Investing 102

[Sieg]

Here's a little history on the IPO and the architecture:
http://seekingalpha.com/article/1147...preview-zoetis

It's certainly not going to set the world on fire but could end up being a moderately priced Steady Eddy so to speak. The way I see it the world will always need healthy animals for food and companionship and this company appears to own the market share globally.

Pfizer is a good stock though I'm a little concerned about the number of expiring patents and competition from the generic sector, especially with the healthcare train wreck that's coming in January 2014.

[GregWeld]

Originally Posted by Sieg

Here's a little history on the IPO and the architecture:
http://seekingalpha.com/article/1147...preview-zoetis

It's certainly not going to set the world on fire but could end up being a moderately priced Steady Eddy so to speak. The way I see it the world will always need healthy animals for food and companionship and this company appears to own the market share globally.

Pfizer is a good stock though I'm a little concerned about the number of expiring patents and competition from the generic sector, especially with the healthcare train wreck that's coming in January 2014.

This is EGG SACK LEE why I tell everyone -- PICK YOUR OWN STOCKS -- because if you listen to someone else... then the reasons YOU own them won't wash -- and if they go down - you're quick to sell rather than hold and add more. INVESTING IS A LOT MORE MENTAL than most people understand.

[GregWeld]

There's not too much to write home about with this choppy market. Trust me - this is typical summer action. We didn't get the usual "sell in May and go away" - but we are getting the typical summer "death of a 1000 cuts"...

I ALWAYS ALWAYS ALWAYS build a cash position coming into summer. Remember that I use JNK - HYG - NLY as cash parking spots. Years ago it was MSFT - GE - DELL.... but you must change with the market... but I digress...


We're at kind of a weird place in the market these days. People KNOW - without a doubt - that INTEREST RATES ARE GOING TO RISE.... when and how much and more importantly HOW FAST.... that's the unknown.


My typical action is to pick away on the stocks I like -- when they dip a bit. I use LIMIT orders for these buys - setting a price below where the market is at the time I place the order. I don't get stupid -- I just go a penny or two below the current BID not the ASK.... and if it dips to there at some point during the day I get the order filled - if not - it expires (I use day only limit orders).

So if I want to build a position to 10,000 shares... I'll buy 2,000 at a time. But during the summer - I only buy more if it goes below my last buy. So if I paid 20.50.... I'll add more if it goes to 20.35 etc. All I'm trying to do is not go all in at 20.50. Why?? Because it feels better to do it this way -- and I've been doing this for some 30 years... and I fully understand the MENTAL part of the game. I EXPECT --- expectations are meant to get crushed --- the market to be better in the fall -- so by September or October I expect the market to be higher or more steady.

This strategy is for large buys not 50 or 100 share positions... a few dimes on 50 or 100 shares isn't going to affect your return. But this is a strategy to remember and use if you're buying 500 or 1000 share position. It's just a game -- it makes you pay attention -- it makes you understand where your heart and mind are and it teaches you to really get in touch with your investor side. Can you stand to buy when the market sucks.... it's very important to know whether or not you can. Some can't -- it's okay.... but you need to know that. It's like a good poker player -- if you start a bluff -- can you see it through til the other player folds or are you going to toss money in the pot a couple times = and then fold -- thereby just increasing your loss. You should have just folded after the first cards came around... If you're not a good bluffer -- it's okay -- just know it and fold early. It'll save you money. Same thing in the market -- if the market is going south and you start buying and it's just killing you mentally... so you buy more and then at the bottom you fold and sell... THAT'S DUMB! That is what MOST "retail" investors do. They sell at the bottom and buy at the top. DUMB - DUMB - DUMB.... Let's not be "that guy".

[Sieg]

Good points.

I just need to learn to sell when the market starts to turn..........as is, if I was a gunfighter, I just stand there and watch in slow-motion as the guy shoots me.

If I would just act on instinct and sell a portion of the holding verses my mindset of all or nothing I'd still be alive and engaged playing the game and learning.

[GregWeld]

Knowing when to SELL is far harder than when to buy.... I use the same resistance in selling as I do buying --- I sell slowly... because it never fails that the day after you sell -- the market goes up.

The hardest part to selling is to question why you bought in the first place.

Here's the deal... if you look at the chart of the stock -- and you check it's total return over a long period of time.... Are you selling because it's down this quarter? Are you selling because you have too large of a gain? Or is it just portfolio rebalancing?

Today --- I asked my broker to sell ALL my BONDS.... Why? Because I have nice gains in them --- I just got the June interest payment... and I'm relatively certain that going forward my gain is going to turn into a loss as interest rates rise. I'll probably be wrong - but nobody ever went broke taking a gain (profit). I've owned them all longer than one year and a day -- so will be taxed at long term capital gains... So this is purely a "plan" -- and the trade off is I will loose the TAX FREE income.... but most of this laddered bond portfolio is out 2 - 3 and 4 years from now... I'd rather NOT loose the capital appreciation and have to hold the lower interest rate return for that time period.

IF -- big IF -- The economy is doing as I feel it is -- which is MUCH better than the unemployment numbers tell -- then we'll have a good XMAS selling period for retailers -- housing is making huge gains -- cars are selling like hot cakes etc.... so I'd rather chase that than hold tax free munis at 4 and 5%. I've started to build a position in FORD (F) etc.... I'm late to that party but I think they're just getting started on the road to recovery. So I'll position accordingly.

[sik68]

Good info on selling, Greg, Thanks! I believe in the dollar cost averaging approach, so I will stay the course this summer & fall. I expect I will a few times that's for sure.


I've been doing more reading on gov't sponsored retirement plans like 401k's. The author makes a pretty compelling argument AGAINST shuffling money into these types of retirement plans, namely because of of the lack of investment control, and that income from the plans is taxed at normal income rates.

Unless you plan to be "poor" when you retire, you plan to be wealthy when you retire and your normal tax rate at retirement will likely be HIGHER than the capital gains rate. For example, if you are retired in a 35% income tax bracket, your 401k income is taxed at 35%. Whereas your income from dividends and sale of stock in your brokerage portfolio is only taxed at 18%. Something to consider when deciding whether or not to max out 401k's...is your expectation REALLY to have a low income when retired?

[JKnight]

Originally Posted by sik68

Something to consider when deciding whether or not to max out 401k's...is your expectation REALLY to have a low income when retired?

This is very true. I think it's very important to have diversification amongst your pre-tax and post-tax retirement savings. 401k's are great because you can get yourself a raise by maximizing the employer match, but we need to have savings where the taxes have already been paid at (hopefully) a lower rate! This is something I've been working towards myself during the past year.

[GregWeld]

Originally Posted by GregWeld

Knowing when to SELL is far harder than when to buy.... I use the same resistance in selling as I do buying --- I sell slowly... because it never fails that the day after you sell -- the market goes up.

The hardest part to selling is to question why you bought in the first place.

Here's the deal... if you look at the chart of the stock -- and you check it's total return over a long period of time.... Are you selling because it's down this quarter? Are you selling because you have too large of a gain? Or is it just portfolio rebalancing?

Today --- I asked my broker to sell ALL my BONDS.... Why? Because I have nice gains in them --- I just got the June interest payment... and I'm relatively certain that going forward my gain is going to turn into a loss as interest rates rise. I'll probably be wrong - but nobody ever went broke taking a gain (profit). I've owned them all longer than one year and a day -- so will be taxed at long term capital gains... So this is purely a "plan" -- and the trade off is I will loose the TAX FREE income.... but most of this laddered bond portfolio is out 2 - 3 and 4 years from now... I'd rather NOT loose the capital appreciation and have to hold the lower interest rate return for that time period.

IF -- big IF -- The economy is doing as I feel it is -- which is MUCH better than the unemployment numbers tell -- then we'll have a good XMAS selling period for retailers -- housing is making huge gains -- cars are selling like hot cakes etc.... so I'd rather chase that than hold tax free munis at 4 and 5%. I've started to build a position in FORD (F) etc.... I'm late to that party but I think they're just getting started on the road to recovery. So I'll position accordingly.

Sometimes a guy just manages to get it right......


That post was dated JUNE 5th....




http://www.usatoday.com/story/money/...funds/2460831/

[HAULNSS]

Does anyone have any wisdom on the Sprint merger?

Shareholders are expected to receive approximately $7.65 per share (or an option to convert their current Sprint stock holdings to "New Sprint common stock"), part of a $16.64 billion pie. Softbank already owns a 70 percent stake in Sprint, which it purchased earlier this year for approximately $20.1 billion. Should this merger go through as it's expected to next month, Softbank and Sprint will become one.

My wife has had a few shares for awhile and now needs to decide if she wants to hold it or sell it. I haven't had much time to dig into the history or the 'word on the street' to know if the "post merger" company has any promise.





The company I work for just went public today and had the big IPO day at NASDAQ. Hopefully, there will be stock options for employees next year.

Randy