Quote:
Originally Posted by 68Cuda
It also helps to learn a little about the company before you throw money in just looking at a chart. I work in the same industry as IBM and 14 years ago was a design engineer at a factory building tools to sell them for their NY and VT factories. IBM used to be one of the 4 companies we partnered with on semiconductor process development. I have a lot of respect for where they have been. In recent history though, they have suffered. Their semiconductor MFG has been bleeding red for a while and the CEO has been under pressure to offload it.
They recently made a deal with a foundry to take the semiconductor MFG group, a large amount of their intellectual property, and gave the "buyer" $1.5 Billion in cash and a deal to buy chips from them. That is why the stock has suffered. So, when you see a company's stock drop, make sure you do a little research and find out the backstory before you just dive in! Now, looking forward, can they do well without the in house MFG? Historically some companies, like Qualcomm, have, others, not so much. Sometimes owning the MFG can be a competitive advantage (just ask Intel and Samsung). Their stock could take off, time will tell. For better or worse I will stay away from this one.
An article on the IBM deal:
http://www.bloomberg.com/news/2014-1...chip-unit.html
Generally I stay out of the semiconductor stocks, I am too close to it if that makes sense to you. The Intel deal I picked up on early last year was too obvious to pass on. I then sold it when I thought it was back in line, still made me nervous to hold on to it.
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LOL -- There are 469 posts here -- 300 of them probably mention that you should start out buying companies you know or understand their business. Then once you've identified some of those names -- there's another 200 posts discussing what to look for and how to compare their performance. Total Return is just ONE metric I like to use because it's a big bold brush stroke that shows HISTORICALLY how an investor would have done over time - as compared to the other company(s) someone might be comparing to.
The entire thread is about how to think - how to compare - where to look for information... the actual names used are just for examples since everyone has to use something for discussions sake. The thread is how to catch a fish - not catching someone a fish sort of thing.
I had a call the other day asking "what is an acceptable dividend percentage" -- and this is a tough answer - which is why I go straight to the total return metric - because I can accept a lower dividend payout if that payout comes with capital growth (the stock price rises) - thus a good or great TR. Total return factors in both the dividend (reinvested) and the share price appreciation. It represents the growth of your money. Period. I'll take something that has historically made 100% over 5 years versus gambling on a the competitor that has only had a 30% TR over the same period. Why do I call it gambling? Because if you buy the 30% TR - you're just hoping and praying that for whatever reason that company (thus the MARKET) is going to suddenly reward them. That's a gamble. All of this is making the ASSumption that you've already identified a few names to invest in... so you're still just doing research and it's just one more thing to help you in making a decision.