Investing 102

[lmnop]

Good info -- and for this forum is very good information for OTHERS.... as this can and does work. I'll "average down" a stock investment - which I've discussed in previous posts.

I have owned LARGE (300 plus units per building) class A apartment complexes... so I understand the rent reward capital depreciation etc. BUT -- big BUTT -- they are professionally managed and I just collect a check every 6 months. Again -- the risk/reward/work factor just isn't worth the 6 tenths of a percent differential of owning McDonalds or Annaly Capital Management. $600K in Annaly (NLY) gets you 35,000 shares of dividend paying stock - it pays .57 per share per quarter... or a total of $79,800.00 per year.

Do you see why I'm rich and you're not? :rofl:


I agree about the hassle but you are not counting the 200 loss in your calculation. If you only had 600 total to invest and you had lost 200 on the condo you would only be able to invest 400 in the market. *And comparing NLY isn't a fair comparison as generally real-estate is more a steady eddy investment *like Mc Donald's. *So basically you have 400 invested in Mc Donald's instead of 600 in condo's. with basically the same % return in both investment your behind. You could always be richer right?*

Ray;)

[WSSix]

I truly believe that everyone can have a better life if they simply pay attention and make small steps that actually make their life better. I also do not believe in trying to exploit those people in society that have more or are "rich". Instead I believe we all can learn from them in most cases. Knowledge is NOT regulated to text books or a classroom. So, me wanting to expand my knowledge, make my life better, and continue to live what I believe simply thought I'd ask people within this group, that I am apart of, what they knew hoping someone could help. I never thought it would turn into what it has. I'm glad others are getting as much or more from this than I am. So you're welcome, but Greg and everyone else that has contributed have my sincere gratitude.

Now, it's only in the 40s but the sun is up so I'm going to partake in one of my pleasures that also makes my life better and go ride my Duc. See ya!

[GregWeld]

It is very hard to do a "recap" of INVESTING 102.... because there are so many variables and scenarios for different ages - differing incomes - differing situations... but what I will try to do here is to get people to think about some aspects of investing and try to shed light and alleviate some of the fears "newbs" might have about "investing".

#1 It is never too late to start! Time is a money multiplier. The old saying was that money doubled every 7 years. That was based on a healthy reinvested return of around 8 or 9% annually. Today - with the lower interest rates that double might be closer to 10 years.

#2 Take control of your investments/money. Putting money in the company 401 program is fantastic! BUT! You can not simply accept that doing so will get you where you need to be. YOU MUST examine where your money is - and what return (ROI - Return On Investment) you're getting. Many people pick a Mutual Fund(s) and plough money in weekly and never ever look at it. Some of these funds may actually LOSE money. Some are barely adequate - and a very few do "okay". YOU can do better than "okay" with just a simple understanding of the returns - the diversification - and your options for your investments.

#3 What to look for in a good investment. There are several very simple easy to understand terms that will help you choose one fund or stock over the other.

A) Growth - or Capital appreciation: At what percentage is the investment growing on face value. So if a share is at $10 - and it's 5 year growth rate is 10% (these numbers are easy to find using Yahoo or Google Finance) then you need to COMPARE that rate against some other choice until you are happy with the rate of return.

B) Dividends - Again - using a financial site look for whether or not the stock is paying a dividend. Dividends are generally paid quarterly and can greatly affect your TOTAL RETURN. They help bouy a stocks price in a down market. Reinvesting the dividend (automatically) can really snowball your return!

C) Total Return - this is harder to find information but is really really worth the effort! Total Return is the growth in capital and the dividend REINVESTED over time. Generally you can find 1 - 3 and 5 year Total Return information. T/R is CRITICAL and should be a deciding factor for most investments. This is the actual amount an investment has grown over the measured time frame. A dividend paying stock might look like a bad investment if it only pays 2% dividend - but with growth in the stock price - the T/R might be 100% in 5 years! I don't care what investment you are making -- The T/R is what you are after!

The Charts - Take any stock or mutual fund and look at the 5 year or longer chart. This is only a reflection of the share price growth (or dip - or decline). It is this long term "picture" that will help you to see that while the price might go down or swing up and down daily or weekly - or even for a year or two - but the OVERALL chart is going UP and the more UP the better! When the market turns against us - we need to re-visit these charts for assurance that our strategy is on the right track. They will help you get through the tough times.

Balance - Greed generally tries to tip us out of balance. We all want the hot stock... or the hot growth industry or the highest dividend payer. Trust me - that if you load the boat with this strategy it will tend to tip over. So try to curb your greed - it's okay to have a hot one, or the bigger dividend payer - but balance it with a steady eddy. A steady eddy is a stock that just plugs along - and when looking at it's chart - compared to another stock - it didn't GO DOWN nearly as much as the "market" did. No - it doesn't go up as fast either - but it's the DOWN that will kill you. Here's why. In a down market people tend to panic - they tend to SELL at the wrong time - They have FEAR... it's real - don't discount it... but if you have an account that has some steady eddies in it - they will help offset your big down stocks - so overall you're not down as much. Just not being down as much - is very comforting. Living with your investments long term is where you'll make your money. Selling in a down market is the way to lose the most.

Diversify - Depending on how much you have to invest - try to get as many different stocks as you can to a point. More than 20 is too much. So if you have 10 grand - try to buy 5 and when you have more dough add a 6th name and so on. But even if you have a million - 20 or so stocks is enough to get you diversified. It's called the 5% rule... no more than 5% in any ONE single investment. That is impossible to achieve until you get to around 100,000 invested. But the rule is simple enough to understand. If you have $1,000 buy ONE company - save another $1,000 and buy a second company and so on.

SIMPLE TO UNDERSTAND STRATEGIES

The old KISS principle to investing works for most people == they just never thought of it this way. Everyone wants to invest in the next hot stock (Faceybook? LOL) but in doing so they overlook real simple winners. Winners are stocks you can live with thru thick and thin... that have that magic Total Return... They are stock that you're familiar with... companies that you buy at, or eat at, or use. Names like McDonalds - Kraft - Coke - Pepsi - Home Depot - Lowes - Ford - Caterpillar - Google - Best Buy - Amazon - Costco - Chevron - Exxon etc. You do not have to look very hard or very far to find real good total returns. You don't have to do any Tom foolery.

I had written earlier - that if you want investment ideas -- drive down a busy commercial street - look around and jot down the names of the biggest business you see and that you know the names of and understand what business they're in. Then go look them up. Write it down - now go and compare them against known competitors. So -- if SEARS is a name you wrote down -- get their Dividend info - growth info - T/R info... now go compare them to other names in that 'sector' or industry. Compare Sears to Best Buy - Home Depot - Lowes - Target - Costco etc. What you're looking for is the education this will give you. Some names just don't do very well as investments - others are stellar... so what you're trying to find is THE BEST OF BREED

BEST OF BREED are the stocks or Mutual Funds that have outperformed their competitors OVER TIME... not 6 weeks -- but over a 5 year period of time. Why is this important? Because it means that their management is on the right track. Remember that when you buy shares -- you've become a partner in that business! Don't you want to partner with the best and brightest?

The real key to investing for the long haul - is to not get caught up in all the news on TV -- while you want to pay attention to the TRENDS -- i.e., is the FED going to raise interest rates -- are we going into a recession - or are we seeing information that is saying we're out of a recession... the rest is just OPINIONS. Opinions are what makes a market -- one guy is chicken little and selling - the other guy is balls out buying... neither one of these so called "experts" KNOW. They're making educated GUESSES.... and they're getting their face on TV. But in the end it's nothing more than their opinion. Since nobody can tell you when something is going to happen - you're best off INVESTING - pick your best of breed stocks with good long term charts - and if possible - the best dividends. Then kick back and watch your investments grow.

You don't need to be an investment professional... you just need to do a minimum amount of research and put your thinking cap on. Do you like COKE over PEPSI - look at their chart - do the Total return comparison - compare the dividend -- then just choose the one you like if there's not much difference... Stick to the basics of making money for yourself.... Names you know and trust - good long term chart - dividend or not - what is the total return... and try to diversify.

And remember the best number one rule ever in the history of the UNIVERSE..... if the grocery store clerk tells you about how much money they're making doing "X" (.coms - house flipping - gold).... RUN! By the time they're into it you're at the end of whatever "it" is.

[GregWeld]

Oh and I don't have a Star Fund I have their VTIVX fund. Still not great though. It gets good ratings from Morning Star et al though.


Either way == HORRIBLE returns overall....


10 year @ 37%

5 year @ MINUS 5%

The 3 year only looks good because of the trough it went in! OMG!

It is another Vanguard fund that invests in other Vanguard funds... sorry. That strategy is just dumber than dumb. What they have done is get you to allow them to create a buyer for their other funds. So it's really just a cash slush fund for them to buy shares in their other funds if they want to sell some... they have a ready made buyer. OMG..... RUN!!!!

[pw2006]

Great recap! Going to hit the print button and start watching the Super Bowl. Thanks Greg!:thumbsup:

[CRCRFT78]

This is what I was working with on December 27, 2011.
Stocks
Apple (AAPL) P/E-14.75 Div/Yield-Not listed 10YR-+3788%
Caterpillar (CAT) P/E-14.03 Div/Yield-0.46/2.00 10YR-+256.89%
Disney (DIS) P/E-14.94 Div/Yield-0.60/1.60 10YR-+81.87%
Harley (HOG) P/E-20.28 Div/Yield-0.12/1.29 10YR--28.24%
Nike (NKE) P/E-20.94 Div/Yield-0.36/1.47 10YR-+248.03%

Mutual Funds
Fidelity Freedom Fund 2045 (FFFGX) 10YR--8.63%
Spartan Total Market Index Investor Class (FSTMX) 10YR-+23.73%
Vanguard Total International Stock Index Fund (VGTSX) 10YR-42.13%

Since then I have sold Harley (HOG), Fidelity Freedom Fund 2045 (FFFGX) & Vangaurd Total International Stock Index Fund (VGTSX). Unfortunately, I didn't jot down the numbers prior to my fire sale but I can tell you that I am much happier with my current portfolio. The performance has been steady and I plan on adding to it. Here is how it currently sits as of today.


Stocks
Apple (AAPL) P/E-13.09 Div/Yield-Not listed 10YR-+3666.33%
Altria Group (MO) P/E- 17.61 Div/Yield- 0.49/5.69 10YR-+151.05%
Caterpillar (CAT) P/E-15.40 Div/Yield-0.46/1.61 10YR-+351.07%
Consolidated Edison (ED) P/E-16.50 Div/Yield-0.61/4.11 10YR-+43.15
Disney (DIS) P/E-15.89 Div/Yield-0.60/1.50 10YR-+78.17%
Kinder Morgan Energy (KMP) P/E-539.96 Div/Yield-1.16/5.41 10YR-+152.38%
Nike (NKE) P/E-22.12 Div/Yield-0.36/1.39 10YR-+244.89%
PepsiCo (PEP) P/E-16.72 Div/Yield-0.51/3.09 10YR-+33%

Mutual Funds
Spartan Total Market Index Investor Class (FSTMX) 10YR-+34.73%

[Sieg]

Greg Weld - Thank you again for the time, energy and passion you have put forward in the this thread. Best example of a charitable contribution I've seen in a long time, you deserve a tax deduction for it. :thumbsup:

[Bucketlist2012]

Greg Weld - Thank you again for the time, energy and passion you have put forward in the this thread. Best example of a charitable contribution I've seen in a long time, you deserve a tax deduction for it. :thumbsup:

LMAO:rofl:

GREG...I asked for a recap...Nice Job...

[WSSix]

I think the recap may need to be posted on page one, lol. Heck of a summation that's for sure.

[GregWeld]

Good super bowl....

Thanks for the kudos guys...

Sieg -- I'm going to see if my CPA agrees with your deduction idea... :hail: :rofl:

Jose --- MUCH BETTER portfolio! Note by the way - of the stocks you HAD - the losers were MUTUAL FUNDS not the stocks! Glad your on a better track now.

[CRCRFT78]

Yeah the mutual funds were the real downer of the bunch. Harley sat idle so of course as soon as I sold it the little f***er on Wall St. yells, "RAISE THE PRICE". The one mutual fund I've held onto seems to be performing pretty good but I'm wondering, can I sell the initial investment of $10,000 to use elsewhere and keep the profits invested in the fund. Something I'll have to look into. Maybe keep the $10,000 in the fund and take the profit and reinvest that. Decisions decisions.

[GregWeld]

Yeah the mutual funds were the real downer of the bunch. Harley sat idle so of course as soon as I sold it the little f***er on Wall St. yells, "RAISE THE PRICE". The one mutual fund I've held onto seems to be performing pretty good but I'm wondering, can I sell the initial investment of $10,000 to use elsewhere and keep the profits invested in the fund. Something I'll have to look into. Maybe keep the $10,000 in the fund and take the profit and reinvest that. Decisions decisions.

Isn't it amazing that when you buy, the stock goes down, and when you sell it goes up -- the whole time you owned it for the last few months it does "nothing".

Reminds me of our sports teams here in Seattle - we get somebody - they suck - we trade them finally - and they become super stars... Deion Branch comes to mind...:rolleyes:

I would put Harley squarely in the "consumer discretionary" camp.... but I would also put them in the "fad" camp... If the consumer is feeling good - Harley will do better -- but at what point do we run out of people that grew up wanting a Harley? So when I look around at investing options -- and remember that we always have options for where we invest -- Harley would scare me because I'd always be wondering if it was "this quarter" when they report a big drop in sales etc. I prefer to invest in stuff that people NEED... and if they're discretionary - then I want them to be able to export (GROW) to China... (Apple - Coke - McDonalds etc). :cheers:

[bdahlg68]

Well nothing is going to happen today for me. I can't figure out how to move things around from the website. Oh well, I'll call this week sometime and speak with a human. Why do they have to make it so difficult? Is this some sort fo ploy to make sure they make as much money off you as possible without you being able to control everything easily, lol?

Oh and I don't have a Star Fund I have their VTIVX fund. Still not great though. It gets good ratings from Morning Star et al though.

Call up Fidelity to get Brokerage Link setup and set that up as the Investment Election for your Fidelity 401k. Within the Brokerage Link account, you should be able to buy and sell all the common stocks being discussed in this thread. Also make sure you elect to reinvest those divi's!

[WSSix]

Thanks Brian. My goal for the week is to make the calls to both vanguard and fidelity so I can find out how to do it all.

[bdahlg68]

Thanks Brian. My goal for the week is to make the calls to both vanguard and fidelity so I can find out how to do it all.

For Fidelity, they are likely going to send you a form to fill out in order to get Brokerage Link setup. I set mine up about 10 years ago, so I forget the exact details. Fidelity commissions aren't the cheapest, but as long as you are following most of the ideas here at 102, commissions are not important.

For those looking to open an account, I also like Zecco. Low commissions ($4.95 or something) and good basic features. If for some reason someone is looking to open a Zecco account with $10k or more, let me know and I'll send you a referral and we both get $100... quick 1% if you ask me! :thumbsup:

[CRCRFT78]

http://online.wsj.com/article/SB10001424052970204542404577158761922787578.html?m od=WSJ_Investing_Investing_2

Just thought I'd share this.

[GregWeld]

Good article Jose....

It's saying pretty much what I've been preaching here -- with one exception -- that we're talking about NEWBS and pretty low dollar amounts here -- or at least that's my perception.... so to follow the advice of bonds and stocks and all the other mixes discussed here is pretty hard to follow even if you had 100K. In a portfolio like I have -- I have all those mixes - munis - stocks - corporates - growth - risk - safety - international etc... but for the normal account - it's just not possible. And you also need to consider "TIME" i.e., your AGE now... younger can take more risk... old farts like me play it a bit safer.

What I did like to see here is that he was also preaching some "risk"/"growth" along with the safety and that's the other thing I've been trying to hammer down on.... all growth isn't' a good thing and it's that greed that comes home to roost in a downturn. In an up market people start thinking they're investing icons! :woot: but if you temper your account with some balance - then you don't get killed.

[Sieg]

that we're talking about NEWBS and pretty low dollar amounts here -- or at least that's my perception.... Speaking for myself only, you're not going very far out on a limb with that statement.......maybe 6" from the trunk on a 12" limb. :rofl: :rofl:

[GregWeld]

Well -- I didn't mean that people don't have anything or that they have zero etc --- it's all relative really -- a 20 year old with 10 grand is a hero in my book -- cause that guy can really hit a home run before retirement... but it's not enough to get all the diversity that was talked about in that article -- thus my comments. Sometimes you read this stuff and you look in the mirror and start to think you're doing something wrong because you don't have it all going on! WRONG... but it is educational and well worth the read.

[Sieg]

Well -- I didn't mean that people don't have anything or that they have zero etc --- it's all relative really -- a 20 year old with 10 grand is a hero in my book -- cause that guy can really hit a home run before retirement... but it's not enough to get all the diversity that was talked about in that article -- thus my comments. Sometimes you read this stuff and you look in the mirror and start to think you're doing something wrong because you don't have it all going on! WRONG... but it is educational and well worth the read.

Please don't think I meant it in a negative way at all. You've shown, at the risk of personal exposure, those following this thread the real potential of strategic personal investing. Personally don't know many people as generous, especially in this day and age. Hopefully there are a good number of 20 and30 year olds reading and taking this thread to heart as the impact it may have on their quality of life is a wonderful thing. :thumbsup:

[Bucketlist2012]

Please don't think I meant it in a negative way at all. You've shown, at the risk of personal exposure, those following this thread the real potential of strategic personal investing. Personally don't know many people as generous, especially in this day and age. Hopefully there are a good number of 20 and30 year olds reading and taking this thread to heart as the impact it may have on their quality of life is a wonderful thing. :thumbsup:

Amen... too many young people think that planning ahead at 20 or 30 is crazy...

That it seems so far away...Instant gratification seems better..

Tell you what, not planning for the future is crazy.. You must plan and invest.

I was on track to retire at about 60....Well two years ago, at 50, I had a major Brain and Heart condition which forced me into early retirement.

Had I not been planning for years , and with Plan "B", and "C", I would be homeless right now..

So, I have started living on my dividends sooner than expected, but all is well.

Even someone older , 45 or so, can still make it happen, if you stay healthy.. You could still save until you are 65..20 years of investing..

The younger viewers...this stuff is Golden and you have the World at your feet...Invest now, and reap the rewards later...:cheers:

[GregWeld]

Please don't think I meant it in a negative way at all. You've shown, at the risk of personal exposure, those following this thread the real potential of strategic personal investing. Personally don't know many people as generous, especially in this day and age. Hopefully there are a good number of 20 and30 year olds reading and taking this thread to heart as the impact it may have on their quality of life is a wonderful thing. :thumbsup:


No! I didn't think you meant it negatively at all!

Sometimes in these threads it's hard to put down all you're thinking.... while watching TV and talking with the kids (they're home this weekend) and I am A.D.D. on top of that.

I just am trying to make sure that people don't get overwhelmed and that they don't start thinking "oh hell - I don't have enough so why bother".

[GregWeld]

Great article on big names you all know -- and why they're successful...

Not pitching any of the companies -- just saying that you don't always have to be in the hot thing to make a lot of money over time.:woot:



http://bottomline.msnbc.msn.com/_news/2012/02/06/10281850-the-cheap-items-that-build-billion-dollar-companies

[Coursey]

Well -- I didn't mean that people don't have anything or that they have zero etc --- it's all relative really -- a 20 year old with 10 grand is a hero in my book -- cause that guy can really hit a home run before retirement... but it's not enough to get all the diversity that was talked about in that article -- thus my comments. Sometimes you read this stuff and you look in the mirror and start to think you're doing something wrong because you don't have it all going on! WRONG... but it is educational and well worth the read.

I am 27 and am trying to figure out how to invest my money, since it is not making anything setting in a savings account. I got in on this thread late (page 68) so i am trying to catch up. I have in the range of 10-15,000 that i would be willing to "tie up" in investments. The rest i need to keep access to for impending life events (i.e. baby due the end of the month, and new house in the next 1-2 yrs.)

There is alot of good advice here and i look up to those that have been successful.:hail:

These is a great thread. Hope I can catch up one day.

[Bucketlist2012]

A page or two back is a recap from Greg.

Check that out, and i think most of your questions will be answered..

About Risk, Diversity, Compound Interest, Dollar cost averaging,Data about ROI.

Actually easier than it sounds.

You have time on your side, and if you are thinking short term, mid term, and long term buckets, you are so much farther than most.

Double check the thread and the recap, and take some notes..

Plenty of guys willing to give opinions that are good..Take them all in, and then make YOUR plan..

Welcome to the best Thread ever:cheers: :lateral: :woot:

[GregWeld]

I am 27 and am trying to figure out how to invest my money, since it is not making anything setting in a savings account. I got in on this thread late (page 68) so i am trying to catch up. I have in the range of 10-15,000 that i would be willing to "tie up" in investments. The rest i need to keep access to for impending life events (i.e. baby due the end of the month, and new house in the next 1-2 yrs.)

There is alot of good advice here and i look up to those that have been successful.:hail:

These is a great thread. Hope I can catch up one day.

:hail: :bow: :hail: :bow: :cheers: :woot:


Coursey -- YOU are exactly the guy we're trying to reach out to. You have that magic thing called "TIME" on your side and you have a nice amount to start with.

You could start out by buying $1000 worth of each company you choose to invest in - and this would give you diversity... or you could - depending on your savings rate - take a narrower focus to start and buy $2000 worth - and then save up and add a new name with the new savings. Either way -- you're a winner.

If you buy dividend paying stocks -- with $10,000 -- you should be able to collect 500 to 700 a year in dividends. Reinvested - in about 3 years you should be collecting $1000 a year... which buys more shares and starts to really snowball. If you're adding to your account $1000 or $2000 a year in addition - you're going to be really rich by the time you retire.

If you don't already have them -- you'll want to ask the brokerage you choose -- about ROTH IRA -- which you can fund before April 15th for 2011 AND you can fund it at the same time for 2012... Hopefully the rules will allow you to fund $8000 into the ROTH -- then put the balance into
a 401... or just a regular taxable (not tax deferred) account. The ROTH comes out at retirement totally tax free. So imagine having a million plus dollars in an account that is spinning off $50 grand a year tax free and is still growing - so by 75 or 80 years old - it's kicking out even more. :woot:

[GregWeld]

Coursey ---

Here's what I'm talking about with dividends and interest -- here's a PREFERRED STOCK I have in JP MORGAN -- and here's a snap shot of SIX STINKY LITTLE MONTHS in payments from the holding.



12/01/2011 JPM+I JPMORGAN CHASE 8.625%PFDDEP SHS REPSTG 1/400 NON
type: QUALIFIED DIV
$4,042.97

09/01/2011 JPM+I JPMORGAN CHASE 8.625%PFDDEP SHS REPSTG 1/400 NON
type: QUALIFIED DIV
$2,964.84

06/01/2011 JPM+I JPMORGAN CHASE 8.625%PFDDEP SHS REPSTG 1/400 NON
type: QUALIFIED DIV
$2,964.85

I should have added that this is a QUALIFIED DIVIDEND -- so is currently taxed at 15% -- if it was in your ROTH it would come out 100% TAX FREE

[GregWeld]

I was just curious and thought about modeling a 10,000 portfolio and seeing what kind of dividends it would spin off for reinvestment.... and then I took a look at one high yielder - ANNALY CAPITAL MANAGEMENT (NLY) and thought --- WHAT IF a guy just bought 10,000 worth of that....

$10,000 would buy 583 shares paying .57 per quarter... $332 per quarter -- so the first quarter you'd buy 19 more shares now you have 602 shares - second quarter dividend would be 602 shares @ .57 which would buy 20 more shares -- so third quarter would be 623 shares @ .57 per share and would buy 20 more shares...for a total of 643 shares -- fourth quarter would buy 21 shares for a total of 664 shares... so now you have a 10 percent increase in shares and you can see how in just one stinky year this is starting to snowball...

So without all the typing here's 2nd year

22 shares
23 shares
23 shares
24 shares

Now in year two you have 756 shares YEAR THREE you're adding 100+ shares!

Okay -- my fingers are worn out just thinking about it. :D

[Blake Foster]

I keep telling the Wife we should be charging her son some rent. (not to mention a food bill every month) and put it in a RRSP for him.
Still working on that lol he will thank us when we are Dead.

[Coursey]

A page or two back is a recap from Greg.

Check that out, and i think most of your questions will be answered..

About Risk, Diversity, Compound Interest, Dollar cost averaging,Data about ROI.


I found a recap on page 76, is this the one you were talking about? or is there a differnet one as well?

[GregWeld]

I found a recap on page 76, is this the one you were talking about? or is there a differnet one as well?

Yep that's it..... but even go back to page one and just cruise thru there because there's been a ton of questions and responses... and examples etc

[GregWeld]

This is OLD NEWS -- from the SEPTEMBER QUARTER -- but what I want to ask you is.... did anyone get a 15% pay increase last year - or this year? :lol:

Here's your lowly McDonalds giving you a 15% pay increase... and this is another aspect that you want to look for in dividend payers.... the DIVIDEND INCREASE over time. Because this means they're making money - and it covers you for inflation!

I am NOT pushing McDonalds - it just happens to be a stock I own so I can use it as an example.

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

McDonald's Corporation announced that its Board of Directors declared a quarterly cash dividend of $0.70 per share of common stock payable on December 15, 2011 to shareholders of record at the close of business on December 1, 2011 . This represents a 15% increase over the Company's previous quarterly dividend rate and brings the fourth quarter dividend payout to over $700 million.

[Taylor1969]

Greg - FANTASTIC THREAD... and just at the right time.

31yo who wants to build a future.

I have 20K in my account ready to invest. This morning i bought my first ($1000 in T)

So, with 19K remaining what do you think about 2K in each of the the following to start:

MCD
GSK
COST
MMM
KO

What do I do with the rest? Anything I should add in to balance things out? BTW - I have an energy stock through a DSPP and options at work.

By the way - if I have the ability to self direct my 401K, should i follow the exact same principles there?

Thanks!
Chris

[hifi875]

im thinking of dropping 10 in annaly. bought some other stocks the other day.

at&t
bank of america
starbucks
altria

the dividend stream alone on annaly can really add up!!

[GregWeld]

Greg - FANTASTIC THREAD... and just at the right time.

31yo who wants to build a future.

I have 20K in my account ready to invest. This morning i bought my first ($1000 in T)

So, with 19K remaining what do you think about 2K in each of the the following to start:

MCD
GSK
COST
MMM
KO

What do I do with the rest? Anything I should add in to balance things out? BTW - I have an energy stock through a DSPP and options at work.

By the way - if I have the ability to self direct my 401K, should i follow the exact same principles there?

Thanks!
Chris


Chris....

Somehow you missed the "GREAT CHART" part of the research...

Go back and look at 3M (MMM) and Glaxo Smith Kline (GSK)... these are not the growth story you need. So what I would do is to look at your choice -- and compare them against other companies in their sector. You really want to TRY to get all of the major components in your picks -- Growth - Dividend - good chart - name/business you understand.

I also think that with 20K to invest - I'd prefer you get more diversity. So even if you just went with 1250 or 1500 per name and spread out a bit more.

You have Coke - McDonalds and Costco.... All good stocks -- but with the size of your account - and your age - I'd try to get some separation. These 3 horsemen are basically in the same 'sector'.... food/retail.

That, and you don't have any higher risk stocks to balance out your steady eddies. Your age allows you to take a little more risk than what you've chosen... and they can really put some octane in your total returns.

So with 20 grand --

choose Coke or McDonalds

Pick a different drug company -- with a better growth story that GSK or at least compare them and see if there is one you'd be just as happy with. You may end up with GSK if it's the one you like.

Ditto this in 3M

I like Costco --- I don't own any -- but it has a growth story and is a really well run company. I just would like to see you have more diversification.

Let's take a look at adding a high yielder -- JNK or HYG or NLY or some other in that category.

Great that you have energy already -- the country is always going to need energy!

Yes I'd follow the same strategy in your 401... You need all the horsepower you can to get you to win the race. You're young. You have time. So treat your 401 and your "new" account as ONE BALANCE -- add them up -- look at them TOGETHER - don't duplicate and don't overlap. IT'S ALL YOUR MONEY -- so diversify and think of them as ONE account when looking at them.

Remember --- I'm (nor anyone else) is here to pick stocks for anyone... We're really discussing what to think about and how to look at them.. so please don't feel I'm dissing your choices... you're on the right track but let's look a little more and then post up what you're thinking... and maybe where you're at in the 401 (names so we can look at it all - and feel free to use PM if you're not comfortable posting this stuff publicly).

[hifi875]

I look at my 401k and see what little its doing and think i could just do my own mutual fund like greg said and come out the same or even better. Its really got me thinking about my money instead of my car to a certain extent. scarry!!

[GregWeld]

I look at my 401k and see what little its doing and think i could just do my own mutual fund like greg said and come out the same or even better. Its really got me thinking about my money instead of my car to a certain extent. scarry!!

THE MONEY PAYS FOR YOUR CAR!

You'll feel better about putting money into your toys -- when you have REAL MONEY being earned and saved (not home equity rising - that don't count).

Just be mindful of INTEREST RATES when you're investing in Annaly (NLY) or HYG or JNK.... because these invest in interest rate sensitive product... and as interest rates RISE you'll take a hit in the capital side...

I use these to PARK money and get a great return -- so think about it this way -- you can have money in a money market account and make .025% --- or you can park money in JNK - HYG - NLY and make 7 to 12%... but you have to be ready to move. They are not "park it and forget it" names.

Since the FED has said it's leaving rates LOW.... we're looking good here - but be ready if the FED SIGNALS it's changing it's mood! Then you SELL these names quick!

[Coursey]

Right now all really have is a high yield checking account and a 401k through work.

My checking account makes 3.54% daily for the first 20K. Over 20K the interest is incurred at .75%. This is were the bulk of my money is setting.

Im not really sure what all my Edward Jones account has in it. I am going to try to get a better hold on this account to see how it is doing, and what funds it is in (I think it is AmeriFunds).

This thread has really got me thinking about were my money is at and if it would betterin other places.

[Bucketlist2012]

So much activity and questions..

I am loving it..

Yes, the Investments now will pay for your toys later..

We are at a crazy time in History.. The last few years, and the next few years.. Incredible opportunities.. Take them..:cheers:

We sure will have big bumps in the road(Market), but in the long Run, those that are in the game now with multiple "employees", will reap the benefits later, and the dividends along the way.

Can I vote that Big Ben speaks every week...Because when he does....:woot: :woot:

[hifi875]

THE MONEY PAYS FOR YOUR CAR!

You'll feel better about putting money into your toys -- when you have REAL MONEY being earned and saved (not home equity rising - that don't count).

Just be mindful of INTEREST RATES when you're investing in Annaly (NLY) or HYG or JNK.... because these invest in interest rate sensitive product... and as interest rates RISE you'll take a hit in the capital side...

I use these to PARK money and get a great return -- so think about it this way -- you can have money in a money market account and make .025% --- or you can park money in JNK - HYG - NLY and make 7 to 12%... but you have to be ready to move. They are not "park it and forget it" names.

Since the FED has said it's leaving rates LOW.... we're looking good here - but be ready if the FED SIGNALS it's changing it's mood! Then you SELL these names quick!

One good thing about this thread is that it has legs. I don't think it will just end, because its something like cars that we all have in common. Its just another part of the car hobby(funding it to a lesser degree sorta). It might even pass vegas69 build thread one of these days! I know I check it daily. thanks for getting it going and keeping it going.

mike

[Sieg]

OK youngsters don't let us down. Pay close attention to the fundamentals and take the ball and run wisely! :thumbsup:

Oh how I wish this opportunity would have been put in front of me in this manner 25 years ago. I'd be focused on track day schedules for this season with Mr. Weld vs. real work. :unibrow:

[CRCRFT78]

You mentioned having to be able to move these stocks (NLY JNK HYG) fast if there was a change with the interst rates. Would you park these in a specific account due to the possible tax hit you might take if you can't hold them for the long term?

I posted what I have in my Rollover IRA, I also have a brokerage account with Schwab and a Roth IRA. When selecting stocks should you watch where you park them for tax purposes?

[ErikLS2]

Personally, I think the only real advantage to a 401k anymore is if the company matches any portion of your contribution. You should of course put enough in every month so you get the maximum match the company is offering. Beyond that, I believe a Roth IRA is a much better choice for people with a long way to retirement. Now, if you have or make enough that you can max out your Roth every year and have some left over, then put the left over amount into the 401k.

Most 401k's have very limited investment options and most of those usually suck. A Roth that you open at a discount brokerage gives you the option to invest in just about anything you want. Also, if you want to take a small portion and gamble or trade with it a little bit any gain you realize is not a taxable event when it's done inside a Roth. It's not even taxed when you withdraw it, you pay the transaction fee for the trade and that's it.

If you have some money in a 401k account in a plan from an employer THAT YOU NO LONGER WORK FOR, you can convert that into a Roth IRA provided you can pay the income tax on the money (at your current tax rate) with money outside the plan. This is because the 401k contributions are pre-tax and the Roth IRA contributions are post-tax. You can't use money from inside the plan to pay the income tax either, you have to pay it with "outside" money and the whole thing goes on your tax return for the year in which you make the conversion. The money does not go through you personally or you'll pay the early 401k withdrawl penalty. What you have to do is a trustee to trustee transfer where the money goes from the old 401k plan directly to an already setup Roth IRA plan. If you don't have a Roth yet setup yet you should anyway and it should be established before you initiate the conversion.

There is some math involved to see if the conversion is worthwhile but I believe for just about anyone probably 45 or younger it makes sense to do it provided you can pay the income tax on the balance from the 401k without suffering a financial hardship. The 401k pre-tax contribution premise is based on the assumption that you will be in a lower tax bracket at retirement age but I bet if you are following an investing 102 philosophy there's a good chance you'll be in a higher bracket in which case the Roth is a much better plan because all withdrawls from it are tax free.

I'm not sure I'm aware of all the current rules so you should investigate the details further if this interests you. I just wanted to contribute a little to the overall thought process here. Any corrections or add-ons are of course welcome. :lateral:

[GregWeld]

You mentioned having to be able to move these stocks (NLY JNK HYG) fast if there was a change with the interst rates. Would you park these in a specific account due to the possible tax hit you might take if you can't hold them for the long term?

I posted what I have in my Rollover IRA, I also have a brokerage account with Schwab and a Roth IRA. When selecting stocks should you watch where you park them for tax purposes?

Man we're getting great questions in this thread!! Amazing how people are thinking now! I love it!!

Jose.... #1 thing about investing when thinking about taxes. BE HAPPY if you have to pay a tax! It's only a small percentage of what you MADE! My accountant used to get so angry with me when I complained about my tax bill! He'd say - GREG! You made a million bucks and you're only paying 350,000 in taxes -- that means you still got to KEEP 650 GRAND! Don't be an idiot! I'd smile and say -- Okay I see what you mean.

Now -- First off -- folks -- do not be confused as to WHICH ACCOUNT you have money in! If it's a TAX DEFERRED ACCOUNT (401/ROTH etc) then there is no tax due until you withdraw.... and in the case of a ROTH there's NEVER any tax due! So fugedidabout taxes.... they're not important here.

IF however, you're talking about a taxable account... then still forget about the taxes --- LTCG are one year and a day - 15%..... STCG are anything less than that and are taxed at your ordinary rate.... so Jose -- what you're really talking about is the DIFFERENCE between 15% -- and your ordinary rate... and while we can sit here and discuss this all day... paying that "difference" on your taxes is FAR FAR better than LOSING CAPITAL! So let's say you made 1,000 in gains -- short term (STCG) -- and you're at the 35% bracket (god bless you!) DUDE! You're only paying taxes because you MADE MONEY!

The alternative is to LOSE your gain --- and pay no taxes.... which would you rather do??

SO the key here is to MAKE MONEY - furgit da tax man - we don't want no stink in' loses! And if that means you have to sell to keep your gain - then DO IT!

Oh == and maybe at the end of the year -- you might want to scoop some gains - redeploy those workers.... then look at your account and take a loss on something else to MINIMIZE your tax gain.... and retrain those losers! Maybe not the whole team but maybe some of them -- just a haircut here and there so as to offset some of your gain...

So the real difference is between being a TRADER and an INVESTOR.... a Trader is just trying to make quick trades to make gains... and he's going to have (hopefully) a tax at the end of the year... but we're not talking about being that guy. We're talking about MANAGING our money to minimize losses - maximize our gains and protect our assets. HUGE difference!

Parking money is still about MAKING MONEY.... Obviously we will try to minimize the tax bill in the process. I have a couple MM in JNK - HYG - NLY.... it's parked there because I don't LOVE these plays for anything other than the cash they spit out... they don't make anything - there's no brand - so I only want them for their bodies! :lol: The minute they get long in the tooth they're outta here! Or if I can find something else that is safer and gives me near the return. In the meantime... I'm loving 'em TODAY.

Remember that we use these kinds of "stocks" to offset our far better INVESTMENTS that pay a smaller dividend. They can really boost your returns.... but if interest rates change or look like they're going UP - RUN! These will get clobbered first! So ya gotta be on the lookout all the time. :cheers:

[GregWeld]

One good thing about this thread is that it has legs. I don't think it will just end, because its something like cars that we all have in common. Its just another part of the car hobby(funding it to a lesser degree sorta). It might even pass vegas69 build thread one of these days! I know I check it daily. thanks for getting it going and keeping it going.

mike

Mike --

I have various buckets of money - old money - new money - stocks - bonds - real estate etc. I like to keep 'em separate so I can track what they're doing. Recent "new money" (an asset that converted to cash) was just gravy for me (thank you thank you thank you... :hail: :hail: :hail: better lucky than smart!!).... and was stuck into several different accounts. One of those was UP $35 grand today and the market wasn't up much.... so buying that $275 replacement module for my trucks Banks Power system was no biggie (in my mind). It's like a total "ho hum"....

This is where ya want to be... making money in your sleep so parts are no biggie.

[JKnight]

...but if interest rates change or look like they're going UP - RUN! These will get clobbered first! So ya gotta be on the lookout all the time. :cheers:

Hey Greg, you're doing a great job of passing along quality information in a way that can be digested by the masses. While this may be an investing 101 topic, I would think the quote above could be a great reason to integrate a discussion on the use of, and strategy behind, limit orders, stops and trailing stops. Particularly as it fits in with your overall investing strategy...

[GregWeld]

Hey Greg, you're doing a great job of passing along quality information in a way that can be digested by the masses. While this may be an investing 101 topic, I would think the quote above could be a great reason to integrate a discussion on the use of, and strategy behind, limit orders, stops and trailing stops. Particularly as it fits in with your overall investing strategy...

Thank you... I'm trying to keep it simple enough that no one is left behind.

Limit orders - stops and trailing stops are something I never use.... so while I certainly understand them and will explain them here I don't think they're a good strategy for Investors 102...

Limit orders is a price you pick when placing a purchase order. And there are several factors you can choose when placing a buy order - limiting the price you are willing to pay - vs "market order" - and also the time frame you're willing to place on an order - good til filled - fill or kill etc. You can even specify fill all or none etc. These are fine "limits" but for our purposes - we just want to own the stock - and a few pennies one way or the other isn't going to make much of a difference.... thus I've left this out of the discussion.

If I don't use this to buy 10,000 or 20,000 shares at a time.... I don't see how it's particularly useful buying 50 / 100 / 500 shares. While setting a limit order price could save you .50 or even maybe a 1.00 per share (on a stock that moves like that) many times you can set a limit and not buy the stock because it never traded that day at your limit price.

Stop orders are a price you choose in advance - telling your brokerage that if it gets to this point sell it... It's kind of a short for "stop loss"... which is just picking a price at which you'd rather sell the stock than hold it should it fall below your chosen price.

Again - for our purposes - the last thing we'd want to do is to get "stopped out" (the stock hits your stop price and is sold out) - and then loose our dividend in the process.... just because for one day or one week - or even for 3 months - the price is lower and meets some pre picked price. Remember -- that for our purposes - we actually want to BUY more stock at lower prices! We want that dividend to buy more shares... And I just don't think that stop loss orders have a place in "Investing 102". These are sophisticated strategies for people that are gambling rather than investing.

If someone is interested in learning these strategies - and there is no doubt that they can be used and in certain instances maybe should be used - there's a ton of information about them on the discount brokerages websites.

If you're really fearful of the stock market -- and wanted to put in stop losses on your stocks - you could just set some price on each stock that when they got to 10% below your cost you'd get sold out...

Guaranteed --- at some point you'll be sold out... and a week later or a month later the stock is higher and you're left shaking your head holding a 10% loss on a stock you wanted to own for 2 /3 /5 years... and now you have to go back and re-buy it... and then maybe miss the "ex" date for the dividend in the process....

If you're a real sophisticated guy - and you're watching your account minute by minute - and have all day every day to fuss around with this kind of stuff... it's fine. Me? I buy good stuff - year after year it goes a little higher - and those checks just keep buying me more car crap.... :rofl:

[Bucketlist2012]

Thank you... I'm trying to keep it simple enough that no one is left behind.

Limit orders - stops and trailing stops are something I never use.... so while I certainly understand them and will explain them here I don't think they're a good strategy for Investors 102...

Limit orders is a price you pick when placing a purchase order. And there are several factors you can choose when placing a buy order - limiting the price you are willing to pay - vs "market order" - and also the time frame you're willing to place on an order - good til filled - fill or kill etc. You can even specify fill all or none etc. These are fine "limits" but for our purposes - we just want to own the stock - and a few pennies one way or the other isn't going to make much of a difference.... thus I've left this out of the discussion.

If I don't use this to buy 10,000 or 20,000 shares at a time.... I don't see how it's particularly useful buying 50 / 100 / 500 shares. While setting a limit order price could save you .50 or even maybe a 1.00 per share (on a stock that moves like that) many times you can set a limit and not buy the stock because it never traded that day at your limit price.

Stop orders are a price you choose in advance - telling your brokerage that if it gets to this point sell it... It's kind of a short for "stop loss"... which is just picking a price at which you'd rather sell the stock than hold it should it fall below your chosen price.

Again - for our purposes - the last thing we'd want to do is to get "stopped out" (the stock hits your stop price and is sold out) - and then loose our dividend in the process.... just because for one day or one week - or even for 3 months - the price is lower and meets some pre picked price. Remember -- that for our purposes - we actually want to BUY more stock at lower prices! We want that dividend to buy more shares... And I just don't think that stop loss orders have a place in "Investing 102". These are sophisticated strategies for people that are gambling rather than investing.

If someone is interested in learning these strategies - and there is no doubt that they can be used and in certain instances maybe should be used - there's a ton of information about them on the discount brokerages websites.

If you're really fearful of the stock market -- and wanted to put in stop losses on your stocks - you could just set some price on each stock that when they got to 10% below your cost you'd get sold out...

Guaranteed --- at some point you'll be sold out... and a week later or a month later the stock is higher and you're left shaking your head holding a 10% loss on a stock you wanted to own for 2 /3 /5 years... and now you have to go back and re-buy it... and then maybe miss the "ex" date for the dividend in the process....

If you're a real sophisticated guy - and you're watching your account minute by minute - and have all day every day to fuss around with this kind of stuff... it's fine. Me? I buy good stuff - year after year it goes a little higher - and those checks just keep buying me more car crap.... :rofl:


Greg,

Good to know..

I may not be investing in quite the same stuff as Investing 102 does, but my strategy is similar.. i buy what i think is the best of a certain asset class, i do the long term research, and i am not into a quick trade, but a longer term strategy.

I may not keep it as simple as you say(KISS), but i sure leave out a lot of the movement and hands on trading that some of the above terms , seem to be.

If i see a longer trend in the asset, and maybe i should fire them, that is one thing, but to sell at a given temporary low price, just seems strange to this newbie..

to me the total value of the asset at a given time does not matter..Dividends are being paid, and in just about ALL cases, it goes back to and above where i would have stop lossed or whatever you call it.

[GregWeld]

to me the total value of the asset at a given time does not matter..Dividends are being paid, and in just about ALL cases, it goes back to and above where i would have stop lossed or whatever you call it.


And there in lies the truth.... regardless of what the price is "today" -- the dividend gets paid quarterly.... and lord knows I've tried to show enough times the power in that.

Which is why I always keep some powder dry (parked as I call it) to buy on the "dips" in stocks I want to own... because the lower I can buy them - the higher that dividend percentage is! I love it when I can buy a stock down $5 or more... than my original purchase cost. That's why -- if at all possible you want to scale into a position. Obviously you've got to be buying 250 or 500 shares (total position) in order to make that work... Ya can't be scaling in to 100 shares... the commissions would eat your savings.

Here's a classic example in real life...

on May 27, 2011 I bought 5,000 Annaly (NLY) at 18.00

on June 21, 2011 I bought 5,000 more at 18.56

on Nov 22, 2011 I bought 10,000 more at 15.91

If I liked it at 18.56 I gotta really love it at 15.91 so I bought TWICE as much!:lol:

It's paying the same .57 per share dividend... so at 18.56 I'm making 12.28%

but at 15.91 I'm getting paid 14.33% !!

So on my holdings in this stock --- I've got a pretty healthy blended return. I'm holding 35,000 shares of this right now - but it goes up and down all the time -- I just use this to park some dough while I'm sitting on my brains doing some thinking.


BTW -- you math whizzes... to figure your PERCENTAGE of any given dividend -- add up the ANNUAL dividend - and divide it by the per share price you paid...

[GregWeld]

im thinking of dropping 10 in annaly. bought some other stocks the other day.

at&t
bank of america
starbucks
altria

the dividend stream alone on annaly can really add up!!

Ya know -- I don't like to be recommending stocks -- just not my thing... I'm more about how to think about investing - the old - catch a fish or teach a guy how to fish thing...

But if it was me - I'd be investing in BANCO SANTANDER (STD) which is a "world bank" and is paying 10% dividend while you wait for the banking industry to "recover"... Poor beleaguered Bank of America (BAC) is only paying .51%

Just thinking out loud here -- both charts are nasty -- but sometimes it "pays" to be early if you're willing to suck up some lumps along the way. I just like being paid to suck up the lumps... :D :woot:

[Bucketlist2012]

Just gotta love making money..:cheers:

I was going to mention on the thought of not watching the balance and focus on the income stream..

And as greg just mentioned about having some high yielders for some money parking, along with your mix of steddie eddies..

i just parked in a fund that i knew was undervalued, getting hammered , and i knew that it would rebound and go back up..High dividend payer no matter what the balance..

Since timing the market is useless, you time as close as you can..

So i bought it, and it kept falling...2 grand later, still falling...Paying a double digit dividend while waiting...

Then boom, it starts to rise.., but I made the money back, and now it is moving the right direction , and it will settle much higher and continue to grow, but man....patience and research..all while getting paid 14%....HELLO... sweet deal..

Also i just got more dividends in, while i played in the garage.. 400 bucks, but again, when you have 17 of these, this all adds up..

i may never know what shorting a stock is, or stop loss, or any of that...

But by using the basics, i don't need to know that voodoo mumbo jumbo...:cheers:

The EDIT, is my investment that turned around is up again 500 dollars so far this morning and it still has 50% to go to get back where it was... a 14K investment...

These are small, very small plays in the portfolio, and NOT a steady eddie.

But money in cash is for rainy days and daily expenses..

I have also down sized my emergency cash, since all my assets are liquid , except the 401K.

Before I needed a 6 month wad to sleep...When bank rates are high again, i will do it, but for now, it is working to fight Inflation..

ALL other employees must be working ,here or abroad, or they are fired...

Your money sits in the bank........crushed by Inflation, or it is at work battling for you while you work, sleep, play, type...

[GregWeld]

Yep -- I love dividends...

Got up this morning to two dividends -- HYG paid me $3295 and PFF paid me $1053

[Bucketlist2012]

Yep -- I love dividends...

Got up this morning to two dividends -- HYG paid me $3295 and PFF paid me $1053

Very nice...:thumbsup: :hail:

I try to give the troops some of my info to give a smaller perspective. 400 dollars overnight. One fund out of 11.:thumbsup:

Sorry before I said 17, but 11 are dividend payers..:willy:

Still, enough wealth at work, that took decades to earn, let alone SAVE. :thumbsup: :thumbsup: :unibrow:

Cause we all know , "it isn't what you earn, but what you keep", and "It isn't what you have, but what you own/Worth"..:cheers: :woot:

But you always get me jacked and excited.:lateral:

Because I get to feeling smart and powerful, and then i realize that I am just a puppy in this game.:willy: :willy: :rofl:

All be it, a very Lucky and Smart Puppy, but I tell my Wife, "you just wait".. Because I am going one direction..Up..:thumbsup:

I have been poor, and rich, and then poor and then rich(rich to me),..I think I have enough smarts now to stay in the right direction..

But more learning is on my List for 2012...As it has been for many years..

Keep up the Great work Greg, i am here to rally the troops , and to chime in with specifics on occasion..

P.S. I did manage to change my 401K to now yield 9.5%... I am working with limited choices, but hey, I will keep an eye on it.

It only holds 10% of the total portfolio due to mumbo jumbo and fees that are written in mandarin Chinese.. The Schwab account is crystal clear.:lateral:

Also due to heart and brain problems 2 years ago, i had to retire from working.. To what ?? The greatest time in our history for making money.Talk about luck.

[JKnight]

so while I certainly understand them and will explain them here I don't think they're a good strategy for Investors 102...


I completely agree with the risks of setting a stop on your Steady Eddy dividend paying stocks. You are correct that getting stopped out would not be beneficial to the long term strategy.

Going back to the quote I highlighted earlier, there are certain stocks (NLY) with a known potential catalyst (rising interest rates) that you would want to bail out of before you take a 50% (or whatever % you choose to be tolerant of) hair cut. These stops do not have to be kept "tight", within 5% of current market value. My view is that this could allow me to notbe the guy watching the market all day every day because I know that if things get rough, I've got a standing order to get me out.

Which leads to my next thought. I can use a trailing stop (set at any amount below current MV according to my individual risk tolerance) on my more speculative plays to "lock in" a profit as discussed in your tax post a couple days ago. Profits are good, so if things get rough, I can take my profit and retrain those soldiers. If things continue to be good, my stop will increase accordingly to lock in more profit.

Again, these stops don't need to be set tight and I gain the freedom to not be watching the market all day to make this happen.

Edit: Personally, I will put a stop below where I deem the technical "support" level to be, so that if the bottom is falling out of a stock I can get out as well. Plus, nobody says I can't buy back in when the stock has found it's next support level. These may be the strategies of someone who is risk averse, but when you're playing with my bankroll, ya gotta be careful!!

[CRCRFT78]

For those that are new to investing and don't necessarily have a grip on it yet click the link below.
http://wharton.pearsoncmg.com/otis/

This is a stock investment simulator I've used in class. It cost $20 but it will allow you to trade, buy, sell and just get an understanding of the market without losing REAL money while learning. Just a thought for those of you still a little worried about losing your hard earned money.

[GregWeld]

I completely agree with the risks of setting a stop on your Steady Eddy dividend paying stocks. You are correct that getting stopped out would not be beneficial to the long term strategy.

Going back to the quote I highlighted earlier, there are certain stocks (NLY) with a known potential catalyst (rising interest rates) that you would want to bail out of before you take a 50% (or whatever % you choose to be tolerant of) hair cut. These stops do not have to be kept "tight", within 5% of current market value. My view is that this could allow me to notbe the guy watching the market all day every day because I know that if things get rough, I've got a standing order to get me out.

Which leads to my next thought. I can use a trailing stop (set at any amount below current MV according to my individual risk tolerance) on my more speculative plays to "lock in" a profit as discussed in your tax post a couple days ago. Profits are good, so if things get rough, I can take my profit and retrain those soldiers. If things continue to be good, my stop will increase accordingly to lock in more profit.

Again, these stops don't need to be set tight and I gain the freedom to not be watching the market all day to make this happen.

Edit: Personally, I will put a stop below where I deem the technical "support" level to be, so that if the bottom is falling out of a stock I can get out as well. Plus, nobody says I can't buy back in when the stock has found it's next support level. These may be the strategies of someone who is risk averse, but when you're playing with my bankroll, ya gotta be careful!!


These are good strategies Jeff... but are far more sophisticated than this thread was intended for. However... Personally I'm glad you brought them up because these are terms people hear about - and there's no reason to not discuss and learn about them. Perhaps someone doesn't use them now -- but knows about them and is willing to investigate them.

I forget that people don't start their day off with coffee at 6AM and then wait for the market to open to see what's happening. I've been doing this for 20+ years and I forget that other folks actually have lives... :lol:

[Bucketlist2012]

Ouch.:rofl:

I think we have lives, we are just obsessed...

I SAY that the overall balance does not matter, and the Income Stream, and the Yield do..

Then why do I do the same thing, west coast time, and check the market, and the balances..

Because I am crazy, and I usually work on other things while I start the day..
Taxes, project outlines, ect..

but checking this thread is a daily stop...too much info to learn..:lateral:

[Woody]

Greg,

I was wondering what your thoughts are about the NLY earnings report. Revenues increased on a year over year basis, but EPS declined. Also, the dividend for 2011 declined from 2010, which is the first decline since 2006.

Early warning signs to be on the lookout for or does this not concern you? I know they still pay a great dividend, but does the declining dividend worry you at all?

In general, how do you handle declines in revenues and/or EPS on a year over year basis. Does it take more than one yearly decline to cause concern.

[Bow Tie 67]

Total newbie here when it comes to making informed decisions on investing.

FYI called Schwab today to open an account. I have been with Scottrade for several years and they do NOT offer dividend reinvestment. Yes their trades are $7 compared to $8.95 but my thinking is the free reinvesting is well worth the difference. While talking with Schwab I was informed they are not in it for the fees. Sales talk? or not I'm moving to greener pastures as far as I'm concerned.

Greg the previous post about your thoughts with NLY has my attention.

Thanks guys for all you experience and time.

One last thought, I have been talking with my youngest, she is 18 and has 7k saved, I'm working on her to invest 5k of it in a Roth and forget about it. My thoughts are 5 Best of bread spread through the OIL, Retail, Food, Pharm, and Util sectors. .................. Thoughts? If she buys it, I'll even let her pic the stocks based on what she likes. LOL:thumbsup:

[GregWeld]

Total newbie here when it comes to making informed decisions on investing.

FYI called Schwab today to open an account. I have been with Scottrade for several years and they do NOT offer dividend reinvestment. Yes their trades are $7 compared to $8.95 but my thinking is the free reinvesting is well worth the difference. While talking with Schwab I was informed they are not in it for the fees. Sales talk? or not I'm moving to greener pastures as far as I'm concerned.

Greg the previous post about your thoughts with NLY has my attention.

Thanks guys for all you experience and time.

One last thought, I have been talking with my youngest, she is 18 and has 7k saved, I'm working on her to invest 5k of it in a Roth and forget about it. My thoughts are 5 Best of bread spread through the OIL, Retail, Food, Pharm, and Util sectors. .................. Thoughts? If she buys it, I'll even let her pic the stocks based on what she likes. LOL:thumbsup:


EXCELLENT!!

Happy to discuss anyones thoughts on stocks etc any time...

[Woody]

I think it is a great idea to get your daughter interested this early. I set up accounts for my kids and we sat down together to discuss some companies that they may be interested in being partners in. My son was especially excited to know that he could be a partner in Apple. Just for kicks I set up a compound interest spreadsheet and showed him what his money would grow to in 60 years at different rates of return. He is very excited about being a millionaire. I think you are on the right track with your daughter. Its great that she has already saved that much money at her age.

Total newbie here when it comes to making informed decisions on investing.

FYI called Schwab today to open an account. I have been with Scottrade for several years and they do NOT offer dividend reinvestment. Yes their trades are $7 compared to $8.95 but my thinking is the free reinvesting is well worth the difference. While talking with Schwab I was informed they are not in it for the fees. Sales talk? or not I'm moving to greener pastures as far as I'm concerned.

Greg the previous post about your thoughts with NLY has my attention.

Thanks guys for all you experience and time.

One last thought, I have been talking with my youngest, she is 18 and has 7k saved, I'm working on her to invest 5k of it in a Roth and forget about it. My thoughts are 5 Best of bread spread through the OIL, Retail, Food, Pharm, and Util sectors. .................. Thoughts? If she buys it, I'll even let her pic the stocks based on what she likes. LOL:thumbsup:

[Bow Tie 67]

I think it is a great idea to get your daughter interested this early. I set up accounts for my kids and we sat down together to discuss some companies that they may be interested in being partners in. My son was especially excited to know that he could be a partner in Apple. Just for kicks I set up a compound interest spreadsheet and showed him what his money would grow to in 60 years at different rates of return. He is very excited about being a millionaire. I think you are on the right track with your daughter. Its great that she has already saved that much money at her age.

Yes, she is even tighter than I am, LOL. I tried to explain to her that she is only tying it up not blowing it. As far as my older daughter, she is the type who wants to help everyone, great quality, but I would love to make her realize she can do much more if she invests early and wise.

I happen to work for an airline that's been in the news lately. My oldest has consistently said " I want to be an entrepreneur " I have never understood that type of thinking or the risks associated with it. Now I'm starting to realize I should encourage her thinking so she can take control of her own future, vs becoming a pawn in the game of monopoly called life!!

[GregWeld]

Greg,

I was wondering what your thoughts are about the NLY earnings report. Revenues increased on a year over year basis, but EPS declined. Also, the dividend for 2011 declined from 2010, which is the first decline since 2006.

Early warning signs to be on the lookout for or does this not concern you? I know they still pay a great dividend, but does the declining dividend worry you at all?

In general, how do you handle declines in revenues and/or EPS on a year over year basis. Does it take more than one yearly decline to cause concern.

Annaly (NLY) deals in mortgages and CMO's etc -- so they basically work on the interest spread... but in the end - they're interest rate sensitive. The guy that runs this is Mike Farrell and he's proven to be a brilliant money manager. However, the mortgage market is a tough one... so it doesn't surprise me that we've seen a reduction in the dividend. It is however still about TRIPLE where the safe stuff resides... so I use it for precisely that. Remember that with that higher dividend comes increased capital risk...

What I tend to do is as stated previously is park money here - so I move in and out. My "normal" position is 10,000 to 15,000 shares. I'm higher than that now because of a recent substantial increase in cash on hand and I hate cash that is just sitting around.

What I do is look at how much dividend I've gotten and will get - and I offset that with the amount of capital depreciation (loss) or gain. As long as I'm ahead I'm happy. However... also remember that I pay very close attention to what I'm doing and have been doing this for many years...

So today -- given my current position - my average cost in NLY is $16.95 a share... and today it closed at $16.55.... I'm okay with that because on balance I'm WAY WAY ahead of this small price difference. My last dividend alone was $14,250. If I take money OUT of NLY - I will check the box "tax managed" for my sales.... so they will sell the LEAST GAIN out first... and when they do that - it actually leaves me with the lower priced shares - which I have a nice gain in. So on balance -- I'm getting the dividend - and I manage my gains/losses in this name (as well as JNK and HYG).

Here's the thing a newb will grow to understand... I don't mind losses... as long as at the end of the year I have an overall gain in my investible dollars... and I've been collecting those dividends... My dividend stream is H-U-G-E...as in beyond your wildest imagination... so if I take a 20K hit in capital on one name in order to pull out 250K or 400K to invest in something else -- it's a total ho hum.... I'm moving money all the time... so it's all just part of the drill.

YOU GUYS can't really think/trade/move the way I (or someone else does) -- because you have to balance out your own accounts and your own needs and goals.

I'm not sure this is answering your question -- but the point is -- I can't tell you what a stock is going to do - today or tomorrow - or next week. What I do know is that NLY is a high risk play - with a high dividend... so I look at that -- it pays $2.28 per year per share... so if I collect $2.00 and the stock is down $1.50 I'm still ahead of the game. It's my bet that the dividend might continue to get squeeze in this name -- or shares of similar companies that do what they're doing. Remember - they don't make anything except a spread on money... and those spreads are subject to the whims of the market. This ain't like McDonalds or Phillip Morse where they actually make stuff... but as long as I'm making almost triple the normal interest rate -- I'm happy --- and I'll be happy even if it's only paying 10% because that's still way above market.

[GregWeld]

If you all never do anything for your kids -- the one thing you should talk to them about is MONEY... Saving - investing - balance the "I wants" with the need to invest... and later have a great case of the "I gets".

Like somebody once told me -- you wouldn't wait unit their wedding night to discuss sex for the first time would you? So showing them that when they get $50 from Grandma for Xmas/Birthday -- saving HALF of it -- and blowing the other half if okay -- but you have to stress the saving is not for spending later on some other "I want". Push this idea when they're 10 or 12 --- and when they're 18 they're going to have some real money.

[Woody]

Greg,

Thanks for the explanation. That does answer part of my question.

But I would also like to know how you look at other stocks such as MCD or JNJ, etc. For example, if next year their revenues and/or EPS declined from this years figures, does that put you on alert that it may be time to put your money elsewhere. Or is a one year hiccup in revenues/earnings alright. I guess I am looking for some guidance on when to get out of a stock that you are holding.


Annaly (NLY) deals in mortgages and CMO's etc -- so they basically work on the interest spread... but in the end - they're interest rate sensitive. The guy that runs this is Mike Farrell and he's proven to be a brilliant money manager. However, the mortgage market is a tough one... so it doesn't surprise me that we've seen a reduction in the dividend. It is however still about TRIPLE where the safe stuff resides... so I use it for precisely that. Remember that with that higher dividend comes increased capital risk...

What I tend to do is as stated previously is park money here - so I move in and out. My "normal" position is 10,000 to 15,000 shares. I'm higher than that now because of a recent substantial increase in cash on hand and I hate cash that is just sitting around.

What I do is look at how much dividend I've gotten and will get - and I offset that with the amount of capital depreciation (loss) or gain. As long as I'm ahead I'm happy. However... also remember that I pay very close attention to what I'm doing and have been doing this for many years...

So today -- given my current position - my average cost in NLY is $16.95 a share... and today it closed at $16.55.... I'm okay with that because on balance I'm WAY WAY ahead of this small price difference. My last dividend alone was $14,250. If I take money OUT of NLY - I will check the box "tax managed" for my sales.... so they will sell the LEAST GAIN out first... and when they do that - it actually leaves me with the lower priced shares - which I have a nice gain in. So on balance -- I'm getting the dividend - and I manage my gains/losses in this name (as well as JNK and HYG).

Here's the thing a newb will grow to understand... I don't mind losses... as long as at the end of the year I have an overall gain in my investible dollars... and I've been collecting those dividends... My dividend stream is H-U-G-E...as in beyond your wildest imagination... so if I take a 20K hit in capital on one name in order to pull out 250K or 400K to invest in something else -- it's a total ho hum.... I'm moving money all the time... so it's all just part of the drill.

YOU GUYS can't really think/trade/move the way I (or someone else does) -- because you have to balance out your own accounts and your own needs and goals.

I'm not sure this is answering your question -- but the point is -- I can't tell you what a stock is going to do - today or tomorrow - or next week. What I do know is that NLY is a high risk play - with a high dividend... so I look at that -- it pays $2.28 per year per share... so if I collect $2.00 and the stock is down $1.50 I'm still ahead of the game. It's my bet that the dividend might continue to get squeeze in this name -- or shares of similar companies that do what they're doing. Remember - they don't make anything except a spread on money... and those spreads are subject to the whims of the market. This ain't like McDonalds or Phillip Morse where they actually make stuff... but as long as I'm making almost triple the normal interest rate -- I'm happy --- and I'll be happy even if it's only paying 10% because that's still way above market.

[GregWeld]

Greg,

Thanks for the explanation. That does answer part of my question.

But I would also like to know how you look at other stocks such as MCD or JNJ, etc. For example, if next year their revenues and/or EPS declined from this years figures, does that put you on alert that it may be time to put your money elsewhere. Or is a one year hiccup in revenues/earnings alright. I guess I am looking for some guidance on when to get out of a stock that you are holding.

Well... like most of these answers - it depends. What caused the earnings miss? Bad product - bad weather - a recession - or crappy management... (i.e., not controlling costs and or inventory).

So it depends on what reason is given for the earnings miss... if it's crappy management or bad product -- I'm hitting the sell button.... if it's a hiccup beyond the companies control - or some temporary setback -- I might buy more!

So it's really the QUALITY of the earnings. Sometimes a company will report real good earnings and you wake up thinking you're the hot stock picker of the decade and you look at the stock and it's sold off?!?!?! IT might be the quality of the earnings - because sales might have slipped or EPS might be the result of an insurance claim or a law suit settlement (where they received a payment that isn't a recurring item). So the "numbers" might look good on the surface but they really aren't once you get out the magnifying glass.

This is where the quality of the management is what is most important - because if they're good managers they'll correct the mistake and carry on... and this created a "buying opportunity" rather than a sell sign.

That's why I hammer that long term chart... 5 and 10 years out... steadily climbing. It's not bullet proof but it's a good indicator. It's also why I say -- if you're a relatively small investor - stick to companies you know... that way if you keep your head on - you might see the problems BEFORE they hit the bottom line. The day I go to the mall and there's nobody lined up at the Apple store - I'm coming straight home and hitting SELL! :woot:

[GregWeld]

Can't remember the question about Annaly Capital Management (NLY) but someone asked about a declining dividend... and what to look out for etc.

I did some explanation...

But here's what I want people to look at -- for themselves -- because for EACH PERSON they need to know what they're into -- and why they bought what they did - and how they intend to fit that into their individual portfolios.

Go back and look at a 5 year chart of NLY --- and you'll see a pretty flat chart - with some "wild" swings -- lots of squiggles! But look closer and you'll see that it's a pretty mild move of a buck or two... except in '08 (EVERYTHING WENT DOWN THEN!)... so for me... it's a pretty good place to park cash.

That's why I want you guys to really LOOK at these charts -- because you'll start to see "more" than just a line. It's like doing a tune up -- after you've done a bunch -- you pay more attention to smaller things... You'll also notice that the dividend is all over the place...

[Taylor1969]

Chris....

Somehow you missed the "GREAT CHART" part of the research...

Go back and look at 3M (MMM) and Glaxo Smith Kline (GSK)... these are not the growth story you need. So what I would do is to look at your choice -- and compare them against other companies in their sector. You really want to TRY to get all of the major components in your picks -- Growth - Dividend - good chart - name/business you understand.

I also think that with 20K to invest - I'd prefer you get more diversity. So even if you just went with 1250 or 1500 per name and spread out a bit more.

You have Coke - McDonalds and Costco.... All good stocks -- but with the size of your account - and your age - I'd try to get some separation. These 3 horsemen are basically in the same 'sector'.... food/retail.

That, and you don't have any higher risk stocks to balance out your steady eddies. Your age allows you to take a little more risk than what you've chosen... and they can really put some octane in your total returns.

So with 20 grand --

choose Coke or McDonalds

Pick a different drug company -- with a better growth story that GSK or at least compare them and see if there is one you'd be just as happy with. You may end up with GSK if it's the one you like.

Ditto this in 3M

I like Costco --- I don't own any -- but it has a growth story and is a really well run company. I just would like to see you have more diversification.

Let's take a look at adding a high yielder -- JNK or HYG or NLY or some other in that category.

Great that you have energy already -- the country is always going to need energy!

Yes I'd follow the same strategy in your 401... You need all the horsepower you can to get you to win the race. You're young. You have time. So treat your 401 and your "new" account as ONE BALANCE -- add them up -- look at them TOGETHER - don't duplicate and don't overlap. IT'S ALL YOUR MONEY -- so diversify and think of them as ONE account when looking at them.

Remember --- I'm (nor anyone else) is here to pick stocks for anyone... We're really discussing what to think about and how to look at them.. so please don't feel I'm dissing your choices... you're on the right track but let's look a little more and then post up what you're thinking... and maybe where you're at in the 401 (names so we can look at it all - and feel free to use PM if you're not comfortable posting this stuff publicly).

Greg - thanks for the tips!

Starting on drug company research tonight.

Does BMY look better in your perspective? Seems to have a pretty steady growth and pays out a 4% dividend. Am I on the right track (in your opinion)?

I am trying to think of drug companies that you see everywhere and that is why I hit on GSK (coupled with the current dividend and growth over the last three years it looked okay).

Teach me Zedi master... I need to see dividend checks like yours in the future.

If I am on the right track, I'll look into tech, real estate (CIM a spinoff of NLY?), and the rest of the other segments.

Thanks!
Chris

[James OLC]

James -

Nice dividend stream - but DUDE <spicoli style> you need some diversification!

However.... I also understand your trade and what YOU understand... and perhaps you even have an "insiders view" of the industry.

Stepping out Greg... Boston Pizza - BPF.UN (TSE) - 7+% yield and a decent chart over the last three years. And it's not oil and gas. I'm looking at it as MCD jr. - most of its value is real estate and it's a good franchise that I kind of understand (at the very least I'm familiar with it). :)

[GregWeld]

Stepping out Greg... Boston Pizza - BPF.UN (TSE) - 7+% yield and a decent chart over the last three years. And it's not oil and gas. I'm looking at it as MCD jr. - most of its value is real estate and it's a good franchise that I kind of understand (at the very least I'm familiar with it). :)



OMG! You added another GREASE choice!! :rofl: :rofl: :rofl:

[James OLC]

Baby steps my friend... Baby steps...

[GregWeld]

Greg - thanks for the tips!

Starting on drug company research tonight.

Does BMY look better in your perspective? Seems to have a pretty steady growth and pays out a 4% dividend. Am I on the right track (in your opinion)?

I am trying to think of drug companies that you see everywhere and that is why I hit on GSK (coupled with the current dividend and growth over the last three years it looked okay).

Teach me Zedi master... I need to see dividend checks like yours in the future.

If I am on the right track, I'll look into tech, real estate (CIM a spinoff of NLY?), and the rest of the other segments.

Thanks!
Chris



Bristol Meyers is a good company -- and has a better 5 year chart that GSK... and a similar dividend.

By the way -- I don't want to pick or "dis" anyones picks -- but you're doing what I want people to do --- THINK about these stocks - compare them - do a little reading - and then make up your mind what fits for you. We'll never pick 10 stocks that all go straight up and pay huge dividends... In our dreams right? But yes -- you're on the right track because you're doing your homework. We never want to gloss over this important part. It's educational - you learn a little every time - and that's part of the fun. Remember - you're choosing a partner - and you're depending on that partner to provide for you now and in the future...


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


CIM (Chimera) is similar to NLY (Annaly) but has a horrible chart - has never recovered from '08 and while the percentage of dividend is high -- it really doesn't have much else going for it.

A 5 year chart reveals that you've lost 80% of your money in CIM and only 2% in NLY -- the 13% dividend makes up for the 2% capital loss over that time but it won't cover up CIM's 80% loss!

[GregWeld]

Baby steps my friend... Baby steps...

:rofl: So true!!

Since I don't know the company I could only look at the chart etc... and I like the real estate play and the dividend.

[GregWeld]

Teach me Zedi master... I need to see dividend checks like yours in the future.Thanks!
Chris

I'm trying buddy -- I'm trying!

.... and I hope one day everybody here reaches that critical mass where they're living off their dividends. It's nice place to be.

Of course the key to that is to reach that critical mass of dividend income -- but at the same time not have your "out go" more than your income. This is most peoples mistake.. that old out flow seems to just be allowed to rise... and then we're like Greece... :lol:

[GregWeld]

Here's how you make money....


While "others" are waiting for all their fancy schmancy stocks to go up --- Phillip Morse (PM) is UP $2.00 today (that's 2.4% GROWTH just today) after announcing they beat earnings estimates.

I mention this because our "steady eddies" pay that nice dividend - in this case 3.86% - AND they quietly sneak up the chart... (growth). And nobody is talking about them on TV...

That's how they get that TOTAL RETURN... and that is what will really get you to the finish line.

Yeah - it's nasty old tobacco... but I'm here to make money not be some moral guiding light. :D

[Bucketlist2012]

Like Greg said..

An example is KinderMorgan, Great 1 yr....Even better 3 and 5 year Total return , and up a buck a share today

So if you own________-shares of it....:woot:

a dollar and sixteen cents dividend per share coming tuesday..:cheers: :lateral:

I have limited skills, but skills... More skills to come..

[CRCRFT78]

Look how Apple has taken off in recent weeks. I don't know whether to be excited or brace myself for a downfall. They're leasing more property which I believe is a good thing. I wished they would pay a diviend to go with the steady rise in price.

[Bucketlist2012]

Look how Apple has taken off in recent weeks. I don't know whether to be excited or brace myself for a downfall. They're leasing more property which I believe is a good thing. I wished they would pay a diviend to go with the steady rise in price.

I just finally broke down and bought an apple phone...You guys win...I was so cheap, i used my Blackberry until it turned into a raisin, 5 years. Talk about money's worth..

But what did I buy ? APPLE...

:cheers:

[CRCRFT78]

I'm debating on an iPhone also. I wish I was able to own more than the measely 6 shares I have now. They start paying a dividend and I might have to see if I can squeeze a couple more shares out of what little money I have.

[Bucketlist2012]

I'm debating on an iPhone also. I wish I was able to own more than the measely 6 shares I have now. They start paying a dividend and I might have to see if I can squeeze a couple more shares out of what little money I have.

Do as Greg says..Spread it around.

Earlier I spoke of KMP being up a dollar...well , it is up 1.30 right now !!!:cheers: :woot:

I don't have as many skills....But I am working on it.

Put your money to work...The housing thing will lay on it's face for a long time..Time enough to get ready and do the house thing. they won't let it recover.

I never was Apple guy....Stupid me...

[CRCRFT78]

I've got what I consider to be a small but decent portfolio. As the money (dividends, gains) start to come in it will be reinvested and I will slowly add to it. KMP is one of my holdings.

[Bucketlist2012]

I've got what I consider to be a small but decent portfolio. As the money (dividends, gains) start to come in it will be reinvested and I will slowly add to it. KMP is one of my holdings.

Very Nice.. You will profit greatly down the road, as I believe , even witht the lateast run up to 13,000, that in a longer span, things are still on sale...

and we get paid while they move around, and then up

[GregWeld]

Like Greg said..

An example is KinderMorgan, Great 1 yr....Even better 3 and 5 year Total return , and up a buck a share today

So if you own________-shares of it....:woot:

a dollar and sixteen cents dividend per share coming tuesday..:cheers: :lateral:

I have limited skills, but skills... More skills to come..



6000 shares -- UP $74,070.00 -- and collecting those dividends on top of that...

[GregWeld]

I'm debating on an iPhone also. I wish I was able to own more than the measely 6 shares I have now. They start paying a dividend and I might have to see if I can squeeze a couple more shares out of what little money I have.


It's all about the PERCENTAGE return on your money... doesn't make any difference what the share price is -- 10% growth is 10% growth...

Don't try to buy "more" just because they're winners now -- don't get led down that path... DIVERSIFY. Look at your gains -- kiss them - write 'em down on a piece of paper and sleep with them under your pillow... but don't let GREED talk you into more of a good thing... That strategy will turn around and bite you. You set your limits - and stick to them.

Repeat after me --- BALANCE.... it's all about BALANCE....

[Bucketlist2012]

6000 shares -- UP $74,070.00 -- and collecting those dividends on top of that...

Ah Chichawa:thumbsup: .

Told you folks.. Me...400 shares....So little guy pay attention...Up 400 dollars and waiting on the dividends...

35 grand making 400 dollars today, and dividends all the time..

Just to give the regular guy the idea of a much smaller scale for reference..

But spread it around like he says...We tend to want to buy more of the hot thing and we lose the safety /risk balance....

don't do it..

[GregWeld]

Ah Chichawa:thumbsup: .

Told you folks.. Me...400 shares....So little guy pay attention...Up 400 dollars and waiting on the dividends...

35 grand making 400 dollars today, and dividends all the time..

Just to give the regular guy the idea of a much smaller scale for reference..

But spread it around like he says...We tend to want to buy more of the hot thing and we lose the safety /risk balance....

don't do it..


Oh --- KMP was only up $6120.00 for me TODAY.... I was showing the unrealized gain on my current holdings.... Hey! $400 or $40 or $4000 it's GAINS... FREE MONEY!! I love free money!


:lateral: :cheers: :woot:

[GregWeld]

Investing is all about PSYCHOLOGY....

Let me tell you right now - and you write this down... when the market is going UP -- you feel good! You feel SMART! You feel invincible!

Ditto that on your house value

Ditto that on your hot rod value

But there will be a day - weeks - months - maybe even a year or two - when the market goes DOWN -- it goes down and you're dying the death of a 1000 cuts... you WILL feel like selling everything - you'll feel STUPID for having invested in the first place - and even stupider for buying MORE of something "back when" just $5 below it's all time high...

That PSYCHOLOGY will eat away at you in a losing market. Please prepare yourself for this! Because that is when you should buy even more! Like buying a house right now -- low cost and lower rates! Or buying that $150K Camaro that sold at Barrett Jackson for $50K in 2009.... Remember those talking heads (idiots) on Speed TV saying over and over again ".... that was well bought..." Trust me - the people that were buying THEN -- they're the smart guys right now.

Get your heads around that "buy low"....

The problem is - NOBODY can tell you when this is going to happen -- so you must just keep a steady hand - and continue to plug away - good market or bad market... because we could be in a 10 year bull market or we could head south tomorrow. Nobody ever seems to see it coming... but this is why you need dividends -- and you need diversity -- and you need good stuff that you can live with.

Think about it this way...

A stock is like a house... let's say you buy a house and you just leave it empty and wait for the market to rise so you can make a return on your money.... OR you can buy that same house - and rent it out... collecting the income... and after 10 years the house should be worth more AND you got all that rent. In the mean time the house might have gone down in value and then even - and then up or even stayed down but the guy is still paying you rent. Which would you rather do?? :unibrow:

[GregWeld]

Here's a very good explanation about what Annaly (NLY) and others like it do -- and what they're risks are... it also explains why they "missed" this quarter (someone asked about this in an earlier post).

This article is well written - and makes this "relatively" easy to understand.

http://seekingalpha.com/article/355491-agency-mreits-bring-high-yields-major-new-risks

[GregWeld]

Again --- someone asked about how "I" know when to sell a stock...

Mostly what we've talked about is how to BUY - and why to buy - but it is just as important to know when to SELL...

I stumbled upon this fairly well written "opinion article" about how one fund manager makes this critical decisions... and it mirrors most of my thinking.

When the position is too big (has grown) - or when there is a fundamental change - good or bad... or sometimes when you were just "wrong" about how you thought the stock would act.

http://seekingalpha.com/article/352631-knowing-how-and-when-to-sell

[Bucketlist2012]

Investing is all about PSYCHOLOGY....

Let me tell you right now - and you write this down... when the market is going UP -- you feel good! You feel SMART! You feel invincible!

Ditto that on your house value

Ditto that on your hot rod value

But there will be a day - weeks - months - maybe even a year or two - when the market goes DOWN -- it goes down and you're dying the death of a 1000 cuts... you WILL feel like selling everything - you'll feel STUPID for having invested in the first place - and even stupider for buying MORE of something "back when" just $5 below it's all time high...

That PSYCHOLOGY will eat away at you in a losing market. Please prepare yourself for this! Because that is when you should buy even more! Like buying a house right now -- low cost and lower rates! Or buying that $150K Camaro that sold at Barrett Jackson for $50K in 2009.... Remember those talking heads (idiots) on Speed TV saying over and over again ".... that was well bought..." Trust me - the people that were buying THEN -- they're the smart guys right now.

Get your heads around that "buy low"....

The problem is - NOBODY can tell you when this is going to happen -- so you must just keep a steady hand - and continue to plug away - good market or bad market... because we could be in a 10 year bull market or we could head south tomorrow. Nobody ever seems to see it coming... but this is why you need dividends -- and you need diversity -- and you need good stuff that you can live with.

Think about it this way...

A stock is like a house... let's say you buy a house and you just leave it empty and wait for the market to rise so you can make a return on your money.... OR you can buy that same house - and rent it out... collecting the income... and after 10 years the house should be worth more AND you got all that rent. In the mean time the house might have gone down in value and then even - and then up or even stayed down but the guy is still paying you rent. Which would you rather do?? :unibrow:

If you were in the market this last year, and you stuck with it and did not panic, then you are on your way.. If you bought in the low areas in 2009, you are even farther..

Because the moments of 500 point up or down, do not matter...Sure, many days in a row are unsettling, but in the end you will come out on top..

After all the volatility of 2011, I stuck with my plan, took a monthly paycheck all year long, and still have more than I started with...

So again, the fluctuation in balance is not to be worried about..

Many I know cut and ran in 2008, and some this last year threw in the towel after 1000 point losses...

Some are talking under the Mattress...

You got to study enough to get passionate about it, and then make informed decisions...

The best ?? Probably not right out of the gate, but with info from this thread,WAY farther than most..

But don't put in money that you need now or soon...It will have to work overtime and will not be able to see you for a while..:lateral: :cheers: :woot:

[FatfreeGTO]

Ok phew finally after a few nights of going through this thread I finally finished reading it! :willy:

There is definitely a great deal of good info in here but there has also been some missed opportunities for the very basic info. What I am going to say has been mildly addressed by others but no discussions were ever made about it and it really should have been.

The very first and most important thing for anyone looking to take control of their financial future should be to set up their 401k/403b etc that their workplace offers. You simply want to invest the maximum it takes to get the "match" from your employer. Talk to your "HR" person or whomever runs the plan at your work to find out what the limits are. This money comes out of your account using "pre-tax dollars" so you are already getting the tax break at the end of the year because it lowers your "gross taxable income" Additionally and this is the most important part, that employer "match" is an instant 100% gain on the money you invested in the account. Where else can you get a guaranteed 100% gain on your investment... Just make sure you look into what your funding options are in your 401k and do your homework. If you don't elect where the money will be invested it won't do anything for you because it will probably end up in some stable asset fund which is the same as cash so to speak.

The next most important step is setting up a Roth IRA and put the maximum amount in every year. I have had many people ask me where do I buy a Roth IRA?? The general public doesn't understand what one is they believe it is something similar to a mutual fund. It is nothing more then an account you setup through a brokerage firm that you put your take home pay (after tax dollars) into to fund the account. You use this account to buy stocks, mutual funds, bonds, etf's, commodities etc. This money can grow to any amount and when you turn 59 1/2 you are entitled to start taking the money out and not have to pay taxes on any of it! Another bonus is at any time you can take out your money that you put in without touching the profits you have made and it is tax free. Please don't do this though because it is for your retirement.

Key points to consider with a Roth IRA are:
- Under age 50 you can contribute $5000 per year (that is $417 per month)
- Over age 50 you can contribute $6000 per year
- Single person can contribute if they make less then $107k per year, from $107-$122k per year the amount you can contribute goes down with no contributions being allowed if you make over $122k per year.
- Married couples filing jointly can each put in the maximum allowed. This is important because most people think that they are limited to $5k if they are married but really you and your spouse can both have a Roth account and be putting in $5k each or more if you are over 50... Again your combined income has to be less than $169K per year to qualify and no more then $179k before you can't contribute anything.

Anyone on here that has mentioned that they have $10k etc to invest right now absolutely should open up a Roth IRA before tax day if you qualify. You can then put half of your money into the account now and get the full contribution limit for 2011 and after April 15th put the other $5k in and get 2012 fully funded. Then go nuts and buy all the dividend stocks or whatever else it is that excites you that has been discussed in this thread.

Obviously don't do any of this if you have credit card debt. Pay off that debt first. If you do the above steps and you have a chunk of change that you have stashed away for those "emergency moments" consider yourself very lucky because you are farther ahead then the vast majority of people.

Investing is so very important even though it seems like you can't possibly amass any wealth investing only $2,3,4,5K etc per year, I'm here to tell you yes you can! You can absolutely do it! I'm only 30 and have been investing in one form or another ever since I got my first job at Mcd's (gotta love that stock!!) 15 years ago. The amount you invest doesn't matter just so long as you start doing it today, not tomorrow! One day you open up your account and all of a sudden you see your saving starting to pay off because you just gained more in your account from "paper profits" in one day then you normally contribute all year... There are days where you "lose" the same amount but that is all part of the game.

Good luck
BJ

[GregWeld]

Great first post BJ!!:cheers:

ROTH accounts are really an amazing gift from our government. Sadly I was never allowed to have one.... (the good news is I never needed one either!) but it is really going to benefit anyone that can and does!

[Bucketlist2012]

BJ,

Well said..

True before people can invest ,they need to clear all consumer debt..Such a simple way to make money...STOP spending what you don't have and then charging it at 18 to 28% interest.. Car loans ?? 6 to 9%. Madness..

Paying those off gives you 6% to 28% gains....

Then you talk of 401K..For sure if you have a Company that matches, and you don't participate to the maximum , you need to read this thread over, and do some additional research..If they match up to 10%..Match them..But not company stocks unless it is a stellar company, and even then, diversify. i did 15% for years, and they matched 10%....free money..i like FREE money.

Then you have the ROTH, That would be the next step.. I don't have one, but i too don't really need it, But i should have put money into it. others should put into one..then they have the diversification of the ROTH, and the 401K.

Then finally you get to the good stuff, A Schwab type taxable account..

What some of you say ??? I thought that is where we are at now...

You might be, but i have some questions before we continue....

Hmmm...Only again if you have ZERO consumer debt ? and you are matching a 401K plan at work ? and you have a cushion of emergency devalued dead presidents ? .How much ? 3 months, six months, 1 year ??

What you can afford and makes you comfortable..Even if it is 500 or 1000 dollars. If you have credit card debt and no emergency fund, you are double screwed....Back off the investing and clear these problems up..

Then the real money making begins...

:cheers: :woot: :lateral:

[GregWeld]

Since we're talking about 401's.... (not ROTHS here)

Some of the stocks we've been discussing are "tricky". Master Limited Partnerships (Kinder Morgan Partners - KMP) is one of these...

Although you can technically hold MLP units in an IRA and other tax-exempt investment vehicles, don’t do it.

Placing investments that are already tax-advantaged in a tax-sheltered account isn’t the most efficient allocation of resources; hold MLP units in brokerage accounts and keep your IRAs and 401(k) plans for more traditional fare.

MLP's pass thru 80 to 90% of their "income" to the unit holder (share holder) and as such are not taxed (Federally) so the unit holder is the partner that gets hit with the tax... There are rules about this and income levels etc -- so if you get a sizable dividend from MLPS you should discuss this with a CPA...
You're not taxed on this until the "return of capital" (which is what it is - it's not a "dividend") is above your cost basis... So let's say you have $10,000 worth of "units" -- you'll have no tax until you've gotten $10,000 in "return of capital/dividends"... There are other rules - but just be aware of them if you're buying bigger amounts because they can affect your income tax return.


I own an apartment complex inside an IRA... and I have to file an income tax and pay a tax on it each year even though it's inside the IRA -- because it get hit with UBIT (Unrelated Business Income Tax)... It's not a big tax but still costs me to have the paperwork done and I have to have the IRA pay the tax etc - so it's a hassle. I wanted to BUY the investment out of the IRA --- in other words I'd pay the IRA the amount of the investment and take it out of there -- but that would cause even more tax issues. UGH!

[Bucketlist2012]

Since we're talking about 401's.... (not ROTHS here)

Some of the stocks we've been discussing are "tricky". Master Limited Partnerships (Kinder Morgan Partners - KMP) is one of these...

Although you can technically hold MLP units in an IRA and other tax-exempt investment vehicles, don’t do it.

Placing investments that are already tax-advantaged in a tax-sheltered account isn’t the most efficient allocation of resources; hold MLP units in brokerage accounts and keep your IRAs and 401(k) plans for more traditional fare.

MLP's pass thru80 to 90% of their "income" to the unit holder (share holder) and as such are not taxed (Federally) so the unit holder is the partner that gets hit with the tax... There are rules about this and income levels etc -- so if you get a sizable dividend from MLPS you should discuss this with a CPA...
You're not taxed on this until the "return of capital" (which is what it is - it's not a "dividend" is above you cost basis)... So let's say you have $10,000 worth of "units" -- you'll have no tax until you've gotten $10,000 in "dividends"... There are other rules - but just be aware of them if you're buying bigger amounts because they can affect your income tax return.


I own an apartment complex inside an IRA... and I have to file an income tax and pay a tax on it each year even though it's inside the IRA -- because it get hit with UBIT (Unrelated Business Income Tax)... It's not a big tax but still costs me to have the paperwork done and I have to have the IRA pay the tax etc - so it's a hassle. I wanted to BUY the investment out of the IRA --- in other words I'd pay the IRA the amount of the investment and take it out of there -- but that would cause even more tax issues. UGH!

Wow... Great info as usual... You sound like your own CPA... I do have a CPA and we discuss this, and my assets are in the right place, But this helps me understand it more. I have more studying to do.

Do you think that a pop quiz sometime would sharpen the troops minds ??

I am not saying that even I could pass it, but it may be a fun way to shake us up..Just a thought.

But again, you money crazy man, thanks for all your tips..:cheers:

I always hated discussing taxes and Money....That is why I never had any money. I learned that I needed to learn this stuff to secure MY future.

Thanks for the tax tips.:cheers:

[GregWeld]

Well... as usual I have to write for EVERYONE reading this thread. I have no idea who that might be - and someone out there might be buying half a million bucks worth of KMP...

STILL -- This is INVESTING 102 -- and I doubt the above statement... and even then - they'd have no tax due until they had gotten all their investment back...

But --- What I'm really saying is that IF people are going to invest -- then they need to discuss this stuff... and they should be discussing it with a CPA not some friggin' forum!

Most of this stuff doesn't affect anyones taxes in a big way... it's just stuff to be "aware" of... awareness of various issues -- not really knowing the exact details - is what people need to know.

It's like a torque spec --- I don't need to know the torque spec of every single fastener in a motor -- I just need to know that there are specs and I should look them up if I'm working on something!

[FatfreeGTO]

That is interesting about owning the apartment complex with your IRA. I always thought someone could purchase something like that with one I just have never personally heard of anyone doing it.

I personally do not have a Traditional IRA simply because I don't make enough to start another account. Any extra that I do feel like playing with I have a Scotttrade account for because of the low commission per trade. I used that account to pay for my LS swap last year which was pretty awesome! Caught a double with Apple and made some good gains with a couple other stocks. I didn't like the way the market was looking in Feb/March of 2011 so I sold it all off took my profits and finally had some fun with the money. Investing doesn't just have to be for retirement... :woot:

I should note that my Roth is with Etrade not Scottrade. Scottrade does not offer a DRIP (dividend reinvestment) so make sure where ever you set up your account that they have that option.

[GregWeld]

BJ ---

Owning the apartment complex in the IRA has been a total PITA since day one.

#1 - Brokerages don't hold "private paper"..... a term used for these kinds of investments since they're not liquid and have no "market" (NASDAQ or NYSE etc). Wells Fargo has a 'unit' that will hold this kind of stuff so I had it set up with them.

To make it just a bit more complicated - when I get a check - which is INTEREST - I deposit it in an 401/IRA I own in Fidelity. A couple of years I paid an extra tax on that because they thought it was a "contribution" and that "contribution" was MORE THAN I was allowed to make... UGH!

Now that I caught that -- I make sure to tell them it's a DIVIDEND/INTEREST payment from an investment already held in an IRA.

Trust me when I tell you all -- stuff like that is just a PITA because I have enough stuff going on that to have to remember all these stupid little details is ridiculous. That's why they just need to simplify the tax code. Just get rid of all this crap - have/let people make money -- and pay the tax due as a flat tax. We'd all be better off. :cheers: :woot: :D

[FatfreeGTO]

Another good item to talk about for people is what to do if they actually have a little bit of a nest egg... Most people just assume that if they die their spouse, kids etc will get the money. Well that is not true, I'm not an estate planner but there are some basics that I'm aware of.

-Most common way someone could potentially die? Car accident probably. Who is usually sitting right next to you in the car? Spouse. Who is usually the beneficiary? Spouse... Well now we have a problem... Your both dead who do you think will get the money? Kids... WRONG!! Minors cannot be the beneficiary. Your money will get tied up in a huge legal battle where the children will be the biggest loser.

You need to setup some sort of a Living Revocable Trust. Minors can inherit that money and take control of it at a time that you laid out in the details. Since this is a "living" trust you can modify it at anytime while you are alive. It really is something that should be thought about and discussed with a pro, well I'm sure Greg can add some insight to this subject :)

[FatfreeGTO]

Trust me when I tell you all -- stuff like that is just a PITA because I have enough stuff going on that to have to remember all these stupid little details is ridiculous. That's why they just need to simplify the tax code. Just get rid of all this crap - have/let people make money -- and pay the tax due as a flat tax. We'd all be better off. :cheers: :woot: :D


That's the truth, although your problems aren't exactly bad ones to have :thumbsup: I agree though it needs to be simplified, but then what about all the CPAs and other tax pros they sure don't want to see that happen:rofl:

[GregWeld]

That's the truth, although your problems aren't exactly bad ones to have :thumbsup: I agree though it needs to be simplified, but then what about all the CPAs and other tax pros they sure don't want to see that happen:rofl:

We'd still need accountants... They just wouldn't be going crazy every April...

My accountant is busy all year working on "stuff" other than tax forms.

[GregWeld]

Another good item to talk about for people is what to do if they actually have a little bit of a nest egg... Most people just assume that if they die their spouse, kids etc will get the money. Well that is not true, I'm not an estate planner but there are some basics that I'm aware of.

-Most common way someone could potentially die? Car accident probably. Who is usually sitting right next to you in the car? Spouse. Who is usually the beneficiary? Spouse... Well now we have a problem... Your both dead who do you think will get the money? Kids... WRONG!! Minors cannot be the beneficiary. Your money will get tied up in a huge legal battle where the children will be the biggest loser.

You need to setup some sort of a Living Revocable Trust. Minors can inherit that money and take control of it at a time that you laid out in the details. Since this is a "living" trust you can modify it at anytime while you are alive. It really is something that should be thought about and discussed with a pro, well I'm sure Greg can add some insight to this subject :)

Good addition!

There are beneficiary designations on all your brokerage accounts... most of these you can choose percentages to give to different people etc. and a Primary and secondary(s).

I hadn't redone our wills etc (or estate planning) for 10 years.... but as part of the sale of Isilon to EMC -- the execs (my wife not me - I'm too stupid to have a job) -- got estate planning and wills etc paid for provided they were completed by 2011. In our case - that can (is/was) several thousand dollars worth of a "freebie". There's all manor of new rules... passthroughs... etc etc. I learned a ton... and it was fun as well as 'hard'. Hard in the fact that our kids are now 21 and 25... so if we're both croaked - how do we manage our money for them. We're not raising any trust fund brats! So we had to have a family discussion about what we were thinking and why - and what they thought about that etc. It was very productive -- and ONCE AGAIN -- it's NOT something most families do! We should all talk about this stuff. Do your kids have any idea of how you'd like to be handled if you die? Buried? Where? Cremated? Etc... Heck -- for that fact - does your wife? Do you know what she's thinking? :lol:

[Bucketlist2012]

Another good item to talk about for people is what to do if they actually have a little bit of a nest egg... Most people just assume that if they die their spouse, kids etc will get the money. Well that is not true, I'm not an estate planner but there are some basics that I'm aware of.

-Most common way someone could potentially die? Car accident probably. Who is usually sitting right next to you in the car? Spouse. Who is usually the beneficiary? Spouse... Well now we have a problem... Your both dead who do you think will get the money? Kids... WRONG!! Minors cannot be the beneficiary. Your money will get tied up in a huge legal battle where the children will be the biggest loser.

You need to setup some sort of a Living Revocable Trust. Minors can inherit that money and take control of it at a time that you laid out in the details. Since this is a "living" trust you can modify it at anytime while you are alive. It really is something that should be thought about and discussed with a pro, well I'm sure Greg can add some insight to this subject :)

Another excellent point.. I forgot to mention it..

DON'T DO LIKE ME........ ARE YOU READING THIS..

So I have all this wealth, and I am 50 and feeling frisky. It is 2008, I have seen the mess coming , positioned my chips and I am on top of the World..Don't need a Will or a Trust yet.. We will do it soon...Uh oh...:willy: :willy:

So when I Stroke/Seizured due to a Major Heart Infection due to a malformed Heart Valve, which caused a Brain Lesion and partial paralysis..

So, My Wife and I call the Trust attorney for other Family trusts, they travel immediately through rush hour traffic at 380 dollars an hour and he and the Notary come to my BEDSIDE next to the priest, and we notarize my Will and Revocable Trust... We made it on time...And i lived. Had i died in the Kitchen of my home, what would have happened ? Hurts to think I could have screwed my family out of all the hard work..

PLEASE make sure you have one, otherwise Uncle Sam, the greedy man, will get it..:cheers:

The above story is as true as it gets...

[GregWeld]

A few posts ago -- we discussed Limit orders - Stops etc.

I normally use a "limit order" if I'm buying on a down day -- like today -- in a position that I don't really care if I get or not.

I've bought Banco Santander (STD) on and off for a couple years. It pays a nice 10% dividend -- but remember that it's paying that high dividend rate not for any other reason that the STOCK PRICE SUCKS.... remember this inverse correlation! The dividend is a set amount - so as the price declines the percentage of dividend goes up and conversely as the stock price goes up the percentage goes down.

I wanted to mention this "limit order" to show why -- for Investing 102 -- it's really not very important. The fact that I use it from time to time is due to the larger amount of shares I deal with.

So -- I put in a 10,000 share purchase with a limit at $8.54.... the ask was $8.57 so had I put in a "market order" I would have gotten the shares at $8.57 or whatever was available at whatever price. Some may have been bought at $8.57 and some might have been bought at higher or lower prices.

So here's the key to this for Investing 102..... the .03 DIFFERENCE between the "bid" (me) and the ASK (seller) on 10,000 shares is a whopping $300 on a $85,000 purchase. Whoo hook.... that ought to make or break a profit on this investment shouldn't it? :D

But -- if I was a trader? That $300 saved - in multiple trades per day -- over the course of a month or a year - would be huge!

I did it because I don't want to pay "up" on a down market day. If I used it in a rising market -- I might not get the shares -- because I was being "cheap" -- and then they might have risen .50 a share after lunch! I'd have missed out on that move. So it is - like all things - subjective and it all "depends".

[Sieg]

-Most common way someone could potentially die? Car accident probably. Who is usually sitting right next to you in the car? Spouse. Who is usually the beneficiary? Spouse... Well now we have a problem... Your both dead who do you think will get the money? Kids... WRONG!! Minors cannot be the beneficiary. Your money will get tied up in a huge legal battle where the children will be the biggest loser.
Correct me if I'm wrong on my assumption............
The children will be left fighting the State and Federal governments for rights to your assets.

[FatfreeGTO]

Correct me if I'm wrong on my assumption............
The children will be left fighting the State and Federal governments for rights to your assets.

Basically the estate will end up in Probate court with a judge deciding who gets what money etc. I would rather see you decide the fate of your kids rather then some judge...

Just think of family members that would come forward trying to appeal to that judge to get a piece of your pie, would they really have the best interest of your kids at heart...

[James OLC]

A few posts ago -- we discussed Limit orders - Stops etc.



So here's the key to this for Investing 102..... the .03 DIFFERENCE between the "bid" (me) and the ASK (seller) on 10,000 shares is a whopping $300 on a $85,000 purchase. Whoo hook.... that ought to make or break a profit on this investment shouldn't it? :D

But -- if I was a trader? That $300 saved - in multiple trades per day -- over the course of a month or a year - would be huge!

I did it because I don't want to pay "up" on a down market day. If I used it in a rising market -- I might not get the shares -- because I was being "cheap" -- and then they might have risen .50 a share after lunch! I'd have missed out on that move. So it is - like all things - subjective and it all "depends".

This is one area that I struggled with for a while - both on the buying and selling side - and a lot of the time it was simply an "emotional" misjudgement (that more often then not caused more disappointment than it avoided). It's especially true when looking at higher valued stocks. Somehow our brains focus on the two digits after the decimal and we (I) sometimes miss the big picture. You hate to miss an opportunity to buy or sell (something that you want to) over a couple of pennies. It's obviously different if you have your mind made on a value or if you're on the fence about something. Especially if you are following Professor Weld's "don't be a trader, be an invester" strategy.

[Sieg]

Basically the estate will end up in Probate court with a judge deciding who gets what money etc. I would rather see you decide the fate of your kids rather then some judge...

Just think of family members that would come forward trying to appeal to that judge to get a piece of your pie, would they really have the best interest of your kids at heart...

I've seen family greed and entitlement too many times. Thankfully we've kept our will's reasonably current, our kids are 10 & 13 so they currently can't fend off the wolves by themselves.

I've been very surprised at the caliber of individuals I've known over the years in their 40's and 50's that have procrastinated or ignored implementing even basic asset protection measures. I quit gambling at 40.

It takes far less time to protect it than it does to make it. :thumbsup:

[GregWeld]

The more you have... the more this is true.

All of our assets go into trusts -- and are all run by a local firm here called Laird Norton Tyee... and that's all they do. The trusts state what the kids get and when and how... etc.

We chose to set them up with annual payments (not enough to live off - but enough to make a substantial difference in "how" they'd live if they're earning a decent income already) that are indexed for inflation and also increasing in 5 year increments... so one amount each year at 25 and a higher amount each year at 30 etc. Until they're 50 years old - then the trusts turn over to self administered trusts (they can run their own trusts then) but we also choose an amount to fund each childs retirement which they can access at 65... which is in separate trusts so if they blow through all the rest - they can at least have one final safety net.

The trusts are set up so that with trust approval they can access additional funds for schools - buying houses - babies - weddings etc.. Trust automatically protect them from divorce - bankruptcy - lawsuits (think OJ Simpson here) and that kind of thing. So even if they're complete idiots the trusts are protected.

[FatfreeGTO]

So this thread did get me looking at some divided stocks and here is what I'm thinking. Looking at the following which have all been mentioned in here I believe. STD, NLY, BMY, CLX

STD- Interesting stock, not for the faint of heart 10% dividend is awesome and its up 13% year to date. I'm interested to see what happens if the stock hits $9.10 or so a share... Risky stock may be overbought at this point, time will tell.

NLY- Another risky one even better dividend of almost 14%! Looking at the charts on it hard to say where it could go from here. I feel it has a better chance of down then up at this point. (my opinion only) If I were looking for a place to park some cash until another long term investment came along I would consider this one but would have to watch it very closely. But man that 14% guaranteed just can't be beat...

CLX- Great stock, long term play, nice 3.5% div yield. Could be getting ready to have a nice upswing in the stock price. Don't think you can really go wrong with this one. Current price is a nice entry point.

BMY- Another great stock 4%+ yield, has had a nice pullback in stock price so far this year. Relatively limited downside in this one in my opinion.

Now seeing as I do not currently have any pharmaceuticals currently in my account I am thinking that BMY is going to be my pick. Its also my pick because of the safety of it compared to the first 2 and also because CLX is too similar to other stocks I currently own. Although I may consider dumping MCD to buy CLX... I will think about it over the weekend and pull the trigger next week.

I have been on autopilot since last spring and I'm sure glad I found this discussion. I enjoy technical analysis and it was fun to actually open up some charts and do some detective work. Although that is not investing 102 stuff.

[GregWeld]

Best tax article I've read in a long time -- mostly because instead of taking a "side" in this poor vs rich debate - it just discusses who pays what and why... Which is (IMHO) the proper way to have a discussion on such issues.


http://www.msnbc.msn.com/id/46313519/ns/business-personal_finance/#.TzWqIVFidUQ


It was most interesting to note at the end of the article that the author figured out that the reason the disparity GREW between rich and poor was not because of taxes... but rather... because - In my own words here - they know how to work and make money?? :D

[GregWeld]

CLX- Great stock, long term play, nice 3.5% div yield. Could be getting ready to have a nice upswing in the stock price. Don't think you can really go wrong with this one. Current price is a nice entry point.

Now seeing as I do not currently have any pharmaceuticals currently in my account I am thinking that BMY is going to be my pick. Its also my pick because of the safety of it compared to the first 2 and also because CLX is too similar to other stocks I currently own. Although I may consider dumping MCD to buy CLX... I will think about it over the weekend and pull the trigger next week.



Somewhere you missed the post about looking at the charts :lol: ...Clorox (CLX) has a 5 year growth rate of a whopping 4% vs McDonalds (MCD) 123%

I'm not sure why you'd consider swapping MCD for CLX... especially given a fairly similar dividend yield. Don't forget to also compare TOTAL RETURN...

MCD total return for 5 years - 161% ----- CLX a not so much 21%

Obviously it's your choice - your money - your account... I'm just discussing this for use in the Investing 102 "thinking/thought process".


BTW -- I have bought and sold Banco Santander about a zillion times over the years. Currently - I just think it's about time to get back into some financials... I can't stomach the current CEO of Bank of America... and I certainly won't dare to be "early" into their stock given the whopping .5% dividend vs the Banco Santander (STD) dividend of 10%. At least if I'm early -- I'll be getting paid to wait.

Also -- this thread isn't/hasn't been used to parse individual stocks etc -- it's really more about the thought process that is behind various stocks only to use them as an example. I like your discourse on why you're thinking about a particular stock. It shows your thought process... which is really what this thread is trying to be about. The catch a fish vs teach how to fish.

[FatfreeGTO]

Somewhere you missed the post about looking at the charts :lol: ...Clorox (CLX) has a 5 year growth rate of a whopping 4% vs McDonalds (MCD) 123%

I'm not sure why you'd consider swapping MCD for CLX... especially given a fairly similar dividend yield. Don't forget to also compare TOTAL RETURN...

MCD total return for 5 years - 161% ----- CLX a not so much 21%

Obviously it's your choice - your money - your account... I'm just discussing this for use in the Investing 102 "thinking/thought process".


Great question. :cheers:

When I was typing that I hadn't yet done any charting on any of the stocks that I currently own, I was just researching for new opportunities. I'm not usually a long term holder of a stock I feel I have done better with more activity. As I am getting older I need to probably focus on things that I can let grow for a longer time then catching a quick 10% and getting out.

I first got into MCD in Nov and Dec of 2010 so owning this stock for over a year now is a pretty long time for me. I bought this stock simply because it was safe and I was needing some safety at the time. I always try to come up with a exit strategy and I remember thinking I would hold on to it because it is a safe play with an ok dividend and if it got over a $90 I would consider letting it go because I would have a 15% + gain. Well it did that and more, now it hasn't really moved so far this year, I was thinking this stock was done for. I went back and brought up the chart with the indicators I like to put on them and noticed that MCD isn't really done yet in my opinion. It just took a little breather.

In regards to CLX I am seeing that it is currently at its lower support line, I currently consider it oversold, but the 50 day is about to cross above the 200 day MA so I was thinking this stock could catch a nice "pop" if there is a stall in the recovery we are having and there is a flight to safety again.

This is more of me trying to be a trader then a investor so I wouldn't follow my advice if anyone is reading this. Trading is more luck then anything, investing will get you where you need to be if your willing to stick it out and dollar cost average into your position. I found a nice calculator yesterday that lets you back test dividend stocks and show you how they would have done for you letting them ride. I will post up a link to it if I can find it again, it was pretty neat.

BJ

[FatfreeGTO]

Here is a link to that site I mentioned I came across yesterday.

http://www.buyupside.com/index.html

I'm not so sure about it now though, the calculators seem to be kind of funky. I'm not sure if they are right.

[WSSix]

Well, I reached half of my goal this week. Fidelity isn't open on Saturdays so I was only able to get my Vanguard Roth account set up to purchase stocks. It'll be a few more days before everything is finalized but I may be able to purchase my first stocks directly next weekend. :woot: I intend to keep a portion of the money in the Target Retirement account I have with them for now. Maybe later on I'll remove all the money but for now baby steps.

I do have a question that I think will be stickily personal opinion but that's fine by me. Since I will be playing with two separate accounts(401K and Roth), how would you divide up the accounts? For example, would you choose four stocks for each account making them all completely different sectors for a total of eight? Or maybe choose two with each account and only have four total sectors you're invested in with the money? I can't imagine that there's a right or wrong so long as you're diversified but I thought I'd ask anyway in case there's a tax advantage or issue I need to be aware of with the two accounts.

[GregWeld]

Well, I reached half of my goal this week. Fidelity isn't open on Saturdays so I was only able to get my Vanguard Roth account set up to purchase stocks. It'll be a few more days before everything is finalized but I may be able to purchase my first stocks directly next weekend. :woot: I intend to keep a portion of the money in the Target Retirement account I have with them for now. Maybe later on I'll remove all the money but for now baby steps.

I do have a question that I think will be stickily personal opinion but that's fine by me. Since I will be playing with two separate accounts(401K and Roth), how would you divide up the accounts? For example, would you choose four stocks for each account making them all completely different sectors for a total of eight? Or maybe choose two with each account and only have four total sectors you're invested in with the money? I can't imagine that there's a right or wrong so long as you're diversified but I thought I'd ask anyway in case there's a tax advantage or issue I need to be aware of with the two accounts.


If it was me - I'd go for the most diversity I could get... so 8 stocks not overlapping...

Sectors are harder to separate... but it can be done.

Industrials

Consumer

A) Cyclical

B) Defensive

Healthcare

Pharma

Energy

Financial

Real Estate

Telecommunications

Tech

Utilities

[68 stang]

Greg, have you thought about looking into companies for investing based on who is hiring? My line of thinking says if they are hiring they should be growing.

Ben

[GregWeld]

Greg, have you thought about looking into companies for investing based on who is hiring? My line of thinking says if they are hiring they should be growing.

Ben

No I haven't... but there's a couple ways to think about that. If SALES are good that might happen BEFORE they add staff.. and sales are easy to track via the quarterly reports.

I firmly believe that all companies made their numbers in '09 and '10 probably via cost cutting.. and everyone has cut to the bone - so if sales are rising - then hiring WILL follow.... but "when"? So I like your theory... because it would certainly be a sure sign that business is good and they have confidence going forward.

Do you have a source for this info?

[68 stang]

I do not have a source, but just by how many people contact me, wanting me to apply for jobs. There has been a forging and stamping company on the east coast that supplies parts to the automoblie industry.

Also Rockwell Collins, they do space parts but they may be too big of a company to really notice.

When I was in Everett, I heard that Boeing was hiring like crazy as long as you had a four year degree. In a previous post you said to avoid the defense contractors, since the wars should be winding down.

I have heard in my industry says Boeing is going from an airplane manufacturing to airplane designing and assembly company. We will also have pilotless passenger carrying aircraft, just have to sell the public on it.

[GregWeld]

Someone was looking for drug/pharmaceutical stocks the other day...

I read Seeking Alpha "regularly" and they have a "stocks going ex-dividend"
posting... which lists several stocks that will go ex dividend shortly (within days) and I just happened to notice AstraZeneca (AZN) is going EX and has a pretty good dividend. This is a "name" that I know but rarely think about... but may be worth including in your comparison against the Bristol Meyers - etc.

Here's what the post looks like in Seeking Alpha:

AstraZeneca (AZN) has a market capitalization of $60.50 billion. The company employs 61,100 people, generates revenues of $33,591.00 million and has a net income of $10,016.00 million. The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $15,345.00 million. Because of these figures, the EBITDA margin is 45.68% (operating margin 38.09% and the net profit margin finally 29.82%).

Twelve trailing months earnings per share reached a value of $7.29. Last fiscal year, the company paid $2.80 in the form of dividends to shareholders. The ex-dividend date is on February 15, 2012.

Here are the price ratios of the company: The P/E ratio is 6.47, Price/Sales 1.80 and Price/Book ratio 2.62. Dividend Yield: 5.94%. The beta ratio is 0.61.


This is another one --- WHICH I HAPPEN TO OWN.... it's a "ripper" price wise and has a good dividend...


Terra Nitrogen (TNH) has a market capitalization of $3.89 billion. The company generates revenues of $564.60 million and has a net income of $201.60 million. The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $219.00 million. Because of these figures, the EBITDA margin is 38.79% (operating margin 35.76% and the net profit margin finally 35.71%).

Twelve trailing months earnings per share reached a value of $14.08. Last fiscal year, the company paid $5.01 in the form of dividends to shareholders. The ex-dividend date is on February 16, 2012.

Here are the price ratios of the company: The P/E ratio is 14.79, Price/Sales 6.82 and Price/Book ratio 18.61. Dividend Yield: 6.68%. The beta ratio is 0.74.

[Flash68]

Nice post Greg.... I used to read seeking alpha a few years but had not in awhile... glad you brought it back for me. :)

What do you mean when you say "ripper"?

[Sieg]

Nice post Greg.... I used to read seeking alpha a few years but had not in awhile... glad you brought it back for me. :)

What do you mean when you say "ripper"?
I get daily email updates from Alpha, a lot of volume but you can pretty much qualify the content by the subject line.

I was wondering his definition of ripper also..........my interpretation is expensive per share.......to mortals anyway. :lol:

[GregWeld]

Nice post Greg.... I used to read seeking alpha a few years but had not in awhile... glad you brought it back for me. :)

What do you mean when you say "ripper"?

Ripping straight UP....

[GregWeld]

I get daily email updates from Alpha, a lot of volume but you can pretty much qualify the content by the subject line.

I was wondering his definition of ripper also..........my interpretation is expensive per share.......to mortals anyway. :lol:

Not touting or recommending this stock to anyone.... it's just a stock that I had an eye on for awhile and it took me some time to become "comfortable" with the spectacular run up.

Today it's trading UP $14.82 a share...

And here's an investing 102 peak -- Remember that I say scale in whether the stock is going down or up... here's my scale in.


02/14/2012 Buy 300.0000 TNH TERRA NITROGEN CO LP COM UNIT

$223.53500
-$67,063.18

02/14/2012 Buy 700.0000 TNH TERRA NITROGEN CO LP COM UNIT

$223.64900
-$156,560.57

02/02/2012 Buy 500.0000 TNH TERRA NITROGEN CO LP COM UNIT

$196.21200
-$98,114.95

02/01/2012 Buy 40.0000 TNH TERRA NITROGEN CO LP COM UNIT

$191.80000
-$7,672.72

02/01/2012 Buy 460.0000 TNH TERRA NITROGEN CO LP COM UNIT

$191.90900
-$88,286.37


I now - despite having scaled into a RISING stock price - have an UNREALIZED (paper) "gain" of $59,600.00

[Sieg]

:willy: I don't want to play Monopoly with you either! :thumbsup:

[Bucketlist2012]

:willy: I don't want to play Monopoly with you either! :thumbsup:

I don't want to as well. But then again, I may learn something while I lose my Money, haha..

But to give a smaller perspective.. I have been building my car for a while with profits from investments.. No out of pocket money..

I used to keep a larger rainy day fund because it IS the thing to do.. 6 months to a year's income..

But you get to a point that you can safely "park" the money somewhere, to get better yields than the .5% in the bank..

So, for a few years, i have parked my Rainy day money, and I made enough to pop on many upgrades..

I stopped for now to let more money "stew".. I will finish the car in 12 months , from those gains..

I am the small fish with much less money at work...Much, much, less..

But I try to share personal stuff too, to rally the troops with less money, or the younger troops..

Man this stuff works..I have another fund for travel...We spend the profits off that yearly. No private Jets, or World excursions, but first class lodging, ect... everytime..

I love to make memories, as much as having cool stuff..

I have some skills...:cheers: :lateral: :woot:

[Sieg]

It's all in "good" humor. I love the examples Greg sets because it shows how effective the strategies are. Though I do cry a little when I see a two week gain that's over 50% of my portfolio. Patience has never been a virtue of mine. :lol:

[GregWeld]

It's all about the PERCENTAGE of gains -- which is what wins in the end. Not the starting amounts. Ya don't start out "rich" -- but this whole thread is about how you will wind up "richer"... whatever that amount is doesn't matter - as long as you're forging ahead!

My points are more that you can have real GAINS -- in this case - even though I paid more than my original investment --- and collect real DIVIDENDS... and if you save a little - you'll have a far better life down the road. SolarGuy is living proof as am I.

It's really about not spinning your wheels.... not about how much horsepower a guy has. :D

[Bucketlist2012]

It's all in "good" humor. I love the examples Greg sets because it shows how effective the strategies are. Though I do cry a little when I see a two week gain that's over 50% of my portfolio. Patience has never been a virtue of mine. :lol:

I know, but it is what it is, Haha..

Like when I say that my emergency fund will make more money in a year.. I am talking 3 or so grand on the rainy day money, in profits.. Nothing earth shaking, but FREE money..Separate from the main Investments..3 grand in profits will pay for my Interior next fall..

Yes, I take Greg's figure's all with humor and awe... But I just try to break it down for the troops..On a Micro level, haha..Most money in Dividend paying , reinvested assets, some in 401K type, some cash for rainy days, but making money that i spend..In the old days, it would be in Savings and laddered CD's at DOUBLE digit gains... But alas, not now..

If you have been IN the game through 2008 and up to now, you are doing well.

Too many on the sidelines that never got it, or got out and they never really got back in..

And while I still see severe corrections in 2012, hold onto the tree, because in the end, we will be better off..And if your consumer debt is in order, oh man, the sweeter life is on the way..:cheers: :lateral: :woot:

[BC69]

I think there is a lot of great stuff in here, but a lot of it makes me cringe a bit too. There is alot of technical analysis, discussion of financial growth, and stock charts, ect. I can tell Greg knows his stuff, I just caution running with some of the simplicity of it. Also, maybe in the 89 pages of comments I missed something like what I am about to say, so I apologize.

But what concerns me is a) lack of using a comparison method and b) focus on technicals

I am one of the young guys here, but have been doing investment banking for 5 years now, 4 at one of those big Wall Street banks in downtown manhattan we all gang up on. On the private side of the world, we help companies buy and sell other companies, do any sort of financing, and of course IPO's. I am not on the private side anymore, so no worries about calling SEC.

When you see X company buying Y company, or X company IPOing at Y there is, at the foundation of it all, a discounted cash flow model behind it. You model out historic and projected periods (as far as you can reasonably be certain). Income is reduced down to cash flow, and that is taken back in time to the present period based on the companies cost of capital. The biggest part of it all is the Terminal Value - this is the value you assume the company grows in perpetuity. This makes up 90% of the total value. You can use a growth rate of 1% or so, but most likely you use a multiple of EBITDA. Think of it as operating income.

That multiple is determined based 99.9% of the time on comparison analysis. What are the public comparibles trading at. The median value of that. You tweek it if you think your company is better or worse at something. Sometimes analysts will use a multiple of earnings (P/E) which you see in research reports, its simpler, but also based on comparison!

My point is - you may see a company. A simple one, a fast food restaurant, that you understand the business model, you understand that in a downturn people go to QSR over sit down. You see sales up 5% yoy, EBITDA margins improving, CF reinvested in Europe, ect ect. So you think...great! BUY.

But what about the TRILLIONS of dollars in smart money out there, hedge funds, mutual funds, asset managers. Don't they see this? Wouldn't they be buying this? So what if all that smart money is already in the stock, and right now the stock is trading at 15x 2013E EBITDA vs. the industry trading at 8x 2013E? That means if they performed at industry average instead of projection you would be down big! If ebitda was 10mm, 1mm shares, at 15x its $150 a share, at 8x times its $80 bucks a share!

You need to make smart comparisons here. NFLX was mentioned earlier, and the chart looked great, but there was no real comp, no real way to measure that growth, and it was retail money coming in late. But industries that have established players and comparisons, you need to use that.

Its not just about stock x, it is stock x compared to the index and its peers.

On the technical analysis. Thats day trader glory, that can change in an instant! Thats not long term investing, thats day trading. And its us vs. smart big money that operates faster. Also, the options market is where the day trading really operates.

Focus on the fundamentals of the business, hold, average down during bear markets, and set limits on losses, and gains.

[GregWeld]

Okay -- Which one of you guys bought TNH?? And killed my run for the day...


:rofl: :rofl:


To BC69:


All "interesting" but not really relevant to the small investor and not "Investing 102" (beginning investing - so super basic). Don't take me wrong here - what you're saying is great information and I certainly hope you continue to add to this thread... but you just did what all Wall Street guys do... You made very complicated reasoning/statements for what is a very simple idea.... which is for the average person... with a longer term horizon (let's say longer than 2 years)... to start to invest. That's what we've been discussing for 89 pages. Get started - here's some basic info to look for etc.

Several of us have been pounding the tables about keeping investing to pretty simple basic steps - buy best of breed - good long term charts - with good dividends...

Once you introduce all manor of calculations and EBITDA - and cash flow models and blah blah blah... the AVERAGE investor will quickly out think themselves.

I'm merely asking people to get involved in their own finances -- it's not complicated -- and if they keep it simple -- they are perfectly capable of of handling the job. I'm also using my own personal investing as examples... and I'm running millions of dollars in my own accounts. So I figure if it's good enough for me... it should be somewhat helpful to "others". It isn't complicated and if I can do it (and have been for 30 years) so can everyone else.

The last line in your post is exactly what we've been talking about... with the couple of additions I stated above (i.e., buy best of breed companies).

[BC69]

Greg -

Believe me, I am all about getting in and holding, I am young, I can sit on losses for 15 years for all I care until they turn black. That's why I finished with that line. But I do think even in picking the long term holds you maybe need to dig a bit deeper. Understand secular vs. cyclical trends, what risk factors lay ahead, competitive positions, and I believe alot of that is priced in, and shows up in the multiples.

Being on the private side, I couldn't trade single name stocks, so I am full of index ETF's which I will hold for a long time. Now that I get into single names more I use much more caution.

The theme here, I get it and support it, just as I saw more and more posts about individual names and not around philosophy I put in some caution, and it certainly gets complicated, but I think having that in the back of your mind helps.

Tim

[GregWeld]

Greg -

Believe me, I am all about getting in and holding, I am young, I can sit on losses for 15 years for all I care until they turn black. That's why I finished with that line. But I do think even in picking the long term holds you maybe need to dig a bit deeper. Understand secular vs. cyclical trends, what risk factors lay ahead, competitive positions, and I believe alot of that is priced in, and shows up in the multiples.

Being on the private side, I couldn't trade single name stocks, so I am full of index ETF's which I will hold for a long time. Now that I get into single names more I use much more caution.

The theme here, I get it and support it, just as I saw more and more posts about individual names and not around philosophy I put in some caution, and it certainly gets complicated, but I think having that in the back of your mind helps.

Tim


AH HA! Yeah -- I caveat those "individual names" with === THIS IS JUST AN EXAMPLE.... we're not really trying to discuss the individual names. I use them as a teaching example. For instance -- my post about the "EX DIVIDEND DATES" that I can find in Seeking Alpha.... it's not about those names but rather about what information is available SHOULD SOMEONE WANT TO KNOW...

We've been hammering dividends - and there's all these terms used -- so things like this is good info (IMHO) for Investing 102... How they're paid - when - what to look for etc.

It's easier - I think - for someone to see by using a real life example. I think people get it "more" than just a broad discussion about theory etc.

I often find myself wanting to dive into a deeper discussion -- and actually spend a lot of time typing up a post only to delete it because when I read it before hitting the "submit" button -- it's not really relevant to the "102" basis this thread is about. While I "know" it - whatever it is - doesn't really mean it serves a purpose here. It's kinda like posting up about EFI in a guys thread when he only asked about adjusting the idle screws on his Holley... :willy: :lol:

I've been holding back "too much" info - until someone asks about it.

I can say - this has been a fun and rewarding (for me at least) thread. Just to see people interested and talking has been just huge!

[BC69]

I often find myself wanting to dive into a deeper discussion -- and actually spend a lot of time typing up a post only to delete it because when I read it before hitting the "submit" button -- it's not really relevant to the "102" basis this thread is about. While I "know" it - whatever it is - doesn't really mean it serves a purpose here. It's kinda like posting up about EFI in a guys thread when he only asked about adjusting the idle screws on his Holley...



I knew the entire time I was typing that it was going to fly over some heads like you say! Haha. It was more just "hey - lets remember it gets complicated". Because I think we all know some of the standard adages were blown to the 3rd standard deviation in the recession.

[Bucketlist2012]

Not to take away from BC69, who sounds like he has more knowledge of Investing than I, but we do need to talk about all ideas of investing, we also need to keep this thread at its core, which brings in people to talk about investing..

So KISS is important.

Otherwise, we can get too confused to ask, or comment.

I too , am one that is using what I see as long term trends, to fuel my Investments, and Monetary policy and Commodities are some tools that I use.

Also I am not invested in individual stocks by choice, but that may prove great, or it may prove not so great. my choice..

But BC69, please continue to posts thoughts and Ideas.That is the whole purpose of the thread.

I am luckier just being in the right place in history in 2008. So I have much to learn.

Yes, you flew right over many of our heads...

[Flash68]

Greg - quite a reversal today on your ex-div stock... and the market overall.

[RECOVERY ROOM]

Love this thread !!!!

[GregWeld]

Greg - quite a reversal today on your ex-div stock... and the market overall.


Yep -- and it's why I purposely posted "Paper gains".... they come and they go... but now instead of a $59 grand paper gain I'm down to $30 grand...

:lol: :willy:


I remember when I put new money to work around February 2011 (the account that I use for examples here).... and it went straight up about 200K.... and 3 or 4 months later (summer swoon) I was DOWN 200K.... so a 400K swing... but... always the big butt... I continued doing what I know works "most of the time"... bought a ton of stuff during the swoon and by Xmas I was up 335K (not counting any of the dividends -- we're just talking paper gains). We all know that since January 1st it's been off to the races.

I "pitch" DIVIDENDS because that is REAL MONEY.... money that I actually spend (quite liberally as you all know! :D ) and that keeps coming regardless of the paper gain or loss. That's why I like them!

I keep pitching them in this thread because they're particularly useful for guys just getting started and because they buy shares when the markets are lower so they're automatic savings.

[GregWeld]

Love this thread !!!!

And we love you!

:lol: :lol:

[Sieg]

Yep -- and it's why I purposely posted "Paper gains".... they come and they go... but now instead of a $59 grand paper gain I'm down to $30 grand...

:lol: :willy: Too bad you didn't sell it prematurely like APPL.





http://s3.amazonaws.com/advrider/peepwall.gif

Sorry GW, couldn't resist

[GregWeld]

Too bad you didn't sell it prematurely like APPL.





http://s3.amazonaws.com/advrider/peepwall.gif

Sorry GW, couldn't resist


Oh.... I only left about $192,000 on the table on that trade... I've done far far worse than that!

:wow: :wow: :faint: :rolleyes:

[Sieg]

Oh.... I only left about $192,000 on the table on that trade... I've done far far worse than that!

:wow: :wow: :faint: :rolleyes:

So far................:unibrow:

[WSSix]

lol, you guys are awesome!

My Roth account stuff is approved so I just need to make a phone call on this first deal to get the money moved. Hopefully, I'll have a day this weekend to take a looksee at the stocks I'm interested in and make my final selection.

In the meantime I made another donation to my online savings account which has earned me mega bucks since the beginning of the year. $29 dollars to be exact.:woot: :cheers:

[Sieg]

Good for you Trey! :thumbsup:

[GregWeld]

lol, you guys are awesome!

My Roth account stuff is approved so I just need to make a phone call on this first deal to get the money moved. Hopefully, I'll have a day this weekend to take a looksee at the stocks I'm interested in and make my final selection.

In the meantime I made another donation to my online savings account which has earned me mega bucks since the beginning of the year. $29 dollars to be exact.:woot: :cheers:

There ya go!!

Don't ya just love those .25% "savings" accounts! But hey! On the bright side this allows the banks to loan us money for "only" 4%!! LOL

[GregWeld]

So far................:unibrow:

I never look back....:lol: :thumbsup:


Did you read the post about my 20 million dollar "yacht"? Or my 10 million dollar "house"? All that Microsoft stock I sold in '88... or '89...or '94...
OMG.... It's way to painful to look back.

[Bucketlist2012]

Yep -- and it's why I purposely posted "Paper gains".... they come and they go... but now instead of a $59 grand paper gain I'm down to $30 grand...

:lol: :willy:


I remember when I put new money to work around February 2011 (the account that I use for examples here).... and it went straight up about 200K.... and 3 or 4 months later (summer swoon) I was DOWN 200K.... so a 400K swing... but... always the big butt... I continued doing what I know works "most of the time"... bought a ton of stuff during the swoon and by Xmas I was up 335K (not counting any of the dividends -- we're just talking paper gains). We all know that since January 1st it's been off to the races.

I "pitch" DIVIDENDS because that is REAL MONEY.... money that I actually spend (quite liberally as you all know! :D ) and that keeps coming regardless of the paper gain or loss. That's why I like them!

I keep pitching them in this thread because they're particularly useful for guys just getting started and because they buy shares when the markets are lower so they're automatic savings.

Again, it isn't the value and total at a given time, but the dividends and income stream...

After all of 2011, i am still up, and i took a paycheck every month, and 10K extra to play with...Still up from my start point after all that...

High 5 figures in yearly income, and not hundreds of thousands, but still living nicely. that is why ,other than dividends, it is called unrealized gains...

Just to say that the power works.. me the little guy , was up and down 20K at times, per day up or down...per day , in 2011 !!! For me, that is a lot, especially if it went for two or three days.. but i stood the course...:cheers: :lateral:

[Bucketlist2012]

Oh.... I only left about $192,000 on the table on that trade... I've done far far worse than that!

:wow: :wow: :faint: :rolleyes:

Clean up on isle three....clean up, on aisle three...:cheers:

[BC69]

I "pitch" DIVIDENDS because that is REAL MONEY.... money that I actually spend (quite liberally as you all know! ) and that keeps coming regardless of the paper gain or loss. That's why I like them!


I am playing devils advocate, all in good spirit, as I probably came off way negative in my first post, but hopefully keep people thinking.

Why dividend stocks vs. corporate bonds? If the focus is the stability in real cash return? (And maybe its, again, trying to keep things 102 and simple).

Take JNJ (Johnson & Johnson) - on a capital gains basis, over the past 5 years the stock has moved alot in terms of volatility, (so timing would matter) but to the day 5 years ago. It was $64.15/sh today is at $64.94/share. Essentially nothing (less with inflation right?). BUT you are earning a 4% dividend yield (annually). Greg has shown how that is cash, its real, its great, and it beats the hell out of a savings account.

But JNJ also has bonds outstanding. The secured debt for a 2016 maturity will earn just above the dividend at 4.7%, a 2021 maturity - 7%. These rates are semi-annual, so there is a small amount more you earn because of compounding.

Yes, bonds are boring, getting capital gains out of them is rare and thats really just getting a higher implied yeild (I know there was a post on this).

But mature dividend stocks generally dont get you much capital gains either, as we discussed. Thats the nature of becoming a high dividend business (you start paying dividends when management and investors believe the capital is better off going to sharholders than into the business). But they come with more risk.

I know we could never imagine JNJ going bankrupt, but 15 years ago did we imagine Sears or Kodak? High dividend mature stocks. We didn't see that coming.

If I owned Kodak stock, I would have initially lost that income stream as they cut dividends to conserve liquidity. And then I would have lost my initial investment completely as the equity holders are last in line.

If I owned the secured bonds, I would have still received my income stream the entire time, and in depending on how bankruptcy comes out, generally over 90% of my face investment.

So yes, its boring, but if we have a diverse portfolio with some growth stocks, and some dividend income stocks. I would say consider the bonds there too as a substitute for the income portion of the portfolio. Assuming everything here is for a long term hold.

I think in summary, the security + the higher income stream can in some cases offset the potential cap. gain + risk of the underlying stock.

Just food for thought. Both great options to earn above savings rate with limited risk.

[Bucketlist2012]

Love this thread !!!!

Yes. It is a Great Thread.:lateral:

I was just thinking a few things this morning.

One is Dividends were paid overnight again. Not much, a few hundred bucks, but hey, it is money.

The next is that this thread keeps going, and that is a blessing just to keep people thinking. All all other sites, when you talk about money, or someone asks about it, it turns into people thinking you are bragging about your money..

Far from it... I am a guppy compared to Greg, and some people would take him talking his numbers as bragging, and it would go south quickly. Yes, his numbers are mind boggling, but i commend the grown-ups on this site that are truly looking for Opinions from those that have and do...I call it, the Success leaves Clues method..It will speed up your learning curve by taking in those opinions.

Next, Since my method is the same , but my Choices are different, I have been Re-Researching all my Investments, just to see where I am at.

I did it by looking at what I owned and the 3 and 5 year Total returns, the Dividends paid, and it's strength long term against it's competition..

That best of the breed, long term numbers, and growth for the future..

For me, all is working good, but just saying that using the methods talked about here work, whatever you end up choosing.

Also, if you don't have a Schwab account, get one.. You can research and get all the numbers you will ever need to make your choices, and they are reasonable fees.

Thanks Greg and others that keep this alive... I have stopped talking Investing in other places...Seems like they don't want to hear it..

BIG mistake and missed opportunities..Also depending on Pensions, and the Government, is a dangerous Play. For me, it is a Worse play than my High Yielding assets..:cheers: :lateral:

[GregWeld]

The calculation you left out of this is TAX RATE Differential.... Corporate Bonds are ordinary income tax rate.... Dividends are max tax (right now) at 15%

Makes a HUGE difference in the yield.

[Bucketlist2012]

The calculation you left out of this is TAX RATE Differential.... Corporate Bonds are ordinary income tax rate.... Dividends are max tax (right now) at 15%

Makes a HUGE difference in the yield.

BIG difference..What like 30% plus vs. 15% ?

Taxes are HUGE in money management. Things I am still learning, but I know play a large role in the strategies used.

Again, thanks for the tip.. :cheers:

I just try to give the troops smaller numbers to think about, so that it all seems possible with research, action, and time..

[bdahlg68]

Maybe this goes beyond 102, but one thing which might be a good topic to discuss is INFLATION! Just read this article and thought it might be a good discussion point for this forum and how to consider this in diversifying your portfolio, or where "parking" you money may change over time.

http://moneymorning.com/2012/02/16/investors-turn-to-tips-as-warren-buffett-warns-on-inflation/

[BC69]

The calculation you left out of this is TAX RATE Differential.... Corporate Bonds are ordinary income tax rate.... Dividends are max tax (right now) at 15%

Makes a HUGE difference in the yield.

Ah, good point. Still in the 4% vs. 7%. $1000 Investment. $40 for dividends ($34 after tax). Or $70 ($47 after 32% rate). I can see the shorter maturity bond being negated by the taxes, but still have security factor.

But totally right, if this is an investment account and you take that out to use yearly, taxes impact. If its a long term account, ROTH 401k or IRA, taxes will be a mute point.

What made me think of this was that my old boss, his father in law lived off of dividends from his old company (a large cap industrial mature business), and in 2009 they cut the dividend to conserve capital. Had a huge impact on guys like that, massive! Bond holders kept their income.

Also, another lesson in diversification right.

[GregWeld]

Ah, good point. Still in the 4% vs. 7%. $1000 Investment. $40 for dividends ($34 after tax). Or $70 ($47 after 32% rate). I can see the shorter maturity bond being negated by the taxes, but still have security factor.

But totally right, if this is an investment account and you take that out to use yearly, taxes impact. If its a long term account, ROTH 401k or IRA, taxes will be a mute point.

What made me think of this was that my old boss, his father in law lived off of dividends from his old company (a large cap industrial mature business), and in 2009 they cut the dividend to conserve capital. Had a huge impact on guys like that, massive! Bond holders kept their income.

Also, another lesson in diversification right.

Good post! And yes -- EVERYONE reading this stuff needs to remember what type of accounts they're "investing in"....

I personally have a large Muni bond laddered portfolio - which yields just over 4%) for the income stream and safety (I'm 58 - retired and have been for 20+ years)... so a safety net and the tax free munis "fit" for me... countered by growth and income in securities (stocks)...

Personally I have corporates in both accounts... and some of them are real good interest rates - like 7 and 8%! But of course in my case that's a taxable interest so I invest in these and look for the higher rates.

Back a few pages = I posted the taxable vs tax free "tables" showing equivalent yields needed depending on the tax rate.

It's VERY IMPORTANT for the "newbs" of Investing 102 not to get confused in these discussions.... you've got to think about what account you're taking action in and it's affects.

[GregWeld]

Maybe this goes beyond 102, but one thing which might be a good topic to discuss is INFLATION! Just read this article and thought it might be a good discussion point for this forum and how to consider this in diversifying your portfolio, or where "parking" you money may change over time.

http://moneymorning.com/2012/02/16/investors-turn-to-tips-as-warren-buffett-warns-on-inflation/


Brian ---

GREAT POINT!

This is where a guy could launch into a discussion about bonds vs securities (stocks) and GROWTH vs Income stream.

I just mentioned in the above post that I have a Muni bond portfolio (about 30% of my investable assets).... So here's a good point to discuss. This account -- should interest rates remain "stable" will spin off income (4% ish) but will basically have zero growth in CAPITAL. The bonds will mature at their maturity dates and I'll just get my money back....

BUT... that is ASSuming that I "hold" the bonds to maturity. Which I plan to do. I'm only laddered out 5 years - as of last year - so to 2018. Each year beginning this year (2012) I will have one 5th of that account "mature" - we will then use that cash to buy bonds that that mature in 2019 and so on.

Here's the problem with that.... you have no growth in capital - and if I can "only" make 4% interest (tax free) and inflation is running at 3%.... I'm really falling behind.

What I've done personally is to keep a larger majority of my investable assets in securities which - if I do it right - will keep me even or better than the inflation rate. That's the "TOTAL RETURN" that I keep banging on. If you don't have that -- you're going to be falling behind more and more every year. That the BALANCE we've discussed.

My balance is - some safety (at my age) - in return for a tax free dividend/interest income stream... while taking more "risk" in the stock market... and attempting to get a higher TAXABLE dividend stream from those investments.

If you're in a ROTH / 401K etc... this is kind of a mute point - because you won't have the tax issues ("yet" -- remember the 401 is only "deferred") and you won't have any taxable event with the ROTH.

If you're reinvesting the dividends from your stocks... and you have growth in the capital (total return) you should be "okay"

[GregWeld]

I got a good laugh today when Schwab sent me an email that my 2011 1099 tax form was ready... okay I thought - I'll just print it off... HA! It's 58 pages!

I'll let 'em mail it.

:rofl: :rofl:

[GregWeld]

What the heck guys -- I go off to Run to the Alamo -- and you all quit talking/posting... what's with that!

Come on now - let's get some new energy going!

Ya wanna go racing with me - that costs money - so ya gotta make some!!!

[hifi875]

been pondering my next move. got my statement on one of my investments the other day and wow it made me 10% in one month. i was like, this is awesome, then i remembered it lost about 5% the previous month. oh well. glad i don't need it now. want to buy some more stock, just trying to figure out what.

[Bucketlist2012]

Well I was reading about the MLP's and their advantages in seeking alpha today.

Things I already own, but good to get more info on the advantages ..

Wife and I were talking balance today... How much to spend vs. Save..

I have set the numbers way out on our portfolio, and we are looking to make sure to not leave too much on the table..

I would love to just blow some more cash, but not yet..

Investing for the future, and enjoying today... We crunch the numbers every January, and then a major review every 5 years..

But Time has compounded things quite well. People think they may have missed opportunities already...

Not so, Time and the income stream is on your side..

Money made while you work, sleep, or race Greg...:cheers:

[GregWeld]

been pondering my next move. got my statement on one of my investments the other day and wow it made me 10% in one month. i was like, this is awesome, then i remembered it lost about 5% the previous month. oh well. glad i don't need it now. want to buy some more stock, just trying to figure out what.

Investing is like that -- it's not a straight line up -- it's a two steps up - one step back - one step up three steps back but that's why I always ask you guys to go back - when in doubt - and look at the charts (3 and 5 years) and see what that tells you....

The average is about 11% a YEAR.... so to go up 10% in a month means you're going to get clubbed somewhere along the line. Trust me - it's REAL REAL hard to beat those "averages". There are pros on Wall Street that get paid millions per year to try to do that and most don't!

[GregWeld]

Well I was reading about the MLP's and their advantages in seeking alpha today.

Things I already own, but good to get more info on the advantages ..

Wife and I were talking balance today... How much to spend vs. Save..

I have set the numbers way out on our portfolio, and we are looking to make sure to not leave too much on the table..

I would love to just blow some more cash, but not yet..

Investing for the future, and enjoying today... We crunch the numbers every January, and then a major review every 5 years..

But Time has compounded things quite well. People think they may have missed opportunities already...

Not so, Time and the income stream is on your side..

Money made while you work, sleep, or race Greg...:cheers:


Well -- this is all real easy in a bull market.... I look at the charts showing the big dipper in '08/'09 and that's a valid reminder of what CAN and DOES happen... I know lots of guys that were down 40% because they had too much invested and didn't keep any out of harms way... then they had to sell in a down market ---- and then couldn't buy in that down market either...

To take a quote from a great movie --- "big mistake! HUGE!"


:cheers:

[Bucketlist2012]

Investing is like that -- it's not a straight line up -- it's a two steps up - one step back - one step up three steps back but that's why I always ask you guys to go back - when in doubt - and look at the charts (3 and 5 years) and see what that tells you....

The average is about 11% a YEAR.... so to go up 10% in a month means you're going to get clubbed somewhere along the line. Trust me - it's REAL REAL hard to beat those "averages". There are pros on Wall Street that get paid millions per year to try to do that and most don't!

Last year was a true test of staying the course...400 and 500 point swings..

several days of drops... but in the end, where are we ? Up and dividends got paid..

I think it again is TIME and the gains over time because you picked the better or best...

i certainly don't pick the asset with the worst 3 or 5 year average...And by picking the one with the better average, even when you take big hits, you still come out on top..In fact, buy more when things have a correction.

7 to 10% is a lot ,once you have enough working for you.

[GregWeld]

Totally agree with you .... and that dividend being paid is what carries you over the lows... that cash just keeps going ka-ching!

EEEEEEEEEHHHHHHHAAAAAAA

[Bucketlist2012]

Totally agree with you .... and that dividend being paid is what carries you over the lows... that cash just keeps going ka-ching!

EEEEEEEEEHHHHHHHAAAAAAA

Yes Sir...And You are right on not being too invested in one area..

I try to be ready to weather the downs and also keep enough liquid assets, not cash, to buy at those depressed times. I believe that as in 2008, I am not in a panic position to need to sell..Money management in personal life really helps..

I could have made a lot more money in the last few years, but I wanted to just keep the income stream going rather than swing for the fence..

Hindsight says it was the best move, and not buying dirt in the mid 2000's , turns out to be genius..

[Flash68]

I've used this thread to get my IRA back on track with a diversified allocation -- some income, a good chunk of growth and some speculative stocks (a couple biotechs).

And I've enjoyed getting back into this and spending quality time each day researching and reading. I forgot how much I enjoy it. These damn car forums pull me away from these essentials too much sometimes. :D



To take a quote from a great movie --- "big mistake! HUGE!"


:cheers:

Pretty Woman?

[GregWeld]

^^^^^^^^ Winner!!


I'm still in Texass boys! 4 days here for one day of running in the rain...:faint: but off to Phoenix this afternoon...

[Bucketlist2012]

Morning gents...

Hope all is well.

The path of things to come are playing into my Hands...

I don't like the direction things are going, and many people hurting will hurt more due to the rising costs, but Large paydays have been , and will continue to come..

And to Greg's point of not being greedy in one sector, you gotta have stay blended and not heavy in one area.

I have one fund that has risen 25% in the last few months...For me a lot of money making a lot of money, but I cannot increase my stake in that asset just for the gains...

I have a mix I am sticking to, and those higher yielding assets are just that.

Kinda like Flash and the BIO stocks, but not BIO.. But If we get greedy and shift too much over, BAD things can happen..

So while i want to be in hyperrichness.my word...I must continue a somewaht safe and prosperous path..Because i still see large swings and volatility coming, but 2011 gave us a view, and feel of what that is like..:lateral: :cheers: :woot:

[carbuff]

Safe travels. Eat a breakfast taco before you leave. :)

[ErikLS2]

The average is about 11% a YEAR.... so to go up 10% in a month means you're going to get clubbed somewhere along the line. Trust me - it's REAL REAL hard to beat those "averages". There are pros on Wall Street that get paid millions per year to try to do that and most don't!

This is a very imporant point Greg and one I don't think has been brought up in here yet. I'm wondering if you regularly compare your portfolio to some sort of benchmark, be it the Dow, S&P, or other various indexes? I always think it's good to know if all the research one puts into buying individual stocks pays off over just buying an index ETF for a corresponding industry.

[GregWeld]

I don't compare my portfolio against anything. I just make sure it's doing what "I" want it to do. Everyone is different and everyone needs their portfolio to be customized for themselves. So a comparison is pretty meaningless. I want to have capital gains and dividends - I search for the best companies in a sector that fit my needs and I treat each company as an individual contributor. I written in the past that I just make sure each of them is doing the best job they can.

People spend too much time fussing with all this stuff and it's really just not very helpful IMHO. You start comparing your portfolio against some other metric and then you start to be pulled off your game trying to play catch up or whatever.

Think about what happens around here with car builds - a guy starts out to build his perfect car - then gets on Lat G and sees all this other stuff - next thing he's 5 years off plan with a complicated car sitting in the garage all torn to pieces. In way over his head and trying to catch up -- in the 5 years he spent doing metal work - now his engine is passé and the wheels are dated...

Don't get caught up in stocks and bonds this way... trying to be something you're not.

[Bucketlist2012]

Morning Guys..

For me, benchmarks are weird, but I am a newbie..

I look at them , but don't use them.

I am also following different assets, but the same best of breed, looking at long term strategies.

Things like the S and P was up and down 25% last year and ended at 0, and my assets were up and down 35% , and ended up 12%...

But I still travel the course I am on...Not easy for most..

Man what Greg just said, i am following a totally different drummer boy Portfolio, and that is why , on this thread, I keep some of it private to not cloud the Thread, But I could have gone crazy with my Car/Portfolio, once i got on this thread...

I would have gone and done all kinds of things midstream. Send back the springs, got a 4 link, on and on..And end us with a half finished car. With the Ideas on the table...Maybe the same with my Portfolio..

I still have a yearning to take a chunk of money and do a test of this thread for myself, another Schwab account..I name them, so this would be the Lat G Portfolio, we will see.

So I am doing things that are coming to fruit right now, and on those Great days, i used to get all giddy and full of myself, but I have learned to just take it as another day, because I don't want to get too high, of too low, in what is a momentary swing..:cheers: :lateral:

[GregWeld]

This is a very imporant point Greg and one I don't think has been brought up in here yet. I'm wondering if you regularly compare your portfolio to some sort of benchmark, be it the Dow, S&P, or other various indexes? I always think it's good to know if all the research one puts into buying individual stocks pays off over just buying an index ETF for a corresponding industry.


Erik --

I think that's been my point of this entire thread --- i.e., it really doesn't take that much "research" to find 20 great stocks to own... it takes a matter of a few minutes really -- particularly if you stick to best of breed stocks and then just diversify to cover different sectors. Investing is really really simple. A guy can try to make it complicated and onerous but then he'd be a stock broker!:lol:

The point of exposing my own holdings etc has been to show that if it works for someone with millions to invest - it certainly should work for those with slightly less.

[MoparCar]

Again what an awesome real life thread. It's inspired me to do a lot of research and learning. I think I'm spending as much time researching stocks and investments (if not more) than cars right now. As mentioned before, this really should be taught in high school and by every parent. What a difference in life it could make.

Any chance the mods can update the sticky PDF on the first page periodically to list all the pages? :D This thing has grown substantially since the last PDF.

Wes

[GregWeld]

Wes ---

Doing this FIRST --- is what allows you to buy all the car parts your heart desires! :D

Happy to hear someone is getting some "good" from the thread. :cheers:

[Bucketlist2012]

Hey guys,

I thought I would post this to avoid problems..

I am Mike and I have started an investment thread elsewhere.

I am just giving people references to use to study, no advise ...I can't.

One was to come to this thread and read it several times and have a note pad with you..

My post today is for the new guys, PLEASE do not PM Greg about what to invest in...

If you are truly PAYING ATTENTION, this thread teaches you some skills to study and apply, not go buy this....

Everyone wants the quick answer and gets upset when we don't give them the Hidden codes to wealth...They are not hidden....But you got to comprehend what you are reading.

I just felt the need to say something ahead of time since I used this thread as what I think is a great tool for learning...I am pointing people to the tools, not the stocks to pick....A man must know his limitations..

So enjoy this thread, and study it, but do not PM Greg for help with your 401K, or what should I do with this or that...That won't go over well and then I am responsible for it..

Please, study and be patient... And these guys are here to help, but read the theme of the thread...To learn to do it yourself, and , or understand why your advisor is doing what he is doing...

Thanks Guys, and gals...I thought a preemptive strike was necessary :cheers: :lateral: ...:cheers:

[GregWeld]

Well said Mike...

None of us mind "helping" -- but this thread is trying to be the "teach a man to fish..." thread rather than let me catch you a fish.

Investing is a lot like hot rodding. Each guy has different taste - different dreams - different resources... different skills.

Once you know how to tune up a car - the basics can be translated to any car..

It's the same in investing. Some guys are chart happy - some need to see a P/E (Price to earnings ratio) that makes 'em happy - some are more comfortable investing in the sector that they work in and understand the best... but the basics remain the same IF you want to be comfortable owning stocks.

But! Before you can DO any of this -- you've got to save some money each month - or be willing to save that bonus rather than blowing it going to Hawaii.... because saving for 10 years -- and investing -- will then allow you to go because your investments will be growing and compounding.... and that's what this thread is really all about. As Nike says! Just do it! :cheers: :woot:

[Bucketlist2012]

Well said Mike...

None of us mind "helping" -- but this thread is trying to be the "teach a man to fish..." thread rather than let me catch you a fish.

Investing is a lot like hot rodding. Each guy has different taste - different dreams - different resources... different skills.

Once you know how to tune up a car - the basics can be translated to any car..

It's the same in investing. Some guys are chart happy - some need to see a P/E (Price to earnings ratio) that makes 'em happy - some are more comfortable investing in the sector that they work in and understand the best... but the basics remain the same IF you want to be comfortable owning stocks.

But! Before you can DO any of this -- you've got to save some money each month - or be willing to save that bonus rather than blowing it going to Hawaii.... because saving for 10 years -- and investing -- will then allow you to go because your investments will be growing and compounding.... and that's what this thread is really all about. As Nike says! Just do it! :cheers: :woot:

Thanks Greg...Yes some of the guys are bitten with interest, and some of them are both smarter than me, and they are excited, so a few will study, act and prosper..

We have the few nervous nelly's and of course the condesending sceptic talking before they read, and reading with bias, and then commenting.

I prefaced by saying that I am no pro and just here to help, and I get the comment that I SAID, I was a Guru, and to buy and trade Gold ??? hahahaha... Never in my words but people read what they want. So that is why I posted what I did.For those who start reading the thread with one eye, and listening with one Ear..

But you would be proud...Almost all are sharing why they are doing this, should I pay off this and do that..Thinking about it and getting ready to act..i love it..I recommend NOTHING but this thread, magazine's and resources, NO assets at all...So they can never say, i said to do this....But funny , someone will say it, but there are so many great people, the one or twp that don't read correctly, it is still worth it to see people getting excited about the right things. because i have a soft spot for those who taught me what i know. Killer life skills that no one wants you to know..

Also if they truly read as they should, you won't get bothered. AND IF YOU DO, tell them to finish reading because they flunked the Quiz.:cheers: :rofl: :rofl: :rofl: :thumbsup:

[toy71camaro]

Just wanted to pop in and say I am one of those "guys from the other forum". LOL

Just have to say, I'm about 1/2 way through reading this thread here, and it has helped tremendously in my understanding and also reiterating what i was reading elsewhere (that i didnt know if i should trust or not). Hearing it come from multiple sources, successful sources, that i trust arent trying to "Sell me something" but rather "help learn something" is key.

So to Greg, Mike, and the others who have participated in both this thread, and the other forum, I say thank you. I can see and feel the motivation for me and a lot of other people just by explaining things in laymen terms.

Again, thanks. :hail: :hail:

Albert

[GregWeld]

Albert == WELCOME!!

Good to hear that someone is reading! Many times I think it's just Mike and I having our own little discussion... so glad to have you join in.

Now - since I'm in Scottsdale enjoying some sunshine after our rainy Run To The Alamo race event... I'm going to hit the Starbucks and start my day!

Cheers!

[Bucketlist2012]

Albert == WELCOME!!

Good to hear that someone is reading! Many times I think it's just Mike and I having our own little discussion... so glad to have you join in.

Now - since I'm in Scottsdale enjoying some sunshine after our rainy Run To The Alamo race event... I'm going to hit the Starbucks and start my day!

Cheers!

Gotta say, it sounds like an old softy, but it warms my heart to see people getting excited about this...Makes me feel good, because I am only trying to help. Makes my day.

Well that and going into the Car dealer the other day to buy my new used toy for cost with a new car warranty, and a pleasurable experience at the car dealers. Wife and i were so prepared and together, that they were blown away.. Second biggest purchase you will ever make, smooth as butter...

[Bucketlist2012]

Gotta say, it sounds like an old softy, but it warms my heart to see people getting excited about this...Makes me feel good, because I am only trying to help. Makes my day.

Well that and going into the Car dealer the other day to buy my new used toy for cost with a new car warranty, and a pleasurable experience at the car dealers. Wife and i were so prepared and together, that they were blown away.. Second biggest purchase you will ever make, smooth as butter...

Albert....Nice job man and all the best.:cheers:

[camcojb]

Hey guys,

I thought I would post this to avoid problems..

I am Mike and I have started an investment thread elsewhere.



troublemaker................... :lol:

[Bucketlist2012]

troublemaker................... :lol:

Hope not to cause problems....That would not be good for me...

I guess time will tell, but I hope I did the right thing.:cheers:

[camcojb]

Hope not to cause problems....That would not be good for me...

I guess time will tell, but I hope I did the right thing.:cheers:

I was kidding. :D NastyZ28 is a great site, and the info in this thread is worth sharing.

[Bucketlist2012]

I was kidding. :D NastyZ28 is a great site, and the info in this thread is worth sharing.

Thanks...I thought it was worth sharing to get the few that will use the info, these great tools..one is this GREAT thread...

So thanks..:cheers:

Love Cars, love Money, love Good friends..:lateral: :cheers: :woot:

[WSSix]

Wish I could update saying I have purchased my stocks but no such luck. I'm being worked into the ground at present. Hopefully soon I'll have enough of a break to be able to regain my mental fortitude enough to make important decisions.

[Bucketlist2012]

Wish I could update saying I have purchased my stocks but no such luck. I'm being worked into the ground at present. Hopefully soon I'll have enough of a break to be able to regain my mental fortitude enough to make important decisions.

I went back to when you started this wonderful thread..

It has only been a couple of months..

I was glad to see that..It has not been that long...

If it had been a year or two, i was going to come back and SCREAM..

But you started this thread, and any motiivation we can do to get you going, we will...:cheers: :lateral:

You have the tools from Greg, and other studies. Now you just have to make the leap.

Man, I did it in 2009, and even still, i do it.

I fell you, when I did it, my thoughts were swirling in my head, should I ? Then when I decided to, I still put it off...Because I knew the future if I did nothing.

The rest was unsure.. I still think we will have LARGE tests of a mans fortitude to stay in this game..

As you are buying in , maybe dollar cost averaging, those will be times to buy cheap.

I think 2012 could go any way....It could be as Crazy as 2011, It could start the slow climb up, or we could get wacked big time.

But no matter what, i am glad I did. Get some rest and get er done..:cheers:

[GregWeld]

Well -- I know we still all thank you for starting this thread! It's been very gratifying.

To those that are still on the fence -- or hear the TV talking heads proclaim "the market is high and now is not the time to buy" --- or --- the predictors of giant market falls. I'll ask you to do this simple mental exercise:

Go back to the charts - 5 year - 10 year - and look at the line from left to right and then (other than the gigantic '08/'09 dip) ask yourself when was the "right time" to have waited to get in?

Obviously anyone that bought in the big dipper.... got a nice reward - but for most all the stocks that we'd pick using the info in this thread -- they're all higher NOW than they were before the big dipper... so if you bought in '07 at the very peak - you'd still be ahead right now. Now to top that off, you'd also have collected 5 years worth of DIVIDENDS...

This is a game that can't be played from the sidelines.

[Sieg]

Wish I could update saying I have purchased my stocks but no such luck. I'm being worked into the ground at present. Hopefully soon I'll have enough of a break to be able to regain my mental fortitude enough to make important decisions.

This works great for me:
http://content.schwab.com/mobile/index.html?cid=OnInvesting_Mag

[GregWeld]

Sitting in Scottsdale waiting for my wife to finish her walk.... I decided to check on my Schwab account to see if there was any "useful" information I could add to the thread...

This account was started (opened) around January 2011 with "new" money... and yeah -- it was a tidy sum -- but that has not been nor should be the point here... my point is that even with a sizable investment of new cash which all needed to be put to work.. there are ONLY 21 positions all of which are "new" investments.

So I went to the Schwab page that shows "unrealized" gains/loss. There are 21 positions none more than 18 months old... so all bought in this "rising" market.

Of the 21 positions:

4 have a capital "loss" --- the highest "loss" (red number) is $1246.00 on a $200K position. The smallest is $474.00 on a $60K position (1000 shares of Coinstar just picked up a month ago after earnings report).

Now... that leaves the gainers:

A $94,000.00 gain in Phillip Morse (PM)... to the smallest $22.00 gain in Verizon (VZ)

The account is UP $509,000.00 as of Fridays close... and I've been receiving dividends which ARE NOT reinvested. If they were I'd be up much much more.

So if you'd have just put in $10K at the same time - you'd be up at least 6 or 7% and you'd be up MORE if you'd reinvested the dividends.

So this is back to my earlier post -- that you can forget all the TV talking heads telling you this that and something else. Only one out of 21 positions is speculative (the 1000 shares of Coinstar). All the rest are just good names countered with some higher paying dividend payers (Annaly - NLY) and a couple corporate bonds.

So here's another point - which is Investing 102. Even if the market goes DOWN from here... I'm still getting dividends (almost $400K per year off this account) and it would have to go DOWN $500K to get me back to even! And it may very well do that... but it will - over time - go right back up and continue to make that relentless march UP on the chart that these stocks have done for many many years. :cheers:

[Bucketlist2012]

Yes Sir.

Like I said, the balance can fluctuate up and down, but the INCOME stream is still happening due to.....DIVIDENDS....

Greg is right as usual..

For me, the fluctuations in 2011 were LARGE on those days of 400-500 up and down.

The shaking the tree, I told my Wife... She is in charge of other large assets and she was ready to bail...

I told her look what i have done so far ...trust me....And here we are, most of my car built, and her with a new toy, all Paid by......Yep, Dividends..

AND the account is still UP...

When I say LARGE, I don't mean Greg LARGE, haha, but you get the point..It works with everything.

I still have people on the sidelines from 2008 ?????? WTF....

I can lead them to water...:cheers:

The best line....I get dividends of 400K no matter what....I am still laughing.....My mind is boggled, but i am laughing because that is the way it is done.

You see the wealthy people know that they are entrusted with a great responsibility NOT too blow it all.. By using the money to make money and spending roughly the profits of that money, you secure an entire future...Your's and beyond..

I have said to those that follow, you can continue the legacy by following that simple rule, or blow it and have stuff you need to sell and be broke...I won't be around for those decisions. Only the one's now.. Look at the 3,5, and 10 year returns...Get busy now....

I have some skills, and you can bet, WHATEVER skills I have, I am using them..

For me, if when I do things, I am always trying to do it the best as possible. Such a Dork.
But even when I fall short, It is way farther than those on the sidelines.

Fear can be your Counselor, or your Jailer....Do not let Fear be your Jailer..

Show up .. ahead of 80% of the people.

Show up on time...85% of the people.

Show up on time, with a plan....90% of the people.

Show up, on time, with a plan, and put it into use, being ready to adjust along the Way ??? Ahead of 95% of the people..

I have figures...Sometimes not investment one's, but you get my point...

[ErikLS2]

Greg,

I've been thinking about Coinstar and wondering what you like about them? There's a lot more to them potentially than RedBox (which will be going away eventually) and change counting machines. The question for me is can they capitalize on all this growth in other types of kiosks I seem to be noticing all over the place.

[GregWeld]

Greg,

I've been thinking about Coinstar and wondering what you like about them? There's a lot more to them potentially than RedBox (which will be going away eventually) and change counting machines. The question for me is can they capitalize on all this growth in other types of kiosks I seem to be noticing all over the place.

One word -- GROWTH


The founder of Coinstar is a family I know locally and used to do a ton of business with. Smart guys... and smart enough strategically to figure out how to leverage their footprint for expansion. Also the new LLC formed with Verizon to stream video should translate straight to the bottom line.

Just a hunch and worth poking a toe in the water. Just taking a bit of a flyer on this one.

While I preach DIVIDEND DIVIDEND DIVIDEND here... And have stuck to writing this thread for newbs or recently converted "investors". So what I do personally is a bit divergent from here and I hate to get into more complicated strategies and "gambling" discussions here. I can afford to dabble in stuff that has a LOT more risk in it even though I do so in a very minor way as a percentage of investible assets. Which is the way these kinds of things should be done.

So if someone was buying all the "normal" stuff -- and then wants to take a stab at something they just have a gut feeling/good feeling for... keep it REALLY low $$ wise. That way when they go south (which most do) it's a real ho hummer. If things go your way -- then if you care to -- you scale in on the way up. But often new companies - and new strategies can get HAMMERED in one hiccup of a quarter - or a new competitor emerges - or the strategy you thought was golden turns in to a dud. :lol:

The way to go broke - or get very discouraged with investing - is to go swinging for the fences. Everyone wants to be the first guy on the block to have bet big on the Google or Apple of tomorrow... but trust me... that is a real quick way to sink the boat. That's GREEDY... and foolhardy, and you'll deserve what you end up with. It's hard enough to make money and hold on to it without tripping yourself up.

Again -- I'm not writing these statements directly to the post with the question - but I'm writing to all that will read the question and the reply. So "YOU" is not "you" but anyone reading.

Personally I don't think I'd be doing speculative investing (gambling) until the portfolio was in the half a million dollar range -- and then the gambling portion might be limited to a couple $25K names. It's kinda like building a house -- you want a great foundation before you put up the walls.

[GregWeld]

Reading the business page and stumbled on this -- which is absolutely amazing!

Apple sells more per square foot of retail floor space than anyone by almost DOUBLE....

1. Apple Sales per square foot: $5,647

No. 5 on the RetailSails top 25 growth list
Revenue/net income (millions): $127,841 /$32,982

Gross margin: 42.4 percent

2011 stock price change: 25.6 percent

Apple is a relative newcomer to the retail scene, with its first store opening in 2001. The stores, which feature genius bars for providing advice and repairs, have become a mecca for its fans. It is not uncommon to see die-hard fans lining up outside the stores, sometimes for days, before a new product launch. In the latest quarter alone, Apple sold 37 million iPhones through all its sales channels. Broader signs of Apple’s success are that its global revenue rose 73 percent to $46.3 billion, and its $477 billion market capitalization, which is the highest of any public company in the world.


Maybe the guy that posted how bad the economy was and how the Internet and competitors were responsible for his crappy business should take a page out of this - what do ya think?? :lol: :wow:

[GregWeld]

For those of you that really want to dig into researching a company rather than just the basic Google or Yahoo finance websites....

Try doing a stock search using this:

http://www.nasdaq.com/


Doesn't have to be a NASDAQ stock... and there's a HUGE bunch of info for you guys that want to really do your digging.... Too much as far as I'm concerned but many like this part of picking stocks -- so have at it! :D

[protour73]

OMG ......... I hang out these sites and soak up the car knowledge and the humor and always enjoy the camaraderie......until now. I never thought that I'd actually get something out of it that could actually benefit the entire family and our future!!!

When Trey first posted this thread, I looked at it, watched it, read it, read some more ...... and then it started to grow into the mega-thread that it is today and couldn't stay away from it. Up to this point I just kept saying to myself "This is the Year I'm finally going to do something. You know what? IT IS!!!!! :unibrow:

I've had money sitting in savings (cash) doing next to NOTHING right through the ugliness '07, '08, '09, '10.... now I need to put this cash to work.

I've also sat back for the last 5 years at my job and GAVE MONEY away, by not getting into the company 401K that gets MATCHED by the company. Through the bulk of the housing crunch I saw so many friends and coworkers getting their collective 401K azzes kicked, losing tons of cash, so I thought why jump into that alligator pit? What in idiot, right? sheeesh

Greg ...... what a friggin inspiration you are... because of your success!!! It's one thing to have someone run their mouth spewing investment advice and not know whether they had any real life success, but you have tons of facts to back it up. The others that have chimed in on a regular basis blend nicely so that it never became the "GregWeld" thread hehehe :thumbsup:

I feel like this thread has really awaken some of the lurkers on Lat-G, even though there haven't been a ton of different people responding to this thread, if you look, the thread ...... at over 22,000 views, is the most viewed thread ever in the Off Topic Forums section. That speaks volumes to the interest that it has created.

SO, I digress ....... First, for the life of me since I started doing research on several stocks, I cannot find Total Return on any stock's Info Page. Div/Yield is the closest thing to it.

I've been looking at:

ATT (T)
Coke (KO)
Chevron (CVX)
Harris Corp (HRS)
McDonalds (MCD)
Rock Tenn (RKT)
Westar Energy (WR)

and I have a meeting tomorrow to finally get into our company's 401K - not sure which direction to go on this one, It's Fidelity I believe.

[pw2006]

OMG ......... I hang out these sites and soak up the car knowledge and the humor and always enjoy the camaraderie......until now. I never thought that I'd actually get something out of it that could actually benefit the entire family and our future!!!

When Trey first posted this thread, I looked at it, watched it, read it, read some more ...... and then it started to grow into the mega-thread that it is today and couldn't stay away from it. Up to this point I just kept saying to myself "This is the Year I'm finally going to do something. You know what? IT IS!!!!! :unibrow:

I've had money sitting in savings (cash) doing next to NOTHING right through the ugliness '07, '08, '09, '10.... now I need to put this cash to work.

I've also sat back for the last 5 years at my job and GAVE MONEY away, by not getting into the company 401K that gets MATCHED by the company. Through the bulk of the housing crunch I saw so many friends and coworkers getting their collective 401K azzes kicked, losing tons of cash, so I thought why jump into that alligator pit? What in idiot, right? sheeesh

Greg ...... what a friggin inspiration you are... because of your success!!! It's one thing to have someone run their mouth spewing investment advice and not know whether they had any real life success, but you have tons of facts to back it up. The others that have chimed in on a regular basis blend nicely so that it never became the "GregWeld" thread hehehe :thumbsup:

I feel like this thread has really awaken some of the lurkers on Lat-G, even though there haven't been a ton of different people responding to this thread, if you look, the thread ...... at over 22,000 views, is the most viewed thread ever in the Off Topic Forums section. That speaks volumes to the interest that it has created.

SO, I digress ....... First, for the life of me since I started doing research on several stocks, I cannot find Total Return on any stock's Info Page. Div/Yield is the closest thing to it.

I've been looking at:

ATT (T)
Coke (KO)
Chevron (CVX)
Harris Corp (HRS)
McDonalds (MCD)
Rock Tenn (RKT)
Westar Energy (WR)

and I have a meeting tomorrow to finally get into our company's 401K - not sure which direction to go on this one, It's Fidelity I believe.

Congrats Scott! Here are the 1/3/5 year total returns that I pulled from Schwab.

ATT (T)- 11.5%/55%/5.3%
Coke (KO)- 11%/76%/69%
Chevron (CVX)- 10%/85%/81%
Harris Corp (HRS)- <4%>/24%/<1%>
McDonalds (MCD)- 36%/98%/156%
Rock Tenn (RKT)- <5%>/155%/109%
Westar Energy (WR) 12%/82%/31%

[GregWeld]

There ya go SCOTT! See -- we're more capable than just what size carburetor you need!!

:rofl:


So when looking at these companies --- remember BALANCE --- and to COMPARE the names that you've listed with their competitors! Remember to try -- key word there "TRY" to find the best of breed in the sector that you're looking at. It always amazes me when I THINK (another key word huh!) I know who's doing what and who's best -- and then stumble into who's really kicking azz in a sector. It's not always who you think it is.

You're post is EXACTLY why I continue to try to just talk stuff out on here... even exposing things that most guys never really discuss... using myself as an example which is not to be self serving but I can really only first hand knowledge my own situation. I hate it when guys post up on a "how do I do "X" thread about something they read about once.... It's like "DUDE!" I don't want that kind of info -- I want someone that's actually done the install or used the part.

I'm so happy that we can spur each other on - collective skills... used to the benefit of all. :cheers:

[GregWeld]

Just one more caveat --- don't pull out all your savings and then just go on a big azz stock buying spree....

Tip toe in -- watch and learn - scale in your buying. Get a feel for it (the market and also how YOU feel when seeing your stocks go DOWN as well as up). Learn to buy on the scary days! Not the big up feel good days... set your names -- and work into it.

Ya didn't build your first car all in one day. Don't try to build a screaming perfect stock portfolio all in one day either.

Depending on your AGE --- you may want to take more "risk" with the 401K since it will be in for a longer period of time -- and the company should be a contributor to it as well. People tend to be too conservative with their 401's.

If you have 15 or 20 years til retirement - and plan to live for another 20 after that -- that's a 40 year horizon!

[Bucketlist2012]

ProTouring73..

If One person gets off their butt this year and does something, the thread is a Success..

And Greg's last post is critical. This is no get rich quick thread..Far from it.

But good to see more than the "Core" group talking and acting...

:cheers:

[protour73]

There ya go SCOTT! See -- we're more capable than just what size carburetor you need!!

:rofl:


So when looking at these companies --- remember BALANCE --- and to COMPARE the names that you've listed with their competitors! Remember to try -- key word there "TRY" to find the best of breed in the sector that you're looking at. It always amazes me when I THINK (another key word huh!) I know who's doing what and who's best -- and then stumble into who's really kicking azz in a sector. It's not always who you think it is.

You're post is EXACTLY why I continue to try to just talk stuff out on here... even exposing things that most guys never really discuss... using myself as an example which is not to be self serving but I can really only first hand knowledge my own situation. I hate it when guys post up on a "how do I do "X" thread about something they read about once.... It's like "DUDE!" I don't want that kind of info -- I want someone that's actually done the install or used the part.

I'm so happy that we can spur each other on - collective skills... used to the benefit of all. :cheers:

When I started to COMPARE, it was an eye opener, and you can find a better performer that you may not have even expected. That was the cool part!!

On the 401K I'm looking at this one: Spartan Extended Market Index Fund - Fidelity Advantage Class (FSEVX)

[WSSix]

I believe Jose had that Spartan account. It sucked, lol. Kind of like my current mutual fund account does. I know the thread is many pages long but it would be good to read through most of it, at least skim it anyway. Lots of good advice and examples. As well as examples to further prove why Greg hates mutual funds :)

[protour73]

I believe Jose had that Spartan account. It sucked, lol. Kind of like my current mutual fund account does. I know the thread is many pages long but it would be good to read through most of it, at least skim it anyway. Lots of good advice and examples. As well as examples to further prove why Greg hates mutual funds :)

SEE!!! this is why this thread kicks butt!!! Previous experience!!

Any help, suggestions, opinions on a Fidelity 401K fund would be WELCOMED :cheers:

and yea Greg ....... the wife won't let me pull all of the cash out of savings!!!

[dhutton]

SEE!!! this is why this thread kicks butt!!! Previous experience!!

Any help, suggestions, opinions on a Fidelity 401K fund would be WELCOMED :cheers:

and yea Greg ....... the wife won't let me pull all of the cash out of savings!!!
You should be able to buy individual stocks in your Fidelity 401k by opening a brokerage link account. Trades only cost $7.95 and you get access to some good research tools.

Don

[WSSix]

That's what I have done with my Roth through Vanguard, and eventually, when I can find the time, I'll call Fidelity and do the same with them as they have my 401k.

[protour73]

You should be able to buy individual stocks in your Fidelity 401k by opening a brokerage link account. Trades only cost $7.95 and you get access to some good research tools.

DonNo sh*t........I had no idea you could do that.

[BC69]

I know Greg doesn't mean to say its the end all be all in getting dividends, but a couple responses to his point made me want to just highlight; Just remember, you are the equity owner, the last in line to get paid, and the first to miss out! So companies do cut dividends. In 2010 these big boys all cut dividends by some amount.

– Bank of America Corporation (BAC)
– General Electric Co. (GE)
- The Home Depot, Inc. (HD)
- Johnson Controls Inc. (JCI)
- Pfizer Inc. (PFE)
- US Bancorp (USB)

With the point about liking dividends, remember the point about balance!! Bonds the coupon is coming no matter what, stocks its not - but growth can! Its all about the right balance for your age and your goals, and understanding the risks in each area you invest. If you want true gauranteed income streams, its fixed income and annuities. If you want fairly stable income with some risk, but some upside potential..dividend stocks. [Taxes exluded because its account dependant]


Tim

[GregWeld]

So just checking on the list above -- not one of those stocks would have made the cut for "investing 102" because every one of them has a lousy 5 year chart and not one of them is "best of breed".

This is where a little bit of work has to come into your choices...

I said over and over in this thread that you need to have EVERYTHING going your way or keep looking for another choice. Good/Great chart... Best of Breed... and to diversify.

The only one on this list that I'd consider to be perhaps best of breed is Home Depot (HD).

Personally I use the long term chart to also look for stocks that have INCREASING dividend payouts. Which I have mentioned before... because of the inflation protection this gives you.

NOW -- On to BONDS:

The only way to make capital gains in BONDS is to be a trader. Bonds carry a very undeniable link of price to coupon rate. Yes you can get capital appreciation in bonds but then you're selling your higher interest paying bonds and instead of getting the higher interest for the term of the bond - you've traded that for capital gains. Short term or long term depends on the holding period but you're for certain trading your tax free (in the case of muni bonds) income for a TAXABLE event by trading them.

Bonds are by no means - these days - any less risky than stocks... and one of the oldest sayings in investing is "when interest rates rise - stocks will die - when interest rates die stocks will fly".

Here's the reason for that. Why would you buy stocks if you could get an 8 or 9 or 10% tax free muni bond? That's a fantastic tax free return. So money moves out of stocks and into the relative safe tax haven of bonds (munis). But the reverse is true in a low interest rate environment such as we're in right now. Nobody really wants to make a lousy 3% on their bonds when they can get nearly double that on a dividend stock such as AT&T... so the money moves from the bond market into the stock market.

Here's the catch.... WE are never going to get the timing of these moves right. WE will most likely always be behind the curve. In stocks in a rising interest rate market and the reverse. This is why BALANCE is so critical. I own muni bonds -- about 30% of my investable assets... it's "safe" money - and I don't add to my taxable income. BUT most smaller investors are falling behind big time trying to work this strategy and you'll lose money trying to be in the right place at the right time.

SO let's examine the dividend vs bond income stream argument in a most basic way.

The dividends - should you be invested in the kinds of companies we've said we should be in - should not only be safe - but they can and do rise over time regardless of the daily stock price. Just look at your stocks and go to the 5 and 10 year chart and see what the dividend was "back then" and see if in fact it hasn't doubled or at the very least gone up over time. If we're doing this RIGHT - the dividend should be steady as a rock and rising - and the chart should be climbing as a price per share. If the dividend is outsized (as a percentage) then some of the charts won't be climbing but they'll be our steady eddies (remember that balance and there's usually trade offs).

I actually worry much more about the DECLINE in capital in my BOND portfolio than I do about my stock portfolio. If we are truly in a real recovery -- and the Fed decides to pop the rate -- you'll see a big haircut in capital value. The good news (and the reason to own 'em) is that if you hold to the maturity date of the bond - you get 100% of your capital back. The bad news is - you aren't growing your capital.

I hope this isn't confusing.... it's just that all this stuff is interrelated... and it's really good to understand it -- but it can be detrimental to try to "figure it all out". If you have big dough invested -- you should have more "interest" in trying to stay abreast of this -- but if you're under half a million or so... I'd just pick a course and stick to it. Don't try to be micro managing == but do keep an eye on the MACRO (large) picture.

Since I'm flying - I'm going to post this without a proof read so hope it makes sense.

:cheers:

BTW -- Not all bonds are "safe" -- a couple of major California cities have filed for bankruptcy... one just recently! Guess what - as a bond holder - that's pretty much a wipeout. :(

[CRCRFT78]

Scott, these were/are the 3 funds I was holding.

Fidelity Freedom Fund 2045 (FFFGX) 10YR--8.63%
Spartan Total Market Index Investor Class (FSTMX) 10YR-+23.73%
Vanguard Total International Stock Index Fund (VGTSX) 10YR-42.13%

I dumped the FFFGX & VGTSX funds due to lack of performance. I held onto the FSTMX fund because its held steady and is up 33.59% since purchasing in 8/23/2010. I also looked at the top 10 holdings in the fund and realized if I had purchased these outside of the fund I'd be well ahead. However, I didn't want to get ahead of myself and sell everything in my portfolio just to start fresh so I eliminated the under performers and added some stocks that have helped my portfolio continue a steady climb. The more I read this thread the more confidence I gain and the more I feel comfortable with my investment choices.

I would just like to THANK everyone that has contributed to this thread.:thumbsup: :thumbsup: :thumbsup: :thumbsup:

[CRCRFT78]

BTW I thought this was an Investing website :_paranoid you mean to tell me I can learn about cars too.:D

Love this thread, thanks again Trey for lighting a fire under some of us.:thumbsup:

[toy71camaro]

Wow fella's... finally.. like 5 days later... i finished the thread.... lmao.

Now, on to do some research before I pose any questions...

My "To Do" list...

1. Review my Roth account, see what i am holding, what sectors they are in, and if they are really, the "best of the breed". I have little in there, but am putting in enough monthly for the past 6 months to max my yearly contribution amount. I do own mostly dividend stuff, but not all great stuff (I do have a handful of some MCD tho! hah)

2. Find what "sectors" I need to be in, for the coming future.
3. Find the best of breeds for these sectors.
4. Then tackle my 401k (which, i'd been paying into since i was 19 (not a max, but company matched max)... 30 now.).. but last time i checked, its roughly +4% since i started it. (better than down i suppose!)

My 401k is via John Hancock, anyone know if you can do the "brokerage link" for it to get away from only picking Mutual Funds??



Again, I want to say thanks. I dont have a schwab account, but wished i did for what sounds like their tools are top of the class. I'm currently using Sharebuilder (dont shoot me) for my Roth (and i have a personal account, which has like $150 in it. lol. but i did buy like 0.2 shares of apple thats up like 260%. hah).... The good side of sharebuilder is that i can auto-buy my stocks on Tuesday for $2 a buy (thanks to costco membership) - and quite often I can find "promotions" for free stock buys. :D

[Bucketlist2012]

Well I said it and I meant.

If only one person gets something out of this thread, then it is a success.

I started the thread somewhere else and only ToyCamaro seems to be the one from that thread...

Good enough for me...

[toy71camaro]

Well I said it and I meant.

If only one person gets something out of this thread, then it is a success.

I started the thread somewhere else and only ToyCamaro seems to be the one from that thread...

Good enough for me...

Thanks again for pointing me towards this thread here. I had an "idea" of the "concept" of dividend/drip investing, but thats all. I've heard people promote it, but they've been "big wig TV people" or "some random investment firm dude across the country ".. i dont feel comfortable "acting on their advice" (just like it was mentioned here, the "upcoming hot stocks" style reports are just "noise" and you cant base everything off that one dudes opinion.

I've always tried to be as smart with my money as i could. since i was little. Never been a "credit card debt" guy. Always paid it off. Got into the housing market when i bought my first house in early/mid 2000's... but gave it up in the divorce in 09 (and still trying to get my name off the damn loan).. so in the meantime, i'm debt free, renting a decent house for a decent price, trying to "invest" now into my retirement, and better my long term future. Been doing 7% or so of my salary into 401k since 19, so its "something" but not much.

if only i could get that damn house out of my name and get my own house again. lol.

Went thru and noted all my investments after last night. documenting what i have, how much, how it pays, etc. so i can "review" them, and see which fit, which down and where to go from there. i will have questions... just not yet. hah :lol:


Also... I am doing this for more than "just me".. as in, im trying to learn as much as i can so i can help my parents with their future. They dont have much at all, but i dont want them to lose what they do have. My dad is medically retired (two time cancer survivor, now medically retired due to congestive heart failure from the chemo drugs). - (fellow car guy, almost done restoring a 65 Malibu ;) ) I need to figure out how to manage his 401k so he is prepared with it and not be in a "volatile" market for the balance of his retirement (a lot of his "funds" are higher risk, and i dont want him taking a long downward slope again if the market does turn). And lastly, to help my sister (a little younger than me, im 31) plan her familys future, as they have basically little to no retirement.

so again, i cant thank you enough.

[Bucketlist2012]

71ToyCamaro.

I commend you on all your efforts..

You are on the right track...I have had and lost everything in a Divorce, so I feel you on that one..1993.

The parents thing...I wish I knew THEN what I know now..I missed that opportunity to help my parents by 10 years. They passed before I became smart and successful.And it fuels me now to be on the TOP of my game, in money management, Investing, and Bucket Lists.. My Mom and Dad spent and did not save...Fun times but lessons learned.. Should of, would of , could of, been a millionaire. but instead they died not in good shape...10 years off. I would have ....could have...should have..But again, no rearview mirrors....

So, as I always have said, I am just the conduit for people to find the Tools and Motivation to do this stuff, and check where they are at, and where they are going...And just a dash of where you been, so you don't repeat it, but not much on the rear view mirror..Life is warp speed and you best be looking forward with your head on a swivel...Life is happening fast...

So you are welcome. I swear this stuff makes my day.. I am on the road to just help give back.
I knew this thread had a lot to offer, and that is why I started the other dead thread. Yes, it is dying.
I hoped people would get motivated to study. I am a nobody in the Investment world. I am no pro or investment advisor.. Just a Car Guy obsessed with controlling his life on his terms and not the crooks in power...:cheers:

[GregWeld]

One of my favorite sayings....


Life is what happens to you while you're busy making other plans.

[toy71camaro]

Finding "Total Return"....

So, Trying to "track down" my current investments so i can analyze them and compare them to what choices i should make when i rebalance my account.

I see Greg mentions schwab having an awesome "Total Return" chart. Trying to find something similar, I ran across MorningStar's 10k growth chart (which, after finding while reading this thread, it was mentioned a few pages later. :rofl: )

Anyhow, I am just not sure i am reading it right, and want to make sure I am reading it right before i start trying to calc the total return on my current/future investments...

Lets take KMP for example, as it was one tossed around here fairly often for review purposes. I pull up the KMP "$10k Growth" Chart. Under the first chart section it has "History", which for 2011 shows 27.43. Is that the "Total Return" that I am looking for (obviously, just for the one year. I'd have to average them out).

Below that chart, is another chart named "trailing total returns", which has a lightly different value for the "1 year" mark of 29.00 (perhaps one year being today minus 365 days, as opposed to just 2011?).

Anyhow, I just want to make sure I am reading this properly, and also, does that report match up with what Schwab is saying for Total Returns (DRIP included)? (if someone with a Schwab account could help, that'd be fantastic!)

Thanks, and told you i'd have questions. :lol:

[Bucketlist2012]

One of my favorite sayings....


Life is what happens to you while you're busy making other plans.

No matter how much you plan, something will come up..We adapt or Die..

My Wife and i have the balance now to enjoy the fruits of years of plans..

Not too much planning as enjoying now days...feels good...

Young enough not to need a walker to get out to the Z/28.

But old enough for compound interest to have done it's magic.

[toy71camaro]

Finding "Total Return"....

So, Trying to "track down" my current investments so i can analyze them and compare them to what choices i should make when i rebalance my account.

I see Greg mentions schwab having an awesome "Total Return" chart. Trying to find something similar, I ran across MorningStar's 10k growth chart (which, after finding while reading this thread, it was mentioned a few pages later. :rofl: )

Anyhow, I am just not sure i am reading it right, and want to make sure I am reading it right before i start trying to calc the total return on my current/future investments...

Lets take KMP for example, as it was one tossed around here fairly often for review purposes. I pull up the KMP "$10k Growth" Chart. Under the first chart section it has "History", which for 2011 shows 27.43. Is that the "Total Return" that I am looking for (obviously, just for the one year. I'd have to average them out).

Below that chart, is another chart named "trailing total returns", which has a lightly different value for the "1 year" mark of 29.00 (perhaps one year being today minus 365 days, as opposed to just 2011?).

Anyhow, I just want to make sure I am reading this properly, and also, does that report match up with what Schwab is saying for Total Returns (DRIP included)? (if someone with a Schwab account could help, that'd be fantastic!)

Thanks, and told you i'd have questions. :lol:

On a side note, I found a "Total Return Price" chart on ycharts.com (under their "interactive charts tab then check the "% option)

Says for KMP the returns is 75.90% for the past 5 years. That obviously doesnt quite match up with what MorningStar reports. So i feel i am not reviewing it correctly.

[Bucketlist2012]

On a side note, I found a "Total Return Price" chart on ycharts.com (under their "interactive charts tab then check the "% option)

Says for KMP the returns is 75.90% for the past 5 years. That obviously doesnt quite match up with what MorningStar reports. So i feel i am not reviewing it correctly.

I am off to do some things, but just remember to be careful of how much you buy of what...

Some of these are added to our mix and not in large % of the total.. Just don't get too heavy in an area because of it's return...

You may buy it for the return, but balance it out ...

[toy71camaro]

well, i am not buying anything yet... actually trying to research what I've already bought, for comparison on whether or not i want to sell it or not to get something else.

I dont own any KMP, and not sure that i will, but i wanted to just use that as an example.

I am trying to "document" what has been previously mentioned for the last 5 and 10 years for each stock:
1. Div %
2. Growth %
3. Total Return
4. Dividends gone up or down?
5. Sector
6. Expense (if any (ie. ETFs)

Then, compare those to the sectors of what i want to be in, and see what i need to diversify.

Like mentioned previously, I want to spread things "even", and keep around 5% of total investment amount in any "one" stock. and want to end up with a half dozen/dozen "solid" sector "Best of the breed" stocks that i am comfortable with.

if that makes sense... unless someone has a suggestion on how i should approach it? (newbie here!!!)

[pw2006]

On a side note, I found a "Total Return Price" chart on ycharts.com (under their "interactive charts tab then check the "% option)

Says for KMP the returns is 75.90% for the past 5 years. That obviously doesnt quite match up with what MorningStar reports. So i feel i am not reviewing it correctly.

Here is what schwab has for total 1/3/5 year returns on KMP.
33%/136%/151%

Schwabs definition is:
The Total Return is the rate of return representing the price appreciation of a stock with cash dividends reinvested on the pay date for the most recent 1, 3 and 5 fiscal years.

I searched the web and most of the results were how to manually calculate returns with dividends, but none were as simple as Schwab.

[toy71camaro]

Here is what schwab has for total 1/3/5 year returns on KMP.
33%/136%/151%

Schwabs definition is:
The Total Return is the rate of return representing the price appreciation of a stock with cash dividends reinvested on the pay date for the most recent 1, 3 and 5 fiscal years.

I searched the web and most of the results were how to manually calculate returns with dividends, but none were as simple as Schwab.

Awesome. That gives me a baseline to compare against...

I think i may have found an alternative chart, from stockcharts.com their "Perf chart" shows KMP at ~135% over the last 1100 days (3 yrs), and that matches pretty darn close to Schwab :D

[GregWeld]

On a side note, I found a "Total Return Price" chart on ycharts.com (under their "interactive charts tab then check the "% option)

Says for KMP the returns is 75.90% for the past 5 years. That obviously doesnt quite match up with what MorningStar reports. So i feel i am not reviewing it correctly.

First --- Total Return for Kinder Morgan Partners (KMP) for the last 5 years is
151.3%

3 years = 136.4%

1 year = 33%


Second --- Morningstar is a good website but a bit "overwhelming" and especially for newbs. One of the major reasons I love Schwab -- simplicity.
I'm a simple guy - I like simple - I just want to find the info I need without a bunch of gobbledegook! :D


Third --- Here's a link to an easier to use site for information. YOU will have to put in the trading symbol and hit enter.... and then there's a ton of information down the left hand side... and if you scroll down near the bottom you'll find TOTAL RETURN data. This link will give you KMP data since that's what I entered.


http://www.dividendinvestor.com/?chk=c64191330472736&symbol=kmp&submit=GO



Obviously returns are calculated from some "date" for data --- so no two sites will come up with the exact same number unless they use the exact same dates. Not sure what dates this site uses but it doesn't match Schwabs... regardless --- all this kind of info is just used for COMPARISONS really so it's fine.


So this is all kinda fun isn't it?? It's like bench racing - or hunting for horse power - or picking cams or gear ratios. Except it's way way more important!:cheers: :woot:

[toy71camaro]

fun.. and addicting.. haha..

I ended up just finishing signing up for a scwhab account. haha :woot:

you can sign up for a free checking, which includes a free brokerage account. With no minimums (for those other people out there wondering).

[GregWeld]

well, i am not buying anything yet... actually trying to research what I've already bought, for comparison on whether or not i want to sell it or not to get something else.

I dont own any KMP, and not sure that i will, but i wanted to just use that as an example.

I am trying to "document" what has been previously mentioned for the last 5 and 10 years for each stock:
1. Div %
2. Growth %
3. Total Return
4. Dividends gone up or down?
5. Sector
6. Expense (if any (ie. ETFs)

Then, compare those to the sectors of what i want to be in, and see what i need to diversify.

Like mentioned previously, I want to spread things "even", and keep around 5% of total investment amount in any "one" stock. and want to end up with a half dozen/dozen "solid" sector "Best of the breed" stocks that i am comfortable with.

if that makes sense... unless someone has a suggestion on how i should approach it? (newbie here!!!)


Nothing wrong with this approach. Just make sure that you totally understand the business of the companies you're buying. It really helps when the market is DOWN... and that is when MOST PEOPLE LOOSE THEIR BUTTS -- because they SELL... They sell because they really have no idea what they own or why --- and most have never heard of a dividend or understand it's importance. :thumbsup:

[Bucketlist2012]

One Guy found the importance in the thread I started and came over here for knowledge.


As well as he was everywhere online trying to learn..Excellent..

But one guy...You would think more would see the importance of what is being talked about.

[MoparCar]

I for one find great importance in this thread. I've watched it from the beginning and learn from it everyday since I am a total investing newbie.

Also, many/most of the online brokerage firms (Schwab, TDAmeritrade, OptionsXpress which is now part of the Schwab group, etc.) have educational sections that have webinairs, videos and other free educational items to help explain the basics of financials, charts, etc. Of course you can get way too overwhelmed in the "trader" items but if you stick to the basics it really does help educate on the whys of financials to help analyze the stocks, dividends and all the terms thrown around. I agree with Greg's comments awhile back---that the overall financial "experts" want to have all this confusion, smoke and mirrors so we feel the need to only use their mutual funds, counseling, etc. In reality some of these videos, etc. really break things down to the basics which have really helped me start to understand the whys and hows of all the reports and charts for researching the companies I want to get to know.

Another thing is some of these brokerages also have free Virtual Trading if you are a little scared to invest yet, want to look at the what if's or lack the initial funds. You can check your virtual investments in real time to see where they are with the market and can at least see the returns that can be had. Then when you are ready to pull the trigger you know what you'll be basically getting into.

Thanks for all the education and please keep it coming!
Wes

[GregWeld]

I for one find great importance in this thread. I've watched it from the beginning and learn from it everyday since I am a total investing newbie.

Also, many/most of the online brokerage firms (Schwab, TDAmeritrade, OptionsXpress which is now part of the Schwab group, etc.) have educational sections that have webinairs, videos and other free educational items to help explain the basics of financials, charts, etc. Of course you can get way too overwhelmed in the "trader" items but if you stick to the basics it really does help educate on the whys of financials to help analyze the stocks, dividends and all the terms thrown around. I agree with Greg's comments awhile back---that the overall financial "experts" want to have all this confusion, smoke and mirrors so we feel the need to only use their mutual funds, counseling, etc. In reality some of these videos, etc. really break things down to the basics which have really helped me start to understand the whys and hows of all the reports and charts for researching the companies I want to get to know.

Another thing is some of these brokerages also have free Virtual Trading if you are a little scared to invest yet, want to look at the what if's or lack the initial funds. You can check your virtual investments in real time to see where they are with the market and can at least see the returns that can be had. Then when you are ready to pull the trigger you know what you'll be basically getting into.

Thanks for all the education and please keep it coming!
Wes


Wes --- Thank goodness someone is reading and posting too! I get tired of just reading my own stuff -- or Mikes...

I'm personally really satisfied that people are checking their financial health -- and are at least willing to look into some of this stuff. It really isn't very hard or complicated (unless you choose to make it that way) and is fun in it's own way.

:lateral: :cheers:

[Bucketlist2012]

Wes --- Thank goodness someone is reading and posting too! I get tired of just reading my own stuff -- or Mikes...

I'm personally really satisfied that people are checking their financial health -- and are at least willing to look into some of this stuff. It really isn't very hard or complicated (unless you choose to make it that way) and is fun in it's own way.

:lateral: :cheers:

LMAO...I am sure Greg is tired of my posts :willy: :willy:

But I am stubborn, and patient... I will still be here..

I am glad some are really digging in and putting in the time to learn..

Others will think you are strange, and why bother...they are the one's to not listen to...They have given up, or got burned doing the wrong things with no studying, and they will never invest..Or never invest again..

I still hear talk of the mattress and leaving it in the bank...Inflation will crush them..If it has not already..

I watched this thread for weeks before chiming in with my long winded babble... but the new , smart, hungry additions to the thread add life blood..

[Flash68]

It's great to see on such a generally "financially wasteful" site like a car forum that many are taking to this and running with it, or using it get their financial house back in order.

This thread is the anti-thread on Lat G. :thumbsup: :D


I'll throw something out there... I have been wanting to get into some AAPL but have been waiting for a pullback recently. This article gives me some technical support behind my waiting which I thought some might find interesting. Basically I am waiting for the next scheduled 12% pullback to buy in (see chart within article). :D

http://seekingalpha.com/article/395511-apple-headed-for-pullback-short-term-of-course?source=email_rt_article&ifp=0

[Bucketlist2012]

Some of us know that the anti thread will fund more than just the race cars...

No help on the apple buy, but someone will chime in soon..

Funny how i forget i am on a car site... Oh ya..check out some cars whlie i am here,haha:willy: :thumbsup:

[GregWeld]

It's great to see on such a generally "financially wasteful" site like a car forum that many are taking to this and running with it, or using it get their financial house back in order.

This thread is the anti-thread on Lat G. :thumbsup: :D


I'll throw something out there... I have been wanting to get into some AAPL but have been waiting for a pullback recently. This article gives me some technical support behind my waiting which I thought some might find interesting. Basically I am waiting for the next scheduled 12% pullback to buy in (see chart within article). :D

http://seekingalpha.com/article/395511-apple-headed-for-pullback-short-term-of-course?source=email_rt_article&ifp=0

While you're WAITING -- the market is moving relentlessly ahead leaving you behind.

There's an old saying - "Don't fight the FED"... which means ya got to join 'em... and they (the FED) has vowed to keep interest rates low...

Next oldest saying... "when interest rates die (stay low) stocks will fly".

See how the two are linked?

Get into Apple before you miss out on the next $50 move. Or move on and get into something else that you "trust". Never ever never ever buy a stock that scares you to own. Doing so will insure that you'll be what's known on Wall Street as a "weak hand" (play poker? You'll know what betting with a weak hand does to you). This should have been in the first post on this thread.

I have pounded the table over and over about owning stocks you know and understand... and owing best of breed... and being able to hold these stocks during down periods. You have to be comfortable living in your own skin so to speak.... or you get your ass handed to you.

So here's the scenario.... You buy Apple EXPECTING it to go to $600.... You're in at $550... Suddenly something in the news affects the market and Apple (and the whole market) pull back... and now it's trading at $475. You freak out and sell.

I laugh my ass off while buying your sell... and the week after you sell - Apple announces sales and record profits and 3 new products and jumps right back to $550 and the week after that trades to $600.

I'm only using APPLE as an example here. I own NO shares in the company. The INVESTING 102 point is --- don't buy something you don't want to own long term - believe in long term - and can afford to hold long term. This ain't GAMBLING -- it's INVESTING.

Ask yourself if you truly believe that this company can grow from here... can they continue to be best of breed... can they gain market share...

If not -- then you're just being a "momentum" player and momentum players operate quickly and get in and out of stocks for a $1 share gain... They don't care about the company - they just care about which way the stock is going that they own for this 15 seconds.

So -- go to the mall -- stand in front of an Apple store for an hour.... do you like what you see? Is this a company you want to own?

Now -- Let's use INVESTING 102 -- for another "lesson" (I hate calling it that).

$550 per share... if it goes to $600 you'd be UP 10%. Wonderful.

I get 13% in CASH on my Annaly (NLY) shares... regardless of whether or not the share price goes up or down. I get 14% on my Chesapeake (CHKR) shares... I get 8% on HYG (corporate bond etf)... GOOD MARKET OR BAD I GET THOSE RETURNS.

This is why I say - when it comes to investing -- you have CHOICES for what you want to do with your money.

If you have 100 grand invested in good solid stuff and want to play the pure growth of a stock like Apple -- I'd buy it in a heartbeat... but if this is most of your investment money -- or half of it then it's not where I personally would be. If you have a spare 10 or 50 grand that you can just go toss in the street and you want to just park some money and HOPE it's going to go up... then that's the kind of money I'd use for these kinds of buys. Again - just using Apple as an example --- cause it's just one of many. But I'd sure put money in Apple before anything else...

[GregWeld]

A NOTE OF CAUTION SHOULD BE POSTED - By ME!


Remember that I always use "examples" -- real life they might be -- but I also want to poke everyone reading -- that what I do -- is not what you should do!

I pay attention to my investments. I have several accounts - each with at least a VP or SVP adding their input/guidance/headsup. You get that "treatment" even at Schwab if you have enough in your account. So what I'm saying here is --- that when I post up the returns on some of these "names".... I will be long gone if I even WHIFF an interest rate increase. High yields are RISKY! They carry the risk of a tax change from Congress.... they carry risk if the FED signals that the economy is going well and they're going to raise the rates... Trust me -- when they do this -- there will be a big haircut in your capital!

So unless you're on top of your game... I'd stay out of the NLY's - the JNK's - the HYG's of the world. They might be crazy good right now... but these are not names you buy and hold forever. They don't actually even make anything! They're just "yielders" - financial instruments that spin off outsized dividends (right now).

So the caveat is --- Nobody is going to wake up in the morning and ride a horse through town yelling "the FED IS RAISING RATES".... and by the time many of you would figure this out -- it'll be too late you'll already have the haircut.

I'm not saying that I'll be any better at reading this - or be that far ahead of the curve. But I have 30 years of "experience" and pay attention to every nuance EVERY DAY -- Day in and day out. It's my job to keep my "employees" sharp and out of harms way. I'm going to ASSume that many of you will carry on your life and NOT be as attuned to the market and might fall into complacent investing (as some WERE before getting this thread!). You don't want to be falling asleep! This is why it's so important that not only are you getting a decent yield -- but that the UNDERLYING COMPANY is where you want to be.

[Sieg]

A NOTE OF CAUTION SHOULD BE POSTED - By ME!


(Pssst, he's the guy that sold Apple for $410 a few months back)

:rofl: :rofl:


Of course I'm the guy (idiot) that sold 100 shares of Nike at $10 after I'd doubled my money back in 1978. :goofy:

[bdahlg68]

Another reason for averaging into the market in general. I know this has been mentioned, but not sure any ideas for accomplishing this have been proposed. Obviously, the more money you are working with, the easier it is. For those with a pretty small amount (say $10,000), you may buy $1,000 - $2,000 of a certain stock and wait a month before buying another stock instead of buying say $400 of 5 stocks each month. This would cause your commisions alone to put you into a relatively substantial hole.

In general, if you can break up the "entry" into 4-5 chunks over around 6 months, you are likely to provide yourself a bit of downside protection in capital value. We are likely to have a bit of a volatile year. Think about the things going on and the risk / opportunity they put into the market. Note that volatility can be good!

EU liquidity
Potential for conflict between Isreal / Iran, Iran sanctions
Easing in Emerging Markets
US Election year

I heard as part of the Michigan primary yesterday that essentially all wealthy republicans are voting for Romney. Thinking about if Romney isn't elected, are these people going to move some of their investments into cash?

Lots of things to consider, think about, and occasionally.... worry about!

[NOVA]

While you're WAITING -- the market is moving relentlessly ahead leaving you behind.

There's an old saying - "Don't fight the FED"... which means ya got to join 'em... and they (the FED) has vowed to keep interest rates low...

Next oldest saying... "when interest rates die (stay low) stocks will fly".

See how the two are linked?

Get into Apple before you miss out on the next $50 move. Or move on and get into something else that you "trust". Never ever never ever buy a stock that scares you to own. ...

Greg, First I truly commend you and all the others that have contributed to this thread, simply awesome and the discussion is very easy to understand, I wanted to comment on Apple, my 401K is switching out one fund and adding (Ticker PRWAX - T.Rowe New America Growth) there biggest holding is Apple, then Google, it is going to be available to us March 22nd, I knew that I was going to get in, this just confirmed it. (now I have not decided how much just yet, but I am putting some in for sure!)

My 401K is very similar to others we can only pick funds that are in there (we have about 12 choices of Large, Medium, Small caps, a bond fund and a basic money market fund) but I check them and I try and make sure I am in the ones I feel are the best for me, I have about 25 years until retirement so my risk level is higher then someone who is 5 years away from retirement.

Thanks again Greg (and WSSix for starting this thread) for putting your time into this thread and educating us on this subject it is truly very rewarding and interesting, I check it daily!

[Sieg]

Lots of things to consider, think about, and occasionally.... worry about!

Appears the market hasn't responded too well to Bernanke's semi-annual monetary policy testimony to the House this morning. One big event or a couple small ones in succession could trigger a slide. We're definitely treading on thin ice IMO. Be ready to counter-steer and keep your 6 covered people. :thumbsup:

[GregWeld]

(Pssst, he's the guy that sold Apple for $410 a few months back)

:rofl: :rofl:


Of course I'm the guy (idiot) that sold 100 shares of Nike at $10 after I'd doubled my money back in 1978. :goofy:



Do as I say - not as I do!

:rofl:


Remember I have been brutally honest about how I've used Apple --- "to park cash".... ditto HYG and NLY and similar. I'm a whore when it comes to those names. I'm also 'moving' a million or two into and out of these names - so the "risk reward" scenario is QUITE DIFFERENT for me than for someone that is trying to INVEST their 401 or ROTH retirement funds.

This is why I re-read my post about Apple (AAPL) and thought --- OH NO! I just mentioned some risky stuff and people will pile into them and not understand the differences --- and the lessons!

I hate to use specific names -- but it's the only way I can come up with to get some points across.

[Bucketlist2012]

This is getting good..

I live life at the moment, but I buy investments that I am looking at 10 years from now...Where will it be ??

This is Investing and not trading.

And yes, when you do have enough money, you get even better treatment at Schwab.

I never Lie...I get advise...I make the final call and they tell me it is MY call , to Cover their rears..We have meetings..But there is no finger on the button, haha...

I have the best Muscle car shop work on my car IMHO, Ihave the best attorney around IMHO, why would i not get some advise with the thing that funds EVERYTHING.. I do.

I am not in and out and I have the merit badges from 2008, and 2011 to prove it...I made Eagle Scout..I held, and i bought...Last year I roped myself to the tree and rode the crazy days...

Point is research, action, long term visions, guidance in these crazy times..No listening to the noise..they run around like a mosh pit at a heavy metal concert..madness..stupidity..

Up and down goes the balance, but in the end, it is up, and I have SPENT another years worth of money, and my NET worth is higher, or it has stayed even at worst...:cheers:

I don't have Greg weld skills, but give me more time...:cheers:

[Sieg]

All poking aside - Greg..........you're awesome. :hail:

Barney Frank on the other hand...........

[GregWeld]

Greg, First I truly commend you and all the others that have contributed to this thread, simply awesome and the discussion is very easy to understand, I wanted to comment on Apple, my 401K is switching out one fund and adding (Ticker PRWAX - T.Rowe New America Growth) there biggest holding is Apple, then Google, it is going to be available to us March 22nd, I knew that I was going to get in, this just confirmed it. (now I have not decided how much just yet, but I am putting some in for sure!)

My 401K is very similar to others we can only pick funds that are in there (we have about 12 choices of Large, Medium, Small caps, a bond fund and a basic money market fund) but I check them and I try and make sure I am in the ones I feel are the best for me, I have about 25 years until retirement so my risk level is higher then someone who is 5 years away from retirement.

Thanks again Greg (and WSSix for starting this thread) for putting your time into this thread and educating us on this subject it is truly very rewarding and interesting, I check it daily!


Appreciate the fact that YOU appreciate this thread! :thumbsup:


Remember -- BALANCE.... Your AGE should have you in more "risk"... you have a very long time on your side. Remember that just because you retire in 25 years -- you don't DIE in 25 years! You're not going to suddenly stop all your investments and draw down every dime to cash. You're going to live another 20 years -- so your time horizon is FAR longer than most think!

You can not separate RISK from GROWTH.... You can however, balance your risk / growth scenario with compounded dividends... some steady eddies.. etc. No bonds at your age -- ZERO.

[Bucketlist2012]

All poking aside - Greg..........you're awesome. :hail:

Barney Frank on the other hand...........

I agree..:thumbsup: :thumbsup:


An edit to my post would be although i am looking long term of where the investment will be long term, i do look at the medium term trends set by policies, feds, ect... But i am not with my finger on the trigger..It is more thought out than that... Things changing overnight are not the concern, as much as the longer term..

Greg, you are the Man...:cheers: The thread Gorilla Glue...:lateral:

[GregWeld]

:faint: :faint:


Okay --- so I had this crazy thought for the newbs this morning. We were discussing interest rates and the FED etc...


This is investing 102 (wasn't 102 a cheap beer years ago??) so let me paint an "interest rate rising" scenario for you.


Here's how you pay attention and react in a MACRO (large picture) environment:


You're in a movie theatre - packed full of people.... you're looking around and checking everyone out and making your judgements about them (don't BS me - we all do this).... and in the corner you notice a 4 year old... no parents around.... no big sister. You also notice that nearby (him) on the stage there's a book of matches... If you're me -- I now keep an eye on this little monkey... I'm not afraid of him... I just know what a 4 year old could/can do with a book of matches.

Now.... I'm still looking around and waiting for the movie to start - a movie I've waited for 6 months to see.... This is when I notice the little monkey making his move to the matches...

Do you wait for him to strike the match before you get up and depart? Heck no! I know exactly what is going to happen when he lights them up! Panic! F-I-R-E!!! and everyone is running for the exits.

Nope -- If I even THINK the little monkey sees those matches -- I'm outta there! I'll stand by the door - and wait to see if a parent is also watching and kicks his sorry little butt... then I'll re-take my seat.


SO......... If the matches are INTEREST RATES.... and the little MONKEY is the FED/CONGRESS.... I'm keeping my eye on them! I'm not going to be out of the market because the minute you make that move -- the market will shoot up 10 points and you'll have missed the move. My point is to KEEP YOUR EYES OPEN... don't bury your head in the sand and hope everything works out for you! Be proactive. Proactive doesn't mean ACTION -- it means staying alert and understanding the relationships (the boy near the matches - doesn't mean he's going to do anything with them - but you KNOW what happens IF he gets his hands on them).

SO if YOU can look around your little piece of the world -- and things are looking up -- the company you work at just hired 10 more guys -- and you're working overtime... and prices of cars at Barrett Jackson just exploded to the upside... and there's less talk about all the houses in your neighborhood for sale... and you're lazy ass sister in law just got a job... DUDE! It's time to start rethinking your high yielding stocks -- 'cause if YOU can see this -- then so does the FED and they'll raise interest rates.

Now there's TWO ways to think this game through! If things are getting that much better! Then sales should also be better... housing picking up - so too will appliances and car sales - which means raw steel and aluminum will start to rise (and copper)... and Caterpillar will sell more backhoes and dozers... So what you do when all this is booming through your little pea brain -- is you start to move those directions. Lighten up (scaling out) of the crazy high yields... and start to move into (scaling into) the areas of the market that will BENEFIT from a booming (or far better) economy. Home builders - banks (lending!) - machine makers (CAT and Cummings) etc. This is why they call them WHAT?? CYCLICALS -- because that's where they are - they cycle up and down good times and bad. Out of them (early) in bad times - (in early) in good times.

Ya don't sell everything and panic and run for the exits.... ya just stay fluid... keeping your ears open... try to hear the winds rustle... before everyone else.

To me it's like house flipping. By the time the grocery store clerk is telling you about the 400K they made flipping a house -- it's just about to come crashing down!

So listen to your instincts... DO YOU see that things are getting better? Interest rates are NOT going DOWN from here... there's no room left at the bottom -- so they're either holding steady or they're going to HAVE TO go up from here... it's just for you to be ahead of that curve. Nobody has a crystal ball. I'm going to make money as long as I possibly can in my current holdings - but I'm also paying attention to the details.

[GregWeld]

(Pssst, he's the guy that sold Apple for $410 a few months back)

:rofl: :rofl:


Of course I'm the guy (idiot) that sold 100 shares of Nike at $10 after I'd doubled my money back in 1978. :goofy:

Did I ever mention that I got to buy into the Starbucks IPO at IPO insider price? Yep -- bought 1000 shares at $17.00

That was on like Thursday or a Friday.... by Monday they went up THREE FIFTY ($21.50) and I sold the whole enchilada! Wow! I thought to myself -- I just scammed those poor suckers for a quick THIRTY FIVE HUNDRED BUCKS!! I'm a frigging GENIUS!


Oh -- Total return on Starbucks.... since it went IPO.....



TWENTY THOUSAND PERCENT. That's right... 20,000% since 1992


Yeah -- I'm a real genius!:faint:

[toy71camaro]

very good point.... i was "wondering" what to think about that situation. That helps. :thumbsup:

[Bucketlist2012]

To Greg's point..

I am in position to make money no matter which way the winds blow.

You bet i am keeping an eye on the little monkey, but I will make money...

If things go as they say, I am not so sure about that, but if they do, Oh happier days for me...:woot:

But if something goes sideways, I am ready for that too..I won't have to make any sudden moves, I am just in a position of not "all or nothing', too much risk in all or nothing .. so a move one way or another will not stray my path..

[GregWeld]

Now that I just sat down and paid all my bills... which is another key to investing... i.e., GET IN CONTROL OF YOUR SPENDING. Make money FIRST - then you'll have some to spend!

Yeah - I know - easy for me to say.

Not the reason for this post though.....


My BOND broker called this morning -- mostly because we're friends (and have been for a very long time) but also because he was "pinging me" on any "new" money I might have for him to invest.

Fred has been in the biz for 40 years! I trust him - he's a great person - I know his family - He works for (an SVP) a big local brokerage (I will NEVER IN A MILLION YEARS GIVE AN INDIVIDUAL CONTROL OF MY MONEY OR MY ACCOUNTS --- NEVER! EVER! NEVER!)

We discussed "bonds" and the market and I said I'm NOT buying any more bonds, that I have enough of my investable assets in bonds and that's plenty (for me) and that I'm kicking his sorry ass in the "market"... He says to me -- and here's the SALESMAN/BROKER talking --- Well -- you've made 4% gain on your bonds!

NO -- I remind him -- I have NOT made 4% on my bonds because the entire reason to own them is for the TAX FREE INCOME -- and that I'm HOLDING TO MATURITY.... therefore -- I will have held them for 5 years (laddered so actually this is not factual but for the furthest dated ones it is) and only get my money back! NO GAIN.... because I would have had to SELL THEM to capture the current gain. SO his salesman part overrode his BRAIN... and I'm not afraid to call him on it.

It's why I don't use brokers (except for this part of my holdings).... even if they're your friend... in the end, their wallet is more important than your wallet! They're trying to make money on my money... I'm just not willing to let them! :woot:

[Sieg]

Atta Boy Tiger!

[GregWeld]

Here's another reason I love that good old dividend stream...

My account (the one I use for examples here) was DOWN 17 Grand today --- but after the closing bell ---- Terra Nitrogen (TNH) sent me a nice little check for NINE GRAND....

Part of the reason I was down 17K today was because TNH was trading off... ALL stocks trade down near equally to what they pay out in a dividend. We've touched on this earlier... but that's just the way it works. Obviously the company can't be worth as much when they're paying out... But that dividend was $4.53 per share today (I own 2000 shares) and the stock was "only" down at the close $2.73 == so I'm happy with that!!

This stock ain't for the faint of heart I can tell ya! It goes bonkers - it goes down double bonkers - next time you look it's up triple bonkers.... I'm telling ya it's a wild one!