Merry Christmas to you too, Lance.

And everyone else. Enjoy the holidays with the fam, let the market do its thing. :)

Really good to hear this Lance... it is an "attitude" and it's a learned attitude. While we need to "respect" the market... once we understand the ebbs and flows -- we can start to see the beauty versus fear.

Merry Xmas to everyone!

Total Return
 

So here's why it's important to not just throw a dart at the stock market dart board. I always say to invest in best of breed companies that pay you a decent dividend - the dividend is the gift that keeps on giving even when the stock price isn't particularly going your way. AND you want to invest in companies with HIGH HISTORIC TOTAL RETURNS. While this TR won't be a guarantee of the future - it is a "metric" (measure) of what the market thinks of the investment over time.

There's steady eddies -- there's high beta (volatile) -- there's high risk that pays high dividends -- there's ETF's that are baskets of stocks that cover every conceivable category -- there's even higher risk IPO's (initial public offerings)... and this is what confuses people. There's just so many choices. Pick the wrong ones and they can kill your investment nest egg... while getting "lucky" could make you a millionaire. My feeling there is you might as well go out and buy $300 a month worth of Lotto tickets. I'll wave to you while you're dining in the food line. LOL


We've used ALTRIA (MO) many times as a steady eddy that pays a decent dividend. It's a SIN STOCK (Booze and smokes). It's very unsexy.... it's even hated for what it is! But it's GROWTH (share price increase) this year is like 33%.... all the while paying out a 4% dividend.


IBM (IBM) meanwhile is DOWN almost 16% while paying a paltry 2.7%


These are just examples I'm going to pick on -- to show why I use the history of their TOTAL RETURN to help guide my investment decisions...


IBM has a 1 year TR of DOWN 9.6% a 3 year of DOWN 8.8% and worse yet is a 5 year TR of UP 35.6%.....

MO has a 1 year TR of UP 39% -- a 3 year of UP 97% and a 5 year TR of UP 231.5%

Which one would you have rather invested in?? So my point is -- don't just pick names that you know (like IBM) because you THINK they're best of the best... do just a tiny bit of research and really make those important comparisons!

So just using the TR as a guiding light.... I would have bought the Altria (MO) over IBM.... and IF I'd done that - I'd have made a better return in ONE year with MO than 5 years with IBM. That's HUGE guys -- just huge. Is that metric 100% accurate? No. Nothing is.... but it's a pretty decent place to hang your hat. I ALWAYS use it as another point of reference before I hit the buy button.

I love my MO stock and I do not smoke or drink. I started managing my own 401k at the end of 2010. Here is a cross-section of my holdings (some of which I sold) along w/ total return, hold period and APR. I have about 5-6 others I have bought and sold, and a few I picked up recently that I am not showing. I also took a bath on Bank of America somewhere along the line. But, overall, I am averaging a bit over 17% annual return.

You may also notice a trend, most of these are big boring companies that pay decent dividends. I just looked for them to be on sale (high dividend rate for the sector) then bought them. Of course the stock market is doing well this year, that makes all of us look smart.

It also helps to learn a little about the company before you throw money in just looking at a chart. I work in the same industry as IBM and 14 years ago was a design engineer at a factory building tools to sell them for their NY and VT factories. IBM used to be one of the 4 companies we partnered with on semiconductor process development. I have a lot of respect for where they have been. In recent history though, they have suffered. Their semiconductor MFG has been bleeding red for a while and the CEO has been under pressure to offload it.

They recently made a deal with a foundry to take the semiconductor MFG group, a large amount of their intellectual property, and gave the "buyer" $1.5 Billion in cash and a deal to buy chips from them. That is why the stock has suffered. So, when you see a company's stock drop, make sure you do a little research and find out the backstory before you just dive in! Now, looking forward, can they do well without the in house MFG? Historically some companies, like Qualcomm, have, others, not so much. Sometimes owning the MFG can be a competitive advantage (just ask Intel and Samsung). Their stock could take off, time will tell. For better or worse I will stay away from this one.

An article on the IBM deal:
http://www.bloomberg.com/news/2014-1...chip-unit.html

Generally I stay out of the semiconductor stocks, I am too close to it if that makes sense to you. The Intel deal I picked up on early last year was too obvious to pass on. I then sold it when I thought it was back in line, still made me nervous to hold on to it.

LOL -- There are 469 posts here -- 300 of them probably mention that you should start out buying companies you know or understand their business. Then once you've identified some of those names -- there's another 200 posts discussing what to look for and how to compare their performance. Total Return is just ONE metric I like to use because it's a big bold brush stroke that shows HISTORICALLY how an investor would have done over time - as compared to the other company(s) someone might be comparing to.

The entire thread is about how to think - how to compare - where to look for information... the actual names used are just for examples since everyone has to use something for discussions sake. The thread is how to catch a fish - not catching someone a fish sort of thing.


I had a call the other day asking "what is an acceptable dividend percentage" -- and this is a tough answer - which is why I go straight to the total return metric - because I can accept a lower dividend payout if that payout comes with capital growth (the stock price rises) - thus a good or great TR. Total return factors in both the dividend (reinvested) and the share price appreciation. It represents the growth of your money. Period. I'll take something that has historically made 100% over 5 years versus gambling on a the competitor that has only had a 30% TR over the same period. Why do I call it gambling? Because if you buy the 30% TR - you're just hoping and praying that for whatever reason that company (thus the MARKET) is going to suddenly reward them. That's a gamble. All of this is making the ASSumption that you've already identified a few names to invest in... so you're still just doing research and it's just one more thing to help you in making a decision.

So I have been looking at some more stocks to pick up to make myself diversified and I struggle to just drive around in my world and know what to pick. Sure I should have picked Chipotle but they don't have a dividend, but there stock really started to sore around the time we started eating there and the line was always 30ft out the front door.

But my question goes along with you last posted, How does a guy find out about the stocks that are good ones that he would never ever know about in his day to day life. Your Alteria (MO) stock I would never know about, the KMI that seems to be a good one. I don't see that stuff and I live in the oil patch since its a pipeline company. I don't think watching all the stock trading shows are really that great.

Currently I find a stock that Think might be growing and I look at it on the long term to see if it constantly grows upward. Then I look at the dividend and make my choice from there. But I'm sure there are way more stocks out there then I will ever know about.

Greg - I have been in the semiconductor field since 1997, prior to that I was an auto mechanic. Basically I am a technician that went to college and became an engineer. I have been riding the roller coaster of this industry for a while. In 2003 the factory I was working for made semiconductor capital equipment shut down permanently and I was out. Pre-9/11 we were trying to cope w/ growth with over 250 employees and working to expand from $5M per month to $40M per month to fill demand. In 2002 our sales were about $5M total and they ended up shutting down MFG and dropping in several steps down to about 60 employees. At the end of May 2003 I was the only person left in the building as I transferred all the design and documentation to the parent company. I took the opportunity to go to graduate school rather than transfer to the main office in Kyushu. In 2006 I left a "quiet" research engineer job at the university to go back to the semiconductor field, this time in the more "stable" MFG side of the chip business. I was rewarded in 2007 when that factory was shut down. Fortunately I was able to find another position in the company at a smaller facility at the same site.

Investing in this industry scares me because I understand the business and consider myself a long term investor, it is bad enough that my income is somewhat dependent on this sector.

It's a HUGE - make that GIANT - mistake to invest money is the stock of the company you work for... essentially ending up with "all of your eggs in one basket". Ask the folks at WorldCom... or PG&E...or Chrysler... or Conseco... or Enron... or Washington Mutual...


When I say to invest in companies you understand and know... I'm talking about if you shop at Home Depot or Lowe's... or you love your Ford... or use AT&T or Verizon.

This is a great question! And don't think you're alone with this dilemma!


Okay - I know I'll miss something in this response - but you'll get the gist of where we're going with this.

Everyone should make a small list of the SECTORS that make up the US stock market. All you need to do is Google - "List Stock market sectors" to come up with this. Here - this is a link to a list:

http://www.investorguide.com/sector-list.php

From a list like this -- you should pick some of INTEREST TO YOU... not the ones you know absolutely nothing about... start with some that are somewhat familiar to you. Try to get to 7 or 8


From there - you can start to search for the biggest well known names from each SECTOR.... So let's just do a quickie here... let's pick "banking" (everyone does some kind of banking). First thing I'd think about is where do I bank - or what's the biggest bank name around me? West coasters might come up with Bank of America or Wells Fargo... Midwest will come up with some different big regional bank names - east coast will be familiar with a different set of names etc.

Go to Google Finance --- look up the name or two that you came up with... Let's say - since the poster is from California - he picks Wells Fargo. Start typing Wells Fargo in the box where it says SEARCH FINANCE -- when you see the name and symbol come up - choose it and hit enter...

Now -- this is going to bring up a selectable chart --- you can choose 1 day or up to 10 years or ALL.... I always start with YTD -- then I look at the 3 year or 5 year - and 10 year. I just want to see the general direction of the line. If it's flat - or looks like camel humps etc -- I think maybe I'll keep looking...

More importantly here -- if you scroll down just a bit -- there's a list (short) of companies they (Google in this case) feel are "RELATED". If you look at the list of related companies - there may or may not be other companies shown there that you know. I start to look at the ones I know... look at their chart - check out whether or not they pay a dividend - is the dividend increasing (you can see the dividend payouts clearly using the 5 year view on the chart... and you can also see some interesting information at the top of the page to the right of the daily closing price.... you can see the price range - the div/yield - the beta - the P/E etc. EACH TIME you put in a different company name in the search field -- go down and write down some of the "RELATED" companies they show... all you need is two or three to start the process.

What this PROCESS is going to do for you is to lead you to names you're familiar with... and you'll start to look them up and you'll start to get a feel for which ones are "better" than others. Maybe you find CHIPOTLE MEXICAN GRILL -- but realize that at $600 a share - and no dividend -- that's not something you want to put your money into -- but maybe during your search for them - you see JACK IN THE BOX.... and during your peak at JACK -- the related companies shown there leads you to somewhere else.

Here's what I do to shorten the process just a bit. There is a column to the right of the names shown in the RELATED list -- it's titled d/m/y. And there's a squiggly line corresponding to each name. d = day. m = month. y = year. I click on the "y" for year -- and that gives me a real quick look at the trend the line is heading. I skip the ones who's lines are headed down.... LOL

Try this whole scenario searching for ALTRIA (MO) -- you can either type in Altria -- or since we've given you the trading symbol - MO - you can just type in MO...

So to sum it up --- make a list of SECTORS you'd like to research -- then find out what kinds of companies make up that sector... and search one you know - then check out others in the same "related" field and compare them. Maybe you decide you don't want to be in that sector at all ---- but what the sectors do is to help you diversify and broaden your research. You don't want to have a portfolio of all retailers or all industrials just because that's a sector you're most familiar with.

Think about this like if you wanted to know something about football --- you might just Google FOOTBALL -- from there you might see there are leagues - and in the leagues are teams etc. Then you could check out their records etc.

If you have up to 100K to invest - you'd only need 20 names.... that would get you 5% of your investable $$ per name -- and that's what we TRY to achieve. It's harder to do that when you have smaller amounts - but the GOAL is to get to where you have around 5% per investment. Maybe that starts out at 100% in one name - and then the next time you have some dough you buy name #2 -- then you have 50% in each name - next time you add another name - now you're at 33% and so on. Diversity will get you 10 names in 10 sectors -- from there you can circle back and add to or expand.

DON'T FORGET TO CHECK EACH NAMES TOTAL RETURN!! You can do this on Schwab easily.... or perhaps the other discount brokers as well.

Another really good site for checking stuff out is MORNINGSTAR.COM -- go to the main site and then look for "STOCKS" -- click that -- then on the left you can scroll down to find "SECTORS" -- click that and it starts giving you charts of performance by sector. Choose a sector -- and it comes up with a list of names in that sector --- now --- click on the "5 YEAR" and it will sort by the best performance over that period....

I choose FINANCIALS -- then went to the chart and clicked 5 year and MASTERCARD came up as the top performer over the 5 year period... below that was VISA etc then BLACKSTONE GROUP (one I own).... click on the name and it takes you to the info for that particular company -- and then there's all manor of info to click on! Oh hell yeah you'll get lost for sure!! LOL

Yes, I tell guys at work that all the time! I participate in the Employee Stock Purchase Program (ESPP) which allows you to purchase company stock at a 15% discount quarterly through payroll deduction for up to 10% of your base salary. Each offering I sell as soon as I get it. I work with a guy who was a multi-millionaire on paper before the double whammy of the "dot-com" bust and 9/11. He had his entire savings in company stock and had a large number of options in the 40 dollar range when the stock crested 90 and was headed toward 100. He held on to it all because "everyone" knew it was going to keep going up. Now he is delaying his retirement to try to scratch enough together to be comfortable. The stock did not climb back above 40 until recently and by then most of his big options had expired. In the past ten years the company has not been as generous with the options because the tax laws changed regarding them and they are no longer as attractive for the companies to use as incentive.

I do not work for INTC, but I know the business quite well and we all share the same vendors. Since the business is quite volatile I also have ex-coworkers and people who were my customers when I was a designer at almost every manufacturer in the US. The industry is relatively small. When a company is hiring I will almost always get a call from a headhunter trying to get me or at least give them a lead on someone who needs the job.

Speaking of AT&T (T).... it was mentioned above. Here's another reason I love dividend paying investments. They announced a 2.2% dividend increase again this year. Okay -- it's a ONE PENNY raise... to .47 per quarter. Hardly earth shattering. I don't think I'll order a new LSA motor because of it... but these raises - over several years - are what increase your YIELD ON COST (as your cost stays stagnant and the dividend rises) --- and more importantly they help with INFLATION.

The above is NOT about "buy AT&T"!! It's about dividend investing... and companies that increase their dividend over time. Don't discount the importance of these. Inflation - even benign inflation (meaning it's really low) - over time eats away at your ability to live life as you desire if you're not keeping even or better yet - getting ahead of it.

The reason you want your home paid for by the time you retire -- is to keep that cost off the debit side of the cash flow... We all know that we'll most likely be buying less car stuff as we age... Our kids should be well out of college... but property taxes and upkeep - food - insurance - travel expense - these costs rise steadily and you need to be able to keep up. A company like AT&T has demonstrated that it's willing to share with it's owners (yes! That is what you are when you own the shares!) and 2% dividend increases year after year starts to add up 10 years down the road!! In 2010 - the dividend was .42 a share --- now it's .47 per share! WTF is wrong with that?? Nothing!!

In full disclosure, own 20,000 shares of T --- quick math says --- in 2010 I was getting $8,400 per quarter or $33,600 annually. Now just 4 short years later -- I'm collecting $9,400 per quarter or $37,600 annually. That's $4,000 per year MORE for doing nothing excepting holding on. That's a coupe sets of Hoosiers that I didn't used to get. LOL

I find a good way to learn about new stock investing ideas is through reading seeking alpha: http://seekingalpha.com/

On the home page is a list of the top articles. Just by browsing through some of the articles you will get some new ideas for stocks that you may want to research further.

This website: http://dripinvesting.org/tools/tools.asp has a pretty good list of stocks in the "Dividend Champions" spreadsheet that may give you some additional investing ideas.

The above sites are just starting points to give you ideas. Make sure you do your own research.

This is exactly what I was going to say. I would look up the user named Chower and read everything he has ever writting there. Make sure to read all the comments at the end of each article and branch off to other posters there. There a lot of smart people that never do an article or a blog but they comment from time to time with great insite. I started with this thread and ended up on seeking alpha and find myself there more of the last year than car sites. I learn something new every time I log in there.

I just wish I started this at 21 instead of 41

You guys can sign up for email notifications on new topics within the category or about specific stocks from Seeking Alpha. I get them everyday and read through them usually as well. I completely agree the comments after an article are great as well, typically. SA could easily be a forum just like this with the way the comments section usually goes.

This is a "behavioral" warning!



I read SeekingAlpha every day as well as many other newsletters and articles etc. Some of the worst investments I've ever made were from reading about the next great blowout investment - get all excited about it and pushed the buy button.

Be very wary of that "type" of investing in yourselves. Once a person finally "discovers" investing - has some success - and becomes enthusiastic... they are looking for ways to stretch their wings. They have a fresh pile of cash and are just itching to put this work.

By NOT having something on the horizon - where they've "pre-selected" the name and then have some time to watch it - read about it - "live with it" a little while leads to the frantic search to get their money to work. All it takes is one well written (even well meaning!) article - and they jump into it (whatever it is).

Don't be a Rob Lowe investor. Make your shopping list... double back on that list and watch and read everything that comes your way on all your names - feel free to modify the list. Substitute or add a name. Stay abreast of the "market" in general... and make certain you have your BASE built on a solid foundation. After you have 20 names... and by the time you've gotten to that point -- then you can buy some outliers... you can jump on an IPO or two... you can broaden your risk. You'll have experienced ups and downs - success and failures - you'll no longer look to the grocery store clerk for investing ideas - you'll be comfortable with your own choices - and why you chose them.

I'll make you this guarantee:

You WILL lose the most money when buying a company that you know nothing about - haven't known about before last week... and didn't "follow" for awhile. When that "investment" turns south -- and doubt creeps in -- and the base in your brain doesn't really get why you bought it in the first place... you'll hit the sell button and lock in a loss.

Why do I say this? Because after doing this for 30 years - I've been there and done that.

I'm thrilled you guys are into reading - and are poking around - and are discussing all this stuff. That is how you learn. I'm not talking about not readying everything you can get your hands on. I'm talking about tempering the new info and not jumping in too quickly. Think about how many pieces of clothing you've bought because it's "on sale" - brought it home - and then never worn it... did you buy it because it's something you've really wanted for a long time - or was it the shiny new thing and it was on sale - but it's blue and you never wear blue...

We've discussed IPO's about a million times -- but now that we're coming up to the end of the year - we can start to get some YEAR TO DATE data to see how some of these have done.

Again -- this is not a BUY THIS and DON'T BUY THAT. I don't really want to get this thread into that sort of discussion because it leads to a lack of research and a lack of knowledge about why YOU bought what you did. There's a TON of websites that have that as their goal.

There's been a couple of names discussed here over the last two years. FaceBook (FB) - GoPro (GPRO) - Twitter (TWTR) are three of the big ones. I've personally advised jumping into any of these - and particularly on the IPO... I've said instead to wait and see how they go - and if you still want in - then okay. Keeping in mind this is 102 investing so ASSuming that most don't have a stock pile large enough that they can afford to loose that much. If you're starting out and have 10 grand invested and you lose 1 grand -- that's 10%!! Trust me - it's easy enough to do that just with market swings!


Facebook is UP YTD 47% and since inception you'd have doubled your money. It's been a wild ride with big swings in share price... and this is what I've warned about. CAN YOU STOMACH these $10 swings... if you can't you panic and sell. Hindsight is great - but doesn't help you sleep well at the time.

GoPro is the big winner - being UP 117% Year To Date! But once again -- here's the killer part that EXPERIENCE tells me this is a tough investment! It's seen a high of almost $94 and a low of $53. It now trades at $68 giving you a double IF -- IF you'd been able to buy at the IPO price. Still there was ample time to get in for a month or two after the IPO and you'd still have huge gains. But ask yourself if you'd have freaked out having seen $94 and watched it glide down to $53. Would you have sold out? Would you have really seen this as a long term investment or would you have started to really question this holding? They call that being "a weak hand" on wall street. Weak hand holders lose their asses.

Twitter is DOWN 40% YTD.... and this was the one that everyone was certain was going to be the biggest IPO ever - the next "Microsoft" millionaire maker. I heard this morning that it loses 50 cents for every dollar of revenue. OUCH.

I'll toss another one in.

Alibaba(BABA)is up a whopping 13%.... that's 6 points BEHIND the NASDAQ. In other words - you could have just bought the QQQ (NASDAQ ETF) and made more money.

Kimberly Clarke (KMB) - the toilet paper maker is up more @ 14%... LOL

My point is not that you could have gotten in these and made a gain - my point is more that it isn't going to be easy. Pick the right one and you're golden - pick the wrong one and you suck. Up 100% is fun - DOWN 40% sucks. That's why I don't "INVEST" in IPO's and the more they're talked about the farther I want to be away from them.

Well then you may want you quickly learn something about Twitter....

Speaking as a guy who bought FB during IPO and more below 20 and am sitting pretty ... With FB only trailing JNJ as my best 2014 gainer


Correction my Apple is up 67% ... Because buying low is where all the money is :-)
Just saying. :G-Dub:

Ok now adding something meaningful ... Their is more to learning about a company then how it's finances look... You have to learn about the market segment and company vision ... In there might be we're you find companies with upside... Take FB as an example... Many people focused on the perceived lack of revenue strategies ... Opposed to market dominance and technical vision ... Which is why I bought held and bought more close to the all time low $$$$$$

Thanks for making my point. Which was - you didn't need to GAMBLE on the IPO's to have nice gains.... Johnson and Johnson (JNJ) and Apple (AAPL) and many other tried and true names did as well or better than some of the IPO's.

I've never said DON'T BUY -- my point is more about NEWBS being able to stomach some of the wild rides these TYPES of stocks take you on.

Ok now adding something meaningful ... Their is more to learning about a company then how it's finances look... You have to learn about the market segment and company vision ... In there might be we're you find companies with upside... Take FB as an example... Many people focused on the perceived lack of revenue strategies ... Opposed to market dominance and technical vision ... Which is why I bought held and bought more close to the all time low $$$$$$

No disagreement however I believe long I will make exponentially more on FB then JNJ which I actually bought for the dividend but my timing was optimal...

No -- Let's be HONEST... not arguing - just pointing out the reality. I personally made money this year on Twitter - Facebook - Alibaba and GoPro TRADES (I bought and flipped). I don't post that because I don't want people copying what I'm doing/do. Everyones situation is different. You were LUCKY. That's my point. Had you bought Twitter instead of Facebook - you'd be DOWN 40%. Whatever your choice(s) might have been doesn't matter -- some readers here would have missed the FB IPO and watched it stream ahead - and therefore plowed into TWITTER and lost their asses (SO FAR). That's not to say they, or you, might have bought some other name, and been equally up or down. The point of the OP was that these IPO's are not guarantees of success... the way you'd think they might be given the way they are touted on TV. The biggest IPO ever in history (BABA) lags behind if you'd just bought the NASDAQ.

I can't disagree more I wasn't lucky by buying FB I was strategic an have and maintain a significant knowledge if the tech sector... Which will eventually lead to a twitter purchase ...
I understand more about the sector then the financials which is a very big lever that folks should explore...

I don't flip and stocks and I am up 31% market value this year on a whole yet couldn't tell you what the P/E is on any of my holdings :grouphug:

What so I took "some" of you advice over the weekend and check out the competition part at the bottom of the stock page. I also tried to find a stock that I had no idea was even on the exchange. I have seen the Polaris market explode in the past few years. They really are the only ones in the industry with a 100hp 20" travel offroad buggy that really works and Polaris must be selling a ton of them as they are now leading sponsors for huge events all over. Do you see something like this as risky or will this growth if capitalized on set them up for a bigger future? I get nervous thinking every bubble can burst. They have decent dividend and over the long term seem to keep going up.

I wish I would have thought out Polaris and Chipotle 4 years ago when they both became aware in my life.


Also what is your take on the slump in the oil? I feel it has to come back again. I live in a heavy oil community and its sad to see all the parked rigs but I have seen this a few times before. Chevron stock is at a 20 year low and I'm trying to diversify my holdings, but I also see a market I think is on sale and has to come back strong as there is nothing to replace it. Should I continue to diversify or hold off and take advantage of what seems to be on "sale". It could go lower but the dividend is descent from what I have understood you to say to get in now and maybe buy more later.

[/QUOTE]

Also what is your take on the slump in the oil? I feel it has to come back again. I live in a heavy oil community and its sad to see all the parked rigs but I have seen this a few times before. Chevron stock is at a 20 year low and I'm trying to diversify my holdings, but I also see a market I think is on sale and has to come back strong as there is nothing to replace it. Should I continue to diversify or hold off and take advantage of what seems to be on "sale". It could go lower but the dividend is descent from what I have understood you to say to get in now and maybe buy more later.[/QUOTE]

I am Not an energy sector expert by any means.. however the thing that causes me pause on the oil market is that it is artificially manipulated by OPEC.
So even though you know that demand is going to go up... (emerging markets in China India Ect..) however what about the supply?

OPEC manipulates the supply routinely to control the prices... Some theories around the recent drop is that OPEC isn't cutting supply (forcing prices to rise) as a way of hurting IRAN or ISIS or even Russia... Who knows... but at the end of the day.. since its artificially manipulated.. its a gamble...

I am staying neutral but will be keeping all of my CVX and XOM

Polaris (PII) has gone balistic since 2010. I do not know that market - but obviously you're involved in it so should be able to keep abreast... and be aware of any big competitors catching up or doing something better.... So that is EXACTLY what I'm always saying to invest in --- whatever that is --- something that you can stay aware of what's going on.

The dividend isn't very good on this name - BUT - you have to look at two factors. #1 huge recent growth and #2 This stock is a "splitter"... there's several splits in their history. Splits generally tend to be good for the investor.

#3 (I don't care that I said two things) -- you're relatively young - and it's okay to invest in higher growth (riskier) stocks as part of your portfolio.



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


Oil is definitely "on sale"... and yes -- even if the USA becomes a net producer - as China's growth comes back on line and Russia's economy mends and European Union stops stalling and begins to grow again (just as the US has done) then DEMAND will / should pick back up.

Short term pain? Yeah most likely.... Longer term gain? I think so. Like anything - DO NOT OVER DO IT. That's gambling. Make INVESTMENTS - keep the percentages in line. People get screwed (screw themselves) when they gamble and lose the bet. NOBOBY KNOWS what the future has in store. So choose your bets wisely and keep them (keep yourselves) in check.

:lmao:

I read an article this morning which contained this little snippet as a paragraph...
I talk about this often. Investors damage themselves - the market just moves up and down like waves on the ocean... It's when the investor doesn't understand what they own or have invested in names where their expectations are on the gambling side vs investing - that's when the panic sets in...

I've also taught myself to look at my finances as a WHOLE. I might be down in one or two or three investments - but if as a total I'm up - and I know for a fact that I'll never have every single investment in the green - I'm okay with it.




Any market segment can have some sort of event that even if unjustified fundamentally can still do permanent portfolio damage to the investor whose panic threshold is breached. This is why diversification and emotional control are both so important to long term investing success.

Oil
 

Here's something to watch out for -- or at least to be thinking about regarding the big OIL price decline. I have a bunch of money invested in oil and oil pipes etc and these investments have paid a higher than normal dividend. Dividends can typically build a "floor" in a share price because as the share price drops -- the dividend percentage payout increases -- investors searching for YIELD are then attracted to the shares (remember the market is about buyers and sellers - period).

BUT --- ALWAYS THE BIG BUTT -- At some point if a company is losing money they can and will CUT the dividend!! When they do that - then the price drops yet again.

The reason I say this now is because I don't want you to get caught up in trying to catch a falling knife. It's a mental game - where you've been in a great up market - everything you've touched has been good... and all of a sudden you're seeing companies share prices dropping and the yield rises - and you're like a moth to a flame. Have patience! None of us know what's going to happen with oil --- we have a new metric in place with the US production numbers rising dramatically... When there's too much of something - the price goes on sale... how much is too much? We don't really know... We don't really know what it costs certain oil producers to produce... We're not experts - we're just investors.... So WAIT until this settles out. I'm not selling what I had -- I've trimmed some to balance up and make other more diversified investments going into the end of the year. In other words I'm not panicking. We'll have plenty of time to sit back and let someone else battle it out - and then we can step in when the picture is clearer.



In the market this is called a VALUE TRAP. Where the value suddenly looks so enticing... but I'd still prefer to buy stuff that is on the upswing over dropping. Let the experts try to pick the bottom. They've got way more money than we have.

I just sat down and did my updates to see how I'm doing. I'm ok with the numbers I'm seeing overall. My oil stocks are in the toilet and MCD wasn't looking so hot. I was expecting my returns to be lower than they are. We'll see what I do since it's quickly becoming time to max my Roth out again, but it was nice reality check to see that even with some big numbers in the red, I'm doing alright overall.

What's funny to me is my boring, old stocks like KMB, CLX, and JNJ are killing it. Guess I got lucky on when I got into them because I'm seeing mainly CG gains from them.

Oh, something else that was nice to see. My one oil stock was/is a gamble. I wanted it for the low entry price and good dividend. It's 67% down. I intend to hold on for the ride because all indications are it will recover eventually. Time will tell of course. However, even if I lose it all, my overall returns will be fine. Before, my attitude was meh I might lose it. Now, I'm Meh whatever knowing that I'm fine even without it. Only gamble with what you can afford to completely lose.

I am fortunate my company disburses SEP IRA checks each year. Each year I would make all my stock purchases in a single day. This year, if for no other reason than to practice 'scaling in' I plan to buy over a 6 month period, having some money on the sidelines for a while. The impending rate-rise seems to loom over the market, so I would like to have some cash ready when the market reacts.

The last two years, I have put my money into my Roth very early in January so it can start earning money. Both years the market went down right after. I think I'm going to wait a couple weeks with some of the stocks and see what happens this year. I'll have it all in by the end of January though.

This is the type of news I was referring to in my earlier post about OIL companies cutting dividends... So even if the share price right now looks like a bargain - they could fall further when the dividend payout doesn't provide support like it can and does many times.




Linn Energy LLC (LINE:US), the oil and natural gas partnership that’s lost almost 70 percent of its value in six months, cut its investor payout and production budget by more than half amid a rout in crude prices.

The company and its affiliate LinnCo. LLC will lower the annual payout by 57 percent to $1.25 a share or unit, Houston-based Linn said in a statement today. Production spending will drop 53 percent from last year, to $730 million. Internal cash is expected to cover both, Linn said.

Greg, wondering if you can simply explain a master limited partnership (MLP). They seem to be a discount (falling), as is the entire oil/gas market, but how do these differ from a stock such as KMI? Is it an alternative tool or how does it complement a dividend investing strategy? Just curious on your thoughts as I feel I am over-analyzing the tool.

I have looked at: Alerian MLP (AMLP) or Kayne Anderson (KYN)

Master Limited Partnerships (MLP's) "dividend" is actually structured as a "return of capital" rather than a dividend or interest. Therefore the taxes on the "dividend" which is really a return of your capital is treated differently ---- UNTIL YOU SELL!! Of course this is over simplified...

90% of the income of an MLP by definition must be derived from REAL ESTATE - or NATURAL RESOURCES or COMMODITIES. Thus there is no "bank" MLP etc.


The two you mentioned are not themselves MLP's but rather ETF's (exchange traded funds) that INVEST in MLPS to drive their own income and thus declare a dividend to the shareholders.


Of the two mentioned - I'd personally invest in KYN (Kayne Anderson) over Alerian (neither of these are actually MLP's - they derive their income from MLP's).

It's important to note AND UNDERSTAND an MLP (where you are not a shareholder but rather - you are a PARTNER) versus being a STOCKHOLDER in a publicly traded company... So I'd direct anyone interested in these (MLP'S) to go here and make sure you "get it".



http://www.naptp.org/PTP101/Print/Ba...Principles.pdf

SO --- many of you guys have now been invested for a year or more.

What I'd love to ask you to do is to review your FEELINGS about being invested and more importantly.... HOW MANY OF YOU WOULD HAVE BEEN FREAKING OUT with the market this last week? How many of you would have panicked and punched the SELL button? Versus - sitting back and saying - Hmmmmmmmm I see some stuff to buy.


Interesting to review your mental status and see what you have or haven't learned with time.

I know this is a little off track, but consider it company research. My step dad just sent me this video of the Tesla factory. Talk about cutting edge technology and cubic bucks spent on the factory. I was impressed.

https://www.youtube.com/embed/8_lfxPI5ObM?rel=0

I've said just recently how much different I look at the market and my investments now as compared to in the past...thanks mainly to this thread.

The main difference for me is things are scaled way down with only a handful of really stable companies in my portfolio. This lets me be clearer with things going on, keep a closer eye on things, and more importantly the quality companies in my portfolio do not take the wild up and down swings with the DOW that the investments I held before used to take. This is comforting and exciting to me. I do look for down spots to invest more as I'm still less than a third reinvested, thankfully though, all of my companies are still up over where I originally bought them starting early last year. XOM is toeing the line but with dividends is still in the green.

Many thanks to Greg Weld and the rest of you touting this thread over the years, it has made a difference in my life and many others I'm certain.

The biggest difference for me is taking on more responsibility for my retirement. I had a little to much faith in my buddy which is my advisor and that's a poor excuse. I've analyzed all those moves and made adjustments and like the self managed stocks as part of the pot.

oil stuff and ATT has me feeling uneasy, but the others arent too bad. I guess that means I picked well

Unfortunately I lost my job right before Christmas, so no more investing for the time being.

I did get my 401k rolled over and bought some Conoco to bring down my cost basis on that one, actually its the first time I have used the limit function. I put it like 1.50 less than it was trading in the morning and amazingly (or not) it filled later in the day.