Ok phew finally after a few nights of going through this thread I finally finished reading it! :willy:

There is definitely a great deal of good info in here but there has also been some missed opportunities for the very basic info. What I am going to say has been mildly addressed by others but no discussions were ever made about it and it really should have been.

The very first and most important thing for anyone looking to take control of their financial future should be to set up their 401k/403b etc that their workplace offers. You simply want to invest the maximum it takes to get the "match" from your employer. Talk to your "HR" person or whomever runs the plan at your work to find out what the limits are. This money comes out of your account using "pre-tax dollars" so you are already getting the tax break at the end of the year because it lowers your "gross taxable income" Additionally and this is the most important part, that employer "match" is an instant 100% gain on the money you invested in the account. Where else can you get a guaranteed 100% gain on your investment... Just make sure you look into what your funding options are in your 401k and do your homework. If you don't elect where the money will be invested it won't do anything for you because it will probably end up in some stable asset fund which is the same as cash so to speak.

The next most important step is setting up a Roth IRA and put the maximum amount in every year. I have had many people ask me where do I buy a Roth IRA?? The general public doesn't understand what one is they believe it is something similar to a mutual fund. It is nothing more then an account you setup through a brokerage firm that you put your take home pay (after tax dollars) into to fund the account. You use this account to buy stocks, mutual funds, bonds, etf's, commodities etc. This money can grow to any amount and when you turn 59 1/2 you are entitled to start taking the money out and not have to pay taxes on any of it! Another bonus is at any time you can take out your money that you put in without touching the profits you have made and it is tax free. Please don't do this though because it is for your retirement.

Key points to consider with a Roth IRA are:
- Under age 50 you can contribute $5000 per year (that is $417 per month)
- Over age 50 you can contribute $6000 per year
- Single person can contribute if they make less then $107k per year, from $107-$122k per year the amount you can contribute goes down with no contributions being allowed if you make over $122k per year.
- Married couples filing jointly can each put in the maximum allowed. This is important because most people think that they are limited to $5k if they are married but really you and your spouse can both have a Roth account and be putting in $5k each or more if you are over 50... Again your combined income has to be less than $169K per year to qualify and no more then $179k before you can't contribute anything.

Anyone on here that has mentioned that they have $10k etc to invest right now absolutely should open up a Roth IRA before tax day if you qualify. You can then put half of your money into the account now and get the full contribution limit for 2011 and after April 15th put the other $5k in and get 2012 fully funded. Then go nuts and buy all the dividend stocks or whatever else it is that excites you that has been discussed in this thread.

Obviously don't do any of this if you have credit card debt. Pay off that debt first. If you do the above steps and you have a chunk of change that you have stashed away for those "emergency moments" consider yourself very lucky because you are farther ahead then the vast majority of people.

Investing is so very important even though it seems like you can't possibly amass any wealth investing only $2,3,4,5K etc per year, I'm here to tell you yes you can! You can absolutely do it! I'm only 30 and have been investing in one form or another ever since I got my first job at Mcd's (gotta love that stock!!) 15 years ago. The amount you invest doesn't matter just so long as you start doing it today, not tomorrow! One day you open up your account and all of a sudden you see your saving starting to pay off because you just gained more in your account from "paper profits" in one day then you normally contribute all year... There are days where you "lose" the same amount but that is all part of the game.

Good luck
BJ

Great first post BJ!!:cheers:

ROTH accounts are really an amazing gift from our government. Sadly I was never allowed to have one.... (the good news is I never needed one either!) but it is really going to benefit anyone that can and does!

BJ,

Well said..

True before people can invest ,they need to clear all consumer debt..Such a simple way to make money...STOP spending what you don't have and then charging it at 18 to 28% interest.. Car loans ?? 6 to 9%. Madness..

Paying those off gives you 6% to 28% gains....

Then you talk of 401K..For sure if you have a Company that matches, and you don't participate to the maximum , you need to read this thread over, and do some additional research..If they match up to 10%..Match them..But not company stocks unless it is a stellar company, and even then, diversify. i did 15% for years, and they matched 10%....free money..i like FREE money.

Then you have the ROTH, That would be the next step.. I don't have one, but i too don't really need it, But i should have put money into it. others should put into one..then they have the diversification of the ROTH, and the 401K.

Then finally you get to the good stuff, A Schwab type taxable account..

What some of you say ??? I thought that is where we are at now...

You might be, but i have some questions before we continue....

Hmmm...Only again if you have ZERO consumer debt ? and you are matching a 401K plan at work ? and you have a cushion of emergency devalued dead presidents ? .How much ? 3 months, six months, 1 year ??

What you can afford and makes you comfortable..Even if it is 500 or 1000 dollars. If you have credit card debt and no emergency fund, you are double screwed....Back off the investing and clear these problems up..

Then the real money making begins...

:cheers: :woot: :lateral:

Kinder Morgan Partners (KMP)
 

Since we're talking about 401's.... (not ROTHS here)

Some of the stocks we've been discussing are "tricky". Master Limited Partnerships (Kinder Morgan Partners - KMP) is one of these...

Although you can technically hold MLP units in an IRA and other tax-exempt investment vehicles, don’t do it.

Placing investments that are already tax-advantaged in a tax-sheltered account isn’t the most efficient allocation of resources; hold MLP units in brokerage accounts and keep your IRAs and 401(k) plans for more traditional fare.

MLP's pass thru 80 to 90% of their "income" to the unit holder (share holder) and as such are not taxed (Federally) so the unit holder is the partner that gets hit with the tax... There are rules about this and income levels etc -- so if you get a sizable dividend from MLPS you should discuss this with a CPA...
You're not taxed on this until the "return of capital" (which is what it is - it's not a "dividend") is above your cost basis... So let's say you have $10,000 worth of "units" -- you'll have no tax until you've gotten $10,000 in "return of capital/dividends"... There are other rules - but just be aware of them if you're buying bigger amounts because they can affect your income tax return.


I own an apartment complex inside an IRA... and I have to file an income tax and pay a tax on it each year even though it's inside the IRA -- because it get hit with UBIT (Unrelated Business Income Tax)... It's not a big tax but still costs me to have the paperwork done and I have to have the IRA pay the tax etc - so it's a hassle. I wanted to BUY the investment out of the IRA --- in other words I'd pay the IRA the amount of the investment and take it out of there -- but that would cause even more tax issues. UGH!

Wow... Great info as usual... You sound like your own CPA... I do have a CPA and we discuss this, and my assets are in the right place, But this helps me understand it more. I have more studying to do.

Do you think that a pop quiz sometime would sharpen the troops minds ??

I am not saying that even I could pass it, but it may be a fun way to shake us up..Just a thought.

But again, you money crazy man, thanks for all your tips..:cheers:

I always hated discussing taxes and Money....That is why I never had any money. I learned that I needed to learn this stuff to secure MY future.

Thanks for the tax tips.:cheers:

Well... as usual I have to write for EVERYONE reading this thread. I have no idea who that might be - and someone out there might be buying half a million bucks worth of KMP...

STILL -- This is INVESTING 102 -- and I doubt the above statement... and even then - they'd have no tax due until they had gotten all their investment back...

But --- What I'm really saying is that IF people are going to invest -- then they need to discuss this stuff... and they should be discussing it with a CPA not some friggin' forum!

Most of this stuff doesn't affect anyones taxes in a big way... it's just stuff to be "aware" of... awareness of various issues -- not really knowing the exact details - is what people need to know.

It's like a torque spec --- I don't need to know the torque spec of every single fastener in a motor -- I just need to know that there are specs and I should look them up if I'm working on something!

That is interesting about owning the apartment complex with your IRA. I always thought someone could purchase something like that with one I just have never personally heard of anyone doing it.

I personally do not have a Traditional IRA simply because I don't make enough to start another account. Any extra that I do feel like playing with I have a Scotttrade account for because of the low commission per trade. I used that account to pay for my LS swap last year which was pretty awesome! Caught a double with Apple and made some good gains with a couple other stocks. I didn't like the way the market was looking in Feb/March of 2011 so I sold it all off took my profits and finally had some fun with the money. Investing doesn't just have to be for retirement... :woot:

I should note that my Roth is with Etrade not Scottrade. Scottrade does not offer a DRIP (dividend reinvestment) so make sure where ever you set up your account that they have that option.

BJ ---

Owning the apartment complex in the IRA has been a total PITA since day one.

#1 - Brokerages don't hold "private paper"..... a term used for these kinds of investments since they're not liquid and have no "market" (NASDAQ or NYSE etc). Wells Fargo has a 'unit' that will hold this kind of stuff so I had it set up with them.

To make it just a bit more complicated - when I get a check - which is INTEREST - I deposit it in an 401/IRA I own in Fidelity. A couple of years I paid an extra tax on that because they thought it was a "contribution" and that "contribution" was MORE THAN I was allowed to make... UGH!

Now that I caught that -- I make sure to tell them it's a DIVIDEND/INTEREST payment from an investment already held in an IRA.

Trust me when I tell you all -- stuff like that is just a PITA because I have enough stuff going on that to have to remember all these stupid little details is ridiculous. That's why they just need to simplify the tax code. Just get rid of all this crap - have/let people make money -- and pay the tax due as a flat tax. We'd all be better off. :cheers: :woot: :D

Another good item to talk about for people is what to do if they actually have a little bit of a nest egg... Most people just assume that if they die their spouse, kids etc will get the money. Well that is not true, I'm not an estate planner but there are some basics that I'm aware of.

-Most common way someone could potentially die? Car accident probably. Who is usually sitting right next to you in the car? Spouse. Who is usually the beneficiary? Spouse... Well now we have a problem... Your both dead who do you think will get the money? Kids... WRONG!! Minors cannot be the beneficiary. Your money will get tied up in a huge legal battle where the children will be the biggest loser.

You need to setup some sort of a Living Revocable Trust. Minors can inherit that money and take control of it at a time that you laid out in the details. Since this is a "living" trust you can modify it at anytime while you are alive. It really is something that should be thought about and discussed with a pro, well I'm sure Greg can add some insight to this subject :)

That's the truth, although your problems aren't exactly bad ones to have :thumbsup: I agree though it needs to be simplified, but then what about all the CPAs and other tax pros they sure don't want to see that happen:rofl:

We'd still need accountants... They just wouldn't be going crazy every April...

My accountant is busy all year working on "stuff" other than tax forms.

Good addition!

There are beneficiary designations on all your brokerage accounts... most of these you can choose percentages to give to different people etc. and a Primary and secondary(s).

I hadn't redone our wills etc (or estate planning) for 10 years.... but as part of the sale of Isilon to EMC -- the execs (my wife not me - I'm too stupid to have a job) -- got estate planning and wills etc paid for provided they were completed by 2011. In our case - that can (is/was) several thousand dollars worth of a "freebie". There's all manor of new rules... passthroughs... etc etc. I learned a ton... and it was fun as well as 'hard'. Hard in the fact that our kids are now 21 and 25... so if we're both croaked - how do we manage our money for them. We're not raising any trust fund brats! So we had to have a family discussion about what we were thinking and why - and what they thought about that etc. It was very productive -- and ONCE AGAIN -- it's NOT something most families do! We should all talk about this stuff. Do your kids have any idea of how you'd like to be handled if you die? Buried? Where? Cremated? Etc... Heck -- for that fact - does your wife? Do you know what she's thinking? :lol:

Another excellent point.. I forgot to mention it..

DON'T DO LIKE ME........ ARE YOU READING THIS..

So I have all this wealth, and I am 50 and feeling frisky. It is 2008, I have seen the mess coming , positioned my chips and I am on top of the World..Don't need a Will or a Trust yet.. We will do it soon...Uh oh...:willy: :willy:

So when I Stroke/Seizured due to a Major Heart Infection due to a malformed Heart Valve, which caused a Brain Lesion and partial paralysis..

So, My Wife and I call the Trust attorney for other Family trusts, they travel immediately through rush hour traffic at 380 dollars an hour and he and the Notary come to my BEDSIDE next to the priest, and we notarize my Will and Revocable Trust... We made it on time...And i lived. Had i died in the Kitchen of my home, what would have happened ? Hurts to think I could have screwed my family out of all the hard work..

PLEASE make sure you have one, otherwise Uncle Sam, the greedy man, will get it..:cheers:

The above story is as true as it gets...

Limit orders
 

A few posts ago -- we discussed Limit orders - Stops etc.

I normally use a "limit order" if I'm buying on a down day -- like today -- in a position that I don't really care if I get or not.

I've bought Banco Santander (STD) on and off for a couple years. It pays a nice 10% dividend -- but remember that it's paying that high dividend rate not for any other reason that the STOCK PRICE SUCKS.... remember this inverse correlation! The dividend is a set amount - so as the price declines the percentage of dividend goes up and conversely as the stock price goes up the percentage goes down.

I wanted to mention this "limit order" to show why -- for Investing 102 -- it's really not very important. The fact that I use it from time to time is due to the larger amount of shares I deal with.

So -- I put in a 10,000 share purchase with a limit at $8.54.... the ask was $8.57 so had I put in a "market order" I would have gotten the shares at $8.57 or whatever was available at whatever price. Some may have been bought at $8.57 and some might have been bought at higher or lower prices.

So here's the key to this for Investing 102..... the .03 DIFFERENCE between the "bid" (me) and the ASK (seller) on 10,000 shares is a whopping $300 on a $85,000 purchase. Whoo hook.... that ought to make or break a profit on this investment shouldn't it? :D

But -- if I was a trader? That $300 saved - in multiple trades per day -- over the course of a month or a year - would be huge!

I did it because I don't want to pay "up" on a down market day. If I used it in a rising market -- I might not get the shares -- because I was being "cheap" -- and then they might have risen .50 a share after lunch! I'd have missed out on that move. So it is - like all things - subjective and it all "depends".

Correct me if I'm wrong on my assumption............
The children will be left fighting the State and Federal governments for rights to your assets.

Basically the estate will end up in Probate court with a judge deciding who gets what money etc. I would rather see you decide the fate of your kids rather then some judge...

Just think of family members that would come forward trying to appeal to that judge to get a piece of your pie, would they really have the best interest of your kids at heart...

This is one area that I struggled with for a while - both on the buying and selling side - and a lot of the time it was simply an "emotional" misjudgement (that more often then not caused more disappointment than it avoided). It's especially true when looking at higher valued stocks. Somehow our brains focus on the two digits after the decimal and we (I) sometimes miss the big picture. You hate to miss an opportunity to buy or sell (something that you want to) over a couple of pennies. It's obviously different if you have your mind made on a value or if you're on the fence about something. Especially if you are following Professor Weld's "don't be a trader, be an invester" strategy.

I've seen family greed and entitlement too many times. Thankfully we've kept our will's reasonably current, our kids are 10 & 13 so they currently can't fend off the wolves by themselves.

I've been very surprised at the caliber of individuals I've known over the years in their 40's and 50's that have procrastinated or ignored implementing even basic asset protection measures. I quit gambling at 40.

It takes far less time to protect it than it does to make it. :thumbsup:

The more you have... the more this is true.

All of our assets go into trusts -- and are all run by a local firm here called Laird Norton Tyee... and that's all they do. The trusts state what the kids get and when and how... etc.

We chose to set them up with annual payments (not enough to live off - but enough to make a substantial difference in "how" they'd live if they're earning a decent income already) that are indexed for inflation and also increasing in 5 year increments... so one amount each year at 25 and a higher amount each year at 30 etc. Until they're 50 years old - then the trusts turn over to self administered trusts (they can run their own trusts then) but we also choose an amount to fund each childs retirement which they can access at 65... which is in separate trusts so if they blow through all the rest - they can at least have one final safety net.

The trusts are set up so that with trust approval they can access additional funds for schools - buying houses - babies - weddings etc.. Trust automatically protect them from divorce - bankruptcy - lawsuits (think OJ Simpson here) and that kind of thing. So even if they're complete idiots the trusts are protected.

So this thread did get me looking at some divided stocks and here is what I'm thinking. Looking at the following which have all been mentioned in here I believe. STD, NLY, BMY, CLX

STD- Interesting stock, not for the faint of heart 10% dividend is awesome and its up 13% year to date. I'm interested to see what happens if the stock hits $9.10 or so a share... Risky stock may be overbought at this point, time will tell.

NLY- Another risky one even better dividend of almost 14%! Looking at the charts on it hard to say where it could go from here. I feel it has a better chance of down then up at this point. (my opinion only) If I were looking for a place to park some cash until another long term investment came along I would consider this one but would have to watch it very closely. But man that 14% guaranteed just can't be beat...

CLX- Great stock, long term play, nice 3.5% div yield. Could be getting ready to have a nice upswing in the stock price. Don't think you can really go wrong with this one. Current price is a nice entry point.

BMY- Another great stock 4%+ yield, has had a nice pullback in stock price so far this year. Relatively limited downside in this one in my opinion.

Now seeing as I do not currently have any pharmaceuticals currently in my account I am thinking that BMY is going to be my pick. Its also my pick because of the safety of it compared to the first 2 and also because CLX is too similar to other stocks I currently own. Although I may consider dumping MCD to buy CLX... I will think about it over the weekend and pull the trigger next week.

I have been on autopilot since last spring and I'm sure glad I found this discussion. I enjoy technical analysis and it was fun to actually open up some charts and do some detective work. Although that is not investing 102 stuff.

Taxes
 

Best tax article I've read in a long time -- mostly because instead of taking a "side" in this poor vs rich debate - it just discusses who pays what and why... Which is (IMHO) the proper way to have a discussion on such issues.


http://www.msnbc.msn.com/id/46313519.../#.TzWqIVFidUQ


It was most interesting to note at the end of the article that the author figured out that the reason the disparity GREW between rich and poor was not because of taxes... but rather... because - In my own words here - they know how to work and make money?? :D

Somewhere you missed the post about looking at the charts :lol: ...Clorox (CLX) has a 5 year growth rate of a whopping 4% vs McDonalds (MCD) 123%

I'm not sure why you'd consider swapping MCD for CLX... especially given a fairly similar dividend yield. Don't forget to also compare TOTAL RETURN...

MCD total return for 5 years - 161% ----- CLX a not so much 21%

Obviously it's your choice - your money - your account... I'm just discussing this for use in the Investing 102 "thinking/thought process".


BTW -- I have bought and sold Banco Santander about a zillion times over the years. Currently - I just think it's about time to get back into some financials... I can't stomach the current CEO of Bank of America... and I certainly won't dare to be "early" into their stock given the whopping .5% dividend vs the Banco Santander (STD) dividend of 10%. At least if I'm early -- I'll be getting paid to wait.

Also -- this thread isn't/hasn't been used to parse individual stocks etc -- it's really more about the thought process that is behind various stocks only to use them as an example. I like your discourse on why you're thinking about a particular stock. It shows your thought process... which is really what this thread is trying to be about. The catch a fish vs teach how to fish.

Great question. :cheers:

When I was typing that I hadn't yet done any charting on any of the stocks that I currently own, I was just researching for new opportunities. I'm not usually a long term holder of a stock I feel I have done better with more activity. As I am getting older I need to probably focus on things that I can let grow for a longer time then catching a quick 10% and getting out.

I first got into MCD in Nov and Dec of 2010 so owning this stock for over a year now is a pretty long time for me. I bought this stock simply because it was safe and I was needing some safety at the time. I always try to come up with a exit strategy and I remember thinking I would hold on to it because it is a safe play with an ok dividend and if it got over a $90 I would consider letting it go because I would have a 15% + gain. Well it did that and more, now it hasn't really moved so far this year, I was thinking this stock was done for. I went back and brought up the chart with the indicators I like to put on them and noticed that MCD isn't really done yet in my opinion. It just took a little breather.

In regards to CLX I am seeing that it is currently at its lower support line, I currently consider it oversold, but the 50 day is about to cross above the 200 day MA so I was thinking this stock could catch a nice "pop" if there is a stall in the recovery we are having and there is a flight to safety again.

This is more of me trying to be a trader then a investor so I wouldn't follow my advice if anyone is reading this. Trading is more luck then anything, investing will get you where you need to be if your willing to stick it out and dollar cost average into your position. I found a nice calculator yesterday that lets you back test dividend stocks and show you how they would have done for you letting them ride. I will post up a link to it if I can find it again, it was pretty neat.

BJ

Here is a link to that site I mentioned I came across yesterday.

http://www.buyupside.com/index.html

I'm not so sure about it now though, the calculators seem to be kind of funky. I'm not sure if they are right.

Well, I reached half of my goal this week. Fidelity isn't open on Saturdays so I was only able to get my Vanguard Roth account set up to purchase stocks. It'll be a few more days before everything is finalized but I may be able to purchase my first stocks directly next weekend. :woot: I intend to keep a portion of the money in the Target Retirement account I have with them for now. Maybe later on I'll remove all the money but for now baby steps.

I do have a question that I think will be stickily personal opinion but that's fine by me. Since I will be playing with two separate accounts(401K and Roth), how would you divide up the accounts? For example, would you choose four stocks for each account making them all completely different sectors for a total of eight? Or maybe choose two with each account and only have four total sectors you're invested in with the money? I can't imagine that there's a right or wrong so long as you're diversified but I thought I'd ask anyway in case there's a tax advantage or issue I need to be aware of with the two accounts.

If it was me - I'd go for the most diversity I could get... so 8 stocks not overlapping...

Sectors are harder to separate... but it can be done.

Industrials

Consumer

A) Cyclical

B) Defensive

Healthcare

Pharma

Energy

Financial

Real Estate

Telecommunications

Tech

Utilities

Greg, have you thought about looking into companies for investing based on who is hiring? My line of thinking says if they are hiring they should be growing.

Ben

No I haven't... but there's a couple ways to think about that. If SALES are good that might happen BEFORE they add staff.. and sales are easy to track via the quarterly reports.

I firmly believe that all companies made their numbers in '09 and '10 probably via cost cutting.. and everyone has cut to the bone - so if sales are rising - then hiring WILL follow.... but "when"? So I like your theory... because it would certainly be a sure sign that business is good and they have confidence going forward.

Do you have a source for this info?

I do not have a source, but just by how many people contact me, wanting me to apply for jobs. There has been a forging and stamping company on the east coast that supplies parts to the automoblie industry.

Also Rockwell Collins, they do space parts but they may be too big of a company to really notice.

When I was in Everett, I heard that Boeing was hiring like crazy as long as you had a four year degree. In a previous post you said to avoid the defense contractors, since the wars should be winding down.

I have heard in my industry says Boeing is going from an airplane manufacturing to airplane designing and assembly company. We will also have pilotless passenger carrying aircraft, just have to sell the public on it.

Someone was looking for drug/pharmaceutical stocks the other day...

I read Seeking Alpha "regularly" and they have a "stocks going ex-dividend"
posting... which lists several stocks that will go ex dividend shortly (within days) and I just happened to notice AstraZeneca (AZN) is going EX and has a pretty good dividend. This is a "name" that I know but rarely think about... but may be worth including in your comparison against the Bristol Meyers - etc.

Here's what the post looks like in Seeking Alpha:

AstraZeneca (AZN) has a market capitalization of $60.50 billion. The company employs 61,100 people, generates revenues of $33,591.00 million and has a net income of $10,016.00 million. The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $15,345.00 million. Because of these figures, the EBITDA margin is 45.68% (operating margin 38.09% and the net profit margin finally 29.82%).

Twelve trailing months earnings per share reached a value of $7.29. Last fiscal year, the company paid $2.80 in the form of dividends to shareholders. The ex-dividend date is on February 15, 2012.

Here are the price ratios of the company: The P/E ratio is 6.47, Price/Sales 1.80 and Price/Book ratio 2.62. Dividend Yield: 5.94%. The beta ratio is 0.61.


This is another one --- WHICH I HAPPEN TO OWN.... it's a "ripper" price wise and has a good dividend...


Terra Nitrogen (TNH) has a market capitalization of $3.89 billion. The company generates revenues of $564.60 million and has a net income of $201.60 million. The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $219.00 million. Because of these figures, the EBITDA margin is 38.79% (operating margin 35.76% and the net profit margin finally 35.71%).

Twelve trailing months earnings per share reached a value of $14.08. Last fiscal year, the company paid $5.01 in the form of dividends to shareholders. The ex-dividend date is on February 16, 2012.

Here are the price ratios of the company: The P/E ratio is 14.79, Price/Sales 6.82 and Price/Book ratio 18.61. Dividend Yield: 6.68%. The beta ratio is 0.74.

Nice post Greg.... I used to read seeking alpha a few years but had not in awhile... glad you brought it back for me. :)

What do you mean when you say "ripper"?

I get daily email updates from Alpha, a lot of volume but you can pretty much qualify the content by the subject line.

I was wondering his definition of ripper also..........my interpretation is expensive per share.......to mortals anyway. :lol:

Ripping straight UP....

Terra Nitrogen (TNH)
 

Not touting or recommending this stock to anyone.... it's just a stock that I had an eye on for awhile and it took me some time to become "comfortable" with the spectacular run up.

Today it's trading UP $14.82 a share...

And here's an investing 102 peak -- Remember that I say scale in whether the stock is going down or up... here's my scale in.


02/14/2012 Buy 300.0000 TNH TERRA NITROGEN CO LP COM UNIT

$223.53500
-$67,063.18

02/14/2012 Buy 700.0000 TNH TERRA NITROGEN CO LP COM UNIT

$223.64900
-$156,560.57

02/02/2012 Buy 500.0000 TNH TERRA NITROGEN CO LP COM UNIT

$196.21200
-$98,114.95

02/01/2012 Buy 40.0000 TNH TERRA NITROGEN CO LP COM UNIT

$191.80000
-$7,672.72

02/01/2012 Buy 460.0000 TNH TERRA NITROGEN CO LP COM UNIT

$191.90900
-$88,286.37


I now - despite having scaled into a RISING stock price - have an UNREALIZED (paper) "gain" of $59,600.00

:willy: I don't want to play Monopoly with you either! :thumbsup:

I don't want to as well. But then again, I may learn something while I lose my Money, haha..

But to give a smaller perspective.. I have been building my car for a while with profits from investments.. No out of pocket money..

I used to keep a larger rainy day fund because it IS the thing to do.. 6 months to a year's income..

But you get to a point that you can safely "park" the money somewhere, to get better yields than the .5% in the bank..

So, for a few years, i have parked my Rainy day money, and I made enough to pop on many upgrades..

I stopped for now to let more money "stew".. I will finish the car in 12 months , from those gains..

I am the small fish with much less money at work...Much, much, less..

But I try to share personal stuff too, to rally the troops with less money, or the younger troops..

Man this stuff works..I have another fund for travel...We spend the profits off that yearly. No private Jets, or World excursions, but first class lodging, ect... everytime..

I love to make memories, as much as having cool stuff..

I have some skills...:cheers: :lateral: :woot:

It's all in "good" humor. I love the examples Greg sets because it shows how effective the strategies are. Though I do cry a little when I see a two week gain that's over 50% of my portfolio. Patience has never been a virtue of mine. :lol:

It's all about the PERCENTAGE of gains -- which is what wins in the end. Not the starting amounts. Ya don't start out "rich" -- but this whole thread is about how you will wind up "richer"... whatever that amount is doesn't matter - as long as you're forging ahead!

My points are more that you can have real GAINS -- in this case - even though I paid more than my original investment --- and collect real DIVIDENDS... and if you save a little - you'll have a far better life down the road. SolarGuy is living proof as am I.

It's really about not spinning your wheels.... not about how much horsepower a guy has. :D

I know, but it is what it is, Haha..

Like when I say that my emergency fund will make more money in a year.. I am talking 3 or so grand on the rainy day money, in profits.. Nothing earth shaking, but FREE money..Separate from the main Investments..3 grand in profits will pay for my Interior next fall..

Yes, I take Greg's figure's all with humor and awe... But I just try to break it down for the troops..On a Micro level, haha..Most money in Dividend paying , reinvested assets, some in 401K type, some cash for rainy days, but making money that i spend..In the old days, it would be in Savings and laddered CD's at DOUBLE digit gains... But alas, not now..

If you have been IN the game through 2008 and up to now, you are doing well.

Too many on the sidelines that never got it, or got out and they never really got back in..

And while I still see severe corrections in 2012, hold onto the tree, because in the end, we will be better off..And if your consumer debt is in order, oh man, the sweeter life is on the way..:cheers: :lateral: :woot:

Caution!
 

I think there is a lot of great stuff in here, but a lot of it makes me cringe a bit too. There is alot of technical analysis, discussion of financial growth, and stock charts, ect. I can tell Greg knows his stuff, I just caution running with some of the simplicity of it. Also, maybe in the 89 pages of comments I missed something like what I am about to say, so I apologize.

But what concerns me is a) lack of using a comparison method and b) focus on technicals

I am one of the young guys here, but have been doing investment banking for 5 years now, 4 at one of those big Wall Street banks in downtown manhattan we all gang up on. On the private side of the world, we help companies buy and sell other companies, do any sort of financing, and of course IPO's. I am not on the private side anymore, so no worries about calling SEC.

When you see X company buying Y company, or X company IPOing at Y there is, at the foundation of it all, a discounted cash flow model behind it. You model out historic and projected periods (as far as you can reasonably be certain). Income is reduced down to cash flow, and that is taken back in time to the present period based on the companies cost of capital. The biggest part of it all is the Terminal Value - this is the value you assume the company grows in perpetuity. This makes up 90% of the total value. You can use a growth rate of 1% or so, but most likely you use a multiple of EBITDA. Think of it as operating income.

That multiple is determined based 99.9% of the time on comparison analysis. What are the public comparibles trading at. The median value of that. You tweek it if you think your company is better or worse at something. Sometimes analysts will use a multiple of earnings (P/E) which you see in research reports, its simpler, but also based on comparison!

My point is - you may see a company. A simple one, a fast food restaurant, that you understand the business model, you understand that in a downturn people go to QSR over sit down. You see sales up 5% yoy, EBITDA margins improving, CF reinvested in Europe, ect ect. So you think...great! BUY.

But what about the TRILLIONS of dollars in smart money out there, hedge funds, mutual funds, asset managers. Don't they see this? Wouldn't they be buying this? So what if all that smart money is already in the stock, and right now the stock is trading at 15x 2013E EBITDA vs. the industry trading at 8x 2013E? That means if they performed at industry average instead of projection you would be down big! If ebitda was 10mm, 1mm shares, at 15x its $150 a share, at 8x times its $80 bucks a share!

You need to make smart comparisons here. NFLX was mentioned earlier, and the chart looked great, but there was no real comp, no real way to measure that growth, and it was retail money coming in late. But industries that have established players and comparisons, you need to use that.

Its not just about stock x, it is stock x compared to the index and its peers.

On the technical analysis. Thats day trader glory, that can change in an instant! Thats not long term investing, thats day trading. And its us vs. smart big money that operates faster. Also, the options market is where the day trading really operates.

Focus on the fundamentals of the business, hold, average down during bear markets, and set limits on losses, and gains.