Investing 102

[SSLance]

I bet I can guess what the April 15th sale was for...


Thanks for posting. I agree that these types of funds should be for a specific use and watched very carefully. They can have pretty attractive yields but are as you say...very interest rate sensitive and also collateralized debt obligation default sensitive...as I found out personally.

I'm still happy with my decision to sell them at the loss and go into equities as that is what brought me back so well in 2009, and will certainly entertain owning at least a portion of them again at some point in the future.

Once I get through this holiday season and things settle down, I intend on opening up some Schwab accounts and getting serious about this.

I'm more and more convinced to do it my way, on my own though...than with my FA like I always have. He won't be happy, but I'm sure he'll get by.

[GregWeld]

Originally Posted by SSLance

I bet I can guess what the April 15th sale was for

Yes.... That would be to fund the ADDITIONAL $800 GRAND in federal income tax due. But like I always say. They get the smaller percentage of the deal and I get to keep the rest. So it's just looked at as they're my partner and they get their cut.

[WSSix]

but I thought the rich don't pay any taxes


Well, the end of the year is looming which means that start of next year is right around the corner. Time to max out the Roth again soon. I think what I will do is simply add to the positions I already have(16) versus buy more. I might buy another petroleum company because I'm tired of seeing OXY in the red after nearly 2 years, but I'm going to run the numbers and see where I am with it because I have been collecting decent dividends off of it the whole time too. I'm going to do that with all my positions so I can get a better idea of who is working the best for me.

I'm leaning towards adding more to the stocks that are paying better dividend percentages versus gain percentages. My thoughts are that the dividend is almost guaranteed money where as the gains might not be since the stock price is way more fickle than the dividend payment. Is that an ok way to look at it or should I be more concerned with the overall gain? I consider myself to be more in the growth mode right now. I would think going after the payments would be a more sound growth mode strategy since the payment is almost guaranteed.

Also, do I need to be seeking out just a normal CPA or is there a particular type of CPA I need to find in order to not only answer the questions I have about my investments and the taxes owed, but also do my taxes so I don't end up paying what I shouldn't? I'm thinking I shouldn't have had to pay taxes on my KMP position since it's under my Roth IRA but I don't know and would like to know and be more certain about my taxes. I've got other positions I might be interested in but don't want to get involved without having the proper guidance.
Thanks

[GregWeld]

This is for EVERYBODY at this time of year - not just you Trey - but since you asked and - it is after all - your thread!


16 stocks (names we'll call 'em) is a pretty good number. I've said before in here - 20 is all your really need... and too many is too much diversification just for the sake of being diversified. So better to just keep the great stuff -- and NOT just buy something "just because". That never works out well. The WalMart family - and Bill Gates et al - got rich pretty much on just ONE name. Right?


Now - here's the tricky part... and this will NEVER work out the way you want it to or the way you think it should.

The laggards (not always losers) are to be looked at for a reason WHY are they lagging? Did you pick a name of the best of the best in a group and everything else around it did better? Or is the entire industry suckolla? OIL right now is sucking wind because the price of crude ain't so hot. They do have overhead to get the crap out of the ground - and obviously - they have better profits when the end prices are higher. Right now their margins are "under pressure".

BUT --- what I want you to think about is what is the FUTURE looking like. Not what DID happen -- that's behind us -- and great stock market gurus want to be IN FRONT OF the "market". So I'd leave my oil patch ride --- it will work out over time unless someone invents a car that runs on water. BUT let's look for a couple names out there that should come into their own with the economy humming along better. So what do you NOT own that you could own (since I don't know what you own and I'm not going to pick for anyone anyway) that should be picking up steam. For example - a year ago I got back into a bank name (Wells Fargo) == it has been in the dumper since the housing debacle -- and I figured the economy picking up would help the banks. Again trying to go for Best of the breed - and JP Morgan has been being pounded by the government - so I'm not going into that one -- but maybe it's starting to come out of that mess and see the light. Remember - we're looking for stuff GOING FORWARD... Great companies can rebound -- after a recall - or after stubbing their toe etc.

I'm not saying go into financials --- I just used that as an example. So think hard - looking at holes in your portfolio -- and see what it is that you're missing and then look to see what those groups/names etc look like.


NOW --- GOING FORWARD --- we all need to be watchful of the LOW dividend payers. They'll get punched in the nose if the interest rates start to become COMPETITIVE. Competitive is always a critical factor. I - and you - want to make a "market" return on our money ---- so if I can buy a bank CD and get 6% --- then that's competition for the 2.8% dividend payer. It's much more complicated than that - but you get the drift.

Don't buy ANYTHING that you think is going to get hurt in the next couple of years because of RISING interest rates. WE ABSOLUTELY KNOW that rates are not going to go down from here. They might hover here - and take a while to move up - but we're not in the prediction game of when etc -- we just have to take a big picture look and say -- EVERYONE is saying rates are going to go up -- so that's a broad general brush stroke that we need to factor in.

I don't own INDUSTRIALS -- because in a down or flat economy - Industrials lag or actually they suck.... Caterpillar just doesn't sell as well when we're not building houses and building buildings etc... but I think we're not too far away from a bust out of that "depression". So IDK -- maybe it's time to look at some of that stuff. My feeling there was that CHINA had to get moving again to really have those pick up some steam. Remember that we're trying to be ahead of the curve if we can.

Go to GOOGLE FINANCE (I use it because I know what's on the page) and scroll down and look at the SECTOR Summary.... a good starting place for research. What makes up each sector - the best names there - start to compare dividend rate - last years percentage - are they a laggard just waiting for their day in the sun?

Originally Posted by WSSix

but I thought the rich don't pay any taxes


Well, the end of the year is looming which means that start of next year is right around the corner. Time to max out the Roth again soon. I think what I will do is simply add to the positions I already have(16) versus buy more. I might buy another petroleum company because I'm tired of seeing OXY in the red after nearly 2 years, but I'm going to run the numbers and see where I am with it because I have been collecting decent dividends off of it the whole time too. I'm going to do that with all my positions so I can get a better idea of who is working the best for me.

I'm leaning towards adding more to the stocks that are paying better dividend percentages versus gain percentages. My thoughts are that the dividend is almost guaranteed money where as the gains might not be since the stock price is way more fickle than the dividend payment. Is that an ok way to look at it or should I be more concerned with the overall gain? I consider myself to be more in the growth mode right now. I would think going after the payments would be a more sound growth mode strategy since the payment is almost guaranteed.

Also, do I need to be seeking out just a normal CPA or is there a particular type of CPA I need to find in order to not only answer the questions I have about my investments and the taxes owed, but also do my taxes so I don't end up paying what I shouldn't? I'm thinking I shouldn't have had to pay taxes on my KMP position since it's under my Roth IRA but I don't know and would like to know and be more certain about my taxes. I've got other positions I might be interested in but don't want to get involved without having the proper guidance.
Thanks

[GregWeld]

Originally Posted by WSSix

but I thought the rich don't pay any taxes

That right there is the biggest crock of crap the Democrats try to sell you every election cycle.


ANYONE can go to the IRS website or similar and see that the RICH pay a huge percentage of all the income taxes collected by the shizzle bags in Washington DC.

According to new IRS data, the 1.35 million taxpayers that represent the highest-earning one percent of the Americans who filed federal income tax returns in 2010 earned 18.9% of the total gross income and paid 37.4% of all federal income taxes paid in that year. In contrast, the 128.3 million taxpayers in the bottom 95% of all U.S. taxpayers in 2010 earned 66.2% of gross income and that group paid 40.9% of all taxes paid. In other words, the top 1 percent (1.35 million) of American taxpayers paid almost as much federal income tax in 2010 ($354.8 billion) as the entire bottom 95% of American tax filers ($388.4 billion)

[WSSix]

More people need to be aware of those facts, and before anyone tries to kill me, I was being sarcastic. Unfortunately, it gets clouded with emotions and this illogical fair share crappola. I try to stay away from those type of distractions when looking into stocks since it's about me growing my money regardless of agreement or support. Nice segue, eh? Basically, the stance you have laid out on why you're into Altria even though you don't smoke. I'm not sure I can do it with banking though. I'm actually very upset with the banking industry in this country. But should I care? Does my investment in them really constitute support or is it simply a means to an end and more money for myself? Sometimes, I think I put too much thought into decisions

I have no intentions of selling off my OXY. I'm just thinking I should maybe look into another petro company to expand my stake in that sector. Or, just hold tight on everything and let it ride. KMP isn't doing so well right now either but the dividend sure is nice. I'll crunch some numbers tomorrow and see where it stands. Maybe let the raw numbers guide me instead of trying to over think the decision.

[GregWeld]

Originally Posted by WSSix

More people need to be aware of those facts, and before anyone tries to kill me, I was being sarcastic. Unfortunately, it gets clouded with emotions and this illogical fair share crappola. I try to stay away from those type of distractions when looking into stocks since it's about me growing my money regardless of agreement or support. Nice segue, eh? Basically, the stance you have laid out on why you're into Altria even though you don't smoke. I'm not sure I can do it with banking though. I'm actually very upset with the banking industry in this country. But should I care? Does my investment in them really constitute support or is it simply a means to an end and more money for myself? Sometimes, I think I put too much thought into decisions

I have no intentions of selling off my OXY. I'm just thinking I should maybe look into another petro company to expand my stake in that sector. Or, just hold tight on everything and let it ride. KMP isn't doing so well right now either but the dividend sure is nice. I'll crunch some numbers tomorrow and see where it stands. Maybe let the raw numbers guide me instead of trying to over think the decision.

That was easy to tell.... I just decided I'd respond with that data - because there's a whole of lot people that think rich people just suck and don't pay taxes and that they "run" everything and they're basically just blood sucking idiots.


I'm the most democratic guy on earth - I don't vote that way - but I choose to be very helpful monetarily to those I think are worthy. We won't get into politics.


One of my "pat" answers when people ask me "what I am" - politically -- I tell them I'm a Democratic Republican. Of course they have no clue - so I tell them that the Republicans ALLOW me to earn enough so that I can afford to be democratic. Sadly BOTH parties suck bilge water.


RE: OXY

I can't tell you what you should do. KMP and OXY are "Oil" plays - while not technically in the same biz -- but that's why you want to be diversified. They'll come back - and then something else will suck... but as you pointed out - you'll keep on getting paid - and if your re-investing the dividend - it will continue to just pile up. The story has a happy ending.

[glassman]

Nice year end banter Greg! keep it comin, lookin, learning, and applying (a little at a time).

Started a pension fund for my employees a couple of months back. May i wish i could tell them to just do this, in fact i do but according to my accountant, "its illegal to advise them, you can get in trouble with the labor board"...so i dont "advise" them. I tell them to look listen and learn.

I have five funds now, i need to transfer three of them into "self directed" ira so i can do more of my own stock dividend paying pics....

[WSSix]

So I sat down and figured up my percentages for everything I own. My totals for all stocks since I've owned them is

Div Gains 4.76% Capital Gains 8.5% Total Gains 13.67%

Some of the stocks I have only owned a few months. Others, I have owned for 18 months. Should I be looking at all these as a lumped group or should I take into account the fact that a few stocks are only a few months old? Since I went for percentages, I think I have it calculated correctly. After all, we're looking at how much money my money has made. I'm trying to compare it to what my money that's being managed by Fidelity and Vanguard in two different mutual funds is doing. My Fidelity account has a year to date return of 16% where as my Vanguard account is up 25% from March 2012 which is when I bought my first stocks. It looks like I'm getting my butt kicked but I wanted to make sure I did my calculations correctly and my comparison too.

Thanks

[protour73]

Originally Posted by GregWeld

Yes.... That would be to fund the ADDITIONAL $800 GRAND in federal income tax due. But like I always say. They get the smaller percentage of the deal and I get to keep the rest. So it's just looked at as they're my partner and they get their cut.

I can't even wrap my head around that figure.



Greg, I don't post in here a lot, but I am a frequent lurker for knowledge, inspiration and ideas, but how much time do YOU spend tending to your portfolio?? It seems like a boatload of time & dedication.

I came into a sizeable (for me) windfall in the last week so I am ready to finally purchased some stock in 2014. Buy it, tend to it, let it sit and not watch it everyday (retirement stuff) so it doesn't drive me crazy.

Your input and others as well, has been a real inspiration, but also extremely helpful. Your unending motto, "Investing isn't complicated as long as you do your homework" has really kept me coming back here, time and time again.