Investing 102

[GregWeld]

Originally Posted by CamaroMike

I sold all my gold a couple years ago. I think I did ok considering the basis was from 1993.

I would love to buy some KMP, just waiting until January to see if prices fall like the "analyst" say they will

In order to figure out if you did "okay" (and not saying or implying that you didn't!) you'd have to factor in the holding period - and the inflation over the holding period.

Luckily we went into a deflationary period for awhile -- when gold was going up and everything else was going down (houses etc).

Here's the deal --- and this IS INVESTING 102 --- so it's why I pull this stuff out and try to get people to open up their view of all things money....

Investments need to be looked at as competing for what COULD have been if the investment choice was "X" or "Y".... during the same period. Investing shouldn't be STAGNANT... money needs to be working and pulling the wagon ALL of the time. And only some minor analysis needs to be done to make sure a guy is seeing that thru. Buy and hold and forget is not a strategy that will win. Winning is critical. More critical than anything else you'll ever do... Money DOES buy happiness -- the guy that said it couldn't or wouldn't never had any.


So just for fun --- I looked at the 10 year chart of GLD (a gold ETF) from 2004 to present.

GLD is UP 160% for that period.


Apple (AAPL) is UP 2916% for the same period


Kinder Morgan Partners (KMP) was only UP 77% for that period


So I think you did okay with your GOLD --- but only if you'd have sold it well up near it's top. The problem is on the way down. But even if you'd have held til now -- you did pretty well.

What you'll read about on here is that MOST people buy as something becomes the "hot" investment... unlike you -- were you bought for whatever reason at the time and held on. Your buy was near the "bottom" before gold took on the speculative aura. That's what I'm trying to get people to understand on here. Like flipping houses -- like the dot com era -- gold became "the hot ticket"... and that usually ends poorly because most don't get in until the gig is just about up.

[CamaroMike]

I see what you are saying, my rule of thumb is if the people at work are talking about it (bitcoins) its too late to catch that train

[GregWeld]

Originally Posted by CamaroMike

I see what you are saying, my rule of thumb is if the people at work are talking about it (bitcoins) its too late to catch that train

EXACTLY!!!



Lucky you (anyone) that can get on the train when it leaves the station... but that's really hard to do when you don't know where that train is going! Easy to see in hindsight.. and the problem with the ghost train is you don't know where it's going and you don't know when it's going to stop. It might be a fun ride with great scenery along the way - but who the hell knows that. Thus my "gambling" statements.

When it's RETIREMENT money - or money you're saving for college - or a house etc - gambling might get you there real quick! But it might also wipe you out... and we don't want to be the wipeouts.

If it's money that's completely EXTRA - you're already set - or already well on your way to retiring --- THEN BY ALL MEANS play a little. It's made me a fortune a couple of times -- so I'm not against gambling at all. I just don't want people to confuse that with actual investing - and they are very very different.

But mostly why I pick on certain items -- is because I want people to be able to tell the difference because that might save them from a big loss. Money is too hard to come by, to loose it foolishly.

You're new here -- and there's about half a zillion pages in this thread -- but the recurring theme is INVESTING wisely - cash flow - building that nest egg you can count on - so we can all go build cars and race together or play golf or whatever else it is people see themselves doing down the road. So it's about time - compounding - averaging in over time - and real savings that are paying you and ADDING to your savings without you ever having to worry about that. So I'm mostly a fan of dividend investing. Not trendy investing. Not gambling. But whatever you choose to invest in == it should have some cash flow paying you to hold it. Rental property - dividend stocks - whatever... Not BitCoins.

[GregWeld]

Originally Posted by CamaroMike

I was researching Southern Company (SO) and found they pay a sturdy dividend but seems like they are lacking in growth for the past couple years. Guess I will research some more in to it.

Both Con Ed (ED) and Duke Energy (DUK) have crushed Southern (SO) by a large margin the last 5 years.... not sure why -- but given a similar dividend -- the TOTAL RETURN is very important -- so yeah -- you need the capital growth component to be there as well.

[Sieg]

Year to date performance

SP 500 +31.86%
Sieg +33.60%

[toy71camaro]

Originally Posted by Sieg

Year to date performance

SP 500 +31.86%
Sieg +33.60%

Woohoo! Awesome!

[GregWeld]

Originally Posted by CamaroMike

I love dividends and hate short term capital gain tax! I consider myself a good saver and have always reinvested my dividends since I started in the market a few years ago but never truly saw how important compounding is. Its like compounding interest on a loan but its working in my favor. I have read most of this thread and would like to finish all the pages in the next week. I have a Bachelors degree in Finance and Greg seems like you should have taught a class at my school.


I have been saving up for a house so I have been investing in low risk high dividend securities that I trust and understand. I feel much more secure after reading the first 20 pages. Thanks for giving us less experienced investors some real world advice!

Good to hear Mike! And thanks for the kudos... The whole thread - as you have read - is pretty basic stuff. We could get far deeper into it but I don't think that serves anyone very well. As you've no doubt heard me say repeatedly -- it's not all that complicated. But sadly, schools do a HORRIBLE job at preparing people for "beyond work"... actually - they do a pretty sad job at preparing for LIFE period -- but we digress.... LOL


The funniest part about the whole investing thing is -- the principals remain the same regardless of the amount invested! Oh yeah -- for certain - big money has more stuff available to them - particularly when you hit that 10 million dollar threshold... but it still all boils down to the same principal... make a return on your money, minimize the risks if possible, pay long term capital gains preferably if at all possible...
Pretty simple really.

Originally Posted by Sieg

Year to date performance

SP 500 +31.86%
Sieg +33.60%

Okay -- YOU need to start to take over -- 'cause I just barely beat the dogs of the dow (kidding).




Nice job by the way -- and to the rest of you.... don't think for one minute it's always this easy! It's been a real easy market to be in. It's more that you have to be in it to win it... and trying to "time" the market usually means you're sidelined during the big plays. So while it's more fun to be out when it sucks and only in when it's rolling high... it's just almost impossible to gauge. Ya just have to remember the good times and think longer term.

[Sieg]

Originally Posted by GregWeld

Okay -- YOU need to start to take over -- 'cause I just barely beat the dogs of the dow (kidding).

Nice job by the way -- and to the rest of you.... don't think for one minute it's always this easy! It's been a real easy market to be in. It's more that you have to be in it to win it... and trying to "time" the market usually means you're sidelined during the big plays. So while it's more fun to be out when it sucks and only in when it's rolling high... it's just almost impossible to gauge. Ya just have to remember the good times and think longer term.

What I like is I did this with stocks rated "C" or higher by Schwab.

The C rated stocks are AT&T, Coca Cola, Excelis, Nike, and Sprint. All but a few pay 3+ % dividends.

Thank you GW

[GregWeld]

Originally Posted by Sieg

What I like is I did this with stocks rated "C" or higher by Schwab.

The C rated stocks are AT&T, Coca Cola, Excelis, Nike, and Sprint. All but a few pay 3+ % dividends.

Thank you GW

WTF!!! You made 33% on your money AND YOU DIDN'T GAMBLE?? Well that's just not right!!!


HAHAHAHAHAHAHAHAHAHA

[WSSix]

So I've already sat down and decided how I'll divvy up my Roth installment for 2014. I just have to wait for the calender to say 2014 and the money to hit the account. Here's what I'll be doing.

I'm still in growth mode so I looked at my returns, especially dividend payments, to decide what to do. I put more weight in the dividend payment than the total return. I like the dividend payments, lol.

KMP is barely positive right now for me but they pay a great dividend and buying more will bring down my average share cost/price.

SO I'm actually losing a little money on but the share price is low enough that I can buy enough to get a good dividend payment. I'm putting a little more in but not as much as other stocks. The company is still considered solid and a good position to hold. This works with my long term desires just like KMP.

WFM has been fantastic for me but I'm only putting a small amount into it. The dividend is small and the gains have been mainly capital. That's great but I prefer the dividend payments. It's more real to me that way. If that makes any sense. I'm simply not focusing a lot on this one but certainly not forgetting about it. Maybe next year I'll put a bigger chunk in but not this year.

MCEP. This one is weird for me. If anyone remembers way back in the spring when I bought this one I said it was a gamble. It's still a gamble. Its share price has actually gone down slightly since I bought it. The dividend payment has gone up not only since I bought it but also since the company became public only a short while ago. The combination of a good dividend payment and a low share price means I can buy a good number of shares for not a whole lot of money. Its dividend is on tract to be close to a 10% return. I can't reinvest the dividend, unless that's changed recently, which sucks but it's no big deal. It's not a lot of money I'm playing with, and I figure I'll use the dividend payments at the beginning of the next year to buy more stocks. That's still free money to me. I should also note I'm huge on percentages. I don't care if 10% returns only equals 50 cents. I feel like I've won the damn lottery.

The rest of the money is going into my other companies which are simply solid investments, nothing risky or special. Examples are KO, MCD, JNJ, and CLX.

I'm not putting anything into OXY or COST. COST is too expensive right now for what little I would have been able to put into it. It's a long term solid choice. I'm trying to be more aggressive with my rather safe choices. That's my idea of risk. OXY simply hasn't performed well enough for me to put more into it at this point. I'm just going to hold it though as I've got a good bit of dividend payments reinvested that are doing ok compared to my initial investment. I'll look at this one again next year or through the year really.

2013 has been good for me. Hopefully, 2014 will be as well. This is the path I'm taking so we will find out. Hope the rest of you do well also.