Investing 102

[gearheads78]

Everyone read part 1 and part 2

By far the best thing I have seen so far about the type of investing Greg has been beating in to our skulls.

http://seekingalpha.com/article/2902...need-it-part-1

[GregWeld]

Originally Posted by gearheads78

Everyone read part 1 and part 2

By far the best thing I have seen so far about the type of investing Greg has been beating in to our skulls.

http://seekingalpha.com/article/2902...need-it-part-1

GREAT ARTICLE RICHARD!!


And yes -- I probably could have written that myself - EXCEPT for the BONDS portion. I don't think anyone should ever be in bonds. They suck just as bad as mutual funds. They're a fixed rate depreciating investment in my opinion. I let my guy talk me into buying a laddered portfolio of bonds (4MM worth) and I couldn't sleep at night owning them (seriously) - I finally said FT and sold 'em all (for a gain)… I can't tell you how happy I was that day. But I digress.

The key is - and has always been -- INCOME -- and TOTAL RETURN. That's how you get success. While we'd love to be the guy that owned Microsoft from the beginning (us)… That's the lottery way to success… not THE way most (all?) folks are going to be able to retire.


Here's the thing I've kind of avoided discussing -- but it is the elephant in the room… so here goes.


If you're in a situation RIGHT NOW - where you're struggling (REGARDLESS OF INCOME LEVEL) to do everything you want to do and pay all your bills etc…

WHAT DO YOU THINK THAT'S GOING TO LOOK LIKE WHEN YOU'RE 65 AND OUT OF WORK?

So if you're in that position now… then something needs to be done to get yourself financially healthy NOW… so you can start to prepare for later.. 'cause later is coming up pretty dang fast.

In years past - people didn't live as long as they do now. 30 years ago if you had a heart attack - dude! You died! Now? It's no biggie… So living to the late 80's or 90's is really a pretty reasonable expectation. None of us wants to live under a bridge.

I've been retired for over 20 years now… and that article talking about inflation etc -- that's REAL LIFE and there's nothing you can do about it! My first BMW cost $7600 -- that same car now is $60,000. Yeah I can buy something else -- but is that how you want to live or see yourself living? Ya drove a BMW all your life and now you HAVE to buy a YUGO… Not me! I'd rather drive a Chevy ALL OF MY LIFE…. if that's what it takes then that's what it takes. That to me is a better overall life.

Just talkin' here…. the "you" is anyone reading… and if it's "you" - "you" should be scared and taking some actions to better your situation. It doesn't get easier - it gets harder… So just get 'er done!

[GregWeld]

Halfway thru the month…. I maybe can pay my gas bill! Ya think? LOL


12/16/2013
as of
12/15/2013 Qualified Dividend ED
CONSOLIDATED EDISON INC
$3,075.00
12/16/2013 Qualified Dividend KO
COCA COLA COMPANY
$2,800.00
12/10/2013 Qualified Dividend CVX
CHEVRON CORPORATION
$3,500.00
12/10/2013 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,020.24
12/06/2013 Cash Dividend HYG
ISHARES TRUST IBOXX $ HI…
$4,500.14
12/02/2013
as of
12/01/2013 Qualified Dividend WFC
WELLS FARGO & CO NEW
$6,000.00
12/02/2013 Qualified Dividend F
FORD MOTOR COMPANY NEW
$1,500.00

[GregWeld]

As long as I'm posting… again… I know! I know! But I keep having thoughts about stuff and I want to share with you all!



Once again - the caveat! This is NOT a stock recommendation thread nor am I recommending this stock. It's just an EXAMPLE of my way of thinking.


As above (post showing dividends) - it's obvious I own shares of Wells Fargo Bank (WFC) -- which is funny because I don't bank there… I bank with Bank of America (BAC) and usually I try to own stuff that I actually use/shop/buy/know etc. But in this case BAC had (IMHO) too many issues with their lending practices…


Here's the deal -- I was "early" back into a "banking" (financials) investment… because it was obvious to me that the housing issues were being cleared up… and business and housing were picking up… AND part of that point is that I'm paying attention to what I "feel" and read about… and that's all part of investing. You guys are trying to TIME the market by scamming a stock down .50 a share on a sell off day…. I'm trying to be 6 months "early" into an investment IF - big IF - I'm clever enough to see it coming..

Okay - back to my bigger point. I hate low dividend payers --- under 3% just ain't going to get 'er done… and when I bought (scaled into!) WFC -- it paid even less than that! But I didn't buy into it UNTIL IT DID RETURN TO PAYING A DIVIDEND --- and it has a HISTORY of paying a decent dividend - so I'll look back into the Board of Directors and figure that is going to be the history going forward as soon as the Gov let's em -- and they think they can afford it….. BUT what I was really looking for is to be in it LOW --- and have them INCREASE the dividend payout over time -- even though to the NEW BUYER (Current price) that div % might still calc out "low" --- it's rising for me on my cost basis…. AND as they raise the div -- the stock will also rise --- for what?? FOR TOTAL RETURN.


ONE YEAR TOTAL RETURN?? 35%


So can we take "only" earning under 3%……. Well yeah ---- if it works out that the share price is going to make up the difference --- AND you think they'll increase the div over a relatively short amount of time (couple years?).

Again -- just sharing the way I think - and the way I try to keep my hat on when I'm looking around for investments. I'm "fluid" -- that's not TRADING -- but it is trying to stay on top of the market. Because like Crammer says -- there's always a bull market somewhere.

Now - let's be real -- I can write about this NOW because it worked out. But that's what I always tell you guys -- ya don't bet the farm -- you just scale in -- up or down sometimes - and sometimes they work out. Not always - and that's when you need to revisit your "thesis" and be fluid. It's okay to be wrong sometimes.

[mdprovee]

My finance guy, Laura's boss, just told me we are up over 17% for this year. Couldn't have done it with you Greg, thanks.

Now we are concentrating on paying off bills, so we can save more.

[68ZClone]

Thanks Greg for all the help here. Although I don't post much, I keep up with this every couple of days.

BTW - just saw I received a 35% raise from 3M today! Even better, my cost basis is $75.55 (I've owned it since 2007 I think). At the new $0.85/qtr, my return is 4.5% just from the dividend!

I'm using my dividends from this and other positions to create new positions within my portfolio. Currently purchasing Duke Energy (my local utility, so I can keep up with the goings on) and PEP (I like that they have both snacks and beverages). When I establish ~$5,000 per each of these, I'll move on to establishing positions in other companies.

I use Scottrade and they are allowing dividends to be used to purchase any stock commission free within their new Flexible Re-Investment (FRIP) program.

[GregWeld]

Originally Posted by mdprovee

My finance guy, Laura's boss, just told me we are up over 17% for this year. Couldn't have done it without you Greg, thanks.

Now we are concentrating on paying off bills, so we can save more.

Ummmmmm….. I fixed it for you…. I think I hope that's what you meant to say. HAHAHAHAHAHAHAHAHAHA

So good to hear BTW!!

Originally Posted by 68ZClone

Thanks Greg for all the help here. Although I don't post much, I keep up with this every couple of days.

BTW - just saw I received a 35% raise from 3M today! Even better, my cost basis is $75.55 (I've owned it since 2007 I think). At the new $0.85/qtr, my return is 4.5% just from the dividend!

I'm using my dividends from this and other positions to create new positions within my portfolio. Currently purchasing Duke Energy (my local utility, so I can keep up with the goings on) and PEP (I like that they have both snacks and beverages). When I establish ~$5,000 per each of these, I'll move on to establishing positions in other companies.

I use Scottrade and they are allowing dividends to be used to purchase any stock commission free within their new Flexible Re-Investment (FRIP) program.

Thanks for posting up -- because every day I wonder why I'm doing this? Not on a philosophical basis --- but because I wonder… is "anybody listening/reading"?


Then a new guy pops in -- like Lance -- and I go on a mission to help him understand…. or some guys like yourself tell me they're doing okay -- and I think FANTASTIC!! That's why I bare my soul in here!!

[Bryan O]

Originally Posted by GregWeld

I wonder why I'm doing this? Not on a philosophical basis --- but because I wonder… is "anybody listening/reading"?

Lots of people listening/reading.

I'll be paying close attention. We've just had a major change in lifestyle this last year and I've got to pay closer attention to our finances/cash flow now. House is paid off. Cars are paid off. 0 debt!!

~$150,000/yr income & $480K in 401K. From that $150K annual we've got to finance my small business I just started and put 2 kids through college beginning in 2 1/2 years. ~13 working years left for my wife Jean and I've got to get the business off the ground.

I wish you'd start a Small Business 101 thread.

[im4u2nvss]

I am so happy for the information in this thread. With a solid 30 working years to go(and for my money to compound), I feel like I have a good chance of success! Reading Investing 102 daily gives me further reason to put my 67 firebird as a "second priority" to saving for the future. A big thanks again!

[GregWeld]

Originally Posted by The Patch

Lots of people listening/reading.

I'll be paying close attention. We've just had a major change in lifestyle this last year and I've got to pay closer attention to our finances/cash flow now. House is paid off. Cars are paid off. 0 debt!!

~$150,000/yr income & $480K in 401K. From that $150K annual we've got to finance my small business I just started and put 2 kids through college beginning in 2 1/2 years. ~13 working years left for my wife Jean and I've got to get the business off the ground.

I wish you'd start a Small Business 101 thread.

Oh man! You're looking fantastic financially dude!

In 13 years -- you have the chance to have that 401K flip over twice -- so hitting the 1.5MM mark for you!

This should maybe be a separate post but here's what I don't want to see you do…



Do not look at that 401K as your "saving grace" - for college or for your new business. Ditto the house equity. YOU don't have all that much more time to work -- and you need this last little bit of time left to have that 401 to be able to provide for you for the next 30 odd years.

If your new business doesn't do what your plans say it should --- don't let it drag you down. All to often people take everything they've worked for and plowed it all back into a small business. EGO makes them do this because they can't separate themselves from "what they've started". A business needs to be self sustaining -- it is not - and never should be - a financial drain. It isn't and never should be "buying yourself a job". Successful business people know (or have learned) when to cut and run. Brings to mind an old adage -- "your first loss is your best lost" --- and what that means is it's far better to just pack up shop and take that first big loss (whatever that is) than it is to add more to it making it an even bigger loss down the road.

And NO I will not start a Business 102 thread -- hahhahahahahaha. There's just way too many variables in that kind of a discussion.

I'll tell you this though -- and it's like this thread. Remember nothing more than the basics. To wit: SALES come first -- without them you have nothing. All of your effort should be on sales. Everything starts there. The warehouse you don't need if you're not selling something for it to exist.

My old partner always said - three things in business are important. Sell it - ship it - get paid for it.

Pretty much sums it up. Everything else you do is nothing more than SUPPORT for the sales that had to come first.

Originally Posted by im4u2nvss

I am so happy for the information in this thread. With a solid 30 working years to go(and for my money to compound), I feel like I have a good chance of success! Reading Investing 102 daily gives me further reason to put my 67 firebird as a "second priority" to saving for the future. A big thanks again!

Thank you -- and by the way -- TOYS should be the LAST item on a list. You can have all the toys you ever wanted once you can afford them. Affording them does not mean at the expense of something more important or more basic. LIVING in retirement is a pretty basic need. It's not a want - it's a need. Do it right and you can have a couple cars to play with and go on trips with when you not only have the time - but the dough.

You can not "save to spend" -- that is not savings -- that is just a pile to spend. That's okay to do AFTER you've funded the retirement account. Then you can SET ASIDE some money for the hobbies and go spend them. Just know that the sooner you fund the retirement -- and it starts on the road to self funding (the dividends start to become more per year than you could have ever saved) -- then you can start to feel free to "indulge".

Do the math…. if you have 25K right now to go buy a car for a "project"… if you put that away instead - in as little as 7 years - it's going to be 50K - and in as little as 14 years it's going to be 100K… and the next flip it's 200K…

You said you have 30 years…. okay --- we have 200K and that took 21 years to get to - the next flip -- inside your 30 year time frame -- takes that to 400K.

Think about that TIME on your side -- 25K became 400K and you didn't do a thing except invest it instead of spend it. Think about now if you had been adding each year just a couple grand to your nest egg - and now you retire with a cool million dollars in CASH (equities actually). Or you're an even better saver and you retire at 55 instead of 65… Now we're talking!

IF I'VE LEARNED ANYTHING about living in retirement -- it's that the only thing I have of any real value - is my TIME. No amount of money can get it back… and each day another day slips away never to be had again. If I sold all the stuff I have I can't buy it back.