Investing 102 - Lateral-g Forums

**GregWeld** · #1 12-31-2012, 05:34 PM

Back to Investing 102 ---- today's action is why it's so hard to be OUT of the market waiting for something to happen. This is why I park cash in an investable spot rather than just sitting on cash.

I consider parking cash in ETF's such as JNK - HYG - NLY... where you get a pretty dang good dividend -- the share prices are "relatively" stable. I currently have quite a bit parked in JNK and NLY... and while NLY has been drifting lower (it's very interest rate sensitive).. overall when I see the dividends I've collected and the increase made on JNK has offset the loss I have in NLY... and overall that's the objective. I look at my account as a whole not as individual performance... and you MUST included the dividends in the calculations.

So just to show what I'm talking about....

I currently show (can't say HAVE because I haven't sold so just have a paper loss) a loss in NLY of $16,500 but consider the dividends -- I don't really have a loss.

I currently show a gain (again just paper gain) on JNK of $39,800

Just the gain in JNK cancels out the loss in NLY -- but lets consider the dividends collected:

10/29/2012 NLY ANNALY CAPITAL MGMT REIT
type: ORD DIV - CASH
$17,500.00
07/26/2012 NLY ANNALY CAPITAL MGMT REIT
type: ORD DIV - CASH
$19,250.00
04/26/2012 NLY ANNALY CAPITAL MGMT REIT
type: ORD DIV - CASH
$13,750.00
01/26/2012 NLY ANNALY CAPITAL MGMT REIT
type: CASH DIV
$14,250.00

and JNK

12/11/2012 JNK SPDR BARCLAYS ETF HIGH YIELD VERY LIQUID
type: ORD DIV - CASH
$13,354.56
09/12/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$6,682.32
08/09/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$2,296.25
07/11/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$2,356.51
06/11/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$2,368.39
05/09/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$2,462.88
01/06/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: LT CAP GAIN
$1,320.39
01/06/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: CASH DIV
$1,093.49

Notice that as the "fiscal cliff" talks seemed to be falling on deaf ears - I increased my JNK holdings significantly... because I had cash on hand - took some year end LONG TERM capital gains (locking in the 15% rate)... so all in all these are making me money SO FAR. That can change in a heartbeat - but for now the strategy is working. IF -- BIG IF -- these clowns can get their act together -- I'll scale out of these and work towards normal company specific positions.

XLexusTech · #2 12-31-2012, 05:37 PM

I just read a few articles on "Rules for investing" this one was pretty interesting... http://www.thestreet.com/static/25-rules.html

Thought it might be a good direction considering the new year.. what are the "LatG investing 102 thread" rules for investing...

I like the Homework one Cramer mentioned..

ErikLS2 · #3 12-31-2012, 10:15 PM

Mostly for you Greg since you know NLY pretty good. I've been away for a while but going to re-do my whole stake along the lines of what's discussed here. I was just poking around today and found this:

http://seekingalpha.com/article/1067...ce=marketwatch

I'm wondering if you know anything about this company or have any comments on this article?

**GregWeld** · #4 12-31-2012, 11:33 PM

Quote:

Originally Posted by ErikLS2

Mostly for you Greg since you know NLY pretty good. I've been away for a while but going to re-do my whole stake along the lines of what's discussed here. I was just poking around today and found this:

http://seekingalpha.com/article/1067...ce=marketwatch

I'm wondering if you know anything about this company or have any comments on this article?

I read the SeekingAlpha article and the writer makes many compelling points about EFC. I just trade NLY because it's a good name that I know and I can trust it. I park pretty large sums in some of this stuff -- and I have to be able to sleep well at night. Thus my "Buy names you know and trust" which I try to hammer home every chance I get.

There are ALWAYS better names -- or better peer performance. But can you sleep with them? What costs people money is that they panic at the first downturn or hiccup - and this panic is exaggerated when they put money into something they don't know anything about.

There is NOTHING wrong with learning about any or all of these company's and if you (you being the larger - any of you) feel this is a place you want to put money and like all the metrics etc over some other investment... then that's the best you can do. It's the best ANY of us can do. Many times - while researching a new name - you find out things about the company you might already be in! They'll all compare "their" company against the peer names. Sometimes you learn good stuff - sometimes you start to question the name you're in and go back and dig deeper... and I'm 200% for this type of self education! That is what we all should be doing and need to continue to do. Jim Cramer calls it HOMEWORK.

My son looked over my shoulder just a minute ago and said "dude - you've been doing that all day". True enough.... I'm always looking at this stuff - comparing - charting... reading. I love it as much as I do car stuff. My response to him was "yep - that's why I'm good at it".

**GregWeld** · #5 12-31-2012, 11:39 PM

By the way -- I'd have made more money using EFC than I have in NLY over the last 6 months or so!

Thanks for bringing up this name --- I'll do more poking around and put it on my "key an eye on it" list!

**GregWeld** · #6 01-01-2013, 11:37 AM

It will be very interesting to see the market reaction to the proposed (since the House hasn't voted yet) changes to the tax laws.

Dividend tax rates increase from 15% (far too low IMHO) to 20%... which is still too low.

We can argue on and on -- but it's this guys opinion that the tax rates are too low on top earners -- BUT -- BIG BUTT -- what top earners really understand and would like to see change is the WASTE that government does with the money they already were getting. That's a different discussion and let's not get into it.

My guess is if you're not in the market on Wednesday morning --- you're going to miss a very nice move UP. But that's just my guess. I'm thinking there's lots of money sitting on the sidelines avoiding a possible disastrous raise in the dividend tax rate... and since that appears to be set - that sidelined money should come pouring back into equities. I know that's what I intend to do. I'll scale back in but... I'll still be a net buyer. Around 40% of the one Schwab account I use for discussions here - is in "parked" cash.

John510 · #7 01-01-2013, 03:40 PM

Im just happy they voted to not double to price of milk!

**WSSix** · #8 01-01-2013, 04:35 PM

Score!!!!!!!!!!!

You can contribute $5500 per year to a Roth IRA now. That was a pleasant surprise. So my max has been reached for this year already. Next week I should be able to purchase the stocks. I just hope they wait til I'm on board before they take off like a rocket ship. Hey, I can engage wishful thinking, right?

**GregWeld** · #9 01-04-2013, 12:43 PM

Quote:

Originally Posted by GregWeld

Back to Investing 102 ---- today's action is why it's so hard to be OUT of the market waiting for something to happen. This is why I park cash in an investable spot rather than just sitting on cash.

I consider parking cash in ETF's such as JNK - HYG - NLY... where you get a pretty dang good dividend -- the share prices are "relatively" stable. I currently have quite a bit parked in JNK and NLY... and while NLY has been drifting lower (it's very interest rate sensitive).. overall when I see the dividends I've collected and the increase made on JNK has offset the loss I have in NLY... and overall that's the objective. I look at my account as a whole not as individual performance... and you MUST included the dividends in the calculations.

So just to show what I'm talking about....

I currently show (can't say HAVE because I haven't sold so just have a paper loss) a loss in NLY of $16,500 but consider the dividends -- I don't really have a loss.

I currently show a gain (again just paper gain) on JNK of $39,800

Just the gain in JNK cancels out the loss in NLY -- but lets consider the dividends collected:

10/29/2012 NLY ANNALY CAPITAL MGMT REIT
type: ORD DIV - CASH
$17,500.00
07/26/2012 NLY ANNALY CAPITAL MGMT REIT
type: ORD DIV - CASH
$19,250.00
04/26/2012 NLY ANNALY CAPITAL MGMT REIT
type: ORD DIV - CASH
$13,750.00
01/26/2012 NLY ANNALY CAPITAL MGMT REIT
type: CASH DIV
$14,250.00

and JNK

12/11/2012 JNK SPDR BARCLAYS ETF HIGH YIELD VERY LIQUID
type: ORD DIV - CASH
$13,354.56
09/12/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$6,682.32
08/09/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$2,296.25
07/11/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$2,356.51
06/11/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$2,368.39
05/09/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: ORD DIV - CASH
$2,462.88
01/06/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: LT CAP GAIN
$1,320.39
01/06/2012 JNK SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF
type: CASH DIV
$1,093.49

Notice that as the "fiscal cliff" talks seemed to be falling on deaf ears - I increased my JNK holdings significantly... because I had cash on hand - took some year end LONG TERM capital gains (locking in the 15% rate)... so all in all these are making me money SO FAR. That can change in a heartbeat - but for now the strategy is working. IF -- BIG IF -- these clowns can get their act together -- I'll scale out of these and work towards normal company specific positions.

Since I posted this ----- we can change the numbers

Annaly Capital Management (NLY) is now UP $6033. In the Green

JNK is now positive $56,587

See what a couple of days can do?

**GregWeld** · #10 01-04-2013, 04:29 PM

I just sent an email to my bond broker and instructed to sell my entire muni bond portfolio. I think we are going to start to see interest rates rise. Houses are selling. Employment seems to be improving. And in order to make money you must be AHEAD of the game many months. If I wait to be certain it can make a giant difference. As low as rates are right now, a very small move up would mean a huge drop in bond values. Since I have a nice capital gain now. I'd prefer to lock that in. And if I'm right I want to have even more money in equities.