Investing 102

[GregWeld]

Originally Posted by Flash68

It's great to see on such a generally "financially wasteful" site like a car forum that many are taking to this and running with it, or using it get their financial house back in order.

This thread is the anti-thread on Lat G.


I'll throw something out there... I have been wanting to get into some AAPL but have been waiting for a pullback recently. This article gives me some technical support behind my waiting which I thought some might find interesting. Basically I am waiting for the next scheduled 12% pullback to buy in (see chart within article).

http://seekingalpha.com/article/3955..._article&ifp=0

While you're WAITING -- the market is moving relentlessly ahead leaving you behind.

There's an old saying - "Don't fight the FED"... which means ya got to join 'em... and they (the FED) has vowed to keep interest rates low...

Next oldest saying... "when interest rates die (stay low) stocks will fly".

See how the two are linked?

Get into Apple before you miss out on the next $50 move. Or move on and get into something else that you "trust". Never ever never ever buy a stock that scares you to own. Doing so will insure that you'll be what's known on Wall Street as a "weak hand" (play poker? You'll know what betting with a weak hand does to you). This should have been in the first post on this thread.

I have pounded the table over and over about owning stocks you know and understand... and owing best of breed... and being able to hold these stocks during down periods. You have to be comfortable living in your own skin so to speak.... or you get your ass handed to you.

So here's the scenario.... You buy Apple EXPECTING it to go to $600.... You're in at $550... Suddenly something in the news affects the market and Apple (and the whole market) pull back... and now it's trading at $475. You freak out and sell.

I laugh my ass off while buying your sell... and the week after you sell - Apple announces sales and record profits and 3 new products and jumps right back to $550 and the week after that trades to $600.

I'm only using APPLE as an example here. I own NO shares in the company. The INVESTING 102 point is --- don't buy something you don't want to own long term - believe in long term - and can afford to hold long term. This ain't GAMBLING -- it's INVESTING.

Ask yourself if you truly believe that this company can grow from here... can they continue to be best of breed... can they gain market share...

If not -- then you're just being a "momentum" player and momentum players operate quickly and get in and out of stocks for a $1 share gain... They don't care about the company - they just care about which way the stock is going that they own for this 15 seconds.

So -- go to the mall -- stand in front of an Apple store for an hour.... do you like what you see? Is this a company you want to own?

Now -- Let's use INVESTING 102 -- for another "lesson" (I hate calling it that).

$550 per share... if it goes to $600 you'd be UP 10%. Wonderful.

I get 13% in CASH on my Annaly (NLY) shares... regardless of whether or not the share price goes up or down. I get 14% on my Chesapeake (CHKR) shares... I get 8% on HYG (corporate bond etf)... GOOD MARKET OR BAD I GET THOSE RETURNS.

This is why I say - when it comes to investing -- you have CHOICES for what you want to do with your money.

If you have 100 grand invested in good solid stuff and want to play the pure growth of a stock like Apple -- I'd buy it in a heartbeat... but if this is most of your investment money -- or half of it then it's not where I personally would be. If you have a spare 10 or 50 grand that you can just go toss in the street and you want to just park some money and HOPE it's going to go up... then that's the kind of money I'd use for these kinds of buys. Again - just using Apple as an example --- cause it's just one of many. But I'd sure put money in Apple before anything else...

[GregWeld]

A NOTE OF CAUTION SHOULD BE POSTED - By ME!


Remember that I always use "examples" -- real life they might be -- but I also want to poke everyone reading -- that what I do -- is not what you should do!

I pay attention to my investments. I have several accounts - each with at least a VP or SVP adding their input/guidance/headsup. You get that "treatment" even at Schwab if you have enough in your account. So what I'm saying here is --- that when I post up the returns on some of these "names".... I will be long gone if I even WHIFF an interest rate increase. High yields are RISKY! They carry the risk of a tax change from Congress.... they carry risk if the FED signals that the economy is going well and they're going to raise the rates... Trust me -- when they do this -- there will be a big haircut in your capital!

So unless you're on top of your game... I'd stay out of the NLY's - the JNK's - the HYG's of the world. They might be crazy good right now... but these are not names you buy and hold forever. They don't actually even make anything! They're just "yielders" - financial instruments that spin off outsized dividends (right now).

So the caveat is --- Nobody is going to wake up in the morning and ride a horse through town yelling "the FED IS RAISING RATES".... and by the time many of you would figure this out -- it'll be too late you'll already have the haircut.

I'm not saying that I'll be any better at reading this - or be that far ahead of the curve. But I have 30 years of "experience" and pay attention to every nuance EVERY DAY -- Day in and day out. It's my job to keep my "employees" sharp and out of harms way. I'm going to ASSume that many of you will carry on your life and NOT be as attuned to the market and might fall into complacent investing (as some WERE before getting this thread!). You don't want to be falling asleep! This is why it's so important that not only are you getting a decent yield -- but that the UNDERLYING COMPANY is where you want to be.

[Sieg]

Originally Posted by GregWeld

A NOTE OF CAUTION SHOULD BE POSTED - By ME!

(Pssst, he's the guy that sold Apple for $410 a few months back)




Of course I'm the guy (idiot) that sold 100 shares of Nike at $10 after I'd doubled my money back in 1978.

[GregWeld]

Originally Posted by Sieg

(Pssst, he's the guy that sold Apple for $410 a few months back)




Of course I'm the guy (idiot) that sold 100 shares of Nike at $10 after I'd doubled my money back in 1978.

Do as I say - not as I do!




Remember I have been brutally honest about how I've used Apple --- "to park cash".... ditto HYG and NLY and similar. I'm a whore when it comes to those names. I'm also 'moving' a million or two into and out of these names - so the "risk reward" scenario is QUITE DIFFERENT for me than for someone that is trying to INVEST their 401 or ROTH retirement funds.

This is why I re-read my post about Apple (AAPL) and thought --- OH NO! I just mentioned some risky stuff and people will pile into them and not understand the differences --- and the lessons!

I hate to use specific names -- but it's the only way I can come up with to get some points across.

[GregWeld]

Originally Posted by Sieg

(Pssst, he's the guy that sold Apple for $410 a few months back)




Of course I'm the guy (idiot) that sold 100 shares of Nike at $10 after I'd doubled my money back in 1978.

Did I ever mention that I got to buy into the Starbucks IPO at IPO insider price? Yep -- bought 1000 shares at $17.00

That was on like Thursday or a Friday.... by Monday they went up THREE FIFTY ($21.50) and I sold the whole enchilada! Wow! I thought to myself -- I just scammed those poor suckers for a quick THIRTY FIVE HUNDRED BUCKS!! I'm a frigging GENIUS!


Oh -- Total return on Starbucks.... since it went IPO.....



TWENTY THOUSAND PERCENT. That's right... 20,000% since 1992


Yeah -- I'm a real genius!

[Bucketlist2012]

To Greg's point..

I am in position to make money no matter which way the winds blow.

You bet i am keeping an eye on the little monkey, but I will make money...

If things go as they say, I am not so sure about that, but if they do, Oh happier days for me...

But if something goes sideways, I am ready for that too..I won't have to make any sudden moves, I am just in a position of not "all or nothing', too much risk in all or nothing .. so a move one way or another will not stray my path..

[GregWeld]

Now that I just sat down and paid all my bills... which is another key to investing... i.e., GET IN CONTROL OF YOUR SPENDING. Make money FIRST - then you'll have some to spend!

Yeah - I know - easy for me to say.

Not the reason for this post though.....


My BOND broker called this morning -- mostly because we're friends (and have been for a very long time) but also because he was "pinging me" on any "new" money I might have for him to invest.

Fred has been in the biz for 40 years! I trust him - he's a great person - I know his family - He works for (an SVP) a big local brokerage (I will NEVER IN A MILLION YEARS GIVE AN INDIVIDUAL CONTROL OF MY MONEY OR MY ACCOUNTS --- NEVER! EVER! NEVER!)

We discussed "bonds" and the market and I said I'm NOT buying any more bonds, that I have enough of my investable assets in bonds and that's plenty (for me) and that I'm kicking his sorry ass in the "market"... He says to me -- and here's the SALESMAN/BROKER talking --- Well -- you've made 4% gain on your bonds!

NO -- I remind him -- I have NOT made 4% on my bonds because the entire reason to own them is for the TAX FREE INCOME -- and that I'm HOLDING TO MATURITY.... therefore -- I will have held them for 5 years (laddered so actually this is not factual but for the furthest dated ones it is) and only get my money back! NO GAIN.... because I would have had to SELL THEM to capture the current gain. SO his salesman part overrode his BRAIN... and I'm not afraid to call him on it.

It's why I don't use brokers (except for this part of my holdings).... even if they're your friend... in the end, their wallet is more important than your wallet! They're trying to make money on my money... I'm just not willing to let them!

[Sieg]

Atta Boy Tiger!

[bdahlg68]

Another reason for averaging into the market in general. I know this has been mentioned, but not sure any ideas for accomplishing this have been proposed. Obviously, the more money you are working with, the easier it is. For those with a pretty small amount (say $10,000), you may buy $1,000 - $2,000 of a certain stock and wait a month before buying another stock instead of buying say $400 of 5 stocks each month. This would cause your commisions alone to put you into a relatively substantial hole.

In general, if you can break up the "entry" into 4-5 chunks over around 6 months, you are likely to provide yourself a bit of downside protection in capital value. We are likely to have a bit of a volatile year. Think about the things going on and the risk / opportunity they put into the market. Note that volatility can be good!

EU liquidity
Potential for conflict between Isreal / Iran, Iran sanctions
Easing in Emerging Markets
US Election year

I heard as part of the Michigan primary yesterday that essentially all wealthy republicans are voting for Romney. Thinking about if Romney isn't elected, are these people going to move some of their investments into cash?

Lots of things to consider, think about, and occasionally.... worry about!

[Sieg]

Originally Posted by bdahlg68

Lots of things to consider, think about, and occasionally.... worry about!

Appears the market hasn't responded too well to Bernanke's semi-annual monetary policy testimony to the House this morning. One big event or a couple small ones in succession could trigger a slide. We're definitely treading on thin ice IMO. Be ready to counter-steer and keep your 6 covered people.