I own a bunch ($ wise) of REITS.... they typically pay real decent dividends and are pretty steady price wise. However... everything that is interest rate sensitive will ease down IF rates rise too quickly. We shall see how this plays out.

Ever heard of NRZ? They're a mREIT (m for mortgage) that holds mostly floating rate securities, like commercial mortgages, which is mainly why they claim they will do better in a rising interest rate environment. They also do something with mortgage servicing rights, but I can't seem to get my mind around just how they make money doing it so I haven't invested yet.

Anyway, have any thoughts?

Panic to me happens when you get caught off guard. You made it very clear in the beginning not to invest in things you don't understand or can't see changes in. No gambling! Its weird to look at down times as buying opportunities. I actually get more excited about the down days then the up days.

Call it dumb luck or maybe I was just listening but I was looking at doing new construction of a commercial building. Lots of people I was talking to kept saying that steel prices were going up. I bought 40 shares of (X) 6/27/16 for 15 bucks and now its nearing 30. Not to mention a very talked about sector since the election, I'm actually up 90%. I never thought it was possible. All my childhood all I ever heard was I wish I would have invested in that when it started or something along those lines from family.

Now how do you decide when to sell? I haven't wrapped my head around that part yet.

that first day I was mildly concerned, but just closed all my apps/news feeds for the market and thought What would Greg Do, haha

********** WHEN TO SELL ?? ****************




I hope I'm awake enough to have this make sense. Selling is the hardest decision to make! Whether you're selling at a loss or trying to capture a profit (gain).

Many factors to think about here:

If you take the gain (loss) is there taxable consequences (Long term or short term gain - makes a HUGE difference in tax rate)

Taxable accounts or IRA?? Makes a big difference!

Do you no longer believe in the underlying reason you bought?

Have you identified what you plan to buy with the funds generated? What makes you think the new purchase will perform any better than what you're planning to sell?

Are you nervous because of the success? Or are you nervous because you have plans to spend the profit and don't want to lose it? Do you need to diversify still - in other words - taking some gain will allow you to spread your wings a bit more.

Is there a dividend about to be paid or going "ex date"?? Don't shoot yourself in the foot and miss a dividend payment!!


These are not argumentative questions! They're just stuff to ask yourself.


Number one question is really -- If you are feeling that you should take some gain -- then DO IT. It's just that simple. You never should feel nervous about your investments

Rarely do I sell all -- I "trim" -- because when I dump the name - the next day it'll open UP $10..... So I drip out - just like I usually drip in.

Answer:

Quietly crap yourself while hoping for the very best outcome! LOL

Truthfully -- THIS is when you really need to ask yourself if you're long term or a short timer. I fully expected to open up DOWN hard and go down for days if not weeks. I was looking to BUY on that kind of market not sell.

I'm still waiting for some shoe to drop... so I'm not fully committed YET... (rarely do I ever feel that confident - and cash is king in my world) but I have a THIRD of the cash I had pre election.

By the way --- Someone came in recently and asked about buying GOLD



I've always felt Gold is gambling. Why? Because the basic premise for owning gold is that it's a "hedge" against something going really wrong with the world. It's a fear trade. Unless you use the stuff to make something - what are you going to do with it? It doesn't pay a dividend to hold it. It goes up and down like a yoyo and I've never figured out WHY except for fear. I don't want to own fear. I want to own the FUTURE and PROFITS and DIVIDEND (cash stream).

Add to that -- who actually is holding your gold? Will they have cash when you want to sell and cash out? Or did the world market crash wipe them out too? Something to consider. This - of course - holds true for ANY investment - but I'm not buying stuff because I think the world is going to hell.

The Gold ETF (GLD) is DOWN 31% over the last 5 years.... while Altria (MO) is UP 126% in share price and has paid almost $10 in cash dividends on a $34 purchase price (back in November 2011).

Seems like it may be a good time to buy GLD. :stirthepot:

I've also been seeing that mining companies of precious metals can be strong in bear markets. They look really volatile, but timing is everything. :tv_happy:

I was up Elk hunting two weeks ago near a major Nevada gold mine. My friend builds drilling sites and reclamation. He's been crazy busy this year working for the mine. They are moving some serious dirt up there and drilling for new mines constantly!

I like what Buffet says, don't ever lose money. If we put ourselves in a comfortable position, many times, we can wait for the right timing. It can take 20 years, but... And I think that's been what you are trying to express all along.

I like some buckets that flourish when the market sucks. I have a majority of $ on the flip side. My whole premise here is to be prepared to find ways to take advantage when the tide goes out. Why not hedge some money on the down cycle? You know it's coming someday.

Okay --- so here's where we WANT to get to.....


Over time if the stocks you own and the houses you own are up lets say 50% over 5 years..... and they're paying you 5% average dividend.

When the market goes to crap -- you'll be DOWN 20%..... but your share or house value is UP far more than that IF you've owned the stuff for awhile.

Now on top of that -- you're collecting 5% cash all along the way... and you'll continue to get that until when? Until the market turns around and you're right back where you were and plus some. It's the way it's been working since the beginning.

So --- On just my WF account I collect over $400K a year in cash off of the dividends. Why would I sell that money maker because "MAYBE" the value of my holdings might go down temporarily? I don't run to sell my apartment buildings --- I bought them because they produce CASH -- and "eventually" we'll break even or sell for a gain I hope. We'll CHOOSE when to sell when the timing is right.

Happy Thanksgiving fellas!

What do you think? I ran across this ALL WEATHER portfolio by Ray Dalio in Tony's book. Seems like it could be a good strategy for those close to retirement if nothing else.
https://youtu.be/c0ARb1N-3kM

My only thought on this -- is that TONY is about RISK..... rather than making money - he really only continues to hammer "risk". As I've said on here many times -- in a big ass downturn -- like 2008 (which he mentions many times) you have to realize there was NO ASSET CLASS that didn't get pounded! Housing - bonds - stocks - commercial real estate.

Here's the biggest take away ---


The ONLY people that lost money from 2008 are the idiots that SOLD what they had. The "weak hands" got killed when they gave their assets away. People like me - made a killing BUYING those "distressed" assets. Your loss is my gain.


The key to investing is to invest steadily -- and NEVER invest money that'll you're going to need to live on.... and to buy MORE assets when they're cheap. Whatever those "assets" are. Diversification is great - should be done - and no... all of your assets shouldn't be just in the stock market. But first you have to build a nest egg to start with - and that's the key!

Damn you Weld!! Why do have to make so much sense?
Thanks again:thumbsup:

The thing that scares me about this the most is being heavily allocated in bonds right now. The allocation has worked in the past 20-25 years because bond rates have been on a long term downward trend. If you have 50+% of your portfolio in bonds and interest rates start increasing on a long term basis, what do you think your returns are going to be? That asset allocation will not work well in a rising interest rate environment. Especially if you use mutual funds for your bond allocation because the NAV of the mutual fund will be declining.

I can not pretend to know what is going to happen to interest rates in the future, but it seems to me there is a greater potential for rates to increase than to continue the downward trend. We may have already hit the lows in interest rates.

The very very last place a person wants to be is in BONDS.... Period. Unless they're 10% triple tax frees... THEN I'd be in bonds.

Updated facts a few posts down...

One of my key takeaways is that most folks close to retirement go into 60% bonds and 40% stocks. They can have their principal murdered in a soft market in both stocks and bonds. Lets be real here, a majority (95%+) of Americans live off their principal plus interest. They aren't wealthy enough to live off dividends alone and must draw on their principal to live. A recession like 2008 destroys their retirement income and their just isn't enough time to recover.

If anyone is interested in more info, it's in the book "Money" master the game by Tony Robbins.

All good points Todd!

We were in that boat in 2007-2008, had over 3/4s our portfolio in high yield muni bonds that got hammered... What killed me is the muni's got hammered in net asset value mainly because of "mark to market" rules and they got drug down by association, not by any fault of their own. Imagine a 45% loss in the net asset value loss of a "safe" investment.

Thankfully we had the foresight to double down, we sold all the munis and bet big on small and large cap stocks and made it all back in less than 6 months...and then some. Many people later in their lives did not make that bet and lost bigly...

The taint of that loss has kept me from EVER even thinking about Munis again, even though I see the attractive looking yield returns on them from time to time.

I broke out the book and here is the breakdown:

7.5% Gold
7.5% Commodities
15% US Intermediate Bonds
40% US Long Term Bonds
30% Stocks/Index Fund

The portfolio must be rebalanced every year, minimum.

He claims there are four economic seasons this strategy is based on:
1. Inflation
2. Deflation
3. Rising economic growth
4. Declining economic growth

The average return from 1984-2013 was 9.72%.

I'm not even close to being an expert on this stuff or utilizing this strategy at this point. I just thought it was interesting and it got me thinking about taking advantage other types of markets with different strategies and buckets.

"Bull markets start at the time of pessimism. The rise on the time of skepticism. They mature at the time of optimism, and they end at the time of Euphoria!"-John Templeton

I shouldn't have to remind any of you that today is the first day of DECEMBER --- and why is that important??

Because you need to get your rebalancing - if you do any - done this month and you can't wait til the very end of the year. Remember there are SETTLEMENT dates, and holidays... and weekends....

Be sure to check for dividend EX dates before you punch the sell button...

Be sure you're not setting up a "wash sale"!

Don't be afraid to TRIM if that makes you feel good or you still need to diversify.

REMEMBER WE ARE IN A RISING INTEREST RATE MARKET!!!! Anything with lower dividend rates can get taken down.... So no point in riding a nice gain into the sunset because you couldn't pull the trigger! In other words --- I've been out of ALTRIA (MO) except in the longer term retirement accounts.

DO NOT make the mistake of just looking at what the shares are paying on TODAYS share price -- and make the decision they don't pay enough!! CALCULATE YOUR OWN RATE OF RETURN ON YOUR COST BASIS.

Now -- look at your gain or loss if any -- what does the return look like going forward.... IT'S A GUESS! Will the EARNINGS be higher -- thus causing the P/E to stretch it's valuation?? Will rates rise faster than their ability to raise the dividend rate? It's ALWAYS about EARNINGS. But it's also about rate of return and money moves away from lower rates of return to keep up with current "scenario". Don't forget that.

Markets ARE ALWAYS CYCLICAL! Try to move WITH the market - you're too late.... the move that finally told you that the train left the station - the big money already moved there. You're going to sell something low to buy something high.... and that is trying to TIME the market... or rather what it really is CHASING the market.... <Buzzer here> Be certain when you're doing that - that there is MORE left to run and that doesn't mean just this afternoon!

Todd ---- I'm not "disputing" any of the information in the book or tape or anything else. But INVESTING 102 is about SIMPLE - reliable - relatively safe - understandable basic saving and growing money. People can barely recite the 10 stocks they own or want to own..... Let alone keep track of "asset allocation" and all it's nonsense. Sorry.

The below info has been factual for years and years.... and, of course, are AVERAGES -- and don't account for many years of LOWS or spectacular rises (like 2008 to present).



Siegel found that stocks have been returning a long-term average of about seven percent for 200 years.

If you’d purchased one dollar of stocks in 1802, it would have grown to more than $750,000 in 2006.

If you’d instead put a dollar into bonds, you’d have just $1,083.

And if you’d put that money in gold? Well, it’d be worth almost two bucks — after inflation.

Siegel’s findings aren’t unique. In fact, every book on investing shows the same thing. Over the long term, the stock market produces an average annual return of about 10%.

By the way --- ALL points of view are VALID and worth reading - discussing - and then each individual needs to decide for themselves what they're comfortable doing.

Investing - and we've said it a zillion times - IS EMOTIONAL. The investment will either make you comfortable or you're on edge. If you're on edge.... trade it for something that makes you happy to own thru thick and thin. Because that is the real key.

That's part of the reason I bought it up. It's good to see things from another perspective. After all, we all have our own unique set of circumstances.

Hi Greg,

Just started going through this thread. Not sure what got me to click on it last week, but I did and have read the first 20+ pages so far. I opened up the brokerage account with Schwab, and hoping to put some money in there later today.

I do have a couple questions for you though if you don't mind.

1. I'm looking at Target(TGT) stock. I shop there weekly, so I have interest in it. If I look on the 5 year snapshop, it's low on the left, higher on the right, with increasing dividends. If I hit the research to Total Return on Schwab, the 5 year result is +65.7%. I know this probably isn't as high as some others, but would this be a good investment to get my feet wet?

2. On one of the pages you stated you owned 21 different stocks. But on another page I see you showed your dividends, which was more more than 21 different stocks. Is that right? I feel like I'm getting something confused. You also mention having only one account? as in one Schwab account? Not that any of this really matters, just trying to keep everything straight with all the lingo and such.

Thanks for writing all this up. You've inspired me and got me started towards investing. I always use to say that I didn't like investing in the stock market since I like tangible assets. For example, I have a second house that I rent out and since the tenants are paying the mortgage on that, I always felt like that was going in my pocket as a retirement. But I feel like that's just not enough. I'd like to own and rent out more houses, but I don't want all my eggs in one basket either.

How are you fellas analyzing your positions and new potential stocks?

I recently read a book that broke down some key numbers to look at. I decided to review my stocks on a regular basis with the attached breakdown and use it to gauge new positions. I'm using Morningstar for the data.

I'm far from an expert and green at this, but I'm learning quickly. As you start digging into the numbers and comparing different stocks, you start to get a better feel for your positions.

I analyzed Snap On which is attached. I found it to be very positive:

Gross and Net revenue have been increasing for 7 years
P/E ration is still below 20
Dividend payout has been consistent and the increases should out distance inflation
There debt is actually Decreasing! And they can pay off all their debt in less than 5 years based on net income.

The only factor that wasn't positive was that their outstanding shares is stagnant. Many of my other companies have been buying back their own stock decreasing outstanding shares.

If anybody would like this form blank, just shoot me a PM.

Real estate is a great investment - just not the only investment..... and frankly -- many other investments have better returns -- but YOU have done it right IMHO -- Getting a real estate investment going EARLY will work out great in the end - because of the length of time to pay off the mortgage..... 30 years or even 15 years is a LONG TIME - and it's nice to be able to pocket the payment in retirement! Good for you!

Are you guys sleeping at the wheel? You may want to go take a look at your positions today!

This has been a nice run. :thumbsup:

Don

No, I'm out back whooping my own ass because I was asleep at the wheel a few weeks ago when T and VZ took big dips. I was being patient and not wanting to catch a falling knife. I was concerned with what the market was thinking about their recent acquisitions. I didn't have a problem with what was happening but the market apparently did. So I decided to be patient and missed the dips. I had the money ready to buy and was planning to buy anyway. The dips were icing on the cake. Still being patient right now and hating it, lol. Moral of the story, buy good names and don't worry about catching all the dips.

My oil stocks are coming up nicely though :D

And many times continuing to be "patient" only causes you to miss even more of the run. Not picking on you when I make this broad general statement..... bending over to pick up dimes causing you to lose dollars??

LOL

You're thinking was all sound..... Where WE miss out is when we begin to think like we're big traders and we're going to buy low.... but when you really do the math on what we were trying to save buy waiting to "get in" is often the train leaves the station.

Once in a great while - the market moves with us and our waiting is rewarded by a fall in the price... but that's just dumb luck.

I had another thought here ----- Why are we always disappointed when the market does EXACTLY what we want it to? We WANT it to go UP right? So why are we upset when the train pulls out of the station and we're left behind --- didn't it just do exactly what we wanted it to?? LOL

But if you're not in - then you're standing on the platform watching the caboose get smaller and smaller, and no matter how fast you run you can't catch up.

I just learned that different brokerages pay different prices when the dividend is reinvested. I had just assumed (incorrectly) that they all got the same price.
Southern (SO) paid their dividend on the 6th. Here are some of the prices that I saw:

Fidelity- $46.46
TD Ameritrade- $47.27
Vanguard- $46.99
Etrade- $46.79
Schwab- $47.29

This may be common knowledge to everyone else, but it was the first I had heard of it.

On another note, I bought RDSB for $62 in May of 15. I picked up a little more while the price was down, and had all dividends reinvested. Today is the first time that position has been green since purchase. I know it could change tomorrow, but it was nice to see.

What do those prices represent from the different brokerages?

Price per share.

Is this just a matter of timing / execution? If you and I buy shares of the same stock on the same day we will get different prices depending on the exact time of the transaction. The market ebbs and flows through the day depending on how many are buying, how many are selling, volumes, offer prices, and etcetera.

The price you pay is determined purely by the lot that is offered by the seller.... buyers and sellers are matched up and the transaction is completed.

If you want to know exactly what you are going to pay --- DON'T put in a "market order". Learn how to put in a "Limit" order.

I "almost" always do limit orders. What the poster was referring to was the fact that it seems that the automatic reinvestment of dividends was done at various price points depending on the broker. What I was trying to get across was that the execution of the purchase was of different lots at slightly different times and it was likely random chance on the resulting price more than anything.

EXACTLY.


The market is a PER TRANSACTION place. If one broker re-invests the dividend 2/100 ths of a second later or earlier than the "other guy" -- then his price will be different most likely.

Well it's official, I bought my very first stock today. I had an extra $100 laying around so I decided to invest it instead of spend it on car parts.

I bought one share of Starbucks, SBUX.

Personally, I don't go there. But my wife goes there almost daily. It looked good on paper (low on left, high on right) with the 5 year projection being almost 200% growth and the increasing dividend. But the other important factor here is that since my wife loves Starbucks, this is a way to get her involved and interested.

She's great with money. In fact she handles all the bills and everything. But we haven't been investing. She's never done that before, so this is a good way for both of us to dip our feet in the water.

Thanks to all of you, and especially Greg for helping explain it all!

Think about it --- when the thread was started (12/2011)-- SBUX was $22 a share. Oh well..... better late that never!

Nice Tim, I have a stake in them too. They do have a unique market cornered at this point. When I analyzed them, their debt was increasing, but so was their net revenue.