Investing 102

[Sieg]

Nope........too busy watching the rise of CPST :rofl:

[Vince@Meanstreets]

Nope........too busy watching the rise of CPST :rofl:

when that thing hits 1.25 im gonna buy the house next to you and turn it into a air-B&B :rofl:

[MPM IV]

Gentlemen,

I'd like to start by thanking everyone who's contributed to this thread. I found a link to it on another forum a while back, and it's been a great resource, and motivator for me. I appreciate even the people who seem very knowledgeable keeping it at the beginners level for those of us that aren't. I'm also very surprised at how open people have been using themselves as examples for the rest of us. Again, thank you.

My father made great efforts to get me to invest, and I did open an IRA when I was 20, but I never really understood much about it. He always spoke at levels far beyond my comprehension and lost me.

I'm currently 41 and retired from the Army. I'm already realizing some mistakes I've made (besides not investing), but my one saving grace is that I live below my means. For years I comforted myself that I was saving for a house and didn't want the money tied up. I bought a house about 1 1/2 years ago and kept saving in a bank account making a whopping .5% or so.

Since reading this thread I've picked up:

Altria Group (MO)
ATT (T)
Southern Company (SO)
and Royal Dutch Shell (RDS.B)

I plan to try and add a bit more diversity in my next purchases, but I overshot on the first few, so I won't be at 5% in each for a while.

I'm on several car forums, but I never thought I'd join one due to an investing thread. I've made it through about 200 pages here so far.

Thanks again to everyone and I look forward to continued learning!

[GregWeld]

WELCOME!!! You'll find a bunch of the info repeated --- but just keep hacking away at it -- because sometimes repetition finally makes some sense after reading "other" stuff -- and then all of a sudden it's a BINGO!

That .5 interest rate is why this thread has been helpful to many -- if for no other reason than to help them make some kind of return in this crazy world.






Gentlemen,

I'd like to start by thanking everyone who's contributed to this thread. I found a link to it on another forum a while back, and it's been a great resource, and motivator for me. I appreciate even the people who seem very knowledgeable keeping it at the beginners level for those of us that aren't. I'm also very surprised at how open people have been using themselves as examples for the rest of us. Again, thank you.

My father made great efforts to get me to invest, and I did open an IRA when I was 20, but I never really understood much about it. He always spoke at levels far beyond my comprehension and lost me.

I'm currently 41 and retired from the Army. I'm already realizing some mistakes I've made (besides not investing), but my one saving grace is that I live below my means. For years I comforted myself that I was saving for a house and didn't want the money tied up. I bought a house about 1 1/2 years ago and kept saving in a bank account making a whopping .5% or so.

Since reading this thread I've picked up:

Altria Group (MO)
ATT (T)
Southern Company (SO)
and Royal Dutch Shell (RDS.B)

I plan to try and add a bit more diversity in my next purchases, but I overshot on the first few, so I won't be at 5% in each for a while.

I'm on several car forums, but I never thought I'd join one due to an investing thread. I've made it through about 200 pages here so far.

Thanks again to everyone and I look forward to continued learning!

[clill]

CPST was up 12% yesterday. A few more days like that and I will be out of the hole.:G-Dub:

[Vegas69]

:D I'm watching it!

[Sieg]

:D I'm watching it!

Shortly after his comment (jinx) it opens up +5% and slides to -2.5%. :bitchslap:

:D

[ironworks]

Shortly after his comment (jinx) it opens up +5% and slides to -2.5%. :bitchslap:

:D

cuz I bought a 1000 shares based on Charlies advice.

[clill]

You can all go broke with me...

[Vince@Meanstreets]

You can all go broke with me...

you guys can put up tents in his yard, plenty of room right? :peepwall:

[GregWeld]

You can all go broke with me...



You do know that "pump and dump" is illegal right?? LOL

[GregWeld]

I've reminded on many occasions for you all to "remember" when the market went up daily... and making gains was easy and fun. You want to remember those periods - when we're in a stinky market like we are right now. These stinky periods are when I LOVE the dividend. Those checks are a great antiseptic to the pain of the losses of those easy gains. For those of you that are in dividend reinvesting - they're also buying shares at lower prices automatically... bringing down your average cost - and building dividend payouts in the future.

Funny how the psyche works -- if I put a '69 Camaro up for sale - and I cut the price from 100,000 to 65,000 you'd be happy! And you'd be unhappy if I raised the price from 100 to 110,000! But not if we're talking about stocks. LOL

It's summer - stocks always suck in the summer. Add to this the possible slowing growth of China -- and a possible FED interest rate hike - and this is the kind of market you get.

I'm a buyer in these kind of markets - but I ALWAYS have plenty of cash kept on the sidelines because it can always get worse! It will help your thinking - if you tip toe in rather than dive in and then watch the shares you just bought go lower.... Keep some buying power "dry". You'll feel better about it.

I'm going to spend a week rafting the middle fork of the Salmon river.... and I won't care one bit about what the stock market is doing.... thanks to the dividends.

[Sieg]

You do know that "pump and dump" is illegal right?? LOL

https://photos.smugmug.com/photos/i-hKzqH4j/0/O/i-hKzqH4j.png

[Vegas69]

CPST chart over the last 15 years. Looks like they have been struggling for a long time. Greg, this doesn't look like the kind of chart you have recommended. ha ha

[Sieg]

I've reminded on many occasions for you all to "remember" when the market went up daily... and making gains was easy and fun. You want to remember those periods - when we're in a stinky market like we are right now. These stinky periods are when I LOVE the dividend. Those checks are a great antiseptic to the pain of the losses of those easy gains. For those of you that are in dividend reinvesting - they're also buying shares at lower prices automatically... bringing down your average cost - and building dividend payouts in the future.

Funny how the psyche works -- if I put a '69 Camaro up for sale - and I cut the price from 100,000 to 65,000 you'd be happy! And you'd be unhappy if I raised the price from 100 to 110,000! But not if we're talking about stocks. LOL

It's summer - stocks always suck in the summer. Add to this the possible slowing growth of China -- and a possible FED interest rate hike - and this is the kind of market you get.

I'm a buyer in these kind of markets - but I ALWAYS have plenty of cash kept on the sidelines because it can always get worse! It will help your thinking - if you tip toe in rather than dive in and then watch the shares you just bought go lower.... Keep some buying power "dry". You'll feel better about it.

I'm going to spend a week rafting the middle fork of the Salmon river.... and I won't care one bit about what the stock market is doing.... thanks to the dividends.
The key for me personally is to not be greedy or get too 'attached' to my stocks and 'make hay when the sun is shining bright' by selling some of my less desirable 'gainers' near the top of the hill thus creating a cash reserve that allows me to capitalize on the pending market downturn.

:sieg:

[GregWeld]

CPST chart over the last 15 years. Looks like they have been struggling for a long time. Greg, this doesn't look like the kind of chart you have recommended. ha ha



Todd --- You're a good student. Drive downtown - put 100 grand on Black or Red - your choice.... and you'd stand just as good of a chance.

Everyone has their own special reasons for buying this or that. What I've tried to "preach" on here is that there are fundamentally great companies to buy - that are making money hand over fist - and are willing to share those profits with their shareholders (the owners of the company)... why not own companies like that FIRST - and then - if you're a gazillionaire and can afford to gamble (and lose)... go for it.


Years ago when I was day trading with a 3 million dollar account (separate money I could afford to lose).... I bought 10,000 shares of a company - they went down - I bought 10,000 more - they went down and I bought 20,000 more..... Each time I was reducing my cost basis... in the theory of -- Get the current cost basis closer to where the shares are trading - that way they have to come back "less" to make me whole. I eventually sold the 90,000 shares I held at a $1.00 per share (each) loss. The trade thus costing my 90 grand. But I'd only lost a dollar per share. LOL

Funny right? My original purchase - had I just sold it all at a loss would have cost me about 5 grand.

Back then - I was making 10 or 20 grand per day, day trading that 3 million so I really could have cared less (pre-1999!) - But I've never forgotten the lesson.

[Vegas69]

I looked at a bunch of the stocks in my portfolio that are strong brands over the last 15-20 years. I have to admit that it's a bit alarming to see a majority of the stocks I researched gain 2, 3, 5 times their value in the last 2-4 years. A majority plodded along a majority of the time the last 20 years until around 2008. I'm really in this for the long haul but it sure looks like a major adjustment must be coming?

For example, look at Altria. If I wasn't in this for the next 30 years, I'd have to be seriously considering pulling the plug on some gains. Am I way off track here? Especially if dividends aren't fueling enough of your income.

[GregWeld]

I looked at a bunch of the stocks in my portfolio that are strong brands over the last 15-20 years. I have to admit that it's a bit alarming to see a majority of the stocks I researched gain 2, 3, 5 times their value in the last 2-4 years. A majority plodded along a majority of the time the last 20 years until around 2008. I'm really in this for the long haul but it sure looks like a major adjustment must be coming?

For example, look at Altria. If I wasn't in this for the next 30 years, I'd have to be seriously considering pulling the plug on some gains. Am I way off track here? Especially if dividends aren't fueling enough of your income.




Nobody ever went broke taking a profit....


But it depends on your goals and timeframe. If you're (anyone) is still needing to diversify - then trimming some gain - to re-invest in something else, is a nice way to get there.

Here's the dilemma. If the shares drop (which means the MARKET drops) your dividends will buy new shares at the lower prices. Over time - that's a good thing as it's on autopilot. PEOPLE are reluctant to buy shares on sale... and tend to miss the better prices because they're waiting for them to go lower....

You also want to re-invest the "gains" in something... and IF and WHEN the market falls - it takes everything with it. Ditto with gains - a rising market tends to take most everything up.

The problem with any of this is "trying to time the market". It never works. You won't find Warren Buffett doing it that way. That may be why his Coke (KO) dividend pays him annually what his original investment was...

So --- I would only trim SOME of the gain -- if you need/feel you need to diversify. Keeping in mind you're creating a taxable event - be aware of he length of time of the holding - whether or not it's in a taxable account or tax deferred account etc.

[ErikLS2]

It's definitely not an easy decision to make. I'm in the same boat with Under Armour (UA), earned 52.5% in less than a year and it's in a tax deferred account, but it's at a 90 P/E now!! I've made the mistake of not paying the tax on a huge real estate gain (even though I was pretty sure things had peaked, and they had) and re-investing the proceeds in another property, which ultimately tanked. Problem is where else would I have put it, in the stock market? And, that was in 2006, and look what happened 2 years later!!

Greg, I really wish you would just stop eff'n with all of us and just tell us what companies are going to earn 30-50% a year over the next 20!

[GregWeld]

It's definitely not an easy decision to make. I'm in the same boat with Under Armour (UA), earned 52.5% in less than a year and it's in a tax deferred account, but it's at a 90 P/E now!! I've made the mistake of not paying the tax on a huge real estate gain (even though I was pretty sure things had peaked, and they had) and re-investing the proceeds in another property, which ultimately tanked. Problem is where else would I have put it, in the stock market? And, that was in 2006, and look what happened 2 years later!!

Greg, I really wish you would just stop eff'n with all of us and just tell us what companies are going to earn 30-50% a year over the next 20!



That's always the issue when you sell a gainer... now what do you do with it. Obviously - we want to buy another name that gains. But that's my caveat... because in a down market - most things go down not up. So all you traded was a tax bill...

Those that sold in 2007 / 08 / 09 -- took losses.... probably were scared out of the market - therefore didn't trust getting back in until most of the turn upwards was "done"... HAD THEY JUST STAYED IN -- they would never have suffered the losses -- and would be 200 and 300% ahead now. That's why people advise NOT trying to "time" the market. You'll be out at all the right times - and in all of the wrong times... This is why I say - collect the dividend - let it buy discounted shares - building more dividends going forward - and you'll still be in great stuff when the market rebounds. When these occur and how long they last is anyones guess - and you'll never get it right.

I only wish I could predict a 10% gainer! Let alone 30%!

If I was that smart - I'd have bought 100% of the apartment building that just returned a 300% gain instead of only a little slice. Hind sight... it's a beautiful but useless trait. LOL

[Vegas69]

The huge stock gains in the last 3-4 years reminds me of the housing market 10 years ago. A huge upswing in a short period that resulted in a big mess. What fundamentals do you guys see in the stock market that dictate these huge gains being anywhere near sustainable? Serious question as I have not a clue. I know interest rates and a stronger economy have freed up discretionary income but to the tune of a 200% rise in stock price? Are we experiencing some new circumstances in the stock market that go against the historical grain?

Greg, I say that all the time, there is never anything wrong with taking a profit. I can say with absolute certainty that there have been times in the last 15 years where I would go back and park money in a safe place after taking a profit.

I'd like to hear some other perspectives on the market.

[GregWeld]

The huge stock gains in the last 3-4 years reminds me of the housing market 10 years ago. A huge upswing in a short period that resulted in a big mess. What fundamentals do you guys see in the stock market that dictate these huge gains being anywhere near sustainable? Serious question as I have not a clue. I know interest rates and a stronger economy have freed up discretionary income but to the tune of a 200% rise in stock price? Are we experiencing some new circumstances in the stock market that go against the historical grain?

Greg, I say that all the time, there is never anything wrong with taking a profit. I can say with absolute certainty that there have been times in the last 15 years where I would go back and park money in a safe place after taking a profit.

I'd like to hear some other perspectives on the market.




If you click a chart of the SPY --- 10 years out.... this is a ETF that is the S&P 500 stocks.

What you'll see is a peak in '07 and a price of about $149 a share.... then a big decline... then the rise to current value. Current value is $212. That's a 56% rise ==== not 200%

You can't use the bottom to calc a gain like this - because you first need to get back to it's old high.


The market is "high" because there's little opportunity elsewhere to put money. But I don't see any bubble - except in certain stocks. Go back to the P/E of your stocks and see where they are individually. That's a price to earnings multiple. I would call the market "normal" if the average P/E was about 17 ish. The current P/E is at 20 so slightly high. But you have to look at this as a WORLD market.... and money flows to safety and return. Right now - the USA looks pretty damn good compared to the rest of the world.

[GregWeld]

Here's an interesting look at P/E's -- Shiller P/E -- historical S&P price - etc.


Click across the top of this page to see various charts for their historical relevance.

You'll see the big blowoff top of 1999 -- the P/E was 44 !! That was the heyday of IPO mania and instant millionaire and back to the bread line... LOL The equivalent of the housing flipping market. Where EVERYONE you know was talking about buying houses -- back then -- the grocery store clerk told you about their day trading account...



http://www.multpl.com

[ironworks]

So I'm just a 39 Year old guy trying to set up his retirement. I don't have much in the pot, yet. But at what point might some one realize they are throwing good money after bad?

Example. I bought into BPT early last year. At like 85 bucks. Today its at 48. I bought a bunch more at like 59. I have had a nice dividend improvement. So when oil comes back it seems I will have more shares. I'm getting ready to buy some more shares this month with me monthly payroll contribution. And I wonder should I buy more shares or is there a point you hold out for what you have.

I live in oil country and it sucks here currently. So its not just BPT that is struggling. My KMI and NBR is struggling. They have not recovered and continue to drop.

Can you give us some more lessons on the different evaluation numbers you talk about? Where exactly to find them.

I know oil will come back, it has to. But is there a point of just waiting it out more even though you can't time the market. I know the previous high was alot higher then 85 I can get my money back and more some day maybe in a long long time. Which is the plan anyway. Right?

[GregWeld]

The richest people BUY MORE in bear markets than they do in BULL markets...


They're smart enough to understand the theory of buying low and selling high... and generally have been around long enough to have lived thru the PAIN of down markets... and the thrill of then seeing what they bought gain (the opposite of pain) in bull markets.


To categorically state "oil will come back - it has to".... is wishful thinking. We just don't know that. We'd LIKE that to be the case - but we can't make a statement like that. There are too many variables -- mostly boiling down to SUPPLY and DEMAND. The supply has increased - and currently - the demand is down. When that corrects is anyone's guess.

That <above> is why people are urged to DIVERSIFY.... lest their big "bet" doesn't materialize.

I currently have about 2.4 million invested in "oil" - pipes - gas.... APU - BPT - COP - KMI - ETP.... combined the dividend stream annually is $185,000 from those... and like most everyone - I'm underwater on a few (I've held most things far longer than many on here). I just bought MORE COP.... and last month bought more APU... but I also own LOTS more stocks outside the oil patch - as well as commercial real estate. My point?? I have to believe that I'm getting a decent return on my investment while being patient and "hoping" they stop falling at some point - and turn around.... but it's the $185,000 annual dividend income from them that helps to bolster my psyche in the meantime.

[sik68]

The Schiller PE is 26.5 It's only been that high 3 other times in history. :bur2:



I should say that I'm still fully invested; but would feel leery about picking up any stocks with high PE multiples in a high PE market.

[ErikLS2]

The SPY is for the S&P 500, not the DOW, just to clarify. Not poking at you Greg, I know you know and just flubbed one, I'm just mentioning it for the newbs. I always look at charts of companies or funds against that because if they haven't beaten it then why be in them really.

Oil is a tough one and like anything else we're just predicting the future. I think use is going to go down, the CAFE standard for 2025 is 54.5 MPG, double what it was in 2011. The oil companies are huge, and generally smart, and will figure it out. I can't help but wonder if they'll have to figure out batteries here pretty soon though. I sure am tempted to buy some CVX (where I but gas regularly) at a 5% dividend, I just personally don't think the stock price is going anywhere for a while and there is some risk that dividend will get cut.

It hasn't gotten any easier with all the ETF's and indexes either. They are where the majority of the money is I believe and often the best of breed stocks will go down in step with the worst of breed because of them.

I still think the best theory is buy what you know. If I would have done that a long time ago with Costco, Southwest Airlines, Snap On, Kroger, Under Armour (among others) I would have done pretty well and I would have felt reasonably safe because I would have picked up on a slide in products or services pretty quickly. I would love to buy some biotech as I think it's pretty exciting what they're doing with immunotherapy these days but I know nothing about it and would have no real idea why something went down all of a sudden (or up).

To me everything seems more on the expensive end than the cheap end but if earnings continue to steadily rise we might have a ways to go. I think when the Fed raises interest rates it will be a boost too, after an initial shock down, because it will instill a bit of confidence that things are finally on a steady uptrend. Ok, I'm done predicting the future :BlahBlah:

I'm curious, how many of you listen to the conference calls and read quarterly earnings reports of the companies you own stock in?

[Woody]

So I'm just a 39 Year old guy trying to set up his retirement. I don't have much in the pot, yet. But at what point might some one realize they are throwing good money after bad?

Example. I bought into BPT early last year. At like 85 bucks. Today its at 48. I bought a bunch more at like 59. I have had a nice dividend improvement. So when oil comes back it seems I will have more shares. I'm getting ready to buy some more shares this month with me monthly payroll contribution. And I wonder should I buy more shares or is there a point you hold out for what you have.

I live in oil country and it sucks here currently. So its not just BPT that is struggling. My KMI and NBR is struggling. They have not recovered and continue to drop.

Can you give us some more lessons on the different evaluation numbers you talk about? Where exactly to find them.

I know oil will come back, it has to. But is there a point of just waiting it out more even though you can't time the market. I know the previous high was alot higher then 85 I can get my money back and more some day maybe in a long long time. Which is the plan anyway. Right?

Trying to help answer your question about adding more BPT shares. You don't say what percentage of holdings you have in BPT, but one guideline is to not have more than 5% of your portfolio in one name. It sounds like you have other holdings in the energy sector too, so you might want to look at how much of your total portfolio is in energy. To decrease the riskiness of your portfolio, it is important to be diversified, so one holding does not have a big impact should something go wrong. That also applies to being too heavily invested in one sector.

I don't know much about BPT but I just took a quick look at it and one thing that stands out to me is the current dividend yield is 15.16% according to Google. That alerts me to this being very high risk and if it was me I would not have anywhere near 5% of my portfolio in something like BPT. But I may be more risk averse than you.

[GregWeld]

Thanks for the catch Erik!


Oils problem is a positive for a lot of stocks! Think how much savings WalMart must be enjoying - or the airlines - or UPS and FedEx.... The problem with that is you have to be able to see a problem and then figure who will benefit. I'm too busy enjoying other parts of life to be that nimble and you must be early to trade like that.






The SPY is for the S&P 500, not the DOW, just to clarify. Not poking at you Greg, I know you know and just flubbed one, I'm just mentioning it for the newbs. I always look at charts of companies or funds against that because if they haven't beaten it then why be in them really.

Oil is a tough one and like anything else we're just predicting the future. I think use is going to go down, the CAFE standard for 2025 is 54.5 MPG, double what it was in 2011. The oil companies are huge, and generally smart, and will figure it out. I can't help but wonder if they'll have to figure out batteries here pretty soon though. I sure am tempted to buy some CVX (where I but gas regularly) at a 5% dividend, I just personally don't think the stock price is going anywhere for a while and there is some risk that dividend will get cut.

It hasn't gotten any easier with all the ETF's and indexes either. They are where the majority of the money is I believe and often the best of breed stocks will go down in step with the worst of breed because of them.

I still think the best theory is buy what you know. If I would have done that a long time ago with Costco, Southwest Airlines, Snap On, Kroger, Under Armour (among others) I would have done pretty well and I would have felt reasonably safe because I would have picked up on a slide in products or services pretty quickly. I would love to buy some biotech as I think it's pretty exciting what they're doing with immunotherapy these days but I know nothing about it and would have no real idea why something went down all of a sudden (or up).

To me everything seems more on the expensive end than the cheap end but if earnings continue to steadily rise we might have a ways to go. I think when the Fed raises interest rates it will be a boost too, after an initial shock down, because it will instill a bit of confidence that things are finally on a steady uptrend. Ok, I'm done predicting the future :BlahBlah:

I'm curious, how many of you listen to the conference calls and read quarterly earnings reports of the companies you own stock in?

[glassman]

Whats funny (and sad) is i'm a stockholder in CVX and while it adjusts (declines), I'm paying almost the highest i've ever paid for gas (and yes, i buy it at Chevron, i'm paying myself a little by doing that).

I'm not sure, but in the gas companies play, the taxes here in Kilifornia are a great contributor to the higher per gallon prices, and theres lines at the pumps in my region....weird.

Is it suprise and "duh-mend"? or supply and demand? cant remember...




"It's time in the market, not timing the market".....

[JKnight]

Looking at this from a consumer perspective, I find that Chevron is usually significantly more expensive than conpetitors with no perceived (by me) difference in quality. This is the problem with choosing a company that deals in a commoditized product. When I look at CVX, I'm not inclined to think they have a competitive advantage.

[Vegas69]

If you click a chart of the SPY --- 10 years out.... this is a ETF that is the S&P 500 stocks.

What you'll see is a peak in '07 and a price of about $149 a share.... then a big decline... then the rise to current value. Current value is $212. That's a 56% rise ==== not 200%

You can't use the bottom to calc a gain like this - because you first need to get back to it's old high.


The market is "high" because there's little opportunity elsewhere to put money. But I don't see any bubble - except in certain stocks. Go back to the P/E of your stocks and see where they are individually. That's a price to earnings multiple. I would call the market "normal" if the average P/E was about 17 ish. The current P/E is at 20 so slightly high. But you have to look at this as a WORLD market.... and money flows to safety and return. Right now - the USA looks pretty damn good compared to the rest of the world.

Thanks for the info. A majority of the stocks in my portfolio are well above the 17.

[blue04.5]

I have nothing to add, but I would like to say thank you for this thread and those who continue to contribute to it. For the first time in my 33 years I am looking to learn more about investing so I can get started. I guess I am a late bloomer, very late....

[MPM IV]

It got quiet in here.

I'm hoping this is a buying opportunity as I'm utilizing money I don't intend to need in the near future.

Since my last post I've added Coke (KO) and Kimber Morgan (KMI) bringing me to a total of six positions. I previously had:

Altria Group (MO)
ATT (T)
Southern Company (SO)
Royal Dutch Shell (RDS.B)

Here is my question for you more knowledgeable and experienced investors. I'm coming to the end of my available funds. RDS has dropped significantly since I invested. Would I be better off creating another position in a different sector, or buying down my price per share of RDS?

I appreciate any insight you gentlemen can provide, but please provide the reason you would do one or the other with your answer.

[96z28ss]

Things are too scary for me I'm selling everything tomorrow!!
Using the money to build my underground bunker.

[Woody]

It got quiet in here.

I'm hoping this is a buying opportunity as I'm utilizing money I don't intend to need in the near future.

Since my last post I've added Coke (KO) and Kimber Morgan (KMI) bringing me to a total of six positions. I previously had:

Altria Group (MO)
ATT (T)
Southern Company (SO)
Royal Dutch Shell (RDS.B)

Here is my question for you more knowledgeable and experienced investors. I'm coming to the end of my available funds. RDS has dropped significantly since I invested. Would I be better off creating another position in a different sector, or buying down my price per share of RDS?

I appreciate any insight you gentlemen can provide, but please provide the reason you would do one or the other with your answer.

Not an easy one to answer, especially not knowing how much of each position is in your potfolio and if these are your only holdings. I am by no means an expert but here is how i look at it.

I am going to assume the six stocks comprise your total exposure to the stock market and you are fairly evenly weighted in each position? If that is the case, The conservative approach would be to open a new position in a sector that you do not have a position in. The reason is it will make your portfolio more diversified which will lower the liklihood of one position having a big negative impact on the portfolio and lower the overall risk of your portfolio. You also said that you have a position in KMI which is in the energy sector as well. Buying more RDS would really put you heavily weigted in energy.

You mentioned that you are at the end of your available funds. The only way I would consider buying more RDS was if I knew I had more funds to continue adding to the portfolio with which i could diversify with when the next buying opportunity arrives. I Think it is difficult to remain equally weighted at all times and there will be times when you are overweighted in one position, especially when you are starting out. The important thing to keep in mind is to not get too heavily weighted in one position or one sector.

[GregWeld]

It got quiet in here.

I'm hoping this is a buying opportunity as I'm utilizing money I don't intend to need in the near future.

Since my last post I've added Coke (KO) and Kimber Morgan (KMI) bringing me to a total of six positions. I previously had:

Altria Group (MO)
ATT (T)
Southern Company (SO)
Royal Dutch Shell (RDS.B)

Here is my question for you more knowledgeable and experienced investors. I'm coming to the end of my available funds. RDS has dropped significantly since I invested. Would I be better off creating another position in a different sector, or buying down my price per share of RDS?

I appreciate any insight you gentlemen can provide, but please provide the reason you would do one or the other with your answer.



Sorry for the delayed responses. I was on a rafting and kayaking trip down the Middle fork of the Salmon river for the last 6 days....


So to me, this is a "guts" question. It's always hardest to "invest" in areas that are getting their asses handed to them. It's even harder to put fresh money to work when you're seeing a sea of red in your holdings. "Averaging down" is a very worthwhile "technique" if you're investing in GOOD/GREAT companies. It does NOT work if you're just chasing a stock that's falling for the simple reason that you "think" (HOPE) will turn around and save your butt.

The ONLY way this works is if you have the guts to hold LONG ENOUGH for the strategy to play out. You can put yourself in a position of adding new money and seeing that also turn red. We never know what the bottom is. We don't know when the MARKET will turn... this could be a number of years! Typical BEAR markets last 3+ years... that doesn't seem like a long time... until it's your money! LOL

Personally --- I WILL continue to buy more oil and oil related investments. I'm not going to put money to work that I need - and I won't just blindly pound money in, in the hopes that it will turn around one day. Oil could be down for a number of years until the worlds economy turns more robust and the demand rebounds to equal the supply. In the meantime - the dividends are good (for now). That's the key! At some point the dividends might be cut -- so this is when you need to pay strict attention to cash burn rates - profits - future statements about operations going forward etc. In other words - if you're investing in a troubled segment - then your ears need to perk up!

In this market ----- I'd be patient ---- and since you're young (guessing) --- and trying to diversify and grow your money.... I'd try to pick up ONE growth stock "on sale". A Facebook - or a NetFlix - or Apple - something along those lines. The "high fliers" like this - will get sold off pretty hard when the market finally enters a phase of "capitulation" (the weak stupid hands toss in the towel). PICK AWAY if possible. Don't plunge...

Pay attention to CHINA.... They've been the big buyer of OIL -- and COPPER - and WOOD - and many building commodities for the last several years. If they're not buying - then those prices will get hammered... We'll want to see good news out of China for many market segments for GROWTH.

[GregWeld]

Things are too scary for me I'm selling everything tomorrow!!
Using the money to build my underground bunker.




Classic buy high and sell low strategy!! LOL


I know you're kidding - or - I certainly hope you're kidding.


This kind of market is EXACTLY WHY I push the DIVIDEND INVESTING theory! You get paid (or the dividend buys more shares) to hold thru bad markets.


I just posted that I was on a 6 day - very rugged - rafting/camping/kayaking trip in the wilderness..... and what happened while I was completely out of touch? The market had some nasty selloff.... but more importantly three companies deposited over $30,000 in my account (dividends). APU paid me $11,960.00 -- ETP paid me $15,525.00 and KMI paid me $7350.00

THAT is why I urge you to build a base of great DIVIDEND paying companies!!! Did I have losses in the face value of my shares? Sure! But I'm not selling so the value this moment means little to nothing to me. They're MAKING ME MONEY every quarter.

[Vortech404]

Hey Greg,
Let's say COP or CVX or whoever cuts thier
Dividend. Do you sell?

PS nice raise from MO.

John

[ironworks]

Classic buy high and sell low strategy!! LOL


I know you're kidding - or - I certainly hope you're kidding.


This kind of market is EXACTLY WHY I push the DIVIDEND INVESTING theory! You get paid (or the dividend buys more shares) to hold thru bad markets.


I just posted that I was on a 6 day - very rugged - rafting/camping/kayaking trip in the wilderness..... and what happened while I was completely out of touch? The market had some nasty selloff.... but more importantly three companies deposited over $30,000 in my account (dividends). APU paid me $11,960.00 -- ETP paid me $15,525.00 and KMI paid me $7350.00

THAT is why I urge you to build a base of great DIVIDEND paying companies!!! Did I have losses in the face value of my shares? Sure! But I'm not selling so the value this moment means little to nothing to me. They're MAKING ME MONEY every quarter.


Yeah me to. KMI gave me 1/3 of share....... SWEET

[Vegas69]

Shoulda cashed out. :stirthepot:

[GregWeld]

Hey Greg,
Let's say COP or CVX or whoever cuts thier
Dividend. Do you sell?

PS nice raise from MO.

John



Great question John!

You never "want" to be in a stock that cuts it's dividend.... things have gone from bad to worse in that case - as companies never want to cut their dividend. They only do so to stop the hemorrhaging. Having said that.... Chevron (CVX) would most likely cut their dividend or their stock buy back or both well before Conoco Philips (COP). Chevron would / does have a classic double edge sword going in that they're a driller/explorer (UPSTREAM) and a refiner and retailer (DOWNSTREAM). The margins on refining/retailing can't hold up to the losses of the crude decline (cash machine). They also have huge DEBT service. Their return on average assets has taken a substantial decline... and their margin is only 1.65% as of last "report".... compare that to COP who's balance sheet is actually "worse" -- but they're primarily a crude production / oil field operator. The management there has already come out and made public statements about protecting the dividend. That's a good thing!

Selling is about taking GAINS -- or protecting gains.... once you have LOSSES -- then you either wait it out - or buy more to average down. This is why we invoke the 5% rule. No single holding - even if it went to zero - should hurt you too badly. Either way -- I wouldn't worry about HOLDING CVX or COP. That's the other golden rule -- buy GREAT companies - so you're not worried about them for the long haul.

[MPM IV]

I appreciate the responses. For clarification, I invested heavily in the first three positions I opened which were AT&T, Shell, and Southern Co., so I am a bit out of balance. I do have an IRA which is a mutual fund, but this is my first time purchasing individual stocks.

Greg, I hope you enjoyed your rafting trip. I'm in my early forties, so not as young as I'd like to be.:lol:

For today I bought a bit of IBM. I'm patient, and will watch for something I consider a bargain, though not sure what that would be. Three years is pretty short term in my mind, it's the + that worries me!

Thanks again for the insight, and have a great weekend.

[GregWeld]

I appreciate the responses. For clarification, I invested heavily in the first three positions I opened which were AT&T, Shell, and Southern Co., so I am a bit out of balance. I do have an IRA which is a mutual fund, but this is my first time purchasing individual stocks.

Greg, I hope you enjoyed your rafting trip. I'm in my early forties, so not as young as I'd like to be.:lol:

For today I bought a bit of IBM. I'm patient, and will watch for something I consider a bargain, though not sure what that would be. Three years is pretty short term in my mind, it's the + that worries me!

Thanks again for the insight, and have a great weekend.



Hey! I turn 62 this month! Going for Social Security.... LOL



Bargains are RELATIVE! Earnings are what counts - and the forward looking statements companies state in their earnings releases. Higher P/E companies need to have great momentum going forward to show the market they can grow into their high P/E's.

Consumer sentiment turns on a dime -- but the "retail" consumer in the stock market isn't what counts. We're just along for the ride. The big "Institutional" investors are who run the markets. They have deeper insights and connections and have a far better feel for what's going on.

Here's what I always try to remember when the shizzle hits the fan.... for every guy that put his shares up for sale --- somebody else is buying them.

What "WE" have to do is to take a back seat - have a good time horizon - which means five years not five minutes - collect our dividends... and try not to get all schizoid over the latest news or market value. Because after doing this for many years (and I retired 24 years ago) the one thing I've learned is - the market takes a different turn just about the time you're convinced of the direction it's going. You could wake up Tuesday and the market is UP 400 points (by the way - that's not a big percentage number!).

The guy that makes all the money - is the guy that's the OWNER of shares when the market turns UP again - and it will... The weak hand holder that sells at the bottom - he's the loser as the ship blows right on past him. It's like driving a race car -- look where you want to BE not where you are.

[JKnight]

For those that haven't been in the market for long, today (8/21/15) was a seriously "bad" day. But as we've talked about, this may not something to be worried about when you have a long time horizon. For those with decades left until retirement, you really can look at this in a more positive light. I'd rather have my periodic investments buy in at a lower price.

Greg, since you mentioned it, what does a guy in your position think about taking social security at 62 vs. waiting until 65 or later? (I know this is one of those questions where everyone should evaluate their own situation, just thought it might be a good discussion topic)

[Mkelcy]

For those that haven't been in the market for long, today (8/21/15) was a seriously "bad" day. But as we've talked about, this may not something to be worried about when you have a long time horizon. For those with decades left until retirement, you really can look at this in a more positive light. I'd rather have my periodic investments buy in at a lower price.

Greg, since you mentioned it, what does a guy in your position think about taking social security at 62 vs. waiting until 65 or later? (I know this is one of those questions where everyone should evaluate their own situation, just thought it might be a good discussion topic)

Unless you need it to put food on the table or have been told by your doctor that you have ten years left to live, waiting to claim Social Security is an incredibly good "investment."

[GregWeld]

For those that haven't been in the market for long, today (8/21/15) was a seriously "bad" day. But as we've talked about, this may not something to be worried about when you have a long time horizon. For those with decades left until retirement, you really can look at this in a more positive light. I'd rather have my periodic investments buy in at a lower price.

Greg, since you mentioned it, what does a guy in your position think about taking social security at 62 vs. waiting until 65 or later? (I know this is one of those questions where everyone should evaluate their own situation, just thought it might be a good discussion topic)




#1 --- There are lots of "BAD DAYS" --- when you want reinforcement of what you're doing --- Take a chart of the stocks you own out to 10 years or "since inception" if possible (depends on who's charting service you're using) --- and you'll see LOWER ON THE LEFT AND HIGHER ON THE RIGHT --- with MANY MANY MANY ups and downs in between! Look at the larger picture!



#2 --- I don't want to get into a political discussion so let's leave this right here.

Social Security should be "means tested" --- Millionaires don't need Social Security. Don't care that I've paid in to it. It was designed as a social safety net. I should not be allowed to "collect" unless I was down to a preset level of net worth or income and net worth or whatever.

I'm a Republican.... but I have very Democratic views on many social issues. I'd far prefer to raise the level of SS for those that really depend on it -- at my expense (since I don't need it at all)... and raise their standard of living.

I'd also amend the tax law to eliminate the SS "cap". There shouldn't be a cap on when you quit paying into the system. Well-to-do people can afford to support the SS system.


#3 --- To respond to your question about when to start taking SS. I don't think anyone should ever have to take it. You shouldn't be dependent on it at all. That's what this thread is all about. To me - it's like Welfare... it should only be there for the truly needy. It should not be about raising your standard of living nor absolve a person of being self sufficient and providing for themselves in retirement. Having said that.... I would opt for taking the least amount over what I would HOPE to be the longest period of time. Should I decide to file for it.... mine would be donated to the causes of my choice.


#4 --- If you "have to work" until you're 65 or 70..... or beyond.... it's an epic failure of personal responsibility.

[AMSOILGUY]

#1 --- There are lots of "BAD DAYS" --- when you want reinforcement of what you're doing --- Take a chart of the stocks you own out to 10 years or "since inception" if possible (depends on who's charting service you're using) --- and you'll see LOWER ON THE LEFT AND HIGHER ON THE RIGHT --- with MANY MANY MANY ups and downs in between! Look at the larger picture!



#2 --- I don't want to get into a political discussion so let's leave this right here.

Social Security should be "means tested" --- Millionaires don't need Social Security. Don't care that I've paid in to it. It was designed as a social safety net. I should not be allowed to "collect" unless I was down to a preset level of net worth or income and net worth or whatever.

I'm a Republican.... but I have very Democratic views on many social issues. I'd far prefer to raise the level of SS for those that really depend on it -- at my expense (since I don't need it at all)... and raise their standard of living.

I'd also amend the tax law to eliminate the SS "cap". There shouldn't be a cap on when you quit paying into the system. Well-to-do people can afford to support the SS system.


#3 --- To respond to your question about when to start taking SS. I don't think anyone should ever have to take it. You shouldn't be dependent on it at all. That's what this thread is all about. To me - it's like Welfare... it should only be there for the truly needy. It should not be about raising your standard of living nor absolve a person of being self sufficient and providing for themselves in retirement. Having said that.... I would opt for taking the least amount over what I would HOPE to be the longest period of time. Should I decide to file for it.... mine would be donated to the causes of my choice.


#4 --- If you "have to work" until you're 65 or 70..... or beyond.... it's an epic failure of personal responsibility.

Ouch that will be a stinger for some folks.

From what I learned this drop just means things are on sale!

[JKnight]

For my generation, I hope that the uncertainty surrounding Social Security, justified or not, will compell them to do as Greg said. Nobody of decent means should count on it to fund their retirement. As fiscally conservative as I am, I would agree with an upper bound for eligibility to take social security. Not sure it would fix the program, but it's the right thing to do.

[GregWeld]

Ouch that will be a stinger for some folks.

From what I learned this drop just means things are on sale!



If it spurs on ONE person to kick themselves into a different gear - then it was worth the "statement".

I can't tell you - all of you - how friggin' fast I've "grown old" (at 62).... and while I've been far luckier than most... Most people just don't do what they KNOW they should be doing as far as the "nest egg". My Mother in Law just turned 90 yesterday... that's 25 years past the retirement "age"... Her house is and was then - paid for - she had a few hundred thousand to live on. Live very modestly... and she's just about out of money. SS does NOT keep up with the cost of living.... and she chose ultra safety and tax free over growth and income. With the money she had - I could have made her a millionaire with the growth over the last 25 years and she'd be making 50 grand a year in income...

People fail to realize how fast the years go by and how long they're going to live in retirement.

[dhutton]

#4 --- If you "have to work" until you're 65 or 70..... or beyond.... it's an epic failure of personal responsibility.

If it spurs on ONE person to kick themselves into a different gear - then it was worth the "statement".

I'm retiring next week on my 58th birthday thanks to this thread and a real estate investment I made 16 years ago. Thanks Greg, you have at least one more success story under your belt! It would not have been possible with the track I was on before I read this thread. :thankyou:

Don

[glassman]

I'm retiring next week on my 58th birthday thanks to this thread and a real estate investment I made 16 years ago. Thanks Greg, you have at least one more success story under your belt! It would not have been possible with the track I was on before I read this thread. :thankyou:

Don

Thats awesome Don!!! I'm ten years behind ya and hope to be getting out (full time) about the same time. I dont plan on ever retiring from what i do, i'm an expert at it and still love the technical and customer side, hate the business side (well, people who dont pay their bills, vendors that lie, customers with unrealistic expectations etc...)

But key for alot of us is, WANTING to work vs. HAVING to work...

I'm hoping this thread goes on for 15-20 years and see what happens and how many lives its touching in a positive fiscal way and hear more stories like Dons....just wish i had a crystal ball lol...

[GregWeld]

I'm retiring next week on my 58th birthday thanks to this thread and a real estate investment I made 16 years ago. Thanks Greg, you have at least one more success story under your belt! It would not have been possible with the track I was on before I read this thread. :thankyou:

Don



Okay -- That's just about the coolest thing ever! And that's exactly why I've poured my soul into this thread. I'm truly honored! Amazed! Kudos to you sir!

[GregWeld]

I'm a relatively early riser -- and I NEVER stop reading and listening to what's happening in the world. I knew today was going down hard - last night - when I checked what Asia was doing in their markets.

I gather KNOWLEDGE - I DO NOT stew about it. I didn't go to sleep last night with churning guts about the "money" I was going to lose in what I know is going to be a sea of red today. Rather - I went to bed thinking about which stocks I would start to pick away at with BUY orders. Perhaps a little more Apple under $100.... Altria (MO) which just raised it's dividends another 9%.... Seems people smoke no matter what (have to laugh at that sad as it is).

Here's the deal. If you own the very best of the best companies... they're still alive and well (maybe not big oil... which could catch a cold that could grow to pneumonia)...

With Altria's (MO) latest raise --- and THIS IS THE INVESTING 102 reason for posting today --- my yield on COST is 5.5% (cost is $41.33 divided into the current ANNUAL divided of $2.26... result is .05468 ..... move the decimal and that's 5.468%). THE ONLY REASON IT'S THAT HIGH ON MY COST??? BECAUSE I'M NOT SELLING AT EVERY LITTLE DIP IN THE MARKET. It's a LONG TERM hold... The company is good (all the companies I invest in are good!). I'm not in and out of the market - I'm NOT a trader - I'm an INVESTOR! When the market puts things on sale --- I try to take advantage of that. I "IMPROVE" my position when possible. There are companies I like that are on sale that I don't own.

My mindset is that no matter what I buy... it will go lower. I'm okay with that. It's like buying a rental house in a bad market -- you buy it - if you don't someone else will... and then you fix it up - rent it out - and EVENTUALLY you'll collect nice rents and the market will come back and you'll be the smartest guy in your office. : > )

I know most of you don't sit around with a pile of cash just waiting for a market correction. I get it. I'm trying to set you up for when you might some day. You need to have spent some TIME in the market - live thru it - LEARN FROM IT - and get your head wrapped around "it".... so when you CAN strike - you'll know what to do.

This thread is not your ultimate guide of buy this - sell that - move here... I'm trying to hand you THOUGHT PROCESSES... Ways to calculate things - ways to LOOK at things.

[PBarkley]

It's a LONG TERM hold... The company is good (all the companies I invest in are good!). I'm not in and out of the market - I'm NOT a trader - I'm an INVESTOR! When the market puts things on sale --- I try to take advantage of that. I "IMPROVE" my position when possible. There are companies I like that are on sale that I don't own.

I like the part in bold. I've been bitten before by the mentality that I can be my own day trader, and I'm lucky I didn't get completely hosed in the process. I've been quietly reading this thread ever since I've joined. It really is a treasure trove of information (especially for a 30 y/o like myself), and I thank you for that.

There is definitely opportunity to be had today for those with the cash, haha.

[SSLance]

I'm going shopping today as well...

[GregWeld]

I'm going shopping today as well...



I couldn't log into my WELLS FARGO account that I use for examples on this thread (trust me - I don't tell you Aholes EVERYTHING).... So I texted my team at the bank... which resulted in an immediate phone call from them.

I put just over 1MM "to work" (I always maintain a pretty sizable cash horde). By the time I tried to log into the account -- and the manual buy order was placed - -ALTRIA (MO) moved from $49.97 to $50.24 (my fill).... on a 5000 share order -- that's a big move (a cost to me!!). I had to switch from LIMIT orders to MARKET orders because the market was moving to the upside so fast. I could write a book about that "strategy" -- you have to move and make decisions in a fast moving market - that you WOULD NOT do in a "normal" moving market. If you're buying 100 or 10 shares - this isn't going to make or break you - and if you WANT the shares... and you should have decided that weeks or months before the actual action...

I bought AAPL -- NFLX -- MO -- T -- KMI

An hour later - I still don't have order confirmations.

[WSSix]

Congrats Don! Best of luck to you in your retirement.

I had some extra bonus money I decided to dump into my brokerage account instead of savings. I'm looking at making some purchases today.

[GregWeld]

Congrats Don! Best of luck to you in your retirement.

I had some extra bonus money I decided to dump into my brokerage account instead of savings. I'm looking at making some purchases today.



I don't want to be a sooth sayer trying to say what I THINK the market will do.... but there are some dynamics that will come into play.

#1 --- this thread is about INVESTING. There is so much more to a market... but we're trying to build long term - cash creating investments.

So --- Here's some dynamics in a wild ass market like this. Many people are SHORT the market waiting for an opportunity to cover. What does this mean?? It means that a SHORT SELLER can sell a stock he doesn't own.... collect the cash from the sell -- and hopefully wait to buy the shares at lower prices than he sold at --- because he OWES the brokerage the shares he sold. If I was a short seller -- I'd have been covering all my shorts this morning... and making very nice gains on the spreads.

A short in NFLX --- just a "scenario".... guy sells 1000 shares short at $122..... and covers the short today at $99.... he makes 23K on that trade (minus interest expense etc).


#3 --- In my old days of trading.... Anything I bought this morning I'd be flipping out this afternoon (and then go play a round of golf!). Let's take a normal name ---- Altria (MO) --- was down under $50 early this morning. If you'd have bought 5000 shares at $50.50 ---- and it's back to $52 this afternoon ---- that's a buck fifty times 5000 shares -- or a quick $7,500 "gain".


SHORT TERM TRADES (GAINS) INCUR MAX TAX RATE!! So we're talking GROSS gains here.

[WSSix]

What I've been doing with my money these last few years is saving through the year to be able to dump the max I can into my Roth on January 1 each year. I also keep adding extra instead of spending it.

I started looking at everything I have going on in my life and where I am with my different accounts, too. I already have my rainy day fund and house down payment fund. I also have general spending in there for the car. So I thought to myself, why should I put this bonus money into a 1% savings account when I already have my Roth covered for the next year? I could just as easily put it into AT&T and with no capital gains in the stock price make 5% on the money. AT&T could go down 3% and I'd still make more than if I had it in savings.

So that's what I did. Only I looked at the long term charts and picked Hasbro and General Mills over AT&T. Lower dividend payments but the long term charts for both kill AT&T by a huge margin. I got lucky that I had put this extra money into the account only recently so I wasn't waiting around for this to occur. I'll take a simple 2-3% drop in price and feel like I've won the lottery any day. :D I just wish I could add more money to my Roth because I have some good companies in there, JNJ and MO for example, that I would have liked to be able to add to but oh well.

[dhutton]

Congrats Don! Best of luck to you in your retirement.



Thanks Trey. And thanks for starting this thread. It has really made a difference. Looking forward to reading of many more retirements and success stories.

Don

[GregWeld]

I like the part in bold. I've been bitten before by the mentality that I can be my own day trader, and I'm lucky I didn't get completely hosed in the process. I've been quietly reading this thread ever since I've joined. It really is a treasure trove of information (especially for a 30 y/o like myself), and I thank you for that.

There is definitely opportunity to be had today for those with the cash, haha.



Glad you are enjoying the thread!

Day trading is the fastest way to lose money I can think of. That's about the purest form of gambling. Then at the end of the year you owe the IRS taxes... and it raises your ordinary income (if done in a taxable account). Many people don't understand the tax rules of "wash sales" etc. The only way to do this is really have a great base of normal savings and investments... and then just take your "extra" money and either go to Vegas or day trade. LOL

Quickly -- a WASH SALE is where you trade the same stock -- within 30 days and have a gain -- then a loss -- The loss doesn't cancel out the gain - so you owe taxes on the gain even though you had a loss. It's a nasty rule that bites many people in a arse. That's a real basic explanation BTW.

[glassman]

Glad you are enjoying the thread!

Day trading is the fastest way to lose money I can think of. That's about the purest form of gambling. Then at the end of the year you owe the IRS taxes... and it raises your ordinary income (if done in a taxable account). Many people don't understand the tax rules of "wash sales" etc. The only way to do this is really have a great base of normal savings and investments... and then just take your "extra" money and either go to Vegas or day trade. LOL

Quickly -- a WASH SALE is where you trade the same stock -- within 30 days and have a gain -- then a loss -- The loss doesn't cancel out the gain - so you owe taxes on the gain even though you had a loss. It's a nasty rule that bites many people in a arse. That's a real basic explanation BTW.

Pretty much how my Dad lost his buttocks in the market. Sad, but true. My bro and i now "help" him out....

[GregWeld]

So this fits "investing 102" only because it's a way people lose money in "private placement" deals....

This hit the news today - and is the guy that bought our house last May.... which is mentioned by address in the article.

Lobsang is married to Andre Agassi's SISTER.... LOL


http://www.seattletimes.com/business/real-estate/sec-charges-local-developer-defrauded-investors-in-eb-5-visa-fundraising/

[SSLance]

Holey Crap Greg!! You are famous!!!

What a scam it sounds like...or should I say "ill advised program" that leaves itself wide open for scam artists to capitalize on.

[ErikLS2]

I'm not posting this to suggest what's going to happen or what to do. I just find this kind of thing interesting is all. This is the ^VIX index, the volatility in the S&P 500, against the S&P 500 overall market. There's a clear correlation between a sharp spike in the VIX and a drop in the market. Again, this is just for entertainment purposes, your guess is as good as mine if it means anything.

http://finance.yahoo.com/echarts?s=%5EVIX+Interactive#{"range":"max","allowChartStacking":true}

[68Cuda]

This hit the news today - and is the guy that bought our house last May.... which is mentioned by address in the article.


Whole program is ripe for abusing foreign nationals and bilking them. I applaud the SEC for policing stuff like this.

Nice shop, the house is OK too:
http://www.zillow.com/homedetails/2560-109th-Pl-NE-Bellevue-WA-98004/48684391_zpid/

[XLexusTech]

Some thoughts..

A while ago I took an educated risk with Peer to peer lending... insulated from this turbulence in China and +12% in real $ out profit this year..

Using that cash to buy while the iron is hot..... I know everyone says you lose when you try to time the market.... But.. I am part of team "Buy low" :sarcasm_smiley:

[ErikLS2]

1,154 stocks made new 52 week lows today. That is actually a much higher number than what happened in 2008-2009 and during that low, as well as others, the number of stocks making new 52 week lows has to be for othe most part dwindling before things start going up again. What do I know but I'm betting that even though the economy is better now than it was then (of course we don't know what we don't know) we still have a ways to go down and Sept is often a bad month.

[toy71camaro]

Figured I'd just pop in and say Hi. Still monitoring, but just don't have much to add. LOL.

Keeping a close eye on the market. I haven't funded my ROTH yet, so it may be some time to make a few buys here soon. :)

[GregWeld]

What I'm "HEARING" in here is very short sighted "investing".

It should be FUN and EXCITING to be able to get a chance to buy shares "on sale" --- but look at these prices on a longer term view both backward and forward. The fact that something is lower than it was last week... is really extremely short sighted. The fact that the market dropped --- TEMPORARILY ---- 1000 points... after it's run some 8000 points since early 2009.... come on. Put that into perspective!

If your house went up DOUBLE in 6 years -- and then went down 25% -- you're still WAY AHEAD.

Go pull up a chart of the DOW --- go to ALL --- look at that line. '08 and '09 was basically a "Great depression" with the complete collapse of the housing and financial markets --- jobs followed.... but this was a financial collapse because of the GAMBLING that was taking place with mortgages and debt and margin by the largest institutions in this country. 1999 was another "recession" for stocks - which wiped out the complete EXCESS in the IPO and tech market...

You must teach yourselves to look at the market with PERSPECTIVE and RELATIVITY... Years ago a 50 point day was a moon shot.... today it takes a 500 point move... I couldn't buy fast enough when the market was down 1000 points --- not because I was getting such good deals --- I paid MORE than my basis of cost in the names I bought two years ago! I RAISED my cost basis with the buys. But they were just lower than they had been LATELY (thus the relativity).

[XLexusTech]

What I'm "HEARING" in here is very short sighted "investing".

It should be FUN and EXCITING to be able to get a chance to buy shares "on sale" --- but look at these prices on a longer term view both backward and forward. The fact that something is lower than it was last week... is really extremely short sighted. The fact that the market dropped --- TEMPORARILY ---- 1000 points... after it's run some 8000 points since early 2009.... come on. Put that into perspective!

If your house went up DOUBLE in 6 years -- and then went down 25% -- you're still WAY AHEAD.

Go pull up a chart of the DOW --- go to ALL --- look at that line. '08 and '09 was basically a "Great depression" with the complete collapse of the housing and financial markets --- jobs followed.... but this was a financial collapse because of the GAMBLING that was taking place with mortgages and debt and margin by the largest institutions in this country. 1999 was another "recession" for stocks - which wiped out the complete EXCESS in the IPO and tech market...

You must teach yourselves to look at the market with PERSPECTIVE and RELATIVITY... Years ago a 50 point day was a moon shot.... today it takes a 500 point move... I couldn't buy fast enough when the market was down 1000 points --- not because I was getting such good deals --- I paid MORE than my basis of cost in the names I bought two years ago! I RAISED my cost basis with the buys. But they were just lower than they had been LATELY (thus the relativity).

I agree 100%... everything I buy to keep, everything I am buying has a long standing track record.. (see Dave Fish) Hint hint... everything I am buying lowers my dollar cost average.... nothing I am doing now is "short sighted"

[ErikLS2]

I think you're mainly talking to me Greg and you should be, I agree with you. I shared what I did because I'm fascinated with the psychology of the market short term and get a kick out of seeing these changes, which often scare beginners out of the market at the exact wrong time. I never use them on their own to put money to work really. The last time I bought anything was last Oct. when this sort of drop happened, although not as bad. It's not even a year later and nothing I bought then, SNA, UA and LUV went below what I paid for it over these past few days (well except maybe for a few minutes Monday morning). In fact, collectively on those 3 names I'm STILL up 20% as of market close today. Makes quite an argument for buying on the dips. I ended up being a day or two late then and I may be a day late this time but I'm going shopping tonight!!

[XLexusTech]

I think you're mainly talking to me Greg and you should be, I agree with you. I shared what I did because I'm fascinated with the psychology of the market short term and get a kick out of seeing these changes, which often scare beginners out of the market at the exact wrong time. I never use them on their own to put money to work really. The last time I bought anything was last Oct. when this sort of drop happened, although not as bad. It's not even a year later and nothing I bought then, SNA, UA and LUV went below what I paid for it over these past few days (well except maybe for a few minutes Monday morning). In fact, collectively on those 3 names I'm STILL up 20% as of market close today. Makes quite an argument for buying on the dips. I ended up being a day or two late then and I may be a day late this time but I'm going shopping tonight!!

+1 on that... added to positions today... and will likely add to more every day this week....

[GregWeld]

Erik --- My comments are RARELY if ever to someone. Everyone is entitled to their thoughts and opinions - here - and everywhere! And are welcome!

What happens for me is that a post evokes thoughts... and I try to post - in a manor that evokes thoughts for anyone reading ALL of the posts collectively. I don't know who's reading - or what they're thinking - or what they're about to do (or not do). I'm mostly trying to be in an Investing 102 mode.... giving folks a base for consideration - calming newbs nerves when they might be asking themselves WTF am I doing - putting things into layman's terms - using my years of experience for a view or a different perspective.

During big moves up and down -- people get all worked up, and often do the exact opposite of what they should be doing, if they're truly investors.

Think about what the idiots feel like that sold down 1000 points --- all freaked out -- bailing out at any price.... and now today we're up 600 points... and they're freaking out trying to buy back what they just sold. They're the LOSERS -- and the folks that bought - are the WINNERS.... and the FOLKS THAT DID NOTHING are the winners... Thus my "take a longer view" post. And if you bought -- don't get too worked up about that either -- because in 5 more days we may have another "dip".... Buy when you can... if you can take advantage of a dip - awesome! If not - buy when you're ready - buy the best - collect the dividend - and years down the road the price you paid will look "cheap" - and they'll still be talking about the "market" being overpriced or overbought or oversold... I've been listening to that same BS every day for 30 F'n' years.

[ErikLS2]

I couldn't agree more. I have had fun listening to CNBC most of the day these last few, boy can they get some mileage out of some swings in the market. Even Jim Cramer, who I like a lot, changes with the market and only briefly slows down enough to say long term dividend growth investing is where you need to be (which most people miss I think) and mostly what he talks about is playing with "mad money" or "the houses money".

Greg, do you regularly listen to conference calls of companies you own shares in or do you just read the earnings reports? I do both but these CEO's and CFO's always seem to put on as positive a spin as possible during these calls.

[GregWeld]

I couldn't agree more. I have had fun listening to CNBC most of the day these last few, boy can they get some mileage out of some swings in the market. Even Jim Cramer, who I like a lot, changes with the market and only briefly slows down enough to say long term dividend growth investing is where you need to be (which most people miss I think) and mostly what he talks about is playing with "mad money" or "the houses money".

Greg, do you regularly listen to conference calls of companies you own shares in or do you just read the earnings reports? I do both but these CEO's and CFO's always seem to put on as positive a spin as possible during these calls.



I do when the market is turbulent -- or when I think I should perk my ears up to a particular name I own. For me - it's easier to scan the quarterly in a PDF format. However, I'm very much "in the game" daily. If you wait for the quarterly to come and don't have a good sense for what to expect - you can get hammered before you have time to sell... and you'll most likely be behind the curve if it's going to run up. For most of the companies I hold - I just don't have to care much. They chug along happily humming a tune - and rise or fall in lock step with the market in general.

In "the old days" I used to worry and wring my hands - and I'd sell just before the report... and then, of course, they'd report a stellar quarter and the stock would run a buck and a half - and I'd be chasing it up... having missed the move.

We should go back and reiterate the information that's been posted here a few times early on. There's a proven fact that most of a stocks GAIN happens on only a very few days in a given year. I'd have to look up the info again - but basically - if you're NOT in the market those couple days - you've missed all of the gain for the year. What I've found is that those days often are either in advance of or just after the quarterly report.

Funny thing this week. I was complaining to Ron Sutton (who comes to the track and manages ME and the race cars) that I was struggling with a particular turn at Sonoma... and that this struggle had me "off" on the series of turns after it (T7 at Sonoma sets up T8/9 esses). He tells me "you're behind the track".... which is EXACTLY what was happening! I modified T7 and 8 and 9 became much faster and easier.

The reason I mention this - is because this week - a guy could easily find himself "behind" the market. Just missing the big down day -- and then trying to catch the market as it zooms off leaving him behind. LOL But these events are for "trader" mentality. Do I love them? Oh hell yeah! Was I waiting for an event like this? Oh hell yeah! But is it important to the average guy?? NO! Is it FUN? You bet! Does it give us bragging rights at the office when we can say we caught the dip? Oh hell yeah! But in the LONGER SCHEME of investing... it's hardly important to your overall net worth.

For me - and this thread - it's more about LEARNING from watching... it's like being in class. If you're not invested - it's a meaningless lesson. If you are invested - then it really wakes your ass up and you pay attention. How'd ya feel? Were you "right" about your hunch on what the market was going to do? What made you "feel" you knew "something"? Did you loose sleep or were you more sanguine and comfortable with your holdings?

I will tell you right now -- that just about the time you're really comfortable with "buying the dips" -- the market will dip - and dip - and drip - and for a period of YEARS (2 or 3) we'll die the death of a 1000 cuts... where the market just leaks red. That's when you'll find out if you're an investor.

[SSLance]

I didn't get my full shopping list sorted until after the market closed last night, too busy at my day job...

I executed the trades this morning even with the big bump... Little ticked that I missed yesterday's prices but still overall very happy to add to the portfolio at sale pricing.

I struggled adding any to my oil stocks even though they looked very attractive on the sheets. I added to them on the last dip and felt overweighted this go around. Only one I added to this time was KMI.

[GregWeld]

I didn't get my full shopping list sorted until after the market closed last night, too busy at my day job...

I executed the trades this morning even with the big bump... Little ticked that I missed yesterday's prices but still overall very happy to add to the portfolio at sale pricing.

I struggled adding any to my oil stocks even though they looked very attractive on the sheets. I added to them on the last dip and felt overweighted this go around. Only one I added to this time was KMI.


The old saying "buy when there's blood in the streets" - while is easy to say - is hard to do. When I bought shares on Monday - none of it was oil... I own enough - they're mostly bleeders - and while they are compelling on a price basis relative to where they were.... other than the pipes... the dividends aren't really covering the possible continued downside risk. Risk needs to carry a comparative reward. My "feeling" in this space is that it's not going to be a sudden snap back where if you didn't get in you're going to miss out. This is a very large commodity and the prices inch up and drip down... A prudent investor - if he's already in - is probably better off watching and waiting. IF a guy is not already in - it's probably better to wait until there's real confirmation that oil is up and heading higher. The counter statement to "buy when there's blood in the streets" is "don't try to catch a falling knife" -- both are true enough - why not wait until the knife hits the floor.

[SSLance]

Agree completely Greg, the dividend yield on ETP is VERY tempting right now, but it's already my second largest holding even at today's prices... I still might add some to it...gradually.

[WSSix]

My purchases are always long term. While I was happy I got to add to my positions at a relative discount compared to the prices they had been, I know in another 5 years it won't matter. I just get a kick out of picking up stocks on a down day versus it going down the day after I purchase. The later happens more than the former so I celebrate all little victories. Woot! :D

[GregWeld]

My purchases are always long term. While I was happy I got to add to my positions at a relative discount compared to the prices they had been, I know in another 5 years it won't matter. I just get a kick out of picking up stocks on a down day versus it going down the day after I purchase. The later happens more than the former so I celebrate all little victories. Woot! :D



Great post Trey! Because that's the message that is "correct". It DOES feel better to get a bit of a deal... and investing is VERY emotional. You need "confirmation" that what you're doing is right - not wrong. I get that it's not about the few bucks saved... Longer term - you're absolutely right - it won't matter one bit.

What I am also trying to convey though --- is that it doesn't always work this way -- or snap quite so dramatically. It's wonderful when it does... but get your heads wrapped around that we WILL -- WITH CERTAINTY -- make these buys one day, and then just bleed for a long time. What I've always tried to get everyone to get ready for is when your buys/investments/markets DON'T work the way we've become quite used to. This is why I say to use this period to learn -- to remember the basics - like reminding yourself with the charts that HISTORICALLY we're more about lower on the left and higher on the right... and to remember the euphoria you feel when the market is with you... and that it WILL be like that again - and that you're still earning money on your money with the dividends etc.

Time is totally relevant! I like to look at my stocks more like living in my house... It doesn't have much value while I'm living there other than to keep me dry and warm (the dividends). The value only becomes important when I want to sell it.

[WILWAXU]

Anyone buying oil stocks?

[WSSix]

I would but they are in my Roth and it's maxed out for the year already. It's not going to turn around quickly. It may get uglier yet, too. Greg had some thoughts on oil stocks on the previous page.

[GregWeld]

Anyone buying oil stocks?




Here John --- "Somebody" is buying oil.... LOL


http://www.reuters.com/article/2015/08/29/us-berkshirehathaway-phillips-idUSKCN0QY0L120150829

[GregWeld]

An interesting view on the "market" in SHANGHAI...... That market was up 100% between last November and last month (JULY)... and everyone is freaking out because it's now DOWN 36%. If you were an investor last October or November or December (you know - as it was rising). You're still way ahead.

This IS what happens when a market runs too far - too quickly. Up 100% in a few months is not normal in anything - anywhere. The fact that some air is coming out is a total "well duh".

You can't compare the US markets with that kind of a run. Our market is based - key word here - based - on EARNINGS. All the lumps and bumps along the way are reactionary moves more based on emotion vs fact. Look at YOUR holdings and make sure their earnings are sound and their revenues are going the right way. That's why you want to own the very best companies.

[GregWeld]

Here's some other food for thought this morning.


If I had not invested in a business in 1975.... or ever since then - bought stocks - and made apartment building investments - and bought commercial buildings... because I thought at the time that they were too high -- or the world was coming to an end - or that interest rates were going one way or the other... or that my house was going down...

We've had wars - I've seen 15% interest rates - I've seen the collapse of the Savings and Loan industry... the collapse of the stock market TWICE (1999 and 2007) - the collapse of the mortgage industry... a slew of Presidents I didn't like... 9/11... Lived thru the cold war - and seen Russia and China go from being imminent threats to being trading partners.

At any time along the way I could have used all of that for INACTION or reasons to be frozen in my tracks... all nothing but excuses for not investing in anything. 25+ years later all of that seems pretty important... and yet here I am living off all those early investments. Maybe you'll see my point? Ignore all of that short term BS... and keep plugging along saving and investing for your future. It matters little that your last investment is down 20%... Where will it be 15 or 20 years from now? My bet is WAY UP.

[96z28ss]

Market could go down way more.

The Chicago Cubs no hitter could spell doom for the market.
Following Milt Pappas' September 1972 'no hitter', The Dow dropped over 40%
Carlos Zambrano's 'no hitter' in 2008 came during the Lehman bankruptcy weekend and was followed by a 30% plunge in the S&P in the next three weeks, as well as a 6000-point-plus total collapse in the Dow.

So, when we saw Jake Arrieta's 'no hitter' this weekend, we can only imagine what doom it implies for US stocks.

And if that is not worrying enough, the last time The Cubs won the National League Pennant was in 1945, two cities were destroyed by atom bombs.

LOL just joking around.

Another fun fact. In the Back to the Future movie when Marty goes to 2015 the Cubs won the World series.

[Payton King]

That is funny stuff right there

[sik68]

I have nearly all of my individual stocks in large-cap dividend companies with 'low' PE ratios: 10 to 25.

But I'm only 31 and have a long investment career ahead of me. So the devil on one shoulder wants me to be bold, and re-balance into 5-10% into these high-flyer tech companies with marginal profits and a ton of growth already priced in.

However, I just can't seem to convince myself that my money is worth it. Sure, NFLX, AMZN, FB, TSLA are pioneers. But according to their profit/loss sheets, their future potential is already priced in. At some point, won't the value of a company need to be reflected in the share price?

Ben Graham says to be wary of these types of stocks because it is very rare to buy a stock at a XXX PE level, then expect to make money as it descends to a 20x-ish PE level. I am trying to find historical examples of companies that have successfully done this, but am stumped. Thoughts/examples?

:EmoteClueless:

[GregWeld]

WOW! Really great question(s).


Since this is "Investing 102" --- I've personally attempted to stay away from discussion of the "high fliers" -- as this is NOT where someone that is a "newb/beginner" should be --- UNTIL they've built a decent base of good stuff (that we always talk about).

However... YOUNG people -- and those with a decent "base" of investments (the building blocks or rocks)... should certainly dabble in GROWTH.

Recommending GROWTH stocks is a precarious cliff. As you mentioned - by the time you know about them - or are willing to buy them - they've already probably gone a long ways.... That is NOT to say that they're done growing or that they'll "flop" just because their P/E's might be a bit out of whack NOW. Personally, I own NetFlix (NFLX) and Shake Shack (SHAK) and a couple others of this breed. They flop up and down like fish! Which is why they're not recommended for beginners! Most people couldn't stomach these wild swings - or the sea of red ink than can kill your performance on all the other wonderful names you own.

The trick is to really dig deep in your soul and ask yourself how much volatility can you take.... AND which of these "high fliers" do you see being around and growing LONG TERM -- 10 or more years out. That's what I do. Personally - I'll buy 100 grand of a name... which is small potatoes as an investment for me. You're going to give up the automatic compounding that's built in with reinvesting the dividends on the steady bigger companies. But the growth can be a triple or a 10X over time.

I have funds in venture capital... that is pure gambling and comes with great risk but also huge rewards if you get it right. Talk in that kind of arena runs around 4X "ordinary" to 9X "killing it". You're young and if your job and earnings potential is solid.. I'd say pick out 2 or 3 and go for it. Just KNOW that GAIN comes with PAIN... some folks can stand this short term (or even longer term) pain and understand what, and why, they've invested.

A year or two I'd have bet FaceBook was short lived or faddish and wouldn't be able to grow REVENUES into their valuation. Obviously those that bet otherwise have done very well! Netflix is a 9X since it's IPO.... it only takes ONE of those to make up for a couple of ho hums or a bleeder.





I have nearly all of my individual stocks in large-cap dividend companies with 'low' PE ratios: 10 to 25.

But I'm only 31 and have a long investment career ahead of me. So the devil on one shoulder wants me to be bold, and re-balance into 5-10% into these high-flyer tech companies with marginal profits and a ton of growth already priced in.

However, I just can't seem to convince myself that my money is worth it. Sure, NFLX, AMZN, FB, TSLA are pioneers. But according to their profit/loss sheets, their future potential is already priced in. At some point, won't the value of a company need to be reflected in the share price?

Ben Graham says to be wary of these types of stocks because it is very rare to buy a stock at a XXX PE level, then expect to make money as it descends to a 20x-ish PE level. I am trying to find historical examples of companies that have successfully done this, but am stumped. Thoughts/examples?

:EmoteClueless:

[ErikLS2]

Great post there Greg! Do you ever use the PEG Ratio? I always look at the PEG ratio, it really helps figure out which of these high growers is cheaper than the other ones based on their current P/E Ratio and expected growth rate (which is subjective of course). You just have to watch what growth rate is used. I always compare PEG ratios from the same source when comparing them, i.e. don't use the PEG from Yahoo Finance for NTFLX and compare it to the PEG ratio for FB on Schwab for example. I try to keep any buys below a 2.0 PEG ratio. Here is a good explanation of it:

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

[GregWeld]

Great post there Greg! Do you ever use the PEG Ratio? I always look at the PEG ratio, it really helps figure out which of these high growers is cheaper than the other ones based on their current P/E Ratio and expected growth rate (which is subjective of course). You just have to watch what growth rate is used. I always compare PEG ratios from the same source when comparing them, i.e. don't use the PEG from Yahoo Finance for NTFLX and compare it to the PEG ratio for FB on Schwab for example. I try to keep any buys below a 2.0 PEG ratio. Here is a good explanation of it:

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





Erik - I know of the PEG... But when I'm buying this crap I use my gut. Take a NetFlix... I bought when everyone I know is USING it not just when the talking heads are talking about it on TV. I bought Shake Shack because my friends in New York City told me about the lines and the food. I'll be in NYC today and will test this theory myself. I bought Apple years ago after seeing the crowds in their stores at the mall. Went home and bought some.

[WSSix]

Another rule or metric you can use to help compare stocks is the Chowder rule. You'll have to search seeking alpha to find the information. It's fairly simple though. I'll look into occasionally just to give me a proper comparison between stocks I own or may be interested in.

I'm sure there are lots of different methods and ways to compare stocks. You don't have to get ridiculous about it. Just pick one or two that are easy and align with your goals or philosophy and go for it.

[GregWeld]

I think I've said this before --- and I think everyone should have and know how to use various "metrics" for helping to make a judgement call. The only thing I would ADD to this is --- don't let metrics over rule your head/gut. When you're buying risky assets... ONLY YOU can live with the result... and if you let metrics talk you into something you really didn't want in the first place... then when it goes south - you'll tend to cut bait -- and kick yourself while you watch "the one" your really wanted to buy - go ballistic.

Growth stocks don't trade well on "metrics" - they trade on momentum... they trade on fear (fear of missing out and fear of being in front of a train)... they trade on hype... they trade up if the talking heads like 'em - and they trade down if the talking heads don't.

Personally --- I like it when people are buying or talking about buying or using the stuff they produce... and sometimes you miss the first legs up because I want to actually witness what's taking place in the real world. I want to see a two block long line out the door (Chipotle and Apple)... I want to see an actual consumer shift (NetFlix). I don't need to be the first guy in and GUESS with my money. GoPro is selling like hot cakes -- has the lions share of that market... buy after the HYPE left... it's done nothing but drip red ink after it's quick rise. Maybe the market is smaller than the P/E can achieve IDK. Tesla -- they're killing it... the car(s) are fantastic.. it trades at a ridiculous P/E... but all my friends seem to want one. To me - that's a good thing (I don't own it). They have a very expensive build out to be a real mass produced manufacturer and I would expect a ton of hiccups.... FaceBook seems to have real lasting traction. I don't use it - so am not buying it - why? Because I won't know when or if it's going to fade into the sunset.... But I think it's a real company and "everyone" is using it. So I miss out... I'll live just fine. I can't own them all and don't want to.

These are all risks -- take them at your own speed.... be sure you want to live with them while they suck.. because usually this stuff drags you down - and then just about the time you're ready to bail and take the loss... they jump 10 points. Or.... they just drip and ooze and cause your stomach to burn. LOL
Sometimes it's just fun to see if you're right. Just don't be upset when the market hands you your ass, it will NOT be on a silver platter. But man do you get bragging rights when you kill it with one or two.

[ErikLS2]

Well said Greg, I like the feeling I get when I can physically see what's happening. I often wonder what would have happened if I just put a little money into each new thing when I noticed a trend developing, i.e. people buying personal computers, EVERYONE getting a cell phone or listening to music that WASN'T on a CD, hell even the company that made those Baby On Board window hangers probably killed it for a while LOL.

Amazon is what's blowing me away lately, I like never buy anything at the store, except groceries and maybe clothes/shoes that I want to try on first. They sell EVERYTHING! I just ordered a bunch of parts for my boat and these flossing things for kids teeth, on the same order, had it in 2 days, free shipping as a Prime member! Sometimes I even get stuff the same day since they put a fulfillment center in here.

[sik68]

Thanks for the feedback fellas, as well as the metrics you use. Maybe I'm not a 'GROWTH' guy; I'm okay with that :)

[GregWeld]

Well said Greg, I like the feeling I get when I can physically see what's happening. I often wonder what would have happened if I just put a little money into each new thing when I noticed a trend developing, i.e. people buying personal computers, EVERYONE getting a cell phone or listening to music that WASN'T on a CD, hell even the company that made those Baby On Board window hangers probably killed it for a while LOL.

Amazon is what's blowing me away lately, I like never buy anything at the store, except groceries and maybe clothes/shoes that I want to try on first. They sell EVERYTHING! I just ordered a bunch of parts for my boat and these flossing things for kids teeth, on the same order, had it in 2 days, free shipping as a Prime member! Sometimes I even get stuff the same day since they put a fulfillment center in here.




I can only wish that I'd have bought into this retail behemoth! Wow -- anyone that's interested should check out their chart (AMZN) - UP 70% year to date - UP 60% for 1 year - UP 280% 5 year - UP 1128% in 10 years...

I just wish it paid a dividend... because for my own personal investing that's a critical piece of the puzzle particularly given their share price.

[MPM IV]

Hey gentlemen, I received my 1st dividend from Shell today, which was nice to see, but I'm a little confused. I bought RDS.B, and when I looked today I now own a few shares of RDS.A. I'm just curious if anyone knows why that is or what effect it might have, if any. Thanks in advance.

[GregWeld]

Hey gentlemen, I received my 1st dividend from Shell today, which was nice to see, but I'm a little confused. I bought RDS.B, and when I looked today I now own a few shares of RDS.A. I'm just curious if anyone knows why that is or what effect it might have, if any. Thanks in advance.



Good question --- I couldn't find an answer. A and B both pay the exact same dividend (.94 a quarter)... and the two shares mirror each other. Sometimes A shares are voting and B shares are Non Voting.... but I wasn't going to spend the time to research it.

[MPM IV]

Thanks for looking Greg. I believe that the A shares pay a 15% tax to the Netherlands where the B shares don't, which is why I chose B from the start. Due to my lack of experience I didn't even consider that they might pay in a different share than what the buyer owned.
I was hoping that someone that owned the stock might know if there's a way to correct that or if I end up paying tax to two countries, which would make me far less happy with my selection. Part of the learning curve I guess.

[GregWeld]

Thanks for looking Greg. I believe that the A shares pay a 15% tax to the Netherlands where the B shares don't, which is why I chose B from the start. Due to my lack of experience I didn't even consider that they might pay in a different share than what the buyer owned.
I was hoping that someone that owned the stock might know if there's a way to correct that or if I end up paying tax to two countries, which would make me far less happy with my selection. Part of the learning curve I guess.



I did find this little "nugget" in an article just published discussing RDS's ability to continue to pay it's dividend!!



Market is concerned that higher dividend yield at the expense of low share prices will mean that the dividend is not sustainable and company may cut its dividend payment in the future. However, Shell has not cut its dividends over the past 70 years. Even at oil below $10 per barrel, it maintained its dividend payments and has always given priority to its shareholders.

The Anglo-Dutch company is in a good position to finance its future projects while satisfying its investors. At the end of second quarter 2015, Shell’s gearing ratio was 12.7%, much better than other oil giants. Although the completion of the Shell-BG would require the oil company to raise its debt financing, it seems that the company would still be in a strong position to finance its dividends.

[MPM IV]

Thanks again. I had not seen that article and it definitely put a smile on my face.

[GregWeld]

In this "crappy" market -- which I have long warned all about WILL happen during your investing horizons.... and I've reminded many times to remember how easy it was to look "brilliant" during an up market. I wanted to just check the pulse on some names we've talked about. Remember that I'm just using these as examples and nothing more.


I pulled up a chart of the ONE YEAR price performance of Altria (MO) - Alibaba (BABA) - GoPro (GPRO) and AT&T (T) and Philip Morris (PM)... just to plot them in my mind. Remember that PM, T, and MO pay dividends - which is the MAIN REASON to own them long term... because they keep paying while the share price is poop....


MO - is UP 20.5%

PM - is DOWN 3.8%

T - is DOWN 8.6%

BABA - is DOWN 30.3%

GPRO - is DOWN 55%

So.... if you owned the three on the top of the list - your account would be positive overall... and you'd be collecting 5% (just rounding off here) dividend... If you owned the last two -- OUCH... and you get nothing while you're waiting for them to come back to even.


Staying in the game in the down market periods is about 99% of the battle... getting PAID while you play the game is even better. Yeah - you're buddy at the office was making a killing the first few weeks or months on his IPO buys... but I'll bet he hasn't mentioned them for awhile... LOL

[WSSix]

I'm swimming in a sea of red personally. It's a little uncomfortable right now honestly. I'm glad I'm in this for the long haul though. If I had to make money on trading, I'd be so screwed. I can see why traders might have high stress levels.

[Sieg]

I'm swimming in a sea of red personally. It's a little uncomfortable right now honestly. I'm glad I'm in this for the long haul though. If I had to make money on trading, I'd be so screwed. I can see why traders might have high stress levels.
Relax......the tide goes in and out, some storms are bigger than others, and major Tsunamis are infrequent.

I hoping there's going to be a reason to go on a little 'average down' shopping spree soon.... :)

[CRCRFT78]

So I have been trying to catch back up with this thread (on page 461) after not reading it for awhile and wanted to skip ahead and get some of your opinions on the Volkswagen debacle. I haven't had a chance to dig deep into whats going on but I did look up the stock to sort of get an idea of whats going on with it. Volkswagen AG (ADR) OTCMKTS:VLKAY the share price is at $27.10, P/E 5.64 and a Div/Yield 1.09/4.01. Now my thinking is that it has the ability to recover and have some decent growth along with the dividend payment over time and be a winner. What could I be missing or not thinking about as an investment consideration?

P.S. I hope I have the right symbol. This was just a spur of the moment look up to see what the stock was doing (besides falling).

[Vegas69]

I bet Greg will say not to catch the falling knife. It's awful early in the cycle.

I started this deal two years ago and I'm still very happy I did. I have 8.5% more dinero than I would if I left it in the bank before dividends. I got lucky with some good companies that are doing well.

I recently listened to a cd that claimed that 97% of mutual funds are outperformed by the S & P 500. Mutual funds are glorified savings accounts. I see the value of a Roth IRA or a match 401k, but mutual funds are to safe to hit a home run with.

[GregWeld]

So I have been trying to catch back up with this thread (on page 461) after not reading it for awhile and wanted to skip ahead and get some of your opinions on the Volkswagen debacle. I haven't had a chance to dig deep into whats going on but I did look up the stock to sort of get an idea of whats going on with it. Volkswagen AG (ADR) OTCMKTS:VLKAY the share price is at $27.10, P/E 5.64 and a Div/Yield 1.09/4.01. Now my thinking is that it has the ability to recover and have some decent growth along with the dividend payment over time and be a winner. What could I be missing or not thinking about as an investment consideration?

P.S. I hope I have the right symbol. This was just a spur of the moment look up to see what the stock was doing (besides falling).


Volkswagon (VLKAY) is much more than just Volkswagen... it's Porsche - it's Bentley - Audi - Lamborghini - Bugatti - Ducati.

The 4% dividend rate is a direct result of the falling share price... My bet is that after a few heads roll -- and some fines are paid... and some fixes are done... This will have been a very good time to buy a good company. In the meantime you might feel like a dart board in a bar... but when the dust settles and things quiet down... the share price should rebound.

[JKnight]

I agree with Todd on this one, falling knife analogy and all. I personally like the idea of trying to buy low during this scandal, but it's probably too early given the size of this mess. If you are going to get in on this, you're going to have to make monitoring this situation your new hobby and even then it's still a gamble.

[GregWeld]

I bet Greg will say not to catch the falling knife. It's awful early in the cycle.

I started this deal two years ago and I'm still very happy I did. I have 8.5% more dinero than I would if I left it in the bank before dividends. I got lucky with some good companies that are doing well.

I recently listened to a cd that claimed that 97% of mutual funds are outperformed by the S & P 500. Mutual funds are glorified savings accounts. I see the value of a Roth IRA or a match 401k, but mutual funds are to safe to hit a home run with.



Now you know why I HATE Mutual Funds.... I'd only ever invest in them if they are the only thing you can get in your company matched retirement program.

Yes - Todd - It might be a bit early for Volkswagon.... but I don't think it's a falling knife. My guess is - most of the damage to the share price is probably done. It's a good company overall... and NOW has a decent dividend payout. Not great - but the 4% and the possible recovery upside is a decent "bet".

[JKnight]

It's only one metric, but the P/E is looking pretty good relative to peers...

[SSLance]

Couple of days ago I did a little 18 month portfolio performance comparison, mine against my business partner's which is managed by a big high faluting wealth management planner.

After you take out the 1% management fee he pays, my portfolio beat his by a couple of tenths of a point...and I'm still less than 50% invested, the rest in money market cash. :D

You should have seen the look on his face when I shared. lol...

And that doesn't take into consideration the income tax consequences of the odd trade here and there the wealth planner did (probably to make it appear as if he knows what he is doing). And oh yeah, the fees...added up to over $45,000...so while the advisor made $45,000 managing his money, he was basically even over the last 18 months.

[GregWeld]

Couple of days ago I did a little 18 month portfolio performance comparison, mine against my business partner's which is managed by a big high faluting wealth management planner.

After you take out the 1% management fee he pays, my portfolio beat his by a couple of tenths of a point...and I'm still less than 50% invested, the rest in money market cash. :D

You should have seen the look on his face when I shared. lol...

And that doesn't take into consideration the income tax consequences of the odd trade here and there the wealth planner did (probably to make it appear as if he knows what he is doing). And oh yeah, the fees...added up to over $45,000...so while the advisor made $45,000 managing his money, he was basically even over the last 18 months.




Sad isn't it?!?!?!


The whole reason behind this thread is to keep the investing SIMPLE -- Easy to learn and understand - and to show that you can EARN money on your money without having to micromanage, or make a bunch of trades. It's just simple investing - more like buying rental real estate. Sure there are the occasional hiccups and worries... just like when the renter moves in the middle of the night. But overall - nobody needs a professional.

I have an entire team just at Wells Fargo... We have the big table meetings on occasion - and go to lunch - and play golf etc. I can tell you without hesitation they don't know one single thing more than I do. Ditto on the VC (Venture Capital) money... which is nothing more than a group of people that have too much money... we pool some cash and choose some investment opportunities. It's a complete crap shoot. Luckily - it only requires one hit to cover up the 9 bottomless pits... The VC at least puts people inside the investments in an effort to help the companies - and also to use connections - and create synergies if possible, and to find the right people when needed.

[GregWeld]

It's only one metric, but the P/E is looking pretty good relative to peers...



I ASSume you're referring to Volkswagon (VLKAY).


Investors will look at the larger picture... and decide whether or not the company as a whole - pimples and all - will be able to recover or not. The issue to me would be -- buying too early and suffering for awhile... while collecting 4%... or waiting for the turn up (if) and perhaps missing it altogether. Yesterday the stock was up $1+..... and that was UP 6.5%

I like to look at the percentages rather than the actual dollar amount.

[SSLance]

I put the theories learned here to another test earlier this week. The wife and I were offered the opportunity to "invest" in a local wine club that is opening a new location. We know the owner, have been members in his other wine clubs in the past, and were invited to a dinner where the new opportunity was floated.

Basically the investment was setup as a no recourse loan, 10% interest paid on the loan, and wine club benefits such as purchases at 10% above cost during the life of the loan.

That is all fine and dandy, but being no recourse I looked hard at the chances the loan will actually be repaid and I jumped back to Greg's rule about how I feel about the actual business. We dropped our membership in his other "club" because the personal feel of the establishment had gone away, a couple of the partners had a falling out and just an overall feeling of not being wanted when visiting the establishment.

If I stopped paying my membership fee in his other club because I didn't like the direction it was heading...why would I loan him a large sum of money to start the same thing only different in another spot? :D

Thanks Greg!!

[Sieg]

...why would I loan him a large sum of money to start the same thing only different in another spot? :D

Thanks Greg!!

Because HE needs YOUR money! :) :thumbsup:

[GregWeld]

I put the theories learned here to another test earlier this week. The wife and I were offered the opportunity to "invest" in a local wine club that is opening a new location. We know the owner, have been members in his other wine clubs in the past, and were invited to a dinner where the new opportunity was floated.

Basically the investment was setup as a no recourse loan, 10% interest paid on the loan, and wine club benefits such as purchases at 10% above cost during the life of the loan.

That is all fine and dandy, but being no recourse I looked hard at the chances the loan will actually be repaid and I jumped back to Greg's rule about how I feel about the actual business. We dropped our membership in his other "club" because the personal feel of the establishment had gone away, a couple of the partners had a falling out and just an overall feeling of not being wanted when visiting the establishment.

If I stopped paying my membership fee in his other club because I didn't like the direction it was heading...why would I loan him a large sum of money to start the same thing only different in another spot? :D

Thanks Greg!!



Good call!!


It's so simple. LOL

[GregWeld]

Frankly --- these down days - weeks, months, or even a year or two... they're good things. We all can hate them. But in the longer run - they'll teach you a lot about who you are as an investor. Patience... buying low instead of when the market is high... Holding rather than capitulating the week before they start the next leg up. Collecting dividends, and having them reinvested which will buy more shares at lower prices... AND when the market turns around, which it WILL... you'll be right back to thinking how smart you were!


Kind of like that old sports intro they used to run --- "the thrill of victory and the agony of defeat".


The key is to learn. Watch and see which stocks suffered the most that you were certain were never going down... and what held it's own... and the reason behind diversity. And more importantly what TIME does for you. Pick a couple of names out that you don't currently own - write down where you think they're headed - and why - and then see if you're right about your 'hunch'. Make a note of when you'd buy them.

We've just talked about Volkswagon -- what's your hunch? It's the perfect name right now to see if you would be right or wrong. You don't have to buy it - just learn from it and see if you can pick the nuggets out of the news - and which way and how many times you'd be a "flopper" on it. LOL

[sik68]

Here's my $0.02 on VLKAY, fwiw.

So far, it has 'only' crashed ~50% since the news was released. The timeline on this recovery is likely very long...it certainly won't be a bounce. So the first opportunity cost question: is there another company to invest in, without the baggage, that could outpace VLKAY?

I'm sure the retrofit of the 09-14 cars will be relatively economical, and the fines will be manageable... I would still be a buyer of their stock if those are the only headwinds they face. BUT the worst thing they did for their business was scare finicky customers. I think their near term sales will be in the toilet (fear) and long term sales will suffer (conquest sales by other brands). The PE will get back to normal... but it will be due to the E.

That says, if it goes substantially lower (another 20%?), I'd think I'd be a buyer.

[Vince@Meanstreets]

Here's my $0.02 on VLKAY, fwiw.

So far, it has 'only' crashed ~50% since the news was released. The timeline on this recovery is likely very long...it certainly won't be a bounce. So the first opportunity cost question: is there another company to invest in, without the baggage, that could outpace VLKAY?

I'm sure the retrofit of the 09-14 cars will be relatively economical, and the fines will be manageable... I would still be a buyer of their stock if those are the only headwinds they face. BUT the worst thing they did for their business was scare finicky customers. I think their near term sales will be in the toilet (fear) and long term sales will suffer (conquest sales by other brands). The PE will get back to normal... but it will be due to the E.

That says, if it goes substantially lower (another 20%?), I'd think I'd be a buyer.

I think this down turn will be short lived since heads are getting chopped and Porsche will take the leads for some time. It will drop further as soon as the news comes out on how many vehicles were affected and who was involved. Just this morning they reported that cars overseas had "issues" too.

Good buying long term opportunity sure. Typical over reaction, reaction then recovery cycle with a scandal. For me im a chicken chit investor, I avoid the auto industry because there are so many outside influences that can "modify" the prices.

[GregWeld]

I think this down turn will be short lived since heads are getting chopped and Porsche will take the leads for some time. It will drop further as soon as the news comes out on how many vehicles were affected and who was involved. Just this morning they reported that cars overseas had "issues" too.

Good buying long term opportunity sure. Typical over reaction, reaction then recovery cycle with a scandal. For me im a chicken chit investor, I avoid the auto industry because there are so many outside influences that can "modify" the prices.



Autos and houses are "CYCLICALS" == they're boom and bust... I've always avoided both of these. The unions strike -- the sales lead changes depending on who has what car (take the Mustang outselling the Camaro with the latest model)... Like Vince -- I see this as a major misstep as far as management goes -- but that should be shaken to the core... and a company like this should be able to recover. Many Mia culpas... will be offered -- fines paid -- lawsuits settled... and two years from now you'll have forgotten all about this little fiasco (hopefully).

[ErikLS2]

Two years might be optimistic, but then I haven't really done any research on this, although I am a tech in the industry. What VW is going to have to do at a minimum is put out a software flash for the computers in all of these cars, which requires a test by CARB to be certified. That takes time, and think there will be any scrutiny over the new software???

It can also be expensive I understand to get approved. Installing it into the car is relatively simple and since it only affects it during emissions testing, other components that sometimes also have to be replaced during a re-flash, probably wont have to be.

Just heard today that regulators in EU are looking into it there, where there are a many more diesel cars than here and just ask Google and Microsoft about European regulators.

With a 4+% dividend right now there is already some "yield protection" protecting it from probably much bigger drops as it's getting to the point where the yield is so attractive that the price can't go much lower (providing they keep paying the dividend). Who knows, but I'll be watching closely, good one to go to school on, that's for sure.

[GregWeld]

This is what I think is good for Investing 102 --- Watching how these things play out - and how you think about them.

GM (GM) had the "ignition switch" debacle... Toyota (TM) had the "runaway throttle"...

GM is DOWN 13.9% on their 5 year chart (yet they pay 4.88% dividend) and TM is UP 63% for the same period (they pay 2.75%).... WOW!! I'd have never thought there was that much spread.

[Vegas69]

I've owned a modern GM and Toyota. I can tell you exactly why... :lol:

[Vince@Meanstreets]

I've owned a modern GM and Toyota. I can tell you exactly why... :lol:

comparing a Prius to a Caviler is hardly fair Todd. :lol: :snapout:

[GregWeld]

I've owned a modern GM and Toyota. I can tell you exactly why... :lol:

comparing a Prius to a Caviler is hardly fair Todd. :lol: :snapout:



Oh...... that was a direct hit! LOL

[ErikLS2]

This is what I think is good for Investing 102 --- Watching how these things play out - and how you think about them.

GM (GM) had the "ignition switch" debacle... Toyota (TM) had the "runaway throttle"...

GM is DOWN 13.9% on their 5 year chart (yet they pay 4.88% dividend) and TM is UP 63% for the same period (they pay 2.75%).... WOW!! I'd have never thought there was that much spread.

Toyota paid out $200+ Million to settle it's issue, and there was never really a proven documented case of unintended acceleration. An even bigger problem is the 85 lawyers who filed the class action lawsuit got $227 million. The plaintiffs who those lawyers filed the suit for? Yep, they collectively got $395,270. Couple years and it was all over with.

GM tried to cover up their issue for more than 10 years and during that time marketed their cars as "safe". It's costing them at least $900M.

And, I still hate Prius-es!

[Sieg]

FWIW: A market perspective client letter from a fund manager I deal with:

As you are aware the past three months have been very difficult for stocks. Given the current environment, we thought it would be helpful for us to share some of our thoughts on these recent market developments.

In early to mid-August, we were reminded that stock market corrections can occur quickly. Global markets retraced most or all of the year-to-date gains and volatility increased significantly. Then September came and although many of the underlying market currents didn’t change, the headline indices regained some of that lost ground. A small group of large stocks (Amazon, Google, Netflix, Facebook, and Chipotle Mexican Grill, to name a few) which have outsized effects on the indices, drove a significant portion of the recovery. Unfortunately, in order to match or exceed this type of index performance, an investor would have to make a few, highly concentrated bets. Our preference remains on running well-diversified portfolios, which are not rewarded in these types of environments.

Many studies on the historical and current divergence between growth and value oriented investing arrive at a similar end point: value-based investing has historically produced superior returns. But we are currently in a period in which markets have flocked toward growth. As the accompanying graphic shows, the year-to-date performance (through Sept. 24, 2015) of several Russell® indices reinforces the current situation. Consistently, across market capitalizations, the growth category returns are essentially flat while the general (core) returns are negative and the value category returns are more negative, still.

Not surprisingly, uncertainty remains the only certainty at this time. Market participants continue to weigh the potential effects of an eventual decision by the Federal Reserve to raise the benchmark interest rate, the collapse of commodity prices, global economic health and market valuations. Third quarter earnings, a key component of the past six year bull market, are expected to be less robust than last year. Currently, it appears that this is a temporary issue, but is one that warrants close attention. Ultimately, we expect these higher levels of market volatility to remain in the near to intermediate term. Importantly, it is in this market environment in which stock picking is rewarded.

Believers in mean reversion, like us, expect the environment to eventually return to normal. More important is that we maintain our value discipline. We have been through these type of markets before. In the short term, they are painful, but in the long term our clients have been well served by staying the course.

[GregWeld]

You'll learn a lot more about yourself - and investing in general when the markets are poop -- than you ever will when the market just goes up every day.

You'll learn about time. Remember that money you were saving and "didn't need" for awhile (2 or 3 years perhaps).... You'll learn about diversity, and how one or two names in your portfolio are the only thing keeping you somewhat afloat... You'll come to understand why earning some money on your money is really important when the growth of the share price IS NOT there... You'll find you look at your portfolio a lot less in bad markets... this is especially true if you own great names... You'll come to understand all my "gambling" statements if that's what you've done...

And when it snaps (or crawls) back... you'll think how lucky (smart) you were to have been acquiring more shares all along the twisty, winding, route the market takes.

[ErikLS2]

You'll learn a lot more about yourself - and investing in general when the markets are poop -- than you ever will when the market just goes up every day.

You'll learn about time. Remember that money you were saving and "didn't need" for awhile (2 or 3 years perhaps).... You'll learn about diversity, and how one or two names in your portfolio are the only thing keeping you somewhat afloat... You'll come to understand why earning some money on your money is really important when the growth of the share price IS NOT there... You'll find you look at your portfolio a lot less in bad markets... this is especially true if you own great names... You'll come to understand all my "gambling" statements if that's what you've done...

And when it snaps (or crawls) back... you'll think how lucky (smart) you were to have been acquiring more shares all along the twisty, winding, route the market takes.

One of your best yet! :thumbsup:

[GregWeld]

Crazy damn market... I have no words other than just to stick with it. NASDAQ UP over 100 points! WTF.... Crazy.

Here's the only thing I can say - do what I do - pick your names (the best ones!) don't get squirrelly... just buy when you are ready. Close your eyes and ride the wave.

Worst quarter in 4 years. Now you know what a ****ty market is like. Sometimes it's like this for a few years!! Stomach it - weather it - don't try to time it - just keep on investing. It ALWAYS gets better. The losers are the ones that bail.

[Sieg]

It will be interesting to see how the market reacts to the Putin :bitchslap: tomorrow.

[ErikLS2]

What about what Carl Icahn said today? I think it's a bit extreme but he's no dummy either.

[ironworks]

Crazy damn market... I have no words other than just to stick with it. NASDAQ UP over 100 points! WTF.... Crazy.

Here's the only thing I can say - do what I do - pick your names (the best ones!) don't get squirrelly... just buy when you are ready. Close your eyes and ride the wave.

Worst quarter in 4 years. Now you know what a ****ty market is like. Sometimes it's like this for a few years!! Stomach it - weather it - don't try to time it - just keep on investing. It ALWAYS gets better. The losers are the ones that bail.

That's good. I'm tired of seeing red every day. Then a big green day and then small red numbers for a week or 2.

[GregWeld]

What about what Carl Icahn said today? I think it's a bit extreme but he's no dummy either.



Erik --- I totally agree with you that Icahn is... well... an icon. I listen to him - and I pay attention. But here's where I usually go... "the market" is just so much bigger than "anyone" including the federal government. Typically the market reacts as a "group think" mechanism. Nobody is buying - everyone is buying...

What we're dealing with is group think - on China - on the rest of the world... nobody really knows what these economies are going to affect here or on US companies. We are dealing with a FED rate hike, or not. We don't know the affect of what that is going to do. We have a collapse in the oil industry... just when the US was looking to become a major oil producer and possibly even an exporter. Where's that going to shake out.

Here's the deal in the market. Lower oil prices -- bad for some - great for many... are you in the right ones? If you're in to oil - you're getting killed (I am ) - if you're into autos - you might be looking like a hero (more sales - more big profitable truck sales etc). Retail sales should look good in the fourth quarter because the consumer has more money in their pocket from the lower prices...

If you're invested into anything that is "international".... Caterpillar... etc... you're DOA... But would you really be afraid to be invested or buying more (CAT)?? This is one of the worlds premier companies. When Europe and China come back on line - you'll look like a hero owing CAT long term.

My point - same point I've always made -- buy the very best the world has to offer - get a decent dividend - buy more as you can when the world appears to be going dark. That is how you make money. Long term is not one quarter... it's time to build your portfolio not shrink it. Grow a set. You'll be happy with the result.

[ironworks]

What is your take on Snap On. They go up and down in big moves almost daily. But man it got more hammered lately then I would have thought. Are they more international then maybe I thought?

[GregWeld]

What is your take on Snap On. They go up and down in big moves almost daily. But man it got more hammered lately then I would have thought. Are they more international then maybe I thought?



They ran up pretty far - pretty fast - and their dividend is small - so you're relying on all share price growth. In a down market - or jittery market - people pull money out of where they have big gains FIRST... everyone is loathe to sell losers.

Great company - great name... the share price might have run a little too far is my guess.

[ErikLS2]

What is your take on Snap On. They go up and down in big moves almost daily. But man it got more hammered lately then I would have thought. Are they more international then maybe I thought?

I've been using the tools for 20+ years, just bought my first shares 10/20/2014 and as of today I'm still up 21%. They have the best tools, are in a lot more businesses than most are probably aware of and look at a 2 year or longer chart. They have these little blips and then keep on chugging along. Go to their website and listen to a recent conference call and you'll get a sense of the whole company. More than just tools to mechanics. This one stock showed me that once I'm aware that a company clearly without a doubt produces the best product, I should be a buyer. I will also know right away if the product starts to suck and can get out because I use them every day.

[GregWeld]

I've been using the tools for 20+ years, just bought my first shares 10/20/2014 and as of today I'm still up 21%. They have the best tools, are in a lot more businesses than most are probably aware of and look at a 2 year or longer chart. They have these little blips and then keep on chugging along. Go to their website and listen to a recent conference call and you'll get a sense of the whole company. More than just tools to mechanics. This one stock showed me that once I'm aware that a company clearly without a doubt produces the best product, I should be a buyer. I will also know right away if the product starts to suck and can get out because I use them every day.



Erik -- This is exactly what I've always said about buying companies that you know and understand. As a consumer - you'll be the first to see signs of cracks in the business. If you suddenly find yourself not happy with the way things are going - you'd have to assume that "others" would feel the same way... and you can start sliding out of the shares.

Obviously this is an over simplification of investing - and it's impossible to do this with every single name you'll want to own. But if you break it down for making CHOICES of which companies to invest in - and you're seeking names to put in your portfolio... then this is one more tool (pun) in your bag to help you. It's as easy as adding a financial name -- if you bank at Wells Fargo and like them - and the choice is between them and Bank of America... you'll sleep better owning WFC. Same with an oil company (that also retails gas)... or a food stock... or a retailer such as Macy's or Nordstrom. Are you a Home Depot guy or a Lowe's guy...

It's not the end all way to invest - but it is a good way to help people (newbs in particular) to get them started -- and to have them STAY IN THE GAME when the game isn't particularly fun (like now).

[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.



How's that working out for you?? :hello:


Capstone Turbine Corp. (CPST) Drops 25.53% on October 01

[Vegas69]

Low blow....ha

[GregWeld]

Low blow....ha



It takes a LOT to keep even on low blows with Charlie!


Really wasn't trying to rub his face in it as much as I was pointing out "statements" like this are always tough to defend. This is INVESTING 102... and it's a good learning point for many here.

I think there are MANY stocks in the S&P that are considered to be in true "bear territory" which is down 20%... so this is not the only stock that sucks... the whole market is stinky right now.

[GregWeld]

So when you think the "pros" do such a much better job than you ever could "investing".... think again. LOL

Read this article on the "hot" hedge funds... The first couple paragraphs will give you all the info you'll need. : > )



http://www.bloomberg.com/news/articles/2015-10-02/ackman-einhorn-lead-hedge-funds-on-track-to-rival-2008-losses

[XLexusTech]

Anyone have any opinions or even a formula for taking gains or taking losses for tax purposes?

Here is my situation... I have one stock and one municipal both traded in a post tax "Play" account... I am going to share the tickers because it will help ..

I have MUI which is a tax free Muni that can take a loss on.. and trade up for MUS.. I am down 38% on it..
I have COKE that I am up 198% on right now.. which I think is a good time to sell off some of it..

Is there a way to calculate how much of each would offset? Assume Coke is not subject to short term gains?

In a nutshell, is there any offset losses and gains strategies to help come april 15th?

[CRCRFT78]

FINALLY I have caught up with this thread again after slacking off. After watching the market take some serious hits I realized I needed to get back on board with what I have going on and put some idle (LAZY) workers back to work.

I have about $3800 in my retirement account and have been considering purchasing ATT (T) with that or adding to my two red positions. CAT is -12.80% and KMI is -28.34%. The rest of the account is doing pretty good.

Do you think it would be wise to spend it all on ATT, add to the 2 in the red or divide it between the three of them? I've included a screenshot of my holdings for your critique.

[XLexusTech]

Jose I am not qualified to answer your question... But congrats on them gains !

[GregWeld]

Anyone have any opinions or even a formula for taking gains or taking losses for tax purposes?

Here is my situation... I have one stock and one municipal both traded in a post tax "Play" account... I am going to share the tickers because it will help ..

I have MUI which is a tax free Muni that can take a loss on.. and trade up for MUS.. I am down 38% on it..
I have COKE that I am up 198% on right now.. which I think is a good time to sell off some of it..

Is there a way to calculate how much of each would offset? Assume Coke is not subject to short term gains?

In a nutshell, is there any offset losses and gains strategies to help come april 15th?



This is easy -- because tax harvesting is not complicated. If you want to be tax NEUTRAL - then sometime before December 31st -- you sell the loser (however much you want to sell).... and then you sell enough of the winner to zero that loss out. Or vice versa. Sell however much of the gainer to equal the amount of the loss you want to take. So if you have a loss sale of $1,000 (capital loss) - then sell something with a gain - where your capital gain is $1,000. Net tax neutral transaction.

Losses are capped at $3000.00 per year -- so if you just sold the loser --- and had a $9,000 loss - you'd have to carry the loss over a three year period...

For losses - there is no distinction between short and long term. That distinction comes if you have GAINS. So you can sell a short term loser and offset that loss with a long term or short term gainer if you want a tax neutral harvest.

But remember that you can't write off more than a $3,000 loss per year. So you can't earn $100,000 and sell a bunch of losers where you lost $50,000 - and think you're going to offset your income by $50,000. You'd only be able to write off $3,000 this year. This is why people that want to take some gains - but not incur the taxes - usually offset the gains with selling some losers. Then use the cash to re-deploy into other investments.

Your brokerage account should show you your "paper" gains and losses per position. And from there it should be pretty easy to do the math to calculate what you need to sell to make this all work out.

[GregWeld]

FINALLY I have caught up with this thread again after slacking off. After watching the market take some serious hits I realized I needed to get back on board with what I have going on and put some idle (LAZY) workers back to work.

I have about $3800 in my retirement account and have been considering purchasing ATT (T) with that or adding to my two red positions. CAT is -12.80% and KMI is -28.34%. The rest of the account is doing pretty good.

Do you think it would be wise to spend it all on ATT, add to the 2 in the red or divide it between the three of them? I've included a screenshot of my holdings for your critique.



Always hardest to put money into the bleeders... but that's what you do if you still think the company is solid - that the dividend is solid - and if you believe the share price is down for some reason other than the company is going to hell. Remember that if you simply bought the same amount of shares that you have - it's only going to cut your loss a little. That would be called "doubling down".

In your case - let's take KMI:

You have 31 shares @ $41.35 per share cost basis. So if you bought 31 more shares at todays price of $29.63 --- your new cost basis would be 62 shares @ $35.49 per share. That is closer to where it's trading - but not really close enough for "me"... If it was me I'd want to get my share price down to maybe $32 ish. That way it has less to recover before I'm made whole - or I take a loss and turn it into a gain. So I might buy 100 shares of it. Your position would then be 131 shares @ $32.47

That is painful to do - takes this position to "out of whack" with the 5% rule -- but rules are made to be broken IF you think of this as a TEMPORARY position that is a bit of a gamble = in a effort to get you back to even.

KMI moved down with oil - yet it's their pipes that move oil... regardless of the price of oil - a person that owns the crude has to move it to sell it - that uses KMI's pipes... the consumption of oil is not the problem - the oversupply of it is. Regardless - if you have too much supply - you might have to store that - and that means you have to move it to a storage facility etc.

If oil comes back just a little... KMI will move with it. In the meantime you're collecting 6.6% dividend... which is just huge. And you have more upside potential here than you do down - unless oil goes to $35 or $20... which is something we just don't know. Oil seems to be floating right around the $40 level here for some time... and the oil rig count is on the decline - which helps with the oversupply... and blah blah blah.

So it would cost you $2900 of your $3800 available. I'd hold the remaining grand and build back some more cash. Cash is always nice - and the more volatile the market the more comfort you'll get from holding some cash. If you really want to do some math - you'd take the 6.6% dividend you're making on the new KMI purchase - and spread that over the $3800 (if you want to look at it that way) and you'd be making about 5% on that - which is a good return! Even though a grand is sitting idle.

Mind you -- this strategy doesn't always work!! Share prices can fall further - giving you an even larger loss (because you'd be holding even more shares!) - but when this strategy works -- it works really really well!

As soon as the share price approached or exceeded the new cost basis.... I'd sell the original 31 shares (you can do this - as you can identify which shares should be sold) leaving you with the 100 shares at your $29 purchase price... and then your gains can start from that new lower cost basis. I'd then use that money plus any new cash and the remaining cash you had and figure out what to do with that... when you're ready.

Ask more detail if you don't understand the strategy. If you're nervous about this strategy - then let's discuss a different move.

I'm focusing on KMI rather than CAT because the CAT isn't that much of a loss - and it can recover that distance pretty quickly on it's own... if we see China and Europe recover a bit... I wouldn't chase that here. The KMI has the big reward component if oil recovers just a bit - and the dividend on it is fantastic down here!

[CRCRFT78]

Thank you for the insight Greg. I didn't think to look at it from that perspective because the bleeders don't scare me into making any irrational decisions (buying high selling low). I'm in this for the long haul and given my time line I believe KMI & CAT will/should recover. One reason why I was considering buying ATT to add to my positions.

Just to make sure I'm understanding what your explaining to me. Buying shares at a lower cost per share will bring my average cost per share down which should help speed up my recovery IF the stock price rises and does not decline further because now the gap has become smaller between my losses and breaking even. Selling the long-term shares of KMI will eliminate the higher cost per share keeping the new shares at the lower cost basis allowing my gains to become more substantial IF the share price rises by not having to make up as much ground to recover.

I think I just repeated what you said but I need to make sure I'm understanding it.

[WSSix]

Jose congrats on the nice portfolio! I'd personally split the money simply because I don't like putting all my eggs in one basket. I'd definitely go KMI but I'd also put T and CAT in there, too. I'd simply expect a lower return on that money that I put into those two. I think I would invest the majority of the $3800 in KMI and not split it into 3rds. Say 50/25/25 KMI/T/CAT. Tough choices sometimes. I wouldn't sweat it too much whatever you decide so long as you put that money to work.

EDIT: I went back and looked at your screen shot again. I don't think I would buy T now since you don't already own it. I own both T and VZ and if I was starting over, I think I would buy VZ first. Personally, I'm considering adding to my T portion simply because it's down from where I bought it and I'm heavier on VZ so I want to balance my T out now. I'd maybe also look to add to some of your other current holdings. I put money into GIS and HAS right before they jumped a couple months back. They were already doing well, and I just wanted to add to my position as I normally do. I got lucky they jumped the way they did. Point being, in another week, your current price on a particularly stock may look like or be a bargain. Do note that I routinely add money to my account every pay check and typically make purchases once a month. I don't want to stress over my purchases so I simply add to a position as I go through the year without trying to time anything.

[GregWeld]

Thank you for the insight Greg. I didn't think to look at it from that perspective because the bleeders don't scare me into making any irrational decisions (buying high selling low). I'm in this for the long haul and given my time line I believe KMI & CAT will/should recover. One reason why I was considering buying ATT to add to my positions.

Just to make sure I'm understanding what your explaining to me. Buying shares at a lower cost per share will bring my average cost per share down which should help speed up my recovery IF the stock price rises and does not decline further because now the gap has become smaller between my losses and breaking even. Selling the long-term shares of KMI will eliminate the higher cost per share keeping the new shares at the lower cost basis allowing my gains to become more substantial IF the share price rises by not having to make up as much ground to recover.

I think I just repeated what you said but I need to make sure I'm understanding it.



Yes --- you're following perfectly.


This is only one opinion... and you need to follow what YOU want to do. Not what I suggest. I'm just tossing this out here because it's a good subject for Investing 102. Just ways to think about stocks... and we've not been in a period where people are experiencing losses. The market has mostly gone UP since we started this whole thing. So I actually like this new "issue"... and it is a good subject. What to do when things aren't going your way.

[GregWeld]

Trey -- Good points -- and you show a healthy understanding of investing. The focus shouldn't ever be "today" --- or next month. Investing is best done with discipline. Steady, routine... up market or down market. Just keep plugging away.

The harder part comes when people are looking at red... So I think these questions are fantastic. They're gut wrenching. Do you throw more money after bad - is it really bad or is it a longer term opportunity - what's the thought process behind putting more money into losers... etc.

The part I like the best about dividend reinvestment is that it automatically buys shares every quarter - come hell or high water... and over time this automatically helps because more shares are bought when prices are lower and fewer when the prices are higher.

The KEY to all of this is to look at your accounts/positions and be comfortable owing what you do. Then it's easier to roll with the punches.

[CRCRFT78]

Ok so here is where the mental part of investing comes into play and tricked me.

I was thinking of adding a new position but also wondered if I should add to KMI & CAT because they were in the red. With the gains I've incurred already I didn't think it was feasible to add 5, 10, or 15 shares here and there to positions already held. Spending that amount on one stock would get me more shares (almost 100+ in T), giving me a higher dividend amount, and eventually getting me more shares at a faster rate. Mentally tricking me into believing I got a better value with my purchase just because I would be looking at a bigger number of shares.

Although KMI & CAT are in the red, I know this is a long-term investment with plenty of time to recover (I hope). Thinking about adding 100+ shares of T kept me from looking at the big picture and considering other options.

Thank you to Greg and Trey, not for suggesting what I should do but for giving me another perspective on how to invest and think about investing.

[GregWeld]

In full disclosure --- I recently added 5000 shares of KMI and now hold 25,000 shares. This position is underwater for me as well - but pays a great dividend - is a company that has a proven track record of raising the dividend payout. I will - if the price stays low - add more to my holdings. I always scale in or out of a position - meaning - I tip toe.

[WSSix]

The mental part has always been my struggle, Jose. I overthink things too often. I finally got to the point a while ago that I decided to not overthink my purchases and just do it almost mechanically every month. I pay attention to why I own a company more than its current share price.

[GregWeld]

The mental part has always been my struggle, Jose. I overthink things too often. I finally got to the point a while ago that I decided to not overthink my purchases and just do it almost mechanically every month. I pay attention to why I own a company more than its current share price.



That's a winning strategy!

The investing game - regardless of what you choose to invest in - is mostly all mental. Those that bought houses when nobody wanted them - have made a killing now. Those that buy the market when it looks terrible... make the biggest gains. It's the exact opposite of buy high and sell low. Most people only invest in something when it's all sunny and roses. Then they panic and sell when it drops. Those people NEVER win.

[CRCRFT78]

Overthinking is also my problem. After not paying attention to this thread for over a year I read it to the end and am now motivated again. I also bought 100 shares of KMI today bringing my Total Gain/Loss down to -6.11% from -28.34%.

[GregWeld]

Overthinking is also my problem. After not paying attention to this thread for over a year I read it to the end and am now motivated again. I also bought 100 shares of KMI today bringing my Total Gain/Loss down to -6.11% from -28.34%.



Okay -- now -- remember that is 6% of a much larger number.... but now you need to be on your game and when you feel it's time - bail on the old shares.

Remember - and this goes for everyone... You have to look at your money as a total pot --- some winners -- some losers -- variable all the time - up and down... but you have to look at the pot as a whole! If you're UP overall == and that percentage is good - then that allows you to gain some confidence -- and the longer you're invested -- the bigger that pot grows... so much so that eventually you're almost immune to down markets. Hope that makes sense.

[GregWeld]

Always hardest to put money into the bleeders... but that's what you do if you still think the company is solid - that the dividend is solid - and if you believe the share price is down for some reason other than the company is going to hell. Remember that if you simply bought the same amount of shares that you have - it's only going to cut your loss a little. That would be called "doubling down".

In your case - let's take KMI:

You have 31 shares @ $41.35 per share cost basis. So if you bought 31 more shares at todays price of $29.63 --- your new cost basis would be 62 shares @ $35.49 per share. That is closer to where it's trading - but not really close enough for "me"... If it was me I'd want to get my share price down to maybe $32 ish. That way it has less to recover before I'm made whole - or I take a loss and turn it into a gain. So I might buy 100 shares of it. Your position would then be 131 shares @ $32.47




Note that the close of KMI today was it at $31.79


Now you see how this can SOMETIMES work out.

[GregWeld]

Note that the close of KMI today was it at $31.79


Now you see how this can SOMETIMES work out.



This "trade" has just gone green.... with KMI trading at $32.52


This is where you learn whether or not you're "greedy" -- meaning that the trade worked as you wanted it to - but now - rather than stick to your plan and sell the original shares etc as explained in the thread...... instead you decide it's worked so well - and you want even more gain - so change to holding it for an even bigger gain.

OR........

You stick to "the plan" - acknowledge that you were lucky this time - beat the street... and you breathe a sigh of relief. Pull the trigger and sell the higher cost shares. And carry on. And use the new cash to go back to your "adding to existing holdings".

Remember that this trade works SOMETIMES --- and the greedy dudes end up holding the far larger % (the 5% rule) and then it can go SOUTH real quickly and destroys your plan and your account. That's where the saying "pigs get fat and hogs get slaughtered" comes from. :lostmarbles:

[ironworks]

This "trade" has just gone green.... with KMI trading at $32.52


This is where you learn whether or not you're "greedy" -- meaning that the trade worked as you wanted it to - but now - rather than stick to your plan and sell the original shares etc as explained in the thread...... instead you decide it's worked so well - and you want even more gain - so change to holding it for an even bigger gain.

OR........

You stick to "the plan" - acknowledge that you were lucky this time - beat the street... and you breathe a sigh of relief. Pull the trigger and sell the higher cost shares. And carry on. And use the new cash to go back to your "adding to existing holdings".

Remember that this trade works SOMETIMES --- and the greedy dudes end up holding the far larger % (the 5% rule) and then it can go SOUTH real quickly and destroys your plan and your account. That's where the saying "pigs get fat and hogs get slaughtered" comes from. :lostmarbles:


So just to expand on your further plan B option. I'm in KMI originally at 41 dollars ( we have a little ways to go ) I only have 21.5 shares. I picked up a 1/2 share in the 10 months I have had it. But the P/E rating is really high from the numbers you guys say to be around 20. It is at 40. SO does that indicate it might be a while before some thing happens to put me in the green.

So if I'm in this for 20 plus years should I let it sit hope to make it green some day? Or double down and move that number down? Or take the number out into some thing else that might be more profitable sooner then waiting on the green.

My shop has done personal 401k for a year for Shannon and I and we started offering it to the employees this year so we could do more of it ourselves ( we have 2 plans - The standard and another called the SIMPLE ). The first one is limited to 6k per year and the 2nd has a pretty big limit - maybe 12k per year, more then I can fully fun for both of us, but we contribute and the company matches the contribution. But I get smaller payments every month so we only get to buy a handful of shares at a time. I doubled down on Shannon's BPT last week and did well on it this week. But the BPT is still way under water from what it was 18 months ago.

Just looking for the ideas on the little guy strategy.

[CRCRFT78]

This is where you learn whether or not you're "greedy" -- meaning that the trade worked as you wanted it to - but now - rather than stick to your plan and sell the original shares etc as explained in the thread...... instead you decide it's worked so well - and you want even more gain - so change to holding it for an even bigger gain.

OR........

You stick to "the plan" - acknowledge that you were lucky this time - beat the street... and you breathe a sigh of relief. Pull the trigger and sell the higher cost shares. And carry on. And use the new cash to go back to your "adding to existing holdings".

Remember that this trade works SOMETIMES --- and the greedy dudes end up holding the far larger % (the 5% rule) and then it can go SOUTH real quickly and destroys your plan and your account. That's where the saying "pigs get fat and hogs get slaughtered" comes from.


Would it be wrong to hold onto the original shares due to my time frame before retirement (22 years if I can retire at 60) because it is a long-term investment? Or should I just be excited that I learned something new, got lucky THIS TIME and sell anyway?

[GregWeld]

Would it be wrong to hold onto the original shares due to my time frame before retirement (22 years if I can retire at 60) because it is a long-term investment? Or should I just be excited that I learned something new, got lucky THIS TIME and sell anyway?



Don't get greedy --- this worked for right now. That's considered being LUCKY.... MAKE IT WORK by sticking to the plan of unloading the original higher cost shares.

The dividend on the new lower cost shares is a huge "gift" that will pay you back for years.

You're better off now taking advantage of some other "on sale" shares that are also paying a higher than normal dividend due to the share price haircut everything has gotten lately.

I'd go back now to your original plan and pick up some AT&T (T) and Caterpillar (CAT)... again - it's hard to own CAT here... but over the long term you'll be happy.

[GregWeld]

So just to expand on your further plan B option. I'm in KMI originally at 41 dollars ( we have a little ways to go ) I only have 21.5 shares. I picked up a 1/2 share in the 10 months I have had it. But the P/E rating is really high from the numbers you guys say to be around 20. It is at 40. SO does that indicate it might be a while before some thing happens to put me in the green.

So if I'm in this for 20 plus years should I let it sit hope to make it green some day? Or double down and move that number down? Or take the number out into some thing else that might be more profitable sooner then waiting on the green.

My shop has done personal 401k for a year for Shannon and I and we started offering it to the employees this year so we could do more of it ourselves ( we have 2 plans - The standard and another called the SIMPLE ). The first one is limited to 6k per year and the 2nd has a pretty big limit - maybe 12k per year, more then I can fully fun for both of us, but we contribute and the company matches the contribution. But I get smaller payments every month so we only get to buy a handful of shares at a time. I doubled down on Shannon's BPT last week and did well on it this week. But the BPT is still way under water from what it was 18 months ago.

Just looking for the ideas on the little guy strategy.


Anything in the oil patch is awful... and could stay awful. What you have to ask yourself is - 5 years from now will this still be awful?

The market has given many people a gift of lower temporary prices coupled with higher dividend percentage - in many areas not just oil... Personally - I always take that gift and run with it. MOST of the time it works out really well if your time horizon is longer than a cup of coffee.

[Vegas69]

Not all, OB1.

[CRCRFT78]

When KMP turned into KMI the shares I held long-term became short-term, although this is a retirement account is this something I should be concerned about when I sell the original shares? Or should I just sell anyway because the tax implications won't affect me?

[SSLance]

Seeing all of the green on my sheets the last week or so has me thinking...might have been the time to put a few more dollars in.

Hopefully your sheets are looking better the past few days as well.

[GregWeld]

When KMP turned into KMI the shares I held long-term became short-term, although this is a retirement account is this something I should be concerned about when I sell the original shares? Or should I just sell anyway because the tax implications won't affect me?


Don't concern yourself with taxes inside of an IRA/401... and this is such a small amount and would be a LOSS sale anyway so no taxes will apply.

These accounts are "tax deferred"... you won't have any issues until you've actually taken the gains etc.... and for the most part - these would be spread over numerous years - and the plan is - to be in a lower tax bracket when you're retired in the first place. That's the entire reasoning behind them.

I prefer a ROTH IRA -- which has ZERO taxes - EVER. If you qualify - look into opening a ROTH and funding that over a standard IRA/401

[Kingcater]

First post here as I mostly lurked enjoying all the builds I can't afford from afar. Never registered because I don't have a Pro Touring car yet ( but maybe this thread will help with that in the future )

Anyways, I was looking on google since I've finally found a long term career as I was :EmoteClueless: and I'm getting to an age where I need to think about my financial future. I have to say the knowledge in this thread is very awesome and it also explains things in a manner pretty much anyone can comprehend. I've even forwarded it to many friends.

Who would've thought a Stocks/Investing thread would finally be the thing to get me to sign up to this site.

Once again thank you OP for making this thread. Also thank you Greg, PW2006, and others for continuing to post in this thread. I'm only 34 pages deep but I went out and bought a notebook to take notes.

I hope to have enough money saved up in the next 6 months to start diving into Investing. I was apprehensive as I didn't know where to start but this thread has really helped me! :thumbsup: :flag2: :G-Dub:

[ErikLS2]

First post here as I mostly lurked enjoying all the builds I can't afford from afar. Never registered because I don't have a Pro Touring car yet ( but maybe this thread will help with that in the future )

Anyways, I was looking on google since I've finally found a long term career as I was :EmoteClueless: and I'm getting to an age where I need to think about my financial future. I have to say the knowledge in this thread is very awesome and it also explains things in a manner pretty much anyone can comprehend. I've even forwarded it to many friends.

Who would've thought a Stocks/Investing thread would finally be the thing to get me to sign up to this site.

Once again thank you OP for making this thread. Also thank you Greg, PW2006, and others for continuing to post in this thread. I'm only 34 pages deep but I went out and bought a notebook to take notes.

I hope to have enough money saved up in the next 6 months to start diving into Investing. I was apprehensive as I didn't know where to start but this thread has really helped me! :thumbsup: :flag2: :G-Dub:

It will be the best thing you ever did for financial stability in your life when you look back years from now. Welcome aboard too!

[Kingcater]

It will be the best thing you ever did for financial stability in your life when you look back years from now. Welcome aboard too!

Thank you and you're absolutely right. I have a 2000 Camaro Z28 and a 2005 GTO.

I hope to have a Pro Touring C10 Square soon

[WSSix]

Welcome to the site! Glad to know you're finding this thread informative. Did it really show up during a google search?

I need to get me one of those high rod jelly beans, too. Love those cars other than the green radio screen.

[Kingcater]

It did lol surprised me then I couldn't stop reading. Aftermarket stereo FTW :thumbsup:

[WSSix]

Wow, ok. Never figured a thread I started would end up in a Google search. Funny how the internet works.

[GregWeld]

You all should remember our discussions about FUNDAMENTAL CHANGE regarding stocks...


There has been a fundamental change at McDonalds (MCD) with a change in the CEO and so far it seems wall street is rewarding the changes being made there. These are the kinds of things (big moves in top management) that you should always be aware of in your holdings.

[SSLance]

I recently had dealings with two companies that are both under the Berkshire Hathaway umbrella and both companies completely impressed me as a consumer...something that is the exception more than the rule it seems like these days.

A shares of BRK are out of the question for me to own and B shares don't pay a dividend, so they don't fall into my normal portfolio strategy.

That said, I am contemplating buying some for a growth return play. Curious if anyone else reading this has looked into or owned any BRK:B shares?

[CRCRFT78]

Without digging further (I'm still learning) I looked at the last 10 years and there is definitely growth from left to right. What confuses me is the P/E ratio is 0.01, Inst. Owned 0% and no dividend. How do you evaluate a stock like this for purchase? Would you look at the financial reports and check the profits/losses, debt balance, asset holdings, etc.

[GregWeld]

I recently had dealings with two companies that are both under the Berkshire Hathaway umbrella and both companies completely impressed me as a consumer...something that is the exception more than the rule it seems like these days.

A shares of BRK are out of the question for me to own and B shares don't pay a dividend, so they don't fall into my normal portfolio strategy.

That said, I am contemplating buying some for a growth return play. Curious if anyone else reading this has looked into or owned any BRK:B shares?



I won't own either - because they don't pay a dividend -- but more importantly - one day you will wake to the news that Warren Buffett has passed away - and you're shares have been cut in half. No thanks. Those shares are ALL about Warren and his fame.

[SSLance]

Yeah, that's a pretty good point...

[GregWeld]

For those of you that own Altria (MO) or Philip Morris (PM).... or both (as I do) do you now understand why you own stocks like this? This is a rhetorical question... but what I'm asking is whether or not you understand - now - owning stocks that hold up in poopie or scary markets... Sometimes the stuff you think is boring as all get out... can be your best investment.

Just sayin'

[WSSix]

x2 My MO, CLX, and KMB have done well for me. JNJ has dropped but it still pays a nice dividend, and I know it will come back up eventually. I like boring when it comes to money typically.

[toy71camaro]

VERY happy MO holder over here. :)

[GregWeld]

VERY happy MO holder over here. :)



It's always funny to me that everyone wants to own the "hot stock" -- obviously -- this thread has always been about investing and growing your money over time - it's about not being worried every day about what your shares are doing... it's about peace of mind and capital growth (as well as preservation in troubled times). It has never been about stock recommendations or what to buy - it's been about how to buy and what are some simple things to think about. Altria (MO) is just an example of one stock used in this thread... and it fits the bill for most of the things we discuss time and again - so it's a good example.

Here's another good look at WHY we use these as examples....



Altria (MO) has a Year-to-date gain of 20% - a One year gain of 29.79% and a 5 year gain of 138%

Pretty impressive for a stock that's never in the news - and nobody ever talks about owing it.

Let's compare it to the ones everyone talks about and that are in the news daily.

Yahoo (YHOO) - YTD DOWN 33.5% - One year Down 12.6% - Five year UP 106%

Let's look at that -- so if you were in 5 years ago - even if the stock were DOWN this year - you're still way ahead... but man what a scary ride along the way -- and zero dividend....

Twitter (TWTR) - YTD down 13.5% - One year down 36% - Five year down 25.5%

It WAS THE HOT STOCK that was going to make everyone rich!

GoPro (GPRO) - YTD down 54% - One year down 61% - Five year (wasn't around) but the chart shows down 19% since it's IPO

This was the OTHER "get rich quick stock"

Not sure about you guys -- but I'd prefer to own boring old MO... over GoPro. LOL

[CRCRFT78]

I bought 10 shares of GoPro early on and watched it jump up to $90+. I knew it wouldn't continue to climb but I surely didn't expect it to nosedive either. Lucky for me its in a Schwab account with money I can afford to gamble with. I will just continue to hold on for the ride and see what happens.

[GregWeld]

I bought 10 shares of GoPro early on and watched it jump up to $90+. I knew it wouldn't continue to climb but I surely didn't expect it to nosedive either. Lucky for me its in a Schwab account with money I can afford to gamble with. I will just continue to hold on for the ride and see what happens.



I've bought and sold all of these - sometimes making some money and sometimes losing some. There's nothing wrong with buying these kinds of names ----- PROVIDED ---- you understand what you're doing and you have a good base of normal investments etc.

[CRCRFT78]

There's nothing wrong with buying these kinds of names ----- PROVIDED ---- you understand what you're doing and you have a good base of normal investments etc.

That is why I bought it with money I could afford to lose. If I gain something, GREAT, if not, no big deal. I wouldn't have added it to my retirement account. On another note, I did add T (AT&T) to the retirement portfolio.

[Vegas69]

I'm a fan of MO as it's one of my best. I can't stand AT&T. They have lied to me way to many times. The leadership is horrible. I own some stock but it would be the first to go if I was selling.

[GregWeld]

So once again we're back to "fundamental changes" in a business.... Here comes McDonalds (MCD) which had been just dripping down and down and reporting sales disappointments quarter after quarter... They changed the CEO... Made a big change to "breakfast all day" and BAM! Finally a big quarterly turnaround and the stock jumps $7

This is the thing when big companies make big changes... you just won't know which way that's going to play out.

[ironworks]

So once again we're back to "fundamental changes" in a business.... Here comes McDonalds (MCD) which had been just dripping down and down and reporting sales disappointments quarter after quarter... They changed the CEO... Made a big change to "breakfast all day" and BAM! Finally a big quarterly turnaround and the stock jumps $7

This is the thing when big companies make big changes... you just won't know which way that's going to play out.

So using the Mcdonalds idea. How does a guy look at this stock now?

Obviously the best position would have been to believe in the new CEO and buy when the stock was at its lowest or some where near there.

Seems to me like a band wagon move to get on board now. But a 3% dividend is decent.

I think MCD is big enough they will change there game to make money. But in tens years the Big Mac might be outlawed or totally changed. I don't think MCD will go under and I'm glad to see they try some big changes, which Jack in the Box did years ago.

Just wondering you mindset looking at this situation to use in others.

[GregWeld]

So using the Mcdonalds idea. How does a guy look at this stock now?

Obviously the best position would have been to believe in the new CEO and buy when the stock was at its lowest or some where near there.

Seems to me like a band wagon move to get on board now. But a 3% dividend is decent.

I think MCD is big enough they will change there game to make money. But in tens years the Big Mac might be outlawed or totally changed. I don't think MCD will go under and I'm glad to see they try some big changes, which Jack in the Box did years ago.

Just wondering you mindset looking at this situation to use in others.




Good questions --- And I wasn't using McDonalds (MCD) for anything other than an example of "fundamental change" and how it can have a dramatic affect on a company - good or bad. The key is IF you owned MCD -- that you should always be paying attention!!!

All stocks are "bets" -- I don't care how big or small.... Things CHANGE. IF you're lucky - they go your way.... and if you're not - they turn against you (take OIL for example). We all have to make a judgement call at some point - do you LIKE and agree with the changes made -- or do you feel they suck? Sometimes we can't possibly know.... and we're just along for the ride.

My personal opinion is that FAST FOOD in general is in for long term changes... and there will be winners and losers. I personally think MCD is a longer term loser because I don't think people are eating that way as much anymore. None of my friends go to McDonalds - for anything - and we're the generation that grew up on this stuff. I will choose a higher quality - healthier meal whenever possible.... and I know where to get a GOOD burger and fries when I want one. But that's my personal feelings - and I sold MCD 2 or more years ago - when I realized that it didn't fit my personal stock picking guide -- which is - DO I LIKE THE PLACE - DO I SHOP THERE - DO I LIKE THE PRODUCTS. The answer to all three is no. Sold.

Everyone has to make that judgement for themselves. Nobody should blindly follow someone else's picks. That's when you get into trouble because you don't personally know anything about your holding or why. Fine if it's going up - but the doubts creep in when it's bleeding.

[WSSix]

Right now, today, if I was thinking of getting on board with MCD, I'd be kicking myself for not going in yesterday. Otherwise, I'd say to myself, good deal MCD but let's see what happens in a few weeks or maybe next quarter before I put some money into it. I think there are a lot of people trying to get into MCD right now while they are hot and hoping it will go a little hotter so they can bail and make a quick profit. The bandwagon affect you mentioned.

Admittedly, I agree with Greg to a large extent about MCD though. I'm not sure they are positioned correctly to capitalize on people's changing attitudes towards food. At the same time though, I'm not ready to pull the plug yet. Maybe I'm being more cautious or simply not as confident as Greg but I'm being patient for right now while also considering other options. My biggest problem which has caused me to be more patient with my MCD shares is I don't know who else I would want to invest my money with. I've got to decide that before I decide to sell off my shares. We'll see what tomorrow brings.

[Vince@Meanstreets]

Right now, today, if I was thinking of getting on board with MCD, I'd be kicking myself for not going in yesterday. Otherwise, I'd say to myself, good deal MCD but let's see what happens in a few weeks or maybe next quarter before I put some money into it. I think there are a lot of people trying to get into MCD right now while they are hot and hoping it will go a little hotter so they can bail and make a quick profit. The bandwagon affect you mentioned.

Admittedly, I agree with Greg to a large extent about MCD though. I'm not sure they are positioned correctly to capitalize on people's changing attitudes towards food. At the same time though, I'm not ready to pull the plug yet. Maybe I'm being more cautious or simply not as confident as Greg but I'm being patient for right now while also considering other options. My biggest problem which has caused me to be more patient with my MCD shares is I don't know who else I would want to invest my money with. I've got to decide that before I decide to sell off my shares. We'll see what tomorrow brings.
why sell? why not just hold if the divi hasn't changed.

[ironworks]

I'm trying to sort through some of the though process on the next stocks to pic. My daughter loves Chicken nuggets from MCD and they just built another one right by our house. But If I have a choice I would do Carls or Jack in the Box. So I'm not sure I see fast food going by the weigh side ( HAHAHA ). but Now that they post the calories on the menu by law I think. People are more aware of what they are ordering. Fast food is usually convenient or price not for taste and as you get older you eat better.

But like with some oil stocks going up and some not lately, you have to decide when to hang the risk out there and when to wait. CVX has gone up alot and the BPT is bounces around. KMI is still tanking.

Ideally you buy when everyone is selling and sell when everyone is buying. And hope everytime you open the Schwab account its all green.

[WSSix]

why sell? why not just hold if the divi hasn't changed.

That's one of the reasons I've held on, too.

[GregWeld]

If I owned MCD I'd hold it. If the new CEO (Easterbrook) is as good as he's been for the stock - there's more good to come. I don't think I'd chase a stock - and certainly not for it's dividend... which as a percentage - goes lower as the price goes higher.

The CEO seems to recognize the company needs some updating and changes to the offerings. That's a good first step.

Don't bail on a stock the market just rewarded for going the right way.

[Vegas69]

McDonalds is suffering from a stigma they deserve. All good things come to an end, in their case, selling poor quality food at the cheapest price. The blinders have come off for many Americans that don't have their head in the sand. Hell, I didn't eat the crap before I really decided to get healthy.

I'd compare it to Cadillac and their old fart stigma. They can run all the commercials they want with young people, but I still can't see myself in a Cadillac.

They can recover and adapt, but it's going to take some serious time and marketing dollars to drown out the past and regain market share to places like Chipotle.

I'd rather invest in a company with a positive vibe and some momentum. No company is to big to fail. I recently read Good to Great. One of the elite companies that made the grade was Circuit City. They are gone... Look at block buster, etc... This is food so it's a bit different. I will say that McDonalds has 50 times the competition it had 25 years ago.

[Vince@Meanstreets]

McDonalds is suffering from a stigma they deserve. All good things come to an end, in their case, selling poor quality food at the cheapest price. The blinders have come off for many Americans that don't have their head in the sand. Hell, I didn't eat the crap before I really decided to get healthy.

I'd compare it to Cadillac and their old fart stigma. They can run all the commercials they want with young people, but I still can't see myself in a Cadillac.

They can recover and adapt, but it's going to take some serious time and marketing dollars to drown out the past and regain market share to places like Chipotle.

I'd rather invest in a company with a positive vibe and some momentum. No company is to big to fail. I recently read Good to Great. One of the elite companies that made the grade was Circuit City. They are gone... Look at block buster, etc... This is food so it's a bit different. I will say that McDonalds has 50 times the competition it had 25 years ago.

Remember that MCD isn't a middle class and up staple. For a single parent or homeless person it maybe the only warm meal they eat in a week. In my opinion they are "too big to fail" and should be able to sustain itself if they can reinvent itself every few years. Long term I think its safe to stay. I don't own any stock or eat there....much. If I had owned it and have 100+ shares, i'd hold.

[glassman]

I recently read Good to Great.

Like 90 people (bout four) have told me to read that book. Its on my "oh, sh_t, i forgot" list lol

[Vegas69]

Remember that MCD isn't a middle class and up staple. For a single parent or homeless person it maybe the only warm meal they eat in a week. In my opinion they are "too big to fail" and should be able to sustain itself if they can reinvent itself every few years. Long term I think its safe to stay. I don't own any stock or eat there....much. If I had owned it and have 100+ shares, i'd hold.
I agree, I just don't think that demographic solely can support a flourishing business. They are franchises so the strong will likely survive with diminishing volume. I doubt they fail either, but nothing is out of play.
Like 90 people (bout four) have told me to read that book. Its on my "oh, sh_t, i forgot" list lol

It was a decent read. It came down to the culture the great companies created. That was the factor from good to great. There, I saved you 250 pages. :lol:

[GregWeld]

Another CLASSIC example of "fundamental change" this morning!!

Microsoft (MSFT)

They (The Board of Directors) dumped Ballmer (the CEO since 2000) and installed Nadella.... and the shares and company are responding positively.

When you look at the MSFT chart -- you'll see great things happened until a sharp peak at the end of 1999.... and then a basic MOUNTAIN top shape downward from there. They announced Ballmer would be CEO in 1999 and he began his term in January 2000.... for the next several years the stock languished. The brains of the company (many are/were friends) bailed like rats leaving a sinking ship. So many big (HUGE) mistakes were made under Ballmer's term - the company spent BILLIONS on failed acquisitions and the linchpin product (Windows) lost market share to Apple (AAPL). Windows 8 was Ballmer's undoing.... OUT!

Enter Nadella... The market cheered... he immediately said they'd fix Windows 8.... and the stock takes off.... Now only a couple quarters and his (Nadella) hands are showing and the market loves it.

That is the essence of fundamental change.

[SSLance]

Anyone else considering adding to or starting a KMI position today? :y0!:

[GregWeld]

Anyone else considering adding to or starting a KMI position today? :y0!:



KMI is he proverbial "throwing the baby out with the bathwater".... NOBODY wants to have anything to do with oil / oil related businesses.

They just raised their dividend... and the "problem" was their forward looking statement which stated they may "only" be able to grow the dividend 6 to 10% instead of the absolute statement of 10%.

Really?? You're only going to grow the dividend? LOL Amazing what the market fails to see sometimes. The herd mentality.

I already own 25,000 shares of KMI so probably won't add to this position just yet but will if it stays down here.

[SSLance]

Was talking with someone that has been in the Natural Gas business for a long time last night and he says anything regarding the transportation of Liquid Natural Gas overseas is the next big thing. Other countries are setting up their infrastructure to operate off of Natural Gas and they need supply once ready.

It seems a lot of people are missing this portion of what KMI does.

[Vince@Meanstreets]

Was talking with someone that has been in the Natural Gas business for a long time last night and he says anything regarding the transportation of Liquid Natural Gas overseas is the next big thing. Other countries are setting up their infrastructure to operate off of Natural Gas and they need supply once ready.

It seems a lot of people are missing this portion of what KMI does.

as do with many oil/fuel companies. revenues steady?

[Sieg]

Anyone else considering adding to or starting a KMI position today? :y0!:

I did yesterday. Their funding secrecy has the talking heads speculating.....and me in the dark. :sieg:

For the day KMI is down 1.71% right now and MSFT is up 11.18% with the DOW up 1.06%........

Global Central Banking industry is being credited with the market gains.

I had idle cash on hand and wanted to average down my KMI position so we'll see if I get bit.......rolled the dice vs sitting on my hands.

[GregWeld]

Apple (AAPL) is due to report earnings this week.... I do not own any of the shares - but love the products and operating system. Once again I will say that I'm not using this name for anything other than an Investing 102 "way to think" - so it's not about this particular stock.

I was reading an article about Microsoft (MSFT) opening a huge NYC retail store (My wife was a Senior Director there (@MSFT) for 19 years). I'm always interested in this company just due to the long connection with them - even though I quit using any of their products long ago.

We have discussed numerous times about beginning investing and trying to own shares in companies that you have exposure to - where you shop - industries you understand or work in etc. It helps you have some "insight" and connection to the shares you choose... I remember buying Apple (AAPL) shares years ago after seeing long lines at their store in the mall I was shopping at. It was the only store in the mall (one of the most successful malls in the country - Bellevue Square). Since I no longer live in a city with any malls - nor an Apple store - I personally have lost my ability to have any insight to this names retail outlets.... while I WAS NOT surprised by what I found in this article! I still said WOW!


<Quote>


According to a March report, Apple’s stores generate a staggering $4,798.82 in sales per square foot on annualized basis—by far the most of any retailer in the nation.

[WSSix]

What Apple has been able to do as a brand is amazing to me.

[GregWeld]

What Apple has been able to do as a brand is amazing to me.



Considering that they'd have gone out of business a few years ago had it not been for a loan from.......... Microsoft! LOL


http://www.bloomberg.com/bw/articles/2013-12-09/worst-deal-ever-microsofts-apple-investment

Think Billy G is wishing he'd not made that loan now?? Oh man... I'm kidding of course because he's not that kind of guy - and everyone knows that keen competition is what keeps us all humming...

I remember this loan well -- and I was thinking - NFW I'd loan them money they're all but OOB!

[GregWeld]

I'm actually glad that many of you are seeing a whacked out market - many of you for the first time since you've become investors.

I'll be darned if I can figure out what's going to work and what's not.... but in the meantime the dividends continue to pay me to go race my cars. LOL

The account I used for examples here etc is down about half a million bucks - all due to the oil patch investments (KMI - ETP - APU) These are down and down hard. I've been buying more of them. I can take the pain and I love the increasing dividend percentage. In the meantime - they're the death of an account on paper....

Here's what I DON'T like about this market -- an earnings hiccup -- and the shares are down in what I think is a way over reactive manor... and an earnings beat is rewarded too much. Shares of Amazon (AMZN) are trading at 886 P/E ratio. Really? OMG! To me - there's too much money trying to find a home - as it's coming out of "non working" names - and trying to find a home in what appears to be "working". It's chasing anything and driving names too quickly too much. I don't like that.

Typically what happens is those names that run up fast and large... the fast money comes out of there the minute something else begins to work. That never ends well.

What we have to remember is the country had to climb out of a big hole... when the market all but collapsed. We had a housing melt down and a financial crisis... so for the last several years - we really were in the proverbial "there's nowhere to go but up" kind of market. Now it seems we're more on a plateau.... Or what's called a "sideways" market - where things just bump along. It's always hard to feel good about being an investor in a sideways market. Many times you feel you're being left behind - then in an effort to catch up - you stretch your rules and start to chase the names that have gains. Be very wary of doing that. Think more about your money long term - earning a good dividend - buying more shares at lower prices (lower prices does NOT mean you are lucky enough to buy the very bottom!).

[GregWeld]

Kevin O'Leary is on CNBC.... says he ONLY buys companies that "return capital" i.e., pay a dividend.


71% of all accrued market gains are due to the dividend.

[CRCRFT78]

I have a question for you Greg, reading quite a few pages back (I can't remember the page number) you discussed what I believe was called a "wash sale." Given that I bought KMI while down to average down my cost per share basis and sold my long-term shares to achieve that, would adding to my position now while the shares are down negate the tax benefit IF I was doing this in an account not slated for retirement?

This activity is in a retirement account but am curious if it applies differently in a regular investment account. Can I buy new shares, sell the old shares and buy new shares again or must you sell all of your shares, clear the position and then buy again to avoid a tax hit. I'm sure I am overthinking this again but does the manner in which your transactions take place make a difference?

[GregWeld]

I have a question for you Greg, reading quite a few pages back (I can't remember the page number) you discussed what I believe was called a "wash sale." Given that I bought KMI while down to average down my cost per share basis and sold my long-term shares to achieve that, would adding to my position now while the shares are down negate the tax benefit IF I was doing this in an account not slated for retirement?

This activity is in a retirement account but am curious if it applies differently in a regular investment account. Can I buy new shares, sell the old shares and buy new shares again or must you sell all of your shares, clear the position and then buy again to avoid a tax hit. I'm sure I am overthinking this again but does the manner in which your transactions take place make a difference?



A wash sale applies -- and crosses accounts.... so you can't use a different account say to sell and take a loss - and then turn around in another account and buy....


A "wash sale" is ------- you sell at a LOSS..... you can not buy the same exact stock within 31 days. Or you lose the ability to take the loss.

Sell at a loss -- mark your calendar - make damn certain there's 31 or more days between transactions... and then do your buying.


It IS NOT a wash sale -- if you sell (example) Conoco (COP) at a loss - and within seconds BUY Exxon (XON).... they're in the same business but they're not the same stock!

[Woody]

Anyone else considering adding to or starting a KMI position today? :y0!:

You might want to read some of the articles on Seeking Alpha about KMI. There is quite a wide range of opinion about KMI. The most concerning thing about KMI to me is their debt issue. This http://seekingalpha.com/article/3609826-kinder-morgan-the-story-of-icarus is a pretty good article if you want to read about some of the reasons to be cautious of KMI. There are plenty of positive articles as well. I don't know which side is right, but due to some of the issues brought up in the negative articles, I think that KMI has quite a bit of risk. It could be a great time to buy, but it could also continue to slide downward.

[SSLance]

Thanks...and yes, I've been reading all them.

I by no means bet the farm on KMI, but I like the model and think I have an understanding on the direction Richard is trying to steer the company. If he's able to pull it off, it should pay off big time. Meanwhile, I'll sit back and collect the dividends.

I view those articles like this...for the most part. Whenever someone is trying to "sell" me on something, I look at what they are saying very critically and I try to figure out why they are trying to sell me. If I can find ANY ounce of potential gain to them in regard to what they are trying to sell me, I hugely discount the advice.

That is somewhat difficult to do when reading the articles posted on SA, but after a while you get used to reading those written by people that think like yourself and you listen more to them that others that...might have an alternative agenda let's just say.

[WSSix]

I agree you do have to read multiple viewpoints and consider the motivations of an author/seller. I've got KMI simply because I owned KMP. I would prefer to be getting into KMI now since I'm/it's down so much. Regardless, I think KMI is a good example of having to know the segment/market the company is in since its numbers will look different. I tend to agree with the people that bring that up repeatedly because it's brought up repeatedly that their numbers are "bad" when looking at them as if they were a normal retail company. KMI's business is very debt heavy because it's a long term model. I personally am not worried at all about them. Though, admittedly, I would prefer to see movement towards the positive sooner than later.

For a funny look at responses to an article, find the MCD article from the guy saying MCD was a poor choice on the very day that MCD jumped due to earnings beat. Read his article and then read the comments. I think too many people dismiss a contrarian view too easily and for very weak reasons.

[GregWeld]

What "makes a market" is some sellers and some buyers.... every single transaction big or small - involves a seller and a buyer. Obviously both have opposing views.

It pays to keep an open mind and listen to both sides.... and then make up your own mind. We all are guessing that we're right when we buy and we're guessing we're right when we sell. In the meantime - you have to sleep well at night with your decisions... whichever side you're on.

[CornHusker4Life]

I was just looking up stocks of stores I frequent and wow was I surprised.
Take a look at O'Reilly's auto parts stock, not a dividend stock but wow what a 5 year growth (ORLY).

[CRCRFT78]

Wow look at the growth is right, ORLY would've been a great growth stock. Holy sh** did you look at AutoZone (AZO)?

[GregWeld]

Wow look at the growth is right, ORLY would've been a great growth stock. Holy sh** did you look at AutoZone (AZO)?




Classic examples of -- buy things you know - where you shop - what you can keep track of.... no different than comparing a Home Depot or Lowe's etc

[GregWeld]

We've discussed strategies for "averaging down" positions... we've talked about NOT trying to "catch a falling knife"... and about how just continuing to buy additional shares in companies you already own - but are down from your original purchase - eventually can work out quite nicely.

Oil investments a year ago looked smokin' hot.... today - anything with the mere mention of oil has tanked. This happens from time to time. Banks and financial institutions were the last ones to tank back in '08 and '09 during the great financial melt down. Some still haven't recovered fully (AIG etc). Autos such as Ford and GM were taken to the woodshed...

When you think about it -- Oil - Banks - Autos - these were safe investments. These are some of the biggest companies in America! My point? It's why we DIVERSIFY! You just never know what's coming down or when or why.

NOW ------ "Big Pharma" is in the hot seat.... and I got a little chuckle to myself when I read that Bill Ackman has taken a 2 BILLION dollar loss (so far) in Valeant (VRX).... and even more laughter from me when he did a classic "I'll take a stand" and bought 2 MILLION more shares when it got hit hard. Now -- here's where we can use this example for Investing 102....

Valeant was already one of the hedge funds largest holdings..... a "short seller" comes out with a very negative report about the company and the shares tank... BLINDLY Ackman takes a stand and loads up on more shares.... only to have the shares continue to tank even harder. What did his stand net him?? An absolutely massive loss.

Don't do this! Ever! Never feel like you absolutely know there's a buying opportunity to be had on this "dip". Stand back -- let the events play out.... if you already have a loss.... don't add to it by buying more shares! Just wait! Make sure you know where the company involved is going - get the facts - wait it out. If the news gets worse - you might decide to go ahead and take your lumps. Move on and invest in something else. If the news gets better... then time might make you whole... and if the news is better - THEN you can add to your position to bring your average down.

This scenario is DIFFERENT than when an entire sector is in the dumper.... There are many fantastic buys in the oils/oils related - the troubles are not company specific... there isn't "fraud" or "mis-doings" going on. The Banks got in trouble as a group... and there were some really good buys to be had during that period.... Bank of America (BAC) or Wells Fargo (WFC)... that long term will be fine.

I'm thinking back to our discussion of whether or not to buy Volkswagon (VLKAY) over the diesel emissions "wrong doing". I think it might be a buying opportunity --- but there was no reason to buy the day the news broke.... They stock is down - probably will stay down for awhile -- so why rush? Wait until there is better news... the fines have been levied... a fix is figured out and the management sorted out. THEN maybe it'll be an opportunity. My point is -- don't try to be a hero... THAT is gambling. :G-Dub:

[GregWeld]

Per the above post --- it will be interesting to see what happens with Chipotle Mexican Grill (CMG) tomorrow --- after the news of E.Coli in it's Washington and Oregon locations.

Here's why it will be interesting --- this stock is one of those "priced for perfection" stocks we talk about.... and the stock is volatile to begin with. So watch to see if this is a fantastic opportunity to get a great growth story at a nice discount -- or if the stock sells off and stays down for a couple quarters... because events like this can change peoples "habits" and the consumer is very fickle! We won't know that until it plays out. The chain may have a supply chain problem -- or it's efforts to be organic don't work well in a fast food chain like this.... We just don't know. Either way - it's of interest to learn from and you should GUESS what you'd do --- then see if it goes your way.

[Vince@Meanstreets]

Per the above post --- it will be interesting to see what happens with Chipotle Mexican Grill (CMG) tomorrow --- after the news of E.Coli in it's Washington and Oregon locations.

Here's why it will be interesting --- this stock is one of those "priced for perfection" stocks we talk about.... and the stock is volatile to begin with. So watch to see if this is a fantastic opportunity to get a great growth story at a nice discount -- or if the stock sells off and stays down for a couple quarters... because events like this can change peoples "habits" and the consumer is very fickle! We won't know that until it plays out. The chain may have a supply chain problem -- or it's efforts to be organic don't work well in a fast food chain like this.... We just don't know. Either way - it's of interest to learn from and you should GUESS what you'd do --- then see if it goes your way.

That was one of the IPO's I had passed on. Co-worker is heavy on IPO's and sub penny stock. He said, gotta jump on Chipotle. I said "Who?" LOL

He's 41 and pretty much retired. Last I heard he was travelling by motor cycle in Europe.

I don't like trendy stock cause these new stock guys are not very loyal. Little wake in the water and they jump.

[GregWeld]

With the markets just bouncing around -- up one day down the next -- so sectors decidedly in the red ----- I would urge you to go back to basics when you're "concerned" about your holdings.... in other words -- pull up those longer term charts and look at them. There's MANY ups and downs - big and small.... but do you see the line that generally is going up over time. That's the line that's important! In the meantime - if you're collecting dividends... then stop worrying. Remember when I reminded everyone to remember when their stocks were going up every day? Now's when you need to remember that.

If you were in real estate 10 years ago you couldn't believe how much your stuff was going up! Then '08 hits and your holdings were worth half what they were... 5 years later - they've doubled or more.... Don't you wish you'd have bought some stuff when it was HALF what it is today?? Yeah ---- that's what I thought..... LOL

[ErikLS2]

If you were in real estate 10 years ago you couldn't believe how much your stuff was going up! Then '08 hits and your holdings were worth half what they were... 5 years later - they've doubled or more.... Don't you wish you'd have bought some stuff when it was HALF what it is today?? Yeah ---- that's what I thought..... LOL

HaHa, thanks for reminding me of selling at the peak time in 2006 and then foolishly thinking I HAD to do a 1031 (because the worst thing is paying taxes) making a huge mistake for the wrong reason. I've now learned, if I'm paying taxes, then I must at least be making money.

[GregWeld]

Here's why I like DIVIDEND INVESTING.... and once again I'll remind everyone that this is simply ONE example. It is not a recommendation to buy or sell or anything else. It's just that things jump out at me (typically in the morning) and I think it's worth posting....


Altria (MO) paid .38 (thirty eight cents) quarterly dividend 5 years ago --- today --- they pay .56 (fifty six cents) per share per quarter.

If you'd purchased 5 years ago - you'd have paid somewhere around $24.... So using that cost basis -- you're now collecting $2.24 per share per year.... quick math would show you are collecting almost 10% per year on your cost basis. Not bad when compared to the .25% you might get at the bank.

[GregWeld]

As we approach the end of the year the talk about an interest rate hike from the FED is growing louder and louder. That remains to be seen. All I know is - I wouldn't want to be one of the folks at the table that must make that call. Personally -- I don't get any sense that the economy in the US is good, great, or just plugging along. Generally you get a sense for how things are going from the earnings reports. What I've seen (and I watch this daily) is one guy is going great and the next one isn't. Amazon is killing it - Macy's is getting killed. Which one is the "meter"? I don't know.

Here's what I DO think... and this is just my thoughts. When the FED raises rates - while I don't expect much of a raise - that's basically a giant redistribution of wealth. What do I mean by that? It means that EVERYTHING that is interest rate sensitive will be raised - which means that everyone will pay more for everything. Housing - Autos - Communities that float a bond to fix streets or build a library - EVERYTHING. That means money flows out of peoples pockets and goes somewhere else.

The question is -- is that a deal breaker? If you weren't offered near zero rates on your car purchase - would it affect whether or not you did a deal and bought a car? Or a house? Or? Good question to ask yourself. How tight is your budget? If your house payment jumps $200 a month.... is that a shock?

I just bought a new snow blower for the new house. I have a HUGE driveway due to the Fire Department requirements... that's neither here nor there... except that I live in the mountains.... where it snows.. it can snow daily or it can snow deep. You wake up and there's 12" dumped overnight. I don't want to wait until mid-day to have a guy come plow me out... and I'm a do-it-yourselfer kind of guy. My best friend owns an excavation company and they switch from digging dirt to plowing in the winter. He talked me into buying a Bobcat with a 62" wide snow blower mounted on it. Why am I telling this story?? Because I was offered either 36 months at 0% -- or $1,000 off to pay cash. I'm a cash buyer and took the discount.... but many might take the 0% rate - essentially then - you'd be paying $1,000 worth of interest but people never do that calculation do they? LOL Now.... if you're like me - I've become quite used to seeing these zero rates offered on a variety of things. Will we balk at the purchase when these go away? Will we bargain harder for a larger discount as compensation? Will we not be simply "spurred on" to buy at all? Or will we not buy because suddenly everything we already own is costing us more out of pocket monthly?

In the end -- rising rates will mostly hurt those that can afford it the least - the middle class... They're also the ones that - because of the law of large numbers - buy the most "stuff". So what will that do to the economy?? So far they've (we all) have gotten a nice refund due to the low cost of energy.... (it's killing my energy investments)... but what happens when that cost starts creeping back to normal ($3 gas?) and your house payment takes a jump - and then your car needs replacement... and that is now 4% rate instead of zero....

I think our next debacle will be INFLATION. We'll need to really be keeping a keen eye on what - if any - affect that will have on the shares we own. I'm not saying you start selling - or buying or do anything. I'm just talking out loud and saying my ears are perked up - my radar is on.... I want to be proactive. If I'm looking to add to positions or buy new ones - should I be taking this into account going forward? In other words - would rising rates hurt housing - which hurts Home Depot (HD)?? I don't know - but I want to pay attention.

[glassman]

So as i've been keeping an eye on the inflation from a wholesale perspective, my cogs have gone up 34% in a year!!!!! WTF you might say, #1 there are people much smarter than me up top figuring out the increases, #2 rates of glass (in my industry) have fluctuated up and down since the 80's, but haven't moved a whole lot up (till now) #3 demand for our "sheet" product is through the roof ( i'm suspecting solar photovoltaic, but nobody's saying)....so yeah, inflation.

so we as the little guy are getting squeezed, taxes are up, labor costs and benefits are up, but so is volume (waaay up for us). So i'm focusing on volume but it will be the first to take a hit if the economy takes another hit (hence diversifying my product base)....

Good stuff guys....keeping this thread interesting....

[ErikLS2]

Inflation isn't such a bad thing, if there's wage inflation to go along with it. My concern is that many companies have gotten away with no real raises for so long that I think a lot of people are used to it now.

Personally I think they're going to raise, and then watch. They've been artificially low so long I think it's ultimately hurt everything more than helped. Stock market at basically all time highs at more or less reasonable valuations and interest rates still at 0%? What if there's another crisis, they don't have any tools left to deploy really, we could really be in trouble then.

[Vince@Meanstreets]

HaHa, thanks for reminding me of selling at the peak time in 2006 and then foolishly thinking I HAD to do a 1031 (because the worst thing is paying taxes) making a huge mistake for the wrong reason. I've now learned, if I'm paying taxes, then I must at least be making money.

Oh man I have stories....losing $300K to avoid a $95K tax hit. Yeah, I was still scratching my head. And that is only one I have witnessed. Better to put it aside or make it work.

[GregWeld]

Oh man I have stories....losing $300K to avoid a $95K tax hit. Yeah, I was still scratching my head. And that is only one I have witnessed. Better to put it aside or make it work.




In a discussion with anyone - the minute they start telling me about selling at a loss so they can offset their huge income tax bill..... I know I'm talking to an idiot.

[ErikLS2]

In a discussion with anyone - the minute they start telling me about selling at a loss so they can offset their huge income tax bill..... I know I'm talking to an idiot.

Isn't that the truth. The only thing I could cling to was despite my big profit in 2006, I had to do something with it, either real estate or stocks, all of which went south in the coming 2-3 years.

I can definitely say though that it's my mistakes in investing, and life for that matter, that have taught me the most, not my successes.

[GregWeld]

Isn't that the truth. The only thing I could cling to was despite my big profit in 2006, I had to do something with it, either real estate or stocks, all of which went south in the coming 2-3 years.

I can definitely say though that it's my mistakes in investing, and life for that matter, that have taught me the most, not my successes.



That's the truth for most all of us Erik... "Experience..... is the name we give our mistakes".

[Vince@Meanstreets]

That's the truth for most all of us Erik... "Experience..... is the name we give our mistakes".

if you are observant enough you can learn from other's experiences.

[ErikLS2]

if you are observant enough you can learn from other's experiences.

It's almost like cheating isn't it?:lol:

[WSSix]

I like to think of it as team work, personally.

[dhutton]

Speaking of mistakes:

http://www.marketwatch.com/story/help-my-short-position-got-crushed-and-now-i-owe-e-trade-10644556-2015-11-19

:lol:

Don

[GregWeld]

Speaking of mistakes:

http://www.marketwatch.com/story/help-my-short-position-got-crushed-and-now-i-owe-e-trade-10644556-2015-11-19

:lol:

Don



Many many times I have WANTED to go short --- just before the Financial Crisis -- and I wanted to short the home builders before the housing collapse.... But I NEVER short anything.... because the minute you do - something you have no idea about pokes your eyes out! No thanks!!


Good story ---- but I don't feel sorry for the guy one little bit. He wouldn't be whining now had his short worked. He got blown up -- and suddenly it's BOO HOO....

[WSSix]

What I don't understand is how after hours trading occurs and it's affect on a price. That's why I don't do anything overnight.

[GregWeld]

You younger guys may want to look at NIKE (NKE).... They just raised their dividend 14% -- split the stock 2 for 1 -- and announced they'd buy back 12 BILLION dollars worth of their own stock.

I don't own it - and have never done any research on it - and this isn't really a recommendation since that's not what this thread is about.... but some of you are looking for "growth" stocks vs dividend payers.... and a company like this has some of both. It certainly fits the criteria of "best of breed" and "things you know".

LOL

[Bronco]

Read a little bit of this thread a long time ago. Came back to it recently and really started reading it. Wow what an incredible amount of info in this thread. Thanks for all the work you guys are putting into this. Greg specifically, you have a great way of explaining your points and reasoning. I'm now going back and reviewing the few stocks I do own. Some I'm dumping and looking at new ones. Now I feel much more informed on the whys and hows on picking stocks.

Thanks
Mike

[GregWeld]

Read a little bit of this thread a long time ago. Came back to it recently and really started reading it. Wow what an incredible amount of info in this thread. Thanks for all the work you guys are putting into this. Greg specifically, you have a great way of explaining your points and reasoning. I'm now going back and reviewing the few stocks I do own. Some I'm dumping and looking at new ones. Now I feel much more informed on the whys and hows on picking stocks.

Thanks
Mike




Welcome aboard Mike! Much of the info it repeated - as new people come and go and ask similar questions etc....

The whole thread is mostly just about debunking the myths and trying to make investing "simple" - because at it's basics, it is.

[toy71camaro]

You younger guys may want to look at NIKE (NKE).... They just raised their dividend 14% -- split the stock 2 for 1 -- and announced they'd buy back 12 BILLION dollars worth of their own stock.

I don't own it - and have never done any research on it - and this isn't really a recommendation since that's not what this thread is about.... but some of you are looking for "growth" stocks vs dividend payers.... and a company like this has some of both. It certainly fits the criteria of "best of breed" and "things you know".

LOL

They're quite the name in sports, always have been. Always used their gear. I need to research a little more, but now with my son playing sports I'm back into the sports world more. Thanks for bringing this one up!

[toy71camaro]

Read a little bit of this thread a long time ago. Came back to it recently and really started reading it. Wow what an incredible amount of info in this thread. Thanks for all the work you guys are putting into this. Greg specifically, you have a great way of explaining your points and reasoning. I'm now going back and reviewing the few stocks I do own. Some I'm dumping and looking at new ones. Now I feel much more informed on the whys and hows on picking stocks.

Thanks
Mike

Welcome Mike! Let us know if we can help ya out.

[ErikLS2]

You younger guys may want to look at NIKE (NKE).... They just raised their dividend 14% -- split the stock 2 for 1 -- and announced they'd buy back 12 BILLION dollars worth of their own stock.

I don't own it - and have never done any research on it - and this isn't really a recommendation since that's not what this thread is about.... but some of you are looking for "growth" stocks vs dividend payers.... and a company like this has some of both. It certainly fits the criteria of "best of breed" and "things you know".

LOL

I was thinking the same thing Greg but then heard an interesting opinion on the radio today. It was a CNBC talking head (I think it was Kevin O'Leary) and his point was that all that cash for the buyback would far benefit the shareholders more if it was paid out in dividends. It kind of made sense in that a buyback lowers the number of outstanding shares thereby HOPEFULLY increasing the value of each one while a dividend is getting actual cash in the mail. He said he would rather get a check than simply a chance that his shares might become worth more. He also said that a buy back benefits the insiders of the company more than a dividend increase and somehow helps them in the options market too (that one is over my head). It is a good point if you think about it but what are your thoughts on it Greg?

[GregWeld]

I was thinking the same thing Greg but then heard an interesting opinion on the radio today. It was a CNBC talking head (I think it was Kevin O'Leary) and his point was that all that cash for the buyback would far benefit the shareholders more if it was paid out in dividends. It kind of made sense in that a buyback lowers the number of outstanding shares thereby HOPEFULLY increasing the value of each one while a dividend is getting actual cash in the mail. He said he would rather get a check than simply a chance that his shares might become worth more. He also said that a buy back benefits the insiders of the company more than a dividend increase and somehow helps them in the options market too (that one is over my head). It is a good point if you think about it but what are your thoughts on it Greg?



These are always debated points for the use of company cash. Whether or not it's better to expand the business rather that buy back shares.... or pay out a special dividend... or to try to create value in some other way. I don't know that any of us will ever know which one is "the best way". I don't own Nike (NKE) because of the small dividend... So perhaps if they'd raise the dividend to a point (what number? 3 or 4%) that it would make the shares more attractive to people like me... Would that create demand for the shares thus raising the price? As a dividend seeker --- yeah --- that would be my choice.

BUT --- always the big but..... if you look at TOTAL RETURN as a guide, over a long period of time. Then it's different. Because Nike has a terrific TR - and that is the truest test of making money on your money.

1 year TR -- 37% -- 3 year 188% -- 5 year 230%


So yes --- a lousy 1% divided -- but I wish I'd have bought a couple hundred thousand worth!!! LOL

[GregWeld]

On the road to Laguna Seca this morning (day 3)... and thought I'd check the market on Ferrari's IPO (RACE). Gee... who'd a thunk it.... it's DOWN almost 16% from it's market debut.

The IPO market just hasn't be rewarding. Seems the market isn't playing along - and actually wants to invest in companies that make money (earnings). So RACE - just like every other listed company - will have to report growing earnings/revenues/sales etc. Until then - it's just another pretty face.

[PDXFactory]

I ended up in KMI as a result of being a KMP share holder...and those of you who are Kinder Morgan holders know what has been going on over the past 8 months or so...a 50%+ drop in share price.

At this point I don't see a lot of reason to pull back at all, and I have been considering adding to my position since the stock is "on sale" these days and it would be nice to average down my price per share. I'm far from an expert though, and I'm curious if those of you with more experience see any reasons to be nervous (like the rest of the market seems to be with KMI!)?

[MPM IV]

I'm not the guy with more experience, but I'm curious to hear other's thoughts as well.

Of the seven positions I own two are oil, one being KMI. I started buying before I understood about keeping each position to 5%. I'm pretty far out of balance now which makes me hesitant to add more, but it would be a significant reduction in price.

[Woody]

I ended up in KMI as a result of being a KMP share holder...and those of you who are Kinder Morgan holders know what has been going on over the past 8 months or so...a 50%+ drop in share price.

At this point I don't see a lot of reason to pull back at all, and I have been considering adding to my position since the stock is "on sale" these days and it would be nice to average down my price per share. I'm far from an expert though, and I'm curious if those of you with more experience see any reasons to be nervous (like the rest of the market seems to be with KMI!)?


I made some comments on page 522 of this thread about KMI. I still think there are reasons to be nervous about KMI. Currently, right or wrong, there is a lot of uncertainty about the company. One concern is their current debt level. Related to that is the fact that their credit rating could potentially be downgraded. If that happens, their cost of borrowing will go up significantly and their ability to continue to grow could be impacted. Another area of concern is the ability to continue to pay the dividend.

KMI did come out today to reiterate their ability to increase the dividend, but that did nothing for the stock price. I think it initially went down even further when that announcement was made.

I don't think anyone really knows what is going to happen. Some believe the price is now near a bottom, but others think it could go much lower. My feeling is that with so much uncertainty, there is a lot of risk and I would only purchase KMI with money I had to lose.

There is a lot of information on KMI on the Seeking Alpha website if you would like to read different perspectives.