Investing 102

[Bucketlist2012]

Originally Posted by GregWeld

BTW --- I think this thread holds interest because it's like our car builds -- we all get to live AND LEARN vicariously watching these cars go together step by step. It's so much more fun than just going to a car show and seeing a completed car. SO it is in that light that I've shared way too much personal info -- but I think it will HELP people more - and they'll be more interested and learn more when done this way. This is why I've shared my thought process more than just Do this don't do that. It's the thought process that is what you need to "get into". It's like fab work on a car - no two are alike - and it takes seeing someone come up with a solution that might kick up a solution for your own build... something "similar" but twisted to meet your needs.

Hope that makes sense....

Greg, Keep it up.. Many more people should be in charge of their future's and Present..

Making Money and keeping it, and growing it, are not just going to happen unless you work at it...

The wolf is always at the door...Wall Street...The Government, Heck, envious family..

So keep it up.. Again I am still figuring it out, But I know a few things.

I am for sure in the game because no ticket, no laundry, so you got to be doing something..

And Dividends are always coming in...One of my wife's favorite words.. Dividends..

Also We talk about money on the good days, and the bad days we know will pass, so we don't sweat them..

I am way longer term that the daily Noise..

[LS1-IROC]

More great info Greg...thanks for doing what your doing. I'm sure there are many guys reading this and learning, not necessarily posting.

I just read an interesting article on the long term outlook on TGT. Any thought there? Seems like it fits our requirements...Not great growth over the last 10 years but they have been increasing their dividend along the way.

[camcojb]

My daughter was given a single share of Disney when she was born (1988). It has split twice (4 to 1 and later 3 to 1) so she now has 12 shares worth about $470. Getting dividends yearly, but very low (1.5% or so). However, that stock was $4.67 when we got it, and is now 12 stocks at $39.31 each. That's a lot of growth I think for 24 years.

Trying to get her interested in investing a portion of her income. My son will for sure, and he's starting a new job when he graduates college that will pay him enough to really invest.

[ErikLS2]

I've always been a tad skeptical of these earnings reports that come out. Now, they do have to follow a set of rules being public companies and all but they are still afforded some flexibility in how they account for various things. So, in my opinion these reports don't tell the WHOLE story many times.

I do think it's wise to watch the earnings reports for companies you are invested in but Greg makes a key point in paying attention to any dividend they pay out. If they aren't bringing the money in, they sure can't be paying it out. It's a lot harder in my opnion to fudge anything here.

Still, I don't think I would pay that much attention to a low earnings report if the company is in a growing or strong industry and there are many other reasons to like them. If anything, I would use a weak period to buy more, as has been said already.

I'm thinking about gambling a little on Bank of America (BAC). It's been very low for a while and like Buffet says, there's no way to know WHEN a stock will rebound, but I can't see them going away totally. Plus, when everyone is fearful of something is the best time to buy it.

[Bucketlist2012]

Originally Posted by ErikLS2

I've always been a tad skeptical of these earnings reports that come out. Now, they do have to follow a set of rules being public companies and all but they are still afforded some flexibility in how they account for various things. So, in my opinion these reports don't tell the WHOLE story many times.

I do think it's wise to watch the earnings reports for companies you are invested in but Greg makes a key point in paying attention to any dividend they pay out. If they aren't bringing the money in, they sure can't be paying it out. It's a lot harder in my opnion to fudge anything here.

Still, I don't think I would pay that much attention to a low earnings report if the company is in a growing or strong industry and there are many other reasons to like them. If anything, I would use a weak period to buy more, as has been said already.

I'm thinking about gambling a little on Bank of America (BAC). It's been very low for a while and like Buffet says, there's no way to know WHEN a stock will rebound, but I can't see them going away totally. Plus, when everyone is fearful of something is the best time to buy it.

We all know you can never time the bottom, and sometimes when you buy into something you know will turn around, you take a hit at first as it bounces, but in the end, most of mine have gone up to where I thought they would go. It just takes the courage to buy at those times..

A few of my good performers fell more when i got into them, but they all did go back up.. The first few days were not good.. but great since then..

[GregWeld]

Originally Posted by ErikLS2

I'm thinking about gambling a little on Bank of America (BAC). It's been very low for a while and like Buffet says, there's no way to know WHEN a stock will rebound, but I can't see them going away totally. Plus, when everyone is fearful of something is the best time to buy it.

If you can afford to buy and hold... I agree with you. I think we can agree that the likelihood of BAC going away is pretty much NADA.... and it's certainly LOW (historically).

Those that bought FORD @ $2 or $3 a share certainly have been rewarded!

But also don't forget that if you were a GM shareholder -- you got ZIP -- So size and the "they've been around forever" statement has been shown to not hold up so well... I mean - Who'd a thunk it!?!?

Just make sure when you put in SPECULATIVE $$$ -- that that is exactly what that money is for... because regardless of how low a stock has gone - it can always go lower! So you'll have to be patient and it should only be money you can truly afford to loose. Everyone should have a fund for buys like this.... provided they account for all the above and already have good safe money - and cash that they can get should they need some. That way you don't get frightened and sell out..... 'cause the little wall street dude will double it a week after you sell.

Did I ever mention how much I hate that little guy??

[GregWeld]

Originally Posted by LS1-IROC

More great info Greg...thanks for doing what your doing. I'm sure there are many guys reading this and learning, not necessarily posting.

I just read an interesting article on the long term outlook on TGT. Any thought there? Seems like it fits our requirements...Not great growth over the last 10 years but they have been increasing their dividend along the way.

There's only one way to do this -- and that's a bit of homework. Remember we want to own BEST OF BREED.... and to find that - - we need to have some comparative basis. So I like to look at Good chart - growth - dividend - Total return - and I use a 5 year comparison period just for ease of "what they're doing now". I don't want to be recommending or not recommending individual stocks --- I want YOU GUYS to be able to do this homework -- and my job is to give you what I look for (neither right or wrong - just my way).... but let's look at this stock and compare it to it's peers. It's a BIG BOX RETAILER (Consumer discretionary) so let's see how it stacks up:

Target (TGT) - 5 yr grwth DWN 18.18% - Div 2.39% - T/R 5 yr - DWN 13.2%

Sears (SHLD) - 5 yr DWN 73% - Div 0% - T/R 5 yr - DWN 71%

Macys (M) - 5 yr DWN 15.65% - Div 2.26% - T/R 5 yr DWN 4.2%

JC Pennys (JCP) - 5 yr DWN 57% - Div 2.28% - T/R 5 yr DWN 52%

Let's toss in another couple of big box stores - but they really don't sell clothing and pots and pans etc

Home Depot (HD) - 5 yr UP 10% - Div 2.61% - T/R 5 yr UP 28.5%

Best Buy (BBY) - 5 yr DWN 49% - Div 2.56 - T/R 5 yr DWN 45%

Lowes (LOW) - 5 yr DWN 22% - Div 2.11% - T/R 5 yr DWN 14.7%



So -- DUDE <Spicoli style> IF you can find one of those that you want to own... go for it.... but I'm going to wait for better signs that the economy is turning the corner - THEN while I might not buy at the very bottom - I'll catch some gains on the way up... but the DIVIDEND doesn't support my criteria of buying and holding waiting for things to get better... because there's no growth in this group/sector.

NOW ++++++ I didn't go compare every big box consumer discretionary stock! I just took these 'cause everyone knows them and it was an easy comparison for our purposes.

[GregWeld]

I forgot a couple big box stores that could have been included in the comps:

Costco (COST) - 5 yr grwth 44.96% - Div 1.18% - T/R 5yr 52.1%


Wal Mart (WMT) - 5 yr grwth 29% - Div 2.4% - T/R 5 yr 40.7%


I think - after looking at these numbers -- COSTCO would be the one I'd pick as Best of Breed... but that 1.18% dividend is pretty sad - but it is countered by a pretty decent growth rate.

[GregWeld]

So just FYI --- While I hold a sizable stake in McDonalds -- I added a 1000 shares today on the sell off.... and here's why --- and this is the "investing 102" part not about "ME" -- I like a company that is growing top line and same store sales #'s. While it's only down a couple bucks that's a "let me in" opening if you want to add to a position. Doesn't mean I'm right... but I like the shares long term so I don't mind if it's down temporarily.

This is the "averaging" or "scaling" in... my costs are far lower than where it's trading - so even if I pay up here - it barely nudges my total holdings cost basis.

So lets say you held 50 shares at $80 and you bought 10 more at $100 -- your overall cost is $83 a share...

Many people get caught up in EACH stock having to be a performer -- and like the above example -- I want my OVERALL account to be positive - there's always going to be some outsized gains - some mediocre - and some losers but overall I want to be up or even (in a bad market)...

[CRCRFT78]

Forgive me for asking but how do you figure out the cost in your McDonalds example when you said those extra shares actually cost you $83 instead of $100.