Just kind of poking you here a bit... so please don't take this personally since we've never met -- and you have to know me to understand my "personality"....

For Investing 102 --- I don't care what anyone buys - or doesn't buy... and I'm never pushing or suggesting any stocks or bonds... only the way you THINK about investing -- and what to look for etc. I use my portfolio as examples only and try to incorporate a "here's a way to look at X".

To compare Pepsi (PEP) and Con Edison (ED) and say that they seem so up and down... kind of tells me that you need to keep reading this thread... cause you're missing something. :lol:

ED has a 1 year total return of 22.7% - 3 year of 92.5% - 5 year of 57% and pays a 4.15% dividend based on current price

PEP has a 1 year total return of 3.3% - 3 year of 47.5% - 5 year of 15.1% and pays a 3.29% dividend based on current price.

So --- over three years you'd have doubled your money in ED and only been up 50% in PEP... and over 5 years you'd be 3 times ahead of PEP...

I'm only picking on you here because this is a great example to use... so again -- please don't take this personally. I'm using it as an INVESTING 102 example for everyone that reads - because if we're not all learning something then we're just wasting our time. Right? :cheers:

LOL. What the hell was i looking at then...

I must of been comparing something else.. I dont have my notes in front of me at the moment.

Perhaps I mixed up ED in my head with a different one i was looking at. Since I've looked at so many lately. :wow:

And true, I am not looking to you for the solution (ie. WHAT stock to buy). with the last question i was merely trying to figure out if i needed more diversification to better "prepare" my investments for the "future".

And no worries, nothin personal at all. we are all learning here. I never mind being an example of either something good or bad. :rofl:

I did feel that i was a little to "consumer purchase" heavy (MCD, PEP, etc), which is why i brought it up in the first place. heheh :)

Thanks again for your help. :thumbsup: :hail:

Trust me --- I have the same issue and have to look and triple check myself all the time... This is just a great example to have used.

Yes you're a bit lopsided on consumer stocks -- but that can be okay IF we're truly in a turnaround in the economy. However... I wouldn't continue to add to your lopsidedness! Thus the diversify "push".

All of you - trust me when I tell you that you'll be happy to be diversified! You feel like a real sap when all your "tech" (substitute ANY sector here) is flying and you're looking at your "laggards" and questioning why you're in those POS names..... and then --- a year goes by and it's the sector that was flying that sucks and your laggards are saving your butt. The biggest problem is that we have real short term memory!

In 2011 - we had down 400 point days and up 500 point days.... On those big down days it was my BOND portfolio that was going UP. So I look at the money and think -- Okay -- I have "X" amount of dough - part of it was down X and part of it was UP X... so overall -- not too bad.

We go to some cocktail party -- and some guy starts yapping about how much he's made doing blah blah blah.... and you compare yourself to him and think "WTF! I'm only up 10% and this bozo is doubling his money". Ask yourself to make a note and check back on how well he's doing next year and the year after that. Usually they disappear into thin air and you never see him again. It's the classic tortoise and the hare.... Ya just want to win in the end - not just for tomorrow. Diversify. Invest, don't trade yourself to death trying to chase the next hot deal. :lateral: :cheers:

excellent point... thats what i need to look into also, is the whole "yin/yang" thing... what "areas" should be looked into for a failing market to "pick up the slack".. like you mentioned, bonds were UP while market was done (and i presume, vice versa).

I'm going to take a look at Scwhabs website further and see if they offer any sort of guidance/classes/stuff on diversification amongst things "outside" of "just stocks".

Hi Albert-
Here's the link to Schwab's workshops.
http://www.schwab.com/public/schwab/...nch_workshops#

Here's one that might be what you are looking for:
Advice at Schwab
Learn key concepts to build and maintain a diversified portfolio along with the range of investment help and guidance available through Schwab. From a managed mutual fund or Exchange Traded Funds to guidance from a local advisor, we will explore the level of investment help that may be right for you.

Speaking of diversification... my bond knowledge kinda sucks so I am taking the following workshops.

Practical Bond Strategies
As an investor, you may be asking: Should I invest in bonds? Should I worry if interest rates rise? How can I generate income? In this workshop, we'll address the potential risks and rewards of bond investing and provide a guidance framework you can use to build a sound bond portfolio.

Muni Bonds: Investing Wisely Today
Tax-free returns. Relative safety. Convenience. There are many reasons to include municipal bonds in your portfolio. At this workshop, we’ll provide an update on the current fixed income environment, with a special focus on the municipal markets. We’ll also review the risks and rewards of investing in municipal bonds, and share our fixed income tools and resources, so you can make well-informed decisions.

Bond Investing: Beyond the Basics
Concerned about the bond market and how it might impact your portfolio? Do you want to become a savvier bond investor? Learn about the structure of the bond market, sophisticated investing strategies, and tools to help you invest with confidence.

Other brokers likely have similar training, I just happen to be comfortable with Schwab's no sales pitch approach. :cheers:

awesome! Thanks! I was just reviewing their "learning Center" stuff. I ended up signing up for Schwab as well last week.

Greg
This is great advice and is exactly the way I have looked at investing in real estate. I have done okay by buying renovation projects and putting a ton of work in and selling them. But I have never purchased a property that I wouldn't live in and it has served me well. I am like your friend that you mentioned about a 100 pages ago who started out this way and now has apartments and a 12mil house. I am just minus the apartments and the mansion. Wanted to let you know I am still reading and learning I haven't invested in the market yet but I am getting closer. Thanks again for all the candid and great info.
Ray

Don't think you need BONDS unless you're almost dead like I am... and retired.
They're far riskier than you think... unless you plan to hold to maturity (like I do). The returns - even though they're tax free - are ridiculously low... and if you hold to maturity you get no growth on your capital.

I hold them as a hedge - and for INCOME tax free which I need because of all my other "stuff"... otherwise I'd never buy them.

Just my .02 worth.

If I was younger and had the energy and drive and wanted to grow my dough and needed diversification -- I'd by loading the boat with cheap (200K to 250K) rental houses... with fixed rate mortgages... and let the renters pay the note down... while I wait for the market to come back. So I'd be in stocks -- and rental property (I already own a large apartment complex and the note on a commercial building) - because that is REAL ESTATE diversity. I also own a stock -- National Retail Properties (NNN) which is commercial real estate... and it pays 5.76% and has pretty good Total return numbers...

That's not a recommendation --- I'm just saying at you guys ages -- bonds are not for you -- and when people say diversify - it doesn't have to be just stocks... it can be lots of different assets. :cheers:

Any chance the PDF version of this thread can be updated.

Great points , as usual...

I rode that train last year, and to be honest, I think 2012 will be more of the same..

So , as today is going, I am getting a diversified hammering across the board..

So I always preach that it is not the balance at at given moments, but the dividends, and total performance of the portfolio over time, What will I do ??

Nothing...I will not watch the balance and go on with the day..Yesterday was Wine Country and Napa/Calistoga...

No Trading or running around...Last year had those 500 point ups and downs.

And i told you before , I was still up at years end, and I got to spend all this money too..

So today is not one of those days, but not a day to write home about..

So, I follow the course...And yes, slow and steady wins the race..With a dash of roller coaster in between..:lateral: :cheers: :woot:

I use days like today to check all my stocks (not that many really - no need to have a zillion -- just good ones!) and anything where my 5% rule is lagging -- I look to add to those positions not sell... I look to buy when the others are selling.

Schwab has a tab in the Positions page - where you can check your "unrealized gains/losses" --- This is the page I go to on days like today. I look at the red numbers first - because these are stocks I've done all the research on - and I only bought them because I want to own them - perhaps they're red/down at the moment - but I certainly don't expect them to stay that way over time.... and I pick away (add to the position) on days like today. That usually (short term) adds to my loss... but I don't care about that --- I'm SCALING IN. I never buy an entire position at once. Some of you can't scale in -- so this is info for when you do get to that place... So this post is just about how I personally use a down market day.

Today I added 5000 shares to my Banco Santander (STD) holdings. I have now made 4 separate 5000 share purchases... and I have a "loss" (paper only) in the name. They pay a very handsome dividend and I expect this world bank to be just fine 3 or 5 years from now. In the meantime - they're paying me to sit on my hands. :unibrow: The name is still a low holding in my Schwab account... and I don't expect to get to 5% in this name because of the share price -- I'd simply have to own too many shares to get to what constitutes 5% of my investable assets. So there's another INVESTING 102 lesson. You don't have to have any particular number in any particular name. The 5% "rule" is about THE MAXIMUM - but it doesn't mean you ever have to get there.

So here's another thing to pay attention to and I've written about this before -- it's what I call the "LAW OF LARGE NUMBERS". This is true regardless of how much you're investing!

10 shares down $1 ='s 10 dollars

100 shares down .35 ='s 35 dollars

Doesn't make any difference that the 10 shares are @ $500 each and the 100 shares are only $5

So as you can see -- the one stock that you have the most shares of can really "counter" your other stocks. The more shares you own - the more affect they can have on your performance -- and this is true whether they're going UP or DOWN!

I try to be cognizant of this when looking at my accounts. Sometimes you're surprised at the gain or loss of a particular holding -- and then you have to look at the number of shares you're holding rather than the actual dollars invested. And that's when you'll see this "law of large numbers" take affect.

Today's market is hardly "scary" and you shouldn't be scared by a market that is down 1 or 2%... I'm always HAPPY for days like this because it allows me to add to my positions. It's like going to Nordstrom and finding a pair of shoes you've been wanting to replace - on sale! :woot:

I was going to say for people waiting to buy certain items, they are having a sale today..

Greg you are right ,, today is not scary but just another day.

And for people sitting in cash.....Time is not on your side...You gotta put the cash to work..

I jumped into the Utilities and Consumer Purchases/tobacco sectors today... thats why the down market. :cheers:

go take advantage of the "After Albert buys" Sale going on now! ;)

Too funny Albert! But it is an absolute truth that right after a guy buys the market goes down... thus my "scaling in".


Okay -- so I forgot a key part of my post about looking at your account and picking away at any of the names you've yet to "max out" on... and that key part was to not look at just the numbers as in --- a $10 stock is down .50....
Rather -- look at the PERCENTAGE move. So Banco Santander (STD) is down today - and I took some more because it was down 5%... This is a $7 ish dollar stock -- so it's down a whopping .45 CENTS - but that .45 cents is 5%

I have other stocks that are down in dollar terms far more... Phillip Morse (PM) is down $1.22 as I write - but that's only down 1.43% so I'm not taking down any more PM for a picayunish 1.5% move... But STD down 5% if it just comes back to YESTERDAYS closing price I'd have a 5% gain.

I'm not looking for 100% gains -- or 50% gains... tomorrow... or by the end of the month. I'd like (LOVE?) to have a 10% gain by years end... but if I have a TOTAL RETURN of 10%+ by years end I'd be thrilled.

So watch for PERCENTAGES... because that's how you make money!

It's comforting to know it's not just me. Stay the course, the tide will come back in. :thumbsup:

You guys are too funny.. The after Albert sale....Dang you are smart and funny..:thumbsup: :lateral:

Yes, I am looking at the long term, so the in and out flow does not matter..

Stocks never rise in linear fashion, and I am just looking to the yearly or long term average too...

Double digits would be nice...Ya, 10% to 12% would be a win in my book for a yearly average gain.

So... Now i am covered in these sectors within my ROTH:

Retail/Wholesale (MCD) 19%
Comp&Tech (MSFT, CSCO, APPL) 16% (before "Investing 102" purchase)
Utilities (ED) 26%
Consumer Staples (MO) 26%
Aerospace (LMT) 5% (before "Investing 102" purchase)
Medical (PFE) 5% (before "Investing 102" purchase)

What sectors would be a good offset for these? My next two considerations for next weeks purchase ($2k) would be possibly be in Finance, and Oil/Energy. Just trying to gauge where to invest my "time" to research. ;)

I'm looking at my Rollover IRA (Fidelity) and when you say to look at the unrealized losses/gains, would that be the same as ''changes since purchase, dollars/percent". Navigating Fidelity's page is somewhat troublesome so I'm hoping their terminology is just different and I'm not looking at it incorrectly.

Im guessing so. My Sharebuilder (where i have my ROTH IRA) has a "Gains or Loss" column. and the footer notes show thats the gain/loss ($ and %) since "purchase".

Looking at my IRA I've noticed Pepsi is -7.72%, Consolidated Edison is -6.93% & Disney is -2.34% since purchase. Is -5% just your benchmark for scaling in or is that one of those unwritten suggestions for investors?

Well I've been itching to add to my stocks so I just purchased 10 more shares of Pepsi @ $62.29 ($622.90). Combined with the initial 15 shares I purchased at $67.51 ($1012.65). Which comes out to an average of $65.42 per share. With the stock being down -7.73%, and with the intention of holding for the long term I thought now is as good a time as ever.

Sorry theres no real purpose for this post, just excited to add to my investments and looking forward to what the future holds for me once these start to pay off.

Sounds good man... its ok, i feel those "need to share moments" too. i think half mine are. hah..

Any how, i think you basically "did good".. you knew u were keeping them long term, you seen a 7% sale today, you had some cash and you took advantage of it. Does that mean next time it goes on sale for 7% off you buy it also? nah, all depends on what ya got to spend, and when, etc.

Atleast thats how i see it.

Albert, I had the cash just sitting there doing nothing (lazy workers) and for some reason it just never dawned on me to look at the market as "going on sale" when its down. Your comment lit a lightbulb when you said that. So buying seemed like the next logical step. Unlike most people I don't feel bad taking the loss when the market is down and I don't panic when that happens. However, after making the purchase I'm no longer worried about when my lazy workers will get back to work.

And on top of that, who doesn't like buying when things go on sale.

LOL exactly. Thanks Greg for that little tidbit of info. ;) :thumbsup:

Greg, regarding Banco Santander, can you give us some insight about the ADR fees and how do they affect your overall ROI? Banco Santander has been a name I've been watching but being a newbie I want to make sure its something I understand before spending money on. Would this be stock to purchase for my IRA (my retirement) or my Schwab (money I have no attachment to if lost) account.

Excitement is good... You know , we never time the bottom..That is why we scale in..

Even stuff I bought on sale last time , went down before it went up..So i lost, right after I bought...But the dividends, and the rebound finally came, as i thought it would..

It is hard to part with cash, but in the end, the cash will generate nothing, and Inflation will crush you..So good job, on putting it to work..

I won't even look at mine today...because it always ends up up, just not today..:cheers:

Meat on the bone
 

Ok, enough of my usual gibber, and on to good stuff..

Ok, the reason I recommend Kiplinger's magazine is that in this issue, among a ton of great money management and investment info, it talks about Chesapeake Energy and Annaly.

So I know Greg talks about these great plays in your portfolio, and they are.

I just want you to have the magazine so that you see on paper what someone else says about these plays.

How Cheasapeake yields 6.1% and although the company profits may decline this years due to nat gas, it will pay it's interest and principal comfortably. And it also talks about some of it's long term plans.

Also info on another great play, annally..And how it may be a good play for a while to come still...

It just gives you more tools to use to make your decisions...No financial advisor needed...Research and tools...And study and Time..

So check it out if you have just bought these assets , or are thinking about it..Plus some cool , useful info in the magazine..

I have some skills...Some days my skills are better than other days...:lateral: :cheers: :woot:

Annaly has been a big buzz every since i started reading this thread... hmm... lol...

Fortune mag just had a write up about Annaly I believe last month. You have to wonder though, once everyone starts talking about it is it too late. Just thinking back to Gregs comment about "once the clerk at the store tells you about it, its too late". I have also been thinking of adding them to my portfolio though.

Actually It has been talked about since 2008/2009..

It was a top pick back then.. So was chesapeake energy.

I have been studying for years, and a lot of what is being talked about today, was talked about then. So they are still strong, and look to stay that way.

But do not overweigh in annaly..

or anything else.:cheers:

Same here... thats why i posted my comment.. seems they are the "buzz" (them and apple)... which kinda makes me "wonder".

This is why its good to have some of you experienced investors chime in. Help keep us newbies from screwing ourselves.

I am a newbie compared to Greg, so I am here to just share thoughts.

But for sure, we cannot get greedy looking to double digit gains or Annaly, and just overbuy..

But in my strategy, I have in the past, looked to common themes from different sources..And they have sang the same tune for a long time now...

Not just investing , but money management, too... When several sources are all talking about certain things to do, I at least check them out.. See why they like it, or what they think will happen going forward..

Also Kiplinger's talks of Stock's fighting inflation, and not just TIPS, or Gold...

But today has been a reading day for me...There is just so much to learn..A life long journey, and I am bitten by the bug to do the best that I can..

Another one to ask Greg about that has been talked about for years..

TVA.. Tennessee valley authority.

Energy distribution. I could not look up the data, but i am throwing it out there for discussion..

Several good names in "energy" --- with good dividends etc... Connoco Phillips == Chevron -- Exxon... or the pipes -- Enbridge Energy Partners - Kinder Morgan Partners -

You'll just have to do some digging around. (Oil pun - get it?)

No particular "rules" that I use... I just prefer to buy on down days. Sometimes waiting for a down day is futile because "down" is relative - if the stock has gone UP 20% while you waited for your down 5% move -- that ain't so brilliant!

I prefer not to try to time the market -- I just buy "some" -- wait and watch -- and maybe buy some more - up or down - there's no rules - this is all just a giant "who the hell knows" game. It's more a gut feeling for when over any thing else. Nobody has a crystal ball.

What I was trying to point out - using your three names listed here - is that I'd add to my Con Ed or Pepsi before adding to Disney -- given the percentages listed.

You've been reading!! And learning!!

This is the best example YET --- doing what should be done -- you've bought good quality best of breed companies -- and then when you wanted to you added -- showing you're an INVESTOR!

I will sleep well tonight knowing that somebody "get's it"!!! :lateral: :cheers: :woot:

ADR's --- American Depository Receipts

There are fees associated with any ADR -- by the institution that holds the underlying securities...

So here's what that "dividend" payment looks like for Banco Santander (STD) the last time I got a dividend. I actually had a position in this name - then sold it - and waited for a little better news on the euro debt crisis -- then have scaled back into it just in the last month or so.


05/09/2011 STD BANCO SANTANDER SA ADR FSPONSORED ADR
type: FOREIGN TAX PAID
-$322.64

05/09/2011 STD BANCO SANTANDER SA ADR FSPONSORED ADR
type: QUALIFIED DIV
$1,698.13

So as you can see -- the $1700 dividend was actually $1400.... and I'll claim the foreign tax paid on my income taxes.

I like the dividend on this bank over other banks - and I don't expect the name to turn around over night. Some times you have to have a brass set to own some of this junk. I fortunately can buy stuff like this... not sure anyone else should be. It's high risk.

Re: Annaly Capital Management -- or any other 'name' like this....

I'm not the resident stock guru - nor resident stock picker... I really am quite uncomfortable discussing various names like this because you all have different reasons for your investments - different tolerances for risk - different goals - incomes etc.

Here's something also worth repeating:

If you don't know the name -- and don't understand the business the company is in ---- DON'T BUY IT! Because when something goes sideways --- you won't know why you own the name - and won't have any connection with it -- and that's SCARY!

I've been preaching since the beginning of this thread about investing in names you know... and there's no sense in investing outside your comfort level until you own all the "regular good stuff"... why go looking for trouble?

This is Investing 102....

Some of this stuff is for sophisticated investors that understand the risks associated with investments like junk bonds - and mortgage REITS etc. When you start playing with this stuff you better know what you're doing and be on top of the news - and trends etc.

Not saying that I'm sophisticated and you're not --- I'm just once again writing for ALL that read these threads... Please start out investing in all the best of breed - good dividend payers - steady eddies -- and live with that stuff for awhile -- before you start jumping into companies that make nothing... ya don't know what they even do... or what affects their earnings etc.

Thank you for the explanation on Annaly Capital Management. I agree I will have to learn more before jumping into something like this.