Read a little bit of this thread a long time ago. Came back to it recently and really started reading it. Wow what an incredible amount of info in this thread. Thanks for all the work you guys are putting into this. Greg specifically, you have a great way of explaining your points and reasoning. I'm now going back and reviewing the few stocks I do own. Some I'm dumping and looking at new ones. Now I feel much more informed on the whys and hows on picking stocks.

Thanks
Mike

Welcome aboard Mike! Much of the info it repeated - as new people come and go and ask similar questions etc....

The whole thread is mostly just about debunking the myths and trying to make investing "simple" - because at it's basics, it is.

They're quite the name in sports, always have been. Always used their gear. I need to research a little more, but now with my son playing sports I'm back into the sports world more. Thanks for bringing this one up!

Welcome Mike! Let us know if we can help ya out.

I was thinking the same thing Greg but then heard an interesting opinion on the radio today. It was a CNBC talking head (I think it was Kevin O'Leary) and his point was that all that cash for the buyback would far benefit the shareholders more if it was paid out in dividends. It kind of made sense in that a buyback lowers the number of outstanding shares thereby HOPEFULLY increasing the value of each one while a dividend is getting actual cash in the mail. He said he would rather get a check than simply a chance that his shares might become worth more. He also said that a buy back benefits the insiders of the company more than a dividend increase and somehow helps them in the options market too (that one is over my head). It is a good point if you think about it but what are your thoughts on it Greg?

These are always debated points for the use of company cash. Whether or not it's better to expand the business rather that buy back shares.... or pay out a special dividend... or to try to create value in some other way. I don't know that any of us will ever know which one is "the best way". I don't own Nike (NKE) because of the small dividend... So perhaps if they'd raise the dividend to a point (what number? 3 or 4%) that it would make the shares more attractive to people like me... Would that create demand for the shares thus raising the price? As a dividend seeker --- yeah --- that would be my choice.

BUT --- always the big but..... if you look at TOTAL RETURN as a guide, over a long period of time. Then it's different. Because Nike has a terrific TR - and that is the truest test of making money on your money.

1 year TR -- 37% -- 3 year 188% -- 5 year 230%


So yes --- a lousy 1% divided -- but I wish I'd have bought a couple hundred thousand worth!!! LOL

Ferrari (RACE)
 

On the road to Laguna Seca this morning (day 3)... and thought I'd check the market on Ferrari's IPO (RACE). Gee... who'd a thunk it.... it's DOWN almost 16% from it's market debut.

The IPO market just hasn't be rewarding. Seems the market isn't playing along - and actually wants to invest in companies that make money (earnings). So RACE - just like every other listed company - will have to report growing earnings/revenues/sales etc. Until then - it's just another pretty face.

KMI...on Sale?
 

I ended up in KMI as a result of being a KMP share holder...and those of you who are Kinder Morgan holders know what has been going on over the past 8 months or so...a 50%+ drop in share price.

At this point I don't see a lot of reason to pull back at all, and I have been considering adding to my position since the stock is "on sale" these days and it would be nice to average down my price per share. I'm far from an expert though, and I'm curious if those of you with more experience see any reasons to be nervous (like the rest of the market seems to be with KMI!)?

I'm not the guy with more experience, but I'm curious to hear other's thoughts as well.

Of the seven positions I own two are oil, one being KMI. I started buying before I understood about keeping each position to 5%. I'm pretty far out of balance now which makes me hesitant to add more, but it would be a significant reduction in price.

I made some comments on page 522 of this thread about KMI. I still think there are reasons to be nervous about KMI. Currently, right or wrong, there is a lot of uncertainty about the company. One concern is their current debt level. Related to that is the fact that their credit rating could potentially be downgraded. If that happens, their cost of borrowing will go up significantly and their ability to continue to grow could be impacted. Another area of concern is the ability to continue to pay the dividend.

KMI did come out today to reiterate their ability to increase the dividend, but that did nothing for the stock price. I think it initially went down even further when that announcement was made.

I don't think anyone really knows what is going to happen. Some believe the price is now near a bottom, but others think it could go much lower. My feeling is that with so much uncertainty, there is a lot of risk and I would only purchase KMI with money I had to lose.

There is a lot of information on KMI on the Seeking Alpha website if you would like to read different perspectives.

Wow I just looked at my KMI damn I never lost so much money before.
I wonder if we are all going to ride it down to a penny stock?

Here's hoping
it turns around in a year or two.

In full disclosure, I own 25,000 shares of KMI -- and currently have a sizable paper loss on this holding.... almost a half million dollar "loss" (you don't lose anything until you sell - I'm not selling).

There are "rules" that we've discussed in Investing 102 -- one of which comes to mind - and has been restated many many times i.e., "Don't try to catch a falling knife".

With oil in free fall - we don't know where these oil and oil related shares will go. Currently we're in a market where anything remotely related is "toxic". If you're a holder - this is known as "pain". These are painful holdings right now. This is why we limit holdings to 5%.... so they're only somewhat damaging even if they went to zero... This is why I preach, at the very least - collecting a dividend while you wait for the possibility that the share price recovers.

I intend to buy more KMI to average my cost basis down..... but I'll do that a little bit (chunks) at a time because I fully expect more pain before a gain. The baby is being thrown out with the bathwater right now. I own a company (APU) that distributes LPG.... and it's just getting hammered. Why? No particular reason except that it's oil related.

Think of this like what happened when the mortgage debacle hit the housing market. Good builder or bad - the builders got creamed - lumber suppliers got creamed - bricks got taken to the woodshed - roofing manufactures - plumbing suppliers.... you name it. The guys that made a ton of money on the recovery of the housing market were the guys that bought shares - bought houses - bought apartments - when nobody else wanted 'em.

We're in such interesting times in the world - as well as the equity (stock) markets. We have oil plunging worldwide. We have entire governments that have suddenly discovered their policies of dipping into the ever bottomless barrel to support their spending habits are problematical (to say the least)... We have China waking up to discover that they too - are mere mortals... And we have the FED attempting (perhaps) to raise rates.

NOW ADD ---- End of year (December) tax selling and re-positioning. Stocks that are down - tend go down more because people need to take some losses to cover some gains - might as well sell the biggest losers - causing what? More losses...

Some of these "losers" will rebound - as the cash that is taken in from the sales eventually gets redeployed - and the stocks that were sold become "bargains". Funny how that works isn't it?? In the since that - As the shares fall - at some point they become desirable because of price...

What's the point?? The point is to understand and try to make some sense out of it all.... and to prepare yourself to try to buy some of the bargains - if you're a long term investor. The key is to understand yourself and being able to handle the fact that some of what you buy might be still in for some pain and you're just "early" (catching a falling knife). This is why you don't buy a total position all at once. Now - that applies only if you can apply it. Obviously if you're buying 10 or 20 shares - at that level you just buy the whole position. But if you plan to buy 100 shares -- try just buying 50 -- and waiting. Buying the next 50 (or not) after you have a better overall view - and have tested your fortitude and thought process.

I'm personally sitting on a mountain of cash - double what I normally have at any given time - earning nothing - but waiting for the first quarter of 2016 before I even think about buying. There's just so many "events" that are colliding and at times - almost seem overwhelming. This doesn't mean I'm planning on doing nothing - it means I'm waiting for some more clarity and direction. I don't even care if I think the direction is more pain. If that's the case - I'll just buy fewer shares with each buy. I know that I'll never catch the bottom of anything - and I'll never catch the top of anything on the sell side. I'm okay with that. I'm not greedy - I just want to catch "some" of it. In the meantime I'll collect and spend the dividend which - to me - is far more important.

My KMI shares are down 46% and for whatever reason, I don't care. That doesn't mean I am not watching though.

That is my basic take - just to keep an eye on it and see where it goes. I did end up buying another small block, and have cash in reserves for when it (hopefully) finally turns the corner! I'm a little surprised that it has continued to drop...but it is the selling season!

Thanks to Greg and all for the feedback!

I just bought a few more shares of KMI, always try to add a few more shares when I like the company and it is below my original entry point. I'm in for the long haul and eventually they usually rise again. Only one I got killed on ever is Lehman Brothers, but made a killing on others in the big downturn.

x2 Jose. I'm not overly concerned yet either but I'm not ignoring the situation.

This really is interesting to watch. Gas is below $2 here in Atlanta. Never thought I would see that again.

My wife bought some KMI at $22.50... She's usually a good luck charm and I figured that would do the trick. :D

Strangely enough, I'm alright with my KMI and ETP being down 50% as well. I got caught in a similar situation in 2008-2009 with my high yield tax free muni bond funds. Their asset value got hammered because their insurers were tied to the mortgage defaults...when they really didn't have anything to do with the mortgage crisis at all.

Back then, I bailed from them at the bottom and went big into equities...and that paid off fantastically...but they were like 75% of my total portfolio. The two mentioned above are (or should say "were") just over 10% of my portfolio now.

I think (hope) this is just another case of Mr Market throwing out the baby with the bath water, mix in a little tax loss selling and bam...this is what you get.

I'll be keeping an eye on this one. I've been considering KMI for a long time to get a stake in the Oil/NG systems. Now might be a good time to stake a small claim of it.

There's the hammer...

Kinder Morgan whacks dividend by 75%
Dec 8 2015, 17:11 ET | About: Kinder Morgan, Inc. (KMI) | By: Carl Surran, SA

Kinder Morgan (NYSE:KMI) -7% AH after announcing a 75% cut in its 2016 quarterly dividend to $0.125/share ($0.50 annually) from the current $0.51, the company's first-ever dividend cut.

KMI says the move enables it to use a significant portion of its cash flow to fund the equity portion of its expansion capital requirements, eliminate any need to access the equity market for the foreseeable future, and maintain a solid investment grade credit rating."This is in the best long term interest of our shareholders,"

CEO Steven Kean tells WSJ. "It gives us the flexibility to fund our growth in other ways."The company will hold a guidance webcast tomorrow morning at 8:30 a.m.


It was already priced in, mostly anyway...I'm thinking the stock might just pick back up some steam now. Main complaint has been cash flow related, this stops that, right?

Kmi
 

Well that's not the kind of news ANY dividend investor wants to hear -- and my guess is that the cut was well telegraphed to their largest shareholders -- thus precipitating the large volume of selling over the last 30 days.

I would not expect KMI to hold their dividend at this low level because their game plan has always been to share the cash flow with the shareholders. So we take our lumps - the shares are already hammered - and you wait for oil to come back. When the happens is anyones guess.

Now you know why there are "rules" about limiting investments to 5% or so of your portfolio !!! This is classic. If you only hold 5% - it's just not that big of a deal. If it's 50% of your portfolio it is!

I'm kinda confused how this is a good thing for dividend investing. I get how this is a good thing for Growth for the stock but does this change anyone's opinion?

I'm so far up side down in my shares there is no reason to quit now. But is now a good time to think about buying back my cost basis.

No --- wait until we can see the light in this name. Otherwise it becomes gambling just based on "I own it so it will come back". We don't know that now. We can wait for a change of prices and we can ALWAYS buy more.

Separate response for a separate question:



5 years ago (or so) all the banks cut, or quit completely, paying any dividend. GM went completely broke... Ford quit paying a dividend. This happens from time to time when you have a complete breakdown in something beyond normal control. In this case - we have a world using less of a commodity - and we have foreign countries determined to put the USA oil production out of business. We have no control - nor do the companies swept up in the debacle.

GM is doing fine - Ford is doing fine - Banks have recovered and are now paying dividends. My point is - wait - and things will change.

The Saudis have a welfare state and depend on selling oil to prop up the government -- was a great article in the LA Times (I think, I read too much to remember where I saw it LOL) on it over the weekend, it was kind of tied into the shootings in San Bernardino and how the Saudis have now got a tiger by the tail in the Sunni Wahabi radicals, which is the state religion there.......

http://www.differencebetween.net/lan...ni-and-wahabi/

So now we have 3+ heads to the monster lol

An Article on the 8 best dividend stocks for this year

http://www.msn.com/en-us/money/savin...015/ss-BBncKK7

For now, my opinion of KMI is staying the same. Since I am long term, what should hopefully turn out to be a temporary cut in the dividend doesn't bother me. Their business is strong and on track for continued growth. They are still paying a good dividend, too. So to me, this isn't things aren't going well for the company. It's people upset that things aren't going as well as they want them to. We'll see if this continues to hold true in the coming quarters. If so, it may be a good time to be buying more shares.

I consider KMI as being in a "collateral damage" situation - one that nobody could foresee.... nor could prepare for. Oil and everything it touches is taboo for now. I just hope it's only 2 or 3 years. That's not very long. The housing debacle now seems light years ago...

Since this thread was started -- we lived in a market that pretty much just went UP day after day. I commented repeatedly during that period to have people remember what that all felt like.... It was SO EASY to just buy something and have it go up - making you feel like the smartest guy in the world.

The reason I reminded people about this - and the possible FED interest rate hikes - is because I've lived thru many periods such as we've been in the last 6 months to a year. Down - what I call "the death of a 1000 cuts".... markets just dripping away. You start to really question WTF you're doing.

This is where LONG TERM thinking comes into play! What's that look like? We have no friggin' idea.... but I'd ask you to take a look at any of your holdings longer term chart and start to see the DIPS instead of just the higher price... There's ZILLIONS of them!! But - when you smooth all of that out - the longer term is higher. Right now - everything SUCKS!

Be like me - don't be in a hurry to be buying right now. Just plug away - have your dividends reinvested. When you have extra money - don't be afraid to put it to work - but don't be a pig and try to buy a whole bunch of one thing (say "oil" just because you're 100% positive it's going to come back). Doing that will just bring more short term pain and have you reeling and thinking you're a lousy stock market investor. Just stay steady. Continue to buy when you're ready - continue to diversify - continue seeking dividends. You will be rewarded.

So yesterday a mutual fund company, Third Avenue Management announced it would not allow withdrawals from a high yield (junk) bond fund saying something like it could not find enough buyers for the assets in the fund which were needed to raise the cash to pay the investors who wanted out. They have not said when they will give investors their money. This is the first time I believe in history that a mutual fund has blocked withdrawals.This is going to motivate other investors in high yield debt investments to want their money I'm sure. I hope this one doesn't get out of hand.

Today Stone Capital Partners, a hedge fund and bound by different rules than a mutual fund, also suspended withdrawals in its credit hedge funds. They also didn't say when investors' money will be returned, which is only going to make more of them want their money. A hedge fund hasn't done this since the financial crisis.

And off to the races we go.......possibly. Monday is going to be interesting for sure.

Yep. Have been following the thread for a while, I have not looked at my 401k/brokerage account in a month so I guess I will take a peak. I am not GW, I do not make that kind of cash and do not have millions socked away. I am just a guy who works too much and who has to watch the household budget and hopefully will get some time and money to do some work on the car again soon.

OK, so my progress to date assessment:

BP is my solo oil stock... I have "lost" 18% since I bought it a year ago, since it is about 4% of my holdings, no big deal. Besides at the current price the dividend rate (assuming they do not cut it) is about 7.5%.

I have been following the general concept of "Dogs of the Dow" for about 5 years now. I just apply it to the market as a whole, not just the DOW, and I typically do not sell as they suggest to rebalance, I just add new stuff as more money trickles into the 401k. I have sold a few that I thought were too volatile, or were at a high point and seemed overvalued to me. But, for the most part it has been buy, hold, and re-invest the dividends. My personal threshold is I won't look at a stock that pays under 3%. I generally look for stocks with a long history of dividend payments and growth (like PG for example) that usually pay just over 3% but for some unexplained reason are paying 4% (or close to that, depends on the company). Sometimes the market moves a group of stocks and a good stock drops because its neighbors do, not because it really deserves to. Then, over the course of a year it "corrects" by raising its price until the dividend is back to 3. Maybe I am being to simplistic, but it has worked for me so far. I also do not invest in products or companies I do not understand, just not comfortable buying them.

Since I started this strategy in 2011 with my E-Trade IRA account and my work "401k Brokerage account" the total balance of my retirement accounts has literally doubled in value. I did not buy any superstar stocks or anything exotic. Here is a list of my core group, the who's who of boring: KMB, PG, BP, CAG, GE, JNJ, MO, MRK, NUE, VZ, WM. My big loser along the way was BAC, just cut my losses on that one. My biggest "short term" gainer was owning INTC for about a year and selling it. Other than that, most of these stocks I have owned since 2011 and have made other small purchases along the way as money trickled in from my 401k contributions. About 15% of the value increase was contributions, the rest was growth and the automatic dividend reinvestments.

Maybe some of that was just luck because the whole market has gone up, but, even if the market stays flat the next 4-5 years I will still be getting my dividends on all these stocks and growing my base. I also have the HUGE advantage that this money is all in tax deferred accounts, so my "realized "gains and dividends are not taxed every year. This way the growth is not hampered. I will have to pay income tax when I withdraw the money 20+ years from now, but no payroll taxes on that money.

You've got this down pat Michael!! Good for you. It's so simple if you keep it simple.

Investors in these funds must be complete idiots..... Surely (don't keep calling me Shirley) The FED has been telegraphing it's going to raise rates... when isn't exactly certain - but there's no question it WILL happen. So to be in a junk bond fund -- or JNK or HYG -- knowing we're getting closer and closer to that "event" --- and then deciding NOW is the time to sell..... HELLO..... IDIOTS.


We all got caught with our pants down on the big and sudden oil price decline. This kind of thing happens from time to time. But not knowing that interest rate rise will affect your holdings is just plain being stupid.

Congrats Michael! Glad to hear it's working out for you.

I would HOPE that most of you are seeing the beauty of having a diversified portfolio - sprinkled with some "steady Eddies"... And that while it's always fun to own a couple of the "hot stocks" when they're going up - they suck when the market goes against you. Of course OIL and related *was* or could have been considered to be a steady Eddie - that has changed - and now we'd probably call these 'home wreckers'.... LOL

It's easy to be discouraged and stress over the ones that are killing you - rather than seeing your portfolio as a pot with a mix of goodies in it. In other words - rather than stressing over the one or two that suck - and how badly they're doing (% wise) - it's better to focus on your overall financial health... and to look at the total of $ invested and what percentage that number is up or down.

The guys that held McDonalds (MCD) have seen that holding go from suckola to hero status in just a few months.... Altria (MO) has been stellar... Oil sucks and it WAS stellar... this is a natural ebb and flow... and when you get it 100% right (where all your holdings are green) let me know - because in 30 years I've yet to have that.

Ok, I'm certainly not bragging here but thought I'd share what a little common sense (learned here mostly), some research and a little Jim Cramer here and there can do. This is short term of course but still good compared to the S&P 500, it's up 11.59% since Oct 2014. This is my first venture into individual stocks and with all of these I am either very impressed with their product or visit them regularly. They all pay a dividend (all are reinvested) except for UA. I just hope the great investing gods will not come down on me and jinx this now (knocking on wood all over the place) but so far so good.

Stock Purchase Date Total Return

CVX 9/2/2015 19.08%

COST 9/17/2015 12.93%

HD 9/17/2015 12.18%

KR 9/17/2015 13.63%

SNA 10/20/2014 39.18%

LUV 10/21/2014 30.19%

UA 10/20/2014 27.55%

DIS 9/17/2015 9.02%

WFC 9/17/2015 (half) 2.55%
11/18/2015 (other half)

Total 20.96%

I also have one mutual fund that I've had a long time, POAGX, which I initially invested in on 4/26/2007, it's up 95.83% since then and beats its peer index by almost double so I keep it.

FRIGGIN' FANTASTIC ERIK !!!!!!



I bow in your direction!



I was being factitious when I said I'd never had all green.... because, of course, there are periods (such as the last 4 or 5 years) where not only have we had all green - but where we've had all green for months or even years. It's RARE to have such bull markets... and that was more my point. HOWEVER - to have your string - in the current market - being a fresh investor is just stellar!



I remind people daily (you'd be shocked how many calls and emails and texts I get) "look at the long term charts of the companies you own" when the days turn against you. Understand WHY a name or two you own might be in the dumper i.e., is it because of bad product - bad press - bad management or is it in a sector that for right now SUCKS?! The key here is to know WHY. When you know why - then you can make proper decisions.

Congrats Erik!

So let's talk about "averaging down" --- even though this strategy has been mentioned a zillion times in this thread.... now might be a good time to bring it up again. Particularly as related to OIL and OIL RELATED holdings.

When you're entering a situation where the results are an unknown... such as we are with Oil. And that situation is not under any kind of control - in other words - the market isn't stable and continues to be a volatile and fluid situation regarding the over supply (Thanks to Saudi Arabia)... There is no reason to RUSH to average down or to buy on the dips or to load up the boat with names in this sphere. It's simply time to keep your antenna up.

By that I mean - if you already own this stuff, you have what's going to be called "dead money". Dead money can be resuscitated - but that's going to take some intervention. So until you can see some intervention - there's no reason to rush to own more just because you "think" there's aid on the way. You'll be better served waiting until such aid is on the scene and you KNOW what you're dealing with.

Patience is what I'm saying here. Don't be quick to just load up on more just because it looks good on paper - or because you'll think you're smart to buy some of these great names "cheap" (cheaper than where you bought them). THEY CAN GO LOWER. I prefer to put my money into something that's not in turmoil... and wait until there's some signals that say "all clear". THEN you have plenty of time to average down your position.

We can't see clearly (YET) where this is all going to play out. KMI - ETP - CVX - XON etc just to toss some names out there... They look cheap right now - but we maybe have yet to see the damage surface. So why stand on the tracks of the train? Just stand a little bit to the side and see if the things has brakes.

I'm not saying to sell - I'm saying to just sit a bit (months or maybe a couple years) and let em lay... all the while watching and waiting for better news and then you can pounce.

Some would advocate for taking the loss and moving on... But I don't think this "space" (oil et al) is going to zero... I just think we're in a political war with Saudi Arabia trying to bury our industry in a market share grab. The thing that happens along the way when stuff like that happens is it forces companies to change or find a better way or whatever.... and all of a sudden - BINGO.... we figure out how to pump oil cheaper and become profitable at the lower selling prices. They'll do that half an hour after you sell and lock in your loss. LOL

Being on some what of the front lines of the oil I can say that things aint gonna get any better soon. Another big company is laying of 82 more guys next month.

And the market is getting bad enough that the companies are laying off good employees now. Not just the lazy worthless ones. I have picked up some really solid guys in the past 3 months I had no idea even existed.

But oil companies are bracing for this to not change till 2017. One customer I have sells electrical items and in 2014 they had a working budget of 160 million for maintenance and improvements. They have gone to zero in 2016.

If oil goes to 65 to 70 per barrel things will be just fine, maybe not as good as it was at 110. One local field makes money at 12 bucks per barrel.