BTW --- If you have a Schwab account -- there's a couple pages in there that will calculate all of this stuff for you... Look under Portfolio Performance and then find the RETURNS tab --- and it will show you various timeframes...


The account I use here (I have FOUR Schwab accounts - So it's easiest to just pick one for consistent use here) for my examples -- is UP Year to date - 22.47%... and it's ONE Year performance (which is just one year back from todays date) is UP 18.75%


Any way you want to look at it -- those numbers (and yours) beats the current bank CD rate - BOND return rate etc...

I like to look at my numbers too, it's not work for me, it's more like therapy.

One trap I have caught myself doing in Quicken (where I keep all of my investment records) when a dividend is reinvested, is shows as an add on to the cost basis...which is technically correct, but if you are just looking at a portfolio value report with a cost basis and a market value column, both can be going up at the same rate and it looks like you are just spinning your wheels.

You have to run a return on investment report and customize it to show the actual return for the periods and accounts or securities you want to review. This will calculate the ROI on not only the income reinvested but also any additions or subtractions you have made to the account during the set period.

Once you get the hang of running the specific reports, and find the ones you like you can save them and click on them to review any time you want.

That's basically what I've done with my own simple calculations, Lance. I only have Excel or Open Office's version of excel really so I sit down and crunch the numbers periodically so I can see where my gains are. A few of my stocks have good Dividend Gains but the Capital Gains are not so great bringing everything into the red. I like to know that distinction. I also have one stock that I cannot reinvest the dividend in and I have to treat it differently than the rest when calculating or else it looks like I'm losing money on it when in fact I'm making a small return. Yesterday, I went ahead and set up a spreadsheet book to track everything. It's simple but it works for me.

If I didn't already have the Fidelity and Vanguard accounts, I think I would go with Schwab simply for the tools you've mentioned, Greg. Maybe those same tools are available to me already but I'm not finding them easily. Fidelity's website does a much better job of breaking things down and displaying them than Vanguard's in my opinion. Of course, I am amateur so maybe I'm just not understanding the terms in which the info is displayed.

I have been using Quicken for years, for both my personal bookkeeping and to track my investment accounts. when I started using it it was still in DOS format if that tells you anything. It really is pretty cheap to buy, super easy to setup and use and works very well.

I'd bet if you bought a copy of Quicken Home and Business, or maybe even just Quicken Premier...in a week you'd kick yourself for not doing it much earlier. It automatically downloads all of your transactions and holdings from your financial institutions so all you have to do is review and accept them and you are done. Then any data you want to look at or see is at your fingertips whenever you want.

If anyone wants to try Quicken out, I know the program inside and out and would be happy to help anyone with initial setup or use of the program.

Here's for everyone that wants to figure this stuff out.


ROI = (gain from investment - minus - cost of investment) DIVIDED BY - Cost of investment




Here's a page --- from a website you should all get familiar with.... that will help you with ROI


http://www.investopedia.com/articles...lating-roi.asp

'Annualized Total Return'

A mutual fund could earn returns varying from 3 to 5% each year and have an annualized total return of 3.995%. On the other hand, a fund could also be much more volatile, losing 3% in one year, earning 12% in another and have an annualized total return of 4.23%. The difference is the first fund would offer steady returns while the second would offer widely fluctuating returns.

Annualized Return = [(1+R1)*(1+R2)...*(1+Rn)] ^ (1/n)

Where R = annual return for a given year

The return on any investment, measured over a given period of time, is simply the sum of its capital appreciation and any income generated divided by the original amount of the investment, which is expressed as a percentage. The term applied to this composite calculation is total return.

However, there is a difference in this simple concept as applied to stocks and mutual funds. Unfortunately, a great many mutual fund investors do not seem to have a clear understanding of a fund's total return. The relationships between a fund's net asset value (NAV), yield (income) and capital gains distributions can be confusing. For stock investors, calculating and understanding their total return is relatively easy. By comparing how total return is derived for both stocks and mutual funds, you'll be able to better understand how this measure works for mutual funds.

Stock Total Return
We begin our illustration with a share of XYZ Company that is bought for $30 at the beginning of the year. During the year, its price fluctuates, but it closes the year at $33, which represents a nice percentage return on the investment of 10% ($3/$30).

But, things get even better because XYZ paid an annual dividend of $1 per share. This dividend equals an additional 3.3% return ($1/$30). Adding together the capital appreciation (price increase) of 10% and the income return (dividend) of 3.3% gives us a one-year total return for XYZ Company stock of 13.3%. However, remember that unless you sell XYZ stock, the price appreciation gain remains in the stock price, or is unrealized. (For more on this concept, see What are unrealized gains and losses?)

Fund Total Return
With mutual funds, explaining total return is a bit more complicated. We begin with a share of the ABC Fund, which is purchased at its net asset value (price) of $16 per share. A fund's NAV is derived by dividing the value of its portfolio securities (the fund's assets), less any accrued fees and expenses (the fund's liabilities), by the number of fund shares outstanding.
Here's an illustration of the computation of net asset value for the ABC Fund:

The fund's cash and cash equivalents = $200,000
The fund's stock holdings at market prices:
10,000 shares of Company X @ $50 = $500,000
20,000 shares of Company Y @ $30 = $600,000
50,000 shares of Company Z @ $8 = $400,000

Total market value of stock holdings = $1,500,000

The fund's total assets = $1,700,000
Less the fund's liabilities = $100,000
The fund's tolal net assets = $1,600,000

The fund's total shares outstanding: 100,000

The fund's NAV: $16 ($1,600,000/100,000)




Remember that mutual funds are priced once a day, at the end of the day. Unlike stocks, where prices are moved by the supply and demand forces of the marketplace, fund prices are determined by the value of the underlying securities in the fund.

In our example, ABC is a hybrid stock/bond fund with a growth-income orientation. Apart from capital gains, its individual portfolio holdings will generate dividends and interest. By law, mutual funds must distribute these to the fund's shareholders. ABC's income distribution (its dividends to shareholders) for the year amounted to $1 per share. In addition, the fund's trading activities (the buying and selling of securities) generated a realized capital gain of $3 per share, which ABC also distributed to its shareholders.

The ABC Fund passed along all the earnings and capital appreciation it generated - $4 ($1 in dividend distributions and $3 in a capital gains distribution) to its shareholders for a total return of 25% ($4/$16). Here again, unlike a stock, by paying out all its capital gains, the ABC Fund's price, or NAV, remains at or close to $16. In this scenario, if a fund investor only focused on the movement in ABC's NAV, the results would not look very good. It's even possible for a fund's NAV to decline, but still have good income/capital gain distributions, which will be reflected in a positive total return.

Obviously, a fund's NAV does not tell the whole mutual fund performance story, but its total return does. It captures a fund's changes in NAV, its income distribution and capital gains distribution, which, as a whole, are the true test of fund's return on investment.

There's no GOOD Quicken for MAC users.... particularly if you're up to date on the latest OS (Mavericks).

Well, not sure what to say about that... :D

Don't most Apple users setup a Windows partition or something like that so they can run the rest of the good software available out there? ;)

My wife - having spent 19 years as a Director at Microsoft (starting in 1984) - won't let me run any of their stuff.

I hear ya... My Mother in Law wanted to invest in cable TV back in the late 70s but my Father in Law wouldn't let her. Said "nobody will ever pay for TV when they can get it for free"

To this day they still don't have cable TV in the house.

:headscratch:

Anyway, that's a bummer as it really is pretty decent software.

I tried!


They just only do the Quicken Home and Business for Windows... and their other products are about a year behind OS Mac wise...


I tried running the Mac / Windows thing -- blew it off a couple computers ago - I just don't need the hassle -- and I'm truly a Windows hater. I eff'd with that crap for 25 years - making everyone else's computers run - and fixing settings - and downloading endless "fixes"... NOW -- NO WAY! I open my little Mac up and just use it - and if someone calls and asks how to do "x" - I just say "sorry... don't run that crap anymore so I have no clue". Life is good now. :>)

Think this is now 9 years of running Apple stuff... and while they might not do everything perfectly - they put the FUN back into using a computer for me. Since I don't work - I don't have to open anything I don't effin' feel like! HA!!

Another year end (actually you can do this ANYTIME) for you SCHWAB account holders --- if you're in your "positions" page --- Click on "VIEW UNREALIZED GAIN/LOSS" --- just above where it lists your positions there's a "header" there with labels --- if you go to "GAIN" -- right under that there is a $ symbol (default) and % symbol...

Click on the % symbol and it will show you your percentage GAIN (or loss) per name.


That's actually just a quick handy way to see how you're doing.

Lots of great discussion in here from the past couple days (just caught back up).

Like the discussion on checking returns and what not.


Since I'm a geek, and like to look at numbers, I actually setup a Google Docs Excel sheet. I put it my initial purchase of my stocks, and then continue to update each time i get a dividend (with how much the dividend bought, the current stock price, and the total div amount). It then tracks everything else for me...

• Current price
• The current dividend based off todays price
• My Dividend on Cost
• My current total return based on the current price
• I have it also simulate my 401k returns (since their buried in a fund, all i get is the NAV price, and my total investment amount). So i have it auto-calculate my values based on current NAV, then every few weeks i go and update my total investment amount so its closer to the actual mark (i cant see if/when they pay out anything).

It's quite nice to just open it, let it "load" up all the current values and i can easily see that my Total Return on Altria is 50.8% and its making me a 6.5% dividend on my cost with a current dividend of 5.3%, its up $0.20 today, and it makes up 2.2% of my entire portfolio and is currently worth $X amount.

Nicely done Albert!!



I keep most of my stuff on "Numbers" - which is a real simple version of Excel spreadsheet. It's just basic but I'm not all that interested in figuring out my exact percentage of growth and ROI --- what I use it for is to track my dividend income per quarter - and the apartments etc that I own (that's a check every 6 months) and then to break that down so I can see what I earn on a monthly basis. I use Schwab for the majority of my stock activity - and I can go into each account so quickly - and then look at "unrealized/gain - loss" tab and see generally how I'm doing.

I understand fully - that you guys are having fun -- and frankly that you NEED to see your progress and I'm glad to see you all taking an interest. Funny how we want to discuss our last horsepower figure --- but people don't take much interest in what it takes to BUY that horsepower -- which is your money and how it's doing! My feeling has always been that if you have the horsepower in your money column -- then horsepower in your car is the easy part. LOL


Here's another thing I do during "dead periods" -- like this week - when frankly - there's not much going on. It's like the lull before the storm... I sit back and take stock of my overall financial health. The biggest sickness that most of us catch is the SPENDING FLU.... and I'm every bit as guilty of that as the rest of you are. While there maybe a difference in zeros - it's still exactly the same! I have managed to spend a fortune this year - some self inflicted - and some is just "life". It's the "life" part that seems to throw the wrench in your "budgets". I didn't budget for a $20,000 repair on the Lotus - I didn't really budget for the 3 different "breakages" on the Mustang - I really never thought about the monthly tabs coming from building the new house here in Sun Valley - and they are quite large actually! Surprisingly so - since we haven't even stuck a shovel in the ground yet. So where does this come from? CAPITAL. Now - I have ample capital - so it affects me absolutely zero from a living standpoint -- but what I'm using as an example here - is what we really don't want to see... and that is an ON GOING DRAIN on capital. Capital is the hardest part to attain. We need the capital to make us money going forward! If you spend 10K - then that's money that won't be making me money going forward and it's money that's losing the compounding affect. That compounding affect cuts two ways! Less free cash flow is less I have to spend - which means that more comes from capital if I need it -- and then that's a toilet bowl you don't want to be in.

Now for me - I control my spending - in the sense that almost 90% of my income is "FREE" - free in that my bills are basically nothing - so most all my income is just there to piss away. So if I'm "spending too much" - I can just cut back. Next year I won't be building a Brizio car... and next year I hope to sell my Bellevue house and pocket that money (which will just go out the door for the SV house build) and so on. We'll be done with the architects monthly bills - but then again - we'll start with far higher bills being paid to the contractor... I've planned all that part out.

I guess what I'm making a long winded post about --- is that in order to make your money really work for you --- you've got to keep that spending habit in check. Just because you had a good year this year - doesn't mean that's going to go on forever and ever. What happens is that you'll have a "life" expense creep in there -- and that will also be the year that the market sucks... and if you're forced to take out of the market -- then you loose that compounding you were well on your way to grinding out. DON'T YOU DO IT!! Don't you succumb to seeing that savings as an easy way to fix the TEMPORARY issue. The "I'll put it back as soon as I can" doesn't happen! STAY THE COURSE... keep that compounding and those dividends working for you - so later you don't have to work!

RANT OVER --- LOL

Well if you can suffer thru that last post --- then we can get on to the fun stuff... which is why I came into the thread in the first place!


Altria (MO) goes "EX" today.... and you'll see that nice .48 a share dividend in your January "stocking".

Aaple (aapl)
 

I sure hope some of you own Apple!! I don't -- it's too much money tied up per share to earn too little "income" for me -- but that TOTAL RETURN for the rest of you is pretty darn good over the last 5 years!


Funny -- if you pull up a chart of AAPL you're year to date percentage is ONLY 3% -- but that's the stock market - it goes up and down and sadly you have to have a little suffering with your cake. Today it's eat cake day!

Not pitching this stock AT ALL.... just thought it was funny and worth sharing is all. Remember my favorite saying is "better lucky than smart".


I'd bought Twitter (TWTR) and posted it back in November --- I'd bought 500 @ $40.82 and said that my position would be 1000 shares max. Well -- it ran another $4.00 real fast so I jumped on another 500 @ $44.38 giving me my 1000 at roughly $42.50 a share. Then Sieg and I exchanged a couple emails about this ---- with me saying NO WAY I'm sticking to my 1000 shares. Well then the damn thing was running so I bought another 1000 @ $56.91 making my 2000 average cost of $49.75


Some times you just have to get a gut feel and roll with it. Now - obviously this is not a core holding... but I know a stock running when I see one.. and I have the cash and resources to gamble just a bit - so I thought what the hell.

Today it's trading at $66.55 for a nice 33.8% unrealized gain in a month and 5 days...

In the old days I'd have flipped this out already and scooped up 33 GRAND for one month of "trading". Then I'd pay 40% income tax - and then I'd watch the damn thing run to $100 and I'd be buying back in.

I've learned a few things in the last 25 years or so -- and one of them is that sometimes you just have to take a ride. I STRONGLY do not advise this kind of gambling unless you have plenty of extra dough just waiting to be put to work! The minute you take a flier like this and actually PLAN on it going straight up -- it won't -- it'll turn south on you -- and then have your guts churning. So this is just a post because it's worked out THIS TIME.


So to any of you that followed me into this name -- Merry Xmas!


But please don't follow me just because I did something -- you know that's against the rules of logical thinking -- it's gambling at it's very worst... which is great fun when it's going your way -- and it sucks HUGE when it doesn't.

My plan is to sell half if I get to a "double" --- then I will be playing with house money - just like at the casino. If it just holds here for a year - I'd be happy as a clam -- then I'd sell some and only pay 20% long term capital gains tax. In the meantime -- one hint of bad news and I loose my ass... So we'll see.

I had a much better feeling about Twitter's market than Facebook. But I didnt have the capital to gamble with. lol. I think twitter has a lot more "business" wise than most people realize. I've just started getting a presence on there as part of my Life Coach recommendations and the future of "social currency".

Yeah -- I'm so not a FaceyBook fan... but Twitter I'm following and there's lots of businesses "tweeting" that I pay attention to, and I like Instagram for what it is.

I bought the Twitter stock because Twitter is something I use (I don't tweet - but I follow others) and I like the way it works. But mostly I'm just gambling!

So here I am -- even on Xmas Eve - reading finance stuff.... and watching TV with the other eye -- and trying to keep Stella off my computer...



So... many times you've heard me state that money competes -- and asset classes compete for money -- and the same money moves around always in competition for trying to make the money "work". Gotta keep them employees cranking day and night, right?!?! No days off! No slackers! Some need retraining... some are doing fine - some are stellar...


This "comment" made me laugh --- because it's absolutely true!


"It has become clearer that 2013 for the U.S. equity markets was all about where can I place my money to make a decent return, and I think a lot of people ended up chasing the market and pushing it higher. It was the least worst house on a bad block," said Robert Pavlik, chief market strategist at Banyan Partners, contrasting the U.S. market to those in Asia, Europe and emerging markets.

"And, when interest rates started to tick up on Treasuries, equities seemed like the only game in town. That and the fact that the Fed continues to print money and provide a low cost of capital environment for corporate America," Pavlik added.




Money CHASES "return" ---- and that's what I've been saying about watching rising interest rates - because there's a "place" where rates on "X" will be good enough for people to sell "Y" and buy "X" and that's what you need to be heads up about. I don't know what that looks like -- but the "SMART MONEY" will chase returns. They have computer programs that do all the calculations -- and there's an axis point that causes the money to move from one type of asset to another -- with taxes etc factored in.

The thing is -- we look at TOTAL RETURN -- well --- okay -- but total return has to be GROWTH in our share price AND a dividend. Typically the lowest total return stocks will get hit first... because the "smart money" moves out to raise capital -- and then they buy whatever is the next thing. But then what happens is -- as the share prices go down --- what happens to the dividend??? The dividend is paid as a dollar amount -- it is NOT paid as a percentage.... so as the share price drops -- the PERCENTAGE that dividend represents goes UP... Making competition for the next new thing that WAS higher...

So guys like me BUY MORE when the price goes down -- we're not first on the spot -- ya got to pick your spots -- but you build a cash position and you take the opportunity when presented. So it looks like this ---- Let's just say Coke (KO) at current price pays 3% === and the price drops per share 10% --- now that dividend is 4% !! And so on.



To calculate the percentage of dividend a stock pays -- you divided the ANNUAL DIVIDEND by the current share price.


$1.00 annual dividend / share price of $10.00 = 10%

So if the share price dropped 10% to $9.00

$1.00 annual dividend / share price of $9.00 = 11%


Of course what TIME gives us is that perhaps you bought a year ago and the shares have already gained 10% in price -- so a small drop doesn't mean much -- it's still paying that dividend.... but if it drops 10 or 15% below your original cost - that's when you want to start to look at buying some more of it. You don't double down -- you just chip away. All the time making a BETTER % dividend on your new purchases.

For the life of me, I can NOT figure out how these companies like facebook and twitter make the money that they do...

Granted, I run ad blockers on all of my PCs so I never see any pop up ads, and I don't facebook at all...but aren't both facebook and twitter free to use?

Where does all of the money come from?

There free to use, but they are a marketers dream. Companies pay money to place "posts" in YOUR news feed. Whether its twitter or facebook, doesnt really matter. They're just different styles of overall the same thing. Its the next age of "TV" commercials...

Reading a recent book about this, and this is how they broke it down....

Say your a company selling "widgets". And, you want to get your widgets out in the market. You spend $50k on making a commercial, you then spend $20k-$500k on getting that commercial on the air. The higher profile the "show" is that its placed on, the higher the cost (see super bowl = millions per commercial spot?). So, that Advert cost you $100k. Did it work? Dont know. Cant really confirm how many people seen it. How many of your target (say its a product geared towards 20-40year old females). Did sales go up? sure. But was it the Ad or coincidence? not really sure. So, whats next? another 100k for another commercial... VERY Expensive. Not sure how productive it is. And who even watches commercials anymore?

Now, take facebook/twitter. I create a Post/Article/Video, whatever you want to call it. FREE (essentially). I can make that Post for free. If its a "good" post, then people will engage with it (like it, share it, comment, etc). Facebook even tells you when you've got a "good" post and suggests you "boost" it (Pay money to reach a higher number of people). Now, when I boost a post on there I can be VERY specific at WHO sees my post. i can spend $500 and specifically reach 2 million 20-40yr old females in the lower 48 that would specifically be interested in my widget (just random figures here). I can also see a lot more info, like what time of day are best to post this, etc. You cant get that sort of reach with radio, TV, etc. Its a marketers dream. And businesses are realizing its money WELL spent. Which means profits up the wazoo for Faceybook and Twittster.

If you're selling something, where would you want to spend your advertising dollars?

Lance ---


Some of these companies like Twitter are very UNPROFITABLE... Twitter posted a loss of MINUS 38% operating margin...


But there's 500 MILLION TWEETS PER DAY.... of course part of the loss is that they need complex back end solutions to handle that volume (part of how I made a small fortune in 2010 was owning part of a company that provides solutions like they need).... and staffing ramp up. That has to come FIRST so for a while - they are losers..... but still have an immense audience of eyeballs -- and advertisers willing to pay for this MOBILE eyeball experience. The HOPE and GAMBLE is that they'll be able to monetize this at some point and become the next Google etc. They SHOULD have big margins if they can get people to pay for the access to eyeballs.


SOMETIMES the stock price is WAY WAY WAY ahead of the actual facts ---- thus anyone that's early is just gambling - which is what a buy of TWITTER (TWTR) is... but I'm okay with gambling a bit (I can afford to) and playing just a bit to see what the outcome is going to be.

I once had 750 "options" on Microsoft in 1986 at a cost basis of $32.25 per share --- at the time - the market was under $30.00 and I used to make fun of that at the time. That GREW just a bit --- as it turned into 216,000 shares at a cost of .11 cents per share... So sometimes a guy can hit a double or a triple or a 10 bagger. And that's what people BET on.

I don't think this is where people should INVEST -- as many of these run up and then blow up. These are gambling money plays and should be viewed as such. I just thought it would be "fun" to post about it here and I'll live or die in front of everyone here. UGH....

Man, some good stuff here the last couple of days.

Merry Christmas my fellow investors.....Cheers

So Christmas is here and I was wondering what to do with the kids gifts (money). I have 4 kids ranging in age between 2-11. I would like to teach them to save & invest at an early age to prepare them for their future and was looking for some opinions on options. I was thinking 4 investment accounts with Schwab with regular contributions for them. Should I invest in the same stocks for each or different holdings per account. I thought an investment account was a good idea so that they can use them for their own individual needs later on in life. Whether it be college, homes, weddings, etc. I would like some provisions so that they just couldn't go out and blow the money once they turn 18.

Any suggestions, what have some of you set up for your children? Any good books I can give to my kids to read on investing and saving?

Do some research on 529's. They are great for college and if you save the history you can show how money grows in the market and just how important saving is. The money stays yours in case they get a scholarship because you don't need a college kid with some large sum of money to blow. They are different by state. Michigan's is good and I think Colorado as well. Otherwise I would say start gifting money but I don't think that's a good plan unless you are certain about responsibility and mega rich. Just my opinion though. Looking forward to others but that's what I'm doing for my 2.5 yr old.

Utah's 529 is/was the best in the nation. I'd definitely research the different plans including your state's plan. You may get a tax break staying within state.

The other thing to keep in mind is that no one but you is going to pay for your retirement. Make sure you're setup first before you set them up for college. They will have many options available to themselves to pay for college.

First off -- the advice to take care of your retirement first - is really good advice... and that's mostly because of that old father time issue... the kids have 10 or 12 years before heading off to college - and retirement has a longer horizon (I'm guessing here) and lasts far longer.

Secondly -- While it's a nice thought to save for two college degrees - it's impossible for an ordinary person to do so. My own first hand experience tells me that. It's about 30 to 40 GRAND per year for all the tuition and books - and living expenses and travel costs..... PER KID. So you'd need 300 GRAND saved in the next 10 or 12 years... That's 25 GRAND saved per year beginning today. Depressing I know.

In state schools are less... Mine went out of state - why? Because the in state schools didn't accept them. Why? Because they're busy accepting out of state students that pay double or triple the tuition. Of all the parents I know - one kid went in state.

So here's where I'd be using the savings teaching.... Which is how we did it. I always taught them that it was okay to spend part of the dough -- as long as they saved at least half of it. It's kind of a reward for savings - that they also get to have some fun along the way. No different than the rest of us. It's human nature. We NEED to have our car parts etc -- but we also recognize the need to save/invest. So depending on how old the they are - you can also begging to teach them about investing. I started that when they were in high school.

I'd bought Apple (AAPL) stock for Alex -- 25 shares @ $85.00... by the time he finished college it was in the 300's... he was really interested in the market by then!!

I had set up accounts -- for each child... but before they turned 18 - I closed them and sucked the money back into my own accounts. That way they had no control over it. It was going to be ME paying for their college regardless... so the separate accounts were just used to show them about investing. When Alex graduated and remembered that "he" had 25 shares of Apple... he then wanted the money! After all -- it was "his". I just looked at him (as fathers do) and said -- Really? Well -- I'll give you that dough just as soon as you pay me back for your college expense. I mention this episode because that's what happens when you "give them" something. They can add - but they can't subtract.

If I was to do it over again --- I'd have pooled the money... so it "looks like" more to them. And it would have bought more of "X" investment.. and I'd have made sure they were donating half of everything they got to it. Some parents choose to incentivize by "matching" dollar for dollar anything the child saves. Sadly though - there's not much employment opportunity anymore for high school kids like there was when I grew up. We could work at any fast food joint - the car wash - the gas station etc. NOW? No way. Alex did yard work at an apartment complex I own (he worked for the management company so THEY were the boss not me).

An interesting side note there on INFLATION. Alex made $12 an hour. A friend said -- wow -- he can't even afford gas! To which I said -- well... When I was his age I made $1 an hour -- gas was .25 a gallon so I could buy 4 gallons of gas for an hours work. Alex makes $12 an hour and gas is $3 a gallon... so he can buy 4 gallons of gas for an hours worth of work.

What we all know really happens (THEN AND NOW) is that "stuff" goes UP faster than our wages -- so if a guy was making $12 an hour... and gas shoots up over $4 a gallon.... now that's inflation.

By the way..... We chose to send our kids to private Catholic school... so we've spent one hell of a lot of money on our kids education. If I'd have saved all that money - including the college tuition... and invested if for them instead. They'd never have to work a day in their lives.... Kidding here. But it's not far off the truth.

An interesting article - remember - articles are just opinions and should be used for information and "thought process" -- as the writer is no fortune teller.. in SeekingAlpha today about how Dividends help in a good market or bad. This has been the realization that took me about 23 years to come to grips with.... but the point of the article is that in a down market the dividends keep paying you something -- whereas the "growth only" strategy of investing pays you ZERO. They included a chart showing the past 8 DECADES for the S&P (a basket of stocks) showing that of the last 8 decades in 4 of them the dividend contributed more than the growth... think about that --- 4 decades --- decades are TEN YEAR periods. That's a long time. Now --- if you happen to hit retirement age during a down market (bear market) period -- some of these bear markets can carry of for quite some time! And in the meantime -- you're still depending on the cash flow from your investments to pay your bills. Thus -- I L O V E the dividend wether it's "trendy" investing or not.


OBVIOUSLY WHAT WE WANT IS TOTAL RETURN -- GROWTH and the INCOME (Dividend) -- that's a WINNING strategy!!






http://i919.photobucket.com/albums/a...30-to-2012.png

And for those that need further PROOF of the dividend REINVESTMENT strategy.... check out this chart. $100 invested in 1987 --- with and without the dividend reinvested. I'll take the reinvestment strategy!!!


SEE THOSE NASTY DIPS IN THE CHART --- turns out they didn't matter all that much did they.






http://i919.photobucket.com/albums/a...Strategy-2.png

So here's the FUNNY PART about the dividend strategy....


I had a question about retirement savings the other day. Wether to invest in RISK assets for growth or "what". My advice was to invest in a higher paying dividend name -- with growth -- and let the compounding take hold.

The above chart kind of shows that the "growth only" method is pretty risky! Even though the S&P 500 is not considered risky - I would consider it risky since you'd be relying on the growth component only.... and you'd have made 75% more on your investment simply by reinvesting the dividends! That's damn near a double just for checking a simple box 'reinvest the dividend'.

Great re-affirming Posts Greg. Hope you had a lovely Christmas with the Fam and the kids were able to come home and enjoy it with you too.

Looking back over the last 2 years since I've started my "dividend" (or, as i like to call it, Investment 102 strategy, heh) I can see how well its taken hold and grown in my accounts. Granted, the past two years have been great in the market, but it just proves to me that its the right thing.

When i look at my 401k, which i've had for a little over 10 years and i see these numbers, I'm happy (note, i completely re-structed/allocated my 401k in Feb of 2013):

2003: 32% Rate of return (note, this is when i opened my account at this employer and rolled in my previous 401k. so not sure how accurate that really is) Dow had a 25.32% return. S&P had a 26.38 return
2004: Me: 12.95%. Dow: 3.15. S&P: 8.99
2005: Me: 4.72. Dow: -.61. S&P: 3.00
2006: Me: 17.53. Dow: 16.29. S&P: 13.62
2007: Me: 5.71. Dow: 6.43. S&P: 3.53
2008: Me: -36.31. Dow: -33.84. S&P: -38.49
2009: Me: 28.42. Dow: 18.82. S&P: 23.45
2010: Me: 12.41. Dow: 11.02. S&P: 12.78
2011: Me: -8.09. Dow: 5.53. S&P: 0.00 (I stopped contributing in this year, due to various reasons. (no employer match, started my ROTH instead)
2012: Me: 12.37. Dow: 7.26. S&P: 13.41
2013: 25.08. Dow: 25.32. S&P: 28.93

Which puts me at a 6.59% rate of return total since i opened the account in 2003 and contributed (with company match) up until sometime in 2011 (i think company match stopped in 2010 tho).

Those arent great numbers (well, a couple of them were much higher than i ever thought before i just looked those up). But, I'm much happier with the 2013 than the rest, as at that point i KNOW what i'm looking at, i'm getting a Dividend on most the funds i've invested in as well. and I've seen my overall balance grow much more than what i could have put into it.

Twitter (TWTR)
 

Tomorrow I'll sell half the Twitter (TWTR) I bought....


Remember the old adage -- pigs get fat - hogs get slaughtered? I'm a pig... the shares are up 50 Grand on my 100 Grand purchase -- I refuse to call it an "investment" as it wasn't and isn't.... it was pure gambling -- I've won pretty good so far - and I'm way way way ahead of where I thought it would be -- and I was only going to buy 1000 shares to begin with!

I hate short term gains -- as this will be taxed at 40%.... but like I always say --- they get their percentage -- I keep the rest. I'd far prefer to pay taxes than try to generate losses.... That's just a stupid suckers "big talk" strategy. Big talkers want you to think that they make so friggin' much money that "they have to make some losses so they can skin the guberment".... That is just pure BS. The goal should always be to make the most money possible.

We're not talking about end of the year tax strategy here -- that's a different strategy where you have huge gains - you feel you need or have taken some -- and now you have the possibility of REDUCING that gain by selling some losers that you were planning on selling anyway. If you sell the losers the same year as the big gainers -- then that's SMART -- rather than taking all the gains and then the following year selling the losers and getting nothing for your effort. Don't confuse the two - they're entirely different.

Recently I've been asked a lot of questions about the Do It Yourself style versus the "Pro" managed accounts... and this got me thinking. That's usually never a good thing -- but I get asked this question A LOT. So let's see if I can put this in to an Investing 102 style thought process.

I think that most people are AFRAID of money. I have no idea why that is... we'll take apart engines with zillions of pieces - hell - we'll take apart entire cars without giving it a thought... but manage our own money?! Are you crazy?!?!

Why? Because we don't know anything about "money" except that we need it.

Okay - so we turn it over to someone that does.

How many of you have read a thread about "the shop" or "the guy" that took their money and did a crap job - or never finished it - or it was 3 times more expensive than quoted? YEP -- a nice showing of hands.

Okay --- what's the difference between that -- and handing over your retirement savings (far more important than any old car!) to a "shop" or "guy" that is supposed to do a good job for you? Never thought about it that way did ya? Every "shop" (money firm) should just be equal and make you rich without you ever having to do a thing.... Right now I wish I knew how to insert that big LOSER BUZZER!!

The "PRO" has some training... in the shop and in the money firm... how much - who taught the class - were they the A student or did they just attend and got a passing grade. The Roadster Shop is a "shop" -- so was Frank's "Prodigy" one is an epic fail. The other turns out some stellar stuff. Do you think "money shops" might just be the same way?

So -- just like building a small block chevy --- there's about a half a zillion parts and pieces you can assemble to build a motor. But if you've learned ANYTHING about motors -- you know there's "parts" and there's COMBINATIONS that make a huge difference in the outcome. INVESTING is the same way. There is a giant array of "pieces" to invest in.... Treasury bonds - CD's - Corporate bonds - stocks - properties - REITS - mREITS - Okay I could fill a page with investment grade ways to park your money. But... and here's the main idea for this post ---- there are only so many ways that ANYONE has to invest. And just like the parts for the small block build --- they're available to anyone.

So does the "Pro" money management firm have an edge up on say -- yourself -- when it comes to investing? Well.... yeah. They do this for a living. But the real difference is - how much time are they going to spend on YOUR account. I mean this really. How much time per month - per quarter - per year - are they going to spend making certain that Joe Average is going to maximize the results to they can retire in comfort? At Schwab -- you get a Senior VP level guy to personally help you out once you have an account with TEN MILLION DOLLARS in it! For that kind of money - you actually get someone that oversees your account. He doesn't do any investing -- and he doesn't give any advice - but he'll make sure that your withdrawals are handled the day you want them - and he invites me to parties - and I get good eats at the golf tournament etc... TEN MILLION MINIMUM. So what level of oversight and thought do you get for say -- ONE HUNDRED GRAND? That's a lot of money!! TO YOU.... to a money management firm that makes a percentage of your deposit... it's the equivalent of a penny in the gutter. If the firm has a staff of 100 people -- all with salaries and they have two whole floors in a downtown high-rise with rent to pay... they have to manage a LOT of money to make that all work -- given that you are going to pay them 2% if you have a million or so to invest -- and about 1% if you have 10 million and so on. So we're clear here -- we're talking about FIXED FEE management. When you have a "broker" -- you might actually get more attention if you're capable of buying 100 or 500 shares of something - because the "broker" makes a commission... and when do they get a commission? When they're buying or selling something in your account. Otherwise - they get ZIPOLA.

So here's the million dollar question. Who should have more interest in your money? You? The Broker? The "Pro" money management house?

Shouldn't it be YOU?

Now -- and here's the real reason for this long winded post.... If everyone has the same access to the same investments as listed above... what's the difference between you and the "pro"? The answer is -- he has some knowledge of all things money. I'll give him that. He's actually spent the time to learn about money. YOU -- THE GUY WHO HAS THE MOST DEPENDENCE MAKING SURE YOU HAVE ENOUGH MONEY TO RETIRE ON!!! YOU HAVE DONE NOTHING!!

Is that right?? The guy who has the most riding on making sure he's going to be okay -- has done the very least to see that happens. Pretty effing sad huh. You sure as hell wouldn't treat your small block Chevy that way would you? Would you work hard and buy all the parts -- and then just lay them around the shop and let 'em rust and never give them ANY thought at all... until what - 10 or 20 years went by? Then what? You look around and go -- wow --- all those parts I bought are old -- out of date -- don't work together -- didn't make the horsepower I thought they would.... ARE YOU EFFING KIDDING ME!!

So I don't care if you give your money to a broker -- to a big money institution - or do it yourself.... LEARN ABOUT YOUR MONEY -- read a book or some articles and ASK SOME PEOPLE ABOUT WHAT OR HOW THEY DO "X" --- no damn different than you do about your motor? Or tire size or wheel offset!!

It's only complicated if you CHOOSE to not learn and pay attention. Thank gawd some have stuck with this and actually done okay for themselves!! They'e taken charge -- and found out it's not really very complicated... it can actually be just as much fun as car parts!


When one guys Small Block Chevy makes a zillion horsepower and lasts 10 years of hard driving --- and the other guys is lame as hell and will barely chirp the tires.... Do ya suppose that one guy paid a lot more attention to his build? And while he might not have built it himself -- he might have spent some time learning who the best SBC builder in the Universe was... or what parts and pieces he wanted to make the best combo for his build... and had great discussions with the builder about all of that.

In other words -- there's a bit more that needs to be done than just pick "Risky" - "not so risky" - and "safety". Or randomly choose the answer to "what kind of investor are you".... I mean really -- how would you really know what kind of investor you are unless you knew what investments you owned and how they added up and so on. It's like racing - how would you know if you liked a road course versus the Bonneville Salt Flats if you didn't even know the difference between them?

Okay -- I've done my job -- I've got ya thinking about that. And put your best Forrest Gump impression on here --- "that's all I'm going to say about that".

Twitter (TWTR)
 

Okay -- I changed my mind --- I SOLD IT ALL....

It's just not a stock I want to be in to. I picked up a 40% return on my purchase for one month. That's good enough. DONE.



12/27/2013 Sell Trade Details TWTR
TWITTER INC
1,700 $69.602 * $118,313.73
12/27/2013 Sell Trade Details TWTR
TWITTER INC
300 $69.591 * $20,875.60

And the numbers today showed everyone else did too. LOL

I was watching it this morning and hope you did. :thumbsup:

Ohhhhhh so true. LOL. Sad. But true.

I woke up the day I went into a broker (whom i had done some work personally for, so we were somewhat friends). Anywho, his base charge was like 5% of my deposits until reached some 50grand mark or something, then it went down a hair, and the more i had invested the less it got.

But, that got me thinking. He told me i can expect a 7-10% return on my cashola. But he (didnt make it quite so clear) would be skimming off 5% off the top. Regardless of how my money did. I figured out that i cant ever get ahead making 2-4% on my money! I can do THAT good myself! Thus, i started learning, paying attention etc. Then I ran across Mike, who introduced me to this thread.. and as they say, the rest is history...

Did i beat that 2-4% return since *I* took over. OH HELL YEAH I DID!

Thank you for another exceptional layman termed example. :thumbsup: