Investing 102

[WSSix]

Good post, Greg.

[GregWeld]

Good post, Greg.




Thanks Trey! I'm always wondering if anyone is still reading.


Still trying to keep this "102".... and just help people to look and think about "the market" as the thoughts come into my head. What I really hope is that people that have followed along for awhile have come to view the market differently... instead of scary... it's more of an understanding of the ups and downs....

The part that still gets to me is that this whole time - the market has been the BULL (meaning going up). WE WILL eventually change to a BEAR market... and that's when I really hope people have learned not to panic sell and change their strategy. When it's all going up it's so f'n easy. It gets real hard to pile in fresh money when it's not all roses. But that is when the big money is made.

[ironworks]

Thanks Trey! I'm always wondering if anyone is still reading.





HUH.... What did you say?

[WSSix]

I read everyday. I'm just sitting back and watching my stocks at this point. I've made almost all my purchases for 2015 for my Roth. I left a little behind in case my oil stocks drop even lower. Then I can get an even better deal. I'll only give it a little more time though as I don't want to miss a dividend payment.

I'm still very torn on my MCD stock though. A big part of me says to sell but the other part says be patient. The two stocks I'm considering as replacements are capital driven instead of dividend plays. So I'm just not sure yet what I'll do.

My one oil gamble stock has gone down so much I was able to buy 50% more shares for only $100. I figure for such a little amount, I could take the risk. Sure, it may be $100 more, which is minor overall, that I lose but the reward could be so much better. I expect it to be rocky for some time but ultimately work out in the end. I may, however, sale it as soon as it goes green just to be done with it, lol. Time will tell.

Oh and the little man behind the curtain screwed me. I bought SO two hours before it crapped itself. I even waited for the Q4 2014 earnings report to see how they were doing, which was good. Then they announced the delay on the nuke plant down here and it dropped. Oh well, I own enough, and at lower prices, that the dividend makes up for the current loses from the new shares I just bought.

Thanks again, Greg

[Payton King]

One of the first places I read when I get on Lat-G

[glassman]

:popcorn2: yep, same here. When "EF Hutton talks, people listen", btw, what ever happened to them?

[GregWeld]

:popcorn2: yep, same here. When "EF Hutton talks, people listen", btw, what ever happened to them?

It's part of smith Barney now...

[captainofiron]

I still read everything you post Greg, just dont have any moolah to throw around at stocks right now, haha

[PaulHarrell]

RECOVERY ROOM, Thanks for your suggestion.

[Sieg]

I still read everything you post Greg, just dont have any moolah to throw around at stocks right now, haha

Good for you, when you do.......you won't throw it down a dark hole. :thumbsup:

[Vortech404]

I'm still here too reading this thread everyday. I don't have tons of money to purchase right now but when I don't it's cool seeing the company's help me out by way of dividends!!

This thread has slowed my build tremendously. lol

John

[YAMATHUMP]

I am a new member here, never thought I would read about investing on lateral-G. LOL With that being said, pretty much everything Mr Weld has written is stuff we have all read before. It feels different coming from someone not on Wall Street. (and that is a Good thing) It's good to read about some of the thoughts and ideas others have to make you think about the "big" picture of investing and not making foolish mistakes. I am sure that I would be speaking for everyone when I say "Well done Sir":thankyou:

[GregWeld]

RECOVERY ROOM, Thanks for your suggestion.




WELCOME PAUL.... It's 477 pages of repetition because the real theme doesn't change. Feel free to chime in and ask questions if you want to. Nobody has to share personal info -- I do, but only for the purpose of goading and real time actual details.




I am a new member here, never thought I would read about investing on lateral-G. LOL With that being said, pretty much everything Mr Weld has written is stuff we have all read before. It feels different coming from someone not on Wall Street. (and that is a Good thing) It's good to read about some of the thoughts and ideas others have to make you think about the "big" picture of investing and not making foolish mistakes. I am sure that I would be speaking for everyone when I say "Well done Sir":thankyou:




There is nothing new here.... saving money - investing it - reinvesting dividends etc is not new. What is "new" is that most people know what they SHOULD be doing but never do. My goal in all of this is to get people to taste what it's like - and see or experience what a huge difference it will make in their lives. Then they're hooked. That's when the magic happens.

[toy71camaro]

Keep it up Greg.

I'm still following as well. I don't post much as I dont have a whole lot to add to what's already been said. lol.

To the newcomers, welcome!

I still track my investments daily, with my tracking spreadsheet that keeps me in the loop.

My "Home Run" has been LMT, which I had actually bought a little before joining in this thread, but I was starting to learn on my own/elsewhere about dividend investing. Cool thing is now its payin me 7% dividend. :) Just wished I had a couple grand to throw at it in the beginning, rather than a couple hundred. LOL.

[chichirone]

Still reading as well Greg. Your goading is what got me hooked in the first place and now the repetitive goading is pushing me to do more. Keep it up man. It's much appreciated and educational. Just to read how you look at the stock beyond the charts is beneficial not only in stocks/market but in everyday business dealings.

On another note, I have been wondering what tools are beneficial on the Schwab site? They have all kinds of links on the right hand side of the research page which I just get lost in...corner stock of the day, highlights, pick lists, Morningstar, etc. Most of this seems to be "noise" to me. I have delved into some of it but not sure if you have any suggestions on how to use these links or continue to focus more on the charts, screeners, and comparison tabs.

I have become "comfortable" navigating these tabs but was curious if there was any additional tools or ways to use them you would recommend to us as we look at the research page.

[captainofiron]

Hows everyone doing on oil?

I must say I was tempted to sell back when I was under ~25%

But I didnt and instead threw a grand at it from my former companies 401k

so far looks like it helped, with the lower cost basis as of this morning I am "only" -1.6%

Just wanted to say thanks to Greg and the other financial wizards posting on here, if not for you guys, I would have sold it when the pressure was on

[chichirone]

I am looking to buy more of it. KMI and COP. Not much more but maybe another $1000 of each. It's what I am comfortable with when having some discomfort with the market.

I read this today as well and was curious what people think about these types of dividend yield suggestions posted by Marketwatch.

By Philip van Doorn, MarketWatch
Looking at free cash flow is very important when picking a dividend stock
If you are an investor relying on stock dividends for income, you want to be sure that the company will be able to continue making the payments, and maybe even raise the dividend at some point.
Back in December, we published a list of dividend stocks for solid income while U.S. interest rates remain low. Since then, long-term interest rates have stayed low, with 10-year U.S. Treasury notes yielding 2.14% on Tuesday, which was actually a pretty significant increase from 2.05% on Friday, as investors looked ahead to next week's policy speech by Federal Reserve Chairwoman Janet Yellen.
The previous list included S&P 500 (SPX) companies with dividend yields of more than 3.5%, that had sufficient free cash flow over the previous 12 months to make it appear that the companies were well positioned to raise their dividends.
Free cash flow is a company's remaining cash flow after capital expenditures. We can calculate a "cash flow yield" by dividing cash flow per share, for a particular 12-month period, by the share price. If the resulting figure is higher than the dividend, the company has "headroom" to increase the dividend.
This approach was suggested by Bill McMahon, the chief investment officer of Thomas Partners, back in May.
So what has changed since then we published our previous list in December? For one thing, 334 S&P 500 companies have had their 2015 earnings estimates cut since the beginning of the year. Two big reasons for this are the decline in oil prices and the rising value of the dollar (EURUSD) against the euro, which means higher prices for exports and declining sales for many companies.
So we thought it would be useful not only to consider the past 12 months' free cash flow, but to look ahead using the consensus free-cash-flow estimates for 2015, among analysts polled by FactSet. This data isn't available for every S&P 500 stock. But a list confined to companies for which the data is available indicates continued headroom to raise dividends is certainly a more conservative one.
Here are the highest-yielding S&P 500 stocks, with headroom to raise dividends based on the past 12 months and consensus 2015 free-cash-flow estimates:

Company Ticker Free cash flow yield - past 12 months Free cash flow yield - 2015 estimate Dividend yield Headroom - past 12 months Headroom - 2015 estimate
Windstream Holdings PLC 13.91% 12.36% 11.19% 2.72% 1.17%
Mattel Inc. 9.48% 5.95% 5.50% 3.98% 0.45%
CenturyLink Inc. 9.57% 11.50% 5.47% 4.09% 6.02%
AT&T Inc. 5.48% 7.38% 5.42% 0.06% 1.96%
Frontier Communications Corp. Class B 8.57% 10.56% 4.77% 3.79% 5.79%
Verizon Communications Inc. 6.56% 8.19% 4.46% 2.10% 3.73%
Plum Creek Timber Co. 4.77% 4.92% 4.02% 0.75% 0.90%
GameStop Corp. Class A 5.63% 11.41% 3.53% 2.09% 7.87%
Seagate Technology Inc. 11.66% 10.56% 3.49% 8.17% 7.07%
Garmin Ltd. 4.26% 5.52% 3.43% 0.83% 2.08%
Source: FactSet

[Vegas69]

I own two oil stocks. Both went from black to red when oil dropped. One has now increased by $14 a share from it's recent low while the other has only come back around $3. I have bought more oil stocks in the last few months.

[captainofiron]

I am looking to buy more of it. KMI and COP. Not much more but maybe another $1000 of each. It's what I am comfortable with when having some discomfort with the market.

I read this today as well and was curious what people think about these types of dividend yield suggestions posted by Marketwatch.

By Philip van Doorn, MarketWatch
Looking at free cash flow is very important when picking a dividend stock
If you are an investor relying on stock dividends for income, you want to be sure that the company will be able to continue making the payments, and maybe even raise the dividend at some point.
Back in December, we published a list of dividend stocks for solid income while U.S. interest rates remain low. Since then, long-term interest rates have stayed low, with 10-year U.S. Treasury notes yielding 2.14% on Tuesday, which was actually a pretty significant increase from 2.05% on Friday, as investors looked ahead to next week's policy speech by Federal Reserve Chairwoman Janet Yellen.
The previous list included S&P 500 (SPX) companies with dividend yields of more than 3.5%, that had sufficient free cash flow over the previous 12 months to make it appear that the companies were well positioned to raise their dividends.
Free cash flow is a company's remaining cash flow after capital expenditures. We can calculate a "cash flow yield" by dividing cash flow per share, for a particular 12-month period, by the share price. If the resulting figure is higher than the dividend, the company has "headroom" to increase the dividend.
This approach was suggested by Bill McMahon, the chief investment officer of Thomas Partners, back in May.
So what has changed since then we published our previous list in December? For one thing, 334 S&P 500 companies have had their 2015 earnings estimates cut since the beginning of the year. Two big reasons for this are the decline in oil prices and the rising value of the dollar (EURUSD) against the euro, which means higher prices for exports and declining sales for many companies.
So we thought it would be useful not only to consider the past 12 months' free cash flow, but to look ahead using the consensus free-cash-flow estimates for 2015, among analysts polled by FactSet. This data isn't available for every S&P 500 stock. But a list confined to companies for which the data is available indicates continued headroom to raise dividends is certainly a more conservative one.
Here are the highest-yielding S&P 500 stocks, with headroom to raise dividends based on the past 12 months and consensus 2015 free-cash-flow estimates:

Company Ticker Free cash flow yield - past 12 months Free cash flow yield - 2015 estimate Dividend yield Headroom - past 12 months Headroom - 2015 estimate
Windstream Holdings PLC 13.91% 12.36% 11.19% 2.72% 1.17%
Mattel Inc. 9.48% 5.95% 5.50% 3.98% 0.45%
CenturyLink Inc. 9.57% 11.50% 5.47% 4.09% 6.02%
AT&T Inc. 5.48% 7.38% 5.42% 0.06% 1.96%
Frontier Communications Corp. Class B 8.57% 10.56% 4.77% 3.79% 5.79%
Verizon Communications Inc. 6.56% 8.19% 4.46% 2.10% 3.73%
Plum Creek Timber Co. 4.77% 4.92% 4.02% 0.75% 0.90%
GameStop Corp. Class A 5.63% 11.41% 3.53% 2.09% 7.87%
Seagate Technology Inc. 11.66% 10.56% 3.49% 8.17% 7.07%
Garmin Ltd. 4.26% 5.52% 3.43% 0.83% 2.08%
Source: FactSet

I have COP as well, only because my dad works for Halliburton on their (Conoco's) shale plays, so I have decent visibility on how things are doing.

yea its alot lower than where I initially bought it, but they arent cutting back nearly as bad as some of the other oil companies in the area.

[GregWeld]

Wow --- several good questions in here!! I'll respond later today or tomorrow. Since I've been gone for a week I've got several things on my plate that need to be finished before I head off to USCA T-hill for another week...

[GregWeld]

Still reading as well Greg. Your goading is what got me hooked in the first place and now the repetitive goading is pushing me to do more. Keep it up man. It's much appreciated and educational. Just to read how you look at the stock beyond the charts is beneficial not only in stocks/market but in everyday business dealings.

On another note, I have been wondering what tools are beneficial on the Schwab site? They have all kinds of links on the right hand side of the research page which I just get lost in...corner stock of the day, highlights, pick lists, Morningstar, etc. Most of this seems to be "noise" to me. I have delved into some of it but not sure if you have any suggestions on how to use these links or continue to focus more on the charts, screeners, and comparison tabs.

I have become "comfortable" navigating these tabs but was curious if there was any additional tools or ways to use them you would recommend to us as we look at the research page.


I only use Schwab for looking at charts of companies I'm interested in - and for comparing choices by overlaying one or two companies to see if they march in lockstep or ??

And I use them for the TOTAL RETURN which they show if you know where to find it. Total Return over a period of time tells me pretty much everything I need to know... So I use the chart to make sure it's low on the left side and climbing to the right side -- and the Total Return numbers to help me see and compare one choice over another. Other sites have these tools - but I know where they are and can navigate quickly on Schwab.

Since moving to Sun Valley -- I've only kept a very small amount in Schwab since they have no local office here.... and I use their site over other sites because I like their tools.

I have used their "finders" tools in the past - but usually just for research. I don't - NEVER - blindly buy some company just because I read about them or found them on the top of some list. That's the kiss of death! If you don't KNOW the company and are familiar with it - stay away! I don't care what the number say. The reason for that is you'll be what's called a weak hand holder. The first time the stock hiccups -- you'll tend to sell.... and that's when you lose money. This is one of my top recommendations about investing. You can't buy and hold and add money to your holdings if you're not familiar with them and feel totally comfortable long term.


So if I want to invest -- I look for a couple categories -- pull up a name I'm most familiar with -- then alway scroll down (using Google Finance) to see what other names are considered to be in the same category -- and I start poking around and comparing the 2 or 3 I know - to see if I can find a better "version" of what I started with.... it's how I learn -- and expand my horizon... but even if I find one that has better numbers - if I'm not familiar with them I don't buy. I'll buy the one with slightly lower numbers used for reference and stick with it.

It's like this oil slump we're in now.... everyone got hammered and suddenly. You'll lose money only when you freak out and sell because of being a "weak hand" --- but if you're comfortable with the name - you might tend to stick some more money in when it's DOWN ---- and reap the reward of the rebound.

[GregWeld]

Hows everyone doing on oil?

I must say I was tempted to sell back when I was under ~25%

But I didnt and instead threw a grand at it from my former companies 401k

so far looks like it helped, with the lower cost basis as of this morning I am "only" -1.6%

Just wanted to say thanks to Greg and the other financial wizards posting on here, if not for you guys, I would have sold it when the pressure was on



So this is exactly what I just wrote about when I responded to Jay's question above. You AVERAGED DOWN your cost -- getting them closer to where the stock is currently trading. This way it only has to go up a little to get your loss smaller or maybe even turn it into a gain. THIS DOES NOT ALWAYS WORK THIS WAY. Trust me -- I've lost plenty of times trying to catch the falling knife!! But you have to TRY -- and you have to have CONVICTION about the name and be willing to take some risk like this once in awhile. It's HOW YOU FEEL about the names your investing in - that keeps you from folding like a blubbering little school girl when things aren't so rosy! That's when you make some money!! Is it HARD to do? Oh hell yeah. Will you lose sometimes? Oh hell yeah! But we have to look at our pile of money as just that -- the pile -- if the pile is growing overall --- then we're okay. So if you're winning on 6 out of 10 investments -- and even on 2 - and losing on 2 - it's okay! You'll rarely if ever have all 10 firing all at the same time.

[GregWeld]

So this is exactly what I just wrote about when I responded to Jay's question above. You AVERAGED DOWN your cost -- getting them closer to where the stock is currently trading. This way it only has to go up a little to get your loss smaller or maybe even turn it into a gain. THIS DOES NOT ALWAYS WORK THIS WAY. Trust me -- I've lost plenty of times trying to catch the falling knife!! But you have to TRY -- and you have to have CONVICTION about the name and be willing to take some risk like this once in awhile. It's HOW YOU FEEL about the names your investing in - that keeps you from folding like a blubbering little school girl when things aren't so rosy! That's when you make some money!! Is it HARD to do? Oh hell yeah. Will you lose sometimes? Oh hell yeah! But we have to look at our pile of money as just that -- the pile -- if the pile is growing overall --- then we're okay. So if you're winning on 6 out of 10 investments -- and even on 2 - and losing on 2 - it's okay! You'll rarely if ever have all 10 firing all at the same time.



I'm going to have to add to this ----


ALWAYS go back and redouble your research before investing more!! Go back and really make certain this is a company that's "okay" and you're comfortable holding. Make sure there's not news you missed about the companies outlook etc.

In other words --- DON'T JUST GAMBLE. Don't just make a bet that you'll buy more on the dips and it will reward you!! You'll feel way better about investing if you've atleast done your homework and think that you have a really good understanding of where you're money is going to work. If you still feel it's a good investment - then go ahead and add to your holdings while it's down.

[chichirone]

Thanks Greg for the guidance on research tools and how to best use the resources to educate oneself.

How do you feel about holding 2 of the top 3 or 4 companies in a segment when the indicators show positive growth charts (low on the left and higher on the right) for the segment?

For example: does it make sense to hold both Verizon and AT&T as they both are fighting for the same/similar marketshare, have slow to moderate growth outlook and an above average dividend yield around 4.5-5.5%? It seems they trade punches but continue to expand the overall market, re-invest in infrastructure (bought, built or rented) and pay a decent dividend. Definitely a longer term holding but not sure if its better to select one or carry both, since competitively, they seem to make one another stronger. Thoughts?

[GregWeld]

Thanks Greg for the guidance on research tools and how to best use the resources to educate oneself.

How do you feel about holding 2 of the top 3 or 4 companies in a segment when the indicators show positive growth charts (low on the left and higher on the right) for the segment?

For example: does it make sense to hold both Verizon and AT&T as they both are fighting for the same/similar marketshare, have slow to moderate growth outlook and an above average dividend yield around 4.5-5.5%? It seems they trade punches but continue to expand the overall market, re-invest in infrastructure (bought, built or rented) and pay a decent dividend. Definitely a longer term holding but not sure if its better to select one or carry both, since competitively, they seem to make one another stronger. Thoughts?



Great question Jay ---- and it's one that has an "it all depends" answer. Depends on how well you think you are diversified overall... accounting for your TOTAL investment portfolio.

I used to hold both... mostly because of the dividend payout and safety I think they BOTH offer. But my personal investments are one to two million per name -- and at one time I had about 1.7 million in these two.... and realized that I wasn't really "gaining" anything. So I cut Verizon (VS) simply because I'm a long term AT&T customer (the go with what you know).

To me -- it's like owning Coke and Pepsi.... or Altria and Lorillard.... I just think you're better off owning the one you like the best --- and then pick some other area to cover.

[Rick D]

So I've got my old 401k just sitting from my last job. I'm working again and thought it's time to do something with it?? But what or where do I start?? :hello:

P.S. The new job does not offer a 401K at this point, well not one that makes any sense to get into anyway. So if I want to move my old 401K and keep adding to it what's the best way to go about it??

Signed Lost and confused!!! :lol:

[GregWeld]

So I've got my old 401k just sitting from my last job. I'm working again and thought it's time to do something with it?? But what or where do I start?? :hello:

P.S. The new job does not offer a 401K at this point, well not one that makes any sense to get into anyway. So if I want to move my old 401K and keep adding to it what's the best way to go about it??

Signed Lost and confused!!! :lol:



Super easy!!! Go to the brokerage of your choice -- and ask them to do a ROLL OVER for you.... Bring the info (Statement) from the "old" so you have account numbers and all of that info... and they'll help you with filling out the paperwork and they'll do all the rest!

Some times they can "bring" the account over "in kind" --- just transferring all the holdings.... Some times they can't bring over the holdings and then they're all sold and converted to cash -- and they bring over the cash. Either way there's no taxes involved so it's not a big deal. Then you can start fresh! Buying whatever you want to in a "self directed" retirement plan.

[Rick D]

Super easy!!! Go to the brokerage of your choice -- and ask them to do a ROLL OVER for you.... Bring the info (Statement) from the "old" so you have account numbers and all of that info... and they'll help you with filling out the paperwork and they'll do all the rest!

Some times they can "bring" the account over "in kind" --- just transferring all the holdings.... Some times they can't bring over the holdings and then they're all sold and converted to cash -- and they bring over the cash. Either way there's no taxes involved so it's not a big deal. Then you can start fresh! Buying whatever you want to in a "self directed" retirement plan.

Greg is it better to go to the brick and mortar or can it be done online?? Does it really matter which brokerage house??

[WSSix]

I called Fidelity on the phone and spoke with them about this when I started my new job. However, my old and new company both used Fidelity. I am happy with them so there was no reason for me to shop around. It's a fairly straight forward thing to do so I would imagine speaking on the phone would work fine so long as you know who you want to use for this service. Biggest thing to keep in mind is that at no point should you allow the money from the account to pass into your hands. It must go between institutions or you'll face taxes.

I would try to roll it into a Roth IRA if possible. Not sure if it is considering the different tax structures of the accounts. I just happen to like the tax structure of the Roth better than the 401K. You're limited to $5500 a year contribution though and you have income limits you must be below to qualify. So it might not work as well for you.

[toy71camaro]

I would discuss the Roll Over options with your Accountant.

You CAN roll it over to a Self Directed retirement account. Generally speaking, a Rollover IRA. With no penalties, tax changes, etc. AS LONG AS THEY do the roll over.

You CAN roll it over to a ROTH IRA, but your hit with taxes due to the fact your retirement account was a PRE-TAX account, and the ROTH is a POST-TAX account. Depending on the penalty, it "might" be worth doing this, but you'd really have to crunch the numbers. The ROTH IRA you will NOT pay taxes on the money when you pull it out for retirement. Since you paid taxes on it when you put it IN the account.

So, need to really crunch numbers to see what's better. Simpler option would just be to roll it over to an IRA and be done with it. Buy your stocks, and pay your taxes at the time you pull it out when you retire.

GOING FORWARD, I would suggest opening/using a ROTH IRA. Max that puppy out each year. At least until the company offers a decent 401k option WITH a company match (= free money). Put enough in the company 401k to get the FREE match, then everything else goes back into the ROTH.

Hope that helps. You should also be able to do this all over the phone/online with the brokerage of your choice. I use Sharebuilder, but its because I'm a costco executive member and they give a discount on fee's and sometimes a bonus when you open your account. I use Schwab too, but only for research tools.

[GregWeld]

Greg is it better to go to the brick and mortar or can it be done online?? Does it really matter which brokerage house??



I think the brokerage choice is more about CONVIENENCE... as long as we're talking "discount" brokerages. Fidelity / Schwab etc.

I'm positive you can not do the transfer via "on line" as you'd need to sign documents etc.

RE: The ROTH vs traditional rollover (basically nothing more than a fancy word for transferring control).... BE VERY CAREFUL HERE!! The US Government wants you to screw this up so they can stick their hand in your pocket!! TALK TO A PROFESSIONAL before doing anything! Thus going to see your new discount brokerage first hand and asking some important questions.

Their are limits to the ROTH --- Tax consequences -- Income limitations - and on and on.... The ROTH account is by far the best but this is a math issue when transferring one type of account into another type of account. The brokerage can help you think thru this plan.

[GregWeld]

If you've read this thread --- then you've heard me complain about hidden fees -- etc --- and particularly --- in company retirement plans... and MUTUAL FUNDS.... and how these can affect your account dramatically over time.

I'll give Obama credit for finally trying to do something about it (I won't give him credit for much else). It's just ABOUT TIME someone quits ripping people off!



President Obama will order the Labor Department on Monday to begin developing new rules for financial managers who handle retirement accounts for working Americans.

The goal is to end "hidden fees that hurt consumers and back-door payments that help Wall Street brokers," said a statement from White House senior adviser Brian Deese.

[JKnight]

President Obama will order the Labor Department on Monday to begin developing new rules for financial managers who handle retirement accounts for working Americans.

The goal is to end "hidden fees that hurt consumers and back-door payments that help Wall Street brokers," said a statement from White House senior adviser Brian Deese.

Well, that's all well and good, but we kinda already did that 2+ years ago. See DOL Rule 404(a)5 (for participants) and 408(b)2 (for plan sponsors). The problem is, the DOL requirements were so broad that the resultant fee disclosures coming from these "financial managers" range from being so brief they don't actually tell you anything to so complex that only those with finance and legal background can draw any valuable conclusions.

So...I say lets fix what's already in place by having the DOL work with those who have implemented these existing regulations rather than layer yet another new regulation onto the retirement industry. Which, by the way, will inevitably increase costs to the participant...exactly what he's trying to avoid.

Edit: The regs I listed above were about disclosure of fees. If they're going to make certain payments illegal, I think that's trying to hit a moving target. People will find new ways to classify a fee or payment or make other arrangements so that it fits within the law. I say lets improve the disclosures and then dare the over-charging entities to try to slip one by their client. But, it's a two-way street. We, as investors and/or company owners, have to take responsibility for this stuff, learn about the industry/fees/disclosures, and be accountable to our employees.

[GregWeld]

IMPORTANT WORDS you want to avoid....


"Your Government is here to help you".









Well, that's all well and good, but we kinda already did that 2+ years ago. See DOL Rule 404(a)5 (for participants) and 408(b)2 (for plan sponsors). The problem is, the DOL requirements were so broad that the resultant fee disclosures coming from these "financial managers" range from being so brief they don't actually tell you anything to so complex that only those with finance and legal background can draw any valuable conclusions.

So...I say lets fix what's already in place by having the DOL work with those who have implemented these existing regulations rather than layer yet another new regulation onto the retirement industry. Which, by the way, will inevitably increase costs to the participant...exactly what he's trying to avoid.

Edit: The regs I listed above were about disclosure of fees. If they're going to make certain payments illegal, I think that's trying to hit a moving target. People will find new ways to classify a fee or payment or make other arrangements so that it fits within the law. I say lets improve the disclosures and then dare the over-charging entities to try to slip one by their client. But, it's a two-way street. We, as investors and/or company owners, have to take responsibility for this stuff, learn about the industry/fees/disclosures, and be accountable to our employees.

[JKnight]

IMPORTANT WORDS you want to avoid....


"Your Government is here to help you".

No doubt. I could have probably left out my diatribe and just said the part about us being accountable for these things. But, I also know it's a utopian view to expect that everyone in the general public will open their brain and learn about this stuff.

You've done an excellent job of opening people's minds and spreading the knowledge of investing Greg, well done sir.

[glassman]

And coming from an employer's perspective (me and the company i own/run), this pension/401k is simple yet complicated. I keep telling my employees, ya gotta invest/watch/manage your money as well, DONT count on just your pension. Myself included. Most people will have SSI, and maybe a pension. Our investing goal for graduated incomes should be Pension, Roth's, SSI, and our personal investments (what i'm doing here and with real estate, in other words, income)

If you make over "X" in retirement, do you still qualify for SSI? my understanding is if you paid in, its "owed" to you....

[GregWeld]

So -- let's use a recent well known IPO (Initial Public Offering) i.e., GOPRO (GPRO) to learn from and continue to learn from what happens when a coming comes under the critical eye of WALL STREET - via going from a private company to a publicly traded one.

To set the tone -- let me say I have no dog in this fight -- and I AM an owner of at least 3 of these cameras.... and I believe them to be THE brand name in the business.


Today I see it's trading in the 43 to 44 range.... That would make it DOWN 30% since January 1st.... That's a real OUCH if you purchased on it's way up to, or near the top... You've lost even more -- DOWN 52% from the peak trades...

I've said in the past that many times it pays to WAIT and see where these IPO's are going to go --- waiting one or two quarters.... a quarter is 3 months -- so we're not talking about waiting a life time. Sometimes waiting costs you the opportunity to get in early -- so you leave some of the massive gains behind -- but sometimes it's better to wait and NOT lose money! And then have to wait and wait and wait for it to come back to break even!

Now -- HERE'S THE INVESTING 102 part of this....


When a company is hyped up - as was GPRO - and the stock shoots up... there's nothing wrong with that!! But what we don't know is how the company is going to do going forward... the management is "new" perhaps... we know the company is probably relatively new... maybe management needs to learn how to manage "wall street" and it's expectations (I'm thinking back to the big hiccup in Netflix when they made some unexpected announcements)..... Sometimes there's a big learning curve... Sometimes the HYPE just plain overshoots the actual execution and the stock has to adjust back down to the real facts.... SOMETIMES the expectations are exceeded and then some and it's off to the races! But here's the problem with that.... WE DON'T KNOW WHICH WAY THIS IS GOING TO GO. We have no history! We're just Betting with the herd!! Great when it works - not so great when it doesn't.

Now -------- I just found this pretty important info on GoPro....




Questions related to inventory revealed GoPro might have over-shipped end demand in the busy holiday season last quarter. 73% of respondents revealed there had been no stock-outs for GoPro products in the recent past. Bidness Etc believes the lower stock-outs are a function of slowing demand (due to seasonality) and higher inventory left over from the last quarter.

If GoPro did end up over-shipping end demand last quarter, it would explain why the company managed to post brilliant numbers for unit shipments last quarter. However, it would also mean that unit shipments this quarter may come in lower-than-estimated, leading to a possible revenue miss.

However, the problem seems to be at a manageable level. If there had been a build-up of GoPro inventory, retailers would have tried to clear it out by giving discounts. Our survey revealed that only 13% of the sampled locations are currently giving discounts on GoPro products. We believe that retailers are in no hurry to get rid of the old inventory because there is a lot of time until GoPro rolls out the new versions of its Hero series. Moreover, the strong brand presence of GoPro almost insures the retailers against write-downs, due to low demand.


When those two things happen (missing sale or guidance numbers) --- you wake up one morning and you have gotten your ass handed to you! Boom! Huge downdraft!!

Many times this will lead to what's called a "broken" stock. Where fundamentally there is really nothing that wrong with the stock --- but the investors that lost huge money (usually the "hot money boys") drop the stock and move on to something else. We need BUYERS to move the price up -- not sellers! It's usually best to just put a name like that on the "watch it" list... and see what happens over another quarter or two. Sometimes they spring right back - and other times they just continue to drift lower. Better to wait than to lose.

Some times the market is now going to go into the P/E ratio valuation... meaning that everyone is waiting to see if they can be profitable --- or if they can really crank up the sales numbers on a growth path which hopefully then they'll "grow into" the often lofty P/E (Price to EARNINGS ratio).

What we're really wanting to see is big growth - or stellar earnings - or BOTH... in order to assign a "value". It's hard to do this with most IPO's. They're generally still in their infancy as companies. If the P/E gets way out ahead of these numbers -- then the price has to shrink to bring it in to line with reality. I think this is the case with GoPro. The company has killer product... has the name... basically owns the market it's in ------ BUT WE DON'T KNOW WHAT THE SIZE OF THAT MARKET IS YET. Is the market billions or simply hundreds of millions going forward... WHO KNOWS?!

This has been a great IPO to be sure! It's up some 40% if you were able to buy it at the IPO price.... but you've not had a happy ride if you bought it almost anywhere else.

Would I buy this stock? Not yet... I want to see what the real sales/growth rate is going to be. Did everyone rush out and buy one for Xmas -- but hasn't used it - or doesn't feel they need another.... Or did they buy one and can't wait to buy one for everyone in their family? We'll find out...

[gearheads78]

So far I have been lucky on my COP stock. My additional buy on it ended up being .08 cents from the bottom of the recent down turn. My other two I was able to average down too.

Now my 2 3D stocks have been killed. One is so bad I'm just going to just hang on and ride it to the ground or back up.

Over all my dividend stocks are up 9-23% after only one year not including the dividends. My 4 down or very little gained stocks are (play money) stocks I was hoping would make big gains and sell to invest in divident players. Its been a good learning experience. Had I invested that $4000 spead among my dividend players a year ago it would be worth $5000 instead of $2800 that it is today. :rolleyes:

[GregWeld]

...... and that's why I preach what I do... it's SO EASY to lose money.







So far I have been lucky on my COP stock. My additional buy on it ended up being .08 cents from the bottom of the recent down turn. My other two I was able to average down too.

Now my 2 3D stocks have been killed. One is so bad I'm just going to just hang on and ride it to the ground or back up.

Over all my dividend stocks are up 9-23% after only one year not including the dividends. My 4 down or very little gained stocks are (play money) stocks I was hoping would make big gains and sell to invest in divident players. Its been a good learning experience. Had I invested that $4000 spead among my dividend players a year ago it would be worth $5000 instead of $2800 that it is today. :rolleyes:

[captainofiron]

So far I have been lucky on my COP stock. My additional buy on it ended up being .08 cents from the bottom of the recent down turn. My other two I was able to average down too.

Now my 2 3D stocks have been killed. One is so bad I'm just going to just hang on and ride it to the ground or back up.

Over all my dividend stocks are up 9-23% after only one year not including the dividends. My 4 down or very little gained stocks are (play money) stocks I was hoping would make big gains and sell to invest in divident players. Its been a good learning experience. Had I invested that $4000 spead among my dividend players a year ago it would be worth $5000 instead of $2800 that it is today. :rolleyes:

right now Im around -6% in COP,

I keep it only because I have visibility on it with my Dad working on the Eagle Ford.

they are letting go of people, BUT its still not bad, they still have the man-camps going and the cooks out there serving steak and lobster.

Once all that goes, then maybe its time to panic.

I think COP is just trying to ride out the price drops

[gearheads78]

right now Im around -6% in COP,

I keep it only because I have visibility on it with my Dad working on the Eagle Ford.

they are letting go of people, BUT its still not bad, they still have the man-camps going and the cooks out there serving steak and lobster.

Once all that goes, then maybe its time to panic.

I think COP is just trying to ride out the price drops

I'm on a 20+ year time horrizon. COP could drop 50% overnight and I would not loose any sleep at this stage of the game.

[Sieg]

Here's what I thought was a good and informative read supporting the primary objectives of this thread: http://seekingalpha.com/article/2956736-you-can-absolutely-positively-retire-early-maybe?ifp=0

On a side note, at 56 years old and 6 to 10 years away from cost effectively accessing retirement funds it's somewhat frustrating knowing my body is not going to perform at a level that allows me to do what I really enjoy doing at a level that makes it rewarding.......strength and reaction times are all starting to atrophy to a degree. Thus it's frustrating knowing I won't genuinely enjoy the activities at levels I consider respectable. Senior Tour Golf would be one simple example, the qualifying age is 50 and you don't see many competitive seasoned players over the age of 60......their second 'prime time' before they start sunseting is between 50-56 years old. Not 62.5-66 or maybe 70+ if the government continues leveraging.

Moral of the story, start young, resist superficial spending, invest aggressively, and set your retirement target earlier than 62.5 or 66 years. If you can pull it off you'll improve the quality of your retirement. :thumbsup:

[SSLance]

Sieg, I'm 48...and this is a common discussion with my wife (shes 5 years senior of me) all of the time. Back in my 20s, I used to say I'd like to retire at age 45. At that time, I didn't have a clue what it would take, I was young, dumb and full of...well I was enthusiastic...

Over the years I've had times where I thought that was absolutely possible and had times where I was afraid that I'd lose everything and never be able to retire like I want. Not having any children has sped our ability to retire early up no doubt, along with good earnings early on, saving responsibly and smart spending choices along the way.

Having lost some family and friends unexpectedly early in recent years, retiring early is on my horizon once again...I'm in the I want to enjoy it now and would rather be broke when I'm 70 than scrimp through the next 20 years saving for when I'm 70 and too old to enjoy the fruits of my labor mode. The hard part is two fold, wondering if I really can afford to enjoy it now and the price I'll have to pay as the majority of our retirement funds are in tax deferred accounts which will be costly to access for the next 20 years.

The graph in the article you linked reminds me of the graph I looked at when making my first real investment when I was 21 years old, a cash value life insurance policy. To this day, still the best investment I've ever made. My advisor call it a reverse IRA and we used the $2000 a year figure as well as that was the IRA deduction limit back then. Good part of that investment for me is, I can borrow against that cash value sitting there long before I turn 70 fee free. That's my ace in the hole towards early retirement.

START EARLY!!!

[captainofiron]

I'm on a 20+ year time horrizon. COP could drop 50% overnight and I would not loose any sleep at this stage of the game.

hahaha

NICE!


As to the retiring early, thats a really great article, and hope I am making strides toward that goal

[gearheads78]

Sieg, I'm 48...and this is a common discussion with my wife (shes 5 years senior of me) all of the time. Back in my 20s, I used to say I'd like to retire at age 45. At that time, I didn't have a clue what it would take, I was young, dumb and full of...well I was enthusiastic...

.

START EARLY!!!

I'm 42 so a little behind you but not by much. I just wish I had followed through with my plans to retire early I had when I was in my mid 20's and started learning about retirement. :shakehead:

[Vegas69]

It's all about the journey, fellas. Waiting to live until you can retire is not a great philosophy, what if you don't make it? The opposite isn't any better. You end up living off social security and not dictating your own life when your age exceeds your money.

A life of balance is preferable. My goal is to get to a point where I can work for the passion and be able to give $ graciously. Imagine getting to a point where you can give away 25%, 50% or more of your income.

[chichirone]

These are pretty good.

Buffett’s 2014 letter: Corporate cancers, preachers of pessimism and lessons of history

NEW YORK (MarketWatch) — He’s at it again.

In his annual letter to Berkshire Hathaway BRK.A, -0.48% BRK.B, -0.63% shareholders, Chairman and Chief Executive Warren Buffett continues his tradition of delivering all sorts of cleverly worded musings on the markets, on the state of American business and on his own quirks and peculiarities (and how they affect his relationship with longtime Berkshire vice-chair, Charlie Munger.)

If you have the time, it’s always worth reading the whole epistle. If not, we’ve settled on 13 of the choicest quotes.

“At Berkshire, we much prefer owning a non-controlling but substantial portion of a wonderful company to owning 100% of a so-so business. It’s better to have a partial interest in the Hope Diamond than to own all of a rhinestone. “

“My successor will need one other particular strength: the ability to fight off the ABCs of business decay, which are arrogance, bureaucracy and complacency. When these corporate cancers metastasize, even the strongest of companies can falter.”

“In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.”

“Who has ever benefited during the past 238 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. In my lifetime alone, real per-capita U.S. output has sextupled. My parents could not have dreamed in 1930 of the world their son would see. Though the preachers of pessimism prattle endlessly about America’s problems, I’ve never seen one who wishes to emigrate (though I can think of a few for whom I would happily buy a one-way ticket).”

“The unconventional, but inescapable, conclusion to be drawn from the past fifty years is that it has been far safer to invest in a diversified collection of American businesses than to invest in securities — Treasuries, for example — whose values have been tied to American currency. That was also true in the preceding half-century, a period including the Great Depression and two world wars. Investors should heed this history. To one degree or another it is almost certain to be repeated during the next century.”

“Market forecasters will fill your ear but will never fill your wallet.”

“If you’ve attended our annual meetings, you know Charlie has a wide-ranging brilliance, a prodigious memory, and some firm opinions. I’m not exactly wishy-washy myself, and we sometimes don’t agree. In 56 years, however, we’ve never had an argument. When we differ, Charlie usually ends the conversation by saying: ‘Warren, think it over and you’ll agree with me because you’re smart and I’m right.’”

“We will never play financial Russian roulette with the funds you’ve entrusted to us, even if the metaphorical gun has 100 chambers and only one bullet. In our view, it is madness to risk losing what you need in pursuing what you simply desire.”

“Business models based on the serial issuances of overpriced shares — just like chain-letter models — most assuredly redistribute wealth, but in no way create it. Both phenomena, nevertheless, periodically blossom in our country — they are every promoter’s dream — though often they appear in a carefully-crafted disguise. The ending is always the same: Money flows from the gullible to the fraudster. And with stocks, unlike chain letters, the sums hijacked can be staggering.”

“At a healthy business, cash is sometimes thought of as something to be minimized — as an unproductive asset that acts as a drag on such markers as return on equity. Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.”

“(We) frequently get approached about acquisitions that don’t come close to meeting our tests: We’ve found that if you advertise an interest in buying collies, a lot of people will call hoping to sell you their cocker spaniels.”

“Berkshire’s yearend employees — including those at Heinz — totaled a record 340,499, up 9,754 from last year. The increase, I am proud to say, included no gain at headquarters (where 25 people work). No sense going crazy.”

“Though practically all days are relatively uneventful, tomorrow is always uncertain. (I felt no special apprehension on December 6, 1941 or September 10, 2001.)”

[GregWeld]

These are pretty good.

Buffett’s 2014 letter: Corporate cancers, preachers of pessimism and lessons of history

NEW YORK (MarketWatch) — He’s at it again.

In his annual letter to Berkshire Hathaway BRK.A, -0.48% BRK.B, -0.63% shareholders, Chairman and Chief Executive Warren Buffett continues his tradition of delivering all sorts of cleverly worded musings on the markets, on the state of American business and on his own quirks and peculiarities (and how they affect his relationship with longtime Berkshire vice-chair, Charlie Munger.)

If you have the time, it’s always worth reading the whole epistle. If not, we’ve settled on 13 of the choicest quotes.

“At Berkshire, we much prefer owning a non-controlling but substantial portion of a wonderful company to owning 100% of a so-so business. It’s better to have a partial interest in the Hope Diamond than to own all of a rhinestone. “

“My successor will need one other particular strength: the ability to fight off the ABCs of business decay, which are arrogance, bureaucracy and complacency. When these corporate cancers metastasize, even the strongest of companies can falter.”

“In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.”

“Who has ever benefited during the past 238 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. In my lifetime alone, real per-capita U.S. output has sextupled. My parents could not have dreamed in 1930 of the world their son would see. Though the preachers of pessimism prattle endlessly about America’s problems, I’ve never seen one who wishes to emigrate (though I can think of a few for whom I would happily buy a one-way ticket).”

“The unconventional, but inescapable, conclusion to be drawn from the past fifty years is that it has been far safer to invest in a diversified collection of American businesses than to invest in securities — Treasuries, for example — whose values have been tied to American currency. That was also true in the preceding half-century, a period including the Great Depression and two world wars. Investors should heed this history. To one degree or another it is almost certain to be repeated during the next century.”

“Market forecasters will fill your ear but will never fill your wallet.”

“If you’ve attended our annual meetings, you know Charlie has a wide-ranging brilliance, a prodigious memory, and some firm opinions. I’m not exactly wishy-washy myself, and we sometimes don’t agree. In 56 years, however, we’ve never had an argument. When we differ, Charlie usually ends the conversation by saying: ‘Warren, think it over and you’ll agree with me because you’re smart and I’m right.’”

“We will never play financial Russian roulette with the funds you’ve entrusted to us, even if the metaphorical gun has 100 chambers and only one bullet. In our view, it is madness to risk losing what you need in pursuing what you simply desire.”

“Business models based on the serial issuances of overpriced shares — just like chain-letter models — most assuredly redistribute wealth, but in no way create it. Both phenomena, nevertheless, periodically blossom in our country — they are every promoter’s dream — though often they appear in a carefully-crafted disguise. The ending is always the same: Money flows from the gullible to the fraudster. And with stocks, unlike chain letters, the sums hijacked can be staggering.”

“At a healthy business, cash is sometimes thought of as something to be minimized — as an unproductive asset that acts as a drag on such markers as return on equity. Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.”

“(We) frequently get approached about acquisitions that don’t come close to meeting our tests: We’ve found that if you advertise an interest in buying collies, a lot of people will call hoping to sell you their cocker spaniels.”

“Berkshire’s yearend employees — including those at Heinz — totaled a record 340,499, up 9,754 from last year. The increase, I am proud to say, included no gain at headquarters (where 25 people work). No sense going crazy.”

“Though practically all days are relatively uneventful, tomorrow is always uncertain. (I felt no special apprehension on December 6, 1941 or September 10, 2001.)”





The man is brilliant. I have a friend that is on the Berkshire board - she is also brilliant. Smart people surround themselves with other really smart people.

[Rod P]

The man is brilliant. I have a friend that is on the Berkshire board - she is also brilliant. Smart people surround themselves with other really smart people.

there's an old saying I always remember told to me about surrounding yourself with others.....

If your the smartest guy in the room.....then your in the wrong room

[captainofiron]

what do you guys think about investing in the players in the "Cable wars"?

I was reading an article about cutting the cable and investing.

They were talking about how some invest in the big cable companies (comcast, att etc)

and some invest in the new comers who are looking to disrupt the cable industry (google with fiber, netflix, hulu, amazon etc)

But they were saying to instead invest in the content providers, since no matter who wins the battle to get the consumer the content, the content providers will still be there making money.

I was looking at FOX, AMC, VIA and DISCK

I watch a ton of programming on the channels under the Discovery umbrella and they look decent on the chart.

Thoughts?

[WSSix]

No idea, Captain. Though, I must say investing in the content provider sounds like the safer option.

With that said, anyone else having fun watching MCD?

[68Cuda]

Greg. The last 5 years have been nice... but I have to admit, since about the beginning of the year I have been feeling a bit nervous, kind of bearish so to speak. I am having trouble comprehending the market... last time I had this feeling was late 1999. I'll have to admit, this does not feel bad in quite the same way, just seems a bit high.

Is this just a natural reaction to the market hitting new highs?

What say you?

[GregWeld]

Greg. The last 5 years have been nice... but I have to admit, since about the beginning of the year I have been feeling a bit nervous, kind of bearish so to speak. I am having trouble comprehending the market... last time I had this feeling was late 1999. I'll have to admit, this does not feel bad in quite the same way, just seems a bit high.

Is this just a natural reaction to the market hitting new highs?

What say you?



Not being mean here -- please understand the response.


Go to any company that has a chart longer than say 20 years.... put the chart in ALL mode. If the chart goes back to about 1950 --- how many "NEW HIGHS" were put in as we climbed from a DOW that was about 300 back then.

The DOW was 130.57 on January 1st 1941....

The reason that I have urged people to buy DIVIDEND paying stocks is because we can not rely on day to day price increases to fund our retirement savings or our retirement income. That takes cash flow. If the stocks you own are paying dividends and they are being re-invested - then if the market takes a dip - you will be buying MORE shares - which is a good thing! The whole point of this long winded thread is to get people to STOP trying to second guess the "market" and just buy the best of the best - that pay dividends - and HOLD ON TO THEM for the long term. Be a Warren Buffett.... He buys - he never sells... he's one of the richest men on the planet.

If you sell every time you "think" you know what's going to happen -- you're never going to get anywhere with your investments. The market will - mark my words WILL - go down.... it will also go back up - or maybe just tread water for a long period of time (as in YEARS - not days). You will never know in advance when any of that is going to happen.

[gearheads78]

Greg. The last 5 years have been nice... but I have to admit, since about the beginning of the year I have been feeling a bit nervous, kind of bearish so to speak. I am having trouble comprehending the market... last time I had this feeling was late 1999. I'll have to admit, this does not feel bad in quite the same way, just seems a bit high.

Is this just a natural reaction to the market hitting new highs?

What say you?

I think oil being down and it says down will have a ripple affect in the overall market. I think we will see it more around here than other parts of the country. I personally know 2 guys that were making a ****load of money in West Texas that live here and they are back home looking for work now. They were both spending and buying up toys, new big houses, reasturants every day they were home ect.

I keep telling people around here so happy about cheap gas that they need to be carefull what they wish for. They might get it and nothing comes free.

[GregWeld]

what do you guys think about investing in the players in the "Cable wars"?

I was reading an article about cutting the cable and investing.

They were talking about how some invest in the big cable companies (comcast, att etc)

and some invest in the new comers who are looking to disrupt the cable industry (google with fiber, netflix, hulu, amazon etc)

But they were saying to instead invest in the content providers, since no matter who wins the battle to get the consumer the content, the content providers will still be there making money.

I was looking at FOX, AMC, VIA and DISCK

I watch a ton of programming on the channels under the Discovery umbrella and they look decent on the chart.

Thoughts?




The smart bet is to have a little in all of the categories you bring up. As in most things - there is rarely a "ZERO SUM" game. Investing like this is called DIVERSIFYING.... because none of us have a crystal ball. While it's easy 20 years from now to look back and pick the 'winner' and wish you'd have invested every dime in "it"... that is just dreaming. Better to put $500 in each category (or whatever a guys allotment is) and let 'em grow. You can always adjust the investment when and if "the picture" becomes clearer.

[68Cuda]

The reason that I have urged people to buy DIVIDEND paying stocks is because we can not rely on day to day price increases to fund our retirement savings or our retirement income. That takes cash flow. If the stocks you own are paying dividends and they are being re-invested - then if the market takes a dip - you will be buying MORE shares - which is a good thing! The whole point of this long winded thread is to get people to STOP trying to second guess the "market" and just buy the best of the best - that pay dividends - and HOLD ON TO THEM for the long term.

Greg - just occasionally have doubts - I know, hold the course. I don't do much of anything in this arena on a whim. I'll obsess about it for a while before I do anything. In the 90% of my 401k that I can port to a self directed brokerage account I am about 10% MO(since 2012), 6% CAG (since 2010), 8% JNJ (since 2011), 6% KMB (since 2011), 10% MRK (since 2011), 8% NUE (since 2011), 12% VZ (since 2012), and 8% WM (since 2012). I moved about 10% to BP and 10% to GE this past December... my only real recent moves. So, as you see, not a lot of jumping in/out or churning and all of them are big names that pay decent dividends. Of course the account is set up to reinvest on all of them. Of the 10% that I cannot do the brokerage on, about 1/2 is in company stock and the rest is in "growth" funds. I have another little IRA account we set up that has mostly KMB and PG that I have held since 2011. And then there is my wife's 401 which is stuck in some generic Schwab funds, but there are not very many choices for us in that one.

[GregWeld]

Greg - just occasionally have doubts - I know, hold the course. I don't do much of anything in this arena on a whim. I'll obsess about it for a while before I do anything. In the 90% of my 401k that I can port to a self directed brokerage account I am about 10% MO(since 2012), 6% CAG (since 2010), 8% JNJ (since 2011), 6% KMB (since 2011), 10% MRK (since 2011), 8% NUE (since 2011), 12% VZ (since 2012), and 8% WM (since 2012). I moved about 10% to BP and 10% to GE this past December... my only real recent moves. So, as you see, not a lot of jumping in/out or churning and all of them are big names that pay decent dividends. Of course the account is set up to reinvest on all of them. Of the 10% that I cannot do the brokerage on, about 1/2 is in company stock and the rest is in "growth" funds. I have another little IRA account we set up that has mostly KMB and PG that I have held since 2011. And then there is my wife's 401 which is stuck in some generic Schwab funds, but there are not very many choices for us in that one.



You have good names --- and kudos to you for understanding investing! Now -- quit fretting about all the "news" and talking heads... they'll only get you churned up in the interest of "news".

[SSLance]

Right now I'm bouncing between feeling like I should be buying more right now and just ignoring things...and letting them roll.

Either way, I'm still sleeping very VERY well.

[ErikLS2]

Greg. The last 5 years have been nice... but I have to admit, since about the beginning of the year I have been feeling a bit nervous, kind of bearish so to speak. I am having trouble comprehending the market... last time I had this feeling was late 1999. I'll have to admit, this does not feel bad in quite the same way, just seems a bit high.

Is this just a natural reaction to the market hitting new highs?

What say you?

I've kinda wondered at times if we're getting to 1999-2000 levels. Take a look at these two charts. If you look at individual tech names like Cisco, Intel, etc the spread is much wider between then and now. I think the biggest risk is some geo-political or terrorist event, aside from that things look pretty good I think, but what do I know, my crystal ball broke last week

http://www.multpl.com/

http://www.multpl.com/shiller-pe/

[GregWeld]

Please remember that the build up to 1999 was a whole bunch of investment into companies that had nothing behind them! They were "eyeball counts" and "page views" and a whole bunch of crap metrics that meant nothing! That was the whole "dot bomb" era.

Now... we repeated this in a round about way when anyone and everyone could buy a house with nothing down - and zero payments and zero job or income to support it. That was a house of cards that had to implode on itself.

Today you need real income and a down payment to buy a house -- and the whole 1 year no interested etc is all but gone.

Ditto the companies you SHOULD be investing in. They should have real brands with real sales and real profits and paying dividends supported by all of that. If you choose to play the "maybe some day they might grow into a real company" that's a whole other scenario. When I "invest" in companies that maybe one day might be something ---- I might buy a couple hundred shares of that -- versus 1000's of shares of the real stuff. So if you buy 100 shares of Ford - or Coke - or McDonalds -- maybe you'd buy 10 shares of GoPro or Alibaba.... Just saying.

The only thing I'd be really wary of right now is INTEREST RATE SENSITIVE STOCKS.... Stuff that might find themselves in an interest rate squeeze with a bunch of low yielding rate investments in a rising rate environment. Banks might actually do well in this scenario because they're spreads might increase but they won't if the consumer says NO to the higher mortgage rates. Remember that in order to make money with higher rates -- you have to be able to lend that money out! So we'll see how the public reacts to that when and if it happens.

[Vegas69]

Greg, what is your take on interest rates? Specifically, mortgage rates?

[GregWeld]

Greg, what is your take on interest rates? Specifically, mortgage rates?



I really don't follow mortgage rates - and couldn't tell you where they stand right now. But what I'm afraid of is that mortgage rates rise after YEARS of them being historically low - and that the consumer can't "afford" or doesn't want to afford the higher rates. Having said that - it might spur people on to get moving and buy a house before they go higher too... so it's anyone's guess. But with the tighter (better) lending standards - I wonder if the two things combined won't be a punch in the gut. Of course this all depends on how FAST they rise.

You're in the front row seat to gauge the consumers reaction to rates - and to how the newer lending standards have affected people's buying. What's your take???

[Vegas69]

I agree that most are conditioned with super low rates. Folks think a 5% interest rate is high. ha I don't think it will take long for most to get past rate as with any installment situation, it's driven by monthly budget.

Here, affordability is still in the zone where it belongs. Buyer's can still afford what they want in most cases. I think we have room for higher rates, just not a drastic change. We are still a slightly seller's market which is one of the factors that backs me up. Depending on market dynamics, I do think a rate jump could result in a healthy adjustment in median price. Much like the stock market, it's a completely different picture than 10 years ago. Qualifying has been hard during the recovery and consumers have the dignity of choice due to the basic fundamentals that didn't exist last time around. Meaning, they can put timing on their side.

[SSLance]

May just dip my toe back in on a few select stocks today...by the looks of things.

It will be interesting to note if buying brings things back up this afternoon or if the selloff continues.

[captainofiron]

I checked my portfolio earlier...

http://www.hizb.org.uk/wp-content/uploads/2011/01/Falling-Off-The-Chart.jpg

the worse thing is I only have like 200 bucks to buy anything...

[gearheads78]

Several of my long term plays took a big dip today. I wish I had money to buy more.

[captainofiron]

Several of my long term plays took a big dip today. I wish I had money to buy more.

yea me too, hadnt seen everything in red in such a long time, not to mention almost everything I have was close to a dollar or more in the red...

[GregWeld]

A rate hike appears to be coming.... and the market will have to adjust to that. I would expect more "dips" as people ready themselves for a rising interest rate environment.

While the rate hike has been "expected" for a very long time... the sooner we get it done - the better the market will like it. In the meantime people will be taking gains and locking them in. That's a pretty short sighted view of the market - but it is what takes place. There's no denying that all of us are just along for the ride.

[SSLance]

I did some buying today...sparingly...

I'm thinking I'll get chance to buy more stuff on sale too.

[68Cuda]

I agree that most are conditioned with super low rates. Folks think a 5% interest rate is high. ha I don't think it will take long for most to get past rate as with any installment situation, it's driven by monthly budget.

Here, affordability is still in the zone where it belongs. Buyer's can still afford what they want in most cases. I think we have room for higher rates, just not a drastic change. We are still a slightly seller's market which is one of the factors that backs me up. Depending on market dynamics, I do think a rate jump could result in a healthy adjustment in median price. Much like the stock market, it's a completely different picture than 10 years ago. Qualifying has been hard during the recovery and consumers have the dignity of choice due to the basic fundamentals that didn't exist last time around. Meaning, they can put timing on their side.

Go look at historical rates from the 80's!
http://www.freddiemac.com/pmms/pmms30.htm

I remember my folks getting into a house at just under 10%.

What is "dangerous" about people shopping at these low rates is they listen too much to the realtors and some buy every bit of house they can "afford". Eight years ago when we moved here my bank told me they would loan me up to a certain amount. When they did my pre-approval letter for the realtor I asked them to drop that number more than 1/2. At the end of the day you still have to heat / cool / and pay taxes on that property! We knew what we wanted and needed, and the number we gave the realtor fit that. And, wouldn't you know, every house she showed us was just at or over that number!

[GregWeld]

Go look at historical rates from the 80's!
http://www.freddiemac.com/pmms/pmms30.htm

I remember my folks getting into a house at just under 10%.

What is "dangerous" about people shopping at these low rates is they listen too much to the realtors and some buy every bit of house they can "afford". Eight years ago when we moved here my bank told me they would loan me up to a certain amount. When they did my pre-approval letter for the realtor I asked them to drop that number more than 1/2. At the end of the day you still have to heat / cool / and pay taxes on that property! We knew what we wanted and needed, and the number we gave the realtor fit that. And, wouldn't you know, every house she showed us was just at or over that number!




Michael --- I think you are missing the point we were discussing. It's not that people will adjust to the rate at any given time. But what we were talking about is the fact that rates have been so historically low for such a long period of time.... that we're wondering what the consumer does when/if they begin going up. We've been in a period of years where 3 and 4% rates are the norm.... and while 5% is still quite good/low... will people be put off by what that does to their "affordability" and what they've become used to.

It takes the "move up" buyer to help a market along.... So now let's say the move up guy has a 3.5% mortgage.... His house is too small - he now has two kids -- his value is up... so he begins to shop... All the other houses in his area are also up in value... but now his new mortgage is going to be 5.25% and he needs to borrow 100K more to do the move up. Is this family mentally ready for such a large increase in their mortgage costs. So do they repulse and just stay in their current house... which is NOT helpful to the market for loans or for real estate sales and all the other things that come with that?!?! Sure 5.25% is still "low" --- but it's a large jump from where they were/are. That's the point.


BTW -- I had a mortgage at 15% back in 1980..... My business was a .75% above Prime borrower... in other words - a stellar account. I can tell you those were NOT good times. Inflation was off the charts. Sales sucked. The economy sucked.

[GregWeld]

Interesting - if only from a historical perspective.... We absolutely know the FED will hike rates... that's a given. What happens when they do... is the unknown. Seeing what's happened historically helps us "understand" the markets reactions.


http://www.marketwatch.com/story/heres-what-stocks-do-in-the-months-just-before-a-rate-hike-2015-03-06

[Vegas69]

Go look at historical rates from the 80's!
http://www.freddiemac.com/pmms/pmms30.htm

I remember my folks getting into a house at just under 10%.

What is "dangerous" about people shopping at these low rates is they listen too much to the realtors and some buy every bit of house they can "afford". Eight years ago when we moved here my bank told me they would loan me up to a certain amount. When they did my pre-approval letter for the realtor I asked them to drop that number more than 1/2. At the end of the day you still have to heat / cool / and pay taxes on that property! We knew what we wanted and needed, and the number we gave the realtor fit that. And, wouldn't you know, every house she showed us was just at or over that number!

That's like blaming the bar for an alcoholic. I've been in the business for nearly 15 years. Many American's are wired to buy as much of everything as they can afford. I can tell you that today, buyer's are more economical with their decisions as many have been burned and learned a lesson or in position by being conservative in the first place.

I believe in representing my clients best interest. We go over the loan worksheet, I discuss the real costs of ownership, new vs old systems, not utilizing retirement funds, locations, crime statistics, and on an on. I know if I do my best at representing my clients, there will be plenty of money. Money is far from my primary focus. As with any business, there is a wide range of professionalism, experience, and integrity.

[GregWeld]

That's like blaming the bar for an alcoholic. I've been in the business for nearly 15 years. Many American's are wired to buy as much of everything as they can afford. I can tell you that today, buyer's are more economical with their decisions as many have been burned and learned a lesson or in position by being conservative in the first place.

I believe in representing my clients best interest. We go over the loan worksheet, I discuss the real costs of ownership, new vs old systems, not utilizing retirement funds, locations, crime statistics, and on an on. I know if I do my best at representing my clients, there will be plenty of money. Money is far from my primary focus. As with any business, there is a wide range of professionalism, experience, and integrity.



Good post Dad!!

[Vegas69]

Thank you sir.. My kid will be way faster than Gordon's. His car will probably run, too.

[68Cuda]

Michael --- I think you are missing the point we were discussing.


No - I get it, just not as eloquent as some in expressing myself. Just remarking on where rates were and how different it is now.


It takes the "move up" buyer to help a market along.... So now let's say the move up guy has a 3.5% mortgage.... His house is too small - he now has two kids -- his value is up... so he begins to shop... All the other houses in his area are also up in value... but now his new mortgage is going to be 5.25% and he needs to borrow 100K more to do the move up. Is this family mentally ready for such a large increase in their mortgage costs. So do they repulse and just stay in their current house...


It will be a large barrier - that is for sure, the monthly budget is the driver.

[Flash68]

Thank you sir.. My kid will be way faster than Gordon's. His car will probably run, too.

Faster at installing an accusump maybe. But not faster at driving. :action-smiley-027:

:cheers:

[68Cuda]

That's like blaming the bar for an alcoholic. I've been in the business for nearly 15 years. Many American's are wired to buy as much of everything as they can afford. I can tell you that today, buyer's are more economical with their decisions as many have been burned and learned a lesson or in position by being conservative in the first place.

I believe in representing my clients best interest. We go over the loan worksheet, I discuss the real costs of ownership, new vs old systems, not utilizing retirement funds, locations, crime statistics, and on an on. I know if I do my best at representing my clients, there will be plenty of money. Money is far from my primary focus. As with any business, there is a wide range of professionalism, experience, and integrity.

OK, the broad general statement was unfair. Yes, there are many who are ethical. But, I have met plenty that are focused on their own bottom line and are more than willing to facilitate.

I am afraid it is like many commission sales based occupations. There are good, bad, and some that are just plain mercenary.

[Flash68]

OK, the broad general statement was unfair. Yes, there are many who are ethical. But, I have met plenty that are focused on their own bottom line and are more than willing to facilitate.

I am afraid it is like many commission sales based occupations. There are good, bad, and some that are just plain mercenary.

If someone can't take some personal responsibility for what is most likely the largest purchase of their life, maybe they shouldn't be buying the house in the first place if they need to listen to the realtor so much. The math is simple.

[68Cuda]

If someone can't take some personal responsibility for what is most likely the largest purchase of their life, maybe they shouldn't be buying the house in the first place if they need to listen to the realtor so much. The math is simple.

If personal responsibility was in vogue the housing crisis would not have happened. Consumers would not have gotten into > 100% home loans, taken HELOCs on the houses, or pulled equity to finance their toys. Loan companies were allowing loans that should not have occurred.

Remember half the people out there, by definition, are below average. And wisdom usually comes at the expense of time and age.

And, as far as math and finance is concerned, a lot of people I know starting out and who are young are very optimistic about their finances and their future income. They assume that the job will always be there, that both spouses will continue work, and that their incomes will go up. For example, I met a young lady eight years ago when I started this job who sat next to me in my orientation class. She and her husband were newlywed and new college graduates with Engineering degrees. They bought a five bedroom house in the suburbs for the two of them to live in. It was at the limit of what they could afford and she was telling me what a great investment it was. Wow!

Whenever a situation exists where one person can take advantage of others with impunity, there will exist such people who will do so.

On one hand I agree with you. Caveat Emptor, and etcetera. I am the kind of person that has a Libertarian mindset towards government, less is better. But, on the other hand how do we make sure things are fair and people do not get taken advantage of. This is not a question I know the answer to, I am not that smart.

[chichirone]

The key issue is people/buyers do not ask enough questions and take responsibility to seek to understand. Too many people buy with emotion and then realize the math does not work until AFTER they sign on the dotted line. 60%'er in my opinion. We have all done it...cars, homes, beverages, watches, stocks, <insert material item name here>

The scariest statistic resonating with me is the average American watches 8-10hrs of TV per week but spends less than 2hrs per month on finances. (The Millionaire Next Door or Automatic Millionaire) I spend at least 2hrs per week in this Investing 102 thread and since joining the Weld Financial Forums, more time researching on Google Finance and Charles Schwa than I care to admit. Ha! And we wonder why we have crisis or market fluctuations. :knock:

[captainofiron]

The key issue is people/buyers do not ask enough questions and take responsibility to seek to understand. Too many people buy with emotion and then realize the math does not work until AFTER they sign on the dotted line. 60%'er in my opinion. We have all done it...cars, homes, beverages, watches, stocks, <insert material item name here>

The scariest statistic resonating with me is the average American watches 8-10hrs of TV per week but spends less than 2hrs per month on finances. (The Millionaire Next Door or Automatic Millionaire) I spend at least 2hrs per week in this Investing 102 thread and since joining the Weld Financial Forums, more time researching on Google Finance and Charles Schwa than I care to admit. Ha! And we wonder why we have crisis or market fluctuations. :knock:

Weld Financial Partners Inc. haha

A rate hike appears to be coming.... and the market will have to adjust to that. I would expect more "dips" as people ready themselves for a rising interest rate environment.

While the rate hike has been "expected" for a very long time... the sooner we get it done - the better the market will like it. In the meantime people will be taking gains and locking them in. That's a pretty short sighted view of the market - but it is what takes place. There's no denying that all of us are just along for the ride.

I did some buying today...sparingly...

I'm thinking I'll get chance to buy more stuff on sale too.

Im thinking to let my dividends accumulate until later in the year to buy more and reinforce a few of my positions

To be honest I am scared to buy more oil even though everyone keeps saying its at the bottom or near it

I have been thinking hard about buying media content providers like I posted not too long ago instead

[68Cuda]

Weld Financial Partners Inc. haha

You could also say that your investor's club has a racing problem...

[chichirone]

You could also say that your investor's club has a racing problem...

Good one Mike! :catfight:

I too am skeptical of oil BUT it is so hard to sift through all the noise. Just sitting tight and not listening to the conjecture. Long term, hold on for the ride and look for buying opportunities.

Something Amy and I have been talking about recently is "if you had $400-500k to invest, how would you do it?"

Would you:
-Buy a franchise
-Invest in commercial real estate
-invest in a business
-pile it into more dividend positions
-buy into an MLP or REIT

...the list could be way longer than the above. Just a few ideas.

Curious what you guys think. We have always pushed ourselves to think beyond our current scenario and better understand differing ways to educate ourselves on how to optimize our "employees".

[GregWeld]

Good one Mike! :catfight:

I too am skeptical of oil BUT it is so hard to sift through all the noise. Just sitting tight and not listening to the conjecture. Long term, hold on for the ride and look for buying opportunities.

Something Amy and I have been talking about recently is "if you had $400-500k to invest, how would you do it?"

Would you:
-Buy a franchise
-Invest in commercial real estate
-invest in a business
-pile it into more dividend positions
-buy into an MLP or REIT

...the list could be way longer than the above. Just a few ideas.

Curious what you guys think. We have always pushed ourselves to think beyond our current scenario and better understand differing ways to educate ourselves on how to optimize our "employees".



The hard part of answering the "what would you do with X scenario" is that it all depends.

For me - being retired - I don't want anything to do with ANYTHING that looks like I'd have to work at "it" or spend time managing "it". So more dividend paying stocks or apartment/commercial real estate LLC's would be my choice.

If a guy is young - still has younger kids at home etc - then maybe something that takes a more active involvement might be the right answer.

If a person is nearing retirement age -- I wouldn't want to see them investing in a business or franchise that is too much "risk" - and if they lost that - wouldn't be able to recoup perhaps.

[glassman]

So given that scenerio, "if" someone was to buy a small apartment complex for cash, besides the fact you have to constantly babysit and maintain, it keeps up with inflation. What is the national average of % of property management fees?

[GregWeld]

So given that scenerio, "if" someone was to buy a small apartment complex for cash, besides the fact you have to constantly babysit and maintain, it keeps up with inflation. What is the national average of % of property management fees?



First of all -- it doesn't pay to buy REAL ESTATE - especially commercial real estate with "cash" -- it pays to put a healthy down payment (the LLC's I invest in use 40% down). The key to making money on rental real estate is to be able to leverage up. Let the tenant(s) make your payments --- and be able to utilize the depreciation to shelter the income. I say SHELTER because when the building is sold -- you're going to recapture all that depreciation. Now we're getting way over Investing 102.... but in a nutshell --- you'll want to use the cash for the down -- leverage for growth -- and the depreciation to minimize taxes during ownership.


Pro management fees vary -- but normal is 5% or so.


There's LOTS to learn about buying rental real estate. Which is why I invest with professionals that only do this sort of work. We typically like to buy a property that is "under market" in rent... for some reason or another - maybe bad previous management -- maybe because the building is aging - maybe they aren't competitive with amenities... But what we want is the potential to come in and re-position the property to be able to charge the market rates going forward. That can mean MAJOR remodeling of the units -- adding amenities - or redoing parking and pools and landscaping and paint and roof etc. That takes CASH... so you'd better have that all planned for in advance.


The last property I invested in - we completely remodeled every unit as they became vacant... the rents on those units are now UP 50% from when we bought and the property brings in $25,000 more per month than it did when we bought it. Doing all the remodeling reduced the cash flow from the property to ZERO for about 2 years... (that's called INVESTING).

Commercial properties are priced based on their revenues etc. They're not priced like your house. In order for an investor to make "X" return based on the current revenue - an investor can only pay "X" for the property. You have to factor the returns based on the prevailing financing... upgrades... future potential of the rents in the surrounding area etc.

You also NEED to know who your competition is! What is the market for X square feet with similar amenities... is there any new properties planned for your area? Is the area a bunch of generation Y's -- single -- no kids and your building is mostly set up for families?? Or vice versa?

There's a lot to it - like most things - if you want to put the chance of success on your side.

This is the one I own a quarter of in Seattle... it was a dump when we bought it -- didn't have washer and dryers... and was ugly colored and outdated.


http://sierraongreenwood.com

[ErikLS2]

Greg has a lot more experience in rental property than I do and I'm not trying to steal your thunder Greg but I will share my experiences to hopefully contribute to the discussion here. I bought my first one here in Phoenix, a 20 unit place, in 2002. I sold it at about it's peak for a 133% profit, plus the monthly income, tax benefit etc. BUT, I was over there every weekend just about (just like when I was a kid at the building my dad owned) after working 10 hours days all week long at my job. I exchanged that one into one twice it's size in San Antonio (a rapidly growing market at the time) and a lower class but higher CAP rate. Biggest investing mistake I ever made. Why? The reason I bought it, so I COULDN'T go over there all the time, was also the biggest reason I SHOULDN'T have bought it. Management wasn't near what it was represented to me it would be. By the time I found the right guy 3-4 years later, the property had sucked up so much money that it couldn't recover. I sold it last year at a considerable loss, and valuable lesson learned which has made me a much better investor going forward.

Now my brother and I have a Walgreen's store that we inherited from our father who passed away about a year ago. He bought it to get him to the end of his life. It's a NNN lease with good cash flow and he didn't have to do anything. The loan is at 6.2% and has tremendous pre-payment penalties, called "defeasance", which basically in our case amounts to 20% of the current loan balance additional if we want to sell it or even re-finance it early. The reason is these loans are sold as CMBS or commercial mortgage backed securities so if you want to get out early the investor wants all the return he originally signed up for, so you have to pay it. It's not a bad deal though, we'll just keep it until it matures in 2019 and collect the income for doing nothing in the meantime. We could just probably do better with it somewhere else, MAYBE!

I think rental property is a great investment but big mistakes or mishaps can happen too. The loans are much different than home mortgages so you have to know what you're signing and getting into and commercial property loans are even more complicated and often harder to get out of early.

BTW, going through some of my fathers things recently turned up a savings account passbook from the early 80's that paid 15% interest, for a REGULAR savings account, so it's all kind of relative in most cases. I'm gonna go out on a limb here and predict we aren't going to see that any time again in the near future.

[glassman]

So some great info I hadn't known before, thanx Greg and Erik. Much to chew on.

[68Cuda]

Commercial real estate scares me - maybe mostly because I do not know enough about it. But, what I observe here locally: New properties that are super hot and fully leased. New properties that look like they are in the 50% leased category, I can't imagine how the owners are making money. And older properties that are in decline and slowly loosing tenants. It seems very fickle. It also seems like the local market is somewhat saturated. I see too many properties with vacancies, that can't be good. And this is an area where the economy seems to be doing well.

Apartments would seem to be a sure thing, especially with house loan requirements being stricter. I remember occupancy rates in Austin in the mid 90's being north of 95% - super tight. Every time we renewed our lease the rate went up, not good for college students. But the local government had put a freeze on building permits for apartments in the 80's because too many people with oil money were building real estate to shelter their profits, even if it meant they lost some money short term. The market was overbuilt, but it caught up and the city was still hesitant to release new permits. But, when they did it was an explosion of growth. It reminds me that these markets are also influenced greatly by the municipalities and the taxing entities. They can change rules on you in a heartbeat and kill what you thought was a sweetheart deal that you are now locked into. So - yes, scary to me.

[SSLance]

What was the 1986 Federal tax law change called that took away depreciation and killed the commercial real estate market for years and years? In one fail swoop everything changed and many got caught with their pants down.

I was pretty young then but watched my now business partner struggle to stay afloat through those years, eventually losing all of his real estate partnerships except 2 that he still owns today. One never has broke even, the other one is a strip mall that is 100% paid for and hasn't been below 90% occupied for the last 15 years.

Great on site management is key...

[GregWeld]

This is a great discussion -- because for "newbs" it raises the specter of LOSSES... Losses occur for many reasons and can occur in ANYTHING at ANYTIME.

The only money I've ever lost - would be in the sure deals I couldn't possibly loose on. They were going to make fortunes. Easy money.

When you think that way. You're going to get your ass handed to you!

So let's use this discussion to revisit INVESTING 102.

When people tell you to never invest money you're going to need... there's a very good reason for that! You may never see that money again! It might also bring with it DEBT the gift that keeps on giving... that you may be on the hook for.

It's also why "rules" such as the 5% rule should be adhered to. That way - you'll still have 95% left when an investment goes south. Even a complete idiot should be able to pick some winners in a portfolio which will cover the couple of complete losers... We ALL have losers. Get used to it. This isn't a perfect science... and things beyond your control change.

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


Why do I invest with a "company" (actually it was ONE guy - that is now Two guys) that picks/prospects/manages/controlling partner when it comes to commercial real estate?? Because I don't know what I'm doing! I want to be "diversified" --- therefore this is another way to diversify. It's NOT in the stock market - therefore it's diversifying my total investment portfolio. I have stocks - commercial real estate - mortgages - and properties I own outright (non commercial and non income producing but that are still assets).

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


I will share this info - even though it's not really a rule or whatever..... it's just how MAYBE you all may want to come about in your "thinking".

I didn't suddenly put a couple million dollars into a real estate deal with ONE guy! Hell no! My tax accountant and I had discussed diversifying and "other" income YEARS AGO -- like 20+ -- and he had another client that did these apartments LLC's. He had been the accountant for the guy for quite awhile - and had invested his own money into a couple of these "deals". When a new acquisition came up -- I bought into it -- I think it was maybe 100 grand. A couple years later I bought into another one -- that was 250 grand - I upped the amount because the first one had proven successful. I also now had a better understanding of how these things worked... and had built trust with "the group". My next investment wasn't with this same group ---- hell no ---- I don't want all my eggs in one basket -- and there are MANY companies that do these kinds of deals -- and having been in the first two -- I became aware of others doing this - so I invested with another company. What if the first group became a bunch of crooks? What if they died? What if they weren't as lucky going forward as they had been in the past..... So I diversified with a different group.

You read all the time about people "loosing it all". Generally it was because ALL of their investments were in ONE thing - or with ONE outfit - or with ONE "investment advisor". Don't be the Rob Lowe of investing!

Investing isn't all about hitting a home run. It isn't all about being "lucky". It IS about patience... it is about CONTROLLING RISK... it is about controlling being GREEDY... it is about taking SOME risk while also trying to avoid losses. The losses WILL be there... but you need to control those losses so they don't take you down. Read this again. YOU WILL LOOSE MONEY at some point in something and it will never be the thing you thought you'd lose in. It always comes out of left field. The key is to have that loss not be a big deal. Hurtful - sure - but losses - when you survive them - make you a better investor. Why? Because they teach you not to be so f'n greedy - they teach you to not invest in stuff you know nothing about - they teach you to do better research.... They teach you to say NO to your neighbor/buddy/cousin who has a "can't loose" investment...

[68Cuda]

Investing isn't all about hitting a home run. It isn't all about being "lucky". It IS about patience... it is about CONTROLLING RISK... it is about controlling being GREEDY... it is about taking SOME risk while also trying to avoid losses. The losses WILL be there... but you need to control those losses so they don't take you down. Read this again. YOU WILL LOOSE MONEY at some point in something and it will never be the thing you thought you'd lose in. It always comes out of left field. The key is to have that loss not be a big deal. Hurtful - sure - but losses - when you survive them - make you a better investor. Why? Because they teach you not to be so f'n greedy - they teach you to not invest in stuff you know nothing about - they teach you to do better research.... They teach you to say NO to your neighbor/buddy/cousin who has a "can't loose" investment...

You had to bring up Bank of America again didn't you... ugly, painful... at one point I just cut it loose. Overall it was about 5% of my total, so with everything else doing good I was fine.

My other, maybe not so painful, was Annaly Capital. I think I broke even, but that means for two years that money made zero net. Great dividends, but the stock was essentially consuming itself to pay for those dividends. The stock price was dropping to match the dividend payout more or less.

Both of those stocks had me watching the market too much. Now I just check in on it every month or so.

[GregWeld]

You had to bring up Bank of America again didn't you... ugly, painful... at one point I just cut it loose. Overall it was about 5% of my total, so with everything else doing good I was fine.

My other, maybe not so painful, was Annaly Capital. I think I broke even, but that means for two years that money made zero net. Great dividends, but the stock was essentially consuming itself to pay for those dividends. The stock price was dropping to match the dividend payout more or less.

Both of those stocks had me watching the market too much. Now I just check in on it every month or so.



The hardest part of BUYING --- is Selling. Knowing when to sell -- when the LOSS is eating you up mentally. Nobody likes to take a hit.... we all keep thinking / hoping / wishing / willing "it" to turn around and make us whole. Once in awhile that actually happens. Most of the time -- the "market" has spoken and that market is bigger than "us". There's DIPS --- and then there's "broken". Dips are fun and make you look really smart... Broken -- that beats you down and picks your pocket. Hard to know when it's a dip and when it's broken.

Owning INTEREST sensitive stocks in what we KNOW will be an interest rising market is DEATH. Old saying -- when interest rates rise... the stock market dies... Now. That's a really broad brush and frankly is only true for parts of the market. The key is to understand WHAT stocks might be hurt with a balance sheet of low interest rate bonds/stocks/mortgages.... Annaly (NLY) will be one of those hurt by being caught in the crossfire. I sold my NLY a LONG time ago.

The "mortgage REITS" may be some of the others caught with a book of low yields in a rising market. Really - it depends on how quickly and how far the rates rise.

BTW -- you know I've said it a million times -- the stock you sell at a loss - will climb to the moon half an hour after you push the button. I hate that damn little man on Wall Street. It's okay! Let it go.

Let me know when you - or anyone else - get's it 100% right. I'll give you all my money to invest.

[ErikLS2]

The "mortgage REITS" may be some of the others caught with a book of low yields in a rising market. Really - it depends on how quickly and how far the rates rise.


I just discovered one of these that I'm researching, New Residential Investment (NRZ). They claim that their portfolio will go up in value if interests rise. I'm still trying to figure out how that will happen and I don't know if I'll ever understand it enough to buy the stock but it pays a 10% dividend right now. I think they buy a lot of mortgages at less than par and then either service it or pool them together and sell them off at a profit once they clean up the pool somehow. They also do a lot of loan servicing, which apparently is a pretty profitable business in itself.

How many of you listen to the company conference call? I've listened to several here recently, COST, KR, HD, NRZ, SNA, LUV and you can learn a lot about the company that way. I heard Cramer recently say that if you own a stock you have to listen to the conference calls. I don't understand all of what they say but I also learn a lot too and get a sense of the attitude of the company heads. I think he might be right. They're not exactly riveting entertainment though.

[GregWeld]

I just discovered one of these that I'm researching, New Residential Investment (NRZ). They claim that their portfolio will go up in value if interests rise. I'm still trying to figure out how that will happen and I don't know if I'll ever understand it enough to buy the stock but it pays a 10% dividend right now. I think they buy a lot of mortgages at less than par and then either service it or pool them together and sell them off at a profit once they clean up the pool somehow. They also do a lot of loan servicing, which apparently is a pretty profitable business in itself.

How many of you listen to the company conference call? I've listened to several here recently, COST, KR, HD, NRZ, SNA, LUV and you can learn a lot about the company that way. I heard Cramer recently say that if you own a stock you have to listen to the conference calls. I don't understand all of what they say but I also learn a lot too and get a sense of the attitude of the company heads. I think he might be right. They're not exactly riveting entertainment though.




One of the many reasons I suggest only buying companies you like and use - and or "understand" - and to NOT have too many names in a portfolio. #1 You have to be interested enough in the business to want to be a partner/owner. #2 You have to like the business enough to want to "keep in touch".

Once people understand that a lot of this is purely a mental state... and they realize that they need to have a "connection" with where their money is. They'll fret less and enjoy more.

[toy71camaro]

Great posts fella's... Like reading the new material, thoughts, etc. :)

[GregWeld]

Some of you have many years left to work - and some are creeping up to retirement age. Funny - it really doesn't seem to take as long as you think it would... I have no idea where the time has gone. Seems like just a couple years ago we were spending the weekends at Toys R Us.... now my kids are 28 and 24. Hardly what you'd call "kids" anymore. It's part of the reason I continue to prod - poke - urge - everyone to start to take part and prepare for what's surely coming!

Since we've moved to Sun Valley Idaho to enjoy the final part of this journey they call "life".... I've noticed a few things, and thought about a few things, that I never did in the "big city". Time moves slower here... relationships move faster! It's a "wealthy" playground... Seems there's three kinds of economies here. The Young - "I just want to <name the fun> Ski... Bike... hunt...get laid" folks... and they wait tables and bartend or fix your skis/bikes. And the uber wealthy that fly their jets in on Friday and boogie back to "wherever" on Sunday evening. And there's those of us that have taken up permanent residence - seeking to enjoy the twilight - doing exactly what the young want to do but can't really afford. Laughing at this thought - but it's mostly true! The young struggle working 3 part time jobs living with 3 others in a 2 bedroom rental, so they might catch some runs when they can... while the "more mature" ski / hike / bike / eat out daily at a far more leisurely pace.

The reason for the long lead in -- is because while we're what most might describe as "quite well off" or some other absurd description... what we really are is "comfortable". I drive by the little airport daily (my shop is just south of it) and I look at the beautiful private Jets and think... WOW! What it must be like to own one of those bad boys! Then I quickly kill that thought with "yeah but it sucks to be them because they came Friday and went back to work on Monday!". It helps to keep me from denigrating myself with "why didn't I do better!". And I guess that's the point of why I'm typing. We're all of different cloth. We have different levels of satisfaction. We have different levels of income. What do we have in common?? All of us WILL at some point need or want to retire.

So what do you want that to look like? You plan to sell "the big house" and move somewhere more affordable? Sounds good... usually doesn't happen. Too many "anchors" - kids - grandkids - friends... Do you see yourself just loading up the motorhome and "heading out" somewhere - only to come back when you're good and ready? I have friends doing that now... So far they've covered most of the western U.S. They have a nice new diesel truck and an Airstream... and they spend a week or so "camping" here and there in "parks" in the cities they want to see. They figure they have to live somewhere - so food is food etc - and the only extra cost are the nightly parking fees. Still - those fees add up! They're $40 or so a night - X's 7 days a week - that's $1100 a month in "extra" expenses!

The trailer friends? They have a SEVEN FIGURE nest egg... and yet they aren't living anywhere near what I'd think someone with that kind of dough would live like! Why? Because ONE MILLION DOLLARS will GROSS them 50 grand a year - which at 20% tax rate will NET them 40 grand a year. Sounds like a lot.... but it's $3,333 per month. With Social Security benefits they're probably NET NET $5,000 a month. House and cars all paid for, no debt. HEALTH INSURANCE is a huge monthly burden! Oh - and then property taxes... and heat and water and groceries... So you can see how that lousy $1100 "extra" for camping fees is starting to take a bite.

So what's my point? My point is, you better figure out what you want those "golden years" to look like... and start doing something about it. It's never too late -- and it's never "enough". But I'll tell ya right now that if you think it's tough to make it every month NOW... Think about what that's going to look like when you're retirement is $60 grand a year and you "only" have a million dollars invested to live on. Pretty daunting - but doable!

[glassman]

Very well said Greg. Understandable and practical. Realistic.

My dad used to have a saying on his refridgerator that said.

"Dreamers build castles in the sky,
"Optimist's live there,
"Realists collect rent from both of them"

It always kinda stuck, the "save a little, spend a little" way. I look back and say the same thing " i coulda done better", but these first world problems jade our minds with greed. I think thats why we call it "managing" our money right?

[toy71camaro]

Awesome post to both Greg and Glassman. Good quote. Great reminders!

I've got 30 years before retirement. It seems so far away, but I can imagine it will come quick!

[SSLance]

What Greg describes above is precisely why there is no right answer when someone asks how or what they should be invested in. Everyone's situation is different.

My situation is way different than most because of a couple of factors. First off, we don't have any children...or any heirs at all to speak of besides our furkids. So not only am I not worried about saving for college educations like a lot of my friends, I'm also not worried about leaving anything behind for anyone either.

Second, my wife and I worked very hard, were pretty successful at earning, made what I think are pretty wise economical and investment choices and lived pretty frugally for a lot of our younger years, enough so to build ourselves what I think is a decent little nest egg.

Now, what is hard for us to decipher (and anyone that I have asked for help) is...the nestegg is not large enough to provide enough income to live off of in our current state for the rest of our retirement years without dipping into the principal, especially when invested in safer, more steady eddie type of investments. But some sort of income off of the nest egg while dipping into the principal a bit at a time, while still earning a bit on side jobs, and having a little bit of passive income from our farm...and still living frugally...just might be enough for us to retire on sooner than later.

I have yet to find the person that can put that actuarial together for me though as it is a unique situation, different than most. Especially when nobody can accurately predict what Mr Market is going to be doing at the same time...

All we can do is the best we can do and try to enjoy ourselves at the same time.

[GregWeld]

Lance --- you lucky dog you!! I like the name FurKids!! LOL - Perfect description.


I just went thru this discussion with one of my buddies. He has extremely modest needs... was doing "fine" on just a union pension / SS / Savings account. House had a very small mortgage that he'd taken out to make some upgrades.... no other debt. Overall a really nice condition financially. Then came some new dough. That needed to be invested... he's single. One kid. So far so good. But he's very active - and finally wanted to be more like "me" (that's what he kept telling me). He also wanted to help "the kid" pay off his house etc.... which I advised AGAINST.

So let me tell you what I told him.

Let's make a plan to invest "X" dollars (seven figures) and see what that looks like on paper - using just dividend paying stocks.... And then figuring that you'll have 20% dividend taxes.... So we did all that - and Schwab now transfers automatically $6,000 a month. HE THINKS HE'S RICH NOW!! And frankly - compared to most people - he is doing pretty dang well!!! Since he was doing fine with what he had coming in -- this is all play money... that that play money is being played with I tell ya!!

A couple of things -- he's too old to want to travel anymore... so that expense is not part of his planning. People kind to fail to think about "trips" (they're no longer vacations cause you don't work!). Hotels and all that are expensive!!

Anyway let's get back on track....

What I told him to do is what I do. On a good year -- I skim some of the big fat gains... in the bad or down or flat years - I don't take anything extra other than just the income. So what's that look like?? On a million bucks invested - on a good year maybe 12 or 15% growth. Dude! That's like 120 grand!! So if you take HALF that - that's 60 grand gross. That's an extra 5 grand a month gross... There's the new car -- or a month in Hawaii... or the fishing boat.... or major home repairs.

Now -- if you really do the math -- and calc how long a guy is going to live.... a guy that's 65 maybe lives 30 more years?? IDK... that's the hard part!! You can't drain the bank and you MUST leave some growth in there -- otherwise you're going to run out of money. But not really..... because you won't buy a new car when you're 85 -- and who cares about going anywhere when you're 90.... so really -- expenses like that kind of dwindle. But what you will have is increases medical expenses! Even with good insurance - medical is going to play a MAJOR role in your expenses.

The "pros" will tell you that you can plan to take out 4% of your capital each year... so on a million bucks - that's 40 grand... and it should replenish that with "growth" in the good years. If you're in decent dividend stocks - they should also be increasing the dividend payout percentage - so your income should be keeping abreast of inflation.

Here's what worries me.... I look back at what I paid for stuff 30 years ago -- and it was OMG cheap! Meals - movies - cars - clothing.... it cost NOTHING compared to what that stuff costs today.... so we have to fast forward 30 years of retirement -- and we know stuff is going to go up. What I think happens is we just use LESS STUFF as we get older. We just won't want stuff.... we'll have been there and done that.

I think it's the FIRST 10 years of retirement that might prove to be the greatest challenge. I know that at 61 -- I have LOTS of things I plan to do or I am doing. So those that say it costs less to be retired - I say BS!! Costs more to be retired because you have all this time on your hands and you want to go do things! A round of golf here is $135 -- play that twice a week and you've blown a grand just on the golf -- add lunches - beer -- and a bucket of balls... it ain't cheap!

I think this is a fundamental reason people plan to MOVE in retirement to somewhere that costs less to live. A resident of Indian Wells for example - plays golf for $35 !!! But then - if I lived there and it was that cheap - I might play every day!!

Lance -- there is NO ANSWER which is why nobody can tell you what the magic number is. I think you play it as it comes. In a good year you do some extra - in a bad year you suck it up and live within your means. At least - that's the way I've done it for the past 23 years.

[SSLance]

Lance -- there is NO ANSWER which is why nobody can tell you what the magic number is. I think you play it as it comes. In a good year you do some extra - in a bad year you suck it up and live within your means. At least - that's the way I've done it for the past 23 years.

Hell, that sounds like the last 40 years for me... :D

I agree, just gotta keep doing the best one can and try to live a little at the same time.

[Vegas69]

It's a delicate balance. Many Americans are a slave to money and their careers. They wake up 65 ready to retire with poor health and not much life left to live. That's when money doesn't mean much. As I approach 40 I'm quickly learning that life is a short adventure. You sure as hell better make the best of it, today. That doesn't mean you should live like a drunken sailor. I've over corrected and made life no fun working towards financial independence not so long ago. We need a solid plan and wise choices. But I have to say, live it up because the wick is short and their are no guarantees you are crapping in depends.

[chichirone]

Lance, like you, we have fur kids. No college savings. No weddings. But also leaves us reliant on "other" resources to assist in our care when age and health requires it. Unlike our parents, we don't have 4 children to bail us out when we have a need or cannot afford our lifestyle choices.

The greatest challenge we face is the intermediate funds required to bridge our financial freedom over the next 20 years when we can obtain access to our IRAs and long term retirement accounts is quite the challenge, even at higher than average earnings. We work extremely hard, sometimes to a fault of fun and life enjoyment, requiring us to remind ourselves to not take ourselves too seriously and get out there with friends, family and our hobbies. It is amazing how a great laugh with friends makes you feel "richer" than any gains in a stock portfolio. Greg's $1M/$60k = $40k after taxes income calculation is a killer. To pay yourself $10k per month one needs around $3M in the bank. Thinking forward 20 years. $10k per month is going to go quickly with inflation and rising costs of everything. Healthcare will require an inequitable share of the available funds.

So this leads me to why we got so hooked on this thread, Investing 102, to begin with. Dividend investing offers us a tool to generate income when we hit our target number to be what we consider financially free. Greg described it as comfortable.

So after the diatribe, here is a question...what is better? A stock with a higher dividend %, higher potential growth rate, riskier investment profile or a proven player. Take PM vs VGR. I lean towards PM but the 7.29% yield of VGR is really attractive. 40% greater revenue on every dollar invested if it stays price neutral but the risk of loss makes me somewhat uncomfortable. What is the best way to evaluate the stock beyond the surface metrics? Curious how you look at this and what lens to add in an evaluation of peers in a group such as "sin" stocks?

[GregWeld]

Lance, like you, we have fur kids. No college savings. No weddings. But also leaves us reliant on "other" resources to assist in our care when age and health requires it. Unlike our parents, we don't have 4 children to bail us out when we have a need or cannot afford our lifestyle choices.

The greatest challenge we face is the intermediate funds required to bridge our financial freedom over the next 20 years when we can obtain access to our IRAs and long term retirement accounts is quite the challenge, even at higher than average earnings. We work extremely hard, sometimes to a fault of fun and life enjoyment, requiring us to remind ourselves to not take ourselves too seriously and get out there with friends, family and our hobbies. It is amazing how a great laugh with friends makes you feel "richer" than any gains in a stock portfolio. Greg's $1M/$60k = $40k after taxes income calculation is a killer. To pay yourself $10k per month one needs around $3M in the bank. Thinking forward 20 years. $10k per month is going to go quickly with inflation and rising costs of everything. Healthcare will require an inequitable share of the available funds.

So this leads me to why we got so hooked on this thread, Investing 102, to begin with. Dividend investing offers us a tool to generate income when we hit our target number to be what we consider financially free. Greg described it as comfortable.

So after the diatribe, here is a question...what is better? A stock with a higher dividend %, higher potential growth rate, riskier investment profile or a proven player. Take PM vs VGR. I lean towards PM but the 7.29% yield of VGR is really attractive. 40% greater revenue on every dollar invested if it stays price neutral but the risk of loss makes me somewhat uncomfortable. What is the best way to evaluate the stock beyond the surface metrics? Curious how you look at this and what lens to add in an evaluation of peers in a group such as "sin" stocks?




The "best" metric IMHO is TOTAL RETURN. It is - after all - what we seek. TR is the measurement of dividend (if any) and growth. The combination - regardless of the % of either (dividend or growth) is how you make money on your money.



Total Return for 5 years on Philip Morris (PM) is 90%


Total Return for 5 years on Vector Group (VGR) is 270%


Would you rather make triple or merely double on your money in the same timeframe? LOL



The key to ALL investments is DIVERSIFICATION -- you balance some risk with some "steady eddies". And what you'll always see is a horse race... if someone was calling it out at the track - it would be one horse leading - then falling behind or being passed by some other horse -- and suddenly (over long time periods) the horse in the way back starts pulling and passing.... THAT is why we want some diversity - some risk - some growth - some "sure things" in the mix.

[GregWeld]

Forgot to respond to your other question - about measuring stocks in a group against each other.

This is a "research" question - which I tell people to use... look up the name you're interested - and then (say on Google Finance) see the list of what they consider 'peers'.... start researching those... start with the names you are familiar with but didn't come to mind... look at their dividend - look at their TOTAL RETURN numbers... did their TR come from a great dividend or growth or some combination... is the company diversified.... is one pure tobacco or are they into other stuff... how do you feel about that? What's the risk / reward... a company with a single horse vs a company with a team of horses....

Depending on your investable resources --- you might end up splitting your SIN STOCK investment between two or three names... rather than one - or maybe this year you buy one name -- and pay attention to a couple others moving forward... get familiar with them - watch them - get comfortable (or not)... So when you have your next buy to put in - maybe you put some in the same one or maybe you add a name.

[GregWeld]

It's a delicate balance. Many Americans are a slave to money and their careers. They wake up 65 ready to retire with poor health and not much life left to live. That's when money doesn't mean much. As I approach 40 I'm quickly learning that life is a short adventure. You sure as hell better make the best of it, today. That doesn't mean you should live like a drunken sailor. I've over corrected and made life no fun working towards financial independence not so long ago. We need a solid plan and wise choices. But I have to say, live it up because the wick is short and their are no guarantees you are crapping in depends.


Wow! I've never looked at life as a ticking time bomb.... My plan is to live forever!! And have fun the entire f'n time!

In order to do that -- I need a plan!


Life is a gamble - with risks just like everything else we do. Had a buddy retire early @ 58 -- he died 4 months later from a rare form a pancreatic cancer. But on the other hand - my MIL is 89 and has mostly outlived her "decent" retirement stash when my FIL passed away when he was 60. So she's lived basically 30 years -- READ THAT AGAIN -- THIRTY YEARS in retirement. What's happened to her is INFLATION has eaten into her really nice retirement cash flow.... WHY?? Because despite my wanting to put her into some dividend payers -- she wanted a strategy that avoided paying taxes... Meaning Muni Bonds... Guess what -- Bonds SUCK as a retirement strategy. What do you get when you roll your 10 years muni bond that was paying 6% tax free - into a new muni that's paying 3% tax free?? A cut in income by 50%..... and when you hold a bond to maturity - you only just get your money back. ZERO growth. So after 30 years she has the same amount cash - earning about 1/3rd.

What did she need?? A strategy that had her money growing at 3 or 4% to stay even with inflation -- and an income strategy that had her income increasing so she could stay even with inflation. Yeah - she'd have paid taxes along the way -- very very minimal taxes.

I used to ask her -- do you want to earn 25,000 per year and pay zero taxes - or would it be smarter to earn 40,000 per year and pay 15% taxes and have 9,000 more to spend per year. Her answer was always "NO TAXES". Thus her current situation.

Funny --- 30 years ago - it cost maybe 3 grand to paint her house -- but the house has needed painting 3 times in 30 years - and it now costs 10 grand to paint her house. That's almost half her annual income. And that 30 year roof she put on back then - that needs replacing now... and the furnace... and property taxes have quadrupled... and insurance / medical costs. And you know what -- today -- "80's is the new 60's" -- People live a long time these days.

[GregWeld]

Hell, that sounds like the last 40 years for me... :D

I agree, just gotta keep doing the best one can and try to live a little at the same time.




WORD!!!!


Like my buddy that just retired == guy never made squat - but retired nicely. He put a little away for 40 years.... He didn't wait 40 years and then try to make it all up. He used the POWER OF COMPOUNDING... Didn't keep him from owning a 32' Grand Banks... or going on nice vacations... or driving "decent yet used cars". He lived within his means and his means meant he also factored in that monthly payment towards retirement.


Love that statement - money is like air - it's only important when you don't have enough.

[SSLance]

My FIL worked hard his whole life, Electrical Engineer by day that worked up to being President of a firm with over 500 employees...and ran a large retail store by night with his wife. Worked 70-80 hours every week...lived well also, but his main activity was always work of some sort. Two months before he was to retire from his day job at 69 years of age, he was diagnosed with Multiple Myeloma and was gone about 6 weeks later.

My Dad also worked hard his whole life, made it and lost it all at least 3 different times, but spent his last 20 years of his working life as a consultant and was able to stash away about 150k in his IRA before retiring in 2003 at age 65. For about 10 years after, he lived large...in his own way. Did what he wanted too...when he wanted too...and by 2012 his IRA was gone and he was down to living on $2,000 a month SS check. He was also in poor health, was diagnosed with COPD around 2005 and steadily declined in health over the years, basically spent the last 5 years of his life as a hermit, the last 3 living in an apartment I built for him in the back of my outbuilding. He passed away Feb 22 with just enough money in his checking account to take care of his arrangements.

Two stark contrasts...My FIL earned and saved a ton and never got to really enjoy the retirement he worked so hard for. He had just turned 69 when he passed. My Father earned okay, spent and lived as he pleased...and ran out of money 3-4 years before he passed basically because he ended up living longer than he really thought he would. He was 76 years old when he passed away. Both were what you might call in pretty good health when they turned 65 other than my Dad had smoked cigarettes his whole life.

You just don't know... 3 weeks before my FIL died, my wife lost both of her Grandmothers 5 days apart, they were 87 and 97 years old. That little stretch of time really had an affect on us...we scaled way back and started to do what WE wanted to do instead of busting our tail to make every dollar we could. Everyone is different and things you encounter along the way shape your view of the world. How you invest whatever you have saved up is just part of the whole picture. It is an important part for sure...but one has to look at the rest of the picture as well and just make the best decisions you can for yourself.

[GregWeld]

Interesting statistic for WHY "richer" people are richer.... Certainly makes perfect sense to me...

If you RENT a place - you have ZERO upside. If you OWN a home... you are far better off than the Renter... If you OWN a business or have some money to actually INVEST... you're better off than just the guy that owns a home as his only asset. DOH!!


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


In 2003, the wealthiest 5% of Americans had a net worth 13 times that of the median household. By 2013, that disparity had nearly doubled, with these households holding 24 times that of the median.

The main reason for this increasing wealth gap: not only do the rich have more assets, but they have more of the assets that have performed better. More than half of a typical household’s wealth is in real estate. But a median household in the top 5% keeps only 16% of wealth in home equity. More of their assets are in businesses (49%) and financial investments like stocks and bonds (25%). So these households have gained far more from the recent equity bull market.

[Vegas69]

Think you can time the market?

[sik68]

Think you can time the market?

Great chart Todd, thanks! Reality check...can't avoid the worst days without missing the best.

I have to admit, it's been very tempting to scale back my portfolio. The negative news and indicators seem to be creeping in, and I've been reading more wolfstreet.com (www.wolfstreet.com) which sees Oil as the trigger for the next collapse. But I suppose I'll just sit tight and ride it out.

[SSLance]

Hmmm... and I've been wondering about putting more in....

[GregWeld]

Absolutely fantastic chart Todd! Thanks for posting it!!


It's HARD to hold when the market is going "south" -- thus my strategy of at least getting some income from the dividends and my "pays you to wait" statements. But if you sell -- and you won't sell until you're getting killed -- then you won't buy until the market is back up 50%... and that's why they (the pros) advise you to not try to "time" the market. It just doesn't work!

[Vegas69]

You miss 10 days in 20 years and you have HALF. :RunninDog:

[GEN_X]

Greg,

I have read most of the thread and at one point back around 2013 you mentioned several stocks:
Consolidated Edison Inc. (ED)
iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
Johnson & Johnson (JNJ)
SPDR Barclays Capital High Yield Bond ETF (JNK)
Kimberly-Clark Corporation (KMB)
The Coca-Cola Company (KO)
McDonald's Corporation (MCD)
Altria Group, Inc. (MO)
Annaly Capital Management, Inc. (NLY)
PepsiCo Inc. (PEP)
The Procter & Gamble Company (PG)
Philip Morris International Inc. (PM)

saying that you felt that these stocks were worth investigating. Now that it is several years later how do you feel about the stocks? A lot has changed within the market with energy stocks. I was just curious of your input. Thanks again for taking the time to add your thought and advise to this thread.

[GregWeld]

Greg,

I have read most of the thread and at one point back around 2013 you mentioned several stocks:
Consolidated Edison Inc. (ED) --- Still a core holding - it's a "utility" stock - people have to buy and pay for - power.


iShares iBoxx $ High Yield Corporate Bond ETF (HYG) -- I'll do two with one stone HYG and JNK -- are "yield" plays - that ARE INTEREST RATE SENSITIVE!! So I'm in and out of these two names all the time - I consider them as places to "PARK" cash - since they pay MONTHLY dividends. I also use PFF for this same type of holding. These are not buy and forget names - they are used for their correct purposes.


Johnson & Johnson (JNJ) -- I don't personally hold this and haven't for many years --- but this is a great name and can be part of anyones holdings.


SPDR Barclays Capital High Yield Bond ETF (JNK) - SEE HYG


Kimberly-Clark Corporation (KMB) -- this is the same response as JNJ


The Coca-Cola Company (KO) -- Same response as JNJ and KMB -- long term great name with growth and safety and dividend... and comfortable to own.


McDonald's Corporation (MCD) -- I think there is a fundamental change in the wind with this STYLE of food.... and warned a long time ago that I was selling my holdings and moving on. I'd far prefer to own Chipotle Mexican Grill (CMG). I don't want my money in a business that struggles to make sales numbers.


Altria Group, Inc. (MO) -- A core holding of mine - booze and smokes -- sin stocks! People with drink and smoke til they're dead - and I'll take the dividend and go on vacation. Thank you drinkers and smokers.



Annaly Capital Management, Inc. (NLY) -- Warned about selling this name long ago -- it's paid a big dividend -- but this name is super interest rate sensitive and gets killed in a rising rate market.


PepsiCo Inc. (PEP) -- This and names like Coke and AT&T and Verizon - etc - these are sleep well long term buy and holds.... not saying to load the boat with them - if you read the thread -- I'll say to make core investments in these kinds of names and offset them when you can with some more risk ONCE YOU OWN THE CORES in the proper amounts!


The Procter & Gamble Company (PG) -- Lump this with Coke - JNJ - KMB - PEP etc -- there's others in this category and you need to do your homework on all of these kinds of names to find the right amount/balance of Total Return - dividends - etc but don't load up on all "CONSUMER" names... even though these have been good for years.


Philip Morris International Inc. (PM) -- Like MO above. And like I said in the P&G response -- just do your homework and then choose which of these sin stocks fits your personal portfolio.



saying that you felt that these stocks were worth investigating. Now that it is several years later how do you feel about the stocks? A lot has changed within the market with energy stocks. I was just curious of your input. Thanks again for taking the time to add your thought and advise to this thread.


Good question! I'll do my response in blue above.

[GregWeld]

A stock I used to own - Terra Nitrogen (TNH) - is THE PERFECT example of the relationship of DIVIDEND to PRICE action. I'd like you all to go to GOOGLE FINANCE -- open up a chart of TNH - stretch it out to the FIVE YEAR (so you can see the dollar amount of dividend paid)..... This should be an eye opener.

Note that as they INCREASED the div - the price went accordingly - but look what happens when they start to cut it!!

What's my point? Be very careful when "chasing yield"!! There's a reason that the yield percentage is so "tantalizingly high"... that comes with RISK! Risk is okay when it works out in your favor. Painful when it doesn't!! And you can only buy RISK assets when you're very actively managing them. They're not buy and holders / sleep well at night investments. Learn the difference.

[glassman]

Nice post Greg.

[GregWeld]

We've talked about this "metric" (a way to measure things) in the past -- and I've said that I don't really look at it - because a fast growing company could have a sky high P/E (Price to Earnings ratio)... yet - isn't growth what you want in a stock?? Or there may be some other compelling story as to why the P/E is a little out of whack vs it's peers. It is ONLY ONE metric... useful yes - but not a sole criteria!

Here's a very good explanation of a whacked out P/E in a stock I own (20,000 shares)... So I thought I'd share it here.


http://www.fool.com/investing/general/2015/03/17/misleading-metric-makes-kinder-morgan-look-pricey.aspx

[SSLance]

I don't know about everyone else, but the market activity the last two months has been a great learning experience for me. In years past, when I had a Financial Advisor that set my portfolio up for me and didn't really understand the objective, watching my net asset value plummet like it has a couple of times recently used to set me off the edge and make me lose sleep. I'll admit to being guilty of asking him to pull at at times like these, sometimes he'd talk me out, other times he wouldn't.

This time around, after watching the investments that I personally chose (and knowing WHY I chose them) dip in value...my first thought was to pick up more of them while on sale instead of running for the hills. I've been reaping the rewards of those actions the past few weeks now.

Nobody can tell where Mr Market is going to go from here on out, but as long as we all just keep on building up shares of the companies we like...eventually we'll have the dividend paydays that we need to enjoy our retirement years.

[WSSix]

Glad you're more at ease this time around, Lance. I'm in the same boat.

[GregWeld]

WOW!!! I think you're my most successful "convert".

One's view of the market must be in terms of years - not days.... it's a long slow up and down battle... which takes time to play out. But like houses - and commercial property - and many other assets - UP is the general long term result. Collecting cash payments (cash or re-invested) is so satisfying along the way!!!










I don't know about everyone else, but the market activity the last two months has been a great learning experience for me. In years past, when I had a Financial Advisor that set my portfolio up for me and didn't really understand the objective, watching my net asset value plummet like it has a couple of times recently used to set me off the edge and make me lose sleep. I'll admit to being guilty of asking him to pull at at times like these, sometimes he'd talk me out, other times he wouldn't.

This time around, after watching the investments that I personally chose (and knowing WHY I chose them) dip in value...my first thought was to pick up more of them while on sale instead of running for the hills. I've been reaping the rewards of those actions the past few weeks now.

Nobody can tell where Mr Market is going to go from here on out, but as long as we all just keep on building up shares of the companies we like...eventually we'll have the dividend paydays that we need to enjoy our retirement years.

[AMSOILGUY]

Greg,
I recently was having a text conversation with a buddy of mine and we were briefly talking about investing. What sparked the conversation was in 2008 when we were in Iraq he had showed me some stocks he held at that time. He was only 18 and light years ahead of me when it came to investing apparently. I remembered he had AAPL shares and was showing me they had gone up and of course I told him to sell and he said I was crazy. I guess he was right! Regardless of that I asked him if he still held shares in anything and he said NLY. I looked at the chart and it has been on a steady decline for a while now. I said ouch and then he said "Its a yield play. Dividend is stong, share depreciation is a good entry. Its positive when it goes down."

Can somebody explain this to me?

[GregWeld]

Greg,
I recently was having a text conversation with a buddy of mine and we were briefly talking about investing. What sparked the conversation was in 2008 when we were in Iraq he had showed me some stocks he held at that time. He was only 18 and light years ahead of me when it came to investing apparently. I remembered he had AAPL shares and was showing me they had gone up and of course I told him to sell and he said I was crazy. I guess he was right! Regardless of that I asked him if he still held shares in anything and he said NLY. I looked at the chart and it has been on a steady decline for a while now. I said ouch and then he said "Its a yield play. Dividend is stong, share depreciation is a good entry. Its positive when it goes down."

Can somebody explain this to me?



Annaly Capital Management (NLY) is something that I used in the past to "park" cash and create a yield stream. For a long while it was a fairly constant price - so was relatively safe from a price standpoint. However, It is largely a "mortgage interest rate" play -- and as such -- I had warned LONG AGO that if interest rates were to rise.... this type of holding will get punished as the spreads on what they hold will be devalued (like holding a low % bond) and that can more than offset (decline) any yield you'll see.

So let me put this very simply. Money chases YIELD.... if the bond market was paying a tax free 10% -- that's where the big money would go. Where would the big money come from (there's a finite amount of investible cash)? From the Stock market! Why would you invest in the stock market with a yield of 5 or so percent - and pay taxes - when you could get 10% tax free on a bond? So the market would go DOWN as the BOND yield became more attractive. What holds the stock market "up" is it's yield -- because as the prices of dividend paying stocks declined - provided they're paying the same dividend rate - their yield would go UP. A stock that is valued at $10 - that pays a $1 dividend - has a 10% yield.... but if that stock price declined to $8... and it continues to pay the $1 dividend -- it's yield is now 12.5%.

Dividends are declared and paid in dollar terms - not percentages. As the price of the stock goes UP -- and the dividend payout stays the same -- the yield % goes down -- as the price declines -- the yield % rises.


If you're a long term holder of a stock that declines -- but has a sufficient yield -- then "eventually" you'll be made whole. That's not a smart way to think about it - but it might be the only way to think about it versus selling the shares at a big loss and taking the capital hit. This works especially well if you're having the dividend reinvested -- as the dividend is then buying more shares (you'd get more shares at $8 than you would at $10) and over time this will bring your average cost down. It's not as simple as that --- because there is a "cost" associated with money... and you're potentially losing out on capital growth etc.


So fundamentally what you have to be aware of is ----- is the stock price declining because there is a fundamental change in the business - or the perceived fundamental change in the business.... therefore rendering it a bad holding ------ or is there potential for the share price to recover? In NLY case -- it's a dangerous holding in a rising interest rate market. Perhaps your buddy just doesn't really understand what NLY is really all about. He could be "blinded" by chasing yield rather than understanding the relationships of what interest rates can do to an interest rate sensitive company.

[AMSOILGUY]

Thanks. That helps me understand it better. Not sure if it's something I would chase. Its all about comfort and that seems like a lot of variables to consider.

[GregWeld]

Thanks. That helps me understand it better. Not sure if it's something I would chase. Its all about comfort and that seems like a lot of variables to consider.



If it's too complicated to understand the business you're thinking about being a partner in (as that is what buying the stock makes you - a partner).... stay away from it (whatever "it" is). There are far too many big great companies that you can invest in that are "easy" to click with. Why make life complicated.


I have used several companies over the years to "park" cash.... a couple ETF's (JNK and HYG and PFF)... GE.... NLY....KO... MO.... PM... AT&T and VZ. These are all "steady" shares that pay decent dividends. What I find about JNK and HYG and PFF is that they pay MONTHLY so I don't have to park for an entire quarter in order to pick up the dividend. But I'm talking about what would be quite large amounts of money for "most" folks reading this. As an example -- I hold over 1MM in EACH JNK and PFF currently (30,000 shares of each). Those two pay me over 10 grand per month... but --- big BUTT --- doesn't take much of a change when you're holding that many shares and you can lose way more than you're getting. This is okay for someone like me -- because I'm watching this stuff DAILY -- and perhaps multiple times per day. These are not buy and forget "investments"... they're "I have some cash I don't know what to do with right now and want to make some pocket money" buys.

This is why - throughout this thread I've preached to invest in best of breed stocks that a guy knows what the company does... That the average guy can buy with confidence and not need to check the price 8 times a day.... (I've got nothing better to do).

[Stuart Adams]

Hey Greg, great thread.

Ive got a generalized question. Tax on dividends goes to personal income rates, then what u see happening?

Thanks

[GregWeld]

Hey Greg, great thread.

Ive got a generalized question. Tax on dividends goes to personal income rates, then what u see happening?

Thanks



Oh boy.... a loaded question that really is a tough one. For me personally -- it would change what I do to a certain degree as that would take a lot of disposable income away.

But, I need to make money on my money. How am I going to do that? Stocks? Bonds? Real estate?

The tax rate comes into play when BOND Yields have normalized returns (not the ultra low FED induced rates we have seen lately). That's when you look to tax free bonds - because you can calculate the tax free rate of return vs the taxable rate of some other investment. The problem with Bonds is you don't have the capital growth... so there is actual "risk" there that people fail to calculate.

Stocks have survived - and paid dividends - thru all manor of tax "schemes" by the government. Ditto real estate. Ditto bonds. So it's not a zero sum game regardless of what the tax scheme is. People still need to invest their money "somewhere".

Here's the way I look at it..... If I make 100,000 and I have to pay 35% - I still kept 65,000 for me. Obviously I like keeping 80,000 of the 100... and one can discuss the benefits (or not) of that free cash flowing back to the economy vs flowing back to Uncle Sam.

But the short response is -- I think it depends on how many other things are going in the economy. A big change would be a definite shock to the economy. Ala interest rates rising too quickly. It would really depend on how the change would roll in. If they gradually raised rates - people would have time to make the proper adjustments.

I remember when (1991) the Gov decided they were going to tax "luxury". So they put a 10% penalty tax on Boats and Furs and high dollar cars etc. It cost 60,000 jobs in the boat building industry in the US and put the fur industry virtually out of business (when was the last time you saw a woman wearing a fur or saw a fur store). But we know the "government" is not the best and brightest... That tax was repealed two years later because of the damage it did. Personally, I think raising the tax rate to ordinary income tax rates would do similar damage to the economy.

As usual -- it's a thorny issue. Many people believe the "rich" should be taxed - but what happens is that the man in the street pays a far heavier price when they loose their jobs.

On a personal note --- what people don't see is how many people make a living off the "rich" guy. The building of my home here in Sun Valley will keep some people employed for over two years. If I was taxed at ordinary rates - I'd have built a smaller project - or not built at all! I could have bought some other place (only the real estate agents would have gotten any income). That would have affected an awful lot of people here in the valley. The excavator - the cement guys - the framers - the plumbers - the electricians - the HVAC guys - the roofers - the sheet rockers - the painters... NONE of those guys would have made a dime off this project - and therefore neither would they pay ordinary income taxes on their earnings. So they can tax ONE guy (me) or they can collect taxes on a 100 people. I go out and have a meal regardless of the taxes I pay. But think about the 100 people. Do they go out or stay home? Do they buy some new equipment or not? Do they buy a new snow machine or have to sell the old one to pay the rent?


Like I said -- taxes are a thorny issue, and need careful consideration of the cause and effects. What sounds good on paper and in theory - can have debilitating effects down the chain.

[WSSix]

On a personal note --- what people don't see is how many people make a living off the "rich" guy. The building of my home here in Sun Valley will keep some people employed for over two years. If I was taxed at ordinary rates - I'd have built a smaller project - or not built at all! I could have bought some other place (only the real estate agents would have gotten any income). That would have affected an awful lot of people here in the valley. The excavator - the cement guys - the framers - the plumbers - the electricians - the HVAC guys - the roofers - the sheet rockers - the painters... NONE of those guys would have made a dime off this project - and therefore neither would they pay ordinary income taxes on their earnings. So they can tax ONE guy (me) or they can collect taxes on a 100 people. I go out and have a meal regardless of the taxes I pay. But think about the 100 people. Do they go out or stay home? Do they buy some new equipment or not? Do they buy a new snow machine or have to sell the old one to pay the rent?


For any one that may be wondering, that is what trickle down economics means.

I remember the luxury tax of 91 even though I was only 11 and far from luxury. I remember it because twice a day I would cross the bridge into and out of Thunderbolt, Georgia and get to see the yachts and sailboats that were being worked on in the town. Seemed like in one day they disappeared and the company folded. It took a very long time for another business to open shop and be successful in that area. There was another shop in Savannah that I didn't get to see that also lost a lot of business due to that tax.
I too can see something similar happening should dividends become ordinary income tax. Only the harm will be much more broad. Let's hope no one gets any dumb ideas about changing the tax code and punishing retirement savings.

[Stuart Adams]

Oh boy.... a loaded question that really is a tough one. For me personally -- it would change what I do to a certain degree as that would take a lot of disposable income away.

But, I need to make money on my money. How am I going to do that? Stocks? Bonds? Real estate?

The tax rate comes into play when BOND Yields have normalized returns (not the ultra low FED induced rates we have seen lately). That's when you look to tax free bonds - because you can calculate the tax free rate of return vs the taxable rate of some other investment. The problem with Bonds is you don't have the capital growth... so there is actual "risk" there that people fail to calculate.

Stocks have survived - and paid dividends - thru all manor of tax "schemes" by the government. Ditto real estate. Ditto bonds. So it's not a zero sum game regardless of what the tax scheme is. People still need to invest their money "somewhere".

Here's the way I look at it..... If I make 100,000 and I have to pay 35% - I still kept 65,000 for me. Obviously I like keeping 80,000 of the 100... and one can discuss the benefits (or not) of that free cash flowing back to the economy vs flowing back to Uncle Sam.

But the short response is -- I think it depends on how many other things are going in the economy. A big change would be a definite shock to the economy. Ala interest rates rising too quickly. It would really depend on how the change would roll in. If they gradually raised rates - people would have time to make the proper adjustments.

I remember when (1991) the Gov decided they were going to tax "luxury". So they put a 10% penalty tax on Boats and Furs and high dollar cars etc. It cost 60,000 jobs in the boat building industry in the US and put the fur industry virtually out of business (when was the last time you saw a woman wearing a fur or saw a fur store). But we know the "government" is not the best and brightest... That tax was repealed two years later because of the damage it did. Personally, I think raising the tax rate to ordinary income tax rates would do similar damage to the economy.

As usual -- it's a thorny issue. Many people believe the "rich" should be taxed - but what happens is that the man in the street pays a far heavier price when they loose their jobs.

On a personal note --- what people don't see is how many people make a living off the "rich" guy. The building of my home here in Sun Valley will keep some people employed for over two years. If I was taxed at ordinary rates - I'd have built a smaller project - or not built at all! I could have bought some other place (only the real estate agents would have gotten any income). That would have affected an awful lot of people here in the valley. The excavator - the cement guys - the framers - the plumbers - the electricians - the HVAC guys - the roofers - the sheet rockers - the painters... NONE of those guys would have made a dime off this project - and therefore neither would they pay ordinary income taxes on their earnings. So they can tax ONE guy (me) or they can collect taxes on a 100 people. I go out and have a meal regardless of the taxes I pay. But think about the 100 people. Do they go out or stay home? Do they buy some new equipment or not? Do they buy a new snow machine or have to sell the old one to pay the rent?


Like I said -- taxes are a thorny issue, and need careful consideration of the cause and effects. What sounds good on paper and in theory - can have debilitating effects down the chain.

Thanks. A patient mentioned that Obama was talking about that, it got my attention, and not in a good way. You da man!

[GregWeld]

Thanks. A patient mentioned that Obama was talking about that, it got my attention, and not in a good way. You da man!




Obama would mostly likely love to issue an "executive order" to mandate taking 75% of my income so he can "redistribute" it to someone that hasn't held a job in their lifetime.... That would most certainly be very helpful to the economy.... for a day... until the recipient was broke again the next day and back on the free food wagon.

[toy71camaro]

Wow. MSFT and AMZN on the move today! Sheesh.

[GregWeld]

Wow. MSFT and AMZN on the move today! Sheesh.


You'd have had to have a lot of "conviction" to have held AMZN or MSFT for a long enough period to get to this point. Both of these stocks have had lousy performance for quite awhile.

If you chart them for comparison sake - only the move yesterday pulled them into "decent" performance category. I charted both against Snap-On (SNA) just for fun and SNA beats MSFT handily -- over a 5 year chart (212% vs 55%) and even beats AMZN (212% vs 209%). I'm laughing here because who'd have thought Snap-On could pound those two.... The performance would be even worse if you backed up a week (before the latest move).

Now --- punch FaceBook (FB) into the equation... it's only up 113% over the same period. HAHAHAHAHAHAHAHA

[GregWeld]

Here's an interesting little tidbit.... I'd have never guessed in a million years. Apple raised it's dividend 11% which is nice... but it still doesn't pay much "percentage wise"... at 1.42%


But here's what shocked me.....


Apple is now the largest payer of dividends writing checks for $12.1 billion a year, topping Exxon Mobil at $11.6 billion.

[WSSix]

Isn't Apple still at the top of the list for companies with the most cash on hand?

[glassman]

Isn't Apple still at the top of the list for companies with the most cash on hand?

Yes, (well from the "news") and "supposedly" paying off investors (partly). I read here a few pages back from one of us that Apple doesn't reward its investors nearly enough....

[GregWeld]

Isn't Apple still at the top of the list for companies with the most cash on hand?



According to this quarters report -- cash on hand - which included short and long term investments (bonds etc) is a whopping 192 BILLION. That's more than Microsoft and Google COMBINED.

Astounding...

In full disclosure I own 2000 shares.

Gwen and I discussed them (AAPL) the other day (she was a Microsoft exec for 19 years beginning in 1984 before they were a public company) - where MSFT seems to just come out with an "upgrade" which many times seems to us to be more complicated to use, or add ons that we don't need or use.... Apple manages to come up with truly useful products and software upgrades that enhance, or makes our lives, more fun or more productive. As a company for investing in -- being able to charge a premium price is directly linked to that companies ability to create desirable products. I think Apple (AAPL) has done this time and again. I only wish they shared that cash hoard with their shareholders. But it's hard to argue with their TOTAL RETURN. Remember we have to balance the dividend payout with growth... but the goal is fantastic total return.

[GregWeld]

Yes, (well from the "news") and "supposedly" paying off investors (partly). I read here a few pages back from one of us that Apple doesn't reward its investors nearly enough....



You missed the part about TOTAL RETURN for investors being the key. That is made up of any combination of growth and dividend.

Apple (AAPL) has a 1 year total return of 56% - a 3 year T/R of 60% - and a 5 year T/R of 270%


I'll take a triple of my money in 5 years as a successful investment any day. :>)

[mdprovee]

I have Apple and it has worked out nicely for me. I wasn't sure when it was dropping like crazy, and I wanted to run. Then I remembered to stick it out, don't panic, low haul, and then it split, and has been doing great.

Thanks Greg.

[glassman]

You missed the part about TOTAL RETURN for investors being the key. That is made up of any combination of growth and dividend.

Apple (AAPL) has a 1 year total return of 56% - a 3 year T/R of 60% - and a 5 year T/R of 270%


I'll take a triple of my money in 5 years as a successful investment any day. :>)

Point.

[ErikLS2]

I especially like the one where they can buy Ford, GM and Tesla and still have $41 Billion umm, left over!

http://business.financialpost.com/business-insider/15-mind-blowing-facts-about-apple-incs-latest-quarter?__lsa=4dd2-6966

I finally bought Snap-On in October after seeing a Snap On truck every week for 25 years and always knowing they are by far the best tools. It was right under my nose all that time! I can't find a more stable, better looking chart.

[GregWeld]

I especially like the one where they can buy Ford, GM and Tesla and still have $41 Billion umm, left over!

http://business.financialpost.com/business-insider/15-mind-blowing-facts-about-apple-incs-latest-quarter?__lsa=4dd2-6966

I finally bought Snap-On in October after seeing a Snap On truck every week for 25 years and always knowing they are by far the best tools. It was right under my nose all that time! I can't find a more stable, better looking chart.



That's some crazy statistic Erik!! Hard to imagine that much money.... Just WOW!!


I own Snap-On (SNA) --- not a good dividend payer so I only own 500 shares -- but it's a great company - great brand - I buy their stuff.... so why not!

[frankv11]

After all these years finally looking at investing on some stock,
Any thoughts on CVX vs Exxon,

[GregWeld]

After all these years finally looking at investing on some stock,
Any thoughts on CVX vs Exxon,




Good question Frank....


I've been buying "oil / oil related" all along during the big "sell off" / "oil is going to $10 a barrel". We ALL know oil is not going to stay at these low levels.

If you pull a 5 year chart on these two companies they mirror each other - and their dividend is within a half a point of each other... so either one will serve you just fine. Don't fail to compare TOTAL RETURN and slug in some other similar names just for your own peace of mind.

[frankv11]

Again , thanks for the info Greg. I figured if I don't buy some now , I'll be mad my self 5 years out.

[GregWeld]

Here's a very good article on how to get started SMALL in investing -- it takes Kinder Morgan Inc (KMI) and just talks about the power of small savings to get started and walks you thru what happens over a 5 year period.

I own KMI <15,000 shares> and it pays me $28,000 per year in dividends.

What this article does is walks a guy thru the process and THINKING about how to get started. Dispelling the notion that you have to have big money to start with. Come to think of it - this is exactly what I've been writing about here for a couple years now! LOL

[ironworks]

Here's a very good article on how to get started SMALL in investing -- it takes Kinder Morgan Inc (KMI) and just talks about the power of small savings to get started and walks you thru what happens over a 5 year period.

I own KMI <15,000 shares> and it pays me $28,000 per year in dividends.

What this article does is walks a guy thru the process and THINKING about how to get started. Dispelling the notion that you have to have big money to start with. Come to think of it - this is exactly what I've been writing about here for a couple years now! LOL


That's great. But the world wide web is pretty big and a link would really help me out there BIG BOYEE.

[sjaroslo]

That's great. But the world wide web is pretty big and a link would really help me out there BIG BOYEE.

LOL! But my thoughts as well. Linkey?

[GregWeld]

That's great. But the world wide web is pretty big and a link would really help me out there BIG BOYEE.

LOL! But my thoughts as well. Linkey?



WHINERS!!! LOL



http://seekingalpha.com/article/3148386-generating-100-a-month-from-kinder-morgan

[GregWeld]

I've stated in this thread many times that I HATE BONDS.... The reason I hate bonds is because they are sold to people as being the end all be all SAFE investment. Well.... That's very true as long as you plan to buy the bond and hold it for it's maturity, and if you're happy with ZERO growth in your money. Since you'll hold the bond to maturity and only receive you're money back. Buy a 10K bond = hold it for 10 years = collect the yield = Get your 10K back.

Now -- here's why I really hate them. Because they're NOT SAFE. Hell no! Right now -- if you'd have bought a bond that paid under 2% (less than the rate of inflation!) and you wanted / needed to sell... you're going to get clobbered on the price of the bond. Remember that the YIELD rate is fixed on the bond.... so in order to get more YIELD - the new buyer needs to PAY LESS than you did - in order to RAISE the yield to whatever the current levels of new bonds are yielding.

So you hold a 2% bond - and a guy can buy a new bond tomorrow that pays 2.5%.... in order to have your bond yield the equivalent of 2.5% the buyer would only offer you "X" (well below your 10k).

Your CHOICE would be to take the loss or to continue to hold the bond til maturity.... so let's say you bought it last year... you now have 9 more years to hold your "safe" bond -- collecting your lousy 2%.... and in the meantime the yields rise to 6% (more normal rates).... and you're only going to get your face value back 9 years from now. That scenario is pure LOSER.

My MIL got talked into bonds and annuities 30 years ago -- I guess that's why we help support her today. Sad. Don't be that guy.

I love it when people tell you to buy stocks and then as you near retirement you should switch to bonds and "safer" investments. REALLY?? So wait -- let me think about this.... I've been investing in stocks for 25 years - and I've tripled my money and I'm getting a 8% yield on my cost basis.... and I'm planning on being retired for another 25 years.... WHY WOULD I ABANDON A STRATEGY THAT HAS MADE ME NOTHING BUT MONEY for something that is going to lose me money and the ability to stay well ahead of inflation?? WHY?? Because someone wants a commission... oh -- and that someone is still working for a living. IF they were so F'n smart with their money - why are they 63 years old and still working?? (okay - that's cruel.... but is the question I'd love to ask them).

[SSLance]

Only time I've ever been involved with ANY success in regards to bonds was back in the early 2000s. Our company's defined benefit pension plan was completely overfunded because of our very successful aggressive investing strategy and the actuary specialist told us that no matter how much more money we made inside the plan, Uncle Sam was going to get it all... So we switched everything over to Treasury bonds to ride out the rest of the term within the plan. This was just a few months before the dot com bust...

Sometimes it's better to be lucky than good...

I got beat up pretty good in the high yield municipal bond market during the 2008 CDO debacle... Again, they were sold to me as the safest way to create steady income with the added benefit of avoiding income tax on the dividends. The municipal bonds themselves held inside the funds weren't hurt by the mortgage scandals, but they got drug down in the mud with them as they were in basically the same market...some of which still haven't gained their value back 7 years later now.

Greg is spot on with his assessment above...

[glassman]

^^^^, as usual.

So true though, the phrase "if it ain't broke, don't fix it" comes too mind. And i dont think that assessments "cruel", just stating a fact. Alot of people (financial salespeople) dont "figure it out" till late in life, better late than never i guess.

Heck, i'm still having trouble assembling this spreadsheet of stocks...

[ironworks]

Seems like an interesting topic for this thread.

http://www.brainjet.com/random/5642/17-corporate-darwin-award-nominees-they-goofed

[GregWeld]

Having been to the Monaco Grand Prix (Gwen and I went to the 75th running).... everything this guy writes, is spot on about the event! The money that attends is WORLD CLASS... the cars are world class... and the yachts are the biggest I've ever seen ANYWHERE (200 footers are TINY - I'd be embarrassed to be on one).... but it's the way the author rolls right into an analogy of racing and INVESTING that caught my attention and thus sharing here. LOL



http://www.uncommonwisdomdaily.com/why-your-portfolio-is-like-a-race-car-20567

[GregWeld]

This IS NOT good news from McDonalds (MCD).... Think about it this way. If your sales are going gang busters you WANT people to know about it! It's good for shareholders... it makes the news (free advertising) etc. When your sales SUCK... then you hide the info. No thank you. Too many other good, growing, companies out there to invest in with better dividends.



http://www.bloomberg.com/news/articles/2015-05-27/mcdonald-s-to-stop-reporting-monthly-same-store-sales


I post this because I always discuss FUNDAMENTAL CHANGES. This is a fundamental change that someone should be concerned about. These are all the little details you need to learn to avoid land mines in investing.

[Evil_s10]

While watching part of the Chevrolet Detroit Belle Isle Grand Prix race today, I saw this e-trade commercial and it really solidifies the mentality that Greg has been trying to emphasize.

https://www.youtube.com/watch?v=cXYO0DBb-sM

[Vortech404]

What do you all have started for your children?
My son is 1 1/2 years old. Did you guys start a 529 college fund
Or is there something else I could start for him. As I understand
He cannot start a Roth because you need to have earned income.

Can I gift money into that?

Thanks
John

[WSSix]

John you may want to sit down with an accountant for something like this. I'm not sure about the Roth but that may be the case with him having no income. The reason I say sit down with an accountant is because you mentioned the 529. If your goal is to save for college, it's a potential source for such a goal. However, there are tax implications involving the 529. Your state may give you a tax break for investing in a 529. Or, it may be better to invest in another state's 529. I know Utah has or had one of the best 529 plans in the country for a while.

The other issue in general is you're doing this for someone else. It could get tricky and you'd want to make sure it's shielded as best as possible now and for when he comes of age. There's also the issue of what happens to it should something happens to you, death or a law suit even. Maybe I'm going overboard but I think putting money away for someone else is not easy to do correctly. Too many what if's.

Good luck

[GregWeld]

What do you all have started for your children?
My son is 1 1/2 years old. Did you guys start a 529 college fund
Or is there something else I could start for him. As I understand
He cannot start a Roth because you need to have earned income.

Can I gift money into that?

Thanks
John



Trey gave you some good advice John --- see a professional with these kinds of questions. There's about half a zillion different ways to save money for a child -- but there's no one right way. It needs to be worked out for YOUR goals and income strategy.

There are "gifts" you can give --- each spouse - to the child - tax free - for both of you. There are limits per year and per lifetime etc. So you really need to get educated on all this stuff. IT will make a huge difference for them.

[GregWeld]

I haven't posted much lately -- mostly - because the thread just gets longer and longer --- but there really isn't much "new" to add to the thought process that is BASIC investing. Basic investing is so simple. You save some money - buy some shares in a great company that pays a dividend... add to the pile as you can.

So having said that -- I always have "cash" that isn't doing anything. Don't ask me why... because I have no answer. I just like a margin of cash that is ready for "whatever". We're not talking about $500 either... so it's really dumb.

Summer is a time when the market typically just drips AWAY day after day. People get busy with vacations... there's not much news... and the market just takes a break. So - knowing that... This is when I usually look to pick away at adding a name or adding to a position. But -- always the big butt -- like everyone else... I'm on the fence watching the affect that a FED rate hike will look like. Do we get crushed (temporarily)? Does the market shrug it off? Is the signal from the FED that the economy is doing well - so the market should be good because business is good (that is the bottom line after all)?

The other thing that runs thru your (and mine) head is always -- is the market overvalued (too high) and I should wait for a big pullback?? So having said that -- I want you to pull up a 5 year chart of BlackRock (BLK).... this is a rhetorical question... at what point in the last five years would that chart (if you did NOT have this historical look now) tell you it's overvalued and to wait for a buy? LOL

Thus my post today... HOPEFULLY this thread - if it's done nothing else - has taught you to take a far longer term approach to your investing. Are we investing for what might happen 6 months from now - or are we investing for 20 YEARS from now??

[dhutton]

Thus my post today... HOPEFULLY this thread - if it's done nothing else - has taught you to take a far longer term approach to your investing. Are we investing for what might happen 6 months from now - or are we investing for 20 YEARS from now??

Hi Greg. Does this approach change at some point relative to retirement age or do you advocate this same strategy well into retirement?

Thanks,
Don

[GregWeld]

Hi Greg. Does this approach change at some point relative to retirement age or do you advocate this same strategy well into retirement?

Thanks,
Don

Don -- The old school used to say that as you approach retirement age -- that you should switch to bonds. The reason behind this was that you wouldn't or "shouldn't" loose capital in a down market. Great. NOT. People used to retire at 65 and maybe live to 75.... now that standard is out the window. People live for YEARS and YEARS now. My Mother in Law is 90 and still going strong!

So here's always been my point about this - and I've been retired for 23 years now (I'll be 62 this summer). If a strategy that worked well enough to get me to retirement - which may have taken years - why would I change that? It might have taken 25 or 30 years to get enough of a nest egg that would see me thru retirement.... and perhaps I have ANOTHER 25 years of life left!! I sure hope so!! 65 to 90 is 25 years! Will there be ups and downs in my portfolio over that time? Hell yes! Many of them. But if I've followed the plan --- I'm living off the dividend strategy -- not the capital. Oh - and by the way - that capital should have grown many fold over the time I've been investing. So if I've got 300% more than I put in -- and it's down 20% -- who cares?!?!? I'm not spending (or selling) all of my capital "this year" (the year or two or three when it's down from the HIGH).

The key to happy retirement is to have your spending "in check" -- there just shouldn't be much outgo... and your Social Security should only be a supplement to your real income from your investments... and the dividends should have grown over time from when you first bought "X". Maybe the actual dividend percentage being paid on your original investment is now 20% or more!! Say you bought at $50 and it paid 5% ($2.50 per year dividend) and now 20 years later it's paying you $4.00 per year in dividends. That's now paying you 8%.... and think about this as well.... it's been paying you $2.50 or better per year for 20 years --- at a steady rate of $2.50 for 20 years that's all of your money back ($50 in total dividends per share!). Hopefully you choose to re-invest the dividend all those 20 years and you now have a bunch more shares than you started with.

Here's a real life scenario --- that just happened to close this week. In 2005 I invested $200,000 in an apartment LLC (Limited Liability Corp). The dividend paid was 7% ($14,000 per year).... "We" just sold this property and my net cash out is $655,000. So in 10 years I collected $140,000 in dividends - and I got a net (gross actually) check for $675,000. Now - if I get a call next week from the same group and they ask me to buy into another apartment.... would I say "F" you! I'm retired!? Let me do the math - in 10 more years I'll be 72 - I hope to still be racing with Charlie.... and maybe if this new investment works as well as the last one did -- I'll get a check for 1.5 million (investing $500,000 in the new deal) and the $500,000 at 6% will be paying me $30 grand a year...

So I ask you.... should I change my strategy??? Or should I buy another race car?

[WSSix]

Option C. BOTH! :D

[dhutton]

Don -- The old school used to say that as you approach retirement age -- that you should switch to bonds. The reason behind this was that you wouldn't or "shouldn't" loose capital in a down market. Great. NOT. People used to retire at 65 and maybe live to 75.... now that standard is out the window. People live for YEARS and YEARS now. My Mother in Law is 90 and still going strong!

So here's always been my point about this - and I've been retired for 23 years now (I'll be 62 this summer). If a strategy that worked well enough to get me to retirement - which may have taken years - why would I change that? It might have taken 25 or 30 years to get enough of a nest egg that would see me thru retirement.... and perhaps I have ANOTHER 25 years of life left!! I sure hope so!! 65 to 90 is 25 years! Will there be ups and downs in my portfolio over that time? Hell yes! Many of them. But if I've followed the plan --- I'm living off the dividend strategy -- not the capital. Oh - and by the way - that capital should have grown many fold over the time I've been investing. So if I've got 300% more than I put in -- and it's down 20% -- who cares?!?!? I'm not spending (or selling) all of my capital "this year" (the year or two or three when it's down from the HIGH).

The key to happy retirement is to have your spending "in check" -- there just shouldn't be much outgo... and your Social Security should only be a supplement to your real income from your investments... and the dividends should have grown over time from when you first bought "X". Maybe the actual dividend percentage being paid on your original investment is now 20% or more!! Say you bought at $50 and it paid 5% ($2.50 per year dividend) and now 20 years later it's paying you $4.00 per year in dividends. That's now paying you 8%.... and think about this as well.... it's been paying you $2.50 or better per year for 20 years --- at a steady rate of $2.50 for 20 years that's all of your money back ($50 in total dividends per share!). Hopefully you choose to re-invest the dividend all those 20 years and you now have a bunch more shares than you started with.

Here's a real life scenario --- that just happened to close this week. In 2005 I invested $200,000 in an apartment LLC (Limited Liability Corp). The dividend paid was 7% ($14,000 per year).... "We" just sold this property and my net cash out is $675,000. So in 10 years I collected $140,000 in dividends - and I got a net (gross actually) check for $675,000. Now - if I get a call next week from the same group and they ask me to buy into another apartment.... would I say "F" you! I'm retired!? Let me do the math - in 10 more years I'll be 72 - I hope to still be racing with Charlie.... and maybe if this new investment works as well as the last one did -- I'll get a check for 1.5 million (investing $500,000 in the new deal) and the $500,000 at 6% will be paying me $30 grand a year...

So I ask you.... should I change my strategy??? Or should I buy another race car?

Thanks Greg. Great advice as usual.

Don

[NOVA]

Don -- The old school used to say that as you approach retirement age -- that you should switch to bonds. The reason behind this was that you wouldn't or "shouldn't" loose capital in a down market. Great. NOT. People used to retire at 65 and maybe live to 75.... now that standard is out the window. People live for YEARS and YEARS now. My Mother in Law is 90 and still going strong!

So here's always been my point about this - and I've been retired for 23 years now (I'll be 62 this summer). If a strategy that worked well enough to get me to retirement - which may have taken years - why would I change that? It might have taken 25 or 30 years to get enough of a nest egg that would see me thru retirement.... and perhaps I have ANOTHER 25 years of life left!! I sure hope so!! 65 to 90 is 25 years! Will there be ups and downs in my portfolio over that time? Hell yes! Many of them. But if I've followed the plan --- I'm living off the dividend strategy -- not the capital. Oh - and by the way - that capital should have grown many fold over the time I've been investing. So if I've got 300% more than I put in -- and it's down 20% -- who cares?!?!? I'm not spending (or selling) all of my capital "this year" (the year or two or three when it's down from the HIGH).

The key to happy retirement is to have your spending "in check" -- there just shouldn't be much outgo... and your Social Security should only be a supplement to your real income from your investments... and the dividends should have grown over time from when you first bought "X". Maybe the actual dividend percentage being paid on your original investment is now 20% or more!! Say you bought at $50 and it paid 5% ($2.50 per year dividend) and now 20 years later it's paying you $4.00 per year in dividends. That's now paying you 8%.... and think about this as well.... it's been paying you $2.50 or better per year for 20 years --- at a steady rate of $2.50 for 20 years that's all of your money back ($50 in total dividends per share!). Hopefully you choose to re-invest the dividend all those 20 years and you now have a bunch more shares than you started with.

Here's a real life scenario --- that just happened to close this week. In 2005 I invested $200,000 in an apartment LLC (Limited Liability Corp). The dividend paid was 7% ($14,000 per year).... "We" just sold this property and my net cash out is $675,000. So in 10 years I collected $140,000 in dividends - and I got a net (gross actually) check for $675,000. Now - if I get a call next week from the same group and they ask me to buy into another apartment.... would I say "F" you! I'm retired!? Let me do the math - in 10 more years I'll be 72 - I hope to still be racing with Charlie.... and maybe if this new investment works as well as the last one did -- I'll get a check for 1.5 million (investing $500,000 in the new deal) and the $500,000 at 6% will be paying me $30 grand a year...

So I ask you.... should I change my strategy??? Or should I buy another race car?

Greg - wouldn't a person need to set up something like this to do what you are doing in this scenario or no ? http://www.sensefinancial.com/services/solo401k/solo-401k-basics/ ..... if nothing else kind of an interesting site.

[GregWeld]

Greg - wouldn't a person need to set up something like this to do what you are doing in this scenario or no ? http://www.sensefinancial.com/services/solo401k/solo-401k-basics/ ..... if nothing else kind of an interesting site.


In our personal situation - "retirement" accounts don't make any sense. I've already BEEN retired 23 years... Gwen has retired TWICE... and she's younger than I am. So the point it - in a retirement account we'd have money tied up that we'd have no access too. Having said that we do have them and they're 7 figure accounts... but that's because they were well invested and have been for many years.


Now --- You have to be really really careful about buying REAL ESTATE investments AKA "passive" investments inside a retirement account. I have done that - mistakenly - and that IRA had to file an income tax form every year and pay taxes. I'm not a "tax" guy... Taxes are way too complicated for my feeble brain - and my stuff if far far too complicated (last years filing was almost 200 pages!). So I stay away from stuff I don't understand as I've made that mistake in the past.

The other thing is -- DIVIDENDS -- are taxed at 20%. They're NOT "earned income" or interest... and the LLC's I've invested in are DIVIDEND paying set ups. That -- and much of the income - if not all of it - is offset by the DEPRECIATION that you get (again - complicated and much more to it than meets the eye). I first got into real estate LLC's via my tax accountant... so since he put his money where his mouth is - and understood our situation - if he said I should do it - I did. Other than that.... I'm an idiot about most of it. The part I do know -- every one of them has worked out in OMG fashion... OMG as in GREAT.

[GregWeld]

Thought of something this morning while reading the "business news". The headline says the US stock market follows Europe down over the Greek debt issue.


I thought to myself.... REALLY? So McDonalds and Coke and Caterpillar are going to be sold off because "WE" are worried about whether or not the Greeks can pay their bills. You know what.... I didn't get up this morning and change a single thing I'm doing or planning based on this kind of info. Frankly - I could care less if they're in or out of the whole "euro" currency thing - because I don't care about the "euro" - who's in it or what it's even all about.

What I do care about is whether or not the businesses I'm investing in are paying their bills - whether or not their sales are higher going forward - and what their willing to share with me as a stockholder. I looked around and didn't see a single company that I'm in that was dependent on Greece for their business.

What's my point?? The point is that the "news" can drive you crazy.... which is why I call them "talking heads". 10 years from now we won't even remember who Greece is let alone whether they "reformed" or not. It's like discussing a pimple. Greece isn't China. I'll get worried when China can't pay it's bills.

[SBDave]

Embarrassingly I've known about this thread since it began and something recently sparked me to start reading it. I've read through page 57 over the last couple days.... which is interesting because I can see the advice and discussions and then what happened in the market following the discussions.

What is your advice on getting caught up on the thread? I can slowly work my way through all 500 pages but that'll take some time.

I need to refine my own investments and feel like I'm in a very good position to use the lessons in this thread. I'm 31 and have a 401K, ROTH 401K, ROTH IRA, HSA, a managed portfolio as well as other mutual funds and am a partner in a craft brewery.
I've been wanting to get into real estate but my location makes it somewhat prohibitive (Santa Barbara, CA).

Thanks!
Dave

[Flash68]

am a partner in a craft brewery.
I've been wanting to get into real estate but my location makes it somewhat prohibitive (Santa Barbara, CA).

Thanks!
Dave

Nice! Which one?

[SBDave]

Faction Brewing in Alameda, CA

http://factionbrewing.com

I'm a small partner :happy23:

[WSSix]

Dave, if you've read to page 57 already, you should have the basics down. Now, it's just time to start applying that info to various stocks/companies that interest you. Analyze them to see if they are worth owning. You can give us a report on your choices and why you like them. From there, we can see if you're thinking things through correctly. It's the method that matters.

You may want to see if you can consolidate some of your accounts, too. It could help you save some fees and simplify what you're looking at. I love Roth accounts.

[Flash68]

Faction Brewing in Alameda, CA

http://factionbrewing.com

I'm a small partner :happy23:

That's awesome. I just took my wife and son there last weekend and had a couple beers and lunch (from Scolari's) on the patio there. Killer scenery.

I must say the people working the bar need to turn over the customers quicker... leaving lots of dollars on the table. :D

Good beer! Hope it works out well for ya. :cheers:

[SBDave]

Nice! The beer and view are pretty hard to beat. I know what you mean about the bar tenders, although it can be outside their control i.e. people ordering samplers, growlers or picking up kegs. My brother said one time a bus with 50 people from Google showed up half hour before they were supposed to close :drowninga: The business is doing very well though!

Would love to talk more beer but I've gotta go find out what my money is doing.

Thanks to Greg and everyone sharing in this thread, what I learn here will no doubt help not only me but my family and friends as well.

Dave

[GregWeld]

SBDave....


You can read this thread as your time and interest permits... it's quite repetitive... and as Trey (WSSix) said... you've probably got the basic info by page 57. As in most of these threads - they wonder about as people ask questions etc... and there are "details" regarding various philosophies etc. But basically it's about NOT trying to time the market - trying not the 'trade' the market and about buying best of breed companies that you understand and trust them.

The rest is about various ways to do research - and from time to time - individual stocks are discussed in a ways (the intent) to help people "THINK". It's about teaching how to fish rather than "buy this and don't buy this" (catching you a fish).

The other thing you'll see here repeatedly - is myself and others - goading people into getting into "investing/saving" so their lives will be better down the road - regardless of the ability/amounts.

Put a buck in a jar for each page you read.... LOL


Feel free to chime in, add, ask, discuss.... some of us are as hooked on this stuff as we are on cars.

[NOVA]

In our personal situation - "retirement" accounts don't make any sense. I've already BEEN retired 23 years... Gwen has retired TWICE... and she's younger than I am. So the point it - in a retirement account we'd have money tied up that we'd have no access too. Having said that we do have them and they're 7 figure accounts... but that's because they were well invested and have been for many years.


Now --- You have to be really really careful about buying REAL ESTATE investments AKA "passive" investments inside a retirement account. I have done that - mistakenly - and that IRA had to file an income tax form every year and pay taxes. I'm not a "tax" guy... Taxes are way too complicated for my feeble brain - and my stuff if far far too complicated (last years filing was almost 200 pages!). So I stay away from stuff I don't understand as I've made that mistake in the past.

The other thing is -- DIVIDENDS -- are taxed at 20%. They're NOT "earned income" or interest... and the LLC's I've invested in are DIVIDEND paying set ups. That -- and much of the income - if not all of it - is offset by the DEPRECIATION that you get (again - complicated and much more to it than meets the eye). I first got into real estate LLC's via my tax accountant... so since he put his money where his mouth is - and understood our situation - if he said I should do it - I did. Other than that.... I'm an idiot about most of it. The part I do know -- every one of them has worked out in OMG fashion... OMG as in GREAT.

Thanks for your reply on this Greg

[Spiffav8]

I haven't posted much lately -- mostly - because the thread just gets longer and longer --- but there really isn't much "new" to add to the thought process that is BASIC investing. Basic investing is so simple. You save some money - buy some shares in a great company that pays a dividend... add to the pile as you can.

So having said that -- I always have "cash" that isn't doing anything. Don't ask me why... because I have no answer. I just like a margin of cash that is ready for "whatever". We're not talking about $500 either... so it's really dumb.

Summer is a time when the market typically just drips AWAY day after day. People get busy with vacations... there's not much news... and the market just takes a break. So - knowing that... This is when I usually look to pick away at adding a name or adding to a position. But -- always the big butt -- like everyone else... I'm on the fence watching the affect that a FED rate hike will look like. Do we get crushed (temporarily)? Does the market shrug it off? Is the signal from the FED that the economy is doing well - so the market should be good because business is good (that is the bottom line after all)?

The other thing that runs thru your (and mine) head is always -- is the market overvalued (too high) and I should wait for a big pullback?? So having said that -- I want you to pull up a 5 year chart of BlackRock (BLK).... this is a rhetorical question... at what point in the last five years would that chart (if you did NOT have this historical look now) tell you it's overvalued and to wait for a buy? LOL

Thus my post today... HOPEFULLY this thread - if it's done nothing else - has taught you to take a far longer term approach to your investing. Are we investing for what might happen 6 months from now - or are we investing for 20 YEARS from now??

A friend of mine recently opened "The World War 2 Aviation Museum in Colorado Springs, CO. Not something to many of your friends do and being a huge WW2 aviation geek, Laurie and I drove over the hill to take the tour and get caught up with my friend. While there we also toured his restoration shop and got a pretty up close look at a few "special" aircraft that are being restored. One being a P-38 Lightening called "White 33". It was flown by both of WW2's leading aces and will be part of Paul Allens collection when finished. The history attached to this particular P-38 increases the value greatly. One would think that a person like Paul Allen would be first in line for an aircraft like this, but he actually got lucky. Another client started the project. He was a rich man when he went to bed one night and woke up the next day to find that he was penniless.

This really got me thinking. There's a lot that can go wrong in the world, but assets that play on a global scale (such as a priceless WW2 airplane) would be a good investment....wouldn't they?

[GregWeld]

A friend of mine recently opened "The World War 2 Aviation Museum in Colorado Springs, CO. Not something to many of your friends do and being a huge WW2 aviation geek, Laurie and I drove over the hill to take the tour and get caught up with my friend. While there we also toured his restoration shop and got a pretty up close look at a few "special" aircraft that are being restored. One being a P-38 Lightening called "White 33". It was flown by both of WW2's leading aces and will be part of Paul Allens collection when finished. The history attached to this particular P-38 increases the value greatly. One would think that a person like Paul Allen would be first in line for an aircraft like this, but he actually got lucky. Another client started the project. He was a rich man when he went to bed one night and woke up the next day to find that he was penniless.

This really got me thinking. There's a lot that can go wrong in the world, but assets that play on a global scale (such as a priceless WW2 airplane) would be a good investment....wouldn't they?





There's two kinds of assets. Liquid and Illiquid. You need more liquid assets in order to be able to hold on to, and buy, illiquid assets.

Houses - art - cars - planes - property - etc are illiquid. They can be very tough to sell in "down" markets. When that happens the value sinks. You want to be a BUYER of illiquid assets in down markets. BUT.... There's always the big butt in the room.... in order for that to take place you have to have plenty of liquid assets. Liquid assets are stocks and bonds and cash. These also have down markets so even liquid assets such as stocks and bonds - while being liquid - creating the liquidity can create losses.

So -- what you always strive for is to have enough INCOME (cash flow) so that you never have to sell in down markets... you can just buy in those markets - hold on to the asset - and continue to have fun.

That's why rich people get richer and poor people get poorer.... Poor is a relative term and doesn't have to describe those that are destitute. Poor can be "cash poor" or "cash flow negative".... thus forcing sales of assets at below market value.

To me -- being "poor" could / does - describe someone that has to sell one car to buy another... or to fund the next project. That's not good management of assets. Because it often leads to the loss of both. That's "cash poor". A person should be able to fund these kinds of assets during good and bad times out of cash flow.

It's funny because all assets FALL in unison. Think of this last "big recession".... car values went south at the same time as housing... and the stock market. The folks that didn't survive - or took big losses - where the ones that didn't have adequate liquidity or liquid assets. Those that did - bought stuff at huge discounts and are now making a killing.

[DBasher]

I've got a customer that has a pretty impressive car collection, cars that have real history or are "1 of" some low number. I'm not sure what the collection is worth but like anything else it rises and falls with the tide. I'm not sure how it came up but we got on the subject of the bozo in the White House and all the great things he's done for this country....:snapout: Apperently with one swipe of Obamas pen, the ivory business took a dump, as in doesn't exist anymore. Illegal to trade, ship, sell, legally you can't give it away. What does this have to do with anything? My customer took a multi million dollar hit overnight with a portion of his business, he still has the cars, the big house and a successful business because all his eggs weren't in one basket. The people in the industry that all they dealt with was ivory...have nothing or very little. These guys aren't street vendors selling goods to tourist but high end art dealers trading globally.
DIVERSIFY!

[WSSix]

You know that's a good point. The ivory deal wasn't meant to cause any problems for collectible art pieces that have a history, but unintended consequences can be a bitch. You definitely have to keep your eyes open and diversify.

[glassman]

I've got a customer that has a pretty impressive car collection, cars that have real history or are "1 of" some low number. I'm not sure what the collection is worth but like anything else it rises and falls with the tide. I'm not sure how it came up but we got on the subject of the bozo in the White House and all the great things he's done for this country....:snapout: Apperently with one swipe of Obamas pen, the ivory business took a dump, as in doesn't exist anymore. Illegal to trade, ship, sell, legally you can't give it away. What does this have to do with anything? My customer took a multi million dollar hit overnight with a portion of his business, he still has the cars, the big house and a successful business because all his eggs weren't in one basket. The people in the industry that all they dealt with was ivory...have nothing or very little. These guys aren't street vendors selling goods to tourist but high end art dealers trading globally.
DIVERSIFY!

Eggzactly!!!

[SSLance]

One of my early investments was in HCP, it was my way to enter the healthcare field in a way that was supposed to take advantage of the aging population. It's a dividend champion and has been for a long time but like Greg likes to point out, it seeming more and more like there are fundamental changes happening within the company and I believe I'm going to step away. Anytime there are Judicial investigations into 25% of the company and senior executives leaving the company, the handwriting may be on the wall.

Read this article but more importantly read the comments below the article and see if you get the same feeling.

http://seekingalpha.com/article/3243576-hcp-inc-safe-to-buy

Hardest decision may be trying to decide which other dividend champ to buy to replace it.

[GregWeld]

Good choice Lance.... better to stand on the side than to get run over. If in doubt bail out. You can always buy it back - or as you have stated - buy something similar.

Remember when buying or selling -- you never have to buy in or sell out all at once... Some times I'll just sell half or a quarter of a position. That way if the shares snap back I capture some of that. But if you think they're going down - then I'll sell all.

[GregWeld]

I just read a stock market report on China - and what has been happening to that market in recent weeks. Seems that 85% of the market is "retail" investors (what we are) and that much of the market is speculation and "margin" buying. With their market selloff - down some 25% in the last couple weeks... many are now only waiting for the market to climb back to "even" before they get out. My bet would be that they'll bail before that - and thus lock in their sizable losses.

My point? Retail investors buy high and sell lower... they fail to understand the risks... and pile in with ever more capital (borrowed when it's margined) when things are going their way... and bail the minute it's not. They're not "INVESTORS" -- they're gamblers. Idiots really... because the ones with the most to loose are probably in the deepest financially... and understand what they're doing, the least.

This all reminds me of the housing market crash here - which also sent the stock market reeling. Borrowing money on their houses - refinancing every other day - buying stuff that depreciates (pro touring cars.... LOL).. and generally living large on money they don't have. That is a recipe for the disaster it eventually became. Don't be "that guy".

The people that stayed in the market - either with houses or the market - eventually did just fine. Those that sold did not. Those that stepped in and bought from the losers (weak handed sellers) - did even better! Be that guy!

[GregWeld]

I cut and pasted this piece because it was so important in it's total value that I didn't even want to post the link thinking that you might not click thru!

Why is it important? Because it's discussing the THOUGHT PROCESS that people must go thru with investing. It's very similar to thoughts we've discussed in here many times.... i.e., it's real easy to think you're going to sell at the top and buy at the bottom or wait and get in at lower prices and blah blah blah... to which I've said how many times???? Just get in and think longer term. Okay -- here it is.

Forget that he is discussing a "style" switch from a Total Return to Dividend Growth Investing -------- because his version of T/R is just really a "GROWTH" portfolio (growth of capital without dividends). For me - TR - is growth of capital AND dividends... what's important is the thought process he discusses and he's spot on!!



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


So, You'll Switch To Dividend Growth Investing After You Have Your Millions, Eh?
Jul. 8, 2015 6:02 AM ET | 20 comments | Includes: BRK.A, BRK.B, CELG, CVX, GOOG, GOOGL, JNJ, KMB, KO, MO, PG
Disclosure: I am/we are long CVX, JNJ, KO, MO, PG. (More...)
Summary

Some investors who focus on total return say they plan to switch to DGI when they are in or near retirement.
It sounds viable, but it's not as easy as some make it sound.
In addition to trying to make major decisions about allocations and valuations, there would be all kinds of psychological factors involved.
Spend decades building the most wealth possible and then - Bingo! Bango! Bongo! - switch to a Dividend Growth Investing strategy upon retirement. Easy-peasy, right?

It is a sentiment frequently presented within Seeking Alpha comment streams. For example, as "hahaha48" said in response to David Van Knapp's recent article, "Measuring The Success Of Your Dividend Portfolio":

You can always sell everything and buy something different with the same total value.

DGI guru "Chowder" noted that such a strategy wouldn't have worked very well during the 2007-09 market meltdown, when the S&P 500 fell nearly 60% from peak to trough. Another commenter, "glinsight," pointed out the potential tax nightmare of hahaha48's plan.

As much as I agree with both counterpoints, I'm going to give hahaha48 and those with similar views a break. Let's say such an investor makes the conversion from a growth-oriented strategy to DGI when the market is going well (as opposed to when recessionary times have brought severe pain). And let's say most funds are held in IRAs or other tax-favored accounts.

So what's not to like about hahaha48's idea?

Tough Choices

Let's look at a fictitious stock portfolio that reached $2 million, thanks to prudent, long-term investments in blue-chip, non-dividend companies, such as Google (GOOG, GOOGL), Celgene (NASDAQ:CELG) and Berkshire Hathaway (BRK.A, BRK.B).

With retirement looming, the holder of that portfolio wanted to switch to Dividend Growth Investing early in 2014. However, articles on this site and others warned about dividend-paying stocks being so richly valued they were in "bubble" territory. Psychologically, how easy would it have been for the investor to sell everything and then turn right around to fund a DGI portfolio featuring Chevron (NYSE:CVX), Coca-Cola (NYSE:KO), Kimberly-Clark (NYSE:KMB), Johnson & Johnson (NYSE:JNJ) and Procter & Gamble (NYSE:PG) - the five companies selected by all 10 of my DG50 panelists last year?

OK, so those stocks were overvalued then. The investor could have sold everything and gone all cash while waiting for "opportunities" to invest, right?

Well, the market kept going up, up, up as Year 5 of the bull run turned into Year 6, which subsequently turned into Year 7. In other words, it wasn't the best time to be Johnny Cash.

So, after sitting in cash for awhile and watching the market run without him/her, should the investor return to his/her familiar growth-investing strategy - knowing full well that if there is a major correction, the market will punish those companies (and that there won't even be dividends to ease the pain)?

Should the investor go all-in on DGI, with most dividend-growing companies even more richly valued?

Should the investor exchange his/her growth stocks a chunk at a time for dividend growth companies? That's probably how I would try to execute the strategy... but it would take quite some time to complete the income stream I'd need during retirement, and it would make me second-guess myself constantly.

Psychology $101

I usually chuckle when someone says he or she simply will sell everything one day and then put hundreds of thousands (or millions) of dollars right into DG companies, as if it's something your average retail investor does all the time.

"Altria (NYSE:MO) might be the best DGI company out there. It's overvalued? So what! I'll take 2,000 shares!"

Yeah, right.

I'm bemused by those who say they will merely wait for the next Great Recession-style market meltdown so they can get amazing buys on wonderful companies.

One, nobody knows when the next near-catastrophe will happen.

Two, once such a meltdown does happen, nobody knows when the market will bottom out. I mean, yeah, we know today that March 2009 was a great time to invest... but going all-in then took nerves of steel.

Conclusion

The main reason I settled on DGI after trying other strategies is that it fits my "investing personality."

Building an income stream over years gives me comfort because I need not pay attention to the daily gyrations of the market. I like that history suggests the high-quality portfolio I'm constructing will lead to a good total return, too. I enjoy charting my "Divvy Dollars," watching them grow as I approach my income goals.

And I'm happy that I will not have to guess the right time to sell a six- or seven-figure portfolio, and then guess the right time to buy a totally different six- or seven-figure portfolio.

Because that sure doesn't sound easy-peasy to me.

[WSSix]

I'm having a hard enough time deciding to sell MCD when it's only a couple thousand dollars. I can't imagine selling my entire portfolio only to turn around and by back in. If I didn't step in gradually, I'd be terrified of making a mistake. Hell, I'm terrified of making a mistake now with my pennies.

I do like the comfort of the dividend though. It's helped cushion the falls and sweeten the gains.

[GregWeld]

Just for giggles this morning -- I checked the Year to Date performance of a couple recent IPO's... I've said in the past that I avoid these not because I don't think they're good products or good companies.... but because of the vicious losses they can deliver once they cool off. The HYPE and the market get together and have EVERYBODY wanting to say they are in the name... then the TV cameras go away (they quit talking about them on TV)... and the air goes out.

Sure enough - or true enough - if you're lucky enough to buy at or near the IPO price... and ride them up - and then sell.... oh yeah - you can double your money in a month or two. But.... are you really that good of a trader? My guess is NOT.


GoPro (GPRO) YTD down 19%

Alibaba (BABA) YTD down 25%

Shake Shack YTD up 12% - but it's down 33% this month! OUCH

I'm not saying people shouldn't buy these names... that depends on your stomach - your wallet - your age - your overall financial health - your longer term horizon. I'm just saying WOW.... What a ride.

[Vince@Meanstreets]

IPO's are hit and miss. Perfect for the gamblers.

What about CMG and FIT. Both doing well. CMG open was $37 and FIT was $30.

[ErikLS2]

CMG and FIT are not the same CMG is much cheaper based on P/E and PEG Ratios and the best in class in fast casual dining. FIT is still out there fighting for position with Apple Watch and others, too early to tell who will win. Just my worthless $0.02 but after looking these up think I'm going to buy some CMG, thanks! I eat there all the time and once my food was free because I had to wait 5-10 minutes for more chicken to cook and once it was free because I was a regular and they "just like to take care of their regulars". Plus if it starts going south I will certainly know about it.

[GregWeld]

#1 --- Erik --- Chipotle Mexican Grill (CMG) is "expensive" now - but 10 years from now you'll look back and wish you'd bought more of it. They have lots of room for growth - their stores a PACKED - their prices are higher margin - it's healthy compared to a burger and shake... and it's super tasty! I'm a fan.



#2 --- LOTS going on around the world... 15 years ago I'd have been "reacting" to all of it... I'd certainly have sold or been in and out multiple times in recent days and weeks. Now days I read, and listen to the talking heads on TV, and I shrug my shoulders and yawn... Then I open up my account and see a bunch of dividends have been paid and I go play golf or polish a hot rod.

[GregWeld]

Here's an interesting comparison of what $100 buys PER STATE.... Sucks to live in California!! LOL



https://patch.com/california/walnutcreek/how-far-does-100-go-california

[Vegas69]

#1 --- Erik --- Chipotle Mexican Grill (CMG) is "expensive" now - but 10 years from now you'll look back and wish you'd bought more of it. They have lots of room for growth - their stores a PACKED - their prices are higher margin - it's healthy compared to a burger and shake... and it's super tasty! I'm a fan.



#2 --- LOTS going on around the world... 15 years ago I'd have been "reacting" to all of it... I'd certainly have sold or been in and out multiple times in recent days and weeks. Now days I read, and listen to the talking heads on TV, and I shrug my shoulders and yawn... Then I open up my account and see a bunch of dividends have been paid and I go play golf or polish a hot rod.

I'm still pretty green at this. How the heck does Chipolte demand $600 a share where say CVS demands $100? Or Starbucks demands $80? Is that an indication that it may split?

[JKnight]

Share price = firm value divided by shares outstanding

So it could simply be a matter of CMG having fewer shares outstanding and isn't necessarily indicative of likelihood of a split. I always say share price is arbitrary. A 10% gain on your investment in a stock is the same amount of $ regardless of share price. That said, firms understand the psychological impact of having a high share price, and they are incentivized to have people buy, so it could be indicative of a higher likelihood of a split.

So to answer your question...maybe ;)

[GregWeld]

I'm still pretty green at this. How the heck does Chipolte demand $600 a share where say CVS demands $100? Or Starbucks demands $80? Is that an indication that it may split?



Chipotle Mexican Grill (CMG) has a Price to Earnings (P/E) ratio of 41 --- so people are paying 41 dollars for each dollar of earnings (currently) for this stock. A high P/E ratio often reflects the "EXPECTED" growth of the earnings in the FUTURE of the stock.

Spits are more about whether or not the BOARD is prone to splits. Some boards are and some aren't. If the shares split - it doesn't increase (or decrease) value - there's just more shares at less value per share. People get excited about them and sometimes that drives new money to the shares. Netflix (NFLX) is splitting 7 for 1 --- it trades for $700 a share - so if you had 100 shares at $700 each - you'll just have 700 shares worth $100 each. This often "fools" small investors into finally getting into the shares because they're now "affordable" - which is complete nonsense....


CVS Health Group (CVS) has a P/E of 26... which just means (or can mean) that it still has a quite high expected growth rate of it's earnings. The average P/E is "normally" closer to 15..... and the "pros" start talking about the market being overvalued when it starts to hit 17ish. In a Bear market period - you'll see average P/E's in the 12's...


Starbucks (SBUX) P/E is 32.... a still "high" expected earnings growth rate.


Now -- so as not to confuse -- let's see how many SHARES each of these three have 'outstanding'.



SBUX - 1.5 BILLION shares.... Earnings PER SHARE $1.70

CVS - 1.13 BILLION shares.... Earnings PER SHARE $4.10

CMG - 31 MILLION shares.... Earnings PER SHARE $15.38



The key is --- what do you think a company will be earning in the years ahead --- or what their growth rate is etc. Like any "market" - how many people want to OWN something versus SELL something.

Beware high multiple P/E stocks IF they manage to not live up to the expectations.... you get killed overnight!

[Vegas69]

Good stuff, thanks for the insight fellas.

[JKnight]

Greg brought the "tech" for sure. I didn't want to look up all the data on my phone he quoted above. As usual, he brought great info. Really shows how a share price can vary just because of the shares outstanding, not necessarily because of a fundamental superiority in the company.

Greg's point about "expected" growth is what it's all about, for better or worse. Can't emphasize enough how important that observation is.

[Vince@Meanstreets]

I'm still pretty green at this. How the heck does Chipolte demand $600 a share where say CVS demands $100? Or Starbucks demands $80? Is that an indication that it may split?

thats what im hoping for.

[GregWeld]

Greg brought the "tech" for sure. I didn't want to look up all the data on my phone he quoted above. As usual, he brought great info. Really shows how a share price can vary just because of the shares outstanding, not necessarily because of a fundamental superiority in the company.

Greg's point about "expected" growth is what it's all about, for better or worse. Can't emphasize enough how important that observation is.




So let's touch on the OUTSTANDING SHARES issue.


Like most things in life... when something is "rare" - that rarity creates value - unless it's an Edsel - in which case it's rarity stems from it being FUGLY - Nobody wanted them when they were new - and for the most part - nobody wants 'em now either - so let's discount some things that are/could be classed as "rare"..... let's stick with RARE AND COVETED.

Microsoft (MSFT) has the highest number of shares outstanding of any publicly traded company. The number of shares outstanding is 8.09 BILLION shares. It's P/E is 18.

Let's compare that to Chipotle Mexican Grill (CMG) which has a whopping 31 MILLION shares outstanding.


8,090,000,000.00 --- NINE Zeros vs
31,000,000.00 --- SIX Zeros



Lots of people and institutions own MSFT.... but in order for MSFT share price to "move" -- there has to be more people wanting to buy than wanting to sell. It's a well established company with a long historical growth and track record of earnings. Using well established "metrics" such as P/E etc... it should trade for "normal" prices given it's size and growth rate.

Here's where we get a variance --- take a Chipotle (CMG) --- it's a relatively new company - has a very high growth rate - has lots of opportunity to open more locations - they're all company owned (this is not a franchise opportunity) - so all the growth flows directly to the company - as well as quality control etc. Add to this the smallish "float" of company shares.... and the demand placed on those shares by people willing to bet their money that there's more growth ahead... and you get the 41 P/E reflected in the share price.

There's two ways for shares to become more valuable (in it's most basic description as there are OTHER ways for them to increase/decrease in value).

#1 - Expansion of the P/E. If people are willing to pay 40 times earnings per share vs 20 times earnings... then the price of the shares increase.

#2 - The company's EARNINGS increase. So if they made $1 per share and they suddenly announce that they're going to make $1.50 per share this year - and think they're on their way to making $2 per share next year.... guess what?? The CURRENT P/E (let's say it was 16 times) - will suddenly expand to reflect NEXT years earnings.

You'll hear this expressed on TV as "TRAILING" earnings (P/E based on history) versus "Forward earnings" (based on the projections/possiblities).

[glassman]

Thanx Greg. Put in layman's term for us (like me) who need that. Listening on TV is too fast for my brain to absorb what their saying, and some of them use big words to feel "bigger" and they miss the true explantion/meaning to their audience...

[GregWeld]

Thanx Greg. Put in layman's term for us (like me) who need that. Listening on TV is too fast for my brain to absorb what their saying, and some of them use big words to feel "bigger" and they miss the true explantion/meaning to their audience...




For you I should have done all this on a chalk board....



LOL

[JKnight]

It's true though Greg, you do have a knack for sharing fundamentally sound information on this subject in a way that makes sense to people without compromising the important details.

I'm confident your thread has/will indirectly create an unbelievable amount of wealth for the guys in this community. Truly an award-worthy contribution. Keep it up!

[ErikLS2]

PEG Ratio is another good and easy way to see how a company is valued, especially smaller faster growing ones. I stay below 2.0 in just about all cases. A couple good explanations:

https://en.wikipedia.org/wiki/PEG_ratio

http://www.fool.com/investing/value/2006/04/06/how-useful-is-the-peg-ratio.aspx

[GregWeld]

Since we just talked about stock splits and high P/E ratios - and whether or not EARNINGS were important etc....

NetFlix (NFLX) just split it's stock 7 for 1 - meaning for each share you owned - you'd now own 7 times as many -- but that also divides the price by 7 as well.

They had an EXTREMELY high P/E.... IIRC -- 181 !!! Which is just a WOW number.

But let's remember how it got that kind of a P/E... It's because people (buyers) have very high expectations for GROWTH of the business and therefore the EARNINGS.

THEIR EARNINGS just announced today after the close - which beat the street estimates... and they added 3 million new subscribers in the quarter....

The stock spiked after hours by 10%.

Now - let's also take into account that everyone that owned the shares... now has 7 times MORE shares in their accounts! Sometimes - people sell off some of the shares and we know what happens when there's more sellers than buyers... you see a price drop. BUT --- the split is supposed to drive demand from the smaller investor who's willing to pay (in this case) $100 a share versus $700 a share. So perhaps there's buyers coming in, to acquire new shares of the stock. Who the heck knows.

I'll tell you what I do.... I never trade *buy or sell - a stock based on a perceived or announced split. Splits in themselves do not add value. They might temporarily drive some excitement - but that's usually short lived.... In the long run - we want to INVEST in companies that we think will do well going forward. End of story.

I have a significant portfolio -- and I own a whopping 100 shares of NFLX (now it's 700).... because while I think it's a growth story -- it doesn't pay me a dividend - AND more importantly - the AIR / FROTH / PE will come down far faster than it goes up when they have 180 ish P/E!!!! These stocks work when they're working -- and they really really stink up the joint if they so much as whisper that their growth is slowing or their earnings aren't up to snuff.

[Ns RS]

As a footnote to the ongoing thread, an illuminating article on wealth mindset, hard work, choices and happiness.

http://www.nytimes.com/2015/06/06/your-money/skimping-on-the-splurges-even-as-a-millionaire.html?_r=0

[GregWeld]

As a footnote to the ongoing thread, an illuminating article on wealth mindset, hard work, choices and happiness.

http://www.nytimes.com/2015/06/06/your-money/skimping-on-the-splurges-even-as-a-millionaire.html?_r=0





Good article!

[GregWeld]

If you go back a couple years in this thread --- You've heard me REPEATEDLY state something along the lines of "if your grocery store clerk is telling you about all the money they're making" -- or "if you turn on the talking heads - and all they're talking about every day is..." RUN!! Run away from whatever it is they're talking about as fast as you can!

How many remember the ENDLESS ---- GOLD bugs....


Okay pull up a FIVE YEAR chart of GLD -- a gold ETF.... Then add the QQQ (basically the NASDAQ) and the SPY (the DOW)....



https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1437422400000&chddm=496961&chls=IntervalBasedLine&cmpto=NASDAQ:QQQ;NYSEARCA:SPY&cmptdms=0;0&q=NYSEARCA:GLD&ntsp=0&ei=J_2sVdGABYn3jAGdhIL4Cg



I'll let you discover why I post this up. Oh -- and did you notice NOBODY mentions gold anymore. DOH!

[GregWeld]

So -- as I always point out in this thread -- I'm trying to give people food for thought... using real life examples - of which - in order to demonstrate what I'm talking about... it helps to use "an" example. In this case we're going to use Chevron (CVX).


Gas and Oil are in the tailspin of too much product - not enough usage. So it's a war on prices. This is a CLASSIC example of when there's too much of something - the price will reflect that. The old "more sellers than buyers". What happens when it's the reverse? Prices go UP. Given the worlds oversupply of crude oil right now - the US is in a battle of supply against the other producing countries. They'll give their's away in an effort to crush our producers. THEY only have one thing to sell (export).... their lives depend on the price of crude. Tough for them.

So more importantly - let's talk about DIVIDENDS. The dividend on CVX is up to 4.8%!! WHY?? Because the price of the stock has dropped some 22% year to date -- and 33% in the last 12 months!! As the price of the shares decline - the dividend PERCENTAGE goes up. This is fantastic IF and AS LONG AS they can remain profitable and continue to pay out the same dividend!!!

We discussed the P/E of some of the high fliers! Some are 181 ish and higher - or in the 40's and 50's!!! What's CVX at....... 9.7

What I'm pointing out here is the RELATIONSHIPS of these numbers. I'm not saying to buy CVX or any other stock... It's just a learning "item". We don't often get a chance to see this kind of phenomenon in such a short time span!

I picked on CVX -- because typically I like infrastructure plays over say - a producer. The producer has to get his product to market. As do other producers - so I like guys that pump it thru pipes to the other guy (the refiner). But when you see a CVX - which is a producer and a refiner go "on sale" - I start to watch. Remember that we don't want to try to catch a falling knife.... time to sit back - put something on your radar - and let it play out. But opportunity usually comes following the old "blood in the streets" scenario! When NOBODY wants to own something --- that's usually a good time to pick away at it. The world will continue to burn up oil and gas.... and as economies around the world stabilize (as ours has) and demand picks up... there CAN BE opportunity.

I'd like to see CVX get down to where the ratio is like 5% dividend or maybe even a little more... 5.5% or so would be OMG.... At that point I'll start picking at it. LOL

To me - it's like the housing market.... the guys that are killing it now - are the guys with the balls to have bought when nobody in their right mind was willing to buy a house! Now those people wished to hell they had bought a dozen of them!! LOL

Think long term! You might get killed for awhile - but if the dividend payout is worth it - it can work out nicely.

REMEMBER -- I'm not saying to buy "X" or "Y" or "Z" ---- I'm saying to be looking for opportunity and then have the balls to take advantage of it.

[glassman]

I don't understand, i need you to draw it on a chalkboard....:idea:

haha...you going to sonoma next weekend? (Greg)

[68Cuda]

I'd like to see CVX get down to where the ratio is like 5% dividend or maybe even a little more... 5.5% or so would be OMG.... At that point I'll start picking at it. LOL


And BP is at 6.6%... just saying.

[GregWeld]

I'd like to see CVX get down to where the ratio is like 5% dividend or maybe even a little more... 5.5% or so would be OMG.... At that point I'll start picking at it. LOL

And BP is at 6.6%... just saying.



I already own BP....

[GregWeld]

As I sit here listening to CNBC, and the talking heads are all discussing which company has blown up due to earnings - and what company they expect to take over some other company.... It makes me think how in the world anyone could keep up with all of this information. I make it my routine. No kids left at home... I'm an early riser... I've been following, and investing, in the market for 30 plus years... So I open up my account (as is the norm) just to see what's up... and here's what I accidentally notice this morning.

Altria (MO) is a base holding for me... I own 10,000 shares. It's not a huge dividend payer but on my cost basis it pays a larger percentage than if you bought it at today's prices. But here's the reason for today's post...

My 10,000 shares are UP $131,030.00 in VALUE. It pays me $20,800.00 on an annual basis. That's not "huge" as far as dividends go... but what I like about it (the stock)... I never go to sleep or wake up fearing what it's going to do. Yet here it is... UP (over time!) $13 a share (my cost basis is $41.63). And it's paid me 20 grand a year on top of that.

I ask you ---- you see anything wrong with that?? LOL

That's the kind of BASE you need to build... 10 great steady eddies that just silently march ahead. Once you have that base - then you can step up and play with GoPro and Twitter and whatever comes along the talking heads are talking about on todays show. :disgusted:

[SSLance]

I've been back in the market about a year and a half steadily following the Dividend Growth strategy. As of today, MO is my biggest gainer, showing up net 39.2 %. Next closest is a Utility...ES at 9.34%.

I use Quicken to track my investments and it adds my dividend reinvestments to my initial cost basis and calculates returns off of the total, so it doesn't give me a true return on investment if you want to look at just the initial investments and total return. Someday I plan on setting up a spreadsheet to do just that.

Meanwhile, I'm sitting back...watching my investments grow even in trying times and my only concerns are if I should add more in and if so, where.

[GregWeld]

It's like getting your car set up -- once it's set up -- you just concentrate on the driving - not what the car is doing (or not doing). LOL


The biggest thing I think I've tried to get people to understand in this whole thread --- the market goes UP and the market goes DOWN.... Get over it! Get some investments that grow over the long haul - pay you dividends - and you'll be set!







I've been back in the market about a year and a half steadily following the Dividend Growth strategy. As of today, MO is my biggest gainer, showing up net 39.2 %. Next closest is a Utility...ES at 9.34%.

I use Quicken to track my investments and it adds my dividend reinvestments to my initial cost basis and calculates returns off of the total, so it doesn't give me a true return on investment if you want to look at just the initial investments and total return. Someday I plan on setting up a spreadsheet to do just that.

Meanwhile, I'm sitting back...watching my investments grow even in trying times and my only concerns are if I should add more in and if so, where.

[Payton King]

Always great stuff from you GW!

[68SS2]

My 10,000 shares are UP $131,030.00 in VALUE. It pays me $20,800.00 on an annual basis. That's not "huge" as far as dividends go... but what I like about it (the stock)... I never go to sleep or wake up fearing what it's going to do. Yet here it is... UP (over time!) $13 a share (my cost basis is $41.63). And it's paid me 20 grand a year on top of that.

I ask you ---- you see anything wrong with that?? LOL

That's the kind of BASE you need to build... 10 great steady eddies that just silently march ahead. Once you have that base - then you can step up and play with GoPro and Twitter and whatever comes along the talking heads are talking about on todays show. :disgusted:

I have a recently switched to focusing on this type of investing over the 401K plan I have been using since I got out of school 10yrs ago, so I appreciate the guidance.

I understand how to calculate my cost basis mathematically, but it just gets messy with auto div reinvestment over a dozen different stocks each month/quarter. I am doing as others have with keeping a running total with averages in excel. How do you keep track of your investments to know your cost basis is $41.63 per share?
Thanks

[Woody]

I have a recently switched to focusing on this type of investing over the 401K plan I have been using since I got out of school 10yrs ago, so I appreciate the guidance.

I understand how to calculate my cost basis mathematically, but it just gets messy with auto div reinvestment over a dozen different stocks each month/quarter. I am doing as others have with keeping a running total with averages in excel. How do you keep track of your investments to know your cost basis is $41.63 per share?
Thanks

I know you asked Greg, but here is how I do it. I have a number of shares column, a price per share column and a total dollar amount column in a spreadsheet. The number of shares and total dollar amount columns are input manually. The price per share column has a formula which divides the total dollar amount by the number of shares. Every time I get a dividend or make a new purchase, I edit the number of shares and/or total dollar amount columns and the new cost basis per share is calculated.

You could also keep a running total by adding a new row for each new dividend or purchase and use a summation formula in the number of share and total dollar amount columns. Your price per share column would have an averaging formula.

[Vortech404]

Greg doesn't have to complicate cost basis with dividends
Reinvested. Because he spends the dividends on hotrods.


John

[GregWeld]

I have a recently switched to focusing on this type of investing over the 401K plan I have been using since I got out of school 10yrs ago, so I appreciate the guidance.

I understand how to calculate my cost basis mathematically, but it just gets messy with auto div reinvestment over a dozen different stocks each month/quarter. I am doing as others have with keeping a running total with averages in excel. How do you keep track of your investments to know your cost basis is $41.63 per share?
Thanks



For that particular holding - which is at Wells Fargo Brokerage - that Brokerage tracks it for me. Some brokerages do this, and some don't. I also don't re-invest any dividends since I'm retired -- and live off these dividend payments (as well as other income from other types of investments) - so figuring my cost basis is pretty simple.

Like John said -- I just waste my dividends on "whatever". LOL

Pretty true actually. I'm beyond needing to "save" or build a nest egg.

[glassman]

Can anybody here give us "spreadsheet illiterate's" a quick example of one?

I know thats the best way too track it, but thats where i'm having a hard time..

Lance, how do you use quicken? i use quick books pro at work, its way above my head. My accountant and our data entry people and general ledger manager (wifey) use it.

I have an idea, and i'm the bottom line kinda guy, but i'd be interested in how u use it with quicken. I do know that Pam(wifey) often transfers my reports from quickbooks pro into spreadsheet form and there pretty easy to read (she used to teach Excel in the 80's and early 90's when she was in her early twenties) but her and i just "never" get it done(spreadsheet), which is why i handle the personal investments....

thanx all, good discussion as usual...

[SSLance]

I use Quickbooks for my company's books and Quicken for my personal bookkeeping. Quicken is much more user friendly than Quickbooks. I describe it this way, Quickbooks is more two entry accounting style whereas Quicken is more single entry accounting.

If you purchase a copy of Quicken, make sure you get the upgraded version that tracks investments (think mine is 2014 Home and Business). Setup is pretty simple and you can use it for as much or as little as you want. I download all transactions straight into it from my banking and investing institutions with one click, review and accept them. Once you get all of your regular transactions memorized inside, transaction entry goes pretty quickly.

I track every banking transaction...want to know how much I spent on gas in 2004...takes me about 30 seconds to run the report. You don't have to go to that detail, but it's good to know you can if you want too.

[Woody]

Can anybody here give us "spreadsheet illiterate's" a quick example of one?

I know thats the best way too track it, but thats where i'm having a hard time..

Lance, how do you use quicken? i use quick books pro at work, its way above my head. My accountant and our data entry people and general ledger manager (wifey) use it.

I have an idea, and i'm the bottom line kinda guy, but i'd be interested in how u use it with quicken. I do know that Pam(wifey) often transfers my reports from quickbooks pro into spreadsheet form and there pretty easy to read (she used to teach Excel in the 80's and early 90's when she was in her early twenties) but her and i just "never" get it done(spreadsheet), which is why i handle the personal investments....

thanx all, good discussion as usual...


If you mean an example on how to set up a spreadsheet. I can try to show you an example below.

A B C D
1 Stock Name No. of Shares Price per share $Amount
2 Apple 100 +D2/B2 $10,000

The columns are labeled at the top of the spreadsheet as A, B, C, D.....
The rows are labeled vertically along the left side 1,2,3, .....

Say you buy 100 shares of apple for $10,000. Enter 100 in cell B2 and $10,000 in cell D2. Enter the formula "+D2/B2" in cell C2 which will calculate the price per share for you at $100.00. The formula will take the value you entered in cell D2 ($10,000) and divide it by the value you entered in cell B2(100).

Just note that in cell C2 the actual figure of $100.00 will be shown and the formula will only be shown in the formula window.

Say you buy 50 more shares of apple at $7,000. You have added 50 shares to your portfolio, so enter 150 in cell B2. Your total cost is now $17,000, so enter $17,000 in cell D2. C2 will automatically recalculate your average cost per share at $113.33 (17,000/150). Your spreadsheet should now look like this:
A B C D
1 Stock Name No. of Shares Price per share $Amount
2 Apple 150 +D2/B2 $17,000


If you get a dividend of 1.5 shares,You have added 1.5 shares to your portfolio, so enter 151.5 in cell B2. Your total cost has not changed. C2 will automatically recalculate your average cost per share at $112.21 (17,000/151.50). Your spreadsheet should now look like this:
A B C D
1 Stock Name No. of Shares Price per share $Amount
2 Apple 151.50 +D2/B2 $17,000

Hopefully, I have not oversimplified this, but I am assuming you don't have much experience with spreadsheets. If you have any questions let me know.


Edit: the formatting did not show up as I had hoped. I had spaced out the columns so it was much easier to identify what was in each column. If my example is too difficult to make sense of maybe I can attach an actual spreadsheet. Let me know.

[GregWeld]

I've written about watching for "FUNDAMENTAL CHANGES" in the stocks you own. While minor ups and downs and rolling with the punches - is what a business NEEDS to do... Often if not done well/correctly - you'll see a change in leadership... which can be a "fundamental change" (Let's use the example of when Steve Jobs came back to Apple! Or when Microsoft gave Ballmer the boot) Sometimes it's just age and personal issues. Here's the point... (There's a couple actually)

I NEED to pay attention to the companies I invest in. This is one of the reasons I generally urge people not to get spread too thin in an effort to "diversify". You can't keep your eye on that many balls (no pun intended). 20 or so companies is A LOT....

I own Conoco-Phillips (COP). It's a small holding (5000 shares) - bought more recently in an effort to position myself for decent dividends while HOPING that oil stabilizes and makes a come back in the future. I don't know what's going to happen in the future - so when making "bets" like this... I "dabble". I buy a little - if it works - I may buy a little more... etc. Right now I'm 50 grand down in this holding. I'm patient. I can afford to be down and I've been doing it long enough to have gained some confidence in my reasoning. When I buy - I EXPECT my pick to go down. I generally never chase the big front runners (The Allibaba's and GoPro's etc)... I like to pick good companies that might be down due to circumstances that are not of their own making. This is harder for newbies to do - sometimes doesn't work well - and it's not what I'm suggesting for you all to do. It's scary and cause's ulcers. I'm in a much different space than "most" and can tolerate investments like this.

Here's where the "Fundamental change" comes into the discussion. COP reported earnings this morning. I pay attention to such things. I try to find the "nuggets" which may or may not make my thinking change. Sometimes the nugget of info is a ho hum - sometimes it's an OMG REALLY? I'm selling - and sometimes it's an "okay then - that seems like a smart move to me" and I'll add to a position. Sometimes it pays to just be a holder and do nothing and see how it plays out. But KNOWING what's going on is important! And you need to be minimally aware of what's going on with your holdings!

Here's what I liked about the COP "change" today... And I'm not saying anyone should buy or sell -- I'm just using this as an example of what I mean by FUNDAMENTAL changes.


Copy and pasted....

Selling Assets
Lance has reshaped the one-time energy conglomerate, selling more than $14 billion in assets to tap prospects in North America. He is staking the company’s future on U.S. and Canadian oil and gas plays, betting they will generate cash at low prices and allow the company to ramp up or halt output quickly.
ConocoPhillips has said it’s continuing layoffs while it strives to slash $1 billion in spending over two years. The company has cut close to 1,500 jobs since the downturn began in June 2014, according to Graves & Co., a Houston-based adviser that has closely tracked the cutbacks.



Me again....


I would expect the oils to be having a hard time with "earnings" - the collapse in oil prices was sudden and unexpected. It's really a price war between producers trying to price each other out of the market. I get it. It's a battle and there will be blood spilled. There'll be cuts and layoffs and earnings will suffer. MAYBE there's a dividend cut coming down the road... I don't know. And that is why I'll tip toe instead of betting the farm. At some point they won't be able to cut "enough" and will look to save cash expenses.. but most boards are reluctant to cut the dividend - it's usually the sacred cow... but you never know. I'm betting that oil recovers enough to save the dividend - and in the meantime the smart companies will adjust the business and will be better off for it when things turn around.



McDonalds (MCD) has a fundamental issue with having the wrong kind of food for today's consumer... that's THEIR problem. The "industry" is doing fine. Chipotle is growing - Panera is growing etc. With OIL - Everybody sucks... there's just too much production and not enough demand. The trick will be to bring costs in line with the price at which they can sell and make a profit. That is easier to TRY to fix than "nobody wants what you have".

[glassman]

thanx Lance i think thats what were goin to do on a personal note as my wife is a quickbooks pro guru...

and thanx Woody, i get it, just haven a hard time actually doing it....

[SSLance]

If your wife is adept at QBs, Quicken will be a breeze to setup. I'm not saying it's the end all and great at everything as it does do some things in regard to investments that aggravate me, but it's pretty good and is very easy to setup and use.

What Woody is describing above is one of those things, when reinvesting dividends, Quicken adds the cost of the shares the reinvested dividend buys to the overall cost basis of the stock. I guess for income tax reasons this is the proper way to do it, but for performance results calculations it skews the numbers.

Your total cost basis in the stock keeps going up even though you aren't putting any more money into it.

[sik68]

Thanks guys; you've motivated me to set up this spreadsheet for myself finally.

And GW, that's good advice on how to view the oil industry right now. I've taken a pounding in CVX lately, but I know we're going to be drinking earth's milkshake for a long time.

[XLexusTech]

Realising this is not good form for this thread... but also knowing that you make money when you buy low... If you are a DRIP investor not looking at XOM right now might be missing out on a good opportunity..

[booah]

"Here's what I liked about the COP "change" today... And I'm not saying anyone should buy or sell -- I'm just using this as an example of what I mean by FUNDAMENTAL changes."

COP is transitioning from doing business like an integrated Upstream and downstream company to a real Independent Exploration and production company. I see the changes they're making and areas their cutting are required to suit the business, and be sustainable for when the prices crawl back up. I think its a bargain for the long term too.

[GregWeld]

"Here's what I liked about the COP "change" today... And I'm not saying anyone should buy or sell -- I'm just using this as an example of what I mean by FUNDAMENTAL changes."

COP is transitioning from doing business like an integrated Upstream and downstream company to a real Independent Exploration and production company. I see the changes they're making and areas their cutting are required to suit the business, and be sustainable for when the prices crawl back up. I think its a bargain for the long term too.



Booah --- I've tried to keep the thread about LEARNING how to think about stocks/companies etc -- so people can "catch their own fish" - rather than recommendations of what to buy - when to sell etc.

The use of COP as an example of what I mean by "fundamental changes" just managed to present itself in their quarterly report. Companies that institute large scale changes can fail at them, just as easily be successful. As an investor - people need to do a minimal amount of "work" to understand the investments they make - and what can help or hurt their investments.

People that blindly "invest".... only to wake up one morning to find they've lost their ass and they don't understand "why"... That's just dumb and lazy. I don't care if we're talking about buying investment property or stocks. You'll stand a far greater chance of success if you understand what you're getting in to.

The other thing I urge people to do is to understand "the market". Sometimes - when we're looking at a large scale fundamental change - such as this dramatic dip in crude oil - that is taking everyone DOWN... and we really don't know what's going to happen in the future. It can pay to just stay on the sidelines - be watchful - be aware - and wait for a bottom - and not buy until things begin to meaningfully turn up. Nobody has to guess the bottom - or the top... and you don't have to buy at the absolute bottom in order to have meaningful gains. You also don't have to buy on the way down and suffer thru the angst of the unknown. This is investing 102 - beginners investing. It's more about learning and being able to stay in the game and be comfortable with "the market".

[glassman]

Realising this is not good form for this thread... but also knowing that you make money when you buy low... If you are a DRIP investor not looking at XOM right now might be missing out on a good opportunity..

What is "XOM?"

[XLexusTech]

What is "XOM?"

http://www.thestreet.com/story/13240521/1/exxonmobil-xom-earnings-report-q2-2015-conference-call-transcript.html

[glassman]

http://www.thestreet.com/story/13240521/1/exxonmobil-xom-earnings-report-q2-2015-conference-call-transcript.html

Oh, my bad, i thought when you referenced DRIP investing XOM was another type of investing i haven't heard of. So, didn't know it was a company...

[clill]

Cpst

[GregWeld]

Cpst



We should have a celebration! You finally made 2000 posts!! EEEEEEHHHHHHHAAAAAAAAA


:king: :king: :king:

[GregWeld]

I thought about it this morning...


If you want to see a dramatic chart of "Fundamental change" -- pull up Microsoft (MSFT) and go to "ALL" to see the chart since they started being a public company (1986),

In December 1999 - Bill Gates announced Steve Ballmer was going to be CEO beginning 2000 ---- SEE THE PEAK?? From then on the stock languished (flat lined) -- Until they made the announcement in 2013 that Ballmer would be replaced by Satya Nadella.

Now --- having said all of that --- I'M USING GOOGLE FINANCE WEBSITE CHARTS --- I want you to add to this chart -- Apple (AAPL) stock. Hopefully you know how to do that - there's a small box top left of the chart labeled "compare" -- just type in AAPL and click ADD....

Bet you never saw that one coming!!! LOL

I'll let the responses speak for themselves rather than me spoiling what you're going to see.

[Sieg]

Cpst

Thanks Clill, not too often I can afford a 'leveraged' position.

[GregWeld]

Thanks Clill, not too often I can afford a 'leveraged' position.



Charlie can afford to be in "penny stocks". LOL

[glassman]

I thought about it this morning...


If you want to see a dramatic chart of "Fundamental change" -- pull up Microsoft (MSFT) and go to "ALL" to see the chart since they started being a public company (1986),

In December 1999 - Bill Gates announced Steve Ballmer was going to be CEO beginning 2000 ---- SEE THE PEAK?? From then on the stock languished (flat lined) -- Until they made the announcement in 2013 that Ballmer would be replaced by Satya Nadella.

Now --- having said all of that --- I want you to add to this chart -- Apple (AAPL) stock. Hopefully you know how to do that - there's a small box top left of the chart labeled "compare" -- just type in AAPL and click ADD....

Bet you never saw that one coming!!! LOL

I'll let the responses speak for themselves rather than me spoiling what you're going to see.

Totally didn't see that one coming.....wow.

[Vegas69]

Cpst

How about the philosophy from someone that is tall AND rich. :D

[GregWeld]

How about the philosophy from someone that is tall AND rich. :D



I can fill this in for ya Todd.....


C's philosophy in a nut shell..... Whatever you buy - make sure you buy low and sell higher.

[clill]

You can't buy CPST much lower than it is. They have yet to make a profit but are building cool turbine generators. 1 moving part that floats on air bearings and swamped with orders. Now they just have to figure out how to make money.
http://www.capstoneturbine.com/

It's the only thing I have any stock in because I am not a high roller like Weld.

[GregWeld]

You can't buy CPST much lower than it is. They have yet to make a profit but are building cool turbine generators. 1 moving part that floats on air bearings and swamped with orders. Now they just have to figure out how to make money.
http://www.capstoneturbine.com/

It's the only thing I have any stock in because I am not a high roller like Weld.





Remember when Motorola used to be "the name" in cell phones....

[Vegas69]

I'm guessing massive debt due to technology is squashing any profits at this time.

[Sieg]

It's the only thing I have any stock in because I am not a high roller like Weld.

Sucks to be you buying it above $2 and all.

:captain1:

[GregWeld]

Charlie doesn't need "stocks" to make money! HellFire won Best Street Cruiser at The Atlantis (Hot August Nights) and he picked up $400 !!





http://i919.photobucket.com/albums/ad33/gregweld/Charlies%20Cars/IMG_8043.jpeg (http://s919.photobucket.com/user/gregweld/media/Charlies%20Cars/IMG_8043.jpeg.html)

[MtotheIKEo]

Charlie doesn't need "stocks" to make money! HellFire won Best Street Cruiser at The Atlantis (Hot August Nights) and he picked up $400 !!
Talk about ROI!

[Sieg]

Charlie doesn't need "stocks" to make money! HellFire won Best Street Cruiser at The Atlantis (Hot August Nights) and he picked up $400 !!
..........and CPST is up 19.1% today. The dude is rolling in it.

[JKnight]

It's definitely not Investing 102, but I made a couple bones on the CPST earnings announcement. #gambling

[Sieg]

It's definitely not Investing 102, but I made a couple bones on the CPST earnings announcement. #gambling
Agreed, at least with CPST it's like playing nickel slots. :D

[GregWeld]

Anyone on here monitoring the decline of BITCOIN besides me?

Funny how NOBODY even mentions this now - and by nobody I mean the "media". When it was on the news daily the price went thru the roof.... of course... this is also when "most people" bought in because they start to pay attention to something like this and believe themselves to have "missed" the
thing that is going to make them a millionaire! Then BAM! The knockout punch after a few jabs... as the "FAD" fades.


That's the difference between gambling and investing.