Investing 102

[GregWeld]

Once again - not saying whether or not someone should buy - hold - or sell any particular stock --- just picking on this name as ANOTHER example of the IPO market.


Twitter (TWTR) was another highly anticipated IPO "block buster".... But Year-to-date it's DOWN over 40% from it's high.... It opened at $44 -- ran to $70 with HYPE... and is now $38....


If you LOVE TWTR as a company and think they have a bright future, with the EARNINGS to go with it.... great. My point is -- there was plenty of time to take a step back and see where the shares would go.


Some of these remind me of the late 90's IPO market when the key "metric" used to hype the market was "EYEBALLS" --- everyone was going to make money because they had eyeballs. The problem though was -- you don't pay your bills with eyeballs... you have to monetize the eyeballs with earnings and profits. That's harder to do. There is only so much advertising dollars to go around. MySpace had eyeballs and "users". Do you even remember who they were? LOL

[CamaroMike]

Just an example that a safe dividend stock can occasionally have a nice run as well.


http://seekingalpha.com/article/2317...r-40-per-share

[GregWeld]

Originally Posted by CamaroMike

Just an example that a safe dividend stock can occasionally have a nice run as well.


http://seekingalpha.com/article/2317...r-40-per-share

What happens with dividend stocks that makes them "somewhat" safe -- is that their share price gets supported on the way down -- by the rising percentage of dividend payout.

AT&T (T) pays 5.08% dividend at this mornings per share price... It doesn't take much of a dip in the share price and it's suddenly paying 6%.... That's where you get the downside protection. And even better --- is that you don't need to sell when they're down to earn a return on your investment. Which is why they (dividend payers) become better holdings during market downturns.

WHAT DOES HAPPEN though is that interest rates COMPETE for dollars when the rates are rising... money flows from "other" interest rate paying investments and flow to where there is equal safety with equal or better rates. The problem with attempting to follow this money trail by selling one asset class to buy the "new" asset class is that individual investors are never ahead of the curve. They will sell at the wrong time every time. That's a game better left for the big boys with armies of economists and accountants on their team. They figure it down to the last 1/4% on a daily basis. That's why we just have to become INVESTORS...

That doesn't mean that if interest rates on Muni Bonds etc start to look like they're headed to 6 or 7% TAX FREE --- that I wouldn't lighten my stock portfolio and add some Munis. But you don't do that in your 401K or IRA or ROTH....

[JasonElvisHeard]

Any CFA's in the house?

Weld, I'm sure you know of a few but maybe they are not on latg.

jason

[GregWeld]

Originally Posted by G-Machine Racing

Any CFA's in the house?

Weld, I'm sure you know of a few but maybe they are not on latg.

jason

I don't use any "professional" investment advisors except for Muni Bond investing.

I just don't think they're any smarter than I am... and if it involves THEM making money on my money -- then their interests are ahead of mine.

[WSSix]

grrrr, kind of wishing my MCD stocks were in a different account today. They are some what "locked in" sitting in my Roth IRA. If they were in my simple brokerage account I'd snatch up a few shares right now. Looking at my cost basis over the last couple years of owning the stock, the current share price is lower than every cost entry except one maybe two entries. Would be a good time to buy right now I say.

[GregWeld]

Originally Posted by WSSix

grrrr, kind of wishing my MCD stocks were in a different account today. They are some what "locked in" sitting in my Roth IRA. If they were in my simple brokerage account I'd snatch up a few shares right now. Looking at my cost basis over the last couple years of owning the stock, the current share price is lower than every cost entry except one maybe two entries. Would be a good time to buy right now I say.

I bailed on McDonalds (MCD) - as documented in this thread - and while we are not discussing particular stocks or what to buy... this name can be used as an example of "Fundamental change". What's that? That's a business that is experiencing sales declines or profit shrinkage or declines -- BECAUSE -- Because their business is positioned wrong. I think that is where MCD is right now. I say this because Chipotle Mexican Grill (CMG) just reported 17% sales INCREASE and a profit margin increase - vs - MCD reporting (now for a number of quarters in a row) another sales decline and weaker profit margins. These are both fast food retailers. One is growing - one is shrinking... I don't want to own companies that are shrinking. That's not to say they can't change and or react to market forces... but so far they don't seem to be able to find that magic bullet. There are better dividend payers if you just want to be paid to wait - and I want dividend AND growth (total return). This name doesn't seem to be in the mode to deliver that.... so that means those employees (you investment equals one employee per dollar invested) seem to be on vacation. I don't pay employees to be on vacation.... which means they need to be retrained (sold and buy something better).

Each investment is up to the individual... and I'm not saying anyone should buy sell or hold.... it's just a "way to look at an investment".

[SSLance]

MCD is right back down to where my cost basis is with my current holdings...might have to think about picking some more up myself.