed stock that now trades in Mexico... LOL



my point was more about the unusual aspect of how markets work. What was in essence a failed stock is now posting increasing profits in a different market. If I were to say that Dish was going to take blockbuster to mexico and make over 100M in 3 quarters I'm sure you would have the same response (me too), but they did and it seems the platform is doing really well down there.

I just noticed it because it was unusual, something that failed here is growing and posting increases in revenue / profit. Only time will tell how long this can be sustained but the parent company knows the market very well along with several ideas on how to increase revenue / profit (because revenue is nothing without earnings).

I'm also not saying go and buy it now, simply pointing out that undervalued situations can pop up anywhere. Ill check it in a few months to see how things are going. It is very unusual that something can fail so bad here then come back so strong in a different market with a refined product offering.

[GregWeld]

If you read your post about this -- it sounds like a troll pump and dump. Not dissing you personally - and you make some decent points. But this is investing 102 --- which means people just getting started. There's no room for sophisticated research -- or gambling -- or foreign holdings..... this is SIMPLE investing -- dividends - some growth - safety - reliability - understanding the fundamentals. When people have 2 or 3 hundred thousand dollars in investments -- then that's a different thread... where people can stretch a bit or gamble a bit. At that level - they should be getting 10 or 15 or 20 thousand dollars a year in dividend income.... and the compounding starts to really take hold...

If you're playing with 10,000 total investable dollars -- why try to make it 2,000..... money is too hard to come by to gamble with it. That's not to say some people win the lottery.... that's not to say someone might gamble 10K and wind up with 100K... but more often than not -- that 10 becomes 2. I'm trying to get people to TRUST in the stock market and take baby steps - and get some solid rewards - and be able to live thru the ups and downs - without getting ulcers or bailing out.




my point was more about the unusual aspect of how markets work. What was in essence a failed stock is now posting increasing profits in a different market. If I were to say that Dish was going to take blockbuster to mexico and make over 100M in 3 quarters I'm sure you would have the same response (me too), but they did and it seems the platform is doing really well down there.

I just noticed it because it was unusual, something that failed here is growing and posting increases in revenue / profit. Only time will tell how long this can be sustained but the parent company knows the market very well along with several ideas on how to increase revenue / profit (because revenue is nothing without earnings).

I'm also not saying go and buy it now, simply pointing out that undervalued situations can pop up anywhere. Ill check it in a few months to see how things are going. It is very unusual that something can fail so bad here then come back so strong in a different market with a refined product offering.

[Rick D]

Ok Greg, I've got a question and tried to look through here but this tread has gotten so big it's harder to find some of the info.

I've got some cash to start investing and I think I've i got a good idea from in here as what to do :newbie:

My question is what can I do to make my 401k work better and grow faster? I've done what their web site has told me todo but it really doesn't do much from a growth stand point, sure it grows from my and my company's matching contributions, but only a little (from what I can tell) from the investments?

If this has been covered already then maybe someone can show me the post?

Thanks Newbe invester!!!:newbie:

[GregWeld]

Ok Greg, I've got a question and tried to look through here but this tread has gotten so big it's harder to find some of the info.

I've got some cash to start investing and I think I've i got a good idea from in here as what to do :newbie:

My question is what can I do to make my 401k work better and grow faster? I've done what their web site has told me todo but it really doesn't do much from a growth stand point, sure it grows from my and my company's matching contributions, but only a little (from what I can tell) from the investments?

If this has been covered already then maybe someone can show me the post?

Thanks Newbe invester!!!:newbie:


The reason for the 500 f'n pages is because people come and go - and ask the same questions repeatedly. So things get covered over and over... Which is perfectly fine as far as I'm concerned.

Okay -- your - and most peoples - 401K's are usually MUTUAL FUNDS... mutual funds are the pablum of investing. They're built on some basis such as one can label --- Growth Fund... or Income Fund... or Large Cap or Small Cap. The FUND then invests the money in the shares that meet that criteria. They are not allowed to invest in anything outside the preset criteria. So if you're into a fund that is "Small Cap" --- and small cap is out of favor this year.... and that fund sucks... and it will offset the growth of the other fund you may happen to own which is doing okay.

FUNDS --- Are generally loaded up with the "Top 10" names in their investing criteria... and then have maybe 90 or more names in the fund. The problem with this type of investing is that the top 10 might be the lead horses - but they're trying to drag along the 90 dead horses. They also have management fees - as they have salaries to pay to manage the 90 dead horses... and your company has costs associated with managing the plan etc. These all affect your return. Negatively not positively!

My deal here - which has been repeated a gazillion times is that all a guy has to do is to research what the top 10 are of the fund he's thinking about... and just buy the couple top ones in there -- and build your own mutual fund - that isn't dragging along 90 dead names with it.

Now -- there's more to it than that. Some company plans won't allow you to invest in individual stocks. Some will. Some make you ask the plan administrator to allow you to do this. Depending on the size of the company etc that can be a big hassle... or not.

My advice is that if you get a matching amount --- then depending on that information - put in the amount that gets matched --- and then open a ROTH IRA or an Individual IRA outside of the work plan and start to contribute to that as well as your company plan. This all depends on how much you have to work with - what your income level allows you to do (there are IRS limits) etc.

The brokerages - such as TD Ameritrade - or Schwab - or some other discount broker usually are pretty well versed in what you can and can't do and will help you setting up and getting started etc.

WHAT you invest in depends on your age - income - tolerance - goal - family. A single guy making 200K a year that's 30 years old can afford to toss some money in chasing the big score... Alibaba - or FaceBook - or GoPro of the world. A guy with half a million bucks invested already that has 3 kids approaching college age and he's 50 -- should be thinking more safety and compounding. Safety SHOULD NEVER be confused with DEAD MONEY. That's where people tend to screw themselves. We want to invest long term - for growth of our capital and as large of TOTAL RETURN as possible.

Remember that you might retire at 65 but you don't stop living then. You probably will live another 25 or 30 years....so if a guy is 50 now -- he's got 40 years of INVESTING ahead of him. People start to buy bonds and other stupid "SAFE" investments that don't grow and then they find themselves running out of money 5 years after they retire. F that!

We have INFLATION. We have property taxes that go up every year. We have medical costs that are out of control (thanks to the dickhead in charge). We have roofs that need to be replaced and houses that need to be painted. When I was in high school - gas cost .21 a gallon.... now I pay 20 times that!

Without some details of what you're already in to... it's hard to look at a more detailed explanation. Feel free to PM me or get my email <preferred> from a mutual friend here... and I'll show you how to look at your mutual funds in detail if you don't care to post them here. Nobody needs amounts -- just names or trading symbols.

[toy71camaro]

Great summary Greg.

My company doesn't allow individual stocks in my 401k, so I printed up the details sheet on EVERY option we were allowed to choose from, then i went and reviewed their top 10 and based my choices on them, as well as some paid a dividend.

[GregWeld]

Beware the "GoPro Syndrome".... WTF is that?? You ask.

That's guys thinking that they "missed" making a huge fortune by NOT buying into GoPro (GPRO)... so the very next chance they get to buy an IPO they go double or triple what they "woulda / shoulda". That IPO then blows up and they get spanked.

Not saying to not go into whatever "it" is that you feel you want to invest in - I'm saying beware the syndrome that sucks you into trying to place catch up...

I'll say this as well. The "market" isn't regulated by the talking heads on TV. I've heard half a zillion discussions about "this is over priced" - "the valuation is too high" - "they'll have to grow into this share price". IN THE MEANTIME THE SHARES KEEP GOING HIGHER.

If you'd have never invested in Microsoft (MSFT) back in 1986/7/8/9 etc - because of those same "ideas"... then you missed one of the greatest investments in the history of the stock market.

The "MARKET" is about more people wanting to own than wanting to sell. PERIOD. All the other metrics are crap. But remember to go back and read the "priced for perfection" posts. The higher things go up - the faster they go up - if they "miss the whisper number" or "growth" is 500% but the market "expected" 525%... you can get hammered in a big hurry. Just play with money that's COMFORTABLE... That is all.

[GregWeld]

RE: GoPro (GPRO)


I'm not discussing whether or not to buy or sell this particular stock! It's just a great example for Investing 102.. that is "Current". I wish I'd have been smart enough to buy some - and flip it out up 100%... but I stay away from this stuff because of my own personal situation. EVERYONE needs to do what is RIGHT for THEMSELVES given their age - their guts - their situation.


I found this - which is WAY TOO COMPLICATED FOR INVESTING 102.... but what I'm using this for is to try to explain that there are many more things "behind the scenes" than we really need to know for our purposes here. WE HAVE NEVER DISCUSSED SHORTING a stock - because I don't think it's appropriate for INVESTING. Shorting is "trading".


Interesting......



As the current authors discovered, borrowing the stock proved to be extraordinarily expensive. Demand for shares to short was so great that security firms were charging a fee of 100% per year to borrow the stock. This fee essentially eliminates the possibility of pure arbitrage. Such massive fees are also further evidence that the market for the stock is not functioning properly.

The bottom line is that the option market is flashing warning lights that say investors should approach the stock with great caution. The combination of a sky high price relative to earnings and the dramatic rise in the cost of put options compared to put-call parity suggest that a sharp drop in the stock price is a distinct possibility.



++++++++++++++++++++++++++++



A "PUT" is the ability to BUY A PUT --- or SELL a PUT --- which allows you to PUT your shares to whomever is on the other side of the trade...


Let's say you buy a put on GPRO:


You'd buy a "PUT" when you think the price of the stock is going DOWN... essentially betting that the FUTURE price at some date - is going to be lower than it is now... and you get to PUT that stock to the other side at that price that was stated in the put ----

So let's say you bought a put at a strike price of $100 that expires on Dec 1st... and the shares are at $90 today. Rather than sell at 90 today - you buy the put - which says you can get $100 for the shares on that future date as the buyer MUST take the shares regardless of the price -- even if the shares had fallen to $75. The PRICE or COST of the PUT is determined by the risk... or what people are willing to bet one way or the other.

The opposite of this market is called a CALL OPTION.... that's where you'd buy the right to BUY shares at "X" price in the future... betting that the shares are going up to "X" by X date (the strike price and the expiration date of the option).

A quicky example is that you might buy 100 share call option - betting that on Dec 1 they're going to be $100 -- and the right to be able to do that transaction is going to cost you $10 per share. You'd only have to pay $1000 for the "right" to be able to buy 100 shares at $100 ($10,000)... and if the shares are trading at $125 when your call is dated (the expiration date).....well you just paid $11,000 for a stock that's worth $12,500.... and you only "risked" the $1000.


It's of course much more complicated than all of this.... and it's a traders market -- and there is an "options" market that does nothing but trade these puts and calls -- it's completely different than the INVESTING we're talking about here.


My old boat was named "Options".... and I should have named the dingy "puts and calls".... as the dingy is often used for taking people to shore or picking them up.... HAHAHAHAHAHAHAHA




OPTIONS:







http://i919.photobucket.com/albums/ad33/gregweld/Boat%20trip/Boattrip003.jpg (http://s919.photobucket.com/user/gregweld/media/Boat%20trip/Boattrip003.jpg.html)







The boat I should have named "Puts and Calls":






http://i919.photobucket.com/albums/ad33/gregweld/Boat%20trip/OldKnotime012.jpg (http://s919.photobucket.com/user/gregweld/media/Boat%20trip/OldKnotime012.jpg.html)

[WSSix]

Naming your boats that would have made for a great conversation starter, Greg.

[GregWeld]

Naming your boats that would have made for a great conversation starter, Greg.





The funny part is that the "O" in options was the original Microsoft "blibbet" (which only early MSFT people would recognize)... and the "Options" was for the MSFT options we had... and the boat gave us "options" other than sitting at home. Nobody got it - everyone thought I was an Options trader.

[XLexusTech]

The funny part is that the "O" in options was the original Microsoft "blibbet" (which only early MSFT people would recognize)... and the "Options" was for the MSFT options we had... and the boat gave us "options" other than sitting at home. Nobody got it - everyone thought I was an Options trader.

Continuing the boat theme .. When my brother retired as a fund manager he left with a bunch of what they called "Deferred compensation". Part of his plan was to establish primary residency in Fla.. which is free of state income tax... He did everything right but still ended up in court defending his freedom from state income which totaled approaching 6 figures in state tax.. He won... purchased and 32 foot Boston whaler outrage... Named it "Happy Returns" for the tax return he eventually got which was 100% of the money back...

[GregWeld]

No doubt the IRS tried to claim that he "earned it" (since it was deferred compensation) in the other state.... but since he didn't actually RECEIVE it until he moved to Florida -- he was correct. The IRS doesn't even understand it's own rules. Which is fine when you're arguing over $500 -- but not when your fighting over half a million or more. And since they're just "clerks" and it's not their money paying the attorney's - no common sense needs to be applied.







Continuing the boat theme .. When my brother retired as a fund manager he left with a bunch of what they called "Deferred compensation". Part of his plan was to establish primary residency in Fla.. which is free of state income tax... He did everything right but still ended up in court defending his freedom from state income which totaled approaching 6 figures in state tax.. He won... purchased and 32 foot Boston whaler outrage... Named it "Happy Returns" for the tax return he eventually got which was 100% of the money back...

[Mkelcy]

No doubt the IRS tried to claim that he "earned it" (since it was deferred compensation) in the other state.... but since he didn't actually RECEIVE it until he moved to Florida -- he was correct. The IRS doesn't even understand it's own rules. Which is fine when you're arguing over $500 -- but not when your fighting over half a million or more. And since they're just "clerks" and it's not their money paying the attorney's - no common sense needs to be applied.

The IRS doesn't administer state tax returns or the collection of state income taxes. I think you meant the applicable state taxing authority.

[CamaroMike]

Your dingy is bigger than my fishing boat lol

[HAULNSS]

A little off topic....

Coming from a construction background, this is my favorite boat name....


"Original Contract" and "Change Order" :lol:

http://www.videouniversity.com/files/changeorderbetter.jpg


Randy

[GregWeld]

The IRS doesn't administer state tax returns or the collection of state income taxes. I think you meant the applicable state taxing authority.



The IRS reference was just a "general name" for tax collectors.... Everyone reading this would understand the reference. Well..... maybe not everyone.

[GregWeld]

Your dingy is bigger than my fishing boat lol




We - regrettably - sold all the marine toys (used that reference in case Mkelcy took umbrage at using the word yacht or boat) when the kids went off to college. When they came home from school - they wanted to spend time with their friends rather than go boating. We will buy another one in a few years, and have already started talking about what and where. We both love (and had hull #26 on order) the 55' Fleming.

A little off topic....

Coming from a construction background, this is my favorite boat name....


"Original Contract" and "Change Order" :lol:

Randy




Randy -- Love that combination! It's perfect.

[Mkelcy]

We - regrettably - sold all the marine toys (used that reference in case Mkelcy took umbrage at using the word yacht or boat) when the kids went off to college. When they came home from school - they wanted to spend time with their friends rather than go boating. We will buy another one in a few years, and have already started talking about what and where. We both love (and had hull #26 on order) the 55' Fleming.

Randy -- Love that combination! It's perfect.

Why would I or anyone else object to the use of an accurate term?

You may be a little thin skinned about what, in the overall scheme of things, was a small correction, made mostly for the purpose of letting folks know that the IRS doesn't make up or enforce the rules concerning in what state income is taxed.

[96z28ss]

We - regrettably - sold all the marine toys (used that reference in case Mkelcy took umbrage at using the word yacht or boat) when the kids went off to college. When they came home from school - they wanted to spend time with their friends rather than go boating. We will buy another one in a few years, and have already started talking about what and where. We both love (and had hull #26 on order) the 55' Fleming.






Randy -- Love that combination! It's perfect.

Last time I checked no ocean in ID.

[GregWeld]

Last time I checked no ocean in ID.




"We" do have an airport here in Hailey that will take us to the boat.... wherever it may be.

I'll be too damned old to drive that far....

[DBasher]

The Kogo is sitting in front of one of my buildings on Lake Union, it's pretty nice.
It's 235' has a sauna and jacuzzi a heli pad and sleeps.....12, crew of 21! Haha! I couldn't check the going rate for rental....something about having a broker? Looks like a money pit anyhow:G-Dub:

[Sieg]

Here's what you could consider a hybrid 'IPO'............

http://online.wsj.com/news/article_email/hewlett-packard-plans-to-break-in-two-1412530028-lMyQjAxMTE0OTAzNTEwNjUzWj

[GregWeld]

Where's all our Bitcoin supporters?? Now that's it's lost half it's value....

[captainofiron]

Havent posted in a while,

BUT I finally got my old 401k rolled over, and dumped the terrible mutual fund that Fidelity had my old company in.

I ended up getting 10 different names in equal dollar amounts (roughly equal) in the 10 sectors. I had a chunk left over, so I put it in KO, since I love the stuff. I was going to wait and see how Adidas was going to do, but it just doesnt feel right, then I read that they are starting a plan to buy back shares.

today is day 2, I made some money yesterday, but the little guy was just waiting for me to feel good and hit me today, haha

Thanks GW and company

I would have never done this if I hadnt started reading this

[glassman]

Havent posted in a while,

BUT I finally got my old 401k rolled over, and dumped the terrible mutual fund that Fidelity had my old company in.

I ended up getting 10 different names in equal dollar amounts (roughly equal) in the 10 sectors. I had a chunk left over, so I put it in KO, since I love the stuff. I was going to wait and see how Adidas was going to do, but it just doesnt feel right, then I read that they are starting a plan to buy back shares.

today is day 2, I made some money yesterday, but the little guy was just waiting for me to feel good and hit me today, haha

Thanks GW and company

I would have never done this if I hadnt started reading this

Yes, this is great stuff. I'm learning a bunch too. Haven't been on in a week or so, something about a road trip, but i love this line "The "MARKET" is about more people wanting to own than wanting to sell. PERIOD."
Never really though about it in that perspective, but we NEED perspective. Keep your eyes open and your ears open and absorb......

[captainofiron]

Related to my Adidas comment earlier.

Management changes at Adidas
Oct 8 2014, 14:01 ET | By: Clark Schultz, SA News Editor [Contact this editor with comments or a news tip]

Adidas (OTCQX:ADDYY) appoints two senior execs to new roles as it continues to revamp its management lineup.
The company has added a chief human resource office and expanded the position of chief information officer.
The big picture: The German apparel seller has lost market share to Nike in key regions this year and has been criticized for moving too slow in adapting to consumer trends.

http://seekingalpha.com/news/2008365-adidas-announces-up-to-1_5b-share-buy-back

I was really considering this, but not sure if this is "noise" or an omen :knock:

[GregWeld]

Havent posted in a while,

BUT I finally got my old 401k rolled over, and dumped the terrible mutual fund that Fidelity had my old company in.

I ended up getting 10 different names in equal dollar amounts (roughly equal) in the 10 sectors. I had a chunk left over, so I put it in KO, since I love the stuff. I was going to wait and see how Adidas was going to do, but it just doesnt feel right, then I read that they are starting a plan to buy back shares.

today is day 2, I made some money yesterday, but the little guy was just waiting for me to feel good and hit me today, haha

Thanks GW and company

I would have never done this if I hadnt started reading this




Good to hear you got yourself squared away. And just as predicted - the market tanks about an hour after you're all in. You just have to get used to that. Same as the stock you just sold gets a buyout offer with a 40% premium the day after you cashed in. It just goes that way.


The reason I pound buying stuff you know and understand and want to be an owner of - is for these reasons. It takes the gut wrenching out of the "investment".



Related to my Adidas comment earlier.

Management changes at Adidas
Oct 8 2014, 14:01 ET | By: Clark Schultz, SA News Editor [Contact this editor with comments or a news tip]

Adidas (OTCQX:ADDYY) appoints two senior execs to new roles as it continues to revamp its management lineup.
The company has added a chief human resource office and expanded the position of chief information officer.
The big picture: The German apparel seller has lost market share to Nike in key regions this year and has been criticized for moving too slow in adapting to consumer trends.

http://seekingalpha.com/news/2008365-adidas-announces-up-to-1_5b-share-buy-back

I was really considering this, but not sure if this is "noise" or an omen :knock:





Sometimes it's just anyones guess as to what big changes in management will bring. I called for Microsofts (MSFT) chief idiot - Steve Ballmer - to be caned so many times I quit even bothering to mention it. The minute they announced he was "retiring" (a nice word for being asked to go find something else to do) - the stock has made a stellar run upward.

I think the bigger question is what brought about the changes. Can ANYONE see that the people running the show are inept? Is the lineup just hideous? Or are they just taking the fall for not being able to turn a sinking giant around?

So when you compare NIKE vs Adidas.... there just isn't any comparison financially that would make a case for buying Adidas over Nike. The growth of Nike far surpasses Adidas...

A 6 month chart shows ADDDF down 21% vs NKE UP 31%.... that is just a HUGE insurmountable investment difference

Go out 1 year it's Adidas down again 21% to Nike's UP 32%

Go out further to a 5 year chart -- Nike dunks it for 200% upside move versus Adidas being up 44%.... UP 44% over five years is pretty lame.

As a 10 year investment it gets even worse! Nike SCORES 334% to Adidas 57% gain.

Here's my take doing no more homework than that ----- looking at a few charts --- I'd buy NIKE and let the dividends and growth buy my Adidas if that's my shoe of choice.... 'cause as an investment it has sucked. It's kinda like my owning boozer and tobacco stocks when I don't indulge in either... I still don't mind cashing their checks.

[GregWeld]

Okay GoPro guys..... prepare to get ready.


One of the big "negatives" to GoPro (GPRO) was the low barrier to entry (in other words - other companies can make cameras that will compete). And here we haven't even gotten to Christmas yet and HTC has got a new $199 version....

Not saying this is or isn't a good stock to own.... I'm just saying that if you own it... PAY ATTENTION.


http://www.businessweek.com/news/2014-10-08/htc-releases-action-camera-as-smartphone-sales-decline

[ErikLS2]

Great article Greg, not that I have a crystal ball but this is why I resisted temptation to get in on GoPro. Plus, Consumer Reports rated a little JVC, that had an LCD and could be dunked under water without being in a case, higher than the GoPro.

I've always liked the saying "If you want to achieve something, find someone who's achieved it and do what they did". Well, we can't really invest like Carl Icahn (probably even you Greg), but I still like this article on him. 27% annually over 52 years is pretty good by any measure.

http://www.forbes.com/sites/greatspeculations/2014/10/07/six-stocks-owned-by-billionaire-carl-icahn/

[GregWeld]

Great article Greg, not that I have a crystal ball but this is why I resisted temptation to get in on GoPro. Plus, Consumer Reports rated a little JVC, that had an LCD and could be dunked under water without being in a case, higher than the GoPro.

I've always liked the saying "If you want to achieve something, find someone who's achieved it and do what they did". Well, we can't really invest like Carl Icahn (probably even you Greg), but I still like this article on him. 27% annually over 52 years is pretty good by any measure.

http://www.forbes.com/sites/greatspeculations/2014/10/07/six-stocks-owned-by-billionaire-carl-icahn/




The only reason I posted that on GoPro was because I found the SPEED with which competitors are coming into the space is what floored me. GoPro will still be "THE NAME" in the business. I personally have three other "track day" cameras and I call them all GoPro's. LOL


Competition does NOT mean the stock won't do well.... and competition can spur bigger and better marketing... more consumer awareness... more retailers to get their eyes opened and stock/carry the category etc. So competition by itself is not a bad thing.


Carl Ichan is a genius... His latest is the split of PayPal from eBay. A move the company SHOULD HAVE done on it's own. I wish my total net worth was what he makes per day. LOL

[GregWeld]

By the way ---- In case someone is new or maybe someone is MISSING the reason for the discussions of a name such as GoPro....


It's not about GoPro. It's about learning from names like this coming to market via an IPO. Ways to think about any business model. Ways to think about investing in IPO's in general. What happens to them - good or bad over time. It's about me - as well as others here - trying to get people to think about their investing style and tolerance for "risk assets". Get them to think about how they feel about missing an investment - or if they are invested - how they feel when it doesn't go up every day...

This is an effort to infuse the human response into investing - because it can't be discounted. Some can handle the risk well -- and some panic and sell out -- and some can't sleep -- and some guys thrive on it. We just don't know who is what type - so I'm attempting to just give you food for thought so you can find out.

[GregWeld]

Just a reminder for the newbs --- or just for readers in general.


The price / yield relationship is inverse.... as the share prices drop -- the yield increases!


October is historically a terrible month... and I personally always have cash saved up for September / October purchases. Some new positions -- some I add to positions...

If I thought for 1 second that we (the USA) weren't doing well --- then maybe I'd sit on the sidelines.... but everything I see with my own eyes - and the discussions I have with my friends that are in business says we're doing just fine.

Personally I have fully anticipated the interest rate increases that we KNOW are coming. I've been too early "waiting" on that to happen sooner rather than later. WE KNOW that as interest rates rise -- that will affect stocks returns but as long as the rate doesn't rise too quickly - then everyone will adjust to the new norm. I'm building a house right now - and I only wish they would hurry up as I know everything I must buy is going up. Prices don't go up in a bad economy... so then it's just up to me to "get over it" and pay the price. Frankly, I'm more secure doing that - than wondering what the hell is going to happen next with a down economy.

[Vegas69]

Do you ever buy bonds? Is there a time and place?

[GregWeld]

Do you ever buy bonds? Is there a time and place?




Todd --- I personally used to have a 4MM bond portfolio -- a laddered set up with max 5 year maturity... So let me explain that for those that don't understand.


A "laddered" maturity portfolio would have your total investment placed so that each year a percentage of your total portfolio would return your capital so that you could reinvest or (roll) that investment. Example

100,000 invested in bonds with a maturity date of 2015
100,000 invested in bonds with a maturity date of 2016
100,000 invested in bonds with a maturity date of 2017

and so on.


Here's my personal problem with BONDS in general. If you are a long term holder / investor.... you'll get only your initial cost back at maturity. So if you bought a 5 year bond at face value - that pays you a tax free interest.... at the end of the 5 years - you're only going to get back your capital. Safe? Oh yeah? A good investment? Not if you missed out on 20 or 30 or 40% returns in the stock market via capital growth.

I personally hated every single minute I owned this laddered portfolio -- because my stocks were soaring --- and all I could see was that money (possible gain) slipping thru my fingers. I unwound (sold) that portfolio at a nice profit because at the time interest rates were falling -- and I owned bonds that paid above market rates (as the interest rates are falling - the higher yielding bonds face value climbs).

I think the only way to make any money in bonds is to be a trader. You have to be so on top of what the interest rates are "maybe" going to do -- and be able to move in and out of the bonds. I'm not interested in doing that - nor am I that smart.

Now --- if you are retired --- and have a very high annual income... then bonds are a way to get TAX FREE income... and that's why I owned them. But as previously stated -- I was calculating the losses on capital growth... and I'd prefer to just have gains and income over trying to skin the tax man.


SO -- your "is there a time and place". Yes --- high taxable income earners can use bonds to gain tax free income. Or a retired person that absolutely requires their capital be guaranteed to be returned.

I would be a buyer of tax free bonds when they're paying 9 or 10% TAX FREE.... because at that point the income would be "stellar" and you'd have no loss of capital (provided you held to maturity). But when they're paying 2 or 3 or 4%... and we're going into a rising interest rate environment. Hell no!

[Vegas69]

That's what I thought you would say. It's the guaranteed path to meager results. I have 30 years, I'm looking at the potential for explosive results and I'll gladly ride the coaster in the duration.

Greg, I want to thank you again for sharing your knowledge with us. This is big time financial stuff. Stuff that very well could result in financial independence and greater lifestyle if pursued actively.

I have to admit that I relied to heavily on financial advising in the past. I've taken the reigns and have analyzed funds and strategies and will make up my own mind with guidance from those voices of value. Looking at the returns on IRA's and 403b's, I just don't see it being the catalyst to get me where I want to go. Will it grow and turn into real money, yes. I just think there are better opportunities like my self managed account.

I know you are anti mutual funds for the most part. I'm looking for another bucket on top of the individual stocks, IRA's, 403b, whole life. I found this healthcare based Fidelity fund that has averaged 16% over the last 30+ years. Should I just forget it and add to my individual stocks? It looks like a majority of the growth is on the tale end which is a bit concerning.
http://research.scottrade.com/qnr/Public/MutualFunds/Summary?symbol=FSPHX

[GregWeld]

So let's dissect the "mutual fund" issue first.


IRA's and 401's et al --- are all about getting people to save SOMETHING! ANYTHING! They are pretax auto deposits for people getting paychecks. I'm all for that - because without them - people wouldn't save at all.

Add to this - the "company match" which is basically free money.... and that can't be all bad. In the strictest sense that something is far better than nothing.

Mutual Funds are the pablum of investing because people don't have to get involved - they don't have to think - they just pick off a list - throw money at them and hope like hell that when they need the money - it will be there.

Here's the problem with all of that.... the lack of actively THINKING about and being involved with something that is so fundamentally important (or sure as hell should be!). Our retirement... where we hope to live 20 or 30 or more years.

I think they're (Mutual Funds) fine until you gather up about 10 grand. At that point - you can pick 10 stocks and invest 1 grand a piece and probably do far better overall on a compounded return.


What I've tried to do in this thread since day one is to get people involved - take some of the fear of making CHOICES out of the game - and get people to look at their investing differently. It's not scary or hard - in fact - pick the right stuff and it couldn't get more simple. Just the mere act of getting people to look at the mutual fund in their IRA -- you know, the one they haven't looked at for 10 years... is monumental.

I wouldn't just NOT LOOK AT any kind or style of investing --- as my personal belief is that as long as you're thinking - comparing - looking - and then acting on your investments is the biggest "move" that people can make. So if you think -- and I pretty much agree with this -- that investing in a mutual fund in an effort to diversify your holdings -- and do so in an area where you have no knowledge (say healthcare - or drugs etc), then I'm all for that kind of investing. My anti Mutual Fund is more about people pick three in their IRA and letting them sit for 20 years and then wake up and find out they didn't do very well. Most don't! But if you're active in the picking and have a valid reason and thought process for why you're buying THIS particular fund. Then great! It's just another act of investing and that's the secret to all of this.

[GregWeld]

I want you "newbs" to look at more than just the shares YOU own on down days. I want you to see your pops and drops in PERCENTAGES... because down .50 cents on a $100 stock is no big deal percentage wise.

I want you to compare the percentage drops in your stocks that pay dividends versus the "hot stocks" that don't. Learn from these kinds of days and weeks and months. How do you feel when you see your paper gains dripping away. I've reminded people many times to make note of how they feel when everything is going up day after day - and to remember that - because there will come a time when they stop going up and they start going down....

On days and weeks like this -- look at the GoPro drops - Look at Facebook drops - look at Tesla... and look at them in percentage terms - and compare to your stocks... Take Altria (MO) today -- it was UP three quarters of a percent GoPro was DOWN over 4.5%. Facebook was down almost 4%. Tesla was down almost 8%. AT&T was down barely over 1%. Realty Income (O) was down just about a half percent. WHY?? Because these dividend payers are supported price wise by the dividends!! It cushions them on the way down. Now you also have to remember that in a month or two YOU'LL be getting a cash dividend that helps ease the pain.

Now -- if any of this shakes you up just a tad - and you start to doubt your strategy... GO LOOK AT A 5 YEAR CHART of your stocks... look at how squiggly that line is! It's not straight up - there's all manor of drops (and pops). Does the line still go from lower on the left side of the chart to higher on the right side?? Yep? Then get over your angst knowing that 1 year - 2 years - 3 years down the road you will never remember this week or this month or even this quarter.

If you're a buyer..... KNOW that no matter what you pay - at some point you could have bought it cheaper. Get over it. A buck or two a share on a 100 share purchase is not what you're after. You're after that dividend quarter after quarter year after year... and the capital gain will come.

NOW --- Let's talk LIMIT ORDERS. I bought 4000 shares of Energy Transfer Partners (ETP) today. 2000 shares with a limit order early this morning at 58.85 a share - it took awhile to get executed. Then as the day got worse I stuck another 2000 limit order in at 58.50 it got executed. So my average is 58.68 per share. Luck for me - this closed at 60.30

I used the LIMIT ORDER to try to get shares at lower prices than where they were trading and it worked. I also stuck in a bid (a limit order) for TESLA (TSLA) at $235.00 a share -- It did NOT get executed. I'm okay with that. I don't feel the need to buy this minute or this hour or this week even. If I can get the shares lower in a market like this then great. If not - OH WELL.... But I'm on top of the market every day - most of the day... If you're NOT.... and you're not buying 100's of shares at a time - then does .50 cents one way or the other really matter? No - it really doesn't. So this strategy is on an "it all depends" basis. If you like to learn from doing this - regardless of the size of your trade - okay! Nothing wrong with preparing yourself for when you are able to play a little deeper. Sometimes it's all just about learning. Look at your car builds - your first build was not a 2000hp twin turbo road killer... you gained skills a little here and a little there. That's how it's done.

[WSSix]

Hell, I'm stoked that I may be able to pick up some T come Monday while it's down 3 something percent from when I purchased. In the end it won't matter but dropping my average cost down a wee bit sure does make me feel like I'm doing something fantastic, lol.

Thanks for the continued insight and pep talks, Greg.

[GregWeld]

Hell, I'm stoked that I may be able to pick up some T come Monday while it's down 3 something percent from when I purchased. In the end it won't matter but dropping my average cost down a wee bit sure does make me feel like I'm doing something fantastic, lol.

Thanks for the continued insight and pep talks, Greg.



Most of the little things - like buying on a dip - or averaging down etc are not really about making a pile of money.... it's mostly about how we feel. We are human and we can't take the feelings out of investing so we might as well acknowledge them. Beating the day makes a guy feel smart... selling for a gain
is euphoria... FEAR is the one we have to contain and manage. You'll experience fear when you're not invested correctly. By that I mean - when you've gambled and it's going against you... or when you've invested too much cash and you really had a need for that money and now the market it against you. We generally cause our own fear situations.

I always keep cash. It makes me feel good/secure. It's my pile that says to me - Dude! If there's a big drop in the market... I'm ready to buy. Many times I don't ever buy - or buy just a little... but it's the comfort that line of thinking gives me. So I acknowledge it and use it to my advantage.

[GregWeld]

Do you ever buy bonds? Is there a time and place?



Todd --- Found this by accident and thought it worthy of a post in response in a round about way to your question.

I can't live with a 3% return - with no capital growth - in an inflationary world.



(Reuters) - Bond investors need to revise their expectations of the returns they can make in the years ahead, said Scott Mather, one of three Pimco managers who run the firm's Total Return Fund following the shock exit of co-founder Bill Gross last month.

In an interview with Germany's Boersen-Zeitung newspaper, Mather, Chief Investment Officer for U.S. core strategies at Pimco, said: "Even if interest rates gradually increase, with a global portfolio of bonds with the best creditworthiness you can maybe expect a return of about 3 percent in the coming years."

[chichirone]

Talking to my financial advisor yesterday, he mentioned tax considerations when investing in dividends. Warned us we would pay regular income tax rates versus the 15-20% I read on this site and elsewhere. Also, he mentioned qualified and unqualified dividends. I tried to research and on www.dividends.com the 2012 fiscal cliff legislation that went into effect kept capital gains and dividend taxes at 15%, unless adjusted gross income is over $400kind/$450kcouple, raising it to 20%. However, there is a statement that unqualified dividends would be taxed at the regular income tax schedule up 39.6%.

So what constitutes qualified versus unqualified? And if I check the box to reinvest dividends, I'm guessing they go down as income but are they taxed at 15-20% or at my personal income tax rate based upon total earnings? I've got an email out to my accountant as well. I'm not trying to play a tax scheme here, just trying to understand the differences between the two types of dividends.

On a better note, my advisor did say we have learned something that takes many 20+ years to figure out. :thankyou: Dividend stocks that combine growth and a healthy dividend return are better during downturns and also allow you to buy shares at a lower average cost if reinvested during growth years, prior to the need to take the cash payout. He said, keep it up and my goal should be to put him out of a job! Thanks to all that contribute to this thread. It has really opened up our eyes to different avenues to grow our wealth and invest to have our "employees" work harder for us.

[chichirone]

Doing more research on dividend types and tax implications, here is an article I found which was helpful:

http://www.dividend.com/dividend-education/qualified-vs-unqualified-dividends/

[68Cuda]

Todd --- Found this by accident and thought it worthy of a post in response in a round about way to your question.

I can't live with a 3% return - with no capital growth - in an inflationary world.



(Reuters) - Bond investors need to revise their expectations of the returns they can make in the years ahead, said Scott Mather, one of three Pimco managers who run the firm's Total Return Fund following the shock exit of co-founder Bill Gross last month.

In an interview with Germany's Boersen-Zeitung newspaper, Mather, Chief Investment Officer for U.S. core strategies at Pimco, said: "Even if interest rates gradually increase, with a global portfolio of bonds with the best creditworthiness you can maybe expect a return of about 3 percent in the coming years."

Why in the world would I accept a 3% return on something I am locked in on when an investment as brute simple as PG pays 3%? T and VZ are both paying more than 4.5% right now. MO is at 4.4%, may have to get me some more of that!

[68Cuda]

Doing more research on dividend types and tax implications, here is an article I found which was helpful:

http://www.dividend.com/dividend-education/qualified-vs-unqualified-dividends/

For most stocks... If you hold your stocks for years, this is a minor issue. If you jump in just before the ex-dividend date, then sell afterward to try to make a quick buck, then this is a bigger issue.

[Vegas69]

Todd --- Found this by accident and thought it worthy of a post in response in a round about way to your question.

I can't live with a 3% return - with no capital growth - in an inflationary world.



(Reuters) - Bond investors need to revise their expectations of the returns they can make in the years ahead, said Scott Mather, one of three Pimco managers who run the firm's Total Return Fund following the shock exit of co-founder Bill Gross last month.

In an interview with Germany's Boersen-Zeitung newspaper, Mather, Chief Investment Officer for U.S. core strategies at Pimco, said: "Even if interest rates gradually increase, with a global portfolio of bonds with the best creditworthiness you can maybe expect a return of about 3 percent in the coming years."

Yep, no thanks. I'm changing all of our existing IRA's to 100% equities. I'll worry about fixed income in 30 years.

[GregWeld]

Talking to my financial advisor yesterday, he mentioned tax considerations when investing in dividends. Warned us we would pay regular income tax rates versus the 15-20% I read on this site and elsewhere. Also, he mentioned qualified and unqualified dividends. I tried to research and on www.dividends.com the 2012 fiscal cliff legislation that went into effect kept capital gains and dividend taxes at 15%, unless adjusted gross income is over $400kind/$450kcouple, raising it to 20%. However, there is a statement that unqualified dividends would be taxed at the regular income tax schedule up 39.6%.

So what constitutes qualified versus unqualified? And if I check the box to reinvest dividends, I'm guessing they go down as income but are they taxed at 15-20% or at my personal income tax rate based upon total earnings? I've got an email out to my accountant as well. I'm not trying to play a tax scheme here, just trying to understand the differences between the two types of dividends.

On a better note, my advisor did say we have learned something that takes many 20+ years to figure out. :thankyou: Dividend stocks that combine growth and a healthy dividend return are better during downturns and also allow you to buy shares at a lower average cost if reinvested during growth years, prior to the need to take the cash payout. He said, keep it up and my goal should be to put him out of a job! Thanks to all that contribute to this thread. It has really opened up our eyes to different avenues to grow our wealth and invest to have our "employees" work harder for us.



I would FIRE your "financial advisor" instantly and never give him another chance. He doesn't know what he's talking about and obviously missed the most basic education. He either doesn't understand -- or doesn't know how to explain your situation or worse.

He's doing the "typical" advice -- trying to make investing scary and difficult - so that you need him/her.


CAVEAT ---- EVERYONE SHOULD DISCUSS THEIR SITUATION WITH THEIR TAX ACCOUNTANT....

Capital gains --- there are TWO TYPES --- "Long Term" which means ONE YEAR AND ONE DAY.... of holding the investment -- if you sell for a gain - it would be LONG TERM CAPITAL GAINS.

Short term capital gains is any other type of gain - where you did not hold the investment the ONE YEAR AND ONE DAY requirement to make it a Long Term Capital Gain. SHORT TERM CAPITAL GAINS are taxed at ordinary income rates.


COPIED FROM THE IRS WEBSITE:


The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2014, the maximum capital gains rate for most people is 15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.

If you're married and filing jointly and your adjusted gross income is over $457,600 your tax rate will be 20%

I certainly hope you're in that bracket!



DIVIDENDS --- (of which you would need to really try hard to buy something that was "unqualified") are taxed at the Dividend rate which is the same at Long Term Capital Gains:



Long-term capital gains and qualified dividends
A top rate of 15% applies to qualified dividends and the sale of most appreciated assets held over one year (28% for collectibles and 25% for depreciation recapture) for single filers with taxable income up to $406,750 ($457,600 for married filing jointly). Long-term capital gains or qualified dividend income over that threshold are now taxed at a rate of 20%.



MORE INFO HERE:



http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-New




I will tell you from my own personal situation -- and I have a quite complicated tax filing. 2013's income tax form was 154 pages.... and our income was just under one million dollars this year.... and my tax rate was 20%. I DO NOT have a lot of deductions - but I have ZERO EARNED INCOME... so all our taxes are dividends - interest - long or short term capital gains.

[Vegas69]

Beautiful:yes: So you are using dividend income on stocks held over one year? Is that correct?

[dylanCamaro582]

So, i have been following the thread for a while. Investing 102 seems to be for the guy who have some money in the market.

I have one bigger question: what should the beginner investor(like one or two deposits in to their 401K) do?

I currently have a small amount(less $100 in to my 401k),but i put 10% of my pretax income in 401K and my company matches up to 6% in to my 401K. I estimate that in will need at least $1 million at today's current money valve to retire and live comfortably. I currenty have my small amount in to Fidelity's LifePath® Index 2055 Fund Q.

So my secondary question is: How long do I wait and change my investment?

[GregWeld]

Beautiful:yes: So you are using dividend income on stocks held over one year? Is that correct?




Sorry Todd -- I'm not sure who or what you're asking...

If you're asking me about my income? All of my income is derived from Dividends - Interest (received) - Long or Short Term Capital Gains - and income from limited partnerships (apartment complexes), which have offsetting depreciation.

I rarely do short term capital gains -- and since I have no earned income -- I'm not sure what the tax rate is on them but my guess is they'd just be at the tax rate of whatever that "income" is, dollar wise, would be. Probably total STCG last year might have been 100K or less... so no big tax hit there.

Having said that -- my personal tax situation is unique - probably - to the group here since there is zero earned income to deal with. My situation is where a guy wants to be when they're retired -- which is partly why I posted what I did. In retirement you want to have very low income taxes - zero or little debt - and no earned income (which affects EVERYTHING).

This is another reason TAX FREE BONDS are such a stupid investment idea as people reach retirement age. The tax rate is so low at that point - what's the point in taking a poor rate of return when you're not really in a taxable situation to begin with?!?!?! WTF!?!?! Stupid. When Gwen was working - and she had a very high income level (mid six figures) - then part of our portfolio was invested in TFMunis because the top tax rate of almost 40% plus the AMT rate - a tax free income of 3 and 4% on the bonds made sense. It doesn't anymore since she retired in 2010 and now we have "no income" (I love that statement).

BY THE WAY -- to those that wonder why I post such personal info. It's ONLY TO HELP OTHERS. I don't really give a sh!t about such things. Gwen or my entire working careers where as officers of public companies - and as such, all of our incomes where public information. All a person had to do was to Google it and it and all the "compensation" was there to see. I got over being offended by it long ago. And if I can help one person gain some financial footing. Then fantastic. Back when I was a VP we didn't have the internet -- so it made it far harder for people to find out such things... you had to get a "prospectus" or read thru the filings to get this info - but if you wanted to know - it was right there in print. Now it's all on the web. Ours isn't any longer since we're no longer officers of any publicly traded corporations.

[GregWeld]

So, i have been following the thread for a while. Investing 102 seems to be for the guy who have some money in the market.

I have one bigger question: what should the beginner investor(like one or two deposits in to their 401K) do?

I currently have a small amount(less $100 in to my 401k),but i put 10% of my pretax income in 401K and my company matches up to 6% in to my 401K. I estimate that in will need at least $1 million at today's current money valve to retire and live comfortably. I currenty have my small amount in to Fidelity's LifePath® Index 2055 Fund Q.

So my secondary question is: How long do I wait and change my investment?


First -- I'm going to ASSume your name is Dylan.... So welcome Dylan!


Let me address one thing first -- this thread is not really so much about guys with any money - some have some - some have a lot - some have very little... and it's not so much about the stock market as it is about saving and INVESTING for retirement. The "stock market" has historically had the highest return - compounded - over time. But that's not all we talk about here. There are rental houses - apartments - commercial buildings - Master limited partnerships etc. BUT --- always the big butt in the room -- for most people INVESTING in the stock market is the easiest way and can use the smallest initial capital and can be added to as money is accumulated. In other words - a guy with a $1000 can buy some stocks and as he gets another $500 saved up - he can buy some more and so on. Other types of investments take larger up front capital. Since this is a thread for BEGINNER investors... we've all tried to stay focused on that aspect. BASIC INFO and ways to look and research and what is and isn't important etc.

Okay -- next up for you -- is your 401K. Good for you for starting early. I'm again going to assume you're young, and perhaps just beginning your career???? The reason I'm assuming that is because your investment in Lifepath 2055. That date has meaning. That date is for people that should be retiring about that year. Correct me if I'm wrong about you being younger.

Fidelity is the investment company your company uses to manage/direct/handle your companies retirement plan. They then give you choices within that plan to invest your contributions in. Some plans have lots of options - some keep it very simple and short. Your actual investment is in BLACKROCK LIFEPATH 2055..... and Blackrock is a very good company which runs about a half a zillion different "funds". I couldn't even find yours specifically in order to look at it. It was the "Q" that threw me off.

What I need from you is the actual TRADING SYMBOL -- such as "LIVIX" or similar.

So -- forgetting all the confusing detail above. You're in the right place as far as contributing to your company plan. Stay with that for now. The matching percentage is a good one... and as soon as you're able - I'd increase your percentage to 15% ASAP. If you read this thread from the beginning - you'll find a recurring theme, i.e., START EARLY in order to reap the benefit of COMPOUNDING over time. The more you save early - the more you'll have at retirement by a LONG SHOT and I mean HUGE.

Just quickly ----- a guy that invests $2000 a year from age 21 until he's 31 and after 31 he never adds another nickel to his pile - will retire with a million bucks at normal rates of return - compounded. If the same guy starts saving the $2000 at 31 and puts that away every year until he/she retires - will have about half that. Which guy would you rather be?? Don't answer that - it's a rhetorical question. LOL


OKAY THEN ---- keep pounding away - and increasing your contribution until you have at least $2500. At that point you're going to need to choose another fund in your plan -- and start putting the new money into that choice until you reach $2500 and so on. When you get $10,000 in your plan total... then you will need to start to look at alternatives if any. BUT -- the NUMBER ONE thing I'd do if I was you --- OPEN A ROTH IRA and start funding it with as much as you can. You're company plan is "PRE TAX" - which is great - but you'll pay taxes on it when you retire and start to withdraw. A ROTH IRA is "after tax" money that you put in on your own - and since you've already paid the taxes on it - it comes out totally tax free when you withdraw. That includes all the gains and income/dividends etc that it earned for all the years. TAX FREE. PERIOD. It's the greatest gift the tax man ever gave the good citizens of the United States. USE IT.

Any discount brokerage will help you understand it - and open the account. Just make a call to the one you choose and set up an appointment to discuss your personal situation. They'll be happy to help you. I'm talking Schwab - Fidelity - etc. Find an office that is convenient to your home or office. You can always move the account later. The key is to get started EARLY and save/invest as much as you can.... 65 years old comes up far faster than you can even imagine! Ask me how I know?!?!?! LOL

[GregWeld]

SO -- Since I'm on a roll this fine Sunday morning... I found a terrific chart to show why I use LIMIT ORDERS to buy or to sell!!!!!!

Not important when buying 25 o5 50 shares... then I'd just do a market order most likely - but it doesn't hurt you to put in a limit order as long as you're going to stay on top of what you're doing!

Here's a ONE DAY chart of a company where the "range" was over $2 a share! On a $16 dollar stock... that's a HUGE percentage. On top of that - it would make you FEEL GOOD if you bought more near the bottom than the top. AND if you sold (using a limit order) nearer the top than the bottom! Just by setting the price you want to buy at or sell at rather than just paying/selling at "market" using a market order.


Check out this chart. You could buy at Market and pay $16 or you could have stuck in a LIMIT ORDER and put the price at $15 or any other number you chose and you'd have gotten a fill. The one day RANGE on this stock was over $2.00 !!! It traded as low as $14.30 and as high as $16.36.... where would you have rather bought the shares? LOL


THIS IS A WILD EXAMPLE.... normally I'm trying to bid a .50 cent or 1.00 range.... but if you're willing to stay on top of your trades and manage them - you can play the game and win.


https://www.google.com/finance?q=arp&ei=CoI6VNikBsGZqAHtoYHIBw

[Vegas69]

Greg, I'm confused on what makes a stock dividend or gain short or long term?

[dylanCamaro582]

Greg,

The closest trading symbol i could find is LPVIX on Google Finance.And yes, I'm pretty young compared to most of you guys.

I would like to increase in 401 K contributions from 10% 15% as you said, but with paying off student loans and other debts accrued during my schooling and working a barely living wage manufacturing job, and trying to save for my own place, my money can get stretched pretty far.

[GregWeld]

Greg, I'm confused on what makes a stock dividend or gain short or long term?




Ah ha!


Okay --- Dividends have some very specific rules - regarding short term holdings like if you're just trading stocks to pick off the dividend.... and that's for an individual to discuss with their accountant BEFORE they start that kind of trading....


For our purposes here -- we're going to ASSume that you're buying stock for long term (at least one year and one day) and that the dividend payouts are just every quarter and so on. At that rate they are just taxed as DIVIDEND INCOME -- 15% for "most people". They can be zero for low income earners - and they can be a MAX of 20% for those high income folks (single is 406K adjusted gross and 457K for married).


So dividends are just going to be taxed at 15% for most everyone.


Long and Short Term gains are when you buy a stock and then sell it.... and those gains (provided you sold higher than were you bought) are taxed at either the LONG TERM RATE of 15% if you held the shares for the one year and one day rule --- or SHORT TERM which is anything less than one year and one day. SHORT TERM CAPITAL GAINS are taxed at ordinary income tax rates.


HERE is where people need to have a very good understanding of what they're doing if they have gains and then want to offset those gains with losses.

Near the end of the year (tax year) --- you may want to look over your accounts (we're talking TAXABLE ACCOUNTS HERE NOT IRA's or ROTHS).... and if you have some gains you want to take advantage off ---- then you'll be smart to also prune your losers and create some offsetting losses to help ease the tax man pain. Pure losses are NOT a 1 for 1 deduction off your income taxes... if you have pure losses - I think the limit is $3K per year... so if you took a 9K loss - it takes you three tax years to recoupe that. I AM NOT an accountant and as such I'm not up on the latest changes if any to these rules. Which is why everyone should discuss this stuff with their tax dude.

But lets say you have a 20K short term gain you want to take.... and you have a 10K loss in another stock you'd like to dump anyway.... then sell the winner and cut the tax bill by 10K by also selling the loser.

Conversely ---- You have a big 20K loser....and you wan to sell it. You're only going to get a 3K write off this year.... so might as well prune some winners for 17K and with the 3K write off... you're just about even.

Where people get screwed is that they concentrate on the possible tax bill --- and forget about the details. Details such as -- maybe taking your gains pushes you into that next higher bracket and now your entire income is moved into the higher bracket by only $100..... and now your tax bill went UP by $1000's. Ask me how I know about this. I've never made that mistake again!

BUT ----- If you buy and hold (again - talking about taxable accounts here) --- there is no taxable event on your PAPER GAINS... regardless of their size. So you could buy a stock at $1 and have it go to 1 million and there's no tax ---- until you sold it! That's the beauty here ---- your net worth is going up without a direct tax consequence. You'll only be paying a small tax on the DIVIDENDS. 15% isn't very much of a tax bite.


If you're in IRA's --- in other words --- retirement accounts... then the questions are mute as there is no taxable event until you withdraw. Thus the beauty there as well.... over 30 years your money could grow 100's of percent and you only withdraw a little at a time thus keeping you in the bottom of the tax brackets. If your IRA is a ROTH there is NEVER ANY TAX EVER.


Many people are confused by these terms --- and they need to fully understand them BEFORE they make any moves!

[Vegas69]

Very interesting to say the least.

Let's say you bought additional shares this year in a stock you have held for over a year and a day. Does it revert back to a short term gain or only on the new shares?

[GregWeld]

Very interesting to say the least.

Let's say you bought additional shares this year in a stock you have held for over a year and a day. Does it revert back to a short term gain or only on the new shares?



When you go to SELL there is always a check box "choice" for selling "tax advantaged lots" or similar statement ---- meaning --- the brokerage will sell the shares with the dates that are the most tax advantages for you... unless of course you're sell "all".

The shares (brokerages do this for you) all have purchase dates.... per "lot" or per transaction date. So of course you'd only want sell the shares in your account that are LONG TERM rather than short term. Adding to the holdings doesn't change the entire holding -- only the shares that were bought on a/that particular date. They're not "retroactive".


You asked earlier about the dividends and dividends get different treatment because of course - the tax man always wants his pound of flesh --- so they're not going to let you get away with buying a stock a day before "ex-dividend" then scooping up that dividend and selling the shares... and then only letting you get away with paying 15% tax on that dividend portion. They made a rule about it... so that if that's what you were doing -- you're going to get slammed with the income tax rate not the dividend rate.

Now --- I've said this before. Taxes should never be a part of an investors strategy. An investors strategy is to maximize his income or gains or return on investment... and the taxes just are what they are. If you make a million bucks this year and you owe Uncle Sam 390K of it... SO WHAT! You still kept the rest... so in my view it's a choice... and I'd prefer to pay as much tax as humanly possible - because that means I made a fortune! LOL

What NONE OF US WANT TO DO however is to inadvertently cost ourselves a tax if we don't have to. So checking a date on the shares you plan to sell --- if you're just "pruning" or perhaps just want to change your portfolio... then why sell them one month "early" and get hit with a short term gain - when waiting a month would have saved you some tax money. Of course explaining all of this is harder than it looks --- because if a guy has a loss and he thinks he's going to lose MORE -- then there'd be no sense in holding on to the shares and taking a larger loss - just because it didn't work out on the income tax form.... conversely.... if you could sell shares and scoop up 100K gain... and maybe not get that gain if you waited until the exact right date for taxes... well then that might prove to be dumb.

It's more just something that should be "considered" before just hitting the sell button.



NOW -- for investing 102 -- We haven't touched on MANY other details. We've mostly just touched on buying - reaping the dividend - plowing that back into more shares and compounding these returns.


There's things like WASH SALES.... oh boy -- here we go! The WASH SALE rule to a way for the tax man to keep you paying max taxes. The Wash Sale Rule says that you can't sell a stock at a "loss" and then turn right around and buy the shares back. You must wait 30 days to buy them back - or you're DISALLOWED the "loss". But there's ways around this rule as well. Let's say you owned Chevron (CVX) and you have a loss at the end of the year - so on December 10th you sell -- writing off the loss against gains you had taken. Now that tax year is 2014 which ends on December 31st.... A new TAX year starts January 1st - so on the 2nd you buy Chevron shares. OH NO YOU DON'T!!! Not so fast --- the tax man says that's complete BS... and you just wanted to take the loss against 2014... and he's right of course. So they disallow the loss as a WASH SALE -- and the loss you took gets added to the cost of the new shares you just bought... It gets complicated --- so just don't do it. WAIT at least 30 days -- and that means 31 days... before you repurchase the shares of the company you just sold at a loss.

The way to beat this is --- you sell Chevron and buy anything else that is SIMILAR - but not substantially identical - if you need "oil" in your portfolio -- so you take the loss on Chevron and buy Conoco or Exxon... but you can't sell Chevon common and buy their preferred convertibles... that would be considered substantially identical.

If you've figure out a trick --- they've figured out how to counter that.

[GregWeld]

Greg,

The closest trading symbol i could find is LPVIX on Google Finance.And yes, I'm pretty young compared to most of you guys.

I would like to increase in 401 K contributions from 10% 15% as you said, but with paying off student loans and other debts accrued during my schooling and working a barely living wage manufacturing job, and trying to save for my own place, my money can get stretched pretty far.



It can't be "close" it has to be THE exact symbol of the shares in your account.


We all understand just starting out. Everyone starts somewhere. The fact that you're started is what counts.

[68Cuda]

BUT -- the NUMBER ONE thing I'd do if I was you --- OPEN A ROTH IRA and start funding it with as much as you can.

Dylan - good idea, but do not do this at the expense of your company match! Make sure you max that out before you go outside the 401k! Take the free money! I'm not suggesting Greg was implying you forgo the free company money, just making sure that it is clear that the free money comes first!

As for the student loans and other financial strains I can relate. I started grad school a few weeks after the company I was working for closed and my twins were six months old. As soon as I was drawing a true pay check again I put in what I could to get the company match at a minimum and increased my withholding with each raise until I had maxed it out. I recently went with the "high deductible" health plan which comes with a HSA that the company kicks a little into and I now am maxing that out. HSA money is tax free going in and tax free coming out, just has the limitation of only being used for health care. Since our plan has an out of pocket maximum and I have three kids it is fairly easy to predict how much I need to put into the HSA. If I do not use it all it carries forward anyway.

[captainofiron]

SO -- Since I'm on a roll this fine Sunday morning... I found a terrific chart to show why I use LIMIT ORDERS to buy or to sell!!!!!!

Not important when buying 25 o5 50 shares... then I'd just do a market order most likely - but it doesn't hurt you to put in a limit order as long as you're going to stay on top of what you're doing!

Here's a ONE DAY chart of a company where the "range" was over $2 a share! On a $16 dollar stock... that's a HUGE percentage. On top of that - it would make you FEEL GOOD if you bought more near the bottom than the top. AND if you sold (using a limit order) nearer the top than the bottom! Just by setting the price you want to buy at or sell at rather than just paying/selling at "market" using a market order.


Check out this chart. You could buy at Market and pay $16 or you could have stuck in a LIMIT ORDER and put the price at $15 or any other number you chose and you'd have gotten a fill. The one day RANGE on this stock was over $2.00 !!! It traded as low as $14.30 and as high as $16.36.... where would you have rather bought the shares? LOL


THIS IS A WILD EXAMPLE.... normally I'm trying to bid a .50 cent or 1.00 range.... but if you're willing to stay on top of your trades and manage them - you can play the game and win.


https://www.google.com/finance?q=arp&ei=CoI6VNikBsGZqAHtoYHIBw

Thanks for explaining this, I never fully understood that or how to use it to my advantage, so I would just do a regular order

[GregWeld]

Thanks for explaining this, I never fully understood that or how to use it to my advantage, so I would just do a regular order



That's what this thread has become all about --- taking the mystery out of things that nobody ever taught us.

[sebtarta]

Well if you missed the GoPro IPO don't worry, Schumacher has you covered. :rolleyes:

Thanks to this

Report: Michael Schumacher's Brain Injury Caused by Helmet-Mounted GoPro

Formula 1 driver Michael Schumacher's traumatic brain injuries—sustained during a skiing accident last year—were caused by a helmet-mounted GoPro camera, a French journalist in contact with the family said this week.


F1 Star Michael Schumacher In Critical Condition After Skiing Accident
Michael Schumacher is in critical condition after he suffered a traumatic head injury yesterday…
Read on deadspin.​com
F1 commentator Jean-Louis Moncet told a French radio station that he's been in contact with Schumacher's son, Mick.

'The problem for Michael was not the hit, but the mounting of the Go-Pro camera that he had on his helmet that injured his brain," Moncet said on the show.

Investigators believe the camera mount may have caused his helmet to shatter on impact. According to the Telegraph:

"The helmet completely broke. It was in at least two parts. ENSA analysed the piece of the helmet to check the material, and all was OK," said a source close to the investigation.

"But why did it explode on impact? Here the camera comes into question. The laboratory has been testing to see if the camera weakened the structure."
Schumacher spent six months in a medically-induced coma after the skiing accident last December. Family members have told the media that the driving legend is "waking up very slowly" in a medical suite installed in his home in Switzerland.


http://gawker.com/michael-schumacher-brain-injury-reportedly-caused-by-he-1645544653

[WSSix]

Well, that's certainly no good. I wonder if it'll have any effect on GoPro.

So I decided to spend some money today and buy some more shares. For the fun of it, I did three separate limit orders. I was stoked to see all three of my orders went through especially since I didn't post them until 1pm EST. I should have shot lower. Every single stock I bought closed lower than my purchase price, lol. Oh well. Fun times.

[96z28ss]

Blaming the Gopro camera on his brain injury is the most stupid thing I've heard. How does a camera mounted outside the helmet with either a strap or double side tape have caused a brain injury?

[WSSix]

Are you sure that's how it was mounted? Also, the double sided tape can easily be bonded well enough to radically change the forces applied to the helmet. Take 3M's outdoor double sided tape, the stuff with the red backing, it's ridiculously strong. Plenty of motorcycle riders talk about the drag the camera causes, too. It's very easy to understand how the camera could cause extra damage to the helmet depending on how it is installed/attached. If the helmet fails, then his head is virtually unprotected.

[chichirone]

I would FIRE your "financial advisor" instantly and never give him another chance. He doesn't know what he's talking about and obviously missed the most basic education. He either doesn't understand -- or doesn't know how to explain your situation.

I will tell you from my own personal situation -- and I have a quite complicated tax filing. 2013's income tax form was 154 pages.... and our income was just under one million dollars this year.... and my tax rate was 20%. I DO NOT have a lot of deductions - but I have ZERO EARNED INCOME... so all our taxes are dividends - interest - long or short term capital gains.

Greg, thanks for your candor and clarity. Amy and I had an epiphany after reading your response and realizing he really did not know what we were talking about and I found myself educating him. We laughed, in a pissed off kind of way, at the idea that not only are we paying him for advice but now I'm paying him for me to give him advice. WTF???

I can't wait for the day of ZERO EARNED INCOME! :military:

[GregWeld]

Greg, thanks for your candor and clarity. Amy and I had an epiphany after reading your response and realizing he really did not know what we were talking about and I found myself educating him. We laughed, in a pissed off kind of way, at the idea that not only are we paying him for advice but now I'm paying him for me to give him advice. WTF???

I can't wait for the day of ZERO EARNED INCOME! :military:



Financial Advisors always bust me up...


It's really hard to understand all of the tax rules - tax changes - little nuances that can have big impacts. An example --- I own an apartment complex that I bought inside our IRA... STUPID.... The income is considered "passive income" - that's not allowed in an IRA - so now the IRA has to file income taxes. Huge nuisance. Live and learn.

Here's my big point of the day. Nobody is more responsible for their own wellbeing than themselves... we owe it to ourselves to learn what to do - even on a basic level. It doesn't take very long. The internet has many sites that will explain stuff to us until we do understand. Investopia will give definitions on almost any term you can type in their search box.

A few bucks (a couple hours of their fee) spent with a tax pro -- and I don't mean the ones that set up shop at the mall just before tax time... I mean a real honest to goodness tax pro... is money well spent. Go to them when it IS NOT tax time! They'll save you money by helping you to not make mistakes.

A good brokerage - like Schwab - will also have people there that are well trained to guide people on IRAs and many other questions that people have. They WILL NOT help you pick a stock... but they can help with just about anything else... and they're FREE. It's so f'n easy.

[chichirone]

I wonder if the past 30-180 days performance, or lack there of, leads to a buying opportunity. An example is COP. They are down 13% since Sept 15th and down nearly 20% over the past 6 months and 5% YOY. There are a number of good payers out there so does it make sense to scoop some up at a discount. The saying goes, buy when people are selling and sell when people are buying? Or is there still discounting available to stretch the investing dollar? It is a long term hold pattern for us but my curiosity is getting the best of me knowing none of us have a crystal ball to truly answer this question, but there has to be some indicators to consider a good buy.

So I guess my question really is, what is a good indicator(s) to consider to make a buy but not wait until its too late and the "opportunity" to buy at a discount has passed on bye.

[GregWeld]

I will make this unequivocal prediction:


You will never buy at the low point - and you'll never sell at the highest point.


You buy when you can... and when you feel "okay" about the market. Buying is harder than selling. I "scale in"... I figure the position I want (in dollars or number of shares) and then I tip toe - then down or up - I buy more - and so on until I hit my position. Okay --- I fully get that I'm buying positions that allow me to do that. If a guy is buying 25 or 50 shares.... furgidaboudit. Just buy. If you're buying 100 shares.... buy 50 and then sit back and see how you feel about that (and all other inputs) and then buy 50 more when you're ready.


Now --- OIL is terrible.... all my oil stuff is terrible and anything related to oil is terrible. OH HELL YES I'M BUYING. As the price drops - the percentage the dividend represents goes up. The price that kept me out because the yield wasn't there - can now come in and that yield is suddenly in my range. I'm much more about the yield than I am about the few bucks the share price swing is "today - or this week". I'm going to go with my knowledge of the last 50 years that the price WILL go up over time. So the price I pay today isn't really all that important other than it makes me feel smart. What I'm really after is the yield on that particular investment. I'm a buyer in a terrible market I'm never a seller in that market.

What happens if I wait too long for just the perfect "low" -- the friggin' market snaps back on me and the next thing you know the stock I wanted to own has run away. So I just try to do the best I can over a longer period of time. Once you get your head around that kind of investing you have far less stress about it.





I wonder if the past 30-180 days performance, or lack there of, leads to a buying opportunity. An example is COP. They are down 13% since Sept 15th and down nearly 20% over the past 6 months and 5% YOY. There are a number of good payers out there so does it make sense to scoop some up at a discount. The saying goes, buy when people are selling and sell when people are buying? Or is there still discounting available to stretch the investing dollar? It is a long term hold pattern for us but my curiosity is getting the best of me knowing none of us have a crystal ball to truly answer this question, but there has to be some indicators to consider a good buy.

So I guess my question really is, what is a good indicator(s) to consider to make a buy but not wait until its too late and the "opportunity" to buy at a discount has passed on bye.

[GregWeld]

Real world "buying" regarding above question and answer about "when to buy".


Nobody knows. You'll never know. If you do -- you'd be the richest man in the world... the info would be priceless. I've never gotten it "perfect". I just do what I think is "okay".


I know energy is horrible - getting killed - might very well go lower.... I also know that September and October are ALMOST ALWAYS horrible months in the market. I stash some cash HOPING they are!! WTF.... it's like knowing you need sheets and you know every August all the stores have big white sales. Might as well get excited about the fact that you'll be allowed to put some money to work. Money sitting around is on vacation... a short vacation is okay -- but you can't let it sit around too long.


I bought 2000 shares of Energy Transfer Partners (ETP) at almost $59.... I bought 2000 more at $58.50.... I bought another 1000 at $58

I just bought another 5000 at $55.40

It might go to $50.... I don't know. I can't possibly know. But the yield on this is nearing 7%... and my average will yield near 6.74% (I haven't done the math - I just did the math and the 6.74% is my yield on my average cost). I'm done building this position. I will now sit back and collect the dividend at a respectable return. That's the best I can do.

[GregWeld]

Okay --- one more post this morning - because these markets are so "interesting" which gives me lots of fodder for posting.


The whole buying question is just "un-answerable".... I wish I had a pat response.


Here's one thing that I personally have trained myself to do. It took years to get to this point. I look at my investments as a whole. I don't look at them as "this stock sucks" and "this stock is hot". I own lots of stuff. Some of it's working - some of it is "okay" - some of it is "killing it". As long as I'm okay overall - then so be it. I can't get 100% working perfectly day after day. It ebbs and flows. I've owned property when you couldn't give it away -- right now - all the property I own (which used to suck) is deep into the green.... Right now I'm losing on my ETP purchases -- but I'm killing it on Con Ed (ED).... one is going down daily - one is going up daily. My "steady eddy" is the current hot ticket... WTF!! - my steady eddy is beating the pants off GoPro (GPRO) which would be killing me if I'd bought it near the highs.

After doing this for so many years --- I've come to understand that I'll never get it right -- but what I do know - is that I'm way ahead of where I was 10 years ago. That's winning. What happens today - isn't so important. I'm very confident that 10 years from now - I will most likely be richer than I am now. LOL What part of my investments that will get me there is anyones guess. I'll just keep plugging along. I keep my expenses low - and my investments liquid (for the most part) and I only invest in stuff that spins off cash... and that cash is the key. What they're worth this morning isn't the driver.

[GregWeld]

Today's market action is PRECISELY what I was talking about when I said you buy whenever you think or you can.


I bought that ETP when everyone was scared this morning - 5000 shares at $55.40 using a limit order... and now a few hours later they're trading at $58+

My first couple buys were too early. Okay - no biggie. I'll scale into the position and move my average cost closer to where it's trading. Might trade lower than my cost basis - but I'll move that direction in a down market. Ditto in an up market. If I was early and got some shares of "X" at $50 - and more at $55... and some more at $62.50.... I'm OKAY with paying up for them. WTF! The share are just doing what I hoped they'd do -- which is to go higher. Why would I then be afraid to buy more? Because it might go down? It might also go higher yet!! I can't ever tell so why get my panties in a knot over it. Do I want to own shares in the company or not. That's my more important question.


Am I smart? No. Lucky? Sometimes. But truthfully - it's more that I'm not afraid. I don't panic and sell - and I love to buy when everyone hates everything. You build calluses on your nerves. You look at your overall situation and think to yourself... "I'm in good shape"... "what does the income look like on the trade"... "are they going to go broke next year?"... "am I okay if it goes lower?".

[captainofiron]

Are you sure that's how it was mounted? Also, the double sided tape can easily be bonded well enough to radically change the forces applied to the helmet. Take 3M's outdoor double sided tape, the stuff with the red backing, it's ridiculously strong. Plenty of motorcycle riders talk about the drag the camera causes, too. It's very easy to understand how the camera could cause extra damage to the helmet depending on how it is installed/attached. If the helmet fails, then his head is virtually unprotected.

I think they might be saying that instead of allowing a patch of the surface area of the helmet to take the impact (and flex accordingly), the gopro might have concentrated the load into a smaller patch or point, and caused higher stress on the helmet therefore causing it to crack

[96z28ss]

seems the journalist is now trying back track his statement a bit now.

http://autoweek.com/article/formula-one/gopro-shares-fall-nearly-10-percent-after-michael-schumacher-reports

[WSSix]

I think they might be saying that instead of allowing a patch of the surface area of the helmet to take the impact (and flex accordingly), the gopro might have concentrated the load into a smaller patch or point, and caused higher stress on the helmet therefore causing it to crack

Quite possible as well. I honestly haven't looked into the situation at all. I just can easily see how getting in any accident with a camera mounted to a helmet can cause serious, unexpected injuries.

As for the topic at hand, my oil stuff is getting killed! The time to buy again is soon IMO. Weeeeeeeee fun times.

[GregWeld]

Quite possible as well. I honestly haven't looked into the situation at all. I just can easily see how getting in any accident with a camera mounted to a helmet can cause serious, unexpected injuries.

As for the topic at hand, my oil stuff is getting killed! The time to buy again is soon IMO. Weeeeeeeee fun times.




I think this is the first time for many readers where the market is probably spooking them. This is a good thing -- it's a good test for how people will react. We've had 3 or so years where the market has basically gone up day after day. Now we may be entering a new territory for "the newbs". Of course - nobody needs to report how they're feeling etc or what they're doing - unless they'd just like to... but let me say - it's okay to be afraid. It's okay to question what you're doing.

This is the time when you go back and review the longer term charts -- and to really understand what I've been saying about buying the best stuff and understanding the businesses you've bought.

[Vegas69]

I'll worry about timing the market in 25-30 years. I see every month as an opportunity to buy much lower than I'll cash out. :walkingdog:

[glassman]

My brother (whose a CFO of a large company) told me once, "its not timing the market, its time in the market". I like that one. I'm learning alot here lately.

[GregWeld]

I'll worry about timing the market in 25-30 years. I see every month as an opportunity to buy much lower than I'll cash out. :walkingdog:





My brother (whose a CFO of a large company) told me once, "its not timing the market, its time in the market". I like that one. I'm learning alot here lately.





Having a longer term horizon is probably the single most helpful "tool" a guy can have when he's investing. The day to day view will just drive you nuts.

Currently -- I think the biggest problem facing the WORLD economies are the very same things that haunt most individuals. They've spent way more than they can pay for. Eventually that will come home to bite people - whether they're an individual or a government (which is just a collective of wallets).

[SSLance]

Thanks Greg.

I used your limit order strategy to pick up more shares in three of my existing positions at pretty good bargains IMHO this morning while I was on my way to work.

Time to go do some more shopping.

[captainofiron]

I think this is the first time for many readers where the market is probably spooking them. This is a good thing -- it's a good test for how people will react. We've had 3 or so years where the market has basically gone up day after day. Now we may be entering a new territory for "the newbs". Of course - nobody needs to report how they're feeling etc or what they're doing - unless they'd just like to... but let me say - it's okay to be afraid. It's okay to question what you're doing.

This is the time when you go back and review the longer term charts -- and to really understand what I've been saying about buying the best stuff and understanding the businesses you've bought.

Yep,

I think everything I have is red except for 1 name I own in the financials sector...

it feels bad man, haha

But I am pretty confident in the stuff I bought, just everything seems to be dropping, I keep trying to channel my inner GregWeld and say "look at the 5 year chart, look at the dividends" haha

[Flash68]

One beautiful thing that has happened in the last few days as a result of this pullback is the plummeting of mortgage rates.

I just rate locked this morning at 4.25% on a NON owner occupant 4 plex. The rate I was looking at just last Friday was 4.625%. And I was okay with that. But that's a huge spread in just 2-3 days. And that's a lot of fixed savings over 2-3 decades.

Basically, I just got lucky. :lol: