Investing 102

[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.../#.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??

[GregWeld]

Originally Posted by FatfreeGTO

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 ...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]

Originally Posted by GregWeld

Somewhere you missed the post about looking at the charts ...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.

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. 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]

Originally Posted by 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. 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]

Originally Posted by 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

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.