Investing 102

[XLexusTech]

Originally Posted by GregWeld

Just happened to check in on FaceBook (FB) this morning.... WOW! Those guys that bought and stayed in it -- it's climbing nicely... but WOW what a gut churning ride that has been!!

So here's why I post this....

Remember we talked about GoPro (GPRO) and about "waiting" -- and rather than thinking you missed the biggest "deal" ever... that if you wait and be patient -- there is always time to get in. FaceBook looks like the HYPE has been wrung out of the stock, and now it might actually be trading based on MAKING A REAL PROFIT. That's important -- because without that key metric -- stocks go down faster than they go up! And that's where people get killed in the market. They buy the hype -- and then sell out when the air goes out of the name.... Sometimes those names NEVER come back -- and sometimes they report that they're making real money (as in profits and margins) and then they can stand on their own two feet without the hype baked in. Now you can make a real decision based on facts and not just hyped hopes.

Not saying to buy or sell it -- just using it as a recent example on buying IPO's

Well thanks if remember you in the beginning very down on "facey book" I got in during IPO at 38 the more at the drop ...... I hope to be posting a similar opine message on peer to peer in a year....

[GregWeld]

Originally Posted by sebtarta

He did not agree on jumping on it.

He did not agree -- because maybe he knows - that like MOST PEOPLE they are in love with the stock - as long as the stock goes UP..... and when it doesn't - or drops in HALF like this one did -- then -- since they only really like the prospects of the stock going up --- they SELL OUT... losing money. MOST PEOPLE don't stick it out. See below for ONE that did.... and like I always say -- better LUCKY THAN SMART!

Originally Posted by XLexusTech

Well thanks if remember you in the beginning very down on "facey book" I got in during IPO at 38 the more at the drop ...... I hope to be posting a similar opine message on peer to peer in a year....

Good for you! As per above -- most would have bailed on this one way before it ever turned around. Here's my point for INVESTING 102.

Had you NOT bought on the IPO --- and you waited --- you might have bought shares for half what you paid.... IF YOU LOVED THE COMPANY VS THE STOCK... you would have really loved it at $22 instead of $38.... So there was plenty of time to sit on the sidelines and watch this one....

THAT'S MY ONLY POINT ON IPO'S..... Let's not discuss THIS COMPANY or some other company --- We learn from EXAMINING this stuff. GoPRO is off and running to the moon since day one -- they DO NOT always do this! It's fun when they do... but FaceBook was a classic example of the most hyped IPO that I can remember in a very long time -- and it was an EPIC FAIL. Since then they have been able to calm down - show they're making money (the goal after all).... and now people can get in without the hype.

We'll watch GoPro and see what happens -- because it's all very interesting.

Glad to hear you stuck it out -- bought more at lower prices -- and are now being rewarded for your faith. Good for you!

[GregWeld]

Once again - not saying whether or not someone should buy - hold - or sell any particular stock --- just picking on this name as ANOTHER example of the IPO market.


Twitter (TWTR) was another highly anticipated IPO "block buster".... But Year-to-date it's DOWN over 40% from it's high.... It opened at $44 -- ran to $70 with HYPE... and is now $38....


If you LOVE TWTR as a company and think they have a bright future, with the EARNINGS to go with it.... great. My point is -- there was plenty of time to take a step back and see where the shares would go.


Some of these remind me of the late 90's IPO market when the key "metric" used to hype the market was "EYEBALLS" --- everyone was going to make money because they had eyeballs. The problem though was -- you don't pay your bills with eyeballs... you have to monetize the eyeballs with earnings and profits. That's harder to do. There is only so much advertising dollars to go around. MySpace had eyeballs and "users". Do you even remember who they were? LOL

[CamaroMike]

Just an example that a safe dividend stock can occasionally have a nice run as well.


http://seekingalpha.com/article/2317...r-40-per-share

[GregWeld]

Originally Posted by CamaroMike

Just an example that a safe dividend stock can occasionally have a nice run as well.


http://seekingalpha.com/article/2317...r-40-per-share

What happens with dividend stocks that makes them "somewhat" safe -- is that their share price gets supported on the way down -- by the rising percentage of dividend payout.

AT&T (T) pays 5.08% dividend at this mornings per share price... It doesn't take much of a dip in the share price and it's suddenly paying 6%.... That's where you get the downside protection. And even better --- is that you don't need to sell when they're down to earn a return on your investment. Which is why they (dividend payers) become better holdings during market downturns.

WHAT DOES HAPPEN though is that interest rates COMPETE for dollars when the rates are rising... money flows from "other" interest rate paying investments and flow to where there is equal safety with equal or better rates. The problem with attempting to follow this money trail by selling one asset class to buy the "new" asset class is that individual investors are never ahead of the curve. They will sell at the wrong time every time. That's a game better left for the big boys with armies of economists and accountants on their team. They figure it down to the last 1/4% on a daily basis. That's why we just have to become INVESTORS...

That doesn't mean that if interest rates on Muni Bonds etc start to look like they're headed to 6 or 7% TAX FREE --- that I wouldn't lighten my stock portfolio and add some Munis. But you don't do that in your 401K or IRA or ROTH....

[JasonElvisHeard]

Any CFA's in the house?

Weld, I'm sure you know of a few but maybe they are not on latg.

jason

[GregWeld]

Originally Posted by G-Machine Racing

Any CFA's in the house?

Weld, I'm sure you know of a few but maybe they are not on latg.

jason

I don't use any "professional" investment advisors except for Muni Bond investing.

I just don't think they're any smarter than I am... and if it involves THEM making money on my money -- then their interests are ahead of mine.