Here's what you could consider a hybrid 'IPO'............

http://online.wsj.com/news/article_e...OTAzNTEwNjUzWj

Where's all our Bitcoin supporters?? Now that's it's lost half it's value....

Havent posted in a while,

BUT I finally got my old 401k rolled over, and dumped the terrible mutual fund that Fidelity had my old company in.

I ended up getting 10 different names in equal dollar amounts (roughly equal) in the 10 sectors. I had a chunk left over, so I put it in KO, since I love the stuff. I was going to wait and see how Adidas was going to do, but it just doesnt feel right, then I read that they are starting a plan to buy back shares.

today is day 2, I made some money yesterday, but the little guy was just waiting for me to feel good and hit me today, haha

Thanks GW and company

I would have never done this if I hadnt started reading this

Yes, this is great stuff. I'm learning a bunch too. Haven't been on in a week or so, something about a road trip, but i love this line "The "MARKET" is about more people wanting to own than wanting to sell. PERIOD."
Never really though about it in that perspective, but we NEED perspective. Keep your eyes open and your ears open and absorb......

Related to my Adidas comment earlier.

Management changes at Adidas
Oct 8 2014, 14:01 ET | By: Clark Schultz, SA News Editor [Contact this editor with comments or a news tip]

Adidas (OTCQX:ADDYY) appoints two senior execs to new roles as it continues to revamp its management lineup.
The company has added a chief human resource office and expanded the position of chief information officer.
The big picture: The German apparel seller has lost market share to Nike in key regions this year and has been criticized for moving too slow in adapting to consumer trends.

http://seekingalpha.com/news/2008365...share-buy-back

I was really considering this, but not sure if this is "noise" or an omen :knock:

Good to hear you got yourself squared away. And just as predicted - the market tanks about an hour after you're all in. You just have to get used to that. Same as the stock you just sold gets a buyout offer with a 40% premium the day after you cashed in. It just goes that way.


The reason I pound buying stuff you know and understand and want to be an owner of - is for these reasons. It takes the gut wrenching out of the "investment".







Sometimes it's just anyones guess as to what big changes in management will bring. I called for Microsofts (MSFT) chief idiot - Steve Ballmer - to be caned so many times I quit even bothering to mention it. The minute they announced he was "retiring" (a nice word for being asked to go find something else to do) - the stock has made a stellar run upward.

I think the bigger question is what brought about the changes. Can ANYONE see that the people running the show are inept? Is the lineup just hideous? Or are they just taking the fall for not being able to turn a sinking giant around?

So when you compare NIKE vs Adidas.... there just isn't any comparison financially that would make a case for buying Adidas over Nike. The growth of Nike far surpasses Adidas...

A 6 month chart shows ADDDF down 21% vs NKE UP 31%.... that is just a HUGE insurmountable investment difference

Go out 1 year it's Adidas down again 21% to Nike's UP 32%

Go out further to a 5 year chart -- Nike dunks it for 200% upside move versus Adidas being up 44%.... UP 44% over five years is pretty lame.

As a 10 year investment it gets even worse! Nike SCORES 334% to Adidas 57% gain.

Here's my take doing no more homework than that ----- looking at a few charts --- I'd buy NIKE and let the dividends and growth buy my Adidas if that's my shoe of choice.... 'cause as an investment it has sucked. It's kinda like my owning boozer and tobacco stocks when I don't indulge in either... I still don't mind cashing their checks.

GoPro (GPRO)
 

Okay GoPro guys..... prepare to get ready.


One of the big "negatives" to GoPro (GPRO) was the low barrier to entry (in other words - other companies can make cameras that will compete). And here we haven't even gotten to Christmas yet and HTC has got a new $199 version....

Not saying this is or isn't a good stock to own.... I'm just saying that if you own it... PAY ATTENTION.


http://www.businessweek.com/news/201...-sales-decline

Great article Greg, not that I have a crystal ball but this is why I resisted temptation to get in on GoPro. Plus, Consumer Reports rated a little JVC, that had an LCD and could be dunked under water without being in a case, higher than the GoPro.

I've always liked the saying "If you want to achieve something, find someone who's achieved it and do what they did". Well, we can't really invest like Carl Icahn (probably even you Greg), but I still like this article on him. 27% annually over 52 years is pretty good by any measure.

http://www.forbes.com/sites/greatspe...re-carl-icahn/

The only reason I posted that on GoPro was because I found the SPEED with which competitors are coming into the space is what floored me. GoPro will still be "THE NAME" in the business. I personally have three other "track day" cameras and I call them all GoPro's. LOL


Competition does NOT mean the stock won't do well.... and competition can spur bigger and better marketing... more consumer awareness... more retailers to get their eyes opened and stock/carry the category etc. So competition by itself is not a bad thing.


Carl Ichan is a genius... His latest is the split of PayPal from eBay. A move the company SHOULD HAVE done on it's own. I wish my total net worth was what he makes per day. LOL

By the way ---- In case someone is new or maybe someone is MISSING the reason for the discussions of a name such as GoPro....


It's not about GoPro. It's about learning from names like this coming to market via an IPO. Ways to think about any business model. Ways to think about investing in IPO's in general. What happens to them - good or bad over time. It's about me - as well as others here - trying to get people to think about their investing style and tolerance for "risk assets". Get them to think about how they feel about missing an investment - or if they are invested - how they feel when it doesn't go up every day...

This is an effort to infuse the human response into investing - because it can't be discounted. Some can handle the risk well -- and some panic and sell out -- and some can't sleep -- and some guys thrive on it. We just don't know who is what type - so I'm attempting to just give you food for thought so you can find out.

Just a reminder for the newbs --- or just for readers in general.


The price / yield relationship is inverse.... as the share prices drop -- the yield increases!


October is historically a terrible month... and I personally always have cash saved up for September / October purchases. Some new positions -- some I add to positions...

If I thought for 1 second that we (the USA) weren't doing well --- then maybe I'd sit on the sidelines.... but everything I see with my own eyes - and the discussions I have with my friends that are in business says we're doing just fine.

Personally I have fully anticipated the interest rate increases that we KNOW are coming. I've been too early "waiting" on that to happen sooner rather than later. WE KNOW that as interest rates rise -- that will affect stocks returns but as long as the rate doesn't rise too quickly - then everyone will adjust to the new norm. I'm building a house right now - and I only wish they would hurry up as I know everything I must buy is going up. Prices don't go up in a bad economy... so then it's just up to me to "get over it" and pay the price. Frankly, I'm more secure doing that - than wondering what the hell is going to happen next with a down economy.

Do you ever buy bonds? Is there a time and place?

Todd --- I personally used to have a 4MM bond portfolio -- a laddered set up with max 5 year maturity... So let me explain that for those that don't understand.


A "laddered" maturity portfolio would have your total investment placed so that each year a percentage of your total portfolio would return your capital so that you could reinvest or (roll) that investment. Example

100,000 invested in bonds with a maturity date of 2015
100,000 invested in bonds with a maturity date of 2016
100,000 invested in bonds with a maturity date of 2017

and so on.


Here's my personal problem with BONDS in general. If you are a long term holder / investor.... you'll get only your initial cost back at maturity. So if you bought a 5 year bond at face value - that pays you a tax free interest.... at the end of the 5 years - you're only going to get back your capital. Safe? Oh yeah? A good investment? Not if you missed out on 20 or 30 or 40% returns in the stock market via capital growth.

I personally hated every single minute I owned this laddered portfolio -- because my stocks were soaring --- and all I could see was that money (possible gain) slipping thru my fingers. I unwound (sold) that portfolio at a nice profit because at the time interest rates were falling -- and I owned bonds that paid above market rates (as the interest rates are falling - the higher yielding bonds face value climbs).

I think the only way to make any money in bonds is to be a trader. You have to be so on top of what the interest rates are "maybe" going to do -- and be able to move in and out of the bonds. I'm not interested in doing that - nor am I that smart.

Now --- if you are retired --- and have a very high annual income... then bonds are a way to get TAX FREE income... and that's why I owned them. But as previously stated -- I was calculating the losses on capital growth... and I'd prefer to just have gains and income over trying to skin the tax man.


SO -- your "is there a time and place". Yes --- high taxable income earners can use bonds to gain tax free income. Or a retired person that absolutely requires their capital be guaranteed to be returned.

I would be a buyer of tax free bonds when they're paying 9 or 10% TAX FREE.... because at that point the income would be "stellar" and you'd have no loss of capital (provided you held to maturity). But when they're paying 2 or 3 or 4%... and we're going into a rising interest rate environment. Hell no!

That's what I thought you would say. It's the guaranteed path to meager results. I have 30 years, I'm looking at the potential for explosive results and I'll gladly ride the coaster in the duration.

Greg, I want to thank you again for sharing your knowledge with us. This is big time financial stuff. Stuff that very well could result in financial independence and greater lifestyle if pursued actively.

I have to admit that I relied to heavily on financial advising in the past. I've taken the reigns and have analyzed funds and strategies and will make up my own mind with guidance from those voices of value. Looking at the returns on IRA's and 403b's, I just don't see it being the catalyst to get me where I want to go. Will it grow and turn into real money, yes. I just think there are better opportunities like my self managed account.

I know you are anti mutual funds for the most part. I'm looking for another bucket on top of the individual stocks, IRA's, 403b, whole life. I found this healthcare based Fidelity fund that has averaged 16% over the last 30+ years. Should I just forget it and add to my individual stocks? It looks like a majority of the growth is on the tale end which is a bit concerning.
http://research.scottrade.com/qnr/Pu...y?symbol=FSPHX

So let's dissect the "mutual fund" issue first.


IRA's and 401's et al --- are all about getting people to save SOMETHING! ANYTHING! They are pretax auto deposits for people getting paychecks. I'm all for that - because without them - people wouldn't save at all.

Add to this - the "company match" which is basically free money.... and that can't be all bad. In the strictest sense that something is far better than nothing.

Mutual Funds are the pablum of investing because people don't have to get involved - they don't have to think - they just pick off a list - throw money at them and hope like hell that when they need the money - it will be there.

Here's the problem with all of that.... the lack of actively THINKING about and being involved with something that is so fundamentally important (or sure as hell should be!). Our retirement... where we hope to live 20 or 30 or more years.

I think they're (Mutual Funds) fine until you gather up about 10 grand. At that point - you can pick 10 stocks and invest 1 grand a piece and probably do far better overall on a compounded return.


What I've tried to do in this thread since day one is to get people involved - take some of the fear of making CHOICES out of the game - and get people to look at their investing differently. It's not scary or hard - in fact - pick the right stuff and it couldn't get more simple. Just the mere act of getting people to look at the mutual fund in their IRA -- you know, the one they haven't looked at for 10 years... is monumental.

I wouldn't just NOT LOOK AT any kind or style of investing --- as my personal belief is that as long as you're thinking - comparing - looking - and then acting on your investments is the biggest "move" that people can make. So if you think -- and I pretty much agree with this -- that investing in a mutual fund in an effort to diversify your holdings -- and do so in an area where you have no knowledge (say healthcare - or drugs etc), then I'm all for that kind of investing. My anti Mutual Fund is more about people pick three in their IRA and letting them sit for 20 years and then wake up and find out they didn't do very well. Most don't! But if you're active in the picking and have a valid reason and thought process for why you're buying THIS particular fund. Then great! It's just another act of investing and that's the secret to all of this.

I want you "newbs" to look at more than just the shares YOU own on down days. I want you to see your pops and drops in PERCENTAGES... because down .50 cents on a $100 stock is no big deal percentage wise.

I want you to compare the percentage drops in your stocks that pay dividends versus the "hot stocks" that don't. Learn from these kinds of days and weeks and months. How do you feel when you see your paper gains dripping away. I've reminded people many times to make note of how they feel when everything is going up day after day - and to remember that - because there will come a time when they stop going up and they start going down....

On days and weeks like this -- look at the GoPro drops - Look at Facebook drops - look at Tesla... and look at them in percentage terms - and compare to your stocks... Take Altria (MO) today -- it was UP three quarters of a percent GoPro was DOWN over 4.5%. Facebook was down almost 4%. Tesla was down almost 8%. AT&T was down barely over 1%. Realty Income (O) was down just about a half percent. WHY?? Because these dividend payers are supported price wise by the dividends!! It cushions them on the way down. Now you also have to remember that in a month or two YOU'LL be getting a cash dividend that helps ease the pain.

Now -- if any of this shakes you up just a tad - and you start to doubt your strategy... GO LOOK AT A 5 YEAR CHART of your stocks... look at how squiggly that line is! It's not straight up - there's all manor of drops (and pops). Does the line still go from lower on the left side of the chart to higher on the right side?? Yep? Then get over your angst knowing that 1 year - 2 years - 3 years down the road you will never remember this week or this month or even this quarter.

If you're a buyer..... KNOW that no matter what you pay - at some point you could have bought it cheaper. Get over it. A buck or two a share on a 100 share purchase is not what you're after. You're after that dividend quarter after quarter year after year... and the capital gain will come.

NOW --- Let's talk LIMIT ORDERS. I bought 4000 shares of Energy Transfer Partners (ETP) today. 2000 shares with a limit order early this morning at 58.85 a share - it took awhile to get executed. Then as the day got worse I stuck another 2000 limit order in at 58.50 it got executed. So my average is 58.68 per share. Luck for me - this closed at 60.30

I used the LIMIT ORDER to try to get shares at lower prices than where they were trading and it worked. I also stuck in a bid (a limit order) for TESLA (TSLA) at $235.00 a share -- It did NOT get executed. I'm okay with that. I don't feel the need to buy this minute or this hour or this week even. If I can get the shares lower in a market like this then great. If not - OH WELL.... But I'm on top of the market every day - most of the day... If you're NOT.... and you're not buying 100's of shares at a time - then does .50 cents one way or the other really matter? No - it really doesn't. So this strategy is on an "it all depends" basis. If you like to learn from doing this - regardless of the size of your trade - okay! Nothing wrong with preparing yourself for when you are able to play a little deeper. Sometimes it's all just about learning. Look at your car builds - your first build was not a 2000hp twin turbo road killer... you gained skills a little here and a little there. That's how it's done.

Hell, I'm stoked that I may be able to pick up some T come Monday while it's down 3 something percent from when I purchased. In the end it won't matter but dropping my average cost down a wee bit sure does make me feel like I'm doing something fantastic, lol.

Thanks for the continued insight and pep talks, Greg.

Most of the little things - like buying on a dip - or averaging down etc are not really about making a pile of money.... it's mostly about how we feel. We are human and we can't take the feelings out of investing so we might as well acknowledge them. Beating the day makes a guy feel smart... selling for a gain
is euphoria... FEAR is the one we have to contain and manage. You'll experience fear when you're not invested correctly. By that I mean - when you've gambled and it's going against you... or when you've invested too much cash and you really had a need for that money and now the market it against you. We generally cause our own fear situations.

I always keep cash. It makes me feel good/secure. It's my pile that says to me - Dude! If there's a big drop in the market... I'm ready to buy. Many times I don't ever buy - or buy just a little... but it's the comfort that line of thinking gives me. So I acknowledge it and use it to my advantage.

Todd --- Found this by accident and thought it worthy of a post in response in a round about way to your question.

I can't live with a 3% return - with no capital growth - in an inflationary world.



(Reuters) - Bond investors need to revise their expectations of the returns they can make in the years ahead, said Scott Mather, one of three Pimco managers who run the firm's Total Return Fund following the shock exit of co-founder Bill Gross last month.

In an interview with Germany's Boersen-Zeitung newspaper, Mather, Chief Investment Officer for U.S. core strategies at Pimco, said: "Even if interest rates gradually increase, with a global portfolio of bonds with the best creditworthiness you can maybe expect a return of about 3 percent in the coming years."

Talking to my financial advisor yesterday, he mentioned tax considerations when investing in dividends. Warned us we would pay regular income tax rates versus the 15-20% I read on this site and elsewhere. Also, he mentioned qualified and unqualified dividends. I tried to research and on www.dividends.com the 2012 fiscal cliff legislation that went into effect kept capital gains and dividend taxes at 15%, unless adjusted gross income is over $400kind/$450kcouple, raising it to 20%. However, there is a statement that unqualified dividends would be taxed at the regular income tax schedule up 39.6%.

So what constitutes qualified versus unqualified? And if I check the box to reinvest dividends, I'm guessing they go down as income but are they taxed at 15-20% or at my personal income tax rate based upon total earnings? I've got an email out to my accountant as well. I'm not trying to play a tax scheme here, just trying to understand the differences between the two types of dividends.

On a better note, my advisor did say we have learned something that takes many 20+ years to figure out. :thankyou: Dividend stocks that combine growth and a healthy dividend return are better during downturns and also allow you to buy shares at a lower average cost if reinvested during growth years, prior to the need to take the cash payout. He said, keep it up and my goal should be to put him out of a job! Thanks to all that contribute to this thread. It has really opened up our eyes to different avenues to grow our wealth and invest to have our "employees" work harder for us.

Doing more research on dividend types and tax implications, here is an article I found which was helpful:

http://www.dividend.com/dividend-edu...ied-dividends/

Why in the world would I accept a 3% return on something I am locked in on when an investment as brute simple as PG pays 3%? T and VZ are both paying more than 4.5% right now. MO is at 4.4%, may have to get me some more of that!

For most stocks... If you hold your stocks for years, this is a minor issue. If you jump in just before the ex-dividend date, then sell afterward to try to make a quick buck, then this is a bigger issue.

Yep, no thanks. I'm changing all of our existing IRA's to 100% equities. I'll worry about fixed income in 30 years.

I would FIRE your "financial advisor" instantly and never give him another chance. He doesn't know what he's talking about and obviously missed the most basic education. He either doesn't understand -- or doesn't know how to explain your situation or worse.

He's doing the "typical" advice -- trying to make investing scary and difficult - so that you need him/her.


CAVEAT ---- EVERYONE SHOULD DISCUSS THEIR SITUATION WITH THEIR TAX ACCOUNTANT....

Capital gains --- there are TWO TYPES --- "Long Term" which means ONE YEAR AND ONE DAY.... of holding the investment -- if you sell for a gain - it would be LONG TERM CAPITAL GAINS.

Short term capital gains is any other type of gain - where you did not hold the investment the ONE YEAR AND ONE DAY requirement to make it a Long Term Capital Gain. SHORT TERM CAPITAL GAINS are taxed at ordinary income rates.


COPIED FROM THE IRS WEBSITE:


The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2014, the maximum capital gains rate for most people is 15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.

If you're married and filing jointly and your adjusted gross income is over $457,600 your tax rate will be 20%

I certainly hope you're in that bracket!



DIVIDENDS --- (of which you would need to really try hard to buy something that was "unqualified") are taxed at the Dividend rate which is the same at Long Term Capital Gains:



Long-term capital gains and qualified dividends
A top rate of 15% applies to qualified dividends and the sale of most appreciated assets held over one year (28% for collectibles and 25% for depreciation recapture) for single filers with taxable income up to $406,750 ($457,600 for married filing jointly). Long-term capital gains or qualified dividend income over that threshold are now taxed at a rate of 20%.



MORE INFO HERE:



http://www.schwab.com/public/schwab/...axes-Whats-New




I will tell you from my own personal situation -- and I have a quite complicated tax filing. 2013's income tax form was 154 pages.... and our income was just under one million dollars this year.... and my tax rate was 20%. I DO NOT have a lot of deductions - but I have ZERO EARNED INCOME... so all our taxes are dividends - interest - long or short term capital gains.

Beautiful:yes: So you are using dividend income on stocks held over one year? Is that correct?

So, i have been following the thread for a while. Investing 102 seems to be for the guy who have some money in the market.

I have one bigger question: what should the beginner investor(like one or two deposits in to their 401K) do?

I currently have a small amount(less $100 in to my 401k),but i put 10% of my pretax income in 401K and my company matches up to 6% in to my 401K. I estimate that in will need at least $1 million at today's current money valve to retire and live comfortably. I currenty have my small amount in to Fidelity's LifePath® Index 2055 Fund Q.

So my secondary question is: How long do I wait and change my investment?

Sorry Todd -- I'm not sure who or what you're asking...

If you're asking me about my income? All of my income is derived from Dividends - Interest (received) - Long or Short Term Capital Gains - and income from limited partnerships (apartment complexes), which have offsetting depreciation.

I rarely do short term capital gains -- and since I have no earned income -- I'm not sure what the tax rate is on them but my guess is they'd just be at the tax rate of whatever that "income" is, dollar wise, would be. Probably total STCG last year might have been 100K or less... so no big tax hit there.

Having said that -- my personal tax situation is unique - probably - to the group here since there is zero earned income to deal with. My situation is where a guy wants to be when they're retired -- which is partly why I posted what I did. In retirement you want to have very low income taxes - zero or little debt - and no earned income (which affects EVERYTHING).

This is another reason TAX FREE BONDS are such a stupid investment idea as people reach retirement age. The tax rate is so low at that point - what's the point in taking a poor rate of return when you're not really in a taxable situation to begin with?!?!?! WTF!?!?! Stupid. When Gwen was working - and she had a very high income level (mid six figures) - then part of our portfolio was invested in TFMunis because the top tax rate of almost 40% plus the AMT rate - a tax free income of 3 and 4% on the bonds made sense. It doesn't anymore since she retired in 2010 and now we have "no income" (I love that statement).

BY THE WAY -- to those that wonder why I post such personal info. It's ONLY TO HELP OTHERS. I don't really give a sh!t about such things. Gwen or my entire working careers where as officers of public companies - and as such, all of our incomes where public information. All a person had to do was to Google it and it and all the "compensation" was there to see. I got over being offended by it long ago. And if I can help one person gain some financial footing. Then fantastic. Back when I was a VP we didn't have the internet -- so it made it far harder for people to find out such things... you had to get a "prospectus" or read thru the filings to get this info - but if you wanted to know - it was right there in print. Now it's all on the web. Ours isn't any longer since we're no longer officers of any publicly traded corporations.

First -- I'm going to ASSume your name is Dylan.... So welcome Dylan!


Let me address one thing first -- this thread is not really so much about guys with any money - some have some - some have a lot - some have very little... and it's not so much about the stock market as it is about saving and INVESTING for retirement. The "stock market" has historically had the highest return - compounded - over time. But that's not all we talk about here. There are rental houses - apartments - commercial buildings - Master limited partnerships etc. BUT --- always the big butt in the room -- for most people INVESTING in the stock market is the easiest way and can use the smallest initial capital and can be added to as money is accumulated. In other words - a guy with a $1000 can buy some stocks and as he gets another $500 saved up - he can buy some more and so on. Other types of investments take larger up front capital. Since this is a thread for BEGINNER investors... we've all tried to stay focused on that aspect. BASIC INFO and ways to look and research and what is and isn't important etc.

Okay -- next up for you -- is your 401K. Good for you for starting early. I'm again going to assume you're young, and perhaps just beginning your career???? The reason I'm assuming that is because your investment in Lifepath 2055. That date has meaning. That date is for people that should be retiring about that year. Correct me if I'm wrong about you being younger.

Fidelity is the investment company your company uses to manage/direct/handle your companies retirement plan. They then give you choices within that plan to invest your contributions in. Some plans have lots of options - some keep it very simple and short. Your actual investment is in BLACKROCK LIFEPATH 2055..... and Blackrock is a very good company which runs about a half a zillion different "funds". I couldn't even find yours specifically in order to look at it. It was the "Q" that threw me off.

What I need from you is the actual TRADING SYMBOL -- such as "LIVIX" or similar.

So -- forgetting all the confusing detail above. You're in the right place as far as contributing to your company plan. Stay with that for now. The matching percentage is a good one... and as soon as you're able - I'd increase your percentage to 15% ASAP. If you read this thread from the beginning - you'll find a recurring theme, i.e., START EARLY in order to reap the benefit of COMPOUNDING over time. The more you save early - the more you'll have at retirement by a LONG SHOT and I mean HUGE.

Just quickly ----- a guy that invests $2000 a year from age 21 until he's 31 and after 31 he never adds another nickel to his pile - will retire with a million bucks at normal rates of return - compounded. If the same guy starts saving the $2000 at 31 and puts that away every year until he/she retires - will have about half that. Which guy would you rather be?? Don't answer that - it's a rhetorical question. LOL


OKAY THEN ---- keep pounding away - and increasing your contribution until you have at least $2500. At that point you're going to need to choose another fund in your plan -- and start putting the new money into that choice until you reach $2500 and so on. When you get $10,000 in your plan total... then you will need to start to look at alternatives if any. BUT -- the NUMBER ONE thing I'd do if I was you --- OPEN A ROTH IRA and start funding it with as much as you can. You're company plan is "PRE TAX" - which is great - but you'll pay taxes on it when you retire and start to withdraw. A ROTH IRA is "after tax" money that you put in on your own - and since you've already paid the taxes on it - it comes out totally tax free when you withdraw. That includes all the gains and income/dividends etc that it earned for all the years. TAX FREE. PERIOD. It's the greatest gift the tax man ever gave the good citizens of the United States. USE IT.

Any discount brokerage will help you understand it - and open the account. Just make a call to the one you choose and set up an appointment to discuss your personal situation. They'll be happy to help you. I'm talking Schwab - Fidelity - etc. Find an office that is convenient to your home or office. You can always move the account later. The key is to get started EARLY and save/invest as much as you can.... 65 years old comes up far faster than you can even imagine! Ask me how I know?!?!?! LOL

Limit Orders
 

SO -- Since I'm on a roll this fine Sunday morning... I found a terrific chart to show why I use LIMIT ORDERS to buy or to sell!!!!!!

Not important when buying 25 o5 50 shares... then I'd just do a market order most likely - but it doesn't hurt you to put in a limit order as long as you're going to stay on top of what you're doing!

Here's a ONE DAY chart of a company where the "range" was over $2 a share! On a $16 dollar stock... that's a HUGE percentage. On top of that - it would make you FEEL GOOD if you bought more near the bottom than the top. AND if you sold (using a limit order) nearer the top than the bottom! Just by setting the price you want to buy at or sell at rather than just paying/selling at "market" using a market order.


Check out this chart. You could buy at Market and pay $16 or you could have stuck in a LIMIT ORDER and put the price at $15 or any other number you chose and you'd have gotten a fill. The one day RANGE on this stock was over $2.00 !!! It traded as low as $14.30 and as high as $16.36.... where would you have rather bought the shares? LOL


THIS IS A WILD EXAMPLE.... normally I'm trying to bid a .50 cent or 1.00 range.... but if you're willing to stay on top of your trades and manage them - you can play the game and win.


https://www.google.com/finance?q=arp...BsGZqAHtoYHIBw

Greg, I'm confused on what makes a stock dividend or gain short or long term?

Greg,

The closest trading symbol i could find is LPVIX on Google Finance.And yes, I'm pretty young compared to most of you guys.

I would like to increase in 401 K contributions from 10% 15% as you said, but with paying off student loans and other debts accrued during my schooling and working a barely living wage manufacturing job, and trying to save for my own place, my money can get stretched pretty far.

Ah ha!


Okay --- Dividends have some very specific rules - regarding short term holdings like if you're just trading stocks to pick off the dividend.... and that's for an individual to discuss with their accountant BEFORE they start that kind of trading....


For our purposes here -- we're going to ASSume that you're buying stock for long term (at least one year and one day) and that the dividend payouts are just every quarter and so on. At that rate they are just taxed as DIVIDEND INCOME -- 15% for "most people". They can be zero for low income earners - and they can be a MAX of 20% for those high income folks (single is 406K adjusted gross and 457K for married).


So dividends are just going to be taxed at 15% for most everyone.


Long and Short Term gains are when you buy a stock and then sell it.... and those gains (provided you sold higher than were you bought) are taxed at either the LONG TERM RATE of 15% if you held the shares for the one year and one day rule --- or SHORT TERM which is anything less than one year and one day. SHORT TERM CAPITAL GAINS are taxed at ordinary income tax rates.


HERE is where people need to have a very good understanding of what they're doing if they have gains and then want to offset those gains with losses.

Near the end of the year (tax year) --- you may want to look over your accounts (we're talking TAXABLE ACCOUNTS HERE NOT IRA's or ROTHS).... and if you have some gains you want to take advantage off ---- then you'll be smart to also prune your losers and create some offsetting losses to help ease the tax man pain. Pure losses are NOT a 1 for 1 deduction off your income taxes... if you have pure losses - I think the limit is $3K per year... so if you took a 9K loss - it takes you three tax years to recoupe that. I AM NOT an accountant and as such I'm not up on the latest changes if any to these rules. Which is why everyone should discuss this stuff with their tax dude.

But lets say you have a 20K short term gain you want to take.... and you have a 10K loss in another stock you'd like to dump anyway.... then sell the winner and cut the tax bill by 10K by also selling the loser.

Conversely ---- You have a big 20K loser....and you wan to sell it. You're only going to get a 3K write off this year.... so might as well prune some winners for 17K and with the 3K write off... you're just about even.

Where people get screwed is that they concentrate on the possible tax bill --- and forget about the details. Details such as -- maybe taking your gains pushes you into that next higher bracket and now your entire income is moved into the higher bracket by only $100..... and now your tax bill went UP by $1000's. Ask me how I know about this. I've never made that mistake again!

BUT ----- If you buy and hold (again - talking about taxable accounts here) --- there is no taxable event on your PAPER GAINS... regardless of their size. So you could buy a stock at $1 and have it go to 1 million and there's no tax ---- until you sold it! That's the beauty here ---- your net worth is going up without a direct tax consequence. You'll only be paying a small tax on the DIVIDENDS. 15% isn't very much of a tax bite.


If you're in IRA's --- in other words --- retirement accounts... then the questions are mute as there is no taxable event until you withdraw. Thus the beauty there as well.... over 30 years your money could grow 100's of percent and you only withdraw a little at a time thus keeping you in the bottom of the tax brackets. If your IRA is a ROTH there is NEVER ANY TAX EVER.


Many people are confused by these terms --- and they need to fully understand them BEFORE they make any moves!

Very interesting to say the least.

Let's say you bought additional shares this year in a stock you have held for over a year and a day. Does it revert back to a short term gain or only on the new shares?

When you go to SELL there is always a check box "choice" for selling "tax advantaged lots" or similar statement ---- meaning --- the brokerage will sell the shares with the dates that are the most tax advantages for you... unless of course you're sell "all".

The shares (brokerages do this for you) all have purchase dates.... per "lot" or per transaction date. So of course you'd only want sell the shares in your account that are LONG TERM rather than short term. Adding to the holdings doesn't change the entire holding -- only the shares that were bought on a/that particular date. They're not "retroactive".


You asked earlier about the dividends and dividends get different treatment because of course - the tax man always wants his pound of flesh --- so they're not going to let you get away with buying a stock a day before "ex-dividend" then scooping up that dividend and selling the shares... and then only letting you get away with paying 15% tax on that dividend portion. They made a rule about it... so that if that's what you were doing -- you're going to get slammed with the income tax rate not the dividend rate.

Now --- I've said this before. Taxes should never be a part of an investors strategy. An investors strategy is to maximize his income or gains or return on investment... and the taxes just are what they are. If you make a million bucks this year and you owe Uncle Sam 390K of it... SO WHAT! You still kept the rest... so in my view it's a choice... and I'd prefer to pay as much tax as humanly possible - because that means I made a fortune! LOL

What NONE OF US WANT TO DO however is to inadvertently cost ourselves a tax if we don't have to. So checking a date on the shares you plan to sell --- if you're just "pruning" or perhaps just want to change your portfolio... then why sell them one month "early" and get hit with a short term gain - when waiting a month would have saved you some tax money. Of course explaining all of this is harder than it looks --- because if a guy has a loss and he thinks he's going to lose MORE -- then there'd be no sense in holding on to the shares and taking a larger loss - just because it didn't work out on the income tax form.... conversely.... if you could sell shares and scoop up 100K gain... and maybe not get that gain if you waited until the exact right date for taxes... well then that might prove to be dumb.

It's more just something that should be "considered" before just hitting the sell button.



NOW -- for investing 102 -- We haven't touched on MANY other details. We've mostly just touched on buying - reaping the dividend - plowing that back into more shares and compounding these returns.


There's things like WASH SALES.... oh boy -- here we go! The WASH SALE rule to a way for the tax man to keep you paying max taxes. The Wash Sale Rule says that you can't sell a stock at a "loss" and then turn right around and buy the shares back. You must wait 30 days to buy them back - or you're DISALLOWED the "loss". But there's ways around this rule as well. Let's say you owned Chevron (CVX) and you have a loss at the end of the year - so on December 10th you sell -- writing off the loss against gains you had taken. Now that tax year is 2014 which ends on December 31st.... A new TAX year starts January 1st - so on the 2nd you buy Chevron shares. OH NO YOU DON'T!!! Not so fast --- the tax man says that's complete BS... and you just wanted to take the loss against 2014... and he's right of course. So they disallow the loss as a WASH SALE -- and the loss you took gets added to the cost of the new shares you just bought... It gets complicated --- so just don't do it. WAIT at least 30 days -- and that means 31 days... before you repurchase the shares of the company you just sold at a loss.

The way to beat this is --- you sell Chevron and buy anything else that is SIMILAR - but not substantially identical - if you need "oil" in your portfolio -- so you take the loss on Chevron and buy Conoco or Exxon... but you can't sell Chevon common and buy their preferred convertibles... that would be considered substantially identical.

If you've figure out a trick --- they've figured out how to counter that.

It can't be "close" it has to be THE exact symbol of the shares in your account.


We all understand just starting out. Everyone starts somewhere. The fact that you're started is what counts.

Dylan - good idea, but do not do this at the expense of your company match! Make sure you max that out before you go outside the 401k! Take the free money! I'm not suggesting Greg was implying you forgo the free company money, just making sure that it is clear that the free money comes first!

As for the student loans and other financial strains I can relate. I started grad school a few weeks after the company I was working for closed and my twins were six months old. As soon as I was drawing a true pay check again I put in what I could to get the company match at a minimum and increased my withholding with each raise until I had maxed it out. I recently went with the "high deductible" health plan which comes with a HSA that the company kicks a little into and I now am maxing that out. HSA money is tax free going in and tax free coming out, just has the limitation of only being used for health care. Since our plan has an out of pocket maximum and I have three kids it is fairly easy to predict how much I need to put into the HSA. If I do not use it all it carries forward anyway.

Thanks for explaining this, I never fully understood that or how to use it to my advantage, so I would just do a regular order

That's what this thread has become all about --- taking the mystery out of things that nobody ever taught us.

Well if you missed the GoPro IPO don't worry, Schumacher has you covered. :rolleyes:

Thanks to this

http://gawker.com/michael-schumacher...-he-1645544653