Investing 102

[mdprovee]

Unfortunately not....didn't have the free cash. Paying off bills at this point is our main focus.

But as you said I did learn a valuable lesson for next time.

[barrrf]

I took a chance on BAC today. Hoping it climbs to around $18 in the coming couple of months.

I hated pressing that buy button - I hate BofA with all of the hates I have to give.

[GregWeld]

Originally Posted by barrrf

I took a chance on BAC today. Hoping it climbs to around $18 in the coming couple of months.

I hated pressing that buy button - I hate BofA with all of the hates I have to give.

I've been a client of Bank of America (BAC) for YEARS.... but have never done anything with them except checking -- and trust me when I say I burn their Alaska Airlines VISA down every month. Other than that - I'm in your camp - as a bank they suck.

Because of that -- I own Wells Fargo (WFC) -- in full discloser I own 15,000 shares -- because Warren Buffet is a HUGE investor in WFC -- and the little amount of dealings I've personally had with them - I was really impressed. While it's one of the smallest dollar amounts I have in an investment - it's one
of my biggest gainers... but I bought WAY AHEAD of when I thought I saw the economy turning the corner.

EITHER ONE - when we're going in to a better housing market with incrementally higher mortgage rates etc - is a good investment if you need "Financials" in your portfolio.


Sorry -- It's EARLY -- and I had a long drive yesterday -- Forgot my train of thought:


What I bought "the banks" for (I chose WFC) -- is the RETURN OF them paying dividends comparable to what they did before the big bank debacle. IF --- ALWAYS A BIG IF -- the government allows them to do that.... and if they return to profitability and WANT to do that -- then the price will/should rise -- giving a double whammy --- bigger dividend and capital growth.

[barrrf]

Originally Posted by GregWeld

I've been a client of Bank of America (BAC) for YEARS.... but have never done anything with them except checking -- and trust me when I say I burn their Alaska Airlines VISA down every month. Other than that - I'm in your camp - as a bank they suck.

Because of that -- I own Wells Fargo (WFC) -- in full discloser I own 15,000 shares -- because Warren Buffet is a HUGE investor in WFC -- and the little amount of dealings I've personally had with them - I was really impressed. While it's one of the smallest dollar amounts I have in an investment - it's one
of my biggest gainers... but I bought WAY AHEAD of when I thought I saw the economy turning the corner.

EITHER ONE - when we're going in to a better housing market with incrementally higher mortgage rates etc - is a good investment if you need "Financials" in your portfolio.


Sorry -- It's EARLY -- and I had a long drive yesterday -- Forgot my train of thought:


What I bought "the banks" for (I chose WFC) -- is the RETURN OF them paying dividends comparable to what they did before the big bank debacle. IF --- ALWAYS A BIG IF -- the government allows them to do that.... and if they return to profitability and WANT to do that -- then the price will/should rise -- giving a double whammy --- bigger dividend and capital growth.

That's just it - if the FEDs green light BofAs capital plan then that $18 is attainable. Otherwise, looks like I'll be owning BAC for awhile.

This particular stock is just a hand of blackjack for me. Not really a portfolio stock at this stage.

[GregWeld]

Please note - IF YOU READ THIS -- I miscalculated (used the wrong math for this purpose!) so look at the dividend numbers again!





This thread is not about individual stocks or what to buy or when to sell etc.... that's just a whole 'nother problem maker... My personal posts have always been intended to get you to think - and to look at investing with a different mindset. Obviously in order to do that - we need to discuss various names as examples etc.

With that in mind -- I was reading an article that mentioned COSTCO (COST) and decided - as I usually do - to go check it out. I wasn't interested in buying the name - nor do I own any of it. I just like looking around - staying "abreast" of the market etc.


What I was surprised to see - is that a name that doesn't particularly excite me as a dividend payer with it's paltry 1.22% dividend - is this...

A five year chart shows that this name (and I'm just using this name as an example here!) had more than doubled in price (UP 132% in five years) AND had doubled it's dividend payout. 5 years ago this stock was paying 18 cents per share -- it's last dividend payout was 36 cents per share.

WOW comes to mind.

So in overlooking the name because of the lousy PERCENTAGE payout -- I never bothered to really look further into it. But obviously a stock that doubles in 5 years - and doubles it's dividend payout WOULD HAVE / COULD HAVE been a good solid investment!

So my take away from this little eye opener is that from now on I will look a little deeper into a companies history of RAISING IT'S DIVIDEND.

Here's why that's important.

If you'd have bought the shares in 2009 -- and paid $44.97 per share -- and at that time they'd have paid 18 cents per share... for a dividend payout of 1.6% (don't miss the POINT here).... it would have been a real HO HUM -- but maybe bought for the GROWTH of this retailer.... but NOW... fast forward to the last dividend - which is paid - and is calculated as a percentage of return on investment.... You're now getting paid 3.2% AND YOU'VE DOUBLED YOUR MONEY in the meantime!

Okay -- Not a bad "long term" investment - with a 5 year TOTAL RETURN of 171%. So let's not overlook a companies HISTORY of raising it's payout to it's shareholders. That's how people get rich.


NO I'm not buying it. I can't buy dividend payers at 1%. I live off my money NOW...but if I was younger and starting out -- I'd certainly say this company (or more importantly OTHERS that have similar history) is one to look at because of it's history of rewarding the shareholder.

[So Cal Camaro]

Greg, There are quite a few of these types of stocks out there....I have TJX which is discount retailers group, bought it back in 2008, worth triple what I paid for it with 1.3% dividend....not a bad stock for growth and getting a dividend too.

The reason I bought this stock, I happened to be in a Marshall's with a line going half way down the center of the store on a Wednesday night...I asked the clerk if it was always like this and when she said yes, I checked a few other locations, then checked the stock price and figured this one had to go up based on sales. Family Dollar stores was another that I saw from my cross country trip for Power Tour in 2010 was one of the few stores that always had a lot of cars in front of them....

Inspiration for stock buys are always around you, just have to be paying attention to what others are not....

Dannie

[GregWeld]

Dannie --

The problem becomes - for INVESTING 102 - which is all about NEWBIE investors... trying to pick a growth stock is far far harder to do than to pick great (best of breed) names that pay real decent dividends in good times and bad.

The entire thread has been about getting people to BEGIN to invest -- see some success... and to CONTINUE to invest.

Most people only need 10 different stocks in their accounts -- probably 20 maximum... and there's a ton of great names with great dividends that they need to own before investing for "growth". Because they can get growth AND a solid dividend giving them serious total returns.

[GregWeld]

Originally Posted by barrrf

That's just it - if the FEDs green light BofAs capital plan then that $18 is attainable. Otherwise, looks like I'll be owning BAC for awhile.

This particular stock is just a hand of blackjack for me. Not really a portfolio stock at this stage.

If you look at almost any chart -- you'll see why I went with WFC over BAC... The 10 year is one of the worst charts out there = With BAC's share price DOWN 61% while WFC is UP 73% over that same 10 year period.


Those numbers are HUGE by WIDE... and can make one hell of a difference in your investment portfolio.

[barrrf]

Totally agree with you Greg. And if I were broadening my portfolio and looking to add another bank stock - I would look at WFC.

That why I mentioned this is a short term stock for me. Like 2 months pending FEDs findings with BACs books. Its only 620 shares worth. Not 15000.

I mean, Im not lookin for much. Just 20% lol.

[Vegas69]

I've personally dealt with both banks many times throughout my real estate career. B of A's name is mud in the business. Agents don't want to accept offers from buyer's that are obtaining mortgages from them. They tend to close way late. On the short sale side of the equation (debt forgiveness), they are a bit weak in my opinion. They just don't fight very hard.

Wells Fargo isn't perfect on the lending side but I've had more good experiences than bad. I've also dealt with them on short sales and they have required cash contributions to short sale, even in hardship situations.

I do bank with Wells and have for 15 years. I've always been happy with them and many times I'm greeted with a smile and hello when I walk in the door.

Sounds like a company that meets the conditions Greg has laid out.