Investing 102

[GregWeld]

So I know this thread is quiet.... frankly there's not been much to add to the learning experience.... and there hasn't been many (any) questions lately.

I will say that I put some major cash to work today. I've given a few employees a few weeks vacation - but today was "get your azz back to work day". Mostly just added to existing positions. I'm still chasing "yield"... and even more so if we're going to see higher taxes!

I think there's still a big chance that the bozos in Washington DC don't get it together --- but I think there may be a bigger chance of missing a few days of nice moves if you're sitting out. Of course this is nothing but a giant guessing game!

HOW ARE YOU GUYS DOING??

[spacepirate]

Okay Greg,

Maybe your words of wisdom can guide me. I was saving to buy a home in Los Angeles around 400k. My goal was 20% and I'm half way there. However, it seems to have turned into a sellers market and I want to put my money to work for me instead of just keeping it in savings while I meet my goal. What would you suggest I do with my funds while I wait for the next few years?

[GregWeld]

Originally Posted by spacepirate

Okay Greg,

Maybe your words of wisdom can guide me. I was saving to buy a home in Los Angeles around 400k. My goal was 20% and I'm half way there. However, it seems to have turned into a sellers market and I want to put my money to work for me instead of just keeping it in savings while I meet my goal. What would you suggest I do with my funds while I wait for the next few years?

Few years?? 2? 5?


So this is really an open ended question without a lot of specifics... and I'm not an investment advisor. But I would give you some things to ask yourself and to think about.

If you have some money -- and you think housing is going UP -- why not buy a house you can afford NOW and ride the wave while you continue to save?
A rising tide floats all boats... and you could be gaining equity in a smaller house or whatever while you build up savings at the same time.

The problem with "what to do" in the meantime is that you need to be liquid if you're continuing to shop for a house. I will guarantee that if you put your money into the stock market -- in order to make a return -- that the day after you found a house to buy - the market would take a dump. Thus the age old investment advice that says "never invest money you think you might need". This can be compounded by the fact that right now the "market" is waiting on pins and needles regarding the so called fiscal cliff etc.

Now --- having said that... making .25% interest on your money won't get you very far towards that down payment... And I like to use a couple high return "stocks" (they're ETF's) one is Junk bonds (JNK) and one is corporate bonds (HYG). They're "fairly stable" price wise and I park pretty large sums of dough in them just because they are stable and they pay a great monthly dividend as a percentage. Since they move in basically lock step - I don't see one being better or worse than the other. You could also look at the sin stocks -- tobacco - as a place to park some dough. Just be forewarned that without a clear direction for tax treatment etc -- anything is a gamble and a guess.

[GregWeld]

Nova -- Clear some space in your PM box.

[NOVA]

done sorry -

Originally Posted by GregWeld

Nova -- Clear some space in your PM box.

[Woody]

Originally Posted by GregWeld

So I know this thread is quiet.... frankly there's not been much to add to the learning experience.... and there hasn't been many (any) questions lately.

I will say that I put some major cash to work today. I've given a few employees a few weeks vacation - but today was "get your azz back to work day". Mostly just added to existing positions. I'm still chasing "yield"... and even more so if we're going to see higher taxes!

I think there's still a big chance that the bozos in Washington DC don't get it together --- but I think there may be a bigger chance of missing a few days of nice moves if you're sitting out. Of course this is nothing but a giant guessing game!

HOW ARE YOU GUYS DOING??

I agree with you about the giant guessing game. I am sitting here waiting for an opportunity to put some more money in the market thinking we will get a good correction if they don't resolve the fiscal cliff issue. On the other hand I am thinking there is going to be a big rally that I will miss out on if they do resolve the issue. I have decided that I am just going to be patient and wait it out. On days like this I am glad to be invested, but wish I had put more in at the last correction.

[slow4dr]

As far as long term dividend paying stocks, do you gus have a minimum/maximum P/E ratio you look for? I've been researching all that I can and I keep coming back to somewhere around 10-20. That doesn't necessarily mean I am going to exclude one that has a P/E of 9.99 but I am just thinking a general rule of thumb for someone like myself that is just starting out.

[GregWeld]

Originally Posted by slow4dr

As far as long term dividend paying stocks, do you gus have a minimum/maximum P/E ratio you look for? I've been researching all that I can and I keep coming back to somewhere around 10-20. That doesn't necessarily mean I am going to exclude one that has a P/E of 9.99 but I am just thinking a general rule of thumb for someone like myself that is just starting out.

P/E ratios don't make you any money. What you should be studying instead is the total return... 'cause over time - that is what makes you money.

[hifi875]

I would like to thank this thread(mainly Greg) for getting me thinking more about managing my own money(or some of it anyway). My little homemade mutual fund is doing quite well. My overal return is 27% for the year. Since i brought it up, it will probly tank tomorrow. If it was only on a larger scale, I would really have something, but its a start. Thanks Greg!

[GregWeld]

Originally Posted by hifi875

I would like to thank this thread(mainly Greg) for getting me thinking more about managing my own money(or some of it anyway). My little homemade mutual fund is doing quite well. My overal return is 27% for the year. Since i brought it up, it will probly tank tomorrow. If it was only on a larger scale, I would really have something, but its a start. Thanks Greg!

Way to go! Holy cow! 27%!!!! I'll pay you to be MY money manager!!