So here's what I was saying about "THE FUTURE" as it pertains to a companies quarterly reports.... and these are - to me - far more important than what they did "this quarter". Because I'm an INVESTOR I want to have a feel for how my dividend is going to be paid going forward... that's what I'm buying - that dividend (earnings) stream...

So HALIBURTON comes out and says this quarter was good - they beat by a penny -- but then say - but going forward we may be impacted because of blah blah blah... Some of that talk is CYA - but some of it is right on the money because they are seeing something they don't like - so expect HAL to open down today and maybe trend down going forward


Here's a cut and paste...


Halliburton Co, the world's second-largest oilfield services company, posted a higher-than-expected quarterly profit and said its revenues would grow faster than oil and gas companies would drill this year.

Still, the company said its costs were rising, and that the industry shift away from dry gas and toward oil and natural gas liquids resources would hit its first-quarter earnings.

"We believe that reduced productivity and increased costs resulting from this relocation will be a short-term disruption for us and that the impact we saw in the fourth quarter will continue into 2012," Chairman and Chief Executive Dave Lesar said in a statement.

HAL down 3.95% in the first five minutes.........

So let's just continue the "102" version of this thread....

Here's why EARNINGS are important -- but those FORWARD looking statements are even MORE IMPORTANT....

Let's continue to use Halliburton as todays example....

They beat on the earnings number - but made that caveat that going forward earnings might be impacted negatively...

When you couple this with a 1.02% dividend... so you don't have that nice "pay me while I wait for things to turn around"... "support level"... suddenly there's more sellers than buyers and the stock price declines.

IF --- it paid a 5% dividend - my guess is the stock would have hardly budged... They didn't say the business stunk - they just said it may have some impact yet they still managed to beat the earnings estimate - so it couldn't be "that bad"... But this is a stock that NEEDS that stock price GROWTH component - and if that's not there to offset that low dividend - then you get what you're seeing today... a decline.

Now -- if you're listening to the talking heads -- then you'll hear the words "it'll need some kind of CATALYST going forward". What they're saying is in layman's terms -- it will need a big business turnaround - or some big new oil field discovery or similar to get it going UP again. There will have to be some big news that will point to some event to get the GROWTH back in the stock price.

Since we're in "earnings season" --- I thought I might go out on a limb here and try to keep this thread interesting and make it a little "FUN" for you guys (at my expense - of course).


We own 160,000+ shares of EMC..... Okay - get off your calculators - and I don't own it at ZERO - so no - the math is not going to give you much indication of my profit or loss... for all you know - I have a loss in the stock (the good news is I DO NOT) :lol:

EMC reports earnings BEFORE the bell tomorrow (23rd).... let's see what happens to me but let's also use this example for a little "lesson". The lesson is the "law of large numbers".

What happens when you have positions like this -- regardless of the size -- size is relative - and it is why you need to be DIVERSIFIED... THIS IS THE "the law of large numbers". The number of shares multiplied by the share gain or loss - turns into "a large number".

So for INVESTING 102 --- I preach buying DOLLAR AMOUNTS rather than share amounts... because it is easier for you to see and keep track of - it's apparent when $1000 goes to $1250 or down to $900... But what happens is, if you have 500 shares of one stock and only 50 of another - that 500 shares becomes YOUR law of large numbers... a .50 swing gets multiplied by the 500 and becomes a real gorilla (up or down) So you need to be AWARE of that.

Because of prices (share cost) it's almost impossible to balance out an account in the number of shares... and maintain that 5% rule and have diversity. One stock costs $10 so a $500 investment gets you a bunch another stock is $50 a share will get you far less for the same $500 --- but a MOVE in the $10 shares can have MORE EFFECT on your account!

I hope this makes sense.


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

WARNING HERE -- I am not allowed to trade EMC because we are considered "INSIDERS" -- as such I have no knowledge to share with ANYONE whether it will be good bad or indifferent...

BTW --- I think this thread holds interest because it's like our car builds -- we all get to live AND LEARN vicariously watching these cars go together step by step. It's so much more fun than just going to a car show and seeing a completed car. SO it is in that light that I've shared way too much personal info -- but I think it will HELP people more - and they'll be more interested and learn more when done this way. This is why I've shared my thought process more than just Do this don't do that. It's the thought process that is what you need to "get into". It's like fab work on a car - no two are alike - and it takes seeing someone come up with a solution that might kick up a solution for your own build... something "similar" but twisted to meet your needs.

Hope that makes sense.... :cheers:

Greg, Keep it up.. Many more people should be in charge of their future's and Present..

Making Money and keeping it, and growing it, are not just going to happen unless you work at it...

The wolf is always at the door...Wall Street...The Government, Heck, envious family..

So keep it up.. Again I am still figuring it out, But I know a few things.

I am for sure in the game because no ticket, no laundry, so you got to be doing something..

And Dividends are always coming in...One of my wife's favorite words.. Dividends..

Also We talk about money on the good days, and the bad days we know will pass, so we don't sweat them..

I am way longer term that the daily Noise..:lateral: :cheers: :woot:

More great info Greg...thanks for doing what your doing. I'm sure there are many guys reading this and learning, not necessarily posting.

I just read an interesting article on the long term outlook on TGT. Any thought there? Seems like it fits our requirements...Not great growth over the last 10 years but they have been increasing their dividend along the way.

My daughter was given a single share of Disney when she was born (1988). It has split twice (4 to 1 and later 3 to 1) so she now has 12 shares worth about $470. Getting dividends yearly, but very low (1.5% or so). However, that stock was $4.67 when we got it, and is now 12 stocks at $39.31 each. That's a lot of growth I think for 24 years.

Trying to get her interested in investing a portion of her income. My son will for sure, and he's starting a new job when he graduates college that will pay him enough to really invest.

I've always been a tad skeptical of these earnings reports that come out. Now, they do have to follow a set of rules being public companies and all but they are still afforded some flexibility in how they account for various things. So, in my opinion these reports don't tell the WHOLE story many times.

I do think it's wise to watch the earnings reports for companies you are invested in but Greg makes a key point in paying attention to any dividend they pay out. If they aren't bringing the money in, they sure can't be paying it out. It's a lot harder in my opnion to fudge anything here.

Still, I don't think I would pay that much attention to a low earnings report if the company is in a growing or strong industry and there are many other reasons to like them. If anything, I would use a weak period to buy more, as has been said already.

I'm thinking about gambling a little on Bank of America (BAC). It's been very low for a while and like Buffet says, there's no way to know WHEN a stock will rebound, but I can't see them going away totally. Plus, when everyone is fearful of something is the best time to buy it.

We all know you can never time the bottom, and sometimes when you buy into something you know will turn around, you take a hit at first as it bounces, but in the end, most of mine have gone up to where I thought they would go. It just takes the courage to buy at those times..

A few of my good performers fell more when i got into them, but they all did go back up.. The first few days were not good.. but great since then..:lateral: :cheers: :woot:

If you can afford to buy and hold... I agree with you. I think we can agree that the likelihood of BAC going away is pretty much NADA.... and it's certainly LOW (historically).

Those that bought FORD @ $2 or $3 a share certainly have been rewarded!

But also don't forget that if you were a GM shareholder -- you got ZIP -- So size and the "they've been around forever" statement has been shown to not hold up so well...:lol: I mean - Who'd a thunk it!?!?

Just make sure when you put in SPECULATIVE $$$ -- that that is exactly what that money is for... because regardless of how low a stock has gone - it can always go lower! So you'll have to be patient and it should only be money you can truly afford to loose. Everyone should have a fund for buys like this.... provided they account for all the above and already have good safe money - and cash that they can get should they need some. That way you don't get frightened and sell out..... 'cause the little wall street dude will double it a week after you sell.

Did I ever mention how much I hate that little guy?? :yes:

There's only one way to do this -- and that's a bit of homework. Remember we want to own BEST OF BREED.... and to find that - - we need to have some comparative basis. So I like to look at Good chart - growth - dividend - Total return - and I use a 5 year comparison period just for ease of "what they're doing now". I don't want to be recommending or not recommending individual stocks --- I want YOU GUYS to be able to do this homework -- and my job is to give you what I look for (neither right or wrong - just my way).... but let's look at this stock and compare it to it's peers. It's a BIG BOX RETAILER (Consumer discretionary) so let's see how it stacks up:

Target (TGT) - 5 yr grwth DWN 18.18% - Div 2.39% - T/R 5 yr - DWN 13.2%

Sears (SHLD) - 5 yr DWN 73% - Div 0% - T/R 5 yr - DWN 71%

Macys (M) - 5 yr DWN 15.65% - Div 2.26% - T/R 5 yr DWN 4.2%

JC Pennys (JCP) - 5 yr DWN 57% - Div 2.28% - T/R 5 yr DWN 52%

Let's toss in another couple of big box stores - but they really don't sell clothing and pots and pans etc

Home Depot (HD) - 5 yr UP 10% - Div 2.61% - T/R 5 yr UP 28.5%

Best Buy (BBY) - 5 yr DWN 49% - Div 2.56 - T/R 5 yr DWN 45%

Lowes (LOW) - 5 yr DWN 22% - Div 2.11% - T/R 5 yr DWN 14.7%



So -- DUDE <Spicoli style> IF you can find one of those that you want to own... go for it.... but I'm going to wait for better signs that the economy is turning the corner - THEN while I might not buy at the very bottom - I'll catch some gains on the way up... but the DIVIDEND doesn't support my criteria of buying and holding waiting for things to get better... because there's no growth in this group/sector.

NOW ++++++ I didn't go compare every big box consumer discretionary stock! I just took these 'cause everyone knows them and it was an easy comparison for our purposes.

I forgot a couple big box stores that could have been included in the comps:

Costco (COST) - 5 yr grwth 44.96% - Div 1.18% - T/R 5yr 52.1%


Wal Mart (WMT) - 5 yr grwth 29% - Div 2.4% - T/R 5 yr 40.7%


I think - after looking at these numbers -- COSTCO would be the one I'd pick as Best of Breed... but that 1.18% dividend is pretty sad - but it is countered by a pretty decent growth rate.

So just FYI --- While I hold a sizable stake in McDonalds -- I added a 1000 shares today on the sell off.... and here's why --- and this is the "investing 102" part not about "ME" -- I like a company that is growing top line and same store sales #'s. While it's only down a couple bucks that's a "let me in" opening if you want to add to a position. Doesn't mean I'm right... but I like the shares long term so I don't mind if it's down temporarily.

This is the "averaging" or "scaling" in... my costs are far lower than where it's trading - so even if I pay up here - it barely nudges my total holdings cost basis.

So lets say you held 50 shares at $80 and you bought 10 more at $100 -- your overall cost is $83 a share...

Many people get caught up in EACH stock having to be a performer -- and like the above example -- I want my OVERALL account to be positive - there's always going to be some outsized gains - some mediocre - and some losers but overall I want to be up or even (in a bad market)...

Forgive me for asking but how do you figure out the cost in your McDonalds example when you said those extra shares actually cost you $83 instead of $100.

$80x50 shares=$4000
$100x10 shares= $1000
$5000 total investment / 60 shares = $83.33 average purchase price per share

Got it. I knew it would be a simple formula for some reason I just kept making it more complicated than necessary over thinking it.

I had really taken note of what you said, Greg about mutual funds and why you don't see them as a good choice over simply choosing the "best of breed" stocks.

So I looked at the mutual funds that I was in...funds that Schwab recommended as "diversified portfolio quick picks" a couple years ago. I had 8 funds, and when I plot them on a 10 year comparison vs. the Dow, you can see that all of them were within a few % of each other of the long term. :willy: Some are slightly up, some are slightly down, but I can see that with these large funds, you can never break away from what the Dow is doing for you...not putting my money to work the way it could be.

I'm starting to be a believer that mutual funds can really hold back growth potential. Like Greg is saying, funds have the best of breed stocks in them...and that's what you see sprinkled among the Top 10 or 25 holdings; but those funds are bloated with hundreds of other companies that drag it down, averaging out the gains.

I used to think of investing mutual funds as less risky than buying individual stocks....now I think a good argument can be made for greater risk in mutual funds over simply going with fifteen or twenty of these "steady eddies." It is pretty easy to see that the "best of breed" stocks will beat the Dow over the long haul.

To walk the walk, I sold much of the diversity of my funds and consolidated down to a couple of funds that I liked. And I used the money to double down on my "best of breed" stocks; the Lateral-G mutual fund, if you will. (As a thank you, the G can stand for Greg :) ).

Throwing this out there, I have some money into clothing retail: Guess (GES) and Ralph Lauren (RL). RL has done a lot better then GES for me so far, but I am seeing that with the momentum behind the rising standards of living in China and India, that they will be commanding more luxury goods, among these are clothes. I have some into Starbucks (SBUX) for the same reason.

In that case Jose -- you're trying to be a broker or analyst.... they always try to make it complicated. Keeping you confused or in the dark is how they make YOU think THEY are smart or something. They're not.
:rofl:


Whether or not you average "IN" or "OUT" it always usually (note that caveat) pays to do the math to see what you're really doing and how it will affect your portfolio. Most of the time you'll see that buying in as a stock RISES - doesn't really raise your cost basis all that much.

Schwab allow you to check a choice when you SELL -- You must check these options BEFORE you sell -- and I went over this before in the thread -- that allows you to SELL the most expensive shares FIRST -- or in other words the best tax managed sales - in order to keep your capital gains as low as possible. Many people don't know this little fact....

So let's say you did that McDonalds trade -- you have the 60 total shares - but the last 10 cost you $100 a share -- and now they're trading at $120.... and you want to balance your account out.... you want to sell the $100 shares FIRST and only have a $20 per share taxable event --- you don't want to sell the $80 shares and have a $40 per share taxable event. Particularly if you plan to hold "some" shares in the name.

We're not trading -- and I'm assuming that magic ONE YEAR AND A DAY holding period for Long Term Capital Gains... but it pays to manage your GAINS and reduce your taxes. What the heck -- why pay 15% on 40 when you can pay 15% on 20!

We are - after all -- TRYING to manage our money!! Right?

:cheers:

That's a very good tip, pw. Thanks! Impressive that BKE is all of those names. I don't wear any of those brands, but if you go to the clubs in S.F. it looks like a BKE convention. :lol:

As far as I know, BKE doesn't own those companies - they just retail those brands along side their own goods....

You are correct, I should have stated they retail/market those brands. :)

I would take down that post lest someone else come along and read it and be mis-informed....

btw - love this thread! :thumbsup:

Thanks! Me too!

Good catch on the BKE post.... we don't want people going all over the place and buying stuff based on erroneous info!

I've been working on the Camaro all day so didn't do any research personally on that "name" --- and had not heard of it before.

:thumbsup:

You guys do the math on my EMC holdings?? :D Paid for the Bubbletop today.

EEEEEEEEEEEHHHHHHHHHAAAAAAAAAA


Better lucky than smart has always been my motto! :lol: :woot:

well aint that a bitch!

yeah... and apple paid for the next one - not a bad tuesday. (I know - they're only up 10% overnight but with that cash on hand and that cash flow it wouldn't surprise me to see a div and a special div in the next 6 months). And you still have the upside that a div would give if and when they do announce it. I hate to buy at a peak but I might have to tomorrow. We had a nice bump today on a positive PR in an otherwise down market but it's a lot of hard work to get the message out.

not sure apple will ever pay a div. Ever since Steve took the company over they haven't made any donations to any charity. A company of that size and with that much wealth no Philanthropy.

I guess I don't understand how a dividend relates to charity...

They aren't sharing the money. So what makes you think they are going to share profits with stock holder now? They have been cash wealthy for years.
I could be wrong but I wouldn't buy into it now in the hopes they are going to pay a div someday.

I agree with you Bob --- WTF they only have almost 100 BILLION dollars in cash... That money belongs to the shareholders... and even a billion given away wouldn't hurt anything.

However... I've been very very happy with the money they've made me AND their products. So I guess I shouldn't complain.

Something to consider while you are researching investments, is to listen to the company's earnings call. These qtrly conference calls can give you an idea into how the management of a company thinks, may give you a read on what the company expects in the coming qtr (sometimes year), and then there is typically a Q&A session with major shareholders and analyst. They are usually about an hour long and worth it when considering an investment. Most companies have an investor section on their website where you can listen to a playback of the earnings call, review the company's press releases and also take a look at the SEC filings.

Since you guys brought up Apple, here is the link:
www.apple.com/investor

Click on the audio webcast to listen to today's conference call. :cheers:

This got me to laughing -- and not at you -- but just when I thought about it with regards to myself.... I've been doing investing since the mid 70's - I've been retired for 21 years (which means I have a LOT of time) and I've NEVER listened to an earnings call yet.

Here's the reason for that.... And again - this is only as it relates to Investing 102. By the time you've heard the earnings call - the cat is already out of the bag - good or bad. When you are really INVESTED or you're about to INVEST - you have plenty of time to gather information and even better - you can get a quick synposis of what they did, and what they're saying going forward, on about 10 gazillion financial websites.

I was using "earnings season" more as a "okay NEWBS -- pay attention this week and next and see how this can affect the market in general"... rather than a drill down on every nuance of a particular companies performance. I was using this "heads up" more like a building block... To build on the other things - good chart and dividend and blah blah blah... So it's like - now lets add some terms you hear and what they mean to the market.

A bunch of negative earnings reports and the market can turn south (general trend) until we start to hear "better" news --- a bunch of the biggies reporting good news and the market can be upbeat. But for our purposes I don't think we need to be trying to find reasons to buy or sell because if you start doing that - you'll lose money. You'll never get it right. You might once or twice - but in general you won't. Leave that to the "traders".

I have two friends that are real life traders - live in NYC and work for a couple of the big houses. They trade zillions of shares minute by minute. That's their job - and they're looking for PENNIES per share. They watch the market minute by minute and only trade in 4 or 5 names. They're looking for the trend in the stock by the HOUR. They don't care how the market is moving they only care that the market IS moving and they place their bets accordingly. They'll trade 20,000 shares 10 times in an hour on one company if they can make a nickel per share. They eat Prilosec for lunch.

Great Points.. That is why I come to this thread to Learn.:cheers: :thumbsup:

So, I only started to pay attention to my money in early 2001, mainly because I did not have any...Why ?? Well I answered that question , and Started Saving what I earned.

As usual, Greg is on the money because I tried the Timing thing as far as getting in, and getting out, and that did not work out so well.

They are so far ahead of you, it is HFT, how do you beat that ?

Greg, your motto is you would rather be Lucky than smart ? Dude, you are first, Smart, and second, Luck is the meeting of preparation, and opportunity...Your Luck is your Smarts...

I am learning to be smart.. Lucky ??? Oh man, in 2006 I saw the writing on the wall, and in 2008, i could not believe that this opportunity that I was told, if it happens, Buy, Buy, Buy..

So we sold an expensive Home at the Top, Invested near the bottom, and bought a less expensive McMansion ( REO), at the bottom..

I was quoting I think Rothchild? back then saying "when there is blood in the streets, it is time to buy".. But I was and am a Rookie..

My Wife thought I was out of my mind....I said strap in..And we have never looked back.

To my Wife's Credit, she was all in...Love my girl...She got her home remodeled for that...

But Investing102 is the nuts and bolts... A lot of info is available out there.

I told my Wife that I am getting access to info, that in the past, only bankers and Big Investors had access to..

What project did Apple fund for you Today ???:lateral: :woot: :woot:

Greg, what do you think about the market if Obummer gets re elected.

Lock this thread NOW!!........so I can catch up.....:willy:

That becomes a political quagmire that I don't want to enter into.

I will comment re: Taxes vs Investing -- the whole have and have not discussion....

Change the tax rates on investments (i.e. tax dividends or LTCG's) from 15% to ordinary income tax rates --- and all you'll do is see money flood OUT of stocks and into TAX FREE MUNI's.... which carry a ZERO tax rate. If I see that is what's coming --- I'll be 100% out of the stock market. Ya know who gets crushed in the stampede? The little guy... the retiree... the Mutual fund holders (working people)... ME -- I'll have a little less income (maybe 5% less overall) and a lot less taxes - I'll pay ZERO.

Rich people have OPTIONS.... in other words.... they will make choices because they HAVE choices.

The POLITICAL CORRECTNESS of jumping on the latest greatest "talking point" to get elected or stay elected NEVER EVER had anything to do with what should be done or should be done RIGHT.

Equality says flat tax - no deductions - no tax free - no dividend - no offshore bs -- just everybody pay a % --- indexed UP for various income levels. Whatever that looks like. Lowest income levels should pay ZERO... pick some other level to say 300K and that's 15 or 20% - after that 25% or whatever.

The tax code needs to be fixed --- but they'll fix it by making it MORE COMPLICATED -- and my people will find a way to beat it. That's what they get paid to do. It's a chess game -- take the chess game away and you'll have a better system.

Too hard to answer the question without speculating on the run away Spending, and the Federal Reserve, and the devaluing of the dollar.

Will Obama ramp up what he has been doing for the last few years ??
Just in case he loses, he still pushes through more spending ?? I think so..
I think that Commodities will do well, and there may be another drop or correction in stocks ,that will be a time to add positions buying..

But thanks for letting me give my point of view.. No politics here...I just try to play over a long period of time, what I see the opportunities are .. :lateral: :cheers: :woot:

Not sure that is Investing 102 ... Kind of Speculation 102.. But I am not sure.

Ok this isn't Investing 102 totally but I was watching Jim Cramer last night (which I never do) and he was talking about a couple potential hot areas this year. Two of them I had already thought had potential, one being cloud computing for which he mentioned a company I've never heard of, VM Ware, and the other natural gas which he suggested Kinder-Morgan for.

I don't know if any of you have any experience with cloud computing but it seems to me like that's where data storage is going. If you've ever heard of Dropbox, Evernote, SugarSync, iCloud you know what I'm talking about. I use Evernote and it's extremely handy to have your info on your phone and your computer without having to do anything. The syncing possibilities for your data are almost endless.

I haven't looked into it yet but VM Ware is owned by EMC but operates as a separate software subsidiary. I'm certainly not recommending it but hoping to maybe spur a little discussion about it.

On natural gas Cramer said it's selling here for $2.50 or so but sells overseas for $14-16. This is where Kinder-Morgan comes in, they have and operate the pipelines that move this stuff around. With all the talk about big diesel going to natural gas, it looks like an area of growth to me. Obama is speaking about this soon in Vegas at a UPS facility that runs all it's trucks on natural gas.

Greg this is where you come in, being a big Kinder-Morgan fan. They have 3 different stocks, KMR, KMP, and KMI one of which according to Cramer is much more tax advantageous than the others. Since you are a fan of them, maybe you could elaborate on the differences among the 3 for me and the rest of the readers. :)

I would love to hear any other thoughts on the cloud computing thing, I know this may be more of the speculative portion of investing but it feels the same to me as it did a few years ago when I was wondering why everyone needs a cell phone.