Just gotta love making money..:cheers:

I was going to mention on the thought of not watching the balance and focus on the income stream..

And as greg just mentioned about having some high yielders for some money parking, along with your mix of steddie eddies..

i just parked in a fund that i knew was undervalued, getting hammered , and i knew that it would rebound and go back up..High dividend payer no matter what the balance..

Since timing the market is useless, you time as close as you can..

So i bought it, and it kept falling...2 grand later, still falling...Paying a double digit dividend while waiting...

Then boom, it starts to rise.., but I made the money back, and now it is moving the right direction , and it will settle much higher and continue to grow, but man....patience and research..all while getting paid 14%....HELLO... sweet deal..

Also i just got more dividends in, while i played in the garage.. 400 bucks, but again, when you have 17 of these, this all adds up..

i may never know what shorting a stock is, or stop loss, or any of that...

But by using the basics, i don't need to know that voodoo mumbo jumbo...:cheers:

The EDIT, is my investment that turned around is up again 500 dollars so far this morning and it still has 50% to go to get back where it was... a 14K investment...

These are small, very small plays in the portfolio, and NOT a steady eddie.

But money in cash is for rainy days and daily expenses..

I have also down sized my emergency cash, since all my assets are liquid , except the 401K.

Before I needed a 6 month wad to sleep...When bank rates are high again, i will do it, but for now, it is working to fight Inflation..

ALL other employees must be working ,here or abroad, or they are fired...

Your money sits in the bank........crushed by Inflation, or it is at work battling for you while you work, sleep, play, type...

Yep -- I love dividends...

Got up this morning to two dividends -- HYG paid me $3295 and PFF paid me $1053

Very nice...:thumbsup: :hail:

I try to give the troops some of my info to give a smaller perspective. 400 dollars overnight. One fund out of 11.:thumbsup:

Sorry before I said 17, but 11 are dividend payers..:willy:

Still, enough wealth at work, that took decades to earn, let alone SAVE. :thumbsup: :thumbsup: :unibrow:

Cause we all know , "it isn't what you earn, but what you keep", and "It isn't what you have, but what you own/Worth"..:cheers: :woot:

But you always get me jacked and excited.:lateral:

Because I get to feeling smart and powerful, and then i realize that I am just a puppy in this game.:willy: :willy: :rofl:

All be it, a very Lucky and Smart Puppy, but I tell my Wife, "you just wait".. Because I am going one direction..Up..:thumbsup:

I have been poor, and rich, and then poor and then rich(rich to me),..I think I have enough smarts now to stay in the right direction..

But more learning is on my List for 2012...As it has been for many years..

Keep up the Great work Greg, i am here to rally the troops , and to chime in with specifics on occasion..

P.S. I did manage to change my 401K to now yield 9.5%... I am working with limited choices, but hey, I will keep an eye on it.

It only holds 10% of the total portfolio due to mumbo jumbo and fees that are written in mandarin Chinese.. The Schwab account is crystal clear.:lateral:

Also due to heart and brain problems 2 years ago, i had to retire from working.. To what ?? The greatest time in our history for making money.Talk about luck.

I completely agree with the risks of setting a stop on your Steady Eddy dividend paying stocks. You are correct that getting stopped out would not be beneficial to the long term strategy.

Going back to the quote I highlighted earlier, there are certain stocks (NLY) with a known potential catalyst (rising interest rates) that you would want to bail out of before you take a 50% (or whatever % you choose to be tolerant of) hair cut. These stops do not have to be kept "tight", within 5% of current market value. My view is that this could allow me to notbe the guy watching the market all day every day because I know that if things get rough, I've got a standing order to get me out.

Which leads to my next thought. I can use a trailing stop (set at any amount below current MV according to my individual risk tolerance) on my more speculative plays to "lock in" a profit as discussed in your tax post a couple days ago. Profits are good, so if things get rough, I can take my profit and retrain those soldiers. If things continue to be good, my stop will increase accordingly to lock in more profit.

Again, these stops don't need to be set tight and I gain the freedom to not be watching the market all day to make this happen.

Edit: Personally, I will put a stop below where I deem the technical "support" level to be, so that if the bottom is falling out of a stock I can get out as well. Plus, nobody says I can't buy back in when the stock has found it's next support level. These may be the strategies of someone who is risk averse, but when you're playing with my bankroll, ya gotta be careful!!

For those that are new to investing and don't necessarily have a grip on it yet click the link below.
http://wharton.pearsoncmg.com/otis/

This is a stock investment simulator I've used in class. It cost $20 but it will allow you to trade, buy, sell and just get an understanding of the market without losing REAL money while learning. Just a thought for those of you still a little worried about losing your hard earned money.

These are good strategies Jeff... but are far more sophisticated than this thread was intended for. However... Personally I'm glad you brought them up because these are terms people hear about - and there's no reason to not discuss and learn about them. Perhaps someone doesn't use them now -- but knows about them and is willing to investigate them.

I forget that people don't start their day off with coffee at 6AM and then wait for the market to open to see what's happening. I've been doing this for 20+ years and I forget that other folks actually have lives... :lol:

Ouch.:rofl:

I think we have lives, we are just obsessed...

I SAY that the overall balance does not matter, and the Income Stream, and the Yield do..

Then why do I do the same thing, west coast time, and check the market, and the balances..

Because I am crazy, and I usually work on other things while I start the day..
Taxes, project outlines, ect..

but checking this thread is a daily stop...too much info to learn..:lateral:

Greg,

I was wondering what your thoughts are about the NLY earnings report. Revenues increased on a year over year basis, but EPS declined. Also, the dividend for 2011 declined from 2010, which is the first decline since 2006.

Early warning signs to be on the lookout for or does this not concern you? I know they still pay a great dividend, but does the declining dividend worry you at all?

In general, how do you handle declines in revenues and/or EPS on a year over year basis. Does it take more than one yearly decline to cause concern.

Total newbie here when it comes to making informed decisions on investing.

FYI called Schwab today to open an account. I have been with Scottrade for several years and they do NOT offer dividend reinvestment. Yes their trades are $7 compared to $8.95 but my thinking is the free reinvesting is well worth the difference. While talking with Schwab I was informed they are not in it for the fees. Sales talk? or not I'm moving to greener pastures as far as I'm concerned.

Greg the previous post about your thoughts with NLY has my attention.

Thanks guys for all you experience and time.

One last thought, I have been talking with my youngest, she is 18 and has 7k saved, I'm working on her to invest 5k of it in a Roth and forget about it. My thoughts are 5 Best of bread spread through the OIL, Retail, Food, Pharm, and Util sectors. .................. Thoughts? If she buys it, I'll even let her pic the stocks based on what she likes. LOL:thumbsup:

EXCELLENT!!

Happy to discuss anyones thoughts on stocks etc any time...

I think it is a great idea to get your daughter interested this early. I set up accounts for my kids and we sat down together to discuss some companies that they may be interested in being partners in. My son was especially excited to know that he could be a partner in Apple. Just for kicks I set up a compound interest spreadsheet and showed him what his money would grow to in 60 years at different rates of return. He is very excited about being a millionaire. I think you are on the right track with your daughter. Its great that she has already saved that much money at her age.

Yes, she is even tighter than I am, LOL. I tried to explain to her that she is only tying it up not blowing it. As far as my older daughter, she is the type who wants to help everyone, great quality, but I would love to make her realize she can do much more if she invests early and wise.

I happen to work for an airline that's been in the news lately. My oldest has consistently said " I want to be an entrepreneur " I have never understood that type of thinking or the risks associated with it. Now I'm starting to realize I should encourage her thinking so she can take control of her own future, vs becoming a pawn in the game of monopoly called life!!

Annaly (NLY) deals in mortgages and CMO's etc -- so they basically work on the interest spread... but in the end - they're interest rate sensitive. The guy that runs this is Mike Farrell and he's proven to be a brilliant money manager. However, the mortgage market is a tough one... so it doesn't surprise me that we've seen a reduction in the dividend. It is however still about TRIPLE where the safe stuff resides... so I use it for precisely that. Remember that with that higher dividend comes increased capital risk...

What I tend to do is as stated previously is park money here - so I move in and out. My "normal" position is 10,000 to 15,000 shares. I'm higher than that now because of a recent substantial increase in cash on hand and I hate cash that is just sitting around.

What I do is look at how much dividend I've gotten and will get - and I offset that with the amount of capital depreciation (loss) or gain. As long as I'm ahead I'm happy. However... also remember that I pay very close attention to what I'm doing and have been doing this for many years...

So today -- given my current position - my average cost in NLY is $16.95 a share... and today it closed at $16.55.... I'm okay with that because on balance I'm WAY WAY ahead of this small price difference. My last dividend alone was $14,250. If I take money OUT of NLY - I will check the box "tax managed" for my sales.... so they will sell the LEAST GAIN out first... and when they do that - it actually leaves me with the lower priced shares - which I have a nice gain in. So on balance -- I'm getting the dividend - and I manage my gains/losses in this name (as well as JNK and HYG).

Here's the thing a newb will grow to understand... I don't mind losses... as long as at the end of the year I have an overall gain in my investible dollars... and I've been collecting those dividends... My dividend stream is H-U-G-E...as in beyond your wildest imagination... so if I take a 20K hit in capital on one name in order to pull out 250K or 400K to invest in something else -- it's a total ho hum.... I'm moving money all the time... so it's all just part of the drill.

YOU GUYS can't really think/trade/move the way I (or someone else does) -- because you have to balance out your own accounts and your own needs and goals.

I'm not sure this is answering your question -- but the point is -- I can't tell you what a stock is going to do - today or tomorrow - or next week. What I do know is that NLY is a high risk play - with a high dividend... so I look at that -- it pays $2.28 per year per share... so if I collect $2.00 and the stock is down $1.50 I'm still ahead of the game. It's my bet that the dividend might continue to get squeeze in this name -- or shares of similar companies that do what they're doing. Remember - they don't make anything except a spread on money... and those spreads are subject to the whims of the market. This ain't like McDonalds or Phillip Morse where they actually make stuff... but as long as I'm making almost triple the normal interest rate -- I'm happy --- and I'll be happy even if it's only paying 10% because that's still way above market.

If you all never do anything for your kids -- the one thing you should talk to them about is MONEY... Saving - investing - balance the "I wants" with the need to invest... and later have a great case of the "I gets".

Like somebody once told me -- you wouldn't wait unit their wedding night to discuss sex for the first time would you? So showing them that when they get $50 from Grandma for Xmas/Birthday -- saving HALF of it -- and blowing the other half if okay -- but you have to stress the saving is not for spending later on some other "I want". Push this idea when they're 10 or 12 --- and when they're 18 they're going to have some real money.

Greg,

Thanks for the explanation. That does answer part of my question.

But I would also like to know how you look at other stocks such as MCD or JNJ, etc. For example, if next year their revenues and/or EPS declined from this years figures, does that put you on alert that it may be time to put your money elsewhere. Or is a one year hiccup in revenues/earnings alright. I guess I am looking for some guidance on when to get out of a stock that you are holding.

Well... like most of these answers - it depends. What caused the earnings miss? Bad product - bad weather - a recession - or crappy management... (i.e., not controlling costs and or inventory).

So it depends on what reason is given for the earnings miss... if it's crappy management or bad product -- I'm hitting the sell button.... if it's a hiccup beyond the companies control - or some temporary setback -- I might buy more!

So it's really the QUALITY of the earnings. Sometimes a company will report real good earnings and you wake up thinking you're the hot stock picker of the decade and you look at the stock and it's sold off?!?!?! IT might be the quality of the earnings - because sales might have slipped or EPS might be the result of an insurance claim or a law suit settlement (where they received a payment that isn't a recurring item). So the "numbers" might look good on the surface but they really aren't once you get out the magnifying glass.

This is where the quality of the management is what is most important - because if they're good managers they'll correct the mistake and carry on... and this created a "buying opportunity" rather than a sell sign.

That's why I hammer that long term chart... 5 and 10 years out... steadily climbing. It's not bullet proof but it's a good indicator. It's also why I say -- if you're a relatively small investor - stick to companies you know... that way if you keep your head on - you might see the problems BEFORE they hit the bottom line. The day I go to the mall and there's nobody lined up at the Apple store - I'm coming straight home and hitting SELL! :woot:

Can't remember the question about Annaly Capital Management (NLY) but someone asked about a declining dividend... and what to look out for etc.

I did some explanation...

But here's what I want people to look at -- for themselves -- because for EACH PERSON they need to know what they're into -- and why they bought what they did - and how they intend to fit that into their individual portfolios.

Go back and look at a 5 year chart of NLY --- and you'll see a pretty flat chart - with some "wild" swings -- lots of squiggles! But look closer and you'll see that it's a pretty mild move of a buck or two... except in '08 (EVERYTHING WENT DOWN THEN!)... so for me... it's a pretty good place to park cash.

That's why I want you guys to really LOOK at these charts -- because you'll start to see "more" than just a line. It's like doing a tune up -- after you've done a bunch -- you pay more attention to smaller things... You'll also notice that the dividend is all over the place...

Greg - thanks for the tips!

Starting on drug company research tonight.

Does BMY look better in your perspective? Seems to have a pretty steady growth and pays out a 4% dividend. Am I on the right track (in your opinion)?

I am trying to think of drug companies that you see everywhere and that is why I hit on GSK (coupled with the current dividend and growth over the last three years it looked okay).

Teach me Zedi master... I need to see dividend checks like yours in the future.

If I am on the right track, I'll look into tech, real estate (CIM a spinoff of NLY?), and the rest of the other segments.

Thanks!
Chris

Stepping out Greg... Boston Pizza - BPF.UN (TSE) - 7+% yield and a decent chart over the last three years. And it's not oil and gas. I'm looking at it as MCD jr. - most of its value is real estate and it's a good franchise that I kind of understand (at the very least I'm familiar with it). :)

OMG! You added another GREASE choice!! :rofl: :rofl: :rofl:

Baby steps my friend... Baby steps...

Bristol Meyers is a good company -- and has a better 5 year chart that GSK... and a similar dividend.

By the way -- I don't want to pick or "dis" anyones picks -- but you're doing what I want people to do --- THINK about these stocks - compare them - do a little reading - and then make up your mind what fits for you. We'll never pick 10 stocks that all go straight up and pay huge dividends... In our dreams right? But yes -- you're on the right track because you're doing your homework. We never want to gloss over this important part. It's educational - you learn a little every time - and that's part of the fun. Remember - you're choosing a partner - and you're depending on that partner to provide for you now and in the future...


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


CIM (Chimera) is similar to NLY (Annaly) but has a horrible chart - has never recovered from '08 and while the percentage of dividend is high -- it really doesn't have much else going for it.

A 5 year chart reveals that you've lost 80% of your money in CIM and only 2% in NLY -- the 13% dividend makes up for the 2% capital loss over that time but it won't cover up CIM's 80% loss!

:rofl: So true!!

Since I don't know the company I could only look at the chart etc... and I like the real estate play and the dividend.

I'm trying buddy -- I'm trying!

.... and I hope one day everybody here reaches that critical mass where they're living off their dividends. It's nice place to be.

Of course the key to that is to reach that critical mass of dividend income -- but at the same time not have your "out go" more than your income. This is most peoples mistake.. that old out flow seems to just be allowed to rise... and then we're like Greece... :lol:

Phillip Morse (PM)
 

Here's how you make money....


While "others" are waiting for all their fancy schmancy stocks to go up --- Phillip Morse (PM) is UP $2.00 today (that's 2.4% GROWTH just today) after announcing they beat earnings estimates.

I mention this because our "steady eddies" pay that nice dividend - in this case 3.86% - AND they quietly sneak up the chart... (growth). And nobody is talking about them on TV...

That's how they get that TOTAL RETURN... and that is what will really get you to the finish line.

Yeah - it's nasty old tobacco... but I'm here to make money not be some moral guiding light. :D

Like Greg said..

An example is KinderMorgan, Great 1 yr....Even better 3 and 5 year Total return , and up a buck a share today

So if you own________-shares of it....:woot:

a dollar and sixteen cents dividend per share coming tuesday..:cheers: :lateral:

I have limited skills, but skills... More skills to come..

Look how Apple has taken off in recent weeks. I don't know whether to be excited or brace myself for a downfall. They're leasing more property which I believe is a good thing. I wished they would pay a diviend to go with the steady rise in price.

I just finally broke down and bought an apple phone...You guys win...I was so cheap, i used my Blackberry until it turned into a raisin, 5 years. Talk about money's worth..

But what did I buy ? APPLE...

:cheers:

I'm debating on an iPhone also. I wish I was able to own more than the measely 6 shares I have now. They start paying a dividend and I might have to see if I can squeeze a couple more shares out of what little money I have.

Do as Greg says..Spread it around.

Earlier I spoke of KMP being up a dollar...well , it is up 1.30 right now !!!:cheers: :woot:

I don't have as many skills....But I am working on it.

Put your money to work...The housing thing will lay on it's face for a long time..Time enough to get ready and do the house thing. they won't let it recover.

I never was Apple guy....Stupid me...

I've got what I consider to be a small but decent portfolio. As the money (dividends, gains) start to come in it will be reinvested and I will slowly add to it. KMP is one of my holdings.

Very Nice.. You will profit greatly down the road, as I believe , even witht the lateast run up to 13,000, that in a longer span, things are still on sale...

and we get paid while they move around, and then up

6000 shares -- UP $74,070.00 -- and collecting those dividends on top of that...

It's all about the PERCENTAGE return on your money... doesn't make any difference what the share price is -- 10% growth is 10% growth...

Don't try to buy "more" just because they're winners now -- don't get led down that path... DIVERSIFY. Look at your gains -- kiss them - write 'em down on a piece of paper and sleep with them under your pillow... but don't let GREED talk you into more of a good thing... That strategy will turn around and bite you. You set your limits - and stick to them.

Repeat after me --- BALANCE.... it's all about BALANCE....

Ah Chichawa:thumbsup: .

Told you folks.. Me...400 shares....So little guy pay attention...Up 400 dollars and waiting on the dividends...

35 grand making 400 dollars today, and dividends all the time..

Just to give the regular guy the idea of a much smaller scale for reference..

But spread it around like he says...We tend to want to buy more of the hot thing and we lose the safety /risk balance....

don't do it..

Oh --- KMP was only up $6120.00 for me TODAY.... I was showing the unrealized gain on my current holdings.... Hey! $400 or $40 or $4000 it's GAINS... FREE MONEY!! I love free money!


:lateral: :cheers: :woot:

Investing is all about PSYCHOLOGY....

Let me tell you right now - and you write this down... when the market is going UP -- you feel good! You feel SMART! You feel invincible!

Ditto that on your house value

Ditto that on your hot rod value

But there will be a day - weeks - months - maybe even a year or two - when the market goes DOWN -- it goes down and you're dying the death of a 1000 cuts... you WILL feel like selling everything - you'll feel STUPID for having invested in the first place - and even stupider for buying MORE of something "back when" just $5 below it's all time high...

That PSYCHOLOGY will eat away at you in a losing market. Please prepare yourself for this! Because that is when you should buy even more! Like buying a house right now -- low cost and lower rates! Or buying that $150K Camaro that sold at Barrett Jackson for $50K in 2009.... Remember those talking heads (idiots) on Speed TV saying over and over again ".... that was well bought..." Trust me - the people that were buying THEN -- they're the smart guys right now.

Get your heads around that "buy low"....

The problem is - NOBODY can tell you when this is going to happen -- so you must just keep a steady hand - and continue to plug away - good market or bad market... because we could be in a 10 year bull market or we could head south tomorrow. Nobody ever seems to see it coming... but this is why you need dividends -- and you need diversity -- and you need good stuff that you can live with.

Think about it this way...

A stock is like a house... let's say you buy a house and you just leave it empty and wait for the market to rise so you can make a return on your money.... OR you can buy that same house - and rent it out... collecting the income... and after 10 years the house should be worth more AND you got all that rent. In the mean time the house might have gone down in value and then even - and then up or even stayed down but the guy is still paying you rent. Which would you rather do?? :unibrow:

Annaly Capital Management (NLY)
 

Here's a very good explanation about what Annaly (NLY) and others like it do -- and what they're risks are... it also explains why they "missed" this quarter (someone asked about this in an earlier post).

This article is well written - and makes this "relatively" easy to understand.

http://seekingalpha.com/article/3554...ajor-new-risks

Knowing when to sell
 

Again --- someone asked about how "I" know when to sell a stock...

Mostly what we've talked about is how to BUY - and why to buy - but it is just as important to know when to SELL...

I stumbled upon this fairly well written "opinion article" about how one fund manager makes this critical decisions... and it mirrors most of my thinking.

When the position is too big (has grown) - or when there is a fundamental change - good or bad... or sometimes when you were just "wrong" about how you thought the stock would act.

http://seekingalpha.com/article/3526...d-when-to-sell

If you were in the market this last year, and you stuck with it and did not panic, then you are on your way.. If you bought in the low areas in 2009, you are even farther..

Because the moments of 500 point up or down, do not matter...Sure, many days in a row are unsettling, but in the end you will come out on top..

After all the volatility of 2011, I stuck with my plan, took a monthly paycheck all year long, and still have more than I started with...

So again, the fluctuation in balance is not to be worried about..

Many I know cut and ran in 2008, and some this last year threw in the towel after 1000 point losses...

Some are talking under the Mattress...

You got to study enough to get passionate about it, and then make informed decisions...

The best ?? Probably not right out of the gate, but with info from this thread,WAY farther than most..

But don't put in money that you need now or soon...It will have to work overtime and will not be able to see you for a while..:lateral: :cheers: :woot: