Investing 102

[GregWeld]

By the way -- the post about NOI and Cap Rate is not for those that know this information or understand it. It was - and I should have identified it as such - information for "INVESTING 102".

I personally think everyone that has the ability - should have investment(s) in commercial and/or rental properties. This is another way to diversify your investments... has great long term proven success etc.

Live every other form of investing - they are not without ups and downs, and their own perils. Renters move out leaving you holding the bag... neighborhoods change (fundamental change you must watch out for!)... they require investment for maintenance and even improvement. They are rarely buy it and forget it.

What people forget are some pretty important investment goals such as:


The income (NOI) is, or can be, offset by depreciation for taxable purposes.

You have "dividend" income - or at least an income stream - that should grow over time. Often times this is NEGATIVE in the first few years.

You can have long term appreciation of the asset on top of the cash flow (NOI) generated. This tends to accelerate with time.

If you compute the income created downstream - against your initial investment (down payment) - the return on investment (ROI) can be staggering.

Let's look at this in a very basic way.

You put 50K down on a 200K property. The rental rate is $1,300 a month. That rate just covers your overhead (payment - taxes - insurance). But 5 years later that rent is $1,500... and 10 years later it's $2,000. At 20 years the mortgage is paid off.... and you're not collecting $2,250 a month. Pocketing $1,750 after expenses. That's $21,000 a year in income off your initial $50K investment.

The above is obviously oversimplification - as there will be paint jobs - roofs - appliances - carpets - landscaping - down periods with no renter - or a period with a bad renter... but in the end.... Your $200K house is now worth $375K and it provides $21,000 a year in retirement income. BAM!

[im4u2nvss]

I personally think everyone that has the ability - should have investment(s) in commercial and/or rental properties. This is another way to diversify your investments... has great long term proven success etc.



This is my personal plan(on top of 401k and ROTH). My question is, what is the best way to protect your rental(and other assets) from lawsuits, exc?

[Flash68]

This is my personal plan(on top of 401k and ROTH). My question is, what is the best way to protect your rental(and other assets) from lawsuits, exc?

For "residential" type rentals (1-4 unit properties) I got a Landlord Policy. I pay a fair amount more for this from Farmers. It is not required - you can get a run of the mill homeowners/GL type policy. But this one covers a lot of problems you can get into with your tenants. And in my pro-tenant political environment investment area, it was an easy call for us.

My wife fights with insurance companies for a living, and she thinks Farmers is the most formidable opponent in our area at least.

[ErikLS2]

This is my personal plan(on top of 401k and ROTH). My question is, what is the best way to protect your rental(and other assets) from lawsuits, exc?

I have always had an LLC for any investment property I've owned. It protects your personal assets from any lawsuit related to the property, if set up right AND you don't co-mingle personal funds with LLC funds. It must have it's own bank account and you can't ever buy anything personal from it. You can take cash out to "pay" yourself and contribute to it if you need to for big expenses and stuff and if it's a single member (meaning no partners) it doesn't need it's own tax return, it just goes on your personal return.

[Flash68]

I have always had an LLC for any investment property I've owned. It protects your personal assets from any lawsuit related to the property, if set up right AND you don't co-mingle personal funds with LLC funds. It must have it's own bank account and you can't ever buy anything personal from it. You can take cash out to "pay" yourself and contribute to it if you need to for big expenses and stuff and if it's a single member (meaning no partners) it doesn't need it's own tax return, it just goes on your personal return.

Good call. I kind of skipped over that part. :lol:

That should be the first thing you do IMO. I actually set mine up before I acquired the actual property.

You can own several properties under one LLC -- some do it that way, and it's better than nothing -- but having a separate LLC for each property is the cleanest and offers the most protection.

To be clear on the LL insurance policy -- it is to provide legal representation in the event of potentially expensive events such as unlawful eviction. You have to have Homeowners/GL policy on the property anyway - so paying a little more where 6 figures of legal fees could be provided by your carrier under a number of unfortunate circumstances is worth looking into IMO.

[im4u2nvss]

I have always had an LLC for any investment property I've owned.

Are lenders OK with this conversion on a current mortgage, or does it have special requirements?

[GregWeld]

I would most certainly set up an LLC for investments like this.


By the way - you don't have to buy these properties on your own - there are many companies that do all the work - find the properties - set up the LLC's - do the management - and just send you a check. That's the way I have always done these types of investments. Personally - I don't want to manage an apartment building. I don't want a phone call that the sink is plugged... I just want the investment and the income.

Now - when you think about it - this is far easier than finding and identifying a "good" investment property - securing a mortgage - find tenants - all the legal ramifications etc.

Typically then - the management company sets everything up - offers a "prospectus" describing every detail of the investment - and their plans - and financials etc. Then if you want "in" - they offer "shares" at a set rate. You can choose to buy one share or whatever. The deals I've always done have been anywhere from 50K to 100K per share. They typically will return 6 or 7% and after a while (years) they're typically sold and have a capital return. Most if not all of the income received is offset by the depreciation on your taxes during the income / holding period.

Here's the downside:

You CAN NOT invest 401/IRA/ROTH funds in these. They're considered "passive" investments and as such have different taxable situations.

You have ZERO control of how they're run - when they might be sold - whether or not they're sold or 1031 exchanged etc. You're just along for the ride. They're very illiquid.

Because of the illiquidity - you typically must "qualify" as an accredited investor. Meaning - you must declare that you have "X" net worth - per share - outside the value of your house etc. This is done because they don't want investors that are going to be calling and wanting their money back 6 months or 3 years down the road.

Like any investment - things can go against you. Rental rates may face stiff competition from a new building in the neighborhood. Management might suck. The economy can actually be TOO GOOD and your renters move up or out (I once had this happen to one of mine).


Here's the upside:


You generally get a very nice cash dividend annually (typically paid every 6 months).

The income is "tax differed" in a sense - because of the offsetting depreciation you get in the tax forms.

The returns can exceed 100% over a 10 year period. I once had an investment that returned 117% in 4 years. That was a special - probably never to be duplicated - event.

A 50K investment (typical single share cost) that is far simpler than owning and managing a single family rental.

These are typically LARGE (100 or more units) Class A apartment complexes. Therefore the occupancy rate can fluctuate throughout the year (years) and not have a big effect on your income. If you invest in single family - and the renter doesn't pay - or moves out - or destroys the property... you have a LARGE swing in income!

[im4u2nvss]

This is great info for someone trying to get into that kind of investment property. In my case, I already live in my future rental(will buy property and build in future). Mainly wondering if I would need to change my loan to convert to LLC or if it is a simple title change? Thanks again for all the information.

[Flash68]

This is great info for someone trying to get into that kind of investment property. In my case, I already live in my future rental(will buy property and build in future). Mainly wondering if I would need to change my loan to convert to LLC or if it is a simple title change? Thanks again for all the information.

On one of my properties I was unable to set up the LLC in time (my original name was rejected by the SOS for being too similar to an existing LLC) before taking possession and had to deed the property twice. My lender did not have an issue with it (not sure what I had to do - but it was not a headache). But I would check with your bank/lender on it for sure.

[ErikLS2]

Every time I had to get an investment property loan the lenders wanted me to personally be liable for the loan in addition to the LLC. This doesn't affect the legal protection offered by having the LLC.

Also, we haven't talked about trusts here much but if you think you'll have compiled any significant amount of assets by the time you die you really should have one that fits your own personal situation. The trust will have just you as Trustee if you're single or you and your spouse (typically) if married but is it's own single entity and will be the sole member of the LLC

[Vegas69]

You'll only ever know "early" and "greedy" when it's history. You never know this at the time of the decision. I 100% agree with your statement that it all depends... each persons time horizon - ability - goals - are different.

Being DEBT FREE is one of the biggest statements a person can make. It's also one of the biggest goals EVERYONE should have. Nobody ever went broke taking a profit.

XOXO

As of last Friday, we paid off the house and have 0 debt. :relax: It feels pretty damn good! The idea of not getting anymore bills for car payments or mortgages is really kind of strange. I've had some type of debt my entire adult life. It was consdiderable not so long ago. Living this far below our means really opens up many doors. It gives us the flexibility to work less, save more, give more, travel more, and be more content. The bible said it best, "The borrower is slave to the lender". I get rid of the liabilities, bills, insurance, tenants, repairs, property manager, larger CPA bill, and on down the line.

Now, I do still believe in strategic debt for investing if the risks aren't too great, you've thoroughly educated yourself, and have a real strategy in place. That means cashing out if there is a healthy gain. Owing taxes is a GREAT problem to have! It served me well in real estate. I do have to admit that I came very close to getting caught with my shorts around my ankles twice using this strategy. You shouldn't have to fudge the numbers to make it work, it either works or it doesn't. Are the fundamentals there? Meaning, the market trends looks right and the ROI is reasonable. Can you survive a suffering economy, repairs, and vacancy factor financially?

[dhutton]

As of last Friday, we paid off the house and have 0 debt. :relax: It feels pretty damn good! The idea of not getting anymore bills for car payments or mortgages is really kind of strange. I've had some type of debt my entire adult life. It was consdiderable not so long ago. Living this far below our means really opens up many doors. It gives us the flexibility to work less, save more, give more, travel more, and be more content. The bible said it best, "The borrower is slave to the lender". I get rid of the liabilities, bills, insurance, tenants, repairs, property manager, larger CPA bill, and on down the line.

Now, I do still believe in strategic debt for investing if the risks aren't too great, you've thoroughly educated yourself, and have a real strategy in place. That means cashing out if there is a healthy gain. Owing taxes is a GREAT problem to have! It served me well in real estate. I do have to admit that I came very close to getting caught with my shorts around my ankles twice using this strategy. You shouldn't have to fudge the numbers to make it work, it either works or it doesn't. Are the fundamentals there? Meaning, the market trends looks right and the ROI is reasonable. Can you survive a suffering economy, repairs, and vacancy factor financially?

Congratulations Todd. We went debt free last fall. You are right, it feels pretty damn good. :cheers:

Don

[Vegas69]

:cheers: Back at you Don, congrats!

[GregWeld]

You guys have no idea how big a smile this puts on my fat little face! I know now that I can leave this earth and know this thread helped a couple people live better lives. My job is complete.

[GregWeld]

So -- I was just listening to statistics for "MAY" -- and the "sell in May and go away" -- which gets lots of questions in this thread. And I normally say - pay no attention to all that kind of stuff - it's trader talk - not investor talk.

May was UP (percentage wise) more than almost any other month.... so if you sold - you blew it. LOL

[dhutton]

You guys have no idea how big a smile this puts on my fat little face! I know now that I can leave this earth and know this thread helped a couple people live better lives. My job is complete.

I think it has helped a lot more than a few. Some more than others maybe but a lot of folks just the same. Thanks Greg!

Don

[96z28ss]

You guys have no idea how big a smile this puts on my fat little face! I know now that I can leave this earth and know this thread helped a couple people live better lives. My job is complete.

You have helped a lot more than a couple people with this thread.
I thank you every time I look at my portfolio, and say if it wasn't for Greg it would still be in someone else hands. I would of had very little control. Now I apply what you have taught. I won't be rich tomorrow, but I hope to retire comfortably.

[ErikLS2]

Congrats Todd and Don for being debt free!! I only owe on my house, at 3.75% and a commercial income property with about 50% equity in it so I'm pretty good as well. Now, if either of you miss ever miss it, you're free to make a couple of my house payments if you like! :D

Anyone seen "Money For Nothing" on Netflix? Highly recommend it, maybe the next bubble that bursts, we've been on an 8 year cycle and it's about 8 since the last one.

[Vegas69]

Thanks, Erik!

I'd be seriously looking at your local market and making a firm decision on whether it's time to "Take your money and run". If the decision is no, you should be ready to ride out the next low cycle. I know commercial leases can run through cycles, but if that business was to fold, you could be left with a vacancy.

I'm on the residential side, but I have some commercial knowledge here. What seemed to happen with the last cycle was that tenants migrated into newer, nicer spaces for a similar outlay. That left many of the older buildings with vacancies.

Going back into debt or getting back into the market is EASY. Those liabilities and opportunities are plentiful. Timing dictates the latter...

[ironworks]

Thanks, Erik!

I'd be seriously looking at your local market and making a firm decision on whether it's time to "Take your money and run". If the decision is no, you should be ready to ride out the next low cycle. I know commercial leases can run through cycles, but if that business was to fold, you could be left with a vacancy.

I'm on the residential side, but I have some commercial knowledge here. What seemed to happen with the last cycle was that tenants migrated into newer, nicer spaces for a similar outlay. That left many of the older buildings with vacancies.

Going back into debt or getting back into the market is EASY. Those liabilities and opportunities are plentiful. Timing dictates the latter...

Todd - Do you mind sharing some of the key factors your talking about in the real estate market. I'm looking at purchasing a the building we currently occupy and have found the open lease space ratio to be getting higher but not alot for sale just yet. But I'm wondering if this is the time. I think things are gonna go on sale and I seem to keep hearing that the sky i falling and alot of smart guys are prepping for market correction. CASH is KING. Just trying to learn all I can.

[Vegas69]

I'd find a really sharp commercial agent and sit down with them for an hour to discuss the market. Not neccessarily the top salesman, but someone that is knowledgable and has data to share.

What has the median price been doing over the last 5 years in commercial sales?
What has the days on market been doing?
Is the supply increasing or decreasing?
Are any major businesses leaving town?
What are leasing rates doing?
What are businesses doing demographically? Are they moving into newer spaces or staying put?
Are new spaces being built that will increase supply?
How is the local economy performing?
What are your other options in the market place? That will help you establish value where you reside.
What's it worth to you not to have to move your facility?
What does a sharp commercial agent feel your place is worth? You could offer them a fee to analyze it and be the middle man in negotiations and close the sale.

I'm far from a commercial expert, but these are some things that came to mind. I'm sure Greg and the guys have other ideas.

I certainly don't think the sky is falling, but I do think it's time to be patient in many areas.

[ironworks]

I'd find a really sharp commercial agent and sit down with them for an hour to discuss the market. Not neccessarily the top salesman, but someone that is knowledgable and has data to share.

What has the median price been doing over the last 5 years in commercial sales?
What has the days on market been doing?
Is the supply increasing or decreasing?
Are any major businesses leaving town?
What are leasing rates doing?
What are businesses doing demographically? Are they moving into newer spaces or staying put?
Are new spaces being built that will increase supply?
How is the local economy performing?
What are your other options in the market place? That will help you establish value where you reside.
What's it worth to you not to have to move your facility?
What does a sharp commercial agent feel your place is worth? You could offer them a fee to analyze it and be the middle man in negotiations and close the sale.

I'm far from a commercial expert, but these are some things that came to mind. I'm sure Greg and the guys have other ideas.

I certainly don't think the sky is falling, but I do think it's time to be patient in many areas.


Its probably alot of work, maybe.

But could you answer these questions with info for the area you in. Not just commercial but real estate in general in your area. I'm just trying to learn for myself and learn more stuff kinda like Greg has done with this thread.

The price of oil has really had an effect here on jobs and such but I have only seen the residential real estate market come down accordingly. Lots of places going under in the oil industry that were not saving money when it was going well.

[Vegas69]

Sure, but the data really needs to be local. Your economy is driven by oil, ours is driven by tourism. We get all the retiree's due to no State tax. etc..

The median price of a single family home is up $600 in 9 months after a 52% increase over the previous 3 years. $118,000 up to $220,600

Inventory levels have nearly doubled since the median price hit it's low point in 2012. Resale inventory has stayed steady for roughly 2 years. New home builders are building everywhere. Their median price is $100,000 higher than the resale market. I've seen standing inventory from multiple builders lately and have negotiated aggressively with them for my buyers.

Days on market has stayed pretty consistent.

Ikea just built a new store and the T-mobile arena just opened. From what I see, many are thriving here and spending money again. People are moving here again from CA and all over the country. The census data shows that we've gained population in the last few years. Not by a large margin, however. Many that were upside down have found freedom with the rising home prices and are moving away. We are growing...

Residential median lease rates have climbed $125 per month in the last 5 years.

I hired a new assistant last week. I had roughly 60 applicants in 48 hours for a $15 an hour job plus bonuses.

I'd have to research the rest of the questions.

I'm seeing a bunch of first time buyers, some relocations, and move ups and downs now with the new found equity in the market. I think the market has some good life left in it and seems fairly stable.

I'd sit down with 2-3 commercial agents and bounce some of this stuff off them if you are thinking of making a major play.

[68Cuda]

Inventory levels have nearly doubled since the median price hit it's low point in 2012. Resale inventory has stayed steady for roughly 2 years. New home builders are building everywhere. Their median price is $100,000 higher than the resale market. I've seen standing inventory from multiple builders lately and have negotiated aggressively with them for my buyers.

Days on market has stayed pretty consistent.


Where are you located?

The market here is crazy, rental rates for residential are stupid high, and it seems resale inventory is real low and moves fast. It seems like a bad time to buy.

Everyone here is building, both residential and commercial.

[ErikLS2]

Thanks, Erik!

I'd be seriously looking at your local market and making a firm decision on whether it's time to "Take your money and run". If the decision is no, you should be ready to ride out the next low cycle. I know commercial leases can run through cycles, but if that business was to fold, you could be left with a vacancy.

I'm on the residential side, but I have some commercial knowledge here. What seemed to happen with the last cycle was that tenants migrated into newer, nicer spaces for a similar outlay. That left many of the older buildings with vacancies.

Going back into debt or getting back into the market is EASY. Those liabilities and opportunities are plentiful. Timing dictates the latter...

Todd, I wish it were that easy, but it's a Walgreens store and it's in TX. The loans for these types of properties are kind of like bonds to the investors (lenders) in that they want all the return they signed up for at the outset. This means there's a significant pre-payment penalty, called a defeasance penalty. So, it rarely pays to sell (or refinance) early. The penalty on this property 4 years out from loan maturity was around $600K!! That's the price for getting a fixed rate loan vs. an adjustable rate. In the meantime, Walgreens is about as solid a tenant as you can get, it's a 75 year lease and unless this 100+ yr old company goes out of business it's guaranteed and it's NNN so there's nothing to do except make sure the money is in the bank every month. Oh, and we still get to depreciate the building and contents, even if Walgreens buys new ones!

Todd - Do you mind sharing some of the key factors your talking about in the real estate market. I'm looking at purchasing a the building we currently occupy and have found the open lease space ratio to be getting higher but not alot for sale just yet. But I'm wondering if this is the time. I think things are gonna go on sale and I seem to keep hearing that the sky i falling and alot of smart guys are prepping for market correction. CASH is KING. Just trying to learn all I can.

Todd gave you some good advice. Some of the bigger firms that would know what your building is worth are CB Richard Ellis, Marcus & Millichap, and Hendricks & Partners. All should have offices in your area and any of them would be happy to give you an opinion of value and tell you all you want to know about your local market. In your situation though I don't think I would have them handle the purchase/sale. I'm assuming that you know the current owner (you're making lease payments to them right?) so there's no need for them to do so and their contracts are great at protecting them but don't do much for you or the seller so you really need a lawyer to review the contract anyway, and they get a healthy commission, mainly for putting buyer and seller together and it sounds like you might already have that part handled. I would highly suggest if you want to buy it that you just find an experienced commercial real estate lawyer draw up a contract and have the seller's lawyer review it and negotiate that way. You'll be much more protected that way too.

You probably know this already but I would also add that if you can swing it to own the building the tax benefits can be considerable, you have the business LLC (or however it's structured) lease it from another LLC (or similar entity), both of which are you. You'd basically just move money from one bank account to another and deduct a lot from your income taxes along the way. How the rich get richer! I wouldn't suggest you have one entity own both the business and the real property, but I'm not a lawyer and Calif is especially unique in it's laws for most of this kind of stuff so do your homework. Good luck!

[Vegas69]

Where are you located?

The market here is crazy, rental rates for residential are stupid high, and it seems resale inventory is real low and moves fast. It seems like a bad time to buy.

Everyone here is building, both residential and commercial.

I'm in Las Vegas. I've really grown to like the philosophy of doing the opposite of the majority.

[glassman]

Todd, I wish it were that easy, but it's a Walgreens store and it's in TX. The loans for these types of properties are kind of like bonds to the investors (lenders) in that they want all the return they signed up for at the outset. This means there's a significant pre-payment penalty, called a defeasance penalty. So, it rarely pays to sell (or refinance) early. The penalty on this property 4 years out from loan maturity was around $600K!! That's the price for getting a fixed rate loan vs. an adjustable rate. In the meantime, Walgreens is about as solid a tenant as you can get, it's a 75 year lease and unless this 100+ yr old company goes out of business it's guaranteed and it's NNN so there's nothing to do except make sure the money is in the bank every month. Oh, and we still get to depreciate the building and contents, even if Walgreens buys new ones!



Todd gave you some good advice. Some of the bigger firms that would know what your building is worth are CB Richard Ellis, Marcus & Millichap, and Hendricks & Partners. All should have offices in your area and any of them would be happy to give you an opinion of value and tell you all you want to know about your local market. In your situation though I don't think I would have them handle the purchase/sale. I'm assuming that you know the current owner (you're making lease payments to them right?) so there's no need for them to do so and their contracts are great at protecting them but don't do much for you or the seller so you really need a lawyer to review the contract anyway, and they get a healthy commission, mainly for putting buyer and seller together and it sounds like you might already have that part handled. I would highly suggest if you want to buy it that you just find an experienced commercial real estate lawyer draw up a contract and have the seller's lawyer review it and negotiate that way. You'll be much more protected that way too.

You probably know this already but I would also add that if you can swing it to own the building the tax benefits can be considerable, you have the business LLC (or however it's structured) lease it from another LLC (or similar entity), both of which are you. You'd basically just move money from one bank account to another and deduct a lot from your income taxes along the way. How the rich get richer! I wouldn't suggest you have one entity own both the business and the real property, but I'm not a lawyer and Calif is especially unique in it's laws for most of this kind of stuff so do your homework. Good luck!

Erik, what is NNN? Also, thanx for the new word of the day, "defeanance".

On another note, while were talking investment stratagies,
I've been interested in purchasing some investment property here in the town of Dublin where my business is based. The buildings (as builts) and land here are too large for my business, just about everything starts at 2 mill and goes up from there. I just don't have the kohones to do it, it will be about 11,000 to 12,000 a month. And while we (the business) can swing it right now, i'm preparing for a slow down( i bought the business 20 years ago in a recession and went through the 09'/'10). So, using the past for guaging the future is what i'm talking about. We are in talks right now with our former landlord about relocating some of or all our business back to that site, for a savings of 60% less per sq ft.
Meanwhile, fully funding the companies pension(income tax differed), keep piling some cash into my diversified Dividend stocks, and continue to learn how to manage the growth.......thanx to this thread (Greg, yes i'm talking to you lol, thanx a BUNCH for you input!!!! Wish i would of heard it in my 20's LOL).

[Vegas69]

Todd, I wish it were that easy, but it's a Walgreens store and it's in TX. The loans for these types of properties are kind of like bonds to the investors (lenders) in that they want all the return they signed up for at the outset. This means there's a significant pre-payment penalty, called a defeasance penalty. So, it rarely pays to sell (or refinance) early. The penalty on this property 4 years out from loan maturity was around $600K!! That's the price for getting a fixed rate loan vs. an adjustable rate. In the meantime, Walgreens is about as solid a tenant as you can get, it's a 75 year lease and unless this 100+ yr old company goes out of business it's guaranteed and it's NNN so there's nothing to do except make sure the money is in the bank every month. Oh, and we still get to depreciate the building and contents, even if Walgreens buys new ones!



Todd gave you some good advice. Some of the bigger firms that would know what your building is worth are CB Richard Ellis, Marcus & Millichap, and Hendricks & Partners. All should have offices in your area and any of them would be happy to give you an opinion of value and tell you all you want to know about your local market. In your situation though I don't think I would have them handle the purchase/sale. I'm assuming that you know the current owner (you're making lease payments to them right?) so there's no need for them to do so and their contracts are great at protecting them but don't do much for you or the seller so you really need a lawyer to review the contract anyway, and they get a healthy commission, mainly for putting buyer and seller together and it sounds like you might already have that part handled. I would highly suggest if you want to buy it that you just find an experienced commercial real estate lawyer draw up a contract and have the seller's lawyer review it and negotiate that way. You'll be much more protected that way too.

You probably know this already but I would also add that if you can swing it to own the building the tax benefits can be considerable, you have the business LLC (or however it's structured) lease it from another LLC (or similar entity), both of which are you. You'd basically just move money from one bank account to another and deduct a lot from your income taxes along the way. How the rich get richer! I wouldn't suggest you have one entity own both the business and the real property, but I'm not a lawyer and Calif is especially unique in it's laws for most of this kind of stuff so do your homework. Good luck!

Sounds solid and complicated... :lol: Can't beat that tenant! I own NNN if you are referring to the stock.

Disclaimer: This is coming from a licensed real estate agent. ha A skilled agent can give you insights that could be a big negotiating factor. I do agree that an attorney is crucial for a commercial deal, but their focus is law, not market dynamics and what should be expected in a negotiation. Bottom line, the money you pay them could be a wise investment. The attorney will ensure the deal is sound.

[WSSix]

Congrats Todd and Don on being debt free. Keep up the good work!

[ErikLS2]

Erik, what is NNN? Also, thanx for the new word of the day, "defeanance".

NNN stands for Triple Net. It means that in addition to rent, a tenant on this type of lease also pays for basically all other expenses related to the property, i.e. property tax, common area management, and any building repairs including a/c units, roof, etc. All upgrades and repairs are still owned (and deductetd) by the property owner though, a nice side benefit. Basically the landlord/property owner has to do nothing other than make sure the money comes in every month. :G-Dub:

Sounds solid and complicated... :lol: Can't beat that tenant! I own NNN if you are referring to the stock.

Disclaimer: This is coming from a licensed real estate agent. ha A skilled agent can give you insights that could be a big negotiating factor. I do agree that an attorney is crucial for a commercial deal, but their focus is law, not market dynamics and what should be expected in a negotiation. Bottom line, the money you pay them could be a wise investment. The attorney will ensure the deal is sound.

I agree that in Rodger's case it would be wise to get a sense of the market from a licensed agent familiar with his type of property, but they do that for free. Since in his case there is already a buyer and a seller there's little else for the agent to do other than draw up a contract (which again mostly protects THEM) which each party should have a lawyer review anyway. If the agent handles the contract I would negotiate a much lower commission from the standard 5-6% which includes marketing, advertising, etc. I'm not against agents at all but on these commercial deals they do everything they can to keep the deal "in house" so they get both the buyer/seller commissions. I've done 3 fairly big deals and every one was a dual representation deal.

[Vegas69]

I agree, I offer a flat fee in these situations. Some see the value, others don't.

I can tell you that I just had interaction with another attorney yesterday on residential sale. The concerns he communicated about the closing documents were elementary and showed very little expertise. The numbers were correct and the documents were valid as they were prepared. (We are an escrow state)

It's a personal preference. Your level of knowledge plays greatly into that decision. For a majority, I see value as it could save you money and surprises that an attorney just doesn't have the expertise to negotiate or communicate.

My interactions with Attorney's over the last 16 years has shown me that they understand law, not the market dynamics. That's exactly how it should be.

I rest my case..:D

[ironworks]

I'm just stuck in this position where I'm not sure its worth it to purchase this building if the owners who have it in a trust will even do. The benefits for me are the landlord they have managing the property is not really doing much for them. My lease rate is pretty low. So it makes it tough to swallow the payment increase but sets me up for later. So I'm working on buying what I in to avoid moving. Plus I like the area I'm in, The building works well and is very close to 3-4 of my repeat customer.

But the commercial market around here never really took a dive like the housing market did. The housing market has doubled in the past 6 years or so. The commercial has not. I'm wondering if buying another property would be more well suited with the rental rate I have. I sold a couple of my race cars in the past year and have been stashing money away to work toward owning my shop and setting myself up for the future. Just trying to understand things. I get the vibe from realtors they want to sell me something and not so much forecast what they see coming.

With the price of oil being down and unemployment being higher then normal, I'm surprised the available properties have not gone up. The rentals have. But maybe that is the sign before those unfilled rentals go up for sale. Bakersfield has always been a weird economy. When the world is falling apart things are OK. Its Agriculture and Oil that really kill us. Currently Dairy and Oil are pretty tough right now.

Just trying to learn more and more. Thanks for the info.

[Vegas69]

An example of a surprise:

The agent makes you aware of a recent code change that will stand in the way of ownership transfer and/or your financing. The seller and their council is unaware the property you wish to buy has the deficiency. You negotiate terms where the seller is responsible for any code violations. They don't realize the ramifications of the terms until they are balls deep. They are left with no choice but to bring the building up to code at their cost which could be substantial.

There is purchase price, and there is terms. Both are very important.

[dhutton]

It looks like John Oliver found this thread... LOL... :lmao:

https://www.youtube.com/watch?v=gvZSpET11ZY

Don

[Vegas69]

:thumbsup:

[ErikLS2]

I am not against agents in any way, especially for housing, but there really is no comparison between commercial and residential agents and deals. The commercial ones I've dealt with care most about getting the deal done and protecting their own arses in the process. Most residential agents are looking out for the client first and closing the deal second and almost none of the deals are dual representation (like a lot of commercial deals). All I'm saying is do your due diligence yourself and don't rely on what a commercial agent, that has skin in the game, tells you about the market. I would do a commercial deal without an agent, but I wouldn't do one without an experienced commercial real estate lawyer.



Do a search on www.loopnet.com for similar commercial properties in your area, both for sale and lease. It's a little limited unless you pay but you can still get a pretty good sense of what's for sale and for how much in your area for free.

[Mizzouri]

So -- I was just listening to statistics for "MAY" -- and the "sell in May and go away" -- which gets lots of questions in this thread. And I normally say - pay no attention to all that kind of stuff - it's trader talk - not investor talk.

May was UP (percentage wise) more than almost any other month.... so if you sold - you blew it. LOL


Next week's vote on Britain exiting the EU could create another nice dip (buying opportunity) in the market. One will have to be nimble as the ECB have pledged to bolster a transition (chaos).

[GregWeld]

Next week's vote on Britain exiting the EU could create another nice dip (buying opportunity) in the market. One will have to be nimble as the ECB have pledged to bolster a transition (chaos).



If you've been in the market long enough - you come to understand there is ALWAYS SOMETHING coming along that's going to be the next big market disruptor. About the time you set yourself up for some event happening - that something goes the other way. LOL

[toy71camaro]

If you've been in the market long enough - you come to understand there is ALWAYS SOMETHING coming along that's going to be the next big market disruptor. About the time you set yourself up for some event happening - that something goes the other way. LOL

Curveball! :)

[Vegas69]

How about a discussion on legal tax shelters?


We've all seen the publicity about the super wealthy having a low tax rate. The reason for that is that they tend to invest their money in vehicles where they can grow their money and not have a taxable event. There is realized and unrealized income every year. The more you pay the tax man, the higher your realized income was.

I've been utilizing a SEP IRA for quite some time. Any capital invested yearly reduces your taxable income by the same amount. This allows us to keep more of what we earn, thus freeing up capital for investing. I believe the maximum contribution was $53,000 last year. You will need to pay taxes on the money when you withdraw it after age 59.5. However, your tax rate may be lower at that time and you can choose to withdraw money in leaner years, thus reducing your tax burden.

If you have employees and they wish to participate, you will need to make an equal percentage contribution on their behalf. Other similar vehicles are available like a simple IRA and self employed 401k.

1031 Exchanges: A 1031 exchange is utilized when an investment property is sold, but the investor wishes to avoid capital gains. The proceeds are held by an exchange company until a like kind property is purchased. This is a snow ball strategy that could allow you to keep growing your equity position without incurring a tax bill.

Converting an investment property to a primary residence: This can be done by moving into one of your investment properties for a minimum of two years. After two years as your primary residence, you can sell the property with no capital gains utilizing the 2 out of the last 5 rule. That means a single person can take up to a gain of $250,000 with no tax event, a married couple up to $500,000.

My understanding is that you still must be levied the tax bill for the depreciation you deducted while the property was an investment.

Charitable Contributions: I'm a believer in giving to those in need. I see it as a triple win. You get to help someone that really needs it, it feels great, and you get a tax break.

What else do you guys have? :relax:

[ironworks]

A client of mine gave me this idea.

We use my daughter as a spokes model and pay her the maximum she can get paid with out state or federal taxes. 6k in California. She has to pay social security and some other expenses out of the check. Then put that money into in an IRA. She will just pay taxes on the growth in how ever many years until she is allowed to use it or we tell her about that. I have thought about doing the same thing for my good long term employees as a benefit. 100 bucks a week is not a huge deal but over 20 years is alot of money.

[ErikLS2]

How about a discussion on legal tax shelters?


We've all seen the publicity about the super wealthy having a low tax rate. The reason for that is that they tend to invest their money in vehicles where they can grow their money and not have a taxable event. There is realized and unrealized income every year. The more you pay the tax man, the higher your realized income was.

I've been utilizing a SEP IRA for quite some time. Any capital invested yearly reduces your taxable income by the same amount. This allows us to keep more of what we earn, thus freeing up capital for investing. I believe the maximum contribution was $53,000 last year. You will need to pay taxes on the money when you withdraw it after age 59.5. However, your tax rate may be lower at that time and you can choose to withdraw money in leaner years, thus reducing your tax burden.

If you have employees and they wish to participate, you will need to make an equal percentage contribution on their behalf. Other similar vehicles are available like a simple IRA and self employed 401k.

1031 Exchanges: A 1031 exchange is utilized when an investment property is sold, but the investor wishes to avoid capital gains. The proceeds are held by an exchange company until a like kind property is purchased. This is a snow ball strategy that could allow you to keep growing your equity position without incurring a tax bill.

Converting an investment property to a primary residence: This can be done by moving into one of your investment properties for a minimum of two years. After two years as your primary residence, you can sell the property with no capital gains utilizing the 2 out of the last 5 rule. That means a single person can take up to a gain of $250,000 with no tax event, a married couple up to $500,000.

My understanding is that you still must be levied the tax bill for the depreciation you deducted while the property was an investment.

Charitable Contributions: I'm a believer in giving to those in need. I see it as a triple win. You get to help someone that really needs it, it feels great, and you get a tax break.

What else do you guys have? :relax:

All excellent ideas!! I did get bit on a 1031 exchange when I assumed that paying a hefty $100K tax bill was worse than ANY property I could buy as a replacement. Big mistake, I sold at close to market peak in 2006 and ended up of course buying in one too and lost a lot more than what my tax bill would have been. In the future, start the 1031 process but if I don't find a property I'd buy even if I wasn't in a 1031, I'll just pay the tax, which is only deferred by a 1031, not eliminated.

A client of mine gave me this idea.

We use my daughter as a spokes model and pay her the maximum she can get paid with out state or federal taxes. 6k in California. She has to pay social security and some other expenses out of the check. Then put that money into in an IRA. She will just pay taxes on the growth in how ever many years until she is allowed to use it or we tell her about that. I have thought about doing the same thing for my good long term employees as a benefit. 100 bucks a week is not a huge deal but over 20 years is alot of money.


Genius!! If you put in into a Roth IRA (while they're still around) she wouldn't pay any tax on any of it EVER!

Depreciation of rental property is one of my favorites. You get to write off an assumed decrease in value while most likely the property goes UP in value. There is some tax recaptured when you sell but still a really good deal.

Also, not really a tax break but if you buy a rental property with a CAP rate that's higher than the interest rate on the money you borrow to buy it with you are making the split between the two rates on the BORROWED money! IOTW, 4% loan on a 5% CAP rate rental property nets you a 1% return on the bank's money. That's how they make money!

[glassman]

Good discussion you guys. The only problem with the Roth for the kids, I believe the age of withdraw, there is a pre penalty for that. An IRA (SEP?) would be the best for the kids, you can also give them limited payroll and use that for the education later, it's what we tried to do, (didn't work out in our case, we got bad advice vs a 529). Plus business was small and didn't net much then.

[GregWeld]

Good discussion you guys. The only problem with the Roth for the kids, I believe the age of withdraw, there is a pre penalty for that. An IRA (SEP?) would be the best for the kids, you can also give them limited payroll and use that for the education later, it's what we tried to do, (didn't work out in our case, we got bad advice vs a 529). Plus business was small and didn't net much then.



A ROTH IRA is probably the greatest gift the government could have ever given a taxpayer. No tax due on the growth of your money - ever. Tax free is tax free. That's a huge benefit right there!

[glassman]

A ROTH IRA is probably the greatest gift the government could have ever given a taxpayer. No tax due on the growth of your money - ever. Tax free is tax free. That's a huge benefit right there!

No doubt there!!, i think i was reading into the benefits of it for education. Thats what u get for ASSuming....lol.

[Vegas69]

A client of mine gave me this idea.

We use my daughter as a spokes model and pay her the maximum she can get paid with out state or federal taxes. 6k in California. She has to pay social security and some other expenses out of the check. Then put that money into in an IRA. She will just pay taxes on the growth in how ever many years until she is allowed to use it or we tell her about that. I have thought about doing the same thing for my good long term employees as a benefit. 100 bucks a week is not a huge deal but over 20 years is alot of money.

Rodger, I like that and I'll tell you why. As we get more productive, our employees should benefit. That's how we engender culture and lack of turnover. Hope you and the girls are well, buddy.

[JKnight]

In a surprising turn of events, looks like Britain will be leaving the EU. Should make for some ugly red numbers on Friday.

[spacepirate]

Yeah, this is going to get weird!

[AMSOILGUY]

I guess we will see what actually does happen to the market. I was planning on adding to a holding or picking up a new one today. I'll take my time and see what happens but I hope what I was going to buy goes on sale.:popcorn2:

[WSSix]

I'd like to think the Brits for triggering a sale. Thanks everyone! I just picked up a couple good deals.

[toy71camaro]

Interesting to watch the market, that's for sure.

Funny how the markets falling, except my MO is climbing. 2% up today. People are freaked out and rushing to buy their Cigs and Booze. heheh

[96z28ss]

Interesting to watch the market, that's for sure.

Funny how the markets falling, except my MO is climbing. 2% up today. People are freaked out and rushing to buy their Cigs and Booze. heheh

People will be going to safe dividend stocks, I was surprised to see my MO NNN and ED all up over 2%.
It will be interesting. Europe is all screwed up right now. This is going to cause a domino effect. Portugal, and Spain may be next. Not sure about Greece, but they were in trouble till they got bailed out.

I'm in for the long term so if it keeps going it just creates a better buying opportunity.

[XLexusTech]

Sorry if this has been asked before but anyone here day trading? If so any resources for educating oneself that you recommend ? 3 years to an early retirement and I hope to pick up 2% here and there to pay for vacations and car parts

Paper trading sites maybe ... Plan on spending 1 to 3 years learning before jumping in ....

[dhutton]

Sorry if this has been asked before but anyone here day trading? If so any resources for educating oneself that you recommend ? 3 years to an early retirement and I hope to pick up 2% here and there to pay for vacations and car parts

Paper trading sites maybe ... Plan on spending 1 to 3 years learning before jumping in ....

Day trading goes against everything that has been explained in this thread. Have you been following along? It is worth reading.

Don

[XLexusTech]

Day trading goes against everything that has been explained in this thread. Have you been following along? It is worth reading.

Don

Sure I have read most of this thread... Trust me the early retirement didn't come from not having most if not all of the fine ideas discussed here damn near mastered... Some I agree with most in fact I have some of my own ideas Like ummmm buying "faceybook" on IPO then down at 18.... See in this thread....

I didn't think I could only discuss the same exact investing ideas

[GregWeld]

Sure I have read most of this thread... Trust me the early retirement didn't come from not having most if not all of the fine ideas discussed here damn near mastered... Some I agree with most in fact I have some of my own ideas Like ummmm buying "faceybook" on IPO then down at 18.... See in this thread....

I didn't think I could only discuss the same exact investing ideas



And buying FaceBooky was brilliant --- and good for you! There are many stocks that "should" be owned... But whenever I wrote here - I tried to drill down on beginners and basics #1. I've always said - that if you can stomach owning stuff like this - then you should.


NOW.... I used to day trade. The ONLY THING that saved me from losing 2 or 3 million that I had in that day trading account - was that I paid cash for a house out of that account. BAM! The market sunk like a rock....... buying the house had me OUT of the market for months while we remodeled etc. In the meantime the market tanked.


I used to buy $500K of MSFT and $500K of DELL and $500K of INTC in the morning... go golf - come home and sell them up .50 a share.... but this was 1997 / 98 / 99.... and a guy couldn't loose..... until he did. Most every one of my friends from that period are STILL working.

[XLexusTech]

And buying FaceBooky was brilliant --- and good for you! There are many stocks that "should" be owned... But whenever I wrote here - I tried to drill down on beginners and basics #1. I've always said - that if you can stomach owning stuff like this - then you should.


NOW.... I used to day trade. The ONLY THING that saved me from losing 2 or 3 million that I had in that day trading account - was that I paid cash for a house out of that account. BAM! The market sunk like a rock....... buying the house had me OUT of the market for months while we remodeled etc. In the meantime the market tanked.


I used to buy $500K of MSFT and $500K of DELL and $500K of INTC in the morning... go golf - come home and sell them up .50 a share.... but this was 1997 / 98 / 99.... and a guy couldn't loose..... until he did. Most every one of my friends from that period are STILL working.

Yeah, no silver bullets I guess, thanks for the advice.. much appreciated... looking for a way off the Corporate treadmill and hoping something like leveraging my assets to help me live frugally could work... No answers yet just questions... always looking for a way out of the Corp Grind..

[Vegas69]

There is no shortcut to prosperity for the majority. It's called hard work and perseverance. Sorry... :lol:

[glassman]

Cheers to that Todd. A little smarts and luck doesn't hurt though (although my smarts reciprocate and luck has never been a part of my diet)......I tell my co-workers, if you work hard and fail at your task, its not a failure, its a learning experience.....

[XLexusTech]

There is no shortcut to prosperity for the majority. It's called hard work and perseverance. Sorry... :lol:

For the record I have worked consecutively for 37 years with of less then 10 weeks of time off have never been unemployed worked 3 jobs simultaneously 2 and full time college to get me to this point... Put that :censored: :censored: :censored: back in your mouth you know nothing about how I got here ...

I don't want to dirty up this wonderful thread with BS so let's forget I asked obviously people are not interested in the subject

[Vegas69]

Whoa, Tonto. I didn't say you didn't. I just didn't think it was a great idea to take big risks at your stage.

[GregWeld]

For the record I have worked consecutively for 37 years with of less then 10 weeks of time off have never been unemployed worked 3 jobs simultaneously 2 and full time college to get me to this point... Put that :censored: :censored: :censored: back in your mouth you know nothing about how I got here ...

I don't want to dirty up this wonderful thread with BS so let's forget I asked obviously people are not interested in the subject



Oh -- I think people are interested in it.... but there's a zillion websites out there pumping and dumping and hyping all their tricks to make millions.....

[68Cuda]

Whoa, Tonto. I didn't say you didn't. I just didn't think it was a great idea to take big risks at your stage.

I played with it a little... lost money on a few deals, made money on most. It twisted me up inside with the stress. I quickly came to the realization that I could not afford to lose the money I was putting out there and that was the end of it for me.

The problem is that regardless of the strategy the market makes bigger moves off hype and emotion than it does off reality. I did not understand it well enough to want to take the risks. I look at it like legalized gambling. The difference is that in gambling you can directly calculate the odds and know the risks.

[GregWeld]

There are LOTS of people and lots of banks and insurance companies etc that have TRADING DESKS.... And there is lots of money to be made if you are a successful trader. But like guy seeking gold and diamonds.... some are successful and most are not.

I made millions trading. I paid HUGE taxes (ordinary income tax rates of 40% or so) and I lost millions trading. Overall I was successful at it. But was "I" successful or was it just the market period I was trading in? I think it was the market that made me look good. It was easy.

I've made WAY MORE investing than I did trading. It just doesn't seem like it.

[glassman]

I've made WAY MORE investing than I did trading. It just doesn't seem like it.

Sums up what i've been after all these years, there is a difference. But if you would of asked me that 20 years ago i woundn't have known the differnece.

[GregWeld]

I'm sorry I haven't added much here lately. As many of you know already - I'm dealing with some nasty health issues... and that's taking my energy right now.

Having said that.... I just had a great call with a good friend regarding his investments. He's done really well and seems to have a decent (not total) grasp of the challenges. But it's what he said to me that prodded this post.... to wit: "I've been buying some stuff that's really out of favor (or something along these lines) and it's really paying off right now!". DOH!! Anyone ever hear of buying low and selling high? LOL

With that in mind - I've had my ass handed to me in some big oil related stuff - KMI - ETP are the two biggest losers.... and KMI hurt because of the dividend cut! I owned 25,000 shares of it down about 50%..... so I just bought 5,000 more shares.... yeah.... that's right... I bought MORE of it.

I also just added some Freeport-McMoRan (FCX) because it is another HUGE loser.... and cut it's dividend to ZERO... it's also down at $12... and for $100K I'll take that flier.

[Vince@Meanstreets]

Thanks to you and this thread my kids will have a nice chunk to deal with when they are of age. Great dividend reinvestment strategy and diverse portfolio is the key!! :captain1: Thanks Greg!

One thing I have learned is don't worry about the ups and downs. With dividend reinvestment if you are down you just get more bang for the buck and if you are up, you are up. Win Win if you ask me.

[toy71camaro]

I've been long silent as well here. But I still stop in each morning to check for any new comments.

Greg, hope your health issues are quick to recover. Let us know if there is anything we can do to help.

Vince, I agree with that last sentence. Man I love seeing those dividends keep on working for me.


Now, I've got some things to ponder. We close sale of our house Tuesday, and start our purchase for our new house. We're downsizing for now, and will be able to drop up to 40% of the purchase price on the new house. Thanks to the gains from the old. But i think we're gonna do 20% and then use some of that cash to do some remodels and even increase the investments some. Cross our fingers it all goes well!

[WSSix]

Good for you, Albert and Vince. Glad to hear the success stories.

Stay strong, Greg.

My oil stocks are starting to pay off with the rebound. I'm still deeply red with OXY and KMI. However, my purchases from earlier this year are doing great. So I'm steadily marching back to green. I had an OXY spin off called CRC that split 10:1 earlier this year which was very nice to see as well since it was sort of given to me. My steady eddies are doing what I bought them to do.

In short, patience is working well for me. Just wish I had bought more of everything when it was down, lol. Hindsight's always 20/20.

[So Cal Camaro]

Right now I would be careful with new positions in stocks other than drip into positions, at the current valuation of this market I personally am profit taking some of the bigger winners and will watch for a pullback that appears to be coming in the near future just based on past experience...

[XLexusTech]

Right now I would be careful with new positions in stocks other than drip into positions, at the current valuation of this market I personally am profit taking some of the bigger winners and will watch for a pullback that appears to be coming in the near future just based on past experience...
+1 on that plus November elections could hurt... What I am doing is selling off profits that are not subject to any short term gains tax (any is strong... I have a few at +100% that I Am going to take advantage of) will buy back on the correction ...

[GregWeld]

Right now I would be careful with new positions in stocks other than drip into positions, at the current valuation of this market I personally am profit taking some of the bigger winners and will watch for a pullback that appears to be coming in the near future just based on past experience...




Donnie..... We've discussed "trying to time" the market for a couple years here now in this thread.

A couple of things come to mind when I read statements such as yours.

#1 - Lets examine the origin of statements such as "wait for a pullback".

Doing this is smart if a guy is trading 10's of 1000's of dollars - and is on top of his game daily or weekly etc.

But what does this say to a guy that is going to save up $1,000 and buy 30 shares of GM. If the shares "pull back" $1.50 he'd save $45.... but he might forget the cash is sitting there and loose out on the next move up.


#2 - This throws out every thought process which says you're an "INVESTOR" and believe in the long term viability of the market(s) - because that "mentality" is training someone to try to catch a bargain - vs - just invest for the long haul and forget about trying to bend over to pick up pennies.

Now --- I'm not slamming your statement. Nor am I slamming what you are feeling as stated etc. I'm just trying to put in to perspective - statements such as this.

For ME personally -- when I'm buying $100 - $500 or 1MM in a name.... yeah - I try to pick off the buys on down days - but that's just a game really isn't it. Because I'm really not after trying to make .50 a share..... I'm trying to make 100% over the next FIVE years... That's where my focus is.

[So Cal Camaro]

Greg, I am an investor, but I want good value for a stock I am purchasing or holding and when that stock becomes overvalued, it is ridiculous to say that taking some profits off the table to wait for a pullback is a bad idea. I also have a list of stocks I would like to own and prices I would pay for the given stock, only when appropriate valuation is there will I buy them.

What you seem to be preaching here is buy whenever you have the money, that is a good way to fall into the usual main street investor trap of buying too high. If that's what people want to do, then more power to them, but just like looking for the best deal on car parts, or whatever, I am going to do the same when buying stocks.

[WSSix]

You're both correct. There's a balance that must be achieved in my opinion. Is it something that can be or should be discussed in Investing 102? I don't know. I think not as it can get very deep quickly but at the same time it could be. I think it should definitely be something think about a little.

What I believe Greg was alluding to in terms of waiting can be illustrated with JNJ. I've been reading people say it's overvalued and overpriced all year and to wait for a pull back. Maybe they will be right. They've been very wrong all year. So what do you do as a long term investor? Wait for a day that never comes? Temper your pull back/entry level expectations? Get in now on a good stock and not worry about short term dips and bubbles? Balance. It's going to be different for everyone.

[SSLance]

I tried to do the old "what I think a stock should be valued at" trick for years, sometimes I got pretty lucky and did very well, other times I had my arse handed to me.

What I discovered is there are way too many other forces out there affecting the value of said stock, some of which made no sense whatsoever.

I 100% prefer this dividend stock investing program we have going on here. I don't worry about my stock holdings when they are 30% down in in asset value and I don't worry about them when they are 30% up in value either. The not worrying part is priceless to me.

[68Cuda]

You're both correct. There's a balance that must be achieved in my opinion. Is it something that can be or should be discussed in Investing 102? I don't know. I think not as it can get very deep quickly but at the same time it could be. I think it should definitely be something think about a little.

My personal approach - input welcome -

I have a half dozen or so stocks that I have researched that I fundamentally like that I would not mind owning in addition to my current holdings. I have money that goes into the retirement account with each paycheck. Once the cash has built up to a comfortable level I look at the dividend payout % and 52 week high / low of the stocks on my list. I also look at my current holdings and consider if I want to increase any of them. I don't like to have any individual carry too high a percentage of the whole. I weigh the price / dividend rate, and etcetera then choose the one that I like the best at that moment and then buy. I rarely sell anything anymore. And I don't buy anything that pays less than 3% dividend.

Like I said, this is my approach, and it has worked pretty well for me.

My purchasing strategy is similar to the "Dogs of the Dow" method. The "Dogs" method only considers DOW and you simply pick the highest dividend rate stocks. Differences include that I rarely rebalance or sell, I do not limit myself to the DOW stocks, and I try not to build too much of the same sector stocks. For example, I only own one oil stock.

[WSSix]

Sounds reasonable to me, Michael. If you're ok with it and are producing the results you like, then keep at it. Only thing I would recommend is consider total returns and not just dividend payout as part of your research. Costco has been working well for me and Halliburton has too. They both are well below 3% dividend.

Good luck!

[GregWeld]

Sounds reasonable to me, Michael. If you're ok with it and are producing the results you like, then keep at it. Only thing I would recommend is consider total returns and not just dividend payout as part of your research. Costco has been working well for me and Halliburton has too. They both are well below 3% dividend.

Good luck!



VERY CRITICAL --- TOTAL RETURN.... it IS the measure of money making.

[avewhtboy]

No rate hike just announced this is great for the div stocks.

Utlilities and Telecom been in favor ever since Brexit trend could continue into next year given the political climate world wide.

Until they start raising interest rate.

[captainofiron]

Havent posted in a while, but I wanted to thank all the posters on here.

My Rollover IRA has been kicking butt in the past year. Im up 22% since rolling over (taking into account the dividends and reinvesting into my positions).

Right now I am accumulating dividends to make more significant buys and take less of a "hit" on the commission.

BUT how much cash on hand is too much?

Would it be smart to put that free cash into a low fee mutual fund so its not just sitting there earning 0.00000001% (exaggerating) interest?

[dhutton]

Havent posted in a while, but I wanted to thank all the posters on here.

My Rollover IRA has been kicking butt in the past year. Im up 22% since rolling over (taking into account the dividends and reinvesting into my positions).

Right now I am accumulating dividends to make more significant buys and take less of a "hit" on the commission.

BUT how much cash on hand is too much?

Would it be smart to put that free cash into a low fee mutual fund so its not just sitting there earning 0.00000001% (exaggerating) interest?

Are you paying a percent commission on trades in your IRA? Or is it a flat fee? No way I would pay a percent commission. I'd move my IRA.

Don

[captainofiron]

Are you paying a percent commission on trades in your IRA? Or is it a flat fee? No way I would pay a percent commission. I'd move my IRA.

Don

no its a flat rate (Fidelity).

what I was saying is I like to make as large of a purchase/sale for each transaction so I only pay the $8 fee as little as possible.

[dhutton]

no its a flat rate (Fidelity).

what I was saying is I like to make as large of a purchase/sale for each transaction so I only pay the $8 fee as little as possible.

Can't you select to have the dividends reinvested automatically and avoid fees altogether? I can in my Fidelity 401k.

Don

[MtotheIKEo]

no its a flat rate (Fidelity).

what I was saying is I like to make as large of a purchase/sale for each transaction so I only pay the $8 fee as little as possible.

Exactly what DHutton said, you should be able to reinvest dividends for no fee. It is typically referred to as DRIP (dividend re-investment plan) and it will purchase as many shares as possible at market value when dividends are received, even fractions of a share.

Read the link below...
https://401k.fidelity.com/static/dcl/shared/documents/StockPlanServices/SPS_Generic_Dividend_Reinvestment_Domestic.pdf

[jkp41]

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!

[captainofiron]

Can't you select to have the dividends reinvested automatically and avoid fees altogether? I can in my Fidelity 401k.

Don
Exactly what DHutton said, you should be able to reinvest dividends for no fee. It is typically referred to as DRIP (dividend re-investment plan) and it will purchase as many shares as possible at market value when dividends are received, even fractions of a share.

Read the link below...
https://401k.fidelity.com/static/dcl/shared/documents/StockPlanServices/SPS_Generic_Dividend_Reinvestment_Domestic.pdf

http://m.c.lnkd.licdn.com/mpr/mpr/p/1/005/057/043/3db1d0f.jpg
AWESOME
Thanks guys, I did not know this was a no-cost option in my IRA. For some reason I had the idea in my head that if I did this they would charge me the purchase fee

[GregWeld]

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!




Kenny - WELCOME!

I'm on a road trip and posting is difficult and I want to be able to give thought to a response... so give me a few days to whip something up. In the meantime - hopefully others will see your post.

[ErikLS2]

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!

Here's my 2 cents worth, but remember it's free and you get what you pay for:D

1) Personally I think you're too young and 23 yrs out at least is too long to even worry about bonds in my opinion. T pays more than most bonds just in it's dividend.

2) See answer 1 but I would favor strong companies you are comfortable with that have taken a dip based more on overall market conditions than their own individual fundamentals. Scaling in, or "dollar cost averaging" is never a bad idea. Also, read this article: http://www.marketwatch.com/story/how-missing-out-on-25-days-in-the-stock-market-over-45-years-costs-you-dearly-2016-01-25

3) Personally, I've learned to always have some cash on hand for when we have these sudden dips that really aren't based on much of anything concrete. I don't use it but HYG is a popular bond ETF for storing cash, it's not the most conservative though nor without risk. On the conservative side, T-Bills may or may not do much for you, depending on how much cash you are parking, to even be worth the trouble, but they are safe.

4) Max out any free money company match 1st, then max out Roth contributions, then go back to 403b and max that out (like most plans, it probably doesn't have very many or very good choices).

BTW, changing jobs is a perfect opportunity to swap out of a limited set of poor choices in a 401k and into a Rollover IRA with unlimited choices without paying a penalty. That was a great move and most people don't even know they can do this. My company was sold and I didn't change jobs but it allowed me to do this too!

You're just fine tuning at this point so don't lose any sleep, you're doing it right! Good luck!

[YAMATHUMP]

I am a long time lurker on this thread, and I just wanted to take the time to say thank you to all who have posted. It is funny how some of the most solid investing advice I have seen has been on a "car forum". LOL Another thing that's funny is how you go from "gambling" to "investing" and you feel so much more secure.
You know I wish I knew at 20 what I know now.......and I have always saved money, just sometimes made bad investment decisions (some good too!) Any how, I hope everyone who reads this thread gets out of it what I have! Thanks again and keep up the good work!
Brad

[WSSix]

Welcome Kenny. Erik pretty said everything I would have. You're smart to be doing this now. Keep up the good work. The only thing I would recommend is to further diversify. If you can continue to purchase more shares of what you own and diversify at the same time, great! If not, I'd lean towards diversifying as a priority over expanding current selections. Keep your eyes on your current selections though for any dips. Jumping in during dips isn't necessary but it's great when you can.

Glad you're getting a lot out of this thread, Brad. Good luck to you.

[jkp41]

Here's my 2 cents worth, but remember it's free and you get what you pay for:D

1) Personally I think you're too young and 23 yrs out at least is too long to even worry about bonds in my opinion. T pays more than most bonds just in it's dividend.

That's what I was thinking, but I thought I'd double check. As I said, this is much more money than I am used to managing by myself.

2) See answer 1 but I would favor strong companies you are comfortable with that have taken a dip based more on overall market conditions than their own individual fundamentals. Scaling in, or "dollar cost averaging" is never a bad idea. Also, read this article: http://www.marketwatch.com/story/how-missing-out-on-25-days-in-the-stock-market-over-45-years-costs-you-dearly-2016-01-25

So how many positions would you look at in total with this amount of money to get a good diversification? I was thinking 10-15 positions total, but it definitely isn't set in stone.

And for scaling in, do you typically start with purchasing half of the position that you'd like and going from there?

3) Personally, I've learned to always have some cash on hand for when we have these sudden dips that really aren't based on much of anything concrete. I don't use it but HYG is a popular bond ETF for storing cash, it's not the most conservative though nor without risk. On the conservative side, T-Bills may or may not do much for you, depending on how much cash you are parking, to even be worth the trouble, but they are safe.

With the relatively low interest rates in bonds, would it be worth keeping money there or in cash over the month or months as I am putting the money into stocks.

4) Max out any free money company match 1st, then max out Roth contributions, then go back to 403b and max that out (like most plans, it probably doesn't have very many or very good choices).

That's what I was thinking.

BTW, changing jobs is a perfect opportunity to swap out of a limited set of poor choices in a 401k and into a Rollover IRA with unlimited choices without paying a penalty. That was a great move and most people don't even know they can do this. My company was sold and I didn't change jobs but it allowed me to do this too!

You're just fine tuning at this point so don't lose any sleep, you're doing it right! Good luck!

I have been watching this thread for around 3 years. It is what got me into investing and paying attention to my retirement. Any ideas that I have were heavily influenced by what I read here. I feel like I'm on a much better retirement path than I was a few years ago. I really appreciate the wealth of knowledge that has been shared here.

[jkp41]

Welcome Kenny. Erik pretty said everything I would have. You're smart to be doing this now. Keep up the good work. The only thing I would recommend is to further diversify. If you can continue to purchase more shares of what you own and diversify at the same time, great! If not, I'd lean towards diversifying as a priority over expanding current selections. Keep your eyes on your current selections though for any dips. Jumping in during dips isn't necessary but it's great when you can.

Thanks, Trey! I'm planning on using this as a chance to reevaluate several of the positions that I have. Some will be expanded and others may be eliminated completely. And as for dips, I am curious as to how the election will affect the market. That has been on my mind as well since it will probably happen around the time that the account transfer finalizes.

[ErikLS2]

I have been watching this thread for around 3 years. It is what got me into investing and paying attention to my retirement. Any ideas that I have were heavily influenced by what I read here. I feel like I'm on a much better retirement path than I was a few years ago. I really appreciate the wealth of knowledge that has been shared here.


1) Personally I think you're too young and 23 yrs out at least is too long to even worry about bonds in my opinion. T pays more than most bonds just in it's dividend.

That's what I was thinking, but I thought I'd double check. As I said, this is much more money than I am used to managing by myself.

2) See answer 1 but I would favor strong companies you are comfortable with that have taken a dip based more on overall market conditions than their own individual fundamentals. Scaling in, or "dollar cost averaging" is never a bad idea. Also, read this article: http://www.marketwatch.com/story/how...rly-2016-01-25

So how many positions would you look at in total with this amount of money to get a good diversification? I was thinking 10-15 positions total, but it definitely isn't set in stone.

And for scaling in, do you typically start with purchasing half of the position that you'd like and going from there?

3) Personally, I've learned to always have some cash on hand for when we have these sudden dips that really aren't based on much of anything concrete. I don't use it but HYG is a popular bond ETF for storing cash, it's not the most conservative though nor without risk. On the conservative side, T-Bills may or may not do much for you, depending on how much cash you are parking, to even be worth the trouble, but they are safe.

With the relatively low interest rates in bonds, would it be worth keeping money there or in cash over the month or months as I am putting the money into stocks.

4) Max out any free money company match 1st, then max out Roth contributions, then go back to 403b and max that out (like most plans, it probably doesn't have very many or very good choices).

That's what I was thinking.

BTW, changing jobs is a perfect opportunity to swap out of a limited set of poor choices in a 401k and into a Rollover IRA with unlimited choices without paying a penalty. That was a great move and most people don't even know they can do this. My company was sold and I didn't change jobs but it allowed me to do this too!

You're just fine tuning at this point so don't lose any sleep, you're doing it right! Good luck!

It's not as much about the number of positions but what percentage of your total you have in each one and what your comfortable with. Look at what happened to Hain Celestial today. I like the rule of never having more than 5-10% of your total in any one name, but keep in mind that the market is basically run by ETF's now, the individual investor doesn't buy enough to have any significant impact really on stock prices compared to ETFs. What that means is that when things go down, most of everything usually goes down at least in a given sector, the good with the bad (temporarily). Your job is to find and separate the good companies from the bad ones and buy at these times if possible.

Another thing to remember is you should be reading earnings reports, listening to conference calls, etc when they come out, gets to be too much if you have too many names.

While it's a generally considered good idea I don't typically scale in personally. If I like something and it's a bit down I'll buy some. With things at all time highs right now I'm not sure this is the time to buy but what do I know, could go much higher from here or crash tomorrow. I do think it's a very good sign we are finally above the highs of 1999-2000 at a much lower P/E.

I don't know enough about bonds to really comment. All I can say is Money magazine has something called the Money 50. Their 50 best stock and bond funds/ETFs. Here are a few from their bond list that I recognize and you can research:

DODIX
FTBFX
VFSTX
VWITX (tax exempt)

[GregWeld]

I have been watching this thread for around 3 years. It is what got me into investing and paying attention to my retirement. Any ideas that I have were heavily influenced by what I read here. I feel like I'm on a much better retirement path than I was a few years ago. I really appreciate the wealth of knowledge that has been shared here.




YOU just made MY day buddy!!


Stick to it -- good market and bad -- buy more in bad market conditions -- then hang on.....


You'll live to appreciate your efforts!

[GregWeld]

I am a long time lurker on this thread, and I just wanted to take the time to say thank you to all who have posted. It is funny how some of the most solid investing advice I have seen has been on a "car forum". LOL Another thing that's funny is how you go from "gambling" to "investing" and you feel so much more secure.
You know I wish I knew at 20 what I know now.......and I have always saved money, just sometimes made bad investment decisions (some good too!) Any how, I hope everyone who reads this thread gets out of it what I have! Thanks again and keep up the good work!
Brad





Brad! So easy a five year old can do it! In fact -- we should all START by putting money away for our five year olds! College is coming!


So happy you've gotten some nuggets you can use to help yourself to a better life! Yippppppeeeeeeeeeee

[captainofiron]

I have a pretty significant chunk of my portfolio in Lowes, and today they missed so they are down ~$5

I have a reasonable chunk of cash sitting (from being an idiot and not using the dividends reinvestment option), but I am really nervous about putting money into them on a dip, given that it has kicked me down hard when I did this the past couple years with COP and STX

Any thoughts?

[GregWeld]

I have a pretty significant chunk of my portfolio in Lowes, and today they missed so they are down ~$5

I have a reasonable chunk of cash sitting (from being an idiot and not using the dividends reinvestment option), but I am really nervous about putting money into them on a dip, given that it has kicked me down hard when I did this the past couple years with COP and STX

Any thoughts?





The very best time to buy is when the market is DOWN not UP.


Having said that --- even when you have a bucket of money --- it's hard to follow this simple advice. I get it.


Whenever you get nervous..... GO TO THE CHARTS!!! Stretch 'em out ---- DO YOU NOT SEE THAT THEY'RE LOWER ON THE LEFT SIDE AND HIGHER ON THE RIGHT??


Now -- be a smart guy and pull up a comparo chart of Home Depot (HD) and Lowe's (LOW).... Personally I've always liked HD better. Lowe's - to me - is too "Chinese imports for the housewife" kind of a store.


How many years do you have before you actually retire --- and then --- wait for it --- how many years do you plan to live after retirement?? My guess is - no matter how many dips the market takes - it'll be higher in the long run.

[captainofiron]

The very best time to buy is when the market is DOWN not UP.


Having said that --- even when you have a bucket of money --- it's hard to follow this simple advice. I get it.


Whenever you get nervous..... GO TO THE CHARTS!!! Stretch 'em out ---- DO YOU NOT SEE THAT THEY'RE LOWER ON THE LEFT SIDE AND HIGHER ON THE RIGHT??


Now -- be a smart guy and pull up a comparo chart of Home Depot (HD) and Lowe's (LOW).... Personally I've always liked HD better. Lowe's - to me - is too "Chinese imports for the housewife" kind of a store.


How many years do you have before you actually retire --- and then --- wait for it --- how many years do you plan to live after retirement?? My guess is - no matter how many dips the market takes - it'll be higher in the long run.

Greg you are the man.

I bought lowes at the time because it was worth half of what HD was, and it has really paid off. I have shopped at both, and I understand exactly what you say about contractor style of Home Depot vs housewife faux-renovation style of Lowes, BUT both are always packed everytime I go into one, PLUS the Lowes is easier to get to for me, haha

Im gonna take a look at the comparison, last time I looked they were pretty neck and neck for the past few years.

[GregWeld]

Greg you are the man.

I bought lowes at the time because it was worth half of what HD was, and it has really paid off. I have shopped at both, and I understand exactly what you say about contractor style of Home Depot vs housewife faux-renovation style of Lowes, BUT both are always packed everytime I go into one, PLUS the Lowes is easier to get to for me, haha

Im gonna take a look at the comparison, last time I looked they were pretty neck and neck for the past few years.




I agree they are so similar that they're hard to differentiate.... like Verizon and AT&T... just close your eyes and toss a dart. LOL



And like I've always said ---- buy the one YOU like! And where YOU shop! That way you'll see any changes with your own eyes.

[WSSix]

Or, do like I did when I couldn't decide which industry giant to choose from and buy both. That's why I own both T and VZ. They both are doing well for me. I'm probably going to buy Nike and UnderArmor soon, too, because yet again, I can't decide which one to choose.

[captainofiron]

Or, do like I did when I couldn't decide which industry giant to choose from and buy both. That's why I own both T and VZ. They both are doing well for me. I'm probably going to buy Nike and UnderArmor soon, too, because yet again, I can't decide which one to choose.

Thats not a bad idea.

speaking of Nike and Underarmor, I am really really REALLY kicking myself for not investing in Adidas at the end of 2014.

it was in the mid 30s and is now sitting at mid 70s

I ended up buying KO instead...

oh well, I keep telling myself its long term, Im not trading WOOSAH

[GregWeld]

It will be interesting to have you all be "on board" here long enough -- that you will be witnessing "MATERIAL CHANGE" to McDonalds (MCD) with yet another U.S. CEO change at year end.


MCD was horrible -- they did a corporate CEO change and BAM! The stock, sales, etc went up and all was good...

The U.S. CEO is retiring and we'll have to see what happens on his watch.

My take?? I never like to stand in a tunnel when I see a headlight... I prefer to step aside - watch whatever - and then re-asses. Particularly if I have a nice gain in the name. Nobody ever goes broke taking a profit..... is my theory there. It's had a nice run.... so does the new guy make it run even more? Who knows? And that's why I prefer to stand aside.

[So Cal Camaro]

It will be interesting to have you all be "on board" here long enough -- that you will be witnessing "MATERIAL CHANGE" to McDonalds (MCD) with yet another U.S. CEO change at year end.


MCD was horrible -- they did a corporate CEO change and BAM! The stock, sales, etc went up and all was good...

The U.S. CEO is retiring and we'll have to see what happens on his watch.

My take?? I never like to stand in a tunnel when I see a headlight... I prefer to step aside - watch whatever - and then re-asses. Particularly if I have a nice gain in the name. Nobody ever goes broke taking a profit..... is my theory there. It's had a nice run.... so does the new guy make it run even more? Who knows? And that's why I prefer to stand aside.

Interesting, when you take profits its noble, to step aside and wait to see what happens, but when I propose essentially the same thing you are stating here, I'm trying to time the market...please explain?

[GregWeld]

Interesting, when you take profits its noble, to step aside and wait to see what happens, but when I propose essentially the same thing you are stating here, I'm trying to time the market...please explain?




Huge difference between Timing the market and FUNDAMENTAL or MATERIAL CHANGE.

Change being the difference.

Trying to TIME the market is sitting on the sidelines - or being invested - and then just trying to wait for the price to dip a buck -- or for it to go up and buck etc....

What happens when you're trying to time the market is you'll miss a move or moves trying to be "cute" with what will amount to very small potatoes. Bending over to pick up a dime.

Now -- Let's take MCD --- back before they made a HUGE FUNDAMENTAL CHANGE with the CEO (corporate) the stock was under $100 and maybe even was flirting with low $90's.... now -- it's had a sweet run UP to $131 and now it's pulling back to the low $115's. So if you've held over a year and one day - there's a 20% long term capital gains tax to be paid... but a very nice gain too!

Now -- My writings here have always been about WHAT TO THINK ABOUT --- not what to do. That's up to people to decide on their own.

Remember what I was really talking about was to beware and aware of FUNDAMENTAL CHANGES in your holdings -- sometimes that is a good thing and sometimes you get eaten alive.

This is more about HEADS UP!! THINK ABOUT IT! BE AWARE!

If you have 5 or 10 shares in your IRA/401K -- then you don't do anything because this is a good long term name you shouldn't worry about TOO MUCH.... but the fast food game has been in some disarray in the last few years so it's not the buy and hold forever game it used to be. Coke has some serious competition with new style drinks - Fast food has it's challenges...

[GregWeld]

Or, do like I did when I couldn't decide which industry giant to choose from and buy both. That's why I own both T and VZ. They both are doing well for me. I'm probably going to buy Nike and UnderArmor soon, too, because yet again, I can't decide which one to choose.

THere's nothing wrong with doing that at all.... as long as you are well diversified!

I often will hold two or more of the same type company - such as T and VZ - or JNK and HYG - or F and GM... or MO and PM.

[ErikLS2]

- Fast food has it's challenges...

I hadn't seen the CEO was retiring. I thought about buying some when it was down but didn't think any CEO could get them past the declining interest in unhealthy fast food, but he did. All day breakfast probably had a lot to do with it, which I can't understand at all. Chance of that happening a second time though?? Prolly not.

[Sieg]

I came across a dated article that I felt was good food for thought read in this thread. GW if you don't approve I'll bleach it.

It's New! It's Nifty! It's The Dividend Growth 50!
Dec. 17, 2014 9:19 PM ET|1031 comments | Includes: AAPL, ADP, AFL, BAX, BDX, CAT, CL, CLX, COP, CVX, D, DE, EMR, GE, GIS, GPC, HCP, HSY, IBM, JNJ, KHC, KMB, KMI, KO, LMT, MCD, MKC, MMM, MO, MSFT, NEE, O, OHI, PEP, PG, PM, QCOM, SBUX, SJM, SO, SPY, T, TGT, UTX, V, VDIGX, VIG, VOO, VZ, WBA, WEC, WFC, WMT, XOM
Mike Nadel Mike NadelFollow(8,603 followers)
Long-term horizon, dividend growth investing
Send Message
Summary

The erstwhile New Nifty Fifty has a new name that is more meaningful and accurate.

A $25K, real-money, equal-weight DG50 portfolio has been established and will be tracked over time.

The plan is to reinvest all dividends, but otherwise do no buying or selling, so the overall portfolio's progress can be charted accurately.

First things first: I am no longer calling this collection of carefully selected Dividend Growth companies the "New Nifty Fifty." The more I thought about that name, the less I liked it. For one thing, I borrowed the moniker from a long-ago list that means little today. Mostly, though, the name told us little about this current group of quality income growers.

So, ladies and gentlemen, I present the Dividend Growth 50.

And along with the new name, I am introducing an exciting new project: a real portfolio with 50 real positions bought in real-time with real money.

Where It All Began

Before we get to the portfolio's particulars, let's quickly revisit the genesis of the DG50.

Back in September, I wrote an article about the original Nifty Fifty of the 1970s. Its thesis was that as flawed as the group of companies was, buy-and-hold investors would have become multi-millionaires. While dealing with the nearly 700 comments the article received, I grew intrigued by the idea of establishing a more modern version. And since I am a proponent of Dividend Growth Investing, I wanted a list with a DGI focus.

I didn't want the list to be purely my opinion, so I sought inputs from 10 respected Seeking Alpha voices: Chowder, David Crosetti, David Fish, Eli Inkrot, Eric Landis, Tim McAleenan, Miz Magic DiviDogs, Scott U, David Van Knapp and Bob Wells. Each provided his/her list of 50 companies, and once the votes were tallied, a consensus was formed.

The New Nifty Fifty debuted in an Oct. 15 article, which turned out to be the most popular piece I've written for this site. I followed with Part 2, featuring each panelist's top 10 picks. In Part 3, I revealed my own choices. The series has drawn more than 83,000 page views and 1,300 comments, and it has been the centerpiece of numerous other Seeking Alpha studies.

Debates Aplenty

Most recently, Chuck Carnevale and Minutemen used extensive back-testing in comparing the New Nifty Fifty to the Vanguard Dividend Growth Fund Inv (MUTF:VDIGX), which fellow Seeking Alpha contributor Dale Roberts repeatedly claimed to be superior. The historic performance of the "Nifties" also has been compared to that of the S&P 500 (NYSEARCA:SPY). There have been many comment stream discussions, some rather heated, about the merits of DGI vs. indexing and individual stocks vs. funds.

Back-testing can be useful because history often provides clues about the future. For instance, a high-quality, deep-moat company that has been raising dividends for decades is likely - not guaranteed, but likely - to continue increasing dividends while flourishing as a business.

Still, only by "forward-testing" can we make true judgments and avoid charges of survivorship bias.

Which brings us to the Dividend Growth 50, and the roughly $25,000 I have invested in it:

COMPANY SYMBOL SH PRICE VALUE DIV. YLD. INC.
3M (NYSE:MMM)
3 161.27 483.81 4.01 2.5 12.03
AFLAC (NYSE:AFL)
8 58.34 466.72 1.56 2.7 12.48
Altria (NYSE:MO)
10 50.28 502.80 2.08 4.1 20.80
Apple(NASDAQ:AAPL)
5 109.28 546.40 1.88 1.7 9.40
AT&T (NYSE:T)
15 32.60 489.00 1.84 5.6 27.60
Automatic Data Processing (NASDAQ:ADP)
6 83.25 499.50 1.96 2.4 11.76
Baxter International (NYSE:BAX)
7 71.73 502.11 2.08 2.9 14.56
Becton, Dickinson (NYSE:BDX)
4 135.42 541.68 2.40 1.8 9.60
Caterpillar (NYSE:CAT)
5 90.60 453.00 2.80 3.1 14.00
Chevron (NYSE:CVX)
5 103.23 516.15 4.28 4.1 21.40
Clorox (NYSE:CLX)
5 99.93 499.65 2.96 3.0 14.80
Coca-Cola (NYSE:KO)
12 40.98 491.76 1.22 3.0 14.64
Colgate-Palmolive (NYSE:CL)
7 68.30 478.10 1.44 2.1 10.08
ConocoPhillips (NYSE:COP)
8 64.47 515.76 2.92 4.5 23.36
Deere (NYSE-DE)
6 89.61 537.66 2.40 2.7 14.40
Dominion Resources (NYSE-D)
7 72.38 506.66 2.40 3.3 16.80
Emerson Electric (NYSE:EMR)
8 60.37 482.96 1.88 3.1 15.04
ExxonMobil (NYSE:XOM)
6 88.88 533.28 2.76 3.1 16.56
General Electric (NYSE:GE)
20 25.05 501.00 0.92 3.7 18.40
General Mills (NYSE:GIS)
10 52.00 520.00 1.64 3.2 16.40
Genuine Parts (NYSE:GPC)
5 103.49 517.45 2.30 2.2 11.50
HCP (NYSE:HCP)
11 44.93 494.23 2.18 4.9 23.98
Hershey (NYSE:HSY)
5 98.86 494.30 2.14 2.2 10.70
IBM (NYSE:IBM)
3 153.59 460.77 4.40 2.9 13.20
J.M. Smucker (NYSE:SJM)
5 99.59 497.95 2.56 2.6 12.80
Johnson & Johnson (NYSE:JNJ)
5 104.48 522.40 2.80 2.7 14.00
Kimberly-Clark (NYSE:KMB)
4 113.77 455.08 3.36 3.0 13.44
Kinder Morgan (NYSE:KMI)
13 38.87 505.31 1.76 4.5 22.88
Kraft Foods (KRFT)
8 59.94 479.52 2.20 3.7 17.60
Lockheed Martin (NYSE:LMT)
3 186.59 559.77 6.00 3.2 18.00
McCormick (NYSE:MKC)
7 73.18 512.26 1.60 2.2 11.20
McDonald's (NYSE:MCD)
5 90.15 450.75 3.40 3.8 17.00
Microsoft (NASDAQ:MSFT)
11 46.06 506.66 1.24 2.7 13.64
NextEra Energy (NYSE:NEE)
5 102.36 511.80 2.90 2.8 14.50
Omega Healthcare (NYSE:OHI)
13 38.30 497.90 2.08 5.4 27.04
PepsiCo (NYSE-PEP)
5 94.79 473.95 2.62 2.8 13.10
Philip Morris (NYSE-PM)
6 82.68 496.08 4.00 4.8 24.00
Procter & Gamble (NYSE-PG)
6 90.41 542.46 2.57 2.8 15.42
Qualcomm (NASDAQ:QCOM)
7 71.11 497.77 1.68 2.4 11.76
Realty Income (NYSE:O)
11 46.50 511.50 2.20 4.7 24.20
Southern Company (NYSE:SO)
10 48.22 482.20 2.10 4.4 21.00
Starbucks (NASDAQ:SBUX)
6 81.04 486.24 1.28 1.6 7.68
Target (NYSE:TGT)
7 73.07 511.49 2.08 2.8 14.56
United Technologies Corp. (NYSE:UTX)
4 114.56 458.24 2.36 2.1 9.44
Verizon (NYSE:VZ)
11 46.39 510.29 2.20 4.7 24.20
Visa (NYSE:V)
2 257.83 515.66 1.92 0.7 3.84
Walgreen (WAG)
7 73.40 513.80 1.35 1.8 9.45
Wal-Mart (NYSE:WMT)
6 84.53 507.18 1.92 2.3 11.52
Wells Fargo (NYSE:WFC)
9 53.67 483.03 1.40 2.6 12.60
Wisconsin Energy (NYSE:WEC)
10 50.59 505.90 1.69 3.3 16.90

TOTALS 25029.94 3.1 775.26


(KEY: SH is the number of shares bought; PRICE is the price paid per share; VALUE is the value of each position at time of purchase; DIV. is annual dividend in dollars; YLD. is dividend yield percentage; INC. is annual income at the current dividend rate. All data is as of purchase date: 12/16/14.)

As you see in the table, I bought about $500 worth of each DG50 company. I did not have to pay sales commissions, because I was given 50 free trades as an incentive to move the money to Fidelity. (Several major brokerages offer such inducements.)

[Sieg]

Building The DG50 Portfolio

We all have seen sentences such as this one: "A $100 investment in Wal-Mart 40 years ago would be worth $829,600 today." While technically accurate, the reality is that nobody invested $100 in WMT or any other company in 1974. Back then, brokers required purchases in 100-share lots, and commissions alone could approach $100.

Besides, a precise $100 investment would have required that a stock trade in multiples of $10. That rarely happened in 1974... and it still rarely happens, which is why not a single DG50 position cost exactly $500 to buy.

Most of the positions filled within $20 of $500. The largest outlay was $559.77 for three shares of Lockheed Martin; the smallest was $450.75 for five shares of McDonald's.

While the primary purpose of this project is to see how the overall income stream grows over time, many readers love to make total-return comparisons. So I also spent $552.57 for three shares of Vanguard S&P 500 ETF (NYSEARCA:VOO) and $477.18 for six shares of Vanguard Dividend Appreciation ETF (NYSEARCA:VIG). Finally, I bought $5,006 worth of VDIGX, representing one-fifth of the DG50 portfolio's cost. That should allow for easy comparisons over the years.

And yes, I said "over the years." Not weeks or months or even quarters, but years.

Add it all up, and I have committed more than $31,000 toward this project. Although some might use that as proof that I should be committed, I consider it a great investment. In addition to the dividends and capital gains I will receive over time, I will benefit from the lessons this study will teach all of us.

Portfolio Rules

All income will be reinvested into the companies that paid the dividends. Otherwise, there will be absolutely no buying or selling. This will be a passive portfolio - classic buy-and-hold. (Dividends and capital gains also will be reinvested into VOO, VIG and VDIGX.)
While the portfolio starts out as close to equally weighted as possible, it will not remain that way over time, because I will not rebalance. I will let the winners run and losers languish.
In the event of a spin-off, the new company will join the DG50 as kind of a plus-1. Will I change the name if the portfolio grows to 51 or 52 companies? I doubt it; the Big Ten didn't change its name when it grew to 11 and then 12 and now 14 schools. Mergers will be handled on a case-by-case basis.
Should any companies go out of business, the value of those positions presumably would go to zero. The idea is to truly reflect the progress of these 50 companies, which the panelists deemed very high-quality.
If a company reduces or eliminates its dividend, or if its fundamentals erode, it will continue to be held. I want to see how the overall portfolio is affected by all manner of events, good and bad.
Because this portfolio is in an IRA, taxes will not be an issue until I am subject to required minimum distributions in 2031. By then, I will either have converted the portfolio to a Roth IRA to avoid RMDs or, more likely, I will have decided that 17 years was a long enough life span for this project.
Some Dividend Growth investors might say: "But this doesn't really represent how we invest. If the dividend is cut, we sell. If fundamentals change, we bail. DGI is not really buy-and-hold, but buy-and-monitor."

That would be a fair point, but every DG investor has different rules. For example, one frequent Seeking Alpha commenter who goes by the handle Buy & Hold 2012 says he has never sold one share of stock in 44 years - and his methods have helped him become wealthy. Some sell if a dividend raise doesn't meet a certain threshold. Some sell immediately if there is a cut. Some buy only companies with yields of 3% or higher. Some rebalance regularly to maintain equal-weight positions; others overweight their core holdings. Many investors would avoid buying several DG50 components now, due to overvaluation.

One of the interesting things about compiling the DG50 was seeing the panelists' various approaches. The 10 of them combined to choose 160 different companies, including several that pay no dividends at all.

So I believe it would be imprudent to establish rules that supposedly cover the way all Dividend Growth investors operate, because, in fact, there is no DGI Creed.

Conclusion

One could argue quite convincingly that this project is as much about a buy-and-hold strategy as it is about DGI - and I wouldn't argue with that argument at all. No matter how one looks at it, this multiple-year study should be fun and instructive.

Welcome to the Dividend Growth 50, folks. Let the "forward-testing" begin!

Disclosure: The author is long AAPL, ADP, AFL, BAX, BDX, CAT, CL, CLX, CVX, COP, D, DE, EMR, GE, GIS, GPC, HCP, HSY, IBM, JNJ, KMB, KMI, KO, KRFT, LMT, MCD, MKC, MMM, MO, MSFT, NEE, O, OHI, PEP, PG, PM, QCOM, SBUX, SJM, SO, T, TGT, UTX, V, VDIGX, VIG, VOO, VZ, WAG, WEC, WFC, WMT, XOM.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

[toy71camaro]

Good little read. Will have to check for their update posts as time goes on.

I've got a handful of those names in my basket too. ;)

[GregWeld]

That list is the who's who of the stock market.... and not a bad name on there either. I think there's far too many names. I've always been about being able to actually recite every investment you own and EXACTLY what they do - what return you're getting etc. Once you get up to 50 ---- that's getting pretty hard to remember. I like 20 or 25 total. But I tend to concentrate...

Will be / would be - very interesting to see how those stocks do over time - my guess is they'll do very, very well.

[SSLance]

Pretty interesting look into DGI, thanks for posting Sieg. I'm now following the author to make sure I don't miss future updates on the portfolio.

[GregWeld]

So here's CRAMERS view of the market:


"Being prepared means selling or trimming not just stocks you're indifferent to, but even the stocks you like, betting that you can buy them back at a lower level."

-Jim Cramer



Let's discuss this for the average investor. Cramer is talking to people with trader brain. He's talking to people that watch the markets move every minute of every day. THEY can TRY to time the market by capturing their gains (inducing a tax event).... sitting on the sidelines.... and waiting in the hopes that they catch the right move in their stocks. In the meantime - they miss a dividend payment.... in the meantime they'll NOT catch the bottom because they'll either be busy with LIFE -- or the market will move HUGE in one day - and they'll miss that - and then chase the market up.

My point??


I've been doing this for 30 years.... I'm trying to impart a tiny bit of what I've learned over the years. I keep huge amounts of cash on the sidelines. BUT I CAN AFFORD TO DO THAT. I'm already rich. You guys are trying to get rich or get your retirements rolling. I guarantee you're not going to get this right. And you'll create a taxable event etc.

Please don't react to every little nuance in the market.

Here's what I do during market corrections or "dips" or whatever you want to call it --- I don't sell --- I use these events to add to positions. But I have cash on the side so I don't have to sell.

[XLexusTech]

I agree but with a minor add... I stock up long positions that are long past short term gains liability... Then if I have big upsides on them (think over 75%) I may trickle some of that out and buy back during a low...

It's really 99% hold long with some opertunistic sales and buy backs... Trick I follow is to always have some of position be in hand longer tha 2 years so you can ladder . Look up CD laddering for an example




So here's CRAMERS view of the market:


"Being prepared means selling or trimming not just stocks you're indifferent to, but even the stocks you like, betting that you can buy them back at a lower level."

-Jim Cramer



Let's discuss this for the average investor. Cramer is talking to people with trader brain. He's talking to people that watch the markets move every minute of every day. THEY can TRY to time the market by capturing their gains (inducing a tax event).... sitting on the sidelines.... and waiting in the hopes that they catch the right move in their stocks. In the meantime - they miss a dividend payment.... in the meantime they'll NOT catch the bottom because they'll either be busy with LIFE -- or the market will move HUGE in one day - and they'll miss that - and then chase the market up.

My point??


I've been doing this for 30 years.... I'm trying to impart a tiny bit of what I've learned over the years. I keep huge amounts of cash on the sidelines. BUT I CAN AFFORD TO DO THAT. I'm already rich. You guys are trying to get rich or get your retirements rolling. I guarantee you're not going to get this right. And you'll create a taxable event etc.

Please don't react to every little nuance in the market.

Here's what I do during market corrections or "dips" or whatever you want to call it --- I don't sell --- I use these events to add to positions. But I have cash on the side so I don't have to sell.

[GregWeld]

Trimming PROFIT (gains) is never a bad thing to do.... particularly if you're re-investing and diversifying with those captured gains. Just remember that you're triggering a taxable event.


Now then ----- I've stated 100 times in this thread.... another overused and often stated:

"when interest rates rise the stock market dies"

In other words -- just like HOUSING PRICES will do -- when interest rates climb to some ARBITRARY RATE - at some point prices must come DOWN when Interest rates rise or they become unaffordable (on a monthly payment basis).

Stocks come down to constantly adjust the yields to reflect current (future actually) thinking. If MONEY can earn X other there -- and it's more than MONEY can earn here - people sell and move the money. Simple. There MUST BE a correlation between price paid and return on investment. EVERYONE is looking for the same thing. It's not magic!

If you're in to 3% or 4% and less dividend payers -- and you'd bought them last week --- you're going to take a hit!

But if you bought the shares months ago -- or a couple years ago -- then you're still collecting a very nice % dividend yield on YOUR COST BASIS.... and when the price of the shares drop - your reinvested dividend will buy more shares.

Now then ------------- LOOK AT YOUR COST BASIS.... compute YOUR dividend return rate..... and if the shares are UP 25% and oh gee! Heaven forbid your shares declined 4% on Friday..... Really?? You're worried about that?? If you sold now ---- and then realized you have a bunch of cash but no investments earning money --- and now you get back in -- you've just paid inflated prices for the "new" shares.

WE ARE NOT THE BIG MARKET MOVERS AND SHAKERS -- WE ARE NOT TRADERS -- WE ARE INVESTORS. We should see a market decline as opportunity to add to our nest egg.... not RUSH IN... but pay attention and tip toeing in constantly is going to serve you well years down the road.

Remember to go to the charts and stretch 'em out and look at all the squiggles in the line... oh yeah -- that's it! They represent price movement up and DOWN... but it's the general long term TREND that's important. Not todays news.

[SSLance]

Keep preaching it Brother Greg...I've bought in to DGI investing and it's true, I didn't even pay attention to my stuff last Friday. Too busy with life and all.

Big drops like that used to eat me up, not any more.

[glassman]

Lance, what does DGI mean? (funny cause my company is DublinGlassInc, but we're not public lol)

[glassman]

your reinvested dividend will buy more shares.




The hugest thing i've taken away from this thread over the last 3+ years, i had no idea otherwise, and STILL haven't heard it mentioned anywhere else on the investment stuff i follow (part time)......

[GregWeld]

Lance, what does DGI mean? (funny cause my company is DublinGlassInc, but we're not public lol)

Dividend Growth Investing

[JKnight]

The other thing to possibly keep in mind is businesses with large amounts of 'float' cash are going to make a lot of money from interest income as rates go up. So you might be able to capitalize on that while still picking up a dividend (albeit a smaller yield compared to many stocks discussed here. Think: banks and brokerage firms.

Yes, some of this is already 'priced in' on the stock, but it's worth keeping in mind if you want to invest in a financial name you like.

[Vegas69]

It's already been three years since I started investing EVERY month. It's turned into a nice sum with a reasonable gain at this point. I like the green days, but I've learned to be patient and let time be on my side. I'm still looking at 25-30 years before I plan to touch these investments. (Unless a position looks weak)

It's been fun for me to analyze and make my own moves. The natural side effect has been getting more involved with our other investments.

On the personal side, we've learned to live well below our means. That gives us the flexibility to save aggressively. In turn, that allows for more discretionary time to enjoy our lives.

In addition to saving, I think it's very important to have solid long term goals and vision. That's really what keeps you saving aggressively. It's amazing once we have a target, how often we are drawn subconsciously. I can't tell you how many times I've written down a goal and achieved it and went, wow, this really works. Many times I've nearly forgot about it, but it was ground way down in my mind. The key is to write it down, scheme and plot, and then start down the path.

[GregWeld]

It's already been three years since I started investing EVERY month. It's turned into a nice sum with a reasonable gain at this point. I like the green days, but I've learned to be patient and let time be on my side. I'm still looking at 25-30 years before I plan to touch these investments. (Unless a position looks weak)

It's been fun for me to analyze and make my own moves. The natural side effect has been getting more involved with our other investments.

On the personal side, we've learned to live well below our means. That gives us the flexibility to save aggressively. In turn, that allows for more discretionary time to enjoy our lives.

In addition to saving, I think it's very important to have solid long term goals and vision. That's really what keeps you saving aggressively. It's amazing once we have a target, how often we are drawn subconsciously. I can't tell you how many times I've written down a goal and achieved it and went, wow, this really works. Many times I've nearly forgot about it, but it was ground way down in my mind. The key is to write it down, scheme and plot, and then start down the path.





Success breeds success! It's amazing how the SNOWBALL that is patient investing -- starts to grow - and the more it grows the MORE you feel like saving and investing!! Funny how that works.

When you don't have squat -- you feel like you can never get ahead so why bother..... but once you have a small pile - you start to see how it works and the excitement takes over. If you buy one rental and it works okay -- you automatically start plotting how to get #2 and so on.

That is NOT TO SAY that every investment works out - and some go to zero - and some just do "okay" and maybe one does great. But hopefully people don't give up when they just do "okay".

[GregWeld]

#1 --- I want you guys to THINK ABOUT the amounts in dollars or volume that I am trading! I'm not trying to "save" $50..... I'm not trying to be "cute" by timing the market.... and the dollar amounts are LARGE. So the following discussion needs to be put into context. AND THESE ARE TAXABLE ACCOUNTS I deal with NOT IRA/401's Tax deferred accounts!

********************************************

I've been working with my Wells Fargo team to find some dividend investments that can be played without making the wrong "pick". One of these areas is oil... I have some big ass losses in oil and as we come up to year end -- and with my health issues.... I need to balance a couple investments and get them lined up for this years taxes and re-deployment etc....


So in that light --- I took a HUGE LOSS on Kinder Morgan Inc (KMI) and then BOUGHT Alerian MLP (AMLP).


Here's why this was done - to help you guys THINK about it.


With near 1 million dollars invested in KMI -- which used to pay a great dividend and had great growth -- but got KILLED with the sudden collapse in the oil patch - and cut the dividend to where it was paying about 2.2%

I had a loss in this name of about $300K AND I'm not earning a return on it.

Now -- I BELIEVE that this name will respond just fine as oil climbs -- but it will stay depressed right alongside oil prices. How long is that going to be? 1 more year? 3 more years? Can they go back down from here? Blah blah blah


Now --------- I invest for INCOME and growth..... remember always that we want a combo of these!! To accept 2.2% dividend - then I'd have to have strong capital growth. I assume I'm going to get neither of these - and I'm held down by other outside influences. Okay -- deal with it.

So we have the INCOME loss if I sell..... and I have a huge tax loss (2016).... and we're nearing the end of the year.

If I sell KMI -- I can not buy it back for 31 days. If I do - I invoke the "WASH SALE" rule. Which says I can't sell a stock for a loss and then buy it right back -- I must WAIT for 30 business days plus one day. In the meantime I'd lose the income and any move the market might make. WHAT TO DO??


I turned right around and BOUGHT ALERIAN MLP (AMLP) -- this is an oil patch Master Limited Partnership (don't buy these inside a IRA/401).... that holds a bunch of names in the industry... AND IT PAYS 8.79%


What this will do is to give me the income that I "lost" ----- and keeps me in the patch to capture any possible upside in that space.

********************************************



Why do all this??

Because in a RISING RATE market -- owning shares that are going to pay a small dividend -- that is NOT GOING TO ATTRACT MORE INVESTORS!! In other words --- the share price only goes up when more people want to own the shares than want to sell. You have to ask yourself -- are people going to put money into something that pays 2%.... and has a considerable risk???

Do I still LOVE KMI??? YES!! But I must MANAGE MY EMPLOYEES == and I had one million of them not doing much work!!

******************************************


I also sold all of my ALTRIA (MO) ---- why??? A HUGE GAIN!! AND A DECLINING % RETURN going forward.

The gain will offset the LOSS on taxes. Perfect timing. A net gain of ZERO.... but going forward a large net gain in income while still keeping my ability to make money on the investment SHOULD THE OIL PATCH RECOVER. I don't want to abandon this area of investment --- and in the end my plan is to MAKE BACK ALL THE MONEY I LOST on KMI --- in ALMP If and when oil prices rise.


WHY SELL MO??? Offset gains for taxes --- and I think the CURRENT high price which makes the dividend begin to pale in a rising rate market --- it starts to become a "CROWDED TRADE" --- lots of people with large gains -- and the returns for NEW BUYERS (remember we NEED THEM!) are getting pretty slim in a rising rate market. Why not trim a huge gain --- for tax purposes --- and buy it or something else and get out of the way of year end selling.


Remember --- this is HUGE MONEY TRADES --- THESE ARE MILLION DOLLAR POSITIONS...... We're not talking about guys holding 100 shares in an IRA with no tax implications (you can't offset losses with gains etc until years down the road). I'm just giving you a glimpse into the thinking that you hear on TV and read in the news about "year end tax loss harvesting" etc. THIS is what they're talking about.

[captainofiron]

Thanks for the post as always Greg,

one thing you brought up got me curious

Master Limited Partnership (don't buy these inside a IRA/401)

I never knew that and I am glad you brought it up because I read up on it and learned something new

[SSLance]

I understand your moves completely Greg, that's good planning on you and your team's part. Only question is...what are you going to do with your MO money now? :D

[GregWeld]

I understand your moves completely Greg, that's good planning on you and your team's part. Only question is...what are you going to do with your MO money now? :D



Well I WILL buy MO again -- but will (as I always do) watch it and see if some air comes out of it near year end and that will all depend on whether the FED raises rates etc before year end.

I always keep pretty large cash balances. I don't need to make a return on every nickel we have - and I like to be "fleet footed". My positions are pretty sizable - and if I get into a situation where I need to move the needle on a holding -- it takes a bit of umpf to make a difference (such as averaging down etc).

I've been adding some Glaxo Smith Kline - GSK..... and nibbling at that. I've also added some risky stuff but at very small positions -- such as Navios Marine (NAP) -- pays a huge dividend but is risky as hell. BUT ---- THERE'S ALWAYS A BUTT in the room when doing this..... so let me explain something.


If I have half a million in a position that's paying 4.77%....... and I want to boost that % just a smidgen.... I can buy a hundred grand of something like NAP that pays 15.4% and move the needle - and if I buy 150K or 200K.... well then that's a really small holding but really pays nicely. WAY TOO RISKY FOR NORMAL INVESTORS TO DO THIS KIND OF CRAP --- PLEASE DON'T TRY TO COPY --- BUT PLEASE DO USE THIS FOR *********** A WAY OF THINKING.



Just super quickie math for ya ----- 500K @ 4.77% is earning 23,850. And another 100K @ 15.4% is earning 15,400..... which makes an average on 600K @ 6.55%

[toy71camaro]

Great insight Greg.

Appreciate it!

[GregWeld]

Great insight Greg.

Appreciate it!




Thanks Albert!

I figured many on here now might be actually capable of understanding some of this investing stuff on a little higher level. I think everyone on here now gets the basics --- and maybe now that I have a little longer to live --- I'll start sprinkling in a little more of "this kind of thinking" stuff now.

[GregWeld]

You guys want to see how WRONG (if picking UPS could be considered "wrong") versus RIGHT (getting lucky and getting it spot on).....


Pull up a Google Finance chart of FEDEX (FDX) and overlay United Parcel Service (UPS) and go "ALL"....



Nuff said --- I'll let you guys take the look!

[DBasher]

Winning vs more winning! I'd imagine if a guy was well diversified and had both of these, over the years/months he could ease out of one and stack the other. (FedEx)

:thumbsup:

[GregWeld]

Winning vs more winning! I'd imagine if a guy was well diversified and had both of these, over the years/months he could ease out of one and stack the other. (FedEx)

:thumbsup:



Many times I own VZ and T -- or MO and PM -- or CVX and XOM etc....... F and GM.... because it's so hard to always pick the exact winner --- and most of these kinds of names are winners long term --- it's a matter of how much of a winner vs the other one.

[ErikLS2]

In addition to saving, I think it's very important to have solid long term goals and vision. That's really what keeps you saving aggressively. It's amazing once we have a target, how often we are drawn subconsciously. I can't tell you how many times I've written down a goal and achieved it and went, wow, this really works. Many times I've nearly forgot about it, but it was ground way down in my mind. The key is to write it down, scheme and plot, and then start down the path.

Funny thing about setting goals I've read a couple different places recently. Apparently, in studies they found that people that told other people what their goals were achieved them much less frequently than those that kept them to themselves. I love psychology, even though I am nowhere near a psychologist, but somehow telling other people causes you to lose a lot of your drive to achieve the goal. I can't explain why but when I thought about it I realized that is definitely true for me.

[Vegas69]

Let me guess, you found it on the internet? :tv_happy: Seriously, I've never read that, but I'm sure for some it's true. I could see that happening in a forced accountability situation like a job and an amiable personality. That seems like the logical place they came up with those results, in the workplace.

Motive is also a key component. As the great, late, Jim Rohn once said, "When the why gets strong, the how gets easy".

I really don't think it makes much difference for me. If I want something bad enough, I don't need someone to spur me along. I think accountability would benefit me more with goals of lower value.

[GregWeld]

I'm still out here "on the road" from the GoodGuys Hall of Fame Tour.... and haven't paid ANY attention to the market - despite actually placing a couple orders while Rudy was driving down the road at mach 2...

Today I was looking at Altria (MO) as I sold mine to offset a huge loss position I'd written about earlier here.

Here's what I want to have you think about because it is good food for thought.


MO paid a .41 cent dividend in 2012 -- just four scant years ago..... today's dividend is .61 cents per share - per quarter... AND since then (2012) it's share price has appreciated 132%

Now then..... let's fast forward your hypothetic retirement date..... out 15 years? 20? 25? What do you suppose they'll be paying "then"? And what percentage return will that look like when they're paying $1.20 per share per quarter and your cost basis in 2012 @ $27 bucks a share. And all the while back in 2012 when the share price was outrageously high P/E and the market was soaring and you were just certain you were paying the all time peak high price......


Yep - that's how ya get 'er done.

[68Cuda]

MO paid a .41 cent dividend in 2012 -- just four scant years ago..... today's dividend is .61 cents per share - per quarter... AND since then (2012) it's share price has appreciated 132%

Now then..... let's fast forward your hypothetic retirement date..... out 15 years? 20? 25? What do you suppose they'll be paying "then"? And what percentage return will that look like when they're paying $1.20 per share per quarter and your cost basis in 2012 @ $27 bucks a share. And all the while back in 2012 when the share price was outrageously high P/E and the market was soaring and you were just certain you were paying the all time peak high price......


Yep - that's how ya get 'er done.

Still have my MO... keeping it thanks! Bought it January 2012 for $28.71.

I have some cash sitting in the 401k account, I am considering GPS. It is different than my other holdings in the 401 and I think they will be doing well over the next 5-10 years.

Attached picture is my current mix. HYH is a small amount, I received it when it was spun off from Abbott I think. The remainder are each somewhere between 7-10% of the total. Any comments about GPS or my mix?

[CRCRFT78]

I really need to get back into this and start taking it a little more seriously than I have as of late.:snapout:

[JKnight]

Since Greg is the OP of this epic thread I'll address this post to him, but it applies to anyone reading.

In many ways it's a good thing that this thread goes dormant for weeks or months at a time. You've discussed how the key is to get invested in good companies and not worry about the weekly (or daily) turmoil that we see in the market. I consider the recent periods of silence in this thread to be proof that the mantra of 'time in the market, not timing the market' is working. That is one of the greatest lessons this thread has instilled.

[GregWeld]

Since Greg is the OP of this epic thread I'll address this post to him, but it applies to anyone reading.

In many ways it's a good thing that this thread goes dormant for weeks or months at a time. You've discussed how the key is to get invested in good companies and not worry about the weekly (or daily) turmoil that we see in the market. I consider the recent periods of silence in this thread to be proof that the mantra of 'time in the market, not timing the market' is working. That is one of the greatest lessons this thread has instilled.



Well.... This thread was started by WSSix (Trey) so we really should all be thanking him.

And you're absolutely correct.... The thread has ALWAYS been about great companies - dividends - and get in it to win it.

[Josh@Ridetech]

***click here to download this thread in PDF format (http://www.lateral-g.org/pdf/Lateral-g-Forums-Investing-102.pdf)***



Great thread that is going on here with alot of good info!

When I opened the thread, I accidentally clicked this link and it froze my browser up with some page about kidney cancer :lostmarbles:. Just thought I'd share that, lol.

[JKnight]

Well.... This thread was started by WSSix (Trey) so we really should all be thanking him.


Ooops! Reading comprehension fail...Props to Trey too!

[GregWeld]

Found this interesting "note" about Altria (MO) and another well known large company....

Remember - we like to keep track of fundamental changes - this isn't a fundamental change "per se".... but a significant stake in another company is something that should be at least noted but the shareholders. Will it be good going forward?? IDK - booze always sells - recession or boom times....


Just thought I'd post it is all.

http://www.wsj.com/articles/as-anheuser-busch-sabmiller-deal-closes-altria-details-impact-1476191713

[WSSix]

Great thread that is going on here with alot of good info!

When I opened the thread, I accidentally clicked this link and it froze my browser up with some page about kidney cancer :lostmarbles:. Just thought I'd share that, lol.

Well, I guess that link is no good any more. Hope your browser thawed.

[CRCRFT78]

With the upcoming election I have been hearing a lot of speculation about what may or may not happen with our economy. People saying ammo prices will skyrocket to the economy immediately tanking if Trump gets elected. What are some of your opinions about this? Are there any actions people tend to take during election years when it comes to investing that they wouldn't normally take any other years?

[MX145]

I'm curious about this as well.

[AMSOILGUY]

I obviously could be wrong but from what I've taken from this thread is you can't control the market. Long haul investing and since NOBODY knows what's going to happen I think we should make adjustments based on fundamental changes within our holdings? WELD help us lol

[Josh@Ridetech]

Well, I guess that link is no good any more. Hope your browser thawed.

It's good to go now! :D

[WSSix]

Jose, I'm not worried one way or the other honestly. I'm looking at what a company is doing, period. I don't have any speculative holdings or holdings that are some how being targeted like coal was when Obama was elected, though. Maybe, if you're into alternative/green energy investments you should be a little more concerned since they are heavily subsidized and that could change. Overall, I'm not concerned with the election.

[SSLance]

It has been a while since I have seen this discussed in here and since I'm in the throws of kicking Merrill Edge to the curb, I'm curious what everyone recommends for low cost investment accounts these days?

I'm looking to transfer 2 IRA accounts and 2 Roth IRA accounts to an institution that allows dividend reinvestment with as little to none monthly or transactions costs as possible. Like most of you I don't make that many buy or sell transactions so a small transaction fee won't be a killer...but monthly maintenance and other fees will.

I also would prefer one that plays nice with Quicken for investment tracking. With Merrill Edge for instance, the monthly dividend transactions they pay on the cash balances never download into Quicken correctly and require manual entry. I also manage accounts that use TD Ameritrade for example and they download everything correctly all of the time with no manual entries ever needed.

So... Schwab, TD Ameritrade, Etrade, Scotttrade, or others... Any suggestions?

[WSSix]

I've got my Roth at Vanguard and my brokerage account is at Fidelity. Fidelity did handle my 401k but the company moved it. Both have low fees. I'm pleased with both but don't do anything involving Quicken. I do prefer Fidelity's website over Vanguard's for stock research. Luckily, I'm more active on Fidelity so it works out well in that aspect.

[ErikLS2]

I have accounts at Fidelity and Schwab, both have very low fees, good websites and top notch service. Don't know about Quicken though.

[toy71camaro]

I have a Schwab account and a Capital 1 Investor (formerly Sharebuilder) account. Neither have any fees for my brokerage account and my ROTH IRA (which is in Cap1).

Buying shares is a flat rate ($6 or $7), but if you "auto invest" (which happens at close on tuesdays i think) its like $2.

[Woody]

Of those you listed, I think only Scottrade does not have a direct dividend reinvestment program. They do have a modified dividend reinvestment plan that allows you to accumulate your dividends and reinvest commission free. I have been very happy with Schwab. They will negotiate on commissions depending on how much money you are bringing over to them.

[GregWeld]

Lance --- For me Schwab has the best investing tools. To me it's like the difference between the iPhone and everything else (okay - this gap may have closed in the last couple years but you get the drift)..... I could pick up the iPhone and do EVERYTHING I needed to do without reading a book or being confused...... That's Schwab for me. It's clear - easy to navigate - has ALL of the information I need. Versus let's say my Wells Fargo brokerage account that is so cumbersome and the info on a screen is missing vital "clicks" like Total Return info.... I go to Schwab to see that in two or three click from logging in. BAM! I need that info and sometimes if I want to take advantage of a situation I need that info NOW! So just my .02

[sd67]

I like the Schwab tools too. Get out your buy list, Dow futures are down big!

[GregWeld]

I like the Schwab tools too. Get out your buy list, Dow futures are down big!

It could go down harder if it's a total republican sweep of both houses and the Presidency. That gives him much more leverage to actually do some - note the some - of the stuff he's saying he'd like to get done.

Like you -- I have a boatload of cash and will be a buyer of the stupid sellers..... also known as "the weak hands".

[XLexusTech]

I know it's kind of frowned on a bit but I would mind hearing about good buys during what will undoubtedly be weak hand tones the next few days

[SSLance]

Thanks for the advice everyone. I'm down to looking at Schwab and TD Ameritrade now.

Wierd as this may seem in this day and age, TD actually has the edge currently because they have a local office I can walk into to open the accounts.

I haven't had a relationship at an actual bank for my everyday banking since 1997 but I recently opened several accounts at a local bank 2 miles from my house and the customer service they have provided since has opened my eyes greatly. It's like they WANT my business... ML can't even handle the closing of my accounts without inadequacies...they are horrible in all regards customer service wise.

I too have my buying button warmed up, stretched out, and ready for action this morning.

[GregWeld]

There's going to be so many buying opportunities going forward! If Trump can get 10% of what he wants to do, done...... then we'll be rebuilding America!

[ironworks]

Caterpillar opened 6 bucks higher this morning.

[XLexusTech]

wanted to share if anyone find its useful...

https://www.barchart.com/stocks/highs-lows/lows#/timeFrame=1y

[toy71camaro]

wanted to share if anyone find its useful...

https://www.barchart.com/stocks/highs-lows/lows#/timeFrame=1y

Interesting little tool. Thanks for that!

[GregWeld]

Todays market was just like the election! Who knew! LOL


I know some of you were thinking maybe you should sell and be out of the market depending on the outcome etc.... I hope you see why that USUALLY doesn't work out the way you think. Some very stupid sellers came in after hours and took the thing down 700 points -- and the market shrugs that off and closes up. SOMEBODY made a very bad bet -- and somebody else (the buyer) KILLED IT! OMG.

[toy71camaro]

Todays market was just like the election! Who knew! LOL


I know some of you were thinking maybe you should sell and be out of the market depending on the outcome etc.... I hope you see why that USUALLY doesn't work out the way you think. Some very stupid sellers came in after hours and took the thing down 700 points -- and the market shrugs that off and closes up. SOMEBODY made a very bad bet -- and somebody else (the buyer) KILLED IT! OMG.

LoL. Who knew!

[WSSix]

I was bummed that I missed the early morning dip on wednesday. However, some of my choices went down again so I'm looking to make some moves again very soon. I like buying dips.

[GregWeld]

I was bummed that I missed the early morning dip on wednesday. However, some of my choices went down again so I'm looking to make some moves again very soon. I like buying dips.



My guess is -- there'll be lots of opportunities presenting themselves in the future. I'm keeping some powder dry for after January 20th.... when simply saying the wrong thing can move the markets.

When you have a big change like we've just voted in -- there's just no way to game which stocks are going to move in which direction. About the time you think you know - they'll work against you. This is when getting paid a dividend really, really helps.

There's SO MANY large items on the table --- repatriation of overseas capital.... import export bank - trade agreements - infrastructure rebuilding - tax breaks and on and on.

So my advice --- don't get greedy buying the dips -- make sure you know what you're buying -- buy smart but don't gamble. Keep some powder dry - but long term - don't be afraid.

[SSLance]

4 new Charles Schwab accounts opened up today, went in to the local branch and had them all done in about 30 minutes. Hope to have the assets fully transferred to them by Friday...

Overall a painless procedure, they seem like very nice people to deal with. Found out the CFP that helped us gets paid a salary, no commission...so there was no push or hype to do anything. Just there to help if needed.

Thanks for the recommendations everyone, can't wait to cut the Merrill Lynch\BankofAmerica ties for good.

[Vegas69]

Mortgage rates have bumped up .5% since the election. I'm already seeing talk of an inflationary period with Trump at the helm which leads to some questions.

What companies do best with higher than average inflation? Would you buy Gold in the short term? What investments are you looking at if we do enter an inflationary period?

[GregWeld]

Mortgage rates have bumped up .5% since the election. I'm already seeing talk of an inflationary period with Trump at the helm which leads to some questions.

What companies do best with higher than average inflation? Would you buy Gold in the short term? What investments are you looking at if we do enter an inflationary period?



Big questions....... when you know the answers clue us in.

Gold is a safety play. People buy gold when they are fearful.

I have not changed my investing strategy one iota and don't plan to. It's the reason I say to buy great companies vs almost anything else. They'll manage their way.

The FED has been ROOTING for inflation for years. There's nothing wrong with inflation -- as long as it's gradual.

The news is all over the map..... and news moves the markets when there's nothing else going on. In the end -- PROFITS and TOP LINE (sales) Growth are what count.

[Vegas69]

I'm trying to get a better understanding of the economy and cycles. There are opportunities regardless of the environment. I think we just need to be aware of them.

I found this video about cycles and the economy by Ray Dalio. He's supposed to be one of the sharpest hedge fund operators.

http://www.economicprinciples.org

[SSLance]

My portfolio has been interesting to watch the past week, as I'm sure yours has been as well. Looks like to me certain groups sold off their dividend income stocks to raise cash to buy treasuries after the election. I kept my powder dry while watching and now finally today, it appears that the sell off has stopped and dividend income stocks are gaining ground again. Another added plus was the tick up in all of my remaining oil related stocks.

In years past in other investing strategies, moves like this would have spooked me a bit but I wasn't concerned at all now. :)

[Vegas69]

I'm not concerned about my stock holdings as I'm holding long term. I just feel there are new opportunities for growth outside of stocks in a fearful market or next cycle. While the stocks take a hit, I'd like to try to capitalize on something that thrives in a down cycle.

I'll be researching it and will share if I find some ideas.

"The money is made when the market is most pessimistic."

I don't recall where I saw this, but I think it holds the key.

[GregWeld]

My portfolio has been interesting to watch the past week, as I'm sure yours has been as well. Looks like to me certain groups sold off their dividend income stocks to raise cash to buy treasuries after the election. I kept my powder dry while watching and now finally today, it appears that the sell off has stopped and dividend income stocks are gaining ground again. Another added plus was the tick up in all of my remaining oil related stocks.

In years past in other investing strategies, moves like this would have spooked me a bit but I wasn't concerned at all now. :)




That will be the most valuable take-away for making you money. Doesn't say that there won't be long periods that will make you sick to your stomach -- but OVERALL -- LONG TERM -- you make money being in versus being out.





I'm not concerned about my stock holdings as I'm holding long term. I just feel there are new opportunities for growth outside of stocks in a fearful market or next cycle. While the stocks take a hit, I'd like to try to capitalize on something that thrives in a down cycle.

I'll be researching it and will share if I find some ideas.

"The money is made when the market is most pessimistic."

I don't recall where I saw this, but I think it holds the key.






Wether you're buying cars, houses, or stocks..... the money is always made on the buy vs the sale. If you bought right - the gain will be far better than if you paid too much.

The problem is knowing (or guessing) when that point is reached.

When we're small time investors -- long term -- it won't make enough difference in our portfolios to change our goal much. When we're looking at PERCENTAGES rather than $$ -- the moves are so small as to be inconsequential at the amounts we're investing in the stock market.

In other words - if someone is buying 400 shares at $20 vs 400 shares at $22..... If they are sitting around waiting for just the right opportunity - they can move to $26 or perhaps they have a 10% sell off and move down to $18. I don't want to bend over to pick up pennies and leave dollars on the ground.

[XLexusTech]

Same boat... I have been here for a few years now... tried rentals... too much stress... tried peer to peer lending... in 3 years my Avg rate of return is 5.4% year over year.. beats a CD or a bank account but I keep looking at some of my holdings saying if I has put that peer to peer money in that one investment 3 years ago I would be way up...

So you learn.. you try things and you diversify.. :G-Dub:



I'm not concerned about my stock holdings as I'm holding long term. I just feel there are new opportunities for growth outside of stocks in a fearful market or next cycle. While the stocks take a hit, I'd like to try to capitalize on something that thrives in a down cycle.

I'll be researching it and will share if I find some ideas.

"The money is made when the market is most pessimistic."

I don't recall where I saw this, but I think it holds the key.

[GregWeld]

Same boat... I have been here for a few years now... tried rentals... too much stress... tried peer to peer lending... in 3 years my Avg rate of return is 5.4% year over year.. beats a CD or a bank account but I keep looking at some of my holdings saying if I has put that peer to peer money in that one investment 3 years ago I would be way up...

So you learn.. you try things and you diversify.. :G-Dub:



EGG SACK LEE!


Regardless of what you're invested in -- the stuff MOVES AROUND!! Housing isn't always UP -- the market isn't always UP -- rentals aren't always profitable -- commercial can sit empty and require huge TI's (tenant improvements).

Oil has sucked -- okay --- if you BOUGHT oil when it sucked -- you're looking pretty smart right now..... if you bought rentals when the housing market sucked -- you're looking pretty smart right now..... if you bought stocks one or two years ago or even better - FIVE years ago.... you're looking pretty smart right now.

TIME will heal most things investment wise as long as they're not hemorrhaging cash... even better if they CREATE cash along the way.

What's my point? I don't know ---- maybe it's just that if you don't get in a play around ---- you'll NEVER get anywhere. And if you buy the wrong stuff and gamble --- you may never get anywhere. But if you buy good stuff and it pays you a dividend..... you may have a gain one day.


LOL


It's so simple. It truly is.

[Vegas69]

I get what you guys are saying and agree for the most part as I do have different buckets and timing things is difficult, especially with stocks. I just feel that there are indicators and people do make intelligent predictions and moves based on analysis. I can tell you that's how I've been successful in my real estate investments and business. Staying educated and adaptable.

I guess my point is, where's the best opportunity for growth in the short term.

We are 7 years into an escalating stock market and 5+ years into appreciating real estate in most markets. The tide always changes, I'm trying to figure out the best opportunities in the next cycle when stocks and housing aren't so robust. I suppose it may be a situation where you have to live it. I would think the past would leave clues, however.

[GregWeld]

I get what you guys are saying and agree for the most part as I do have different buckets and timing things is difficult, especially with stocks. I just feel that there are indicators and people do make intelligent predictions and moves based on analysis. I can tell you that's how I've been successful in my real estate investments and business. Staying educated and adaptable.

I guess my point is, where's the best opportunity for growth in the short term.

We are 7 years into an escalating stock market and 5+ years into appreciating real estate in most markets. The tide always changes, I'm trying to figure out the best opportunities in the next cycle when stocks and housing aren't so robust. I suppose it may be a situation where you have to live it. I would think the past would leave clues, however.




I'd guess the reason there's not a lot of responses is...... because who knows?


I just keep doing things the way I've always done them --- when something - whatever that is -- looks to be cheap or beat up and I think I can make money on it IN THE FUTURE -- I'm a buyer.... if I view whatever it is as too expensive right now... then I don't buy. Or perhaps I "trim" and take a loss or a profit... but my BASIC premise of investing doesn't change. Buy good stuff.... that pays you to carry the costs (or almost)... and that you know and understand. Done.

By the way --- nothing goes straight up. They go up - but never in a straight line.


How hard is it to sell some young couple a house if you didn't think that eventually they'd be making a smart decision?? We are all mostly confident that EVENTUALLY our houses should be worth more than we paid. We figure TIME is what will fix that. No different than any other investment. Sure a guy can buy a bad house in a bad neighborhood - or maybe a guy is just a lousy manager etc... I'm speaking in broad general terms.

[GregWeld]

Gotta ask -----


How many guys(gals) are happy SO FAR - that they didn't panic and sell because of the election?

[Vegas69]

I found this analysis on how other asset classes performed during the last two bear markets.

I would think Reits will perform better this time around vs. during the real estate collapse 10 years ago.

[JKnight]

Gotta ask -----


How many guys(gals) are happy SO FAR - that they didn't panic and sell because of the election?

Absolutely! Even took some profits in my taxable account where it made sense. Whoohoo $$$!!

[SSLance]

Gotta ask -----


How many guys(gals) are happy SO FAR - that they didn't panic and sell because of the election?


Of course I'm happy I didn't sell...but I am thinking I wish I would have made my move over to Schwab a bit earlier so I could take advantage of some trades I'd like to make right now.

Hopefully my transfers will be complete tomorrow and I can dig back in. I went to a seminar at Uncle Chucks place Wednesday about the market in election cycles and cycles overall. It was very enlightening, the best part being the demonstration of their StreetSmartEdge app which I downloaded today and am beginning to get used to messing with.

[GregWeld]

Absolutely! Even took some profits in my taxable account where it made sense. Whoohoo $$$!!


Yeah --- I've been moving some stuff around...... I park cash in JNK -- and I've been lowering that steadily and buying where I have losers (ETP) and re-bought KMI - and some other stuff. Like taking down my whopping 100 shares of AMZN that were bought too high - so I bought 200 more and dropped my cost.




Of course I'm happy I didn't sell...but I am thinking I wish I would have made my move over to Schwab a bit earlier so I could take advantage of some trades I'd like to make right now.

Hopefully my transfers will be complete tomorrow and I can dig back in. I went to a seminar at Uncle Chucks place Wednesday about the market in election cycles and cycles overall. It was very enlightening, the best part being the demonstration of their StreetSmartEdge app which I downloaded today and am beginning to get used to messing with.




When we moved to Sun Valley -- there is no Schwab office anywhere near.... and while that's not critical - I also lost my bank when Bank of America closed all their branches here. So I moved those two accounts to Wells Fargo..... I thought I might have a coronary while waiting for all that crap to transfer because it was always the Schwab account that I mess with and the one that I can manipulate the earnings potential etc. While I'm no fan of Wells Fargo -- I don't think I can stand another move! LOL

[GregWeld]

I found this analysis on how other asset classes performed during the last two bear markets.

I would think Reits will perform better this time around vs. during the real estate collapse 10 years ago.



I own a bunch ($ wise) of REITS.... they typically pay real decent dividends and are pretty steady price wise. However... everything that is interest rate sensitive will ease down IF rates rise too quickly. We shall see how this plays out.

[ErikLS2]

I own a bunch ($ wise) of REITS.... they typically pay real decent dividends and are pretty steady price wise. However... everything that is interest rate sensitive will ease down IF rates rise too quickly. We shall see how this plays out.

Ever heard of NRZ? They're a mREIT (m for mortgage) that holds mostly floating rate securities, like commercial mortgages, which is mainly why they claim they will do better in a rising interest rate environment. They also do something with mortgage servicing rights, but I can't seem to get my mind around just how they make money doing it so I haven't invested yet.

Anyway, have any thoughts?

[AMSOILGUY]

Gotta ask -----


How many guys(gals) are happy SO FAR - that they didn't panic and sell because of the election?



Panic to me happens when you get caught off guard. You made it very clear in the beginning not to invest in things you don't understand or can't see changes in. No gambling! Its weird to look at down times as buying opportunities. I actually get more excited about the down days then the up days.

Call it dumb luck or maybe I was just listening but I was looking at doing new construction of a commercial building. Lots of people I was talking to kept saying that steel prices were going up. I bought 40 shares of (X) 6/27/16 for 15 bucks and now its nearing 30. Not to mention a very talked about sector since the election, I'm actually up 90%. I never thought it was possible. All my childhood all I ever heard was I wish I would have invested in that when it started or something along those lines from family.

Now how do you decide when to sell? I haven't wrapped my head around that part yet.

[captainofiron]

Gotta ask -----


How many guys(gals) are happy SO FAR - that they didn't panic and sell because of the election?


that first day I was mildly concerned, but just closed all my apps/news feeds for the market and thought What would Greg Do, haha

[GregWeld]

Panic to me happens when you get caught off guard. You made it very clear in the beginning not to invest in things you don't understand or can't see changes in. No gambling! Its weird to look at down times as buying opportunities. I actually get more excited about the down days then the up days.

Call it dumb luck or maybe I was just listening but I was looking at doing new construction of a commercial building. Lots of people I was talking to kept saying that steel prices were going up. I bought 40 shares of (X) 6/27/16 for 15 bucks and now its nearing 30. Not to mention a very talked about sector since the election, I'm actually up 90%. I never thought it was possible. All my childhood all I ever heard was I wish I would have invested in that when it started or something along those lines from family.

Now how do you decide when to sell? I haven't wrapped my head around that part yet.




********** WHEN TO SELL ?? ****************




I hope I'm awake enough to have this make sense. Selling is the hardest decision to make! Whether you're selling at a loss or trying to capture a profit (gain).

Many factors to think about here:

If you take the gain (loss) is there taxable consequences (Long term or short term gain - makes a HUGE difference in tax rate)

Taxable accounts or IRA?? Makes a big difference!

Do you no longer believe in the underlying reason you bought?

Have you identified what you plan to buy with the funds generated? What makes you think the new purchase will perform any better than what you're planning to sell?

Are you nervous because of the success? Or are you nervous because you have plans to spend the profit and don't want to lose it? Do you need to diversify still - in other words - taking some gain will allow you to spread your wings a bit more.

Is there a dividend about to be paid or going "ex date"?? Don't shoot yourself in the foot and miss a dividend payment!!


These are not argumentative questions! They're just stuff to ask yourself.


Number one question is really -- If you are feeling that you should take some gain -- then DO IT. It's just that simple. You never should feel nervous about your investments

Rarely do I sell all -- I "trim" -- because when I dump the name - the next day it'll open UP $10..... So I drip out - just like I usually drip in.

[GregWeld]

that first day I was mildly concerned, but just closed all my apps/news feeds for the market and thought What would Greg Do, haha


Answer:

Quietly crap yourself while hoping for the very best outcome! LOL

Truthfully -- THIS is when you really need to ask yourself if you're long term or a short timer. I fully expected to open up DOWN hard and go down for days if not weeks. I was looking to BUY on that kind of market not sell.

I'm still waiting for some shoe to drop... so I'm not fully committed YET... (rarely do I ever feel that confident - and cash is king in my world) but I have a THIRD of the cash I had pre election.

[GregWeld]

By the way --- Someone came in recently and asked about buying GOLD



I've always felt Gold is gambling. Why? Because the basic premise for owning gold is that it's a "hedge" against something going really wrong with the world. It's a fear trade. Unless you use the stuff to make something - what are you going to do with it? It doesn't pay a dividend to hold it. It goes up and down like a yoyo and I've never figured out WHY except for fear. I don't want to own fear. I want to own the FUTURE and PROFITS and DIVIDEND (cash stream).

Add to that -- who actually is holding your gold? Will they have cash when you want to sell and cash out? Or did the world market crash wipe them out too? Something to consider. This - of course - holds true for ANY investment - but I'm not buying stuff because I think the world is going to hell.

The Gold ETF (GLD) is DOWN 31% over the last 5 years.... while Altria (MO) is UP 126% in share price and has paid almost $10 in cash dividends on a $34 purchase price (back in November 2011).

[Vegas69]

Seems like it may be a good time to buy GLD. :stirthepot:

I've also been seeing that mining companies of precious metals can be strong in bear markets. They look really volatile, but timing is everything. :tv_happy:

I was up Elk hunting two weeks ago near a major Nevada gold mine. My friend builds drilling sites and reclamation. He's been crazy busy this year working for the mine. They are moving some serious dirt up there and drilling for new mines constantly!

I like what Buffet says, don't ever lose money. If we put ourselves in a comfortable position, many times, we can wait for the right timing. It can take 20 years, but... And I think that's been what you are trying to express all along.

I like some buckets that flourish when the market sucks. I have a majority of $ on the flip side. My whole premise here is to be prepared to find ways to take advantage when the tide goes out. Why not hedge some money on the down cycle? You know it's coming someday.

[GregWeld]

Seems like it may be a good time to buy GLD. :stirthepot:

I've also been seeing that mining companies of precious metals can be strong in bear markets. They look really volatile, but timing is everything. :tv_happy:

I was up Elk hunting two weeks ago near a major Nevada gold mine. My friend builds drilling sites and reclamation. He's been crazy busy this year working for the mine. They are moving some serious dirt up there and drilling for new mines constantly!

I like what Buffet says, don't ever lose money. If we put ourselves in a comfortable position, many times, we can wait for the right timing. It can take 20 years, but... And I think that's been what you are trying to express all along.

I like some buckets that flourish when the market sucks. I have a majority of $ on the flip side. My whole premise here is to be prepared to find ways to take advantage when the tide goes out. Why not hedge some money on the down cycle? You know it's coming someday.





Okay --- so here's where we WANT to get to.....


Over time if the stocks you own and the houses you own are up lets say 50% over 5 years..... and they're paying you 5% average dividend.

When the market goes to crap -- you'll be DOWN 20%..... but your share or house value is UP far more than that IF you've owned the stuff for awhile.

Now on top of that -- you're collecting 5% cash all along the way... and you'll continue to get that until when? Until the market turns around and you're right back where you were and plus some. It's the way it's been working since the beginning.

So --- On just my WF account I collect over $400K a year in cash off of the dividends. Why would I sell that money maker because "MAYBE" the value of my holdings might go down temporarily? I don't run to sell my apartment buildings --- I bought them because they produce CASH -- and "eventually" we'll break even or sell for a gain I hope. We'll CHOOSE when to sell when the timing is right.

[Vegas69]

Happy Thanksgiving fellas!

What do you think? I ran across this ALL WEATHER portfolio by Ray Dalio in Tony's book. Seems like it could be a good strategy for those close to retirement if nothing else.
https://youtu.be/c0ARb1N-3kM

[GregWeld]

Happy Thanksgiving fellas!

What do you think? I ran across this ALL WEATHER portfolio by Ray Dalio in Tony's book. Seems like it could be a good strategy for those close to retirement if nothing else.
https://youtu.be/c0ARb1N-3kM



My only thought on this -- is that TONY is about RISK..... rather than making money - he really only continues to hammer "risk". As I've said on here many times -- in a big ass downturn -- like 2008 (which he mentions many times) you have to realize there was NO ASSET CLASS that didn't get pounded! Housing - bonds - stocks - commercial real estate.

Here's the biggest take away ---


The ONLY people that lost money from 2008 are the idiots that SOLD what they had. The "weak hands" got killed when they gave their assets away. People like me - made a killing BUYING those "distressed" assets. Your loss is my gain.


The key to investing is to invest steadily -- and NEVER invest money that'll you're going to need to live on.... and to buy MORE assets when they're cheap. Whatever those "assets" are. Diversification is great - should be done - and no... all of your assets shouldn't be just in the stock market. But first you have to build a nest egg to start with - and that's the key!

[DBasher]

The key to investing is to invest steadily -- and NEVER invest money that'll you're going to need to live on.... and to buy MORE assets when they're cheap. Whatever those "assets" are. Diversification is great - should be done - and no... all of your assets shouldn't be just in the stock market. But first you have to build a nest egg to start with - and that's the key!

Damn you Weld!! Why do have to make so much sense?
Thanks again:thumbsup:

[Woody]

Happy Thanksgiving fellas!

What do you think? I ran across this ALL WEATHER portfolio by Ray Dalio in Tony's book. Seems like it could be a good strategy for those close to retirement if nothing else.
https://youtu.be/c0ARb1N-3kM

The thing that scares me about this the most is being heavily allocated in bonds right now. The allocation has worked in the past 20-25 years because bond rates have been on a long term downward trend. If you have 50+% of your portfolio in bonds and interest rates start increasing on a long term basis, what do you think your returns are going to be? That asset allocation will not work well in a rising interest rate environment. Especially if you use mutual funds for your bond allocation because the NAV of the mutual fund will be declining.

I can not pretend to know what is going to happen to interest rates in the future, but it seems to me there is a greater potential for rates to increase than to continue the downward trend. We may have already hit the lows in interest rates.

[GregWeld]

The thing that scares me about this the most is being heavily allocated in bonds right now. The allocation has worked in the past 20-25 years because bond rates have been on a long term downward trend. If you have 50+% of your portfolio in bonds and interest rates start increasing on a long term basis, what do you think your returns are going to be? That asset allocation will not work well in a rising interest rate environment. Especially if you use mutual funds for your bond allocation because the NAV of the mutual fund will be declining.

I can not pretend to know what is going to happen to interest rates in the future, but it seems to me there is a greater potential for rates to increase than to continue the downward trend. We may have already hit the lows in interest rates.



The very very last place a person wants to be is in BONDS.... Period. Unless they're 10% triple tax frees... THEN I'd be in bonds.

[Vegas69]

Updated facts a few posts down...

One of my key takeaways is that most folks close to retirement go into 60% bonds and 40% stocks. They can have their principal murdered in a soft market in both stocks and bonds. Lets be real here, a majority (95%+) of Americans live off their principal plus interest. They aren't wealthy enough to live off dividends alone and must draw on their principal to live. A recession like 2008 destroys their retirement income and their just isn't enough time to recover.

If anyone is interested in more info, it's in the book "Money" master the game by Tony Robbins.

[GregWeld]

I believe one of the bonds is inflation protected. Supposedly they analyzed it over 75 years and it averaged 10% with the largest loss being 3.6%. We've had the inflationary periods in the last 75 years. I have a book that discusses it in much greater detail. Portions of it thrive in all four seasons which are: leveraging, de-leveraging, deflation, and inflationary markets.

One of my key takeaways is that most folks close to retirement go into 60% bonds and 40% stocks. They can have their principal murdered in a soft market in both stocks and bonds. Lets be real here, a majority (95%+) of Americans live off their principal plus interest. They aren't wealthy enough to live off dividends alone and must draw on their principal to live. A recession like 2008 destroys their retirement income and their just isn't enough time to recover.

If anyone is interested in more info, it's in the book "Money" master the game by Tony Robbins.



All good points Todd!

[SSLance]

We were in that boat in 2007-2008, had over 3/4s our portfolio in high yield muni bonds that got hammered... What killed me is the muni's got hammered in net asset value mainly because of "mark to market" rules and they got drug down by association, not by any fault of their own. Imagine a 45% loss in the net asset value loss of a "safe" investment.

Thankfully we had the foresight to double down, we sold all the munis and bet big on small and large cap stocks and made it all back in less than 6 months...and then some. Many people later in their lives did not make that bet and lost bigly...

The taint of that loss has kept me from EVER even thinking about Munis again, even though I see the attractive looking yield returns on them from time to time.

[Vegas69]

I broke out the book and here is the breakdown:

7.5% Gold
7.5% Commodities
15% US Intermediate Bonds
40% US Long Term Bonds
30% Stocks/Index Fund

The portfolio must be rebalanced every year, minimum.

He claims there are four economic seasons this strategy is based on:
1. Inflation
2. Deflation
3. Rising economic growth
4. Declining economic growth

The average return from 1984-2013 was 9.72%.

I'm not even close to being an expert on this stuff or utilizing this strategy at this point. I just thought it was interesting and it got me thinking about taking advantage other types of markets with different strategies and buckets.

"Bull markets start at the time of pessimism. The rise on the time of skepticism. They mature at the time of optimism, and they end at the time of Euphoria!"-John Templeton

[GregWeld]

I shouldn't have to remind any of you that today is the first day of DECEMBER --- and why is that important??

Because you need to get your rebalancing - if you do any - done this month and you can't wait til the very end of the year. Remember there are SETTLEMENT dates, and holidays... and weekends....

Be sure to check for dividend EX dates before you punch the sell button...

Be sure you're not setting up a "wash sale"!

Don't be afraid to TRIM if that makes you feel good or you still need to diversify.

REMEMBER WE ARE IN A RISING INTEREST RATE MARKET!!!! Anything with lower dividend rates can get taken down.... So no point in riding a nice gain into the sunset because you couldn't pull the trigger! In other words --- I've been out of ALTRIA (MO) except in the longer term retirement accounts.

DO NOT make the mistake of just looking at what the shares are paying on TODAYS share price -- and make the decision they don't pay enough!! CALCULATE YOUR OWN RATE OF RETURN ON YOUR COST BASIS.

Now -- look at your gain or loss if any -- what does the return look like going forward.... IT'S A GUESS! Will the EARNINGS be higher -- thus causing the P/E to stretch it's valuation?? Will rates rise faster than their ability to raise the dividend rate? It's ALWAYS about EARNINGS. But it's also about rate of return and money moves away from lower rates of return to keep up with current "scenario". Don't forget that.

Markets ARE ALWAYS CYCLICAL! Try to move WITH the market - you're too late.... the move that finally told you that the train left the station - the big money already moved there. You're going to sell something low to buy something high.... and that is trying to TIME the market... or rather what it really is CHASING the market.... <Buzzer here> Be certain when you're doing that - that there is MORE left to run and that doesn't mean just this afternoon!

[GregWeld]

I broke out the book and here is the breakdown:

7.5% Gold
7.5% Commodities
15% US Intermediate Bonds
40% US Long Term Bonds
30% Stocks/Index Fund

The portfolio must be rebalanced every year, minimum.

He claims there are four economic seasons this strategy is based on:
1. Inflation
2. Deflation
3. Rising economic growth
4. Declining economic growth

The average return from 1984-2013 was 9.72%.

I'm not even close to being an expert on this stuff or utilizing this strategy at this point. I just thought it was interesting and it got me thinking about taking advantage other types of markets with different strategies and buckets.

"Bull markets start at the time of pessimism. The rise on the time of skepticism. They mature at the time of optimism, and they end at the time of Euphoria!"-John Templeton







Todd ---- I'm not "disputing" any of the information in the book or tape or anything else. But INVESTING 102 is about SIMPLE - reliable - relatively safe - understandable basic saving and growing money. People can barely recite the 10 stocks they own or want to own..... Let alone keep track of "asset allocation" and all it's nonsense. Sorry.

The below info has been factual for years and years.... and, of course, are AVERAGES -- and don't account for many years of LOWS or spectacular rises (like 2008 to present).



Siegel found that stocks have been returning a long-term average of about seven percent for 200 years.

If you’d purchased one dollar of stocks in 1802, it would have grown to more than $750,000 in 2006.

If you’d instead put a dollar into bonds, you’d have just $1,083.

And if you’d put that money in gold? Well, it’d be worth almost two bucks — after inflation.

Siegel’s findings aren’t unique. In fact, every book on investing shows the same thing. Over the long term, the stock market produces an average annual return of about 10%.

[GregWeld]

By the way --- ALL points of view are VALID and worth reading - discussing - and then each individual needs to decide for themselves what they're comfortable doing.

Investing - and we've said it a zillion times - IS EMOTIONAL. The investment will either make you comfortable or you're on edge. If you're on edge.... trade it for something that makes you happy to own thru thick and thin. Because that is the real key.

[Vegas69]

That's part of the reason I bought it up. It's good to see things from another perspective. After all, we all have our own unique set of circumstances.

[Brewtal66]

Hi Greg,

Just started going through this thread. Not sure what got me to click on it last week, but I did and have read the first 20+ pages so far. I opened up the brokerage account with Schwab, and hoping to put some money in there later today.

I do have a couple questions for you though if you don't mind.

1. I'm looking at Target(TGT) stock. I shop there weekly, so I have interest in it. If I look on the 5 year snapshop, it's low on the left, higher on the right, with increasing dividends. If I hit the research to Total Return on Schwab, the 5 year result is +65.7%. I know this probably isn't as high as some others, but would this be a good investment to get my feet wet?

2. On one of the pages you stated you owned 21 different stocks. But on another page I see you showed your dividends, which was more more than 21 different stocks. Is that right? I feel like I'm getting something confused. You also mention having only one account? as in one Schwab account? Not that any of this really matters, just trying to keep everything straight with all the lingo and such.

Thanks for writing all this up. You've inspired me and got me started towards investing. I always use to say that I didn't like investing in the stock market since I like tangible assets. For example, I have a second house that I rent out and since the tenants are paying the mortgage on that, I always felt like that was going in my pocket as a retirement. But I feel like that's just not enough. I'd like to own and rent out more houses, but I don't want all my eggs in one basket either.

[Vegas69]

How are you fellas analyzing your positions and new potential stocks?

I recently read a book that broke down some key numbers to look at. I decided to review my stocks on a regular basis with the attached breakdown and use it to gauge new positions. I'm using Morningstar for the data.

I'm far from an expert and green at this, but I'm learning quickly. As you start digging into the numbers and comparing different stocks, you start to get a better feel for your positions.

I analyzed Snap On which is attached. I found it to be very positive:

Gross and Net revenue have been increasing for 7 years
P/E ration is still below 20
Dividend payout has been consistent and the increases should out distance inflation
There debt is actually Decreasing! And they can pay off all their debt in less than 5 years based on net income.

The only factor that wasn't positive was that their outstanding shares is stagnant. Many of my other companies have been buying back their own stock decreasing outstanding shares.

If anybody would like this form blank, just shoot me a PM.

[GregWeld]

Hi Greg,

Just started going through this thread. Not sure what got me to click on it last week, but I did and have read the first 20+ pages so far. I opened up the brokerage account with Schwab, and hoping to put some money in there later today.

I do have a couple questions for you though if you don't mind.

1. I'm looking at Target(TGT) stock. I shop there weekly, so I have interest in it. If I look on the 5 year snapshop, it's low on the left, higher on the right, with increasing dividends. If I hit the research to Total Return on Schwab, the 5 year result is +65.7%. I know this probably isn't as high as some others, but would this be a good investment to get my feet wet?



So this is never going to be about "Me" and what "I" think YOU should own or not own. Having said that -- you have demonstrated the ability to comprehend the basic principals and that is 100% the goal here.

Now -- The above information you posted - is awesome.... and the reasoning sound. Now compare all of the information above against the "competition" and see if there is a better (or worse!) investment. Target should be compared against similar retailers. Who has had the best track record - who looks best going forward? Who has growth left?

Once you have done THAT research -- then you've narrowed it down - and CONFIRMED or denied what you believe. IN the end --- YOU have to like the stock and understand why you picked it. Otherwise - when they drop $2 a share after Xmas (just making this up) you'll be freaked out and sell at a loss. THAT is what we're trying to avoid.




2. On one of the pages you stated you owned 21 different stocks. But on another page I see you showed your dividends, which was more more than 21 different stocks. Is that right? I feel like I'm getting something confused. You also mention having only one account? as in one Schwab account? Not that any of this really matters, just trying to keep everything straight with all the lingo and such.




You'll need 100K invested before you get to NEEDING to own 20+ names... You're referring to the 5% rule.... and those rules need to be adjusted to fit teh circumstances.











Thanks for writing all this up. You've inspired me and got me started towards investing. I always use to say that I didn't like investing in the stock market since I like tangible assets. For example, I have a second house that I rent out and since the tenants are paying the mortgage on that, I always felt like that was going in my pocket as a retirement. But I feel like that's just not enough. I'd like to own and rent out more houses, but I don't want all my eggs in one basket either.






Real estate is a great investment - just not the only investment..... and frankly -- many other investments have better returns -- but YOU have done it right IMHO -- Getting a real estate investment going EARLY will work out great in the end - because of the length of time to pay off the mortgage..... 30 years or even 15 years is a LONG TIME - and it's nice to be able to pocket the payment in retirement! Good for you!

[Vegas69]

Are you guys sleeping at the wheel? You may want to go take a look at your positions today!

[dhutton]

Are you guys sleeping at the wheel? You may want to go take a look at your positions today!

This has been a nice run. :thumbsup:

Don

[WSSix]

Are you guys sleeping at the wheel? You may want to go take a look at your positions today!

No, I'm out back whooping my own ass because I was asleep at the wheel a few weeks ago when T and VZ took big dips. I was being patient and not wanting to catch a falling knife. I was concerned with what the market was thinking about their recent acquisitions. I didn't have a problem with what was happening but the market apparently did. So I decided to be patient and missed the dips. I had the money ready to buy and was planning to buy anyway. The dips were icing on the cake. Still being patient right now and hating it, lol. Moral of the story, buy good names and don't worry about catching all the dips.

My oil stocks are coming up nicely though :D

[GregWeld]

No, I'm out back whooping my own ass because I was asleep at the wheel a few weeks ago when T and VZ took big dips. I was being patient and not wanting to catch a falling knife. I was concerned with what the market was thinking about their recent acquisitions. I didn't have a problem with what was happening but the market apparently did. So I decided to be patient and missed the dips. I had the money ready to buy and was planning to buy anyway. The dips were icing on the cake. Still being patient right now and hating it, lol. Moral of the story, buy good names and don't worry about catching all the dips.

My oil stocks are coming up nicely though :D





And many times continuing to be "patient" only causes you to miss even more of the run. Not picking on you when I make this broad general statement..... bending over to pick up dimes causing you to lose dollars??

LOL

You're thinking was all sound..... Where WE miss out is when we begin to think like we're big traders and we're going to buy low.... but when you really do the math on what we were trying to save buy waiting to "get in" is often the train leaves the station.

Once in a great while - the market moves with us and our waiting is rewarded by a fall in the price... but that's just dumb luck.

[GregWeld]

I had another thought here ----- Why are we always disappointed when the market does EXACTLY what we want it to? We WANT it to go UP right? So why are we upset when the train pulls out of the station and we're left behind --- didn't it just do exactly what we wanted it to?? LOL

But if you're not in - then you're standing on the platform watching the caboose get smaller and smaller, and no matter how fast you run you can't catch up.

[MPM IV]

I just learned that different brokerages pay different prices when the dividend is reinvested. I had just assumed (incorrectly) that they all got the same price.
Southern (SO) paid their dividend on the 6th. Here are some of the prices that I saw:

Fidelity- $46.46
TD Ameritrade- $47.27
Vanguard- $46.99
Etrade- $46.79
Schwab- $47.29

This may be common knowledge to everyone else, but it was the first I had heard of it.

On another note, I bought RDSB for $62 in May of 15. I picked up a little more while the price was down, and had all dividends reinvested. Today is the first time that position has been green since purchase. I know it could change tomorrow, but it was nice to see.

[AMSOILGUY]

What do those prices represent from the different brokerages?

[MPM IV]

What do those prices represent from the different brokerages?

Price per share.

[68Cuda]

Price per share.

Is this just a matter of timing / execution? If you and I buy shares of the same stock on the same day we will get different prices depending on the exact time of the transaction. The market ebbs and flows through the day depending on how many are buying, how many are selling, volumes, offer prices, and etcetera.

[GregWeld]

The price you pay is determined purely by the lot that is offered by the seller.... buyers and sellers are matched up and the transaction is completed.

If you want to know exactly what you are going to pay --- DON'T put in a "market order". Learn how to put in a "Limit" order.

[68Cuda]

The price you pay is determined purely by the lot that is offered by the seller.... buyers and sellers are matched up and the transaction is completed.

If you want to know exactly what you are going to pay --- DON'T put in a "market order". Learn how to put in a "Limit" order.

I "almost" always do limit orders. What the poster was referring to was the fact that it seems that the automatic reinvestment of dividends was done at various price points depending on the broker. What I was trying to get across was that the execution of the purchase was of different lots at slightly different times and it was likely random chance on the resulting price more than anything.

[GregWeld]

I "almost" always do limit orders. What the poster was referring to was the fact that it seems that the automatic reinvestment of dividends was done at various price points depending on the broker. What I was trying to get across was that the execution of the purchase was of different lots at slightly different times and it was likely random chance on the resulting price more than anything.



EXACTLY.


The market is a PER TRANSACTION place. If one broker re-invests the dividend 2/100 ths of a second later or earlier than the "other guy" -- then his price will be different most likely.

[Brewtal66]

Well it's official, I bought my very first stock today. I had an extra $100 laying around so I decided to invest it instead of spend it on car parts.

I bought one share of Starbucks, SBUX.

Personally, I don't go there. But my wife goes there almost daily. It looked good on paper (low on left, high on right) with the 5 year projection being almost 200% growth and the increasing dividend. But the other important factor here is that since my wife loves Starbucks, this is a way to get her involved and interested.

She's great with money. In fact she handles all the bills and everything. But we haven't been investing. She's never done that before, so this is a good way for both of us to dip our feet in the water.

Thanks to all of you, and especially Greg for helping explain it all!

[GregWeld]

Well it's official, I bought my very first stock today. I had an extra $100 laying around so I decided to invest it instead of spend it on car parts.

I bought one share of Starbucks, SBUX.

Personally, I don't go there. But my wife goes there almost daily. It looked good on paper (low on left, high on right) with the 5 year projection being almost 200% growth and the increasing dividend. But the other important factor here is that since my wife loves Starbucks, this is a way to get her involved and interested.

She's great with money. In fact she handles all the bills and everything. But we haven't been investing. She's never done that before, so this is a good way for both of us to dip our feet in the water.

Thanks to all of you, and especially Greg for helping explain it all!





Think about it --- when the thread was started (12/2011)-- SBUX was $22 a share. Oh well..... better late that never!

[Vegas69]

Nice Tim, I have a stake in them too. They do have a unique market cornered at this point. When I analyzed them, their debt was increasing, but so was their net revenue.

[Brewtal66]

Think about it --- when the thread was started (12/2011)-- SBUX was $22 a share. Oh well..... better late that never!

Yeah but back then I didn't have two dimes to rub together!

[slow4dr]

The price you pay is determined purely by the lot that is offered by the seller.... buyers and sellers are matched up and the transaction is completed.

If you want to know exactly what you are going to pay --- DON'T put in a "market order". Learn how to put in a "Limit" order.

Can a "Limit" order be applied to a dividend reinvestment? I only ask because that was what the original question was derived from.

[GregWeld]

Can a "Limit" order be applied to a dividend reinvestment? I only ask because that was what the original question was derived from.




Ah - no it (dividend reinvestment) can't -- that's all just done automatically.


I was perhaps confusing -- in that I was trying to make the point that the ONLY WAY someone would get the exact same price - regardless of brokerage etc - would be to enter a limit order.... otherwise every transaction is likely going to be at various prices. Just look at a chart of DAILY activity for the name.... and then look to see how many shares trade per day - and the average daily trading etc...

[GregWeld]

I love this Warren Buffettism.....



Americans LOVE stocks when they're expensive and HATE them when they're cheap.


SO TRUE!


Resist the impulse to CHASE a rising market..... but at the same time - we have to guard against the market pulling out of the station for a run and we're standing on the platform holding our putz.....

It's why I URGE YOU to just buy when you're ready.... high or low.... When the market is high - you're $1,000 will buy fewer shares.... when the market sells off and everybody runs for the hills.... you're $1,000 will buy MORE shares...

In other words GET OVER IT...... you'll get nowhere if you're not "IN" and you're not buying enough shares at any given time that it's going to make a big deal in the overall scheme of things.

Think about it -- you have $1,000 -- and you're going to buy Home Depot (HD) = that $1,000 would buy 7 shares at $135..... and so your purchase today would be 7 X 135 = $945

Had you bought at the 52 WEEK LOW -- of $109 -- you'd have bought 9 shares! So that would be 9 X 109 = $981

So had you done both those buys -- you now have 16 shares for an AVERAGE COST of $120 (add both purchase costs $945 + $981 = $1,926 divided by 16 shares.



See how that worked out?? GET OVER IT..... you're reward is ZERO if you invest ZERO.

[GregWeld]

Anyone looked a what GOLD has done lately?


Yeah ---- not a good holding. IMHO......... E - V - E - R

[Vegas69]

I couldn't bring myself to get into Gold or any of the precious metals commodity stocks at this point. The economy is still doing well. If I start to feel things slow down in my business and people aren't spending like mad, I'll reconsider.

In the meantime, I'm still buying stocks every month. It was nice to log on this week and see some MO shares bought automatically from my dividend income. :flag2:

My son already has some piggy bank money. Instead of going to Wells Fargo and losing money with inflation in a savings account, I bought him a Vanguard index fund. One whole share! I figure I'll throw his birthday and Christmas money at it every chance I get. We are already funding his 529 every month. I'm looking forward to teaching him about how to invest and manage his money at a young age.

[GregWeld]

#1 -- I hope you all have had much success with your investments this year!


#2 -- I personally L - O - V - E Cramer's #1 Tip. Here's why:

The minute I mention "I" own Annaly Capital Management (NLY) --- and "you" (the readers) go out and buy it for no other reason than because I said I owned it.... Then I decide it's time to sell -- because for me - it's reached the goals I set for it - or there's a what? Yes! A Fundamental change.... I sell but I don't say that here = or where you work (if you're following some co-workers tip) etc. You keep holding and loose your butt.... WHY? Because you have NO CLUE why you bought it - what it is - what it does - and you were too lazy to do the work to find your own investments! Oh yeah - OUCH. A couple losses in the "market" and you're forever turned off.... and you suffer yet again come retirement time.


Also -- remember how many times I say "the minute you buy, there's a guy on Wall Street yelling at everyone else --- Okay guys! He's in! Take 'er down!" Yes - a stocks price will be lower than what you paid for it at some point. You'll need to understand Tip #1 to get Tip #4





No. 1 Tips are for waiters.
No. 2 You must do the homework if you are going to own an individual stock.
No. 3 If you can't do the homework, then own an index fund.
No. 4 If you fear losing money, don't own stocks at all because they will go down as well as up.

[Vegas69]

Greg, i'm curious about the advantages of owning individual stocks vs. a low cost Vanguard index fund for the average investor?

I cancelled my whole life policy last week and I'm looking for a new bucks to toss the that money in now and moving forward. I'll still stay the course on my individual stocks, but would like something a little less hands on for this bucket.

[JKnight]

I'd be interested in hearing more about the thought process behind cancelling a whole life insurance policy. I have one too and I often think the money could be put to work elsewhere, like in a brokerage account or IRA. Guess it would only bite me if I kick the bucket early, obviously...

On your question Todd, I've been using ETFs for the type of investing you describe. No commissions online and goal of generating the 'market return'. Primary downside with certain ETFs and mutual funds is you are buying the whole index, the good, bad, and everything in between.

[Vegas69]

It seems the best things in life are fairly simple and Whole Life isn't. Have you noticed how complicated that product is? The fact of the matter is that you can get term life for pennies on the dollar to protect your family. The more I researched Whole Life, the more I hated it!

Just to clarify my thought process, I'm 39 and 100% debt free including my house. If I kick the bucket, my family will be doing alright with our current net worth and my 20 year term life policy. If I live to be 79 which is roughly the average life expectancy of an American these days, I've paid a whole life insurance premium every month for 40 years that I don't need!!! Let's call that $100,000 in premiums for round numbers. Clearly that gets invested plus the cash value monthly amount. in my case, it was another $400 roughly for principal.

The best Whole Life policies will get you 5% on your money if you keep them FOREVER. They are so loaded up with commissions and fees the first 10 years, that you will be in the hole in most cases at that point. Many policies also surrender your cash value for the insurance amount. Your family doesn't keep both. Lastly, for you to get your money tax free, you have to BORROW your own money with interest which offsets the death benefit! Bull f#@#@#

Let's say you invest the premium amount of $200 plus the $400 in cash value you were creating in stocks, index fund, or mutual fund at 8% for 30 years. Drum roll.... You end up with over twice $$$$$! I'm talking $500,000 more! The power of compounding isn't a gradual ladder. Compounding at 8% is stronger than 5%.

Now, I'm not saying there aren't times when people SHOULD keep Whole Life. Especially if your health has declined since you got the polices or you are getting old enough where term insurance is hard to get. In my case, I aggressively paid off debt over the last 3-4 years and it eliminated the need for the extra insurance. With that being said, I would've been better off with term from the start and investing my money in a higher return vehicle.
-----
One thing I recently learned is that 96% of mutual funds under perform the S&P 500. The Index funds I've seen, out perform it slightly due to dividends.

You make a good point. You get the whole ball of wax instead of hand picking the best companies. I think I'll move forward with both strategies and see where they get ME in 5-10 years. I enjoy the individual stock investing.

[SSLance]

I'm a big fan of whole life policies, my first investment (and still to this day my best investment) was the whole life policy I bought when I was 21 years old.

It was sold to me by a financial adviser as a "reverse IRA", basically a $2,000 a year premium with a death benefit and compounding tax free cash value. I have no doubts I can retire comfortably just by borrowing from the cash value of it alone if needed. Remember we have no kids and basically no debt, so term life has never been on our radar, this was strictly an investment vehicle.

That said, as you get older they are harder and harder to get to make financial sense. I've tried several times as I got older to buy more of them and the cost of the insurance is just too high to make them work. My policy's cash value crossed the invested amount between years 7 and 8. Every time I tried to buy them after that it was 9-10 years before your cash value crossed past the invested amount and the growth rate was much slower after that as well.

So the trick to cash value policies is...buy them early...and keep them forever. I smile every year when I write that premium check and see how much the cash value of the policy rises...tax free. My only regret is I didn't buy more of them earlier.

[Vegas69]

That sound exactly like the pitch I got from my advisor. :sarcasm_smiley:

Let's look at an analysis:

You invest $2000 a year at 5% for 59 years in Life Insurance.

Or

You invest $2000 a year at 8% for 59 years in stocks.


Life Insurance Compounded: $705,167

Stocks Compounded: $2,504,426

This is a prime example that compound interest has more momentum at a higher rate.

I'm leaving out the fact that you can invest more principal in stocks due to no premium. Now if you have a life insurance policy where you get the cash value and death benefit, that needs factored in. (read your fine print) You do need to back out the interest you pay to borrow your own money. Most are around 8%. I don't trust them. My assistant told me a story about how her father's life insurance failed to pay out.

How many insurance companies go out of business? Not many... The cards are stacked in their favor.

[WSSix]

Well, I just finished making my 2017 selections in the Roth for the most part. I decided to mix some things up and might do so further. For the most part, I believe in holding a position for a long time so long as it is a great company.

With that said, I still did my typical position for the year in KO. My total return for that pick has been good but there has not been a lot of growth, if any for a while. I'm ok with that but I also want some growth. I decided to open a small position in DPS so I can get my growth and dividend. We will see what happens through the year to determine what I do come 2018.

KMI has had a great run up this year. Too bad I bought in years ago through KMP. I'm deep in a hole on this one. I see no reason to bail though. I do believe they will rebound but they also have a lot of debt that gives me pause. I decided to not add to this one due to those factors and the fact that I felt there was a better place to put my money while remaining in that sector. So, my money ended up in PSX. Solid midstream company that has had good growth and pays a good dividend. I'll continue to hold KMI and reevaluate them and PSX for 2018.

WFM I'm not sure what to do with. I didn't add to my position this year. I actually think I'm going to bail even though I'm in a hole with them too. That's a tough market to be in and they are getting beaten up. I didn't expect them to be a high growth pick. I didn't expect them to tank either though. The dividend is paltry. In the grand scheme of things, my position is small. The loss I'll take isn't anything great either. I'd just prefer to try and recover my loses in another stock. This deviates from my hold for a long time style because I honestly don't think they will survive long term. To me, they are a great company but people don't give a damn about that. They only care about cost. That sector is so competitive I expect their to be some causalities and am afraid WFM will be one of them since they are high end.

The rest of the picks in my ROTH received their typical increase for 2017. As far as I'm concerned, they are moving along just fine.

I've been adding to my regular brokerage account too. So far so good now that oil has rebounded a little.

Here's hoping 2017 is good for everyone.

[GregWeld]

My quick and dirty answer to LIFE INSURANCE questions is -----


Buy enough TERM LIFE - if you need it - to protect your family in the event of an untimely demise.....


Let me qualify that.


If you have enough assets to provide for your family without life insurance - then why would you buy it? I don't have any. Don't need it. Kids are grown - house and all the other toys are debt free.


But If you have a house mortgage and car payments - and little CASH assets..... then Life insurance would certainly be beneficial to those you leave behind AND IT'S TAX FREE.... So you could leave a paid for house and cars and whatever else you choose to toss in there.

You single? Buy a $10,000 policy so somebody can bury you. Done.

[JKnight]

Definitely agree with both Todd and Greg. I kinda got setup on this path as my parents started this policy when I was a baby. They paid the premiums for the first 22 years, then I took over when I graduated college. I never really questioned it since it "seemed" like I was doing the right thing continuing it. There's been some opportunities to expand the death benefit at intervals through the last 10 years, so I did. At 33, I'm married, but not debt free, so I can see how it would be good to keep what I have in case of untimely demise, but I don't think I'm going to increase it anymore at the next 3-4 intervals. I'll have to look into the details some more though. Glad this got brought up.

To Todds point, can you imagine if my folks would have just invested the money they paid into this policy? I sure as hell wouldn't have needed to take out student loans to get my undergrad!

[SSLance]

That sound exactly like the pitch I got from my advisor. :sarcasm_smiley:




I had to chuckle because your pitch sounds exactly like the one the last two financial advisers (stock brokers) I had gave to me to try to get me to invest more money with them instead of in real estate or life insurance. :D

It's all good, I've been down the to buy or not to buy life insurance debate many times. I fully understand both sides of the discussion. I have seen the Life policys that go broke, don't return as projected, and companies that do not pay out as promised when asked to do so. It is a touchy vehicle for sure, research and timing is key.

Personally, my overall annual ROI on my market investments since I started investing back in the early 90s has been no where near 8%. In fact those returns look paltry compared to the 6ish % my Whole Life policy has returned (tax free) to my account year after year. The net asset value of my life policy has never had a down year, never lost value and never failed to pay a dividend. Also, if you ever borrow from the cash value of my policy, you pay interest sure...back to your own policy... You are basically borrowing money from yourself. Maybe I'm lucky but I prefer to think I just did my homework and picked a good one at just the right time...just like a lot of us have done with our dividend paying stocks in this thread.

If I get some free time, I'll create an updated ROI spreadsheet on my life policy and share it with everyone. Right now I'm buried in year end payroll duties, tax return prep, estimated tax payments and preparing for a 3-4 week vacation trip out West in a couple of weeks. Priorities ya know... ;)

[Vegas69]

The S&P 500 has nearly doubled since 1997 and tripled since 1987. Have you invested as consistently in the market and in good growth vehicles like index funds or individual stocks?

My strategy comes down to holding LONG. Should you cash out a decent whole life policy with only 5-15 years left to retirement, probably not.

[GregWeld]

I've warned here many times about RISING INTEREST RATES and their correlation to values of your holdings.

We CAN NOT ignore the relationship. House values are affected by rising rates... as the rush to beat the rise in rates temporarily pushes buyers in to the market - they'll be the ones paying the highest prices ------ until the rates reach a point where they simply price out the average buyer and then home prices will need to be adjust DOWNWARD to get the monthly payments down to where people can afford to make them.

Autos --- We've seen a big cycle of renewal... bolstered by low rates that are often near or at ZERO...

Banks.... they borrow your money at super low rates and lend it out at higher rates - "the spread" - this increases as rates rise. Remember that banks use leverage in their lending.... and a simple .25 rise in the spread makes the banks a lot of money.

Capital spending here in the USA..... this can only be a good thing for the USA. But there will be lots of bumps in the road because nothing ever really just steams ahead as planned.... so while we should see a increase in capital expense here -- if rate rise too fast too far - that will pinch corporate profits and slow cap ex.... so we need a nice balance here. Sales and profits might continue to fund Cap Ex spending..... squeeze one too hard and it pinches the other off. I think we'll see a rush to borrow to get ahead of rising COSTS.... The more you borrow now -- the smarter you'll look down the road. But you have to have the CONFIDENCE to invest in plant and equipment etc - so we need confidence to stay high as well.


Healthcare ----- Oh my...... Who knows where this is going to go. My guess is we'll see LOTS of pressure to bring down prices and costs.... that is going to have to come from somewhere.... usually someones bottom line until they adjust their costs. But someone will be a winner in this space.... we just don't know what that is going to look like yet. I expect winners and losers in this space - rising costs - rising borrowing costs - and a FED that is hot on the trail of making changes.


Why does any of this matter? ---- Because PROFITS are what drives the stock market in the end. In the end this is what really matters. So if your costs rise -- are you able to sell more to make up for this? Are you able to raise your selling prices? If BUSINESS IS GOOD.... then it's not a big problem. It's a problem when cost rises and sales falter.... Remember we need TOP LINE (SALES) growth and BOTTOM LINE (PROFITS) to have a good stock market. To have a good stock market - we have to have a healthy sales environment. WATCH FOR ANY CHANGE. A reset or rebuilding of America can be an absolute boon to our economy -- but we must be ever vigilant of the ugly elephant of INFLATION as we heat up.... You couple rising overhead costs (rates) and price increases to cover said rising costs.... and that can become hard to contain and can spiral out of control like it did in the early 80's.

[XLexusTech]

My options ... my dividend stocks .... my mutual funds ... open a new Roth ? (Note 8% of the 15 mentioned above goes into a Roth)

[Vegas69]

I've warned here many times about RISING INTEREST RATES and their correlation to values of your holdings.

We CAN NOT ignore the relationship. House values are affected by rising rates... as the rush to beat the rise in rates temporarily pushes buyers in to the market - they'll be the ones paying the highest prices ------ until the rates reach a point where they simply price out the average buyer and then home prices will need to be adjust DOWNWARD to get the monthly payments down to where people can afford to make them.

Autos --- We've seen a big cycle of renewal... bolstered by low rates that are often near or at ZERO...

Banks.... they borrow your money at super low rates and lend it out at higher rates - "the spread" - this increases as rates rise. Remember that banks use leverage in their lending.... and a simple .25 rise in the spread makes the banks a lot of money.

Capital spending here in the USA..... this can only be a good thing for the USA. But there will be lots of bumps in the road because nothing ever really just steams ahead as planned.... so while we should see a increase in capital expense here -- if rate rise too fast too far - that will pinch corporate profits and slow cap ex.... so we need a nice balance here. Sales and profits might continue to fund Cap Ex spending..... squeeze one too hard and it pinches the other off. I think we'll see a rush to borrow to get ahead of rising COSTS.... The more you borrow now -- the smarter you'll look down the road. But you have to have the CONFIDENCE to invest in plant and equipment etc - so we need confidence to stay high as well.


Healthcare ----- Oh my...... Who knows where this is going to go. My guess is we'll see LOTS of pressure to bring down prices and costs.... that is going to have to come from somewhere.... usually someones bottom line until they adjust their costs. But someone will be a winner in this space.... we just don't know what that is going to look like yet. I expect winners and losers in this space - rising costs - rising borrowing costs - and a FED that is hot on the trail of making changes.


Why does any of this matter? ---- Because PROFITS are what drives the stock market in the end. In the end this is what really matters. So if your costs rise -- are you able to sell more to make up for this? Are you able to raise your selling prices? If BUSINESS IS GOOD.... then it's not a big problem. It's a problem when cost rises and sales falter.... Remember we need TOP LINE (SALES) growth and BOTTOM LINE (PROFITS) to have a good stock market. To have a good stock market - we have to have a healthy sales environment. WATCH FOR ANY CHANGE. A reset or rebuilding of America can be an absolute boon to our economy -- but we must be ever vigilant of the ugly elephant of INFLATION as we heat up.... You couple rising overhead costs (rates) and price increases to cover said rising costs.... and that can become hard to contain and can spiral out of control like it did in the early 80's.

Is there really any doubt a correction is coming on the horizon? When you team what Greg said with the debt cycle, it seems likely in the near future. Think about what happened 7-10 years ago. Many wiped out there excessive debts through foreclosure, short sales, and bankruptcy. When the economy came roaring back, they now had a large percentage of income that could be displaced with debt. The fact is that roughly 85% of cars are financed. The US economy is very reliant on consumers taking on debt to make purchases of houses, cars, boats, furniture, etc.. When Americans start getting toward the end of their available monthly income due to excessive debt load, spending slows down. Team that with higher interest rates and.... I know I've seen people spending similar to 12-15 years ago.

I recently read in the Wall Street Journal that the stock market had it's second best run under Obama vs. any other president in history. That's 8 years of serious gains. Housing has been appreciating for 5-6 years in most markets.

Are we there yet? Who knows, but we are much closer than yesterday. If I was closing in on retirement, I'd be making some conservative moves with my money, that I know. Unless I lived off my dividends like Greg! 97% can't do that.

One thing is certain, cash will be king in the next low cycle. I hope to be ready.

[glassman]

Good discussion here this morning guys. I wish I can add to these comments to help out, but I'm still learning. With my hyper brain the one thing I have learned (albeit slowly) is too keep it simple, basic fundamentals

Watching the closing hours of the Rolex Daytona24

[GregWeld]

Is there really any doubt a correction is coming on the horizon? When you team what Greg said with the debt cycle, it seems likely in the near future. Think about what happened 7-10 years ago. Many wiped out there excessive debts through foreclosure, short sales, and bankruptcy. When the economy came roaring back, they now had a large percentage of income that could be displaced with debt. The fact is that roughly 85% of cars are financed. The US economy is very reliant on consumers taking on debt to make purchases of houses, cars, boats, furniture, etc.. When Americans start getting toward the end of their available monthly income due to excessive debt load, spending slows down. Team that with higher interest rates and.... I know I've seen people spending similar to 12-15 years ago.

I recently read in the Wall Street Journal that the stock market had it's second best run under Obama vs. any other president in history. That's 8 years of serious gains. Housing has been appreciating for 5-6 years in most markets.

Are we there yet? Who knows, but we are much closer than yesterday. If I was closing in on retirement, I'd be making some conservative moves with my money, that I know. Unless I lived off my dividends like Greg! 97% can't do that.

One thing is certain, cash will be king in the next low cycle. I hope to be ready.




I see a period of "between" --- where we are spending *thus - buying* FIRST..... as there's a rush to get things done BEFORE the rates go very much higher (we have time here)..... Then - as TODD rightly points out - the glass begins to fill with debt and spending slows accordingly. We're not talking about next week guys!!! But WE MUST BE OUT FRONT (that means to be thinking in ADVANCE) of this...... at some point. Not yet - but at some point you need to understand these relationships.

[Vegas69]

I'm with ya, my friend!

A great quote I read today:

"You must not only be in the right place at the right time, but you must be the "right person" at the right place and time." -T Harv Eker

[WSSix]

The company I work for was acquired recently. We were just told effective this month our existing 401k ( I contribute 15% ) is dead (we can't contribute and employer contributions are dead) when the new company takes over we have their 401k and ESPp that we can participate in... my question is where should I go with that 15% during the mulitiple months it's going to take?

My options ... my dividend stocks .... my mutual funds ... open a new Roth ? (Note 8% of the 15 mentioned above goes into a Roth)

I'd just keep it simple and put the extra money into your current dividend stocks after making sure your Roth IRA is maxed out for 2017. I'm assuming this won't be for a long period of time so there's no need to start a new retirement account to replace the no longer available 401K. Those are my thoughts anyway.

I hope the ESPP is a good option for you, too. I took full advantage of mine when at Halliburton a few years ago. It's worked out nicely even with the downturn in oil.

[WSSix]

Along with what Greg and Todd have mentioned this morning, what are people's thoughts on industries that Trump has specifically called out and might be affected by his tariff demands? For example, I was thinking about opening a position in Ford just for the dividend. I'm concerned though that they may take a hit since many vehicles are made in Mexico. I'm also concerned about my own employer, Cummins. We have a lot of engine plants in other parts of the world. We sell engines here that were made in India, China, and Japan. I don't like it when I see certain industries specifically targeted for legislative abuse.

[68Cuda]

our existing 401k is dead

What are your options there? Can you roll this over into a self directed IRA? That may give you more flexibility than just rolling it into the new 401k plan.

This is essentially what we did with one of my wife's old employer's 401 plans. When she left they put her in some plan outside the company that has stupid high fees so I just had her roll it into a E-trade IRA where we choose the stock investments and only pay for trades.

[JKnight]

The issue in the interim period will be that you can't contribute pre-tax money from your pay. I'm a little surprised they are handling the transition in a way that doesn't have you participating in the acquiring firm's plan prior to stopping contributions into the existing. Trey's point about funding a Roth during that period is valid, but those will have to be after-tax dollars. I'd ask your firm's HR group for more info about your options during this period. If they don't provide a mechanism for pre-tax contributions, you don't really have an option to continue that.

[JKnight]

The potential cut in corporate tax rates has undoubtedly contributed to the DOW surpassing 20.000, if the optimism around that changes, we'll see a correction, and vice versa. I won't be betting against it happening in this political environment. Whether or not you agree with it, investing in stocks is one way to capitalize on it.

[So Cal Camaro]

I see a period of "between" --- where we are spending *thus - buying* FIRST..... as there's a rush to get things done BEFORE the rates go very much higher (we have time here)..... Then - as TODD rightly points out - the glass begins to fill with debt and spending slows accordingly. We're not talking about next week guys!!! But WE MUST BE OUT FRONT (that means to be thinking in ADVANCE) of this...... at some point. Not yet - but at some point you need to understand these relationships.

Yes, but with Trump proposing to reduce regulation and cut corporate taxes, hoping for business to spend those huge piles of cash they have been sitting on during Obama's reign....I anticipate things are gonna roll up higher, there may be a correction, but in the long run this party is just starting if you look in the right places...

[Vegas69]

Give us some details on the "right places".