Investing 102

[chichirone]

Originally Posted by GregWeld

Jay -- Yeah -- I've shared way too much personal info on here -- but figure WTF -- if it gets one person going on the right track - then I've done good. So I throw myself on the sword for all. LOL


I figured you had to be "in the industry" or close to it.... There is LIFE outside of work you know. Drive up and down the street and look at all those viable businesses that are just waiting for you to be a partner with them.

5% dividend doesn't have to come with risk. AT&T pays over 5% and I wouldn't classify it as risky. Altria (MO) pays 4.66% and that's not very risky... so there's plenty out there.

Philip Morse (PM) pays almost 5%... Both MO and PM are sin stocks -- I like MO because of the booze component... I don't smoke or drink -- doesn't keep me from making money off the people that do.

MCO is Moody's (the ratings agency) and I ASSume you meant McDonalds (MCD). I sold MCD awhile ago based on my belief that they're losing the fast food battle... and that the general public they appeal to has shifted to healthier restaurants. Their sales continue to slip -- and that's a "Fundamental" change I can't sleep with. Their down almost 8% in the last 3 months... that's a nasty dip and I'm glad I've moved on. If it paid a dividend - I'd be in Chipotle Mexican Grill (CMG) versus MCD. CMG is growing and MCD is shrinking.

Greg, thank you for your sword diving and WTF attitude. LOL! I've read nearly all 400+ pages in this thread and you continually share personal stories, opinions, ways to think differently. It's sincere counsel to get others on a track, and I don't mean the kind we all love to drive on. (BTW, you do a darn good job of that for us as well.)

Healthcare/Med Devices is what I know. Thinking back to your other posts, look at what you eat, where you shop, what you buy, and what you consume. I can't remember the last time I went to Sears so I don't own it. I drink Coke products which is why we like KO vs Pepsi and own it. You have made me realize I need to take the blinders off and look beyond what I work on and expand the horizon to research and identify alternative ways to generate wealth, demonstrated by T, low growth, well run and good payer.

MCO should have been MCD. Good ASSumption. Like Sears, I cannot recall the last time I stepped foot in a McD's. No wonder I sort of missed on that one, especially when we eat at Chipotle with more frequency than I care to admit. Just reinforces your point to reflect on your consumption behaviors. This is a really good learning point if one is just starting out.

What's your opinion of chasing 2-3 high growth stocks, not a fad stock, but one that has a shorter growth chart, is a little less mature like GPRO than the likes of T or COP as a part of a start up portfolio? Reason I ask, would a little higher risk tolerance on growth make sense to balance the "sleep well at night" buys? I believe I know the answer but am not 100% sure so that is the reason for the question.

[68Cuda]

Greg - it will take me a while to catch up on reading all the posts. Good stuff what I have read so far!

Give the rest of you guys some encouragement! My current employer allows us to put up to 90% of our 401 into a "self directed" brokerage. I consolidated all my previous employers accounts and put as much as my finances or the company allows into the account each year. So about 60% of my total savings are sitting in this account as of now. The neat part is that ALL the gains in this account are not taxed until later, so the growth is not hampered. I also put away as much as they let me into our HSA, once I reach a set amount they will also let me self manage the investments in that one. The HSA is really neat in that the money both in and out are tax free. I also expect that health care costs down the road are not going to be lower, so money saved there will probably get used. I have not reached a critical mass on the HSA yet, maybe at some point I will slow down on funding that one.

OK, back to the "self directed" account. Currently has ABT, BMY, CAG, INTC, JNJ, KMB, MO, MRK, NUE, RDSA, VZ, PG, and WM. INTC I picked up 2 years ago, the rest I have had longer. They are all DRIP... Dividend Reinvestment. Between these and my other holdings the average rate of return since I opened the account in August 2006 is about 21%. My investment strategy is similar to the "Dogs of the Dow" strategy (has its own web page), my "secret" is that I do not limit myself to this list or just the Dow index. Other than that, it is dumb simple. When I have some cash, the "Dogs" web page is where I start my search. Must be mid to large cap, must be growing, must be a company that I believe is sound in principal and direction, and then I look for a period where magically that stock is inexplicably priced on the low side. Some of the stocks listed I bought when the dividend rate was 4-5%, I don't recall buying any under 4%.

Oh, my other rule is a personal one. I participate in the company ESPP (employee stock purchase program), but I sell it immediately when I get it and move the money elsewhere. I hold $0 in company stock. I have too much already invested emotionally in the place, I do not need the stock performance souring my mood. Besides, as good as they are, they do not meet my stock picking criteria, the dividend is too low.

I used to have NLY and a few other similar investments in my E-Trade account... returns were great but it was kind of scary, I got out. Went back to the simple stuff I am not inclined to look at so much.

[GregWeld]

I would also suggest that you look at some real estate companies..... not only do they spin off decent dividends - it adds to your diversity. I personally own NNN - but have also owned O... and I'm not recommending either of them -- I'm just saying I think you need more diversity and some better dividends.


O

NNN

BXP

Originally Posted by chichirone

OUCH! I appreciate the candor and levity!

So here's our thinking...would love your feedback.

Amy and I have the rainy day fund in place. A years worth of cash on hand. We have invested in actively managed mutual funds for over 15 years, accumulating a 7 digit nest egg for longer term retirement. Our current goal is to generate more cash flow for mid-term money for our bridge years age 40-65. Managed growth over 5/10yr horizons with dividends reinvested is something we are very comfortable with. Your comment on it being a personally managed mutual fund resonates with us.

We have been looking at the following dividend stocks. I'd like to get your feedback on my "analysis" based upon share price and dividend yield. I really want to make sure I am looking at these stocks through the right set of lenses. We do not have a high tolerance for risk so the High-flyers don't interest me too much now, but as we build the portfolio, a TSLA or GPRO will become more attractive.

Symbols that interest us are:
KRFT
COP
XOM
F
PFE
MRK
SMG
T
MDT
KO

Our plan is to invest a portion of our monthly revenue, buy shares with the intent to receive dividends over the next 10 years. I am prioritizing the investments based upon yield percent of share price to get started which seems to be a low "risk" option when I evaluate the 10yr charts. I like your strategy of 5% return on the stock performance, reinvesting the dividend, and then building a portfolio that has 20-25 stocks with no more than 5% of the total invested in any one share. Time for you to tear it apart and push our thinking...I look forward to your response.

[sebtarta]

Greg please send me a PM with your Paypal address, amazon wishlist or something so I can send a present to you for all your help here. Be it with beer, ONE racing glove, something! I have been reading here since I posted back then about MNKD. I have learned a lot.

[GregWeld]

Originally Posted by sebtarta

Greg please send me a PM with your Paypal address, amazon wishlist or something so I can send a present to you for all your help here. Be it with beer, ONE racing glove, something! I have been reading here since I posted back then about MNKD. I have learned a lot.

What?!?!?!


You finally learn about chicks with cold sores?? LOL

[toy71camaro]

LMAO. Some great discussions here the past couple days. I love it. I could read, talk, learn, BS about this stuff ALL day. hahaha.

[chichirone]

Originally Posted by GregWeld

I would also suggest that you look at some real estate companies..... not only do they spin off decent dividends - it adds to your diversity. I personally own NNN - but have also owned O... and I'm not recommending either of them -- I'm just saying I think you need more diversity and some better dividends.


O

NNN

BXP

Going to school on these. If you had an opportunity to invest in shares of a commercial real estate LLC or buy real estate shares publicly shared, which would be more attractive to you? Better question may be, what attributes would you look at if considering a commercial real estate LLC that is being organized to buy a single location or land development project?

[CamaroMike]

Looks like BABA is going to be set at $68 I believe. Lets do some gambling without going to vegas! lol

[GregWeld]

Originally Posted by CamaroMike

Looks like BABA is going to be set at $68 I believe. Lets do some gambling without going to vegas! lol

ALABAMA FOR ALIBABA!! You go girl!! LOL

[GregWeld]

Originally Posted by chichirone

Going to school on these. If you had an opportunity to invest in shares of a commercial real estate LLC or buy real estate shares publicly shared, which would be more attractive to you? Better question may be, what attributes would you look at if considering a commercial real estate LLC that is being organized to buy a single location or land development project?

Single entities always assume more risk. Then you're really investing with the management -- which is fine if you know them and their history of bringing successful developments to market. I've been investing with a guy in apartment buildings for 20+ years and every one of them has a been a total score. My biggest fear is if he dies... Then what? I really have never asked him.. and maybe I should.

Smaller money --- more LIQUID --- as in way way way more liquid is a publicly traded REIT such as the ones I mentioned earlier "O" and "NNN" as well as many others. You can sell with a click of the mouse. Not so in LLC's where you're a minor partner and really have ZERO control as an investor.

If you have tons of money -- don't have any need for it (as in see it go to zero) and have no immediate (5 to 10 years) need for the cash for "other stuff" -- then LLC's have some nice tax benefits such as depreciation etc that work pretty well... and if there's cash flow (interest)... and the upside of a sale and return of principal down the road - they can be real corkers! I was in a 344 unit class A apartment complex in Tucson that was dead money for 4 years - until it was sold to convert to condos - and returned 117%. I'll take a double in 4 years every day if I could get it. But for 4 years before then I was kicking myself for having ever looked at the deal.

So the criteria for these two commercial real estate investments is:

Do you want liquidity and relative safety with a dividend but no tax benefit or
Do you tie up your money (Illiquid) and increase risk (single entity) with a tax benefit... and a possibility much larger total return out to an unknown date.

I own both types... but I have no liquidity issues either... 20 years ago I knew I was gambling (I was 40 and not 60+) - and it worked out well. I've since invested with the same guy in several apartment complexes but I would NOT invest like this with anyone else if he should quit business or whatever. In my mind - I'm not investing in an apartment... I'm investing in him with and I get his considerable skills.

Good question by the way.