Investing 102

[CRCRFT78]

Read a headline stating Warren Buffet reveals he has prostate cancer, what are your thoughts on how this will affect the market? Will a panic ensue for all those investors that follow his every move?

[GregWeld]

Originally Posted by CRCRFT78

Read a headline stating Warren Buffet reveals he has prostate cancer, what are your thoughts on how this will affect the market? Will a panic ensue for all those investors that follow his every move?

Good question Jose...

My take on it would be that anyone that is investing in Berkshire would have to wake up every morning they held the shares and ask themselves... "is this the day the headline reads Buffet died".

When you see what happened to Apple after Steve Jobs passing.... (it's gone straight up)... then you have to question "conventional wisdom" when you'd be certain the stock would tank.

The world seems to be more willing to shake off events like this and keep on truckin'

I think that most investors - the ones that move the markets - which is not individual investors, it's institutional investors - realize that these people aren't running the day to day businesses.... they're figureheads... and there's lots and lots of really good smart people still at the helm.

Although -- there are just as many cases where the CEO has left and the stock has never recovered from it -- GE being one I can think of... when Jack Welch retired. Citigroup being another. And watch out below if you're a JP Morgan owner and Jamie Dimon ever leaves.

[GregWeld]

So here's something we really haven't discussed much -- mostly because of the "102" preference of keeping things simple...
But several people have asked in PM's etc about different stocks/bonds/interest bearing vehicles etc.

So here's a look at a PREFERRED STOCK I own as an example.


Here's a dividend -- not interest (big difference in the tax rate) -- on a PREFERRED stock that I have in U.S. Bank (USB) Note the "+L" after USB. In Schwab, that's it's symbol. Since there are several, or can be, several preferred's issued they tack on an "A" or "L" etc. Preferred's carry a fixed "interest rate" but is paid as a dividend. It's paid as a fixed rate - thus the notation of the rate. Really - preferred's are a hybrid of a bond and a stock. You'd buy these kinds of investments when you're looking for an "above average" dividend - you don't want "interest" - and you're not looking for much growth in capital. The growth in capital is constrained by the rate the preferred pays. They carry a due date like a bond - where the issuer is going to pay "X" for them. They are also "callable" (most of the time) which means that if the rate being paid is too high - the issuer can call them in and "retire" them. So that generally tends to put a cap on the price.

I'm not sure I'd buy these inside an IRA unless you're creeping up on retirement and want some safety and a higher yield.... if you're say -- under 60... I'd stick with capital appreciation and dividend for the total return. But wanted to just show these various ways to earn a dividend. My holdings are NOT in any retirement accounts (I don't need retirement accounts - I'm already retired! ) so I like the higher cash flow some of this type of stuff gives me.


04/16/2012 USB+L US BANCORP 7.875% PFD DEP SHS REP 1/1000 PFD D
type: QUALIFIED DIV
$3,483.62

[hifi875]

I was checking my home made mutual fund that i started creating on 2/1/12.
Started with a paltry 4k, not much i know, but as of today its up $625 with a 16.5% return. Not bad to me for not doing anything. I just need more money now.
With thanks to Greg for getting us thinking and DOING something instead of just thinking about it.

[GregWeld]

Fantastic!


Making money on your money -- that's what this thread is all about.


BTW -- NOBODY starts with a large pile.... you have to start somewhere... and just getting started is the best thing you can do!

[GregWeld]

Here's another "thought" about investing....


If you want to see what MAKING A PILE OF MONEY IN "Dividends/Interest" looks like --- IF any of you OWE money on your VISA/MASTERCARD.... just look at what they 'make' every month on what you owe.....

YOU should be making that -- not them!!



BE THE BANK --- Don't owe the bank.

[toy71camaro]

Originally Posted by hifi875

I was checking my home made mutual fund that i started creating on 2/1/12.
Started with a paltry 4k, not much i know, but as of today its up $625 with a 16.5% return. Not bad to me for not doing anything. I just need more money now.
With thanks to Greg for getting us thinking and DOING something instead of just thinking about it.

Wow! nice!! much better picking than what I did when i started early march. lol

[Bow Tie 67]

Originally Posted by toy71camaro

Wow! nice!! much better picking than what I did when i started early march. lol

I'm down less than 1% total, with some real " go getters " vs some laggards. But the important thing is I believe in the companies I own. Greg was oh so wise when he told us to research and get to know the company.

[GregWeld]

Originally Posted by Bow Tie 67

I'm down less than 1% total, with some real " go getters " vs some laggards. But the important thing is I believe in the companies I own. Greg was oh so wise when he told us to research and get to know the company.

Thanks Matt!


I started investing in the mid seventies.... so there is some "experience" in my bag. Over the years I've done a little bit of everything investment wise... and the biggest thing I've learned is the human psyche plays a key role in investing. Knowing what you own is critical when things aren't going so well. An investor can do his portfolio a lot more damage during bad times than he can make during good times... That happens when we sell LOW. When the weak hands get blown out.

2007/'08 and the recovery since then - is a perfect example. Those that blew out - lost money. Those that held - are back and making money.