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Regarding networth the only debt/liability we have is our home and it's $250K balance was refinanced two years ago on a 15 schedule so it will (should) be paid for the same time I hit age 65. :thumbsup: |
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I love this thread....:lateral: No really I do.. We can share and go over ideas and the different strategies we are using. And some that are getting started will feed off our passion.:woot: Well done Sieg.. To share, My only liability is a 4.5% fixed 30 year 150K balance( 330K value), everything else is assets , and they are in nimble, liquid, global Investments.. Mike V.:cheers: |
This thread is moving too fast for me to even participate, lots of great info here. And Greg, what a great contribution you've made to a great many here.
Got to put in my 2 cents on Facebook, and you heard it here first, :) they are a short term fad soon to be replaced by the next short term fad. They are not Google, Microsoft or Apple who make products people have integrated into their daily lives. I know, Facebook is part of people's daily lives, but in an entertainment sense more than a practical use sense. I believe people are quite fickle when it comes to entertainment and can easily and quickly move onto the next hot thing. I heard recently, can't recall where, that there were more people leaving FB per month than joining. I believe usage on there has about peaked and will start to decline as people get bored with it. Anyone prone to get hooked by that type of thing probably already is and will eventually get bored with it. I would much rather own a piece of the companies that make the vehicle for getting on FB (and it's replacement), the cell phone makers and cell service providers. Websites and social media fad will come and go but the way people access those things will remain. Anyway, this thread will certainly be still going when FB flops and I can then point everyone back a couple hundred pages and claim I called it. :rofl: I'm sure there's going to be some big short term bucks made on it though. Maybe I'll be one of those few shorting it after a huge upward run. (Gotta learn how to short stocks first though) :rofl: Sorry for the rant, just trying to contribute to the thought process of investing in my own corny way. :lateral: |
Wanted to share two great websites for keeping track of all your financial stuff in one place, calculate net worth, etc.
http://www.yodlee.com/ymc_home.shtml www.mint.com |
^^^^^^^^ That's not a rant -- that's a very good honest opinion.... and all anyone need do is remember --- MYSPACE?? DOA
stick a fork in it... it's done! BLOCKBUSTER -- killed by the Netflix and Hulu and whatever else... So it's always worth listening to others opinions. Please though -- never short anything... ever. This would take a lot of explanation but that is gambling at it's very very worst. |
Greg you mentioned to never short anything. Is that because this class is Investing 102, or never at all even with WTH money? I just want to understand your thought process.
Have you thought about teaching a Investing 103 or a 201 class? Thanks again! |
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There are complex models that have been set up in an attempt to measure risk. If you are interested, Google "risk and capital asset pricing models". (You will probably need a finance backround to understand them). Another method of measuring risk is Beta. Beta is shown in Google Finance and Yahoo in the financial summaries of the stock. A Beta of 1.0 means that the stock moves in direct correlation to the overall stock market. A Beta less than 1.0 means the stock moves less than the overall market and may be less risky, while a Beta greater than 1.0 indicates the stock moves more than the overall market and may be more risky. The things that you have to understand about Beta is that it is based on past performance. Also, Beta is only a measure of the stock price movement. It does not take into account the impact of dividends. In other words you could have a very steady stock (low beta), that pays a large dividend and it could still have above average risk due to the potential for the dividend to decrease. Along with using Greg's explanation about looking at the dividend (Generally the higher the return, the greater the risk), you can simply look at a historical chart and analyze the magnitude of the price moves. Riskier stocks will tend to move more than conservative stocks. In other words, the riskier stocks will tend to have the biggest price swings (on a percentage basis). They will have greater percentage increases when the market is going up and greater percentage declines when the market is going down. Just remember these are generalizations. As you probably know, the general rule of thumb is higher return potential = higher risk. I believe that is how this thread started out. How to get a higher return than what is currently offered by a "safe" low risk money market fund. Not much risk of a money market fund declining, but not much potential return (Currently 1.0% or less). Just trying to bring another persective to the discussion. Hopefully, I have not overcomplicated the issuse. |
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This is an investment thread meant to get us to participate and share...Thanks:cheers: again, I am pleasantly surprised that this thread has a life of it's own...every other site i have been on and talked about money, the subject shifts to spending money , and never making it...True they are car sites but man, you would think they would care more.... Oh well....I know what is up, and Investing is what is up... |
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Naked short means you borrowed the shares from the brokerage and sold them. The brokerage deposits the money into your account - but now you OWE the brokerage the SHARES. You can't pay back with money - you owe the SHARES you borrowed. A Short against the box means YOU own the shares - but you put in a short sale - thus you get the cash - you still hold the shares in your account - and eventually you'll have to give up the shares OR buy shares to replace what you sold short. The problem with going "Short" is that by the time the "man in the street" thinks it's time to short a company - which in essence means he thinks the company is doing poorly - the PROFESSIONALS on Wall Street are about 10 Zillion times AHEAD of you. And you get caught in the classic "short squeeze" trying to cover your short in a rising market. The more it rises -- the more "shorts" have to cover - the more the stock rises... so it's a toilet bowl way to try to GAMBLE on the stock market - which is complicated enough without trying to be cute. If you think a company is going to do poorly --- why own it at all - in any form? The key that I've been trying to get across here (in 102) is that we want to own best of breed - great companies - ones we're proud to own - and like them enough that when they do go down (in sympathy with the market) we want to buy more of them so when they rise - we make money. Shorting is playing a game of chicken against a stacked house. Let the pros with billions to play with do the shorting and hedging and euro dollar gold trades. I've seen all too often - stocks the everyone is short - and you wake up one morning and the company has agreed to be sold to X company for X amount - or fires the CEO and hired the most famous turn around guy in the biz etc.... and you just get your arse handed to you. Rarely do you get a chance to have the CEO shoot himself in the foot - ala NetFlix CEO - where people are short (BIG TIME!) and the SOB delivered the perfect short to them on a silver platter. This is the polar opposite of playing the IPO game... for every 10 short positions you try - one will be a home run.... the same can be said about IPO's - one out of 10 will be a home run - so the odds are not very good. My favorite saying has been - and continues to be - "better lucky than smart" . A guy can be real smart and just know that shorting X is going to be a winner -- but if he's not LUCKY -- something like I said above will happen and you get creamed. |
Pretty good jobs report just came out this morning. I'm far from an economist but to me this is very good news. It was much higher than the so called "experts" predicted and most measured areas saw an increase. Some prior months were revised up as well.
If this continues you can plan on seeing Obama back and I'm not sure interest rates will remain low as long as they had initially planned either. I don't have any big things to buy anytime soon so I say bring on the inflation. That's probably inevitable anyway with all this QE we've been doing to keep the ship afloat. Here's the report if you want to read it: http://www.bls.gov/news.release/empsit.nr0.htm |
So the wife and I met with Chuck last night. Was overall a good experience. Anyhow...we started talking about capitol gains and the current rate of 15%. He felt strongly that by this time next year we will be looking at an increase in that rate. Any thoughts about that?
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So, if you have positioned yourself well with your debt, and your investments.. Inflation will help you... People have had plenty of time to get ready.. I don't see the government in Left or right...That is Politics,,the exact noise that they want you to buy into, and argue about.. I see the Fiscal policy, the domestic and foreign policies, as Investment tools, nothing else.. Keeps me from having to talk politics and religion with anyone.. But the FACTS are , do you see the spending continue, ala Home mortgage and student loan bailouts, just for starters, i could go on... If you see more spending, then there is money on the table waiting to be made.. But boy that gets into Investing/Speculating. I do not day trade, but i do formulate a yearly game plan, as well as mid and long term plans.. I need Greg's input, I know his returns are stellar:cheers: :woot: , so i may be spinning my wheels some, .:cheers: |
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As Greg says, that is when the little man on wall Street makes his moves.. look back at all the numbers...They readjusted the wrong way,everytime, weeks later, to be swept under the rug.. Again, no politics, just facts...facts that can be used to make money..:cheers: |
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Either way - the government loses. They -- the 535 idiots that actually run the country - don't understand that 15% of everything is better than 35% of nothing. |
Nice to see I'm not the only that has developed a serious distrust for any .gov related noise.
Considering the code of "ethics" in modern politics you can't trust the noise. All one has to do is compare core campaign promises vs. their actual performance and accomplishments record during their terms. I know this because I'm in the rug business. :rofl: |
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I should have explained the MUNI BOND yield to tax relationship as they are directly linked.
Depending on what tax bracket someone is in - you can calculate what TAX FREE return you need to EQUAL a taxable return. So as taxes go UP on dividends or LTCG's -- then the return required to equal that NET goes down. So in Washington state -- we have no income tax -- and if I can buy a TAX FREE BOND paying 5% --- I'd have to get a TAXABLE return @ 35% income tax rate of 7.69% Right now -- with dividends taxed at only 15% that taxable dividend only needs to be 5.56% Since it's "riskier" and harder to make that 7.69% income in the stock market -- why would a person bother -- when they could just buy 5% tax free munis -- be guaranteed to get 100% of their capital back at "X" date... |
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Amazing.. but back to Greg's point of no listening to the Noise, and make the Investments for you and the Long Term.. Not the short term, or the left or right...YOUR money....Forget about the 535 and the way they work..it is your world that counts.. :cheers: :lateral: |
Okay -- so let's examine the STOCK MARKET and DIVIDENDS if they change the tax rate -- now that you've digested the BONDS vs STOCKs and taxable / non taxable return quality.
DIVIDENDS are paid as a dollar amount... i.e., they are declared in an AMOUNT not a PERCENTAGE. SO..... as the stock FALLS in price -- the PERCENTAGE of the dividend return INCREASES. Now -- if I have to make a 7.69% taxable dividend --- to equal a 5% tax free bond -- what has to happen to get there?? STOCK PRICES HAVE TO FALL... The oldest saying on Wall Street --- "as interest rates RISE - stock prices DIE" Ignore the relationship at your own peril. |
Here's an actual chart using the DIVIDEND tax rate of 15%
TAX-FREE YIELD TAXABLE-EQUIVALENT YIELD @ 15% tax rate 1.00% 1.18% 1.50% 1.76% 2.00% 2.35% 2.50% 2.94% 3.00% 3.53% 3.50% 4.12% 4.00% 4.71% 4.50% 5.29% 5.00% 5.88% 5.50% 6.47% 6.00% 7.06% 6.50% 7.65% 7.00% 8.24% 7.50% 8.82% |
Here's same chart if you're at the 35% income tax bracket...
TAX-FREE YIELD TAXABLE-EQUIVALENT YIELD @ 35% 1.00% 1.54% 1.50% 2.31% 2.00% 3.08% 2.50% 3.85% 3.00% 4.62% 3.50% 5.38% 4.00% 6.15% 4.50% 6.92% 5.00% 7.69% 5.50% 8.46% 6.00% 9.23% 6.50% 10.00% 7.00% 10.77% 7.50% 11.54% |
So if we are to continue this little dialogue....
My MUNI BOND portfolio currently yields just about 4% tax free -- so at 15% dividend tax rate -- I "only" need to yield somewhere around 4.71% in the stock market. Since we need to pay attention to TOTAL RETURN -- that's pretty dang easy or has been easy in an "up market". If a guy can get a 3% dividend and a paltry 2 or 3% growth --- I'm killin' it! But you have the "535" change that all up.... and watch out below!! |
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I think it's quite likely the 15% rate is doomed, but it may not go back to the way it was. I think a lot of people dislike the uncertaintity around it changing almost as much as it changing. If you know it's going to go back to the way it was, you could plan, if you know it was going to jump to 20% you could plan etc. I would not anticipate interest rates rising until 2014 as that is what the fed has indicated. |
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Here's my personal "take" on unemployment....
There's always at least 6% or so that are "terminally" unemployed. If you counted the welfare roles or the folks that never have looked for a job -- or those that have "given up" -- it would be a much higher (%). Frankly -- "they" don't count since they're not "consumers" except for the very basic goods. It's the psychology and fear that affects the 80% that counts... because they're the ones that "pull back" spending... and that's where the damage is done. IF the talking heads said -- hey! Good news! Most everyone that wants a job has one! :D What I never understand is the FOCUS on the unemployed. If you had 20% unemployed - what that says to me is that 80% are still working... and being productive. But all anyone (the tv talking heads) can talk about is the unemployed. My wife spent her entire career as a senior HR person... and the only "unemployed" people in her businesses where the bottom of the productive barrel. They might have gotten "laid off" -- but that's just noise for being fired in a mass way. House cleaning. Ditto the housing crisis... MOST people are paying their mortgage on time -- MOST people are NOT underwater on their houses... sadly those that are have ruined it for the rest of us. This debacle is deeply rooted in GOVERNMENTAL interference in the normal housing market. They ALLOWED and set up the lenders to give away cheap TEMPORARY money... which escalated, artificially the price of houses. BUT now we're in a political discussion which serves no purpose as I think almost everyone in America understands what happened. All of my professional life -- only the people with a real down payment - and stellar credit rating got the lowest interest rate. Poor credit -- you paid a risk premium or had to come up with a co-signer - or higher down payment. What the REGULATORS did is to "allow" (by not putting a stop to this practice) the poorest credit rate folks with ZERO down payment get the best interest rate. And we know how that turned out don't we? :willy: :rofl: |
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Thanks again for the great information and also taking the time to write it down. This is exactly what I needed to hear. The more basic information I get the better my research can be. This thread is also opening up conversations for me with my friends about investing and money. Most of them talk about the next big thing to buy. I take all the information with a grain salt write the company down and do my own research now that I have some idea what to look for. To anyone who is just finding this thread now please go back and read it from the beginning it is worth it if are serious about taking charge of your employees. Ray |
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Hey Woody Thanks for the information I think different perspectives are important. If you had giving this information 69 pages ago I would have been overwhelmed by it but now with basic understanding that Greg has provided I feel up to the challenge. Ray |
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Back to this thread of Investing and the here and now.. The nuts and bolts of why we are here... Bubbles come and Go... But the Steady Eddie that manages his workers will win out in the end. |
Solar -- I was laughing to myself as I posted this.... because in this so called DOWN economy... I've made more money than in the 10 years leading up to it when everyone had rose colored glasses on!
The brand new building (bank owned) my brother in law just bought (I'm the bank) at HALF PRICE -- will be a stellar investment for him 10 years from now! And if he holds it - it will be his retirement fund + There have been so many opportunities handed to "us" on a silver platter it's just been ridiculous. Some days I have to pinch myself and see if it's all for real. The stock market -- had you bought or added to positions in 08/09 have doubled your money... Those that are buying property NOW will double or triple their money especially if it's income property. The cash flow is just huge and the buy in is half price. Sorry for the folks that have lost it all -- but someone out there is going to make an absolute killing on their mistakes. And here's where people get it ALL WRONG.... they lined up to pay over asking price for homes and condos.... and took out artificially low rate loans with short terms... THEY LINED UP TO DO THIS.... WHERE THE HELL ARE THEY NOW?!?!?!?! Right now you can buy the very same property down 30/40+% AND get a 30 year fixed rate loan under 4%!!! Dude.... nobody wants to buy now.... they lined up to buy high and sell low. Talk about squandered opportunity....:wow: |
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AWESOME!!! |
I'm having fun owning (FUN). Cedar Fair, L.P. Just picked up some this year as the dividend has finally started bouncing back. Great yield with still potential for growth. They will be announcing FY2011 earnings in a few weeks will show if the high yield is going to stick around. Anyone else looking at this one as a "best of breed" ???
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Excellent. Mike V:cheers: |
Even though we know it's "fundamentally wrong" to help our kids too much -- we've been looking at real estate for them. Not sure what kind of "deal" we're going to come up with - and they have to lower their "standards" - 'cause a 4 million dollar house on the lake isn't what Mom and I have in mind... but now is the time to get them into a house/condo/townhome with these super low mortgage rates. We were on Zillow yesterday looking at a $350K town home - and if we put down 50% - their payment would be 5 or 600 a month less than their rent!
Obviously it's the down payment that would be the clincher... for anyone -- but this is a cross in the road that may not happen again in our lifetimes -- depressed house prices AND super cheap fixed rates. |
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You can do the best you can raising them, and them giving them an advantage most will never have... If they do it right...Much happiness and security will come there way...If they do it wrong, and choose the wrong lifestyle, and dip into the equity...You did the best you could.. i put enough down to make my payment really affordable, and put the rest to work. I used creative ways to get up this mountain..:cheers: :woot: |
Uhg...this housing market has been an ongoing thorn in my side. I'm glad so many smart people are taking advantage of it. I unfortunately bought my house in the peak market. I have been paying my mortgage for 11 years and I'd be lucky to sell it for what I owe right now. I'm jealous of all the guys younger than me that have bought homes in the last couple years. 10 years from now they will be miles ahead of where I'm at. It's depressing...:faint:
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I did not want to open old wounds.:cheers: Think of it this way , brother..... You are actually one of the lucky one's.. I am in a court with 9 homes.... All of them but one foreclosed... the lady across the street bought new in 2000...Paid for 12 years and it is worth the same as 2000... But she is the survivor... All the others were foreclosed and now resold and the court has all new families and owners, except the sole survivor...Like you... The rest of us are in various stages of value... I am lucky, plus what was 660,000 at the peak , I got for 267,000 in 2009. In 2000, they sold for 275,000. Actually I could sell it for 330,000 now, so i am Very lucky. But the point is that you still have your investment at least even..you would have had to live somewhere, and 10 years from now, you will be in even better shape.. No, not as lucky as some, but still a survivor. I just wanted you to see the other side , and be Happy you are a homeowner, and you are not 100K to 400K underwater.. Mike V.:cheers: |
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Everyone makes mistakes, how you handle the lesson is the key. Admitting you made one on a public forum is a huge step in my opinion. :thumbsup: Analyze your options and plot a course to prosperity! Onward and upward!! |
Thanks for the pep talk guys...:cheers:
I know of a few people who were in the same situation as I am, and they cut bait and walked away from their mortgages. I wasn't about to do that because I view it as a commitment. |
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