A good article for 'Investing 102' this morning in Seeking Alpha.... I love having the internet in airplanes now! I can get all kinds of reading done!

This article - for me - is one of reinforcement about what happens when the SHARE PRICE rises over time -- and the stock pays a dividend.... and if that dividend rises over time and just stays at 3 or 4% of the CURRENT share price... you actual dividend yield could be far higher based on YOUR COST BASIS.

What a marvelous way to make money! :unibrow:

When I read articles like this -- I don't so much look at the stock it might be discussing..... but rather - look at the principles it might be discussing as they can apply to ANY stock.


http://seekingalpha.com/article/5013...g_income&ifp=0

Another "good" but sadly --- heart wrenching --- article about whether or not people are prepared to retire.

Some very sad statistics here....

Hopefully NO ONE reading Investing 102 will fare so poorly!


http://www.msnbc.msn.com/id/47063385.../#.T42Sie0_e0s

Banco Santander
 

So --- Anyone that has this stock -- BANCO SANTANDER (STD) in their accounts --- should receive a notice on HOW YOU WANT TO RECEIVE YOUR DIVIDEND...

You'll have three choices -- and they're important!

The DEFAULT CHOICE is that you'll be paid in cash -- BUT!!! You'll pay 21% withholding to the SPANISH GOVERNMENT... (which is what I do)

OR

You can choose to receive SHARES with NO withholding.

Those of you not living off your dividends should be choosing to get SHARES rather than cash.

Just my opinion.


:cheers:

This took some time to grasp. I got it before the article, but it took some contemplation of what my portfolio might look like in 10-15 years and what my yields might be at that point. Really can add up, and at age 32 I'm hoping it does!

Got my form yesterday. Will be taking care of business ASAP and collecting more shares!!! :thumbsup:

Read a headline stating Warren Buffet reveals he has prostate cancer, what are your thoughts on how this will affect the market? Will a panic ensue for all those investors that follow his every move?

Good question Jose...

My take on it would be that anyone that is investing in Berkshire would have to wake up every morning they held the shares and ask themselves... "is this the day the headline reads Buffet died".

When you see what happened to Apple after Steve Jobs passing.... (it's gone straight up)... then you have to question "conventional wisdom" when you'd be certain the stock would tank.

The world seems to be more willing to shake off events like this and keep on truckin'

I think that most investors - the ones that move the markets - which is not individual investors, it's institutional investors - realize that these people aren't running the day to day businesses.... they're figureheads... and there's lots and lots of really good smart people still at the helm.

Although -- there are just as many cases where the CEO has left and the stock has never recovered from it -- GE being one I can think of... when Jack Welch retired. Citigroup being another. And watch out below if you're a JP Morgan owner and Jamie Dimon ever leaves.

Preferred Shares
 

So here's something we really haven't discussed much -- mostly because of the "102" preference of keeping things simple...
But several people have asked in PM's etc about different stocks/bonds/interest bearing vehicles etc.

So here's a look at a PREFERRED STOCK I own as an example.


Here's a dividend -- not interest (big difference in the tax rate) -- on a PREFERRED stock that I have in U.S. Bank (USB) Note the "+L" after USB. In Schwab, that's it's symbol. Since there are several, or can be, several preferred's issued they tack on an "A" or "L" etc. Preferred's carry a fixed "interest rate" but is paid as a dividend. It's paid as a fixed rate - thus the notation of the rate. Really - preferred's are a hybrid of a bond and a stock. You'd buy these kinds of investments when you're looking for an "above average" dividend - you don't want "interest" - and you're not looking for much growth in capital. The growth in capital is constrained by the rate the preferred pays. They carry a due date like a bond - where the issuer is going to pay "X" for them. They are also "callable" (most of the time) which means that if the rate being paid is too high - the issuer can call them in and "retire" them. So that generally tends to put a cap on the price.

I'm not sure I'd buy these inside an IRA unless you're creeping up on retirement and want some safety and a higher yield.... if you're say -- under 60... I'd stick with capital appreciation and dividend for the total return. But wanted to just show these various ways to earn a dividend. My holdings are NOT in any retirement accounts (I don't need retirement accounts - I'm already retired! :D ) so I like the higher cash flow some of this type of stuff gives me.


04/16/2012 USB+L US BANCORP 7.875% PFD DEP SHS REP 1/1000 PFD D
type: QUALIFIED DIV
$3,483.62

I was checking my home made mutual fund that i started creating on 2/1/12.
Started with a paltry 4k, not much i know, but as of today its up $625 with a 16.5% return. Not bad to me for not doing anything. I just need more money now.
With thanks to Greg for getting us thinking and DOING something instead of just thinking about it.

Fantastic!


Making money on your money -- that's what this thread is all about.


BTW -- NOBODY starts with a large pile.... you have to start somewhere... and just getting started is the best thing you can do!

Here's another "thought" about investing....


If you want to see what MAKING A PILE OF MONEY IN "Dividends/Interest" looks like --- IF any of you OWE money on your VISA/MASTERCARD.... just look at what they 'make' every month on what you owe.....

YOU should be making that -- not them!!

:D

BE THE BANK --- Don't owe the bank.

Wow! nice!! much better picking than what I did when i started early march. lol

I'm down less than 1% total, with some real " go getters " vs some laggards. But the important thing is I believe in the companies I own. Greg was oh so wise when he told us to research and get to know the company. :thumbsup: :hail:

Thanks Matt!


I started investing in the mid seventies.... so there is some "experience" in my bag. Over the years I've done a little bit of everything investment wise... and the biggest thing I've learned is the human psyche plays a key role in investing. Knowing what you own is critical when things aren't going so well. An investor can do his portfolio a lot more damage during bad times than he can make during good times... That happens when we sell LOW. When the weak hands get blown out.

2007/'08 and the recovery since then - is a perfect example. Those that blew out - lost money. Those that held - are back and making money. :thumbsup:

I'm generally hovering between +1% and -1% each day... but, not worried. I know they'll go up over the next 30 years. lol

plus, i'll sit and collect my dividend even while their "not moving" much. :woot:

The Schwab portion of my portfolio (the only one I use for info here) is

UP 4.44% Year to Date

UP 4.17% 3 months

UP 12.52% One year


NOTE:
I DO NOT re-invest the dividends or the performance would be higher. I don't re-invest because I'm retired and live off my dividends and interest.

Here's another good article on DRIP - Or Dividend Reinvestment...

I particularly love the "disclaimer" at the end...



http://seekingalpha.com/article/5066...ividend-growth

Yeah, some day in the future I'll be in the green. my timing sucked. I wish I had made some gains before everything started heading down. I'm long term so I won't worry about it, let it ride!

Well don't feel bad Bob! Go back and review the 5 year chart of the companies you've bought and ask yourself "when would have been a good time to get in"?

Of course the bottom of the market - in '08 maybe... but then we'd be thinking you're an investing god! :lol:


Okay -- so along that line.....

I've now built (scaling in) a 60,000 share position in Banco Santander (STD).

I'm going to use this for investing 102.

This stock pays a very nice dividend even with the tax issues it has (Spanish withholding of 21%) and I like it as an international 'banking recovery' - just as we're now seeing here with U.S. Banks. I like to be ahead of the curve - because if you can be "early" you can catch a nice 20%+ upside on top of getting the dividend.

Well....... in this case I've been WAY TO EARLY -- and now I'm trying to catch a falling knife. Not a good/smart strategy. BUT -- BIG BUT -- I have enough dough that SOMETIMES I can buy my way out of trouble... by bringing my average cost down WITH the market for the stock. I started this position in FEBRUARY --- 5000 @ $8.54 -- then 5000 more later in the month at a lower cost -- then 5000 more in March @ 7.88 and so on. What I didn't do was to wait LONG ENOUGH between buys - on a stock that was obviously falling (the falling knife) thinking that I wanted a dollar amount in the position - and that the stock is "cheap" and it pays a higher than normal yield..... so I was okay with that.

Well -- the position - and chasing it down ended with 40,000 shares at an average of $7.65

So today -- in order to actually move my average cost down a bit - I bought 20,000 more shares at $6.28

So to have any impact on your per share cost average - you have to buy more and more shares to bring that cost down. And what I'm trying to do is to get my average cost "CLOSER" to where it's trading. That way IF -- BIG IF -- it comes back -- it has to come back LESS than it would if I just stayed put. It can also just make my loss larger. The position is still not where I will take it DOLLAR wise...

I once chased a stock to a position of 93,000 shares. When I finally pulled the plug I ONLY lost $1.00 per share (a narrower loss than I would have had PER SHARE) but the "law of large numbers" still cost me a fortune! So this strategy is not "smart" nor does it always work. I'm just using it as an example of what "averaging down" is. I've made this strategy work more times than not - but you have to have stones of steel and CASH to work with. :cheers:

Don't feel bad Bob...

We all have stories of "I should of"..."I could of"...

I could have been one of those investing God's Greg talks about..

Sure I bought property in Late 2008/early 2009, But I KNEW to start adding big to my positions in early 2009...IF I would have ? Triple gains on six figures...

BUT, I just dollar cost averaged more in....Sure that worked out good, But since I thought I had Big balls back then, but I wish I had listened to my research and my little voice...I did , but not as much as I " Should have"..." could have"...

I would have a quarter million more in my Portfolio..But I don't.....So, we all have those regrets...If you don't have any, you haven't been investing long..

We just hope we win more than we lose...:cheers: :lateral:

U a brave man, Greg. heheh

When u mentioned that stock a month or so ago, i've "eyed" it on occasion and noticed it dropping.

Well.... yes... and also STUPID. However.... I also pick up a $9,366 dividend per quarter while waiting...

lol true. very true.

Seriously -- that's where getting a dividend REALLY REALLY helps - because it keeps pounding money in your pocket... where a pure growth stock does not. If I've learned ANYTHING over the last 30 years -- it's that.

yeah.. when i first opened my investment account in roughly 2008, i got $50 free. So i bought $25 of google. (well, 21 after commission).. its worth a whopping like 30 today. sure would of been nice to also get a dividend during those years.

on the other hand, i also bought $21 worth of Apple, which is worth like $100 now. heheh. got lucky on that one. but, not enough to write home about. but it was a "success" story for me. but, ive flopped some too. But that was before i understood what we're doing here now.

And for those that reinvest the dividends, it automatically averages down your cost / share. As an example with STD, I own 600 shares at an average cost of $7.50. They pay a dividend on May-09-2012 of $0.2291 / share. At the current price of $6.34, I would get 21.681 shares. My new average cost per share is $7.235. Assuming a similar dividend and price / share next quarter, my cost / share could be under $7 without doing anything. This is where the yield vs. cost basis becomes exponential. Extrapolate this out 5 or 10 years.....

EXACTLY

I have 12 stocks spread across several sectors in the Schwab account I opened in January. Now I want to invest some additional money. Some have done considerably better than others. A couple are down a few percent and I have a handful that are well above 10%. Should I invest the additional funds in the better performing stocks, or spread it evenly across the board? I also have a few that have done well in my 401k, would it be a good idea to add them to my Schwab account?

Thanks,
Don

I would ALWAYS choose MORE diversification over anything else. It's easy to load up on the current winners.... but they won't always be the winners... a year from now the loser could be your big winner!

I'd like you to look at ALL of your investable funds as one giant account... and don't duplicate - and get the most diversification you can get taking into consideration ALL of your investments.

It's ALL your money! Just because they are in different accounts doesn't really make any difference. That should only be a consideration when you're looking at investments inside the IRA - because you don't need tax advantaged investments in there -- they're already tax advantaged!

Thanks Greg. I appreciate the time you take to answer these questions. I've learned quite a lot and made a little money thanks to you and this thread.

Don

That's making my day right there Don!

Today I've Uninstalled the '32 roadster rear end -- made some money in my stock accounts (a nice up day) and helped somebody while I'm at it! That's a good day!

Another thing to consider is whether or not you will continue to have these chunks of money to invest and how big the chunks are. If you are going to continue to have these chunks of money to put in, pick one or two of the stocks you currently hold or a new one and put your money to work. With the next chunk pick one or two other stocks and just rotate through. If this is a one time chunk, diversification is really the way to go. Make sure you feel like you've got the best of the best. As long as you have the confidence in that like Greg is preaching you'll weather the bumps in the road much better.

As far as sizes of stock purchases, I like to keep the commission below 1% to get in. So if your commission is $7, buy at least $700 worth of stock. The lower you can keep this percentage, the better. Keep this in mind when thinking about the # of positions you may want to add to. In Greg's world, he is looking at 0.01%! :bow:

I got a good laugh out of the .01% commission comment -- but it is somewhat true I guess...

Here's the trade on Banco Santander (STD)

20,000 shares = $125,590.86 commission was $8.95 so total was $125,599.81


I think that works out to even less than .01%


:rofl: :woot:

Holy crap, $8.95 for any size trade? :wow: :hail:

Yes Matt! That's Schwab! Any trade -- $8.95

I don't know what account "size" that starts at -- or if all trades regardless of the account size are that amount. :cheers:

That seems normal. Sometimes it depends on trade volume or account size, sometimes not. For my accounts, Zecco has $4.95 commission and Fidelity has $7.95.

It's just important to keep an eye on commission cost. You really want to try and avoid paying 5% to establish a position. If you're just starting out with a small amount of dough this is important. If you're buying $1000 - $2000 of a stock at each purchase, then don't worry about it....

On these "big" (they're actually not so big) down days --- when you start to wonder why you're in the market.... go back and look at the 5 and 10 year charts of your stocks. Traders (a definition) are always talking heads and always have some reason for why the market or a particular stock is doing "X".... INVESTORS look for the underlying value and long term reasons for stock ownership.

If you have some "new money" to put to work -- WAIT until this summer... the market is always down in the summer.... I usually don't start buying again until AUGUST. This is a very short horizon in the scheme of things.

Cool! I'll have some more money to play with then I do believe. So I'll keep an eye on things until then.

I can't find any definitive answer as of today -- but I "THINK" Coke (KO) just voted to split it's shares 2 or 1.....


It was talked about at the annual meeting - but I can't find where it was voted on or not.

Coca-Cola (NYSE:KO) wants to do something it hasn’t done in years — offer a stock split.

The company’s board of directors voted to recommend a 2-for-1 split this morning. If approved by shareholders, it would be the 11th stock split in Coke’s near-century as a publicly traded company, and the first in 16 years.


Under the plan, which shareholders will vote on July 10, the number of outstanding shares of the beverage and snack food maker would double from 5.6 billion to 11.2 billion in August — the number of outstanding shares will go from roughly 2.26 billion to 4.52 billion.

KO shares have gained about 7% this year — including a roughly 1% boost Wednesday — and currently trade around $75.

from that article sounds like they voted to recommend it this morning. In july the shareholder will vote yes or no on splitting.
One thing I'm wondering is since they split the shares, does the dividend also get cut in half also? Only got 82 shares would be nice to have 164 shares.
Got like the compunding dividend.

I read this in another article
"If the latest proposed split is approved, the company noted that a single share purchased in 1919 for $40 would be worth more than 9,000 shares and $341,545. If dividends were reinvested annually, the share would be worth $9.8 million.