Investing 102

[GregWeld]

This got me to laughing -- and not at you -- but just when I thought about it with regards to myself.... I've been doing investing since the mid 70's - I've been retired for 21 years (which means I have a LOT of time) and I've NEVER listened to an earnings call yet.

Here's the reason for that.... And again - this is only as it relates to Investing 102. By the time you've heard the earnings call - the cat is already out of the bag - good or bad. When you are really INVESTED or you're about to INVEST - you have plenty of time to gather information and even better - you can get a quick synposis of what they did, and what they're saying going forward, on about 10 gazillion financial websites.

I was using "earnings season" more as a "okay NEWBS -- pay attention this week and next and see how this can affect the market in general"... rather than a drill down on every nuance of a particular companies performance. I was using this "heads up" more like a building block... To build on the other things - good chart and dividend and blah blah blah... So it's like - now lets add some terms you hear and what they mean to the market.

A bunch of negative earnings reports and the market can turn south (general trend) until we start to hear "better" news --- a bunch of the biggies reporting good news and the market can be upbeat. But for our purposes I don't think we need to be trying to find reasons to buy or sell because if you start doing that - you'll lose money. You'll never get it right. You might once or twice - but in general you won't. Leave that to the "traders".

I have two friends that are real life traders - live in NYC and work for a couple of the big houses. They trade zillions of shares minute by minute. That's their job - and they're looking for PENNIES per share. They watch the market minute by minute and only trade in 4 or 5 names. They're looking for the trend in the stock by the HOUR. They don't care how the market is moving they only care that the market IS moving and they place their bets accordingly. They'll trade 20,000 shares 10 times in an hour on one company if they can make a nickel per share. They eat Prilosec for lunch.

[Bucketlist2012]

Originally Posted by GregWeld

This got me to laughing -- and not at you -- but just when I thought about it with regards to myself.... I've been doing investing since the mid 70's - I've been retired for 21 years (which means I have a LOT of time) and I've NEVER listened to an earnings call yet.

Here's the reason for that.... And again - this is only as it relates to Investing 102. By the time you've heard the earnings call - the cat is already out of the bag - good or bad. When you are really INVESTED or you're about to INVEST - you have plenty of time to gather information and even better - you can get a quick synposis of what they did, and what they're saying going forward, on about 10 gazillion financial websites.

I was using "earnings season" more as a "okay NEWBS -- pay attention this week and next and see how this can affect the market in general"... rather than a drill down on every nuance of a particular companies performance. I was using this "heads up" more like a building block... To build on the other things - good chart and dividend and blah blah blah... So it's like - now lets add some terms you hear and what they mean to the market.

A bunch of negative earnings reports and the market can turn south (general trend) until we start to hear "better" news --- a bunch of the biggies reporting good news and the market can be upbeat. But for our purposes I don't think we need to be trying to find reasons to buy or sell because if you start doing that - you'll lose money. You'll never get it right. You might once or twice - but in general you won't. Leave that to the "traders".

I have two friends that are real life traders - live in NYC and work for a couple of the big houses. They trade zillions of shares minute by minute. That's their job - and they're looking for PENNIES per share. They watch the market minute by minute and only trade in 4 or 5 names. They're looking for the trend in the stock by the HOUR. They don't care how the market is moving they only care that the market IS moving and they place their bets accordingly. They'll trade 20,000 shares 10 times in an hour on one company if they can make a nickel per share. They eat Prilosec for lunch.

Great Points.. That is why I come to this thread to Learn.

So, I only started to pay attention to my money in early 2001, mainly because I did not have any...Why ?? Well I answered that question , and Started Saving what I earned.

As usual, Greg is on the money because I tried the Timing thing as far as getting in, and getting out, and that did not work out so well.

They are so far ahead of you, it is HFT, how do you beat that ?

Greg, your motto is you would rather be Lucky than smart ? Dude, you are first, Smart, and second, Luck is the meeting of preparation, and opportunity...Your Luck is your Smarts...

I am learning to be smart.. Lucky ??? Oh man, in 2006 I saw the writing on the wall, and in 2008, i could not believe that this opportunity that I was told, if it happens, Buy, Buy, Buy..

So we sold an expensive Home at the Top, Invested near the bottom, and bought a less expensive McMansion ( REO), at the bottom..

I was quoting I think Rothchild? back then saying "when there is blood in the streets, it is time to buy".. But I was and am a Rookie..

My Wife thought I was out of my mind....I said strap in..And we have never looked back.

To my Wife's Credit, she was all in...Love my girl...She got her home remodeled for that...

But Investing102 is the nuts and bolts... A lot of info is available out there.

I told my Wife that I am getting access to info, that in the past, only bankers and Big Investors had access to..

What project did Apple fund for you Today ???

[Stuart Adams]

Greg, what do you think about the market if Obummer gets re elected.

[Beegs]

Lock this thread NOW!!........so I can catch up.....

[GregWeld]

Originally Posted by Stuart Adams

Greg, what do you think about the market if Obummer gets re elected.

That becomes a political quagmire that I don't want to enter into.

I will comment re: Taxes vs Investing -- the whole have and have not discussion....

Change the tax rates on investments (i.e. tax dividends or LTCG's) from 15% to ordinary income tax rates --- and all you'll do is see money flood OUT of stocks and into TAX FREE MUNI's.... which carry a ZERO tax rate. If I see that is what's coming --- I'll be 100% out of the stock market. Ya know who gets crushed in the stampede? The little guy... the retiree... the Mutual fund holders (working people)... ME -- I'll have a little less income (maybe 5% less overall) and a lot less taxes - I'll pay ZERO.

Rich people have OPTIONS.... in other words.... they will make choices because they HAVE choices.

The POLITICAL CORRECTNESS of jumping on the latest greatest "talking point" to get elected or stay elected NEVER EVER had anything to do with what should be done or should be done RIGHT.

Equality says flat tax - no deductions - no tax free - no dividend - no offshore bs -- just everybody pay a % --- indexed UP for various income levels. Whatever that looks like. Lowest income levels should pay ZERO... pick some other level to say 300K and that's 15 or 20% - after that 25% or whatever.

The tax code needs to be fixed --- but they'll fix it by making it MORE COMPLICATED -- and my people will find a way to beat it. That's what they get paid to do. It's a chess game -- take the chess game away and you'll have a better system.

[Bucketlist2012]

Originally Posted by GregWeld

That becomes a political quagmire that I don't want to enter into.

I will comment re: Taxes vs Investing -- the whole have and have not discussion....

Change the tax rates on investments (i.e. tax dividends or LTCG's) from 15% to ordinary income tax rates --- and all you'll do is see money flood OUT of stocks and into TAX FREE MUNI's.... which carry a ZERO tax rate. If I see that is what's coming --- I'll be 100% out of the stock market. Ya know who gets crushed in the stampede? The little guy... the retiree... the Mutual fund holders (working people)... ME -- I'll have a little less income (maybe 5% less overall) and a lot less taxes - I'll pay ZERO.

Rich people have OPTIONS.... in other words.... they will make choices because they HAVE choices.

The POLITICAL CORRECTNESS of jumping on the latest greatest "talking point" to get elected or stay elected NEVER EVER had anything to do with what should be done or should be done RIGHT.

Equality says flat tax - no deductions - no tax free - no dividend - no offshore bs -- just everybody pay a % --- indexed UP for various income levels. Whatever that looks like. Lowest income levels should pay ZERO... pick some other level to say 300K and that's 15 or 20% - after that 25% or whatever.

The tax code needs to be fixed --- but they'll fix it by making it MORE COMPLICATED -- and my people will find a way to beat it. That's what they get paid to do. It's a chess game -- take the chess game away and you'll have a better system.

Too hard to answer the question without speculating on the run away Spending, and the Federal Reserve, and the devaluing of the dollar.

Will Obama ramp up what he has been doing for the last few years ??
Just in case he loses, he still pushes through more spending ?? I think so..
I think that Commodities will do well, and there may be another drop or correction in stocks ,that will be a time to add positions buying..

But thanks for letting me give my point of view.. No politics here...I just try to play over a long period of time, what I see the opportunities are ..

Not sure that is Investing 102 ... Kind of Speculation 102.. But I am not sure.

[ErikLS2]

Ok this isn't Investing 102 totally but I was watching Jim Cramer last night (which I never do) and he was talking about a couple potential hot areas this year. Two of them I had already thought had potential, one being cloud computing for which he mentioned a company I've never heard of, VM Ware, and the other natural gas which he suggested Kinder-Morgan for.

I don't know if any of you have any experience with cloud computing but it seems to me like that's where data storage is going. If you've ever heard of Dropbox, Evernote, SugarSync, iCloud you know what I'm talking about. I use Evernote and it's extremely handy to have your info on your phone and your computer without having to do anything. The syncing possibilities for your data are almost endless.

I haven't looked into it yet but VM Ware is owned by EMC but operates as a separate software subsidiary. I'm certainly not recommending it but hoping to maybe spur a little discussion about it.

On natural gas Cramer said it's selling here for $2.50 or so but sells overseas for $14-16. This is where Kinder-Morgan comes in, they have and operate the pipelines that move this stuff around. With all the talk about big diesel going to natural gas, it looks like an area of growth to me. Obama is speaking about this soon in Vegas at a UPS facility that runs all it's trucks on natural gas.

Greg this is where you come in, being a big Kinder-Morgan fan. They have 3 different stocks, KMR, KMP, and KMI one of which according to Cramer is much more tax advantageous than the others. Since you are a fan of them, maybe you could elaborate on the differences among the 3 for me and the rest of the readers.

I would love to hear any other thoughts on the cloud computing thing, I know this may be more of the speculative portion of investing but it feels the same to me as it did a few years ago when I was wondering why everyone needs a cell phone.

[GregWeld]

First the easy one:

VM Ware


I am currently a large holder of EMC stock --- which owns 85% of VM Ware -- and having just sold a company to EMC that specialized in digital clustered storage (big sales into the cloud) = that company (Isilon Systems) is now owned by EMC...

VM WARE allows users to use their "computers" as Virtual Machines -- so in real quicky terms --- their software allows a large company to operate on several different OS (operating systems) and have the "clients" (user machines) operate as virtual machines. With all the different OS out there now -- iOS - Unix - Windows (whatever version) etc and then you're really running the company on something by IBM or whatever.... so basically VM Ware allows this all to take place and all the "clients" can receive changes from IT etc. So in large workplace situations it's a wonderful "fix" for a complicated problem. Hope that makes sense.

An individual can run Win (X) on their Apple (iOS) using VM Ware product... so it allows iOS to be the basic machine OS -- and allow you to run Win (X) in "virtual" mode. Pretty cool stuff and lots of people are using this product because lots of people are running Macs in a Windows world...

So you can OWN EMC stock and actually own 85% of VM Ware -- or you can just own VM Ware...

When VM Ware does well -- EMC gets a kick in it's stock because of it. EMC of course is a VERY large company compared to VM Ware.


+++++++++++++++++++++++++++++


Kinder Morgan is a little more complicated -- KMP -- Kinder Morgan Partners is a "MASTER LIMITED PARTNERSHIP" and as such has to pass most of their income on to it's partners -- when you own this stock you are a "partner". Thus a nice dividend payer (provided of course that the income stream is good!

KMP -- OWNS substantially the other two stocks - KMI and KMR....and they're all set up in a very complicated inter-related way to run and or spin off "income" from their businesses. It's so complicated that it isn't really worth trying to understand --- because in the real world that we function in --- we just want to own good companies that pay good dividends. That would be KMP --- the main Master LLP....

When you do the research -- you'll find that just owning KMP is the way to play. The growth is outstanding - the dividend is stellar -- and the other two entities -- not so much. KMR pays no dividend and actually operates more like a secondary offering to raise cash for KMP... DUDE -- your head will spin trying to figure it all out.

[GregWeld]

Now -- let's talk about you listening to CRAMER......

He will make your head spin like Beetlejuice! I listen to him all the time -- he's brilliant... his wife is more brilliant.. BUT == THEIR BACKGROUND IS TRADING....

He can't seem to get far from that trader mentality. If you listen to him and follow his advice you'll lose money. I used to -- and bought all his news letters and all his "inner workings" crap -- on which - HE made money selling to dumbasses like me.

I LOVE to listen to him --- and he makes money -- but you'll be all over the board trying to invest with him and his reasoning and strategies. FUGIDABUDIT!

INVESTING 102 is all about stopping all that nonsense and noise --- and just doing what is RIGHT --- which is buy best of breed -- you don't need ANYONE to tell you what those are - you already know the names of the 20 or so companies you'll need to invest in..... AND all you need to do is pick a name --- compare other companies in that sector -- and you'll come up with "Best of breed" ---- Best of breed stocks get you the LONG TERM proven growth -- get you the dividend, and give you stability which gives you a good nights sleep thru thick and thin. That way you don't freak out and sell LOW --- and then buy back HIGH...

[billscamaros]

Originally Posted by GregWeld

I was using "earnings season" more as a "okay NEWBS -- pay attention this week and next and see how this can affect the market in general"....

Where would I see this type of news? Schwab or Fidelity's websites, CNNMoney, .... ??

Thanks for all the insight you guys provide to this thread!!