Investing 102

[GregWeld]

Today looks like a good day.... and yet - when I look at what I own and what's "working" and what's not (lazy employees) I noticed that an energy play I have is the laziest. Enbridge Energy Partners (EEP) is down a $1.24 (4%) on a big up day....

That is the Investing 102 cue....

WHY? When everything is green is this one so red? Ya got to just poke around and see what's up.

Seems they offered up a "secondary". That's when a company issues (offers) MORE shares to the market. Usually these are priced at a discount to the current trading quote - so that big money buyers will soak them up and if the offering is below market -- the minute it gets back to "even" - they've got upside potential. They offered 14 million shares at a 3.6% discount to the market --- THUS --- the "price" for the common is now taken lower on the street since the company just valued (offered) to sell shares at a lower price. Makes sense I hope...

So.... is the company going south? No. Is the business bad? No Is there a fundamental change in the business? No Well then what changed? What changed is that they "went to the market to raise some more cash"... i.e., the "secondary offering" ---- they are sellers --- and they get the cash. Usually this is done when companies are making acquisitions... etc. Because if they just needed money to operate --- nobody would buy the stuff! It's kinda like needing a loan --- if you go to the bank because you desperately need money - they won't give it to you! But if you don't really need it - you can borrow all day long!

So with these facts in hand --- in other words --- I went out to find out why this is selling off 4% and found out --- and when I saw what I needed to know I doubled down.... WHY? Because a company I like that pays a pretty good dividend just went ON SALE.... and now all it needs to do is come back to where it was and I have a 4% gain on the new shares. OBVIOUSLY that's IF it comes back. But this isn't FACEBOOK (FB)...


Again -- this is not a recommendation to buy or sell this company. I'm just using it as an example to show the way I (BIG I) think and use the market.

[Rybar]

Greg how do you find out this information so quickly? I find simple google searches do not help. Is there a website you recommend?

[96z28ss]

Originally Posted by Rybar

Greg how do you find out this information so quickly? I find simple google searches do not help. Is there a website you recommend?

yeah been wondering the same thing.

[GregWeld]

I go to Google Finance ---- pull up a 'quote' for the stock I'm interested in and read the news that is listed down the right hand side. The "news" is shown in alphabetical order as related to the same alphabet shown in the time line on the chart... so you can relate news with a "move" or point in time.


If you use (EEP) for instance -- you'll see a big "gap down" with the alphabet starting at "C" --- and a bunch more stacked up behind it so D - E - F etc and the related "news" is about the secondary offering.

Then I'll read the "10K" for that offering info which comes along with news like this to see what the company says it will use the money for... OR in this case -- I clicked on news article "B" and that news article detailed the 10K filing and I got my info.

BRILLIANT HUH??

[GregWeld]

How sad..... but this thread aims to change that! Now that's hope and change you can understand!



http://marketday.nbcnews.com/_news/2...udy-finds?lite

[RECOVERY ROOM]

Thanks for the insight again always useful

[Bucketlist2012]

Well I will throw in my two cents again.

I am hooked on that show, "American Greed", where people get scammed out of their money. It just amazes me what people will do with their life savings...Sad.

One thing I would say is to get a subscription to Kiplinger's Magazine just as some more reading material. Also maybe Smart Money, or Money magazine.
It couldn't hurt to get more info on investing, How much you need for retirement, Long term care , ect...

Also IF you need help....And I say IF, you would be looking for a FIDUCIARY, who would only be a FEE-ONLY Planner..Someone in the NAPFA or Garrett Organization.

You never write the checks to them, you ALWAYS have a Custodian like Schwab or Fidelity, ect...

A Fiduciary has the obligation to have YOUR best interests at Heart, and they do not sell you products on Commission..They are not Brokers.

I know most of you do your own Investing, but for those who may need help, try the magazines first, and then try a FEE ONLY FIDUCIARY..

Just a thought for the day...