Averaging down is a very good way to work out of a "problem" stock.... IF -- it's a stock you don't mind owning for awhile. I've done this zillions of times and most of the time it's worked out real well.

One time I averaged into a 93,000 share position that eventually cost me a $1.00 per share loss.... I was trying to save an $8,000 (total) paper loss in the position. That was extreme -- but was worth the loss for the education it provided! :lol:

Yes, it does normally work but it's important that the size of the position stays in check to the rest of your portfolio. SAN was starting to "stand out" i guess you could say as a percent of my portfolio. That is where I started to get nervous - as even though I don't mind holding on to it for the next 25 years, I don't want to lock up that much of my portfolio for that long. At one point it was almost 15% of my portfolio! :brix: So I've since averaged out of the position and parked that money elsewhere for other opportunities....

Just a "thought" as long as I'm blabbing here....

I'm NOT anti taxes... I DO use the tax laws to my advantage... and I DO have people that know where we should be invested in order to minimize my tax bill and get the best returns... Having said that - my tax bill for 2011 was 1.7MM so I'm pretty comfortable in my skin knowing that I paid my "fair share". 1.7MM and I still only get ONE vote...

What I am AGAINST is WASTE.... and it's my personal belief that the government can waste more money than anyone in the history of man.

I also believe that people always spend more than they earn... and the government is no different. Give them more money and they'll spend it and some more.

I am also firmly against the 'them vs us' pitch that's being used to generate dissension and division in America. America has always been only about US - together - and about how we fix OUR problems.

I watched a discussion on CNBC this morning about the "Americas Cup" sailing race -- and the BILLIONAIRES BOATS.... The takeaway was that spending zillions on these racing boats was GOOD for everyone because of the solutions they bring to issues etc - that - (think Carbon Fiber in race cars - that was super exotic only a few years ago!) eventually make their way down to "us". Without this excessive spending -- things tend NOT to advance. We've all benefited from the Carbon Fiber parts "invented" at some great expense to someone that went before us. So I'm all for it.

Chevy spent a fortune racing aluminum blocks in order to eventually give us the LS engine series... Well... IMHO I'm glad they did! :cheers:

Agree with ya Greg. I think part of the problem that divides us is intentional by the media and politicians. We are all the same and have more in common, but anytime you hear something from the media or politicians, it's always a matter of sex, race, class or religion. Anyway...

I'm no expert in this field, but what do you all make of Soros dumping his stocking and buying over a million worth of gold stock?

One million to George Soros is like $1 to you and I....

It was pointed out the other day on CNBC that Soros doesn't run his own money anymore - he's 80 some years old - quit his hedge fund and returned all the client money - and now has the lions share of his personal money run by several different firms.

I'd need more facts -- or to see where this info is coming from to be able to have any opinion one way or the other.

Yes, and I'd need more facts to firmly believe what CNBC is saying as well.... at 80yrs old would you let 'others' handle your affairs after you've been doing it all your life? I find that hard to believe, but this is a good point that 1 million isn't much to him.

They interview him all the time -- so that info is from "him" via CNBC.


He's marrying some super young chick.... so he's maybe playing with her more than his money. He's got plenty!

Greg, I haven't been in front of my personal pc since Wed eve. Just checked in this morning and In those two days you've provided me with more info than i've learned in my 46 years on this planet. BIG thank you for continuing sharing your experience with us. IT IS MUCH APPRECIATED!!!!

My brother is a CFO of a large law firm here in the Bay area and is helping coach me. My whole family is in "managing numbers" to some degree. My dad has been telling me to get started early. Well, When your 27 (1993), have three kids, wifey staying home with them, net 515 a week, own your own "townhome", NO debt other than the town home, theres not a whole lot left over to "invest" when survival is the name of the game. We bought our company when i was 30, it was bankrupt and def a "fixer upper". So I started investing 1100 a month at 32 (now 46) and while we have something, its not impresive. So I am getting a little more aggresive NOW.

Once again, thank you, Mike

I like Greg's point of owning only so many assets...I own 17. I don't ever see me owning more than 20.. It is not the quantity , but the quality.

As Far as Gold, and Greg's point about the election and who is the Leader.

I use the Nation's politics in some of what I do..I always keep 5% in Precious Metals as an Insurance. Since 2008, I rose that to 15% plus...I am using the cues from the Federal Reserve and the Administration as my guide. Is it a long term play ? No, but is has gone up 125%..

So although it is not long term, it is part of what I am doing...If things change in the Administration in November, I will dial back to 5%. If nothing changes and the Congress and House and Leadership stay the same, I see more stimulus, which will devalue the dollar..

I always have other plays other than steady eddy's...:cheers:

Also with Precious Metals, I am not one to keep large amounts in physical metal in my safe for armageddon..

Sure i have some, but most is in ETF's around the globe.Australia, Canada, and the U.S.

If I see a shift in the Market with the Federal Reserve, I can sell it without loading it up and running to the store, haha.. I can put in the order to sell it, if the Market for commodities goes sideways on me...

Per my usual morning... I'm watching CNBC and a guy comes on that had some interesting things to say about APPLE (AAPL). And as per usual - I (many times) will look up the guy just to see his background etc. It's standard for me to "check someone out" because what they have to say can be discounted or re-enforced IMHO depending on their credentials etc.

While poking around their website -- I found this interesting little tidbit and thought it "relevant" for Investing 102 education.



Historical studies show that dividends contribute one-third to one-half of the total return in the stock market over longer-term holding periods.

I like that!

Agency Mortgage REITs Likely To Benefit From Treasury's Modifying Fannie, Freddie Backing Terms

http://seekingalpha.com/article/8157...g_income&ifp=0

Mr. Weld - What's your take?

Wow that is a telling statistic! I interpret this as a non-dividend portfolio growth would have to outperform by 66% to 100% just to 'keep up' with a dividend-based portfolio, correct?

If you're not investing in stable, dividend yielding stocks, there better be a darn good reason.

Yeah -- I'd read that article. I hold 35,000 Annaly Capital (NLY) shares so I follow any news like this.

My take is that we're still in the "undecided" camp on the economy and "rates" in general. It's a delicate balancing act of being ahead of the "curve" - in layman's terms - getting OUT of shares like this BEFORE you get killed -- and still holding - because of the outsized returns (dividend/interest) the name pays.

So - let's put that into an Investing 102 "thought process"..... using my holdings for an example.

35,000 shares @ todays price (17.04) = $596,400

Dividend payout currently = $19,250 PER QUARTER = $77,000 annually


My cost per share is $16.76 -- so right now I have a $9,600 "paper gain".

I don't buy shares like this for the "gain" -- I buy them to bring up my average % of "income". Remember that we're always dealing in money with PERCENTAGES -- and something like Annaly that pays almost 13% -- really helps bring up that average. If you had $600K in Coke and $600K in Annaly - you'd have some safety with a pretty decent "average" dividend. So this is how I "balance" my accounts out.

Now ------------ Let's say this cut the dividend payout by HALF --- so dropped from 13% down to 6%.... That would give a stock like this a BIG haircut! This is where we try to use some historical data to help up make a call on whether to buy or sell.

In 2006 NLY paid .26 a share dividend - and their share price was $16.00.... So that dividend rate was HALF where it is today -- but the share price was only $1 less... and over a 5 year period - their dividend rate has been all over the place! They've paid .75 a share - and they've paid .32... but even when their shares were at the low of the period (2008) at $9 - they were paying .55 a share.

Their range is about $2 a share for the last couple years -- somewhere between $16 and $18 bucks a share.... and the REASON for that is because of the "high" dividend payout.

So the conundrum is -- if they continue to pay me $77K per year -- is that more important than the CAPITAL AMOUNT I have invested. If their shares went down by 50% - I'd have a paper loss of $300K.... but if I get $77K per year - in 4 years I've gotten my money back... and who knows where the share price will be then.

My big worry would be if they cut the dividend in half SUDDENLY --- and the shares dropped by half. But when you look at the historic relationship of the share price and the dividend - they don't seem to do things SUDDENLY... AND if I pay attention to the MORTGAGE RATES I should have a good telegraph of what is going to happen in the future and therefore be "forewarned".

OKAY SO I'M BEING LONG WINDED.... but I'm trying to use this as some kind of "learning" experience for this thread....

The long and short of my take is -- it "depends" -- it depends on your GOAL for your investments. My goal is different and my horizon is different. My goal is CURRENT INCOME.... I already have the capital. I can sit and hold and collect that wonderful dividend/interest. I'm not freaked out by $1 or $2 capital "change". What I'm also going to say is ---- that people NEED TO UNDERSTAND WHAT THE COMPANY DOES AND HOW SMART THEY ARE.... because in the end --- that is what you're investing in! You need to trust the management to be way smarter about what they're doing than you are!

So go here and just read some of this....

http://www.annaly.com/site/marketcommentary.aspx#Asset

And you'll see that RMBS (Residential Mortgage Backed Securities) is just "some" of what they do...


BTW -- THE MARKET will tell us what they think - and THE MARKET is fickle... and if they sense that NLY won't be able to make a ton of money and pay that huge dividend -- we'll see that reflected in the share price. And since the price doesn't move all that much -- if you're at all concerned about what the upcoming elections have in store.... and how that will affect our taxes etc... then it never hurts to get out of the way of a train coming down the track...NLY only moves a little - so if you get out - you can get back in - it's not like they're going to jump $5 a share like APPLE....

ME? I'm holding and collecting that dividend. It's just too hard to find CURRENT high rate relatively safe places to put money to work.

I'd written before about BONDS - and that this years bonds were coming due and to roll them into the next 5 year due dates - I'd be taking a cut in return (they're paying 2%!) so I built up the cash and bought into an apartment LLC instead. Remember that we always have CHOICES where to put our money!

Thank you, I like it when you think out loud. :thumbsup:

Me too, thanx Greg.

This site is a bit wild in predicting the end of the world, but they seem to have some interesting info on when/if another financial crisis is on the way

http://truththeory.com/2012/08/18/st...something-big/

and that the govenment is getting ready for the resulting protests/unrest

http://truththeory.com/2012/08/16/th...y-one-purpose/

what do you guys think?

Which one of you guys bought BPT ?

Come on now, who was it ? It got hammered today for the first time in years...

:_paranoid

Obviously buy ammo mfgs. Sorry but that website is hilarious.

Sin stocks are the way to go...

People will be smoking and drinking..More so in a down economy...

Armageddon ? Not too worried about it...Life is too short , and I will stay invested and enjoy everyday...

No hiding in a Silo for me...:thumbsup:

Yeah, assuming you think the economy will contract at all again, I'd suggest looking at areas that benefit from that. In 2008ish I was looking at Ross, assuming that with everyone pinching pennies, people that might otherwise shop somewhere more upscale would go there. I was so paranoid about more drops that I ended up pulling what I had out..

The chart tells the tale: 11$ in November 2008, 70$ today.

So what you just said ---- is EXACTLY what the average (not disparaging you in any way) person does...

They're happy as clams putting money IN when the market is high or flying... and as soon as it turns they start thinking about pulling out... MORE MONEY is pulled out at the BOTTOM of the market.

Ya know what that is?? Buy HIGH and sell LOW... and the smart money knows that to make money you have to buy low and sell high...

Look at this recent housing market for a CLASSIC EXAMPLE... people couldn't buy houses fast enough at the peak... then the minute the spigot turned off they all tried to sell which only exacerbates the downturn. The big money is buying houses NOW and buying apartments that are distressed etc... and buildings etc.

People need to recondition their thinking to be able to take advantage of things handed to them on a silver platter. A weak economy or a recession is when it's time to buy like a pig... Back the truck up and fill it up!

The people that have HUGE gains in the stock market NOW - are the ones that invested in 2008 and 2009... they're sitting on 100+% gains.

Apple shares were $82 in November of 2008.... MO was $22.... CVX was $57...


You have to start thinking "on sale" -- like the food store does and the clothing store does - and that big screen you want -- you wait til stuff goes on sale... then you pounce!

exactly, I didn't buy all this ammo for nothing.

don't buy into the fear, if enough people cry the sky is falling, someone will make it happen. Buy 500 shares of AIG and call me in the morning. :thumbsup:

Sorry -- But I won't even bother to click on sites like that... it's just like reading the headlines at the grocery store check out line... UFO's invade China... Big Foot really killed JFK...


:willy: :rofl:

Here's a very well written article on Dividend Investing -- and the possible "bubble" that people speculate about.

There's a lot of really good info in it's entirety -- but you only need to LEARN from the very last paragraph. THIS IS SO TRUE IT HURTS! When everyone was talking about dot coms -- it broke -- when everyone was flipping houses - that broke - when everyone was into gold - it peaked...

What I truly feel is different about dividend investing is that people are FINALLY learning that it makes sense to GET PAID to invest your money. So until prices just get stupid (which would drive down the yields) --- or we get into the age old war of rising interest rates competing for capital.... we're safe. But read the article when you have time because it's (IMHO) good stuff.


http://seekingalpha.com/article/8261...g_income&ifp=0

But the smoking bubble is sustaining itself well:
http://finance.yahoo.com/news/altria...151915822.html

:woot:

Dividend investing is somewhat self controlling as most people watch %-yield. If lots of people buy in, share price goes up and yield goes down. Suddenly it's a bit less attractive and people stop buying. Share prices may settle back down or the dividend may increase - yield goes back up and it again becomes more attractive. All related to risk of a certain stock, but %-yield is what really keeps things in check. Most people won't buy an Altria (MO) at 0.5% yield, or Annaly (NLY) at 1% yield. These types of things really make it dividend investing a good long term strategy and somewhat immune to bubbles - only heating up and cooling off.

Put the helmet on and cinch down the belts.........http://finance.yahoo.com/blogs/daily...152145014.html

:question:

Just as soon as someone has it all figured out... it'll take a left turn... or not...


If I've learned ANYTHING with 30 years of investing... it's that I know nothing and NOBODY can predict anything.


So -- I buy things that PAY ME to own them. That may be real estate... it might be stocks... it might be corporate bonds... or muni bonds.... But regardless of what all the talking heads talk about ------- #1 rule is that my investments pay me to own them.

Remember that rule and you'll do well. :thumbsup:

Also don't read anything on yahoo...

Think for yourself, and stay the course.

Also always be ready for a dip...We have run up for a while now..good times..

But we are due for a dip. And that will be the time to add and buy...

And as Greg said, get paid to own something..14 of my 17 are dividend payers..3 are monetary policy plays...

I should have put a smilie there also. No panick, I'm comfortable with my positions and it will be interesting to watch how the market reacts to all the noise in the next month or two.

I have multiple brokerage accounts --- and I get more friggin' memos and newsletters and "insider" info than I can even manage to read... but here's my take on most all of it.

ZIP


It's all just "info" and 100% of the time -- one brokerage's info will say "stay clear of X" and the next day I get a buy recommendation from the other one..
and two days later I'll get a hold recommendation from another. NONE OF THEM HAVE A CLUE.

So here's what I like....


I have 30,000 shares of JNK - pays me MONTHLY .23 or so per share... YEAH BUDDY... do I care that it goes up and down 50 cents. NOPE.

I have 11,500 shares of HYG - pays me MONTHLY .50 or so per share... ditto above.

Both of these can get slammed if INTEREST RATES suddenly go askew... but If I'm paying attention -- then I should be able to get a heads up.

I use the above to PARK CASH... not as a long term investment buy and forget it type deal.

My point is --- they pay me to own 'em! Period. If not - I'm not in it. Someone else can buy the Faceybooks of the world...


:rofl: :unibrow:

Just for fun this AM -- I checked out Facebook (FB) chart and technicals....


OH MY is about all I could come up with. WOW! Here's a real learning experience for newbs to investing. When you are absolutely CONVINCED that you just couldn't loose on some investment.... just go look at this bad boy.

Stretch the chart out to "ALL" and you'll see why I always reference these charts. This is a true "fell off a cliff" chart vs the low on the left and higher on the right that I preach. THEN I looked at a couple other metrics... and it gets worse! The P/E (price to earnings multiple) is 106! That means that the CURRENT price of their shares - even at these lower prices (only lower relative to the ridiculous valuation of the IPO).... that the share price is 106 times HIGHER than they EARN. Let's compare that to APPLES (AAPL) who's share price SEEMS ridiculous -- but their P/E is only 15.8!

I'm not a P/E guy but it does "matter". It matters when the P/E is HIGH --- because the company will have to GROW INTO the P/E... so they're going to have to have some stellar earnings GROWTH in order to get that ratio back to some normal point (whatever that is). It also matters when the P/E is low because that signals a complete lack of interest in the company by "the market" or that expectations for the company are for it (earnings) to SHRINK - and that's certainly no way to invest! It's why you can't just choose one metric to hang your hat on.

Here's the other big reminder. When they say "only invest money you can afford to loose"... it's because they're RIGHT. Because just when you think you've found the next Microsoft or Apple.... it might just bite you in the arse.

If I was a Facebook "fan boi" --- which I'm not because my kids have already moved on from it, and that spells death watch to me --- the play was to buy it -- and since it didn't 'work' right out of the box --- sell it --- and sit on the sidelines and watch and learn... then if you still were a fan -- buy it back at the lower prices and only buy the number of shares you had - not the amount of money you'd invested. SO you'd have bought at 40 - sold at 35 - and then bought back in at 19 or lower... and sitting on 500 shares at 19 is way better than 500 at 40 BUT that still might not work so you come back to that "don't invest money you can't afford to loose".

Look at Kodak... :lol:

All great points.

I didn't want anything to do with it for multiple reasons:
1. I didn't have 'the money to lose". I HATE losing money.
2. I didn't think it would "do anything". What I mean is I've been a FB user for quite a few years now. I've seen it go from a "everybody HAS to have it" to "yeah, some people got it, but those that do, are generally disliking MUCH of what they keep changing". So, eventually, their gonna piss off enough people and everyone's going to jump ship to the next fad. Google+? heh

#2 goes back to what Greg said way way back in this thread. Own something you have an "inside" track to. Own the Home Depot because you shop there cuz your a contractor 4 times a week. When YOU notice its "going sour" in the store, best think about your shares, and if you think the company as a whole is sinking. That's what I "seen" with FB. It was going downhill already. Not jumping on a sinking ship here!

Honestly, they shoulda done something back in 2008-2009. THAT'S when it was at its peak. They were a couple years late. And still, I don't see the "business" model to make $$ over at FB.

I wasn't really just dumping on FaceBook -- just using it as an example of what can go south -- and just how quick it can go that way. It's real easy to stand to the side and examine the carnage.

Obviously -- had their IPO gone to the moon -- everyone would wish they'd gotten in.

BUT... That is the gambling lesson to be learned. And it's a hard lesson to learn! The excitement - the hype. It's like buying a lottery ticket when the prize is 300 million. Everyone is buying into it. But that's 20 bucks not 2000 or 20,000. So in my mind - 20 or 40 is fine to lose. But if you loose a grand when you've got 10 grand invested - that's 10% - and that's an ENTIRE YEARS performance down the tube.

So what is a good rule of thumb for some profit taking?

Good question. I'm not sure there's a quick or easy answer...

Let's examine a couple things.

Let's say a stock has doubled... okay... why? Great growth - new products - killer earnings...

Are you willing to take a double or take some off the table.... but what if it goes up 300% or 1000%...

I think it's up to each individual - their risk tolerance - their gut feelings etc. Personally I have several instances of multi hundred % gainers.... and I'd be a lot richer if I'd let 'em all ride instead of selling along the way...


BUT - there's always a big butt!


Nobody ever went broke taking a profit.

I'd say if you're not fully comfortable with your diversification... or your not comfortable having an outsized gain... then do what makes you feel good.

I'm never one to sell "all" unless something has fundamentally changed and I just don't want anything to do with the company. Scale in - scale out... so take 25% off the table or 15%...

The other big butt....

This question also depends on your tax situation - and don't overlook this detail. Is the gain long term or short term -- HUGE tax hits on short term.... AND is it in a tax account or an IRA/ROTH where taxes are deferred so have less impact.