Investing 102

[GregWeld]

WOW.... this market is just whacked out! I like it -- but it's still just whacked.

You "newbs" are getting to see one crazy azz market that's for sure.

These market moves show you why you can't "time" the market -- and why it's so hard to "trade" the market... The days you think it should go up it goes down - the days you think there's nothing happening and the market is up 200 points.

It's days like today that show the "shorts" the door... and yet I think I'd have been betting with them (in other words - betting the market was going LOWER).

[GregWeld]

A very interesting look at investing.... and investing in big best of breed dividend payers.


http://seekingalpha.com/article/6917...g_income&ifp=0

[GregWeld]

Today I took a look at some of the home builders... Which is a group I don't own and have never owned. I now know why! Wow what horrible charts. I thought perhaps now might be the time to look to see if there's some upside to them but AS USUAL I'm way late to that party. The smart money has already bid them up over the last couple years.

Lennar (LEN) has moved 200+% in the last TWO years! And now trades near its peak and pays a lousy half a percent dividend.

K B Homes (KBH) is one they talked about on CNBC this morning as having "not traded up with its peers" --- but it too is up this year 35% already and pays a stinky little dividend.

It's easy to look and say -- geez! They're going up big time and I'm losing out... and that MAY be true enough.. and yes... I think we're on the road to a housing recovery based on the bids for property my buddy just got on his 5 acres (6 bidders slugging it out!).

SO HERE'S MY TAKE: This is gambling... you're gambling that there is a SUSTAINED (2 to 5 years) housing turnaround.. and at this point if there is one LITTLE hiccup in the numbers - you're going to see these sell off big time... and the dividends aren't the kind that will make you comfortable waiting for 'em to come back. So while I might miss a nice double over the next couple years - I might also miss getting my azz handed to me.

Remember that in investing - you have CHOICES... and if you make a wrong choice -- you get a double negative for your effort. The double negative is that you loose on the bet - and since your bet is now tied up - something else is on the move up. So you lost and you lost the ability to catch the ride on the upside... that's a double negative in my book.

So here's my thought when choosing investments -- you look -- like at a pretty girl - it's okay to constantly be looking... but you don't need to risk your marriage going on a date. Yes - the upside is appealing - everyone loves to hit a big winner.... but the downside is just not worth "the risk". Europe hiccups - we hiccup - the tax law changes (vote OBAMA if you want to continue on a downward "entitlement" slide ala Europe) that might happen etc... and there's a lot of risk to a shaky recovery at this point. And since you don't get paid to wait - why bother.

[bdahlg68]

Greg - any thoughts on coal? They don't seem to have recovered well from 2008 yet. Also gambling, but thinking about picking some up some small positions in the likes of ACI or ARLP.

[GregWeld]

Originally Posted by bdahlg68

Greg - any thoughts on coal? They don't seem to have recovered well from 2008 yet. Also gambling, but thinking about picking some up some small positions in the likes of ACI or ARLP.

I don't know anything about coal - or commodities like that. I don't have investments in anything along those lines.

[preston]

Greg maybe you should invest in companies that run and maintain internet forum message boards. You're obviously a big believer in their products

[toy71camaro]

sure has been a crazy market...

on a good note tho.. I'm up 4% overall, with all my "Investing 102" strategy purchases i've made this year so far. Not bad i think!! Only 2 are "in the red" and one is only 1% in the red (CVX), other 6ish% (MCD), but that was bought before Investing 102 came along, when i was researching dividend investing on my own (starting to).



Although, technically, I'd want them ALL go to down for the next few years so i can build up more positions with the dividends they pay out.. but it is alot easier seeing your "picks" in the green vs the red. lol

[GregWeld]

Originally Posted by bdahlg68

Greg - any thoughts on coal? They don't seem to have recovered well from 2008 yet. Also gambling, but thinking about picking some up some small positions in the likes of ACI or ARLP.

Since you asked -- I looked into Coal... I now know why I'm not invested in that kind of energy...

Arch Coal (ACI) YTD - DOWN 52% - 1 year DOWN 73% - 5 year DOWN 89% - 10 year DOWN 39% And ----- drum roll --- the dividend is a whopping 1.74%

THEN I CHECKED OUT ALLIANCE RESOURCE PARTNERS (ARLP) -- now that's a stock a guy could invest in!

YTD - DOWN 19% - 1 year DOWN 21% - 5 year UP 33+% - 10 year UP 372%

And -- drum roll -- it pays a 7.31% dividend...

But since I don't know anything about that market - or why the Coal ETF (KOL) is so awful! Dreadful! BAD!.... I'd say I'm not looking to get into it. Just my own opinion. I just don't invest in stuff I don't know anything about.

[Vegas69]

What about Facebook?

[Bucketlist2012]

Originally Posted by Vegas69

What about Facebook?

Todd. I still think there is a lock on shareholders selling..I think it will drop when some people bail out.

It is still a no buy for me, but again, I only buy what I understand, and facebook doesn't seem like a good investment to me..More of a gamble , but not for me.

Hopefully others will chime in about faceBook.