Investing 102

[chichirone]

Originally Posted by GregWeld

I just found another eyeopener... and this is what I'm talking about "powering" your retirement fund... OR NOT!


Run a one year chart of Under Armor (UA) vs LuluLemon (LULU) stock.... I'm not even going to give you the numbers - ya gotta see it to believe it.


You can do this on Google Finance --- pull up the one chart (either company) and then put the other symbol in the "compare" box in the chart... and choose 1Y.

Ok, I have been stalking this thread long enough and if I am going to blame GW for making me filthy rich and selling my cars (HA!) I better participate/contribute.

The charts are crazy insightful. 1 year is plus 90% UA vs. -38% LULU...Yoga anybody? Thanks for sharing Greg! Now check the 10yr chart. I'm not going to describe it but "namaste" to LULU.

[GregWeld]

Originally Posted by chichirone

Ok, I have been stalking this thread long enough and if I am going to blame GW for making me filthy rich and selling my cars (HA!) I better participate/contribute.

The charts are crazy insightful. 1 year is plus 90% UA vs. -38% LULU...Yoga anybody? Thanks for sharing Greg! Now check the 10yr chart. I'm not going to describe it but "namaste" to LULU.

Just trying my best Jay!


As you know - 'cause I've said it enough times in the last 400 pages.... the stocks are only used as real life EXAMPLES.... and the points shouldn't be Sell LULU and buy UA.... The points are COMPARE things -- they're not always what you think. Poke around a bit. THINK!! It ain't hard and a guy can always LEARN just by making comparisons and opening their eyes to FACTS rather than "I think" or "somebody said"....


Makes you wish you'd have put 100K into UA 5 years ago instead of a car???? LOL

[chichirone]

Originally Posted by GregWeld

Just trying my best Jay!

Makes you wish you'd have put 100K into UA 5 years ago instead of a car???? LOL

OUCH! I appreciate the candor and levity!

So here's our thinking...would love your feedback.

Amy and I have the rainy day fund in place. A years worth of cash on hand. We have invested in actively managed mutual funds for over 15 years, accumulating a 7 digit nest egg for longer term retirement. Our current goal is to generate more cash flow for mid-term money for our bridge years age 40-65. Managed growth over 5/10yr horizons with dividends reinvested is something we are very comfortable with. Your comment on it being a personally managed mutual fund resonates with us.

We have been looking at the following dividend stocks. I'd like to get your feedback on my "analysis" based upon share price and dividend yield. I really want to make sure I am looking at these stocks through the right set of lenses. We do not have a high tolerance for risk so the High-flyers don't interest me too much now, but as we build the portfolio, a TSLA or GPRO will become more attractive.

Symbols that interest us are:
KRFT
COP
XOM
F
PFE
MRK
SMG
T
MDT
KO

Our plan is to invest a portion of our monthly revenue, buy shares with the intent to receive dividends over the next 10 years. I am prioritizing the investments based upon yield percent of share price to get started which seems to be a low "risk" option when I evaluate the 10yr charts. I like your strategy of 5% return on the stock performance, reinvesting the dividend, and then building a portfolio that has 20-25 stocks with no more than 5% of the total invested in any one share. Time for you to tear it apart and push our thinking...I look forward to your response.

[GregWeld]

Originally Posted by chichirone

OUCH! I appreciate the candor and levity!

So here's our thinking...would love your feedback.

Amy and I have the rainy day fund in place. A years worth of cash on hand. We have invested in actively managed mutual funds for over 15 years, accumulating a 7 digit nest egg for longer term retirement. Our current goal is to generate more cash flow for mid-term money for our bridge years age 40-65. Managed growth over 5/10yr horizons with dividends reinvested is something we are very comfortable with. Your comment on it being a personally managed mutual fund resonates with us.

We have been looking at the following dividend stocks. I'd like to get your feedback on my "analysis" based upon share price and dividend yield. I really want to make sure I am looking at these stocks through the right set of lenses. We do not have a high tolerance for risk so the High-flyers don't interest me too much now, but as we build the portfolio, a TSLA or GPRO will become more attractive.

Symbols that interest us are:


KRFT

First off -- I'd deem Kraft a "steady eddie"... boring - low growth - increases the dividend - relatively low dividend percentage... but you can take this one to the bank 20 years from now and never loose a single nights sleep.



COP



Connoco Philips is one of the energy plays... It's another steady eddie - sleep well... 171% 5 year Total Return! Can't beat that with a stick! And you're getting 3.62% dividend!



XOM



I'd make a choice here and either hold COP or XOM but not both. COP has been the stellar grower and pays a far better dividend so I know which one I'd choose just off the stats. EXXon's problems could stem from their issues dealing with the Gulf oil spill and that may have held people back from wanting to own it.



F




Ford is a good recovery story - well run now that Bill Ford isn't at the helm... As long as the economy is perking along Ford should do just fine. Look for them to increase the dividend along the way. Good choice. It's powered by a 5 year Total Return of 142% which when you do the math - compare 142% TR to your SMG's 55%... :>)


PFE



I don't like the drug stocks... I can't keep up with who has the latest greatest next gen coming out. Frankly - I couldn't tell you what company makes what and that is something I can't invest in because if I don't actually know what they're doing -- then I don't understand my investment.


MRK




Merck --- Ditto above. If I had to have a big pharma.... I'd have ONE not both.




SMG




Scotts Miracle Grow - I can't even imagine why you came up with this one.... LOL... unless you work there. Dismal 5 year total return of 53%.... pretty low return - and given that it also pays a smallish dividend -- then you're not getting the growth in capital to offset the small payout. I'd find a better one than this. Even you're above big pharma choice MRK had a 123% 5 Year Total Return... and Pfhizer had a 5 year of 118%

In compounding TOTAL RETURN is everything... and there's just a monumental difference between 100% and 50%...




T



AT&T -- is one of my sleep well stocks -- good dividend -- good well run company - slow growth but I use it to get a good dividend and to make me comfortable. 5 year Total Return 69% not good frankly but it's still kicking' SMG!!




MDT




Medtronic is another one I can't keep up with what it is they do... or who the competition is. If you're a Doctor you probably understand them. I wouldn't own it for that reason --- and mostly because of the under 2% dividend. At least it had a 92% 5 year Total Return --- so the growth in share price offset the measly dividend. The problem I have with under 3% payers -- they don't keep up with inflation and it gets worse when the market sucks... I want my dividends to be enough to make/keep me happy when the market is horrible. 1.8% wouldn't do it for me.




KO





Coke is a good well run company. They pay a near 3% dividend and have a 5 year Total Return of 86% -- which in my book is decent -- and enough growth to cover the under 3% dividend. It's also a sleep well stock.





Our plan is to invest a portion of our monthly revenue, buy shares with the intent to receive dividends over the next 10 years. I am prioritizing the investments based upon yield percent of share price to get started which seems to be a low "risk" option when I evaluate the 10yr charts. I like your strategy of 5% return on the stock performance, reinvesting the dividend, and then building a portfolio that has 20-25 stocks with no more than 5% of the total invested in any one share. Time for you to tear it apart and push our thinking...I look forward to your response.

I think you have too many small dividend payers --- I'd shop for a couple that are 5% and have better TR's that a couple of your picks.

In order to diversify -- try not to double up -- i.e. the COP/XOM and the PFE/MRK...


You're to be commended by the way on your already sizable holdings -- I bow to you.

[chichirone]

Originally Posted by GregWeld

I think you have too many small dividend payers --- I'd shop for a couple that are 5% and have better TR's that a couple of your picks.

In order to diversify -- try not to double up -- i.e. the COP/XOM and the PFE/MRK...


You're to be commended by the way on your already sizable holdings -- I bow to you.

Greg, I REALLY appreciate your insight and compliment. This thread is one of the most personally moving reads I've experienced since reading the Millionaire Next Door. Your willingness to share and provide insight to your personal situation, for the benefit to educate others has been incredibly helpful.

The healthcare, med device and pharma stocks are very familiar to me since I've been in the business for almost 20years. Call it my comfort zone. If I read your comments correctly:
1. Select one in the sector and don't duplicate
2. Quit sniffing the fertilizer. HA!
3. Be a little more focused on 5% yield...look for more risk
4. MAKE IT HAPPEN!!!! The first step is to get the Schwab account set up and get rolling.

Your insight is valuable. It is not often that one is wiling to share, educate, and also call bull**** on another's thinking. On another note, is PM and MCO still on your "sleep at night" list? I left these off my list.

[Vegas69]

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.

[GregWeld]

Originally Posted by Vegas69

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.

So many of the companies we own nowadays are already "international". So I don't go looking for a pure international play. 20 years ago you needed to own some foreign company stocks -- but the big best of breed guys are almost all doing business in other countries. Frankly I can't think of many countries where I'd want to own their stocks. Europe is a welfare entity... Spain? Japan hasn't had a good economy for 20 years.... If you want China - buy McDonalds - Coke - Apple... and I don't want to own anything I can't pronounce. Germany is just now slipping into a possible recession...

The other way I think is about stuff like KMI/KMP/KMR.... they own the Pipes...Everyone needs to get their stuff from point A to point B... so I don't try to pick the one guy that's going to win that battle -- when they ALL have use KMP pipes...

Ditto oil --- I'd prefer to own the infrastructure plays (the pipes/storage). Versus the guys that have to drill - risk capital to find more - or have to play the pricing game. THEY ALL have to use the pipes so I invest in pipes. :>)

Again -- this is just something more to think about rather than BUY THIS or DON'T BUY that.... which isn't the way I like to do this thread.

[96z28ss]

Originally Posted by Vegas69

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.

Now that CVS isn't going to sell cigarettes which I heard was 2 billion in sales a year. That might make the company not hits its numbers, sending the value down.

[chichirone]

Originally Posted by Vegas69

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.

Thanks Todd. CVS is an interesting pick as they recently acquired a home infusion/home care business which aligns them to the entire patient pathway once discharged from the hospital. Their growth over the past 10 years is 254%. Their model is also creating a network of "doc in the box" locations across the US. Patients/consumers can go get a flu shot, advil for their headache or knee pain, their blood pressure medicine, a prescription from the on call physician assigned to the location for their sinus infection filled in 20 mins or less, a cold compress for their back pain and a pint of Ben & Jerry's to "help" with the healing in less time than hanging out in the waiting room trying to see the family practitioner, or God forbid go to the ER and wait for 3 hours just to be told you need a prescription for an antibiotic to treat your sinus infection. My only concern was the dividend yield and the uncertainty of Obamacare. They have had a good run but are they (and other healthcare stocks, specifically Rx companies) at a bubble.

Per Greg's suggestion to look for higher yields, I have been looking at healthcare specific REITs such as Healthcare REIT (HCN), Ventas (VTR) as an alternative to the drug dealers and manufacturers. The baby boomers you mention will have to go someplace as they age and assisted living, nursing homes, SNIF's, and senior care facilities will be a key component of elderly care over the next 20 years. Medical offices are popping up all over the place. ER clinics, CareNows and minute clinics are popping up in every neighborhood their is even the slightest level of population density. Look at HCN and VTR's chart. 10 yr gains of 80% and 120% growth, plus at or around 5% dividend yield. It's not the growth scale of CVS, and the buy in is close to peak, even tho they are somewhat depressed the past year, but one thing is for sure...we are not getting any younger. The demands on healthcare will continue to be a need as long as humans are on this planet. And, they are looking to expand across the ponds. India and China are target rich environments for these companies. 3 to 5 times the population in the US with massive demand for infrastructure. Not saying its the right strategy, but an alternative to consider. CVS is more of a steady eddie performer with lower yield, and the REITs diversify without having to physically buy a building.

Greg and Todd, thanks for the guidance to look for closer to 5% yields and think about my "comfort zone" a little differently. It was your nudge Greg, that made me research my strategy a bit differently the past couple days versus going in with all "sleep well at night" stocks I proposed on my list. Now tell me if I'm crazy or if this type of diversification is more aligned to your guidance from previous responses!

[GregWeld]

Originally Posted by chichirone

Greg, I REALLY appreciate your insight and compliment. This thread is one of the most personally moving reads I've experienced since reading the Millionaire Next Door. Your willingness to share and provide insight to your personal situation, for the benefit to educate others has been incredibly helpful.

The healthcare, med device and pharma stocks are very familiar to me since I've been in the business for almost 20years. Call it my comfort zone. If I read your comments correctly:
1. Select one in the sector and don't duplicate
2. Quit sniffing the fertilizer. HA!
3. Be a little more focused on 5% yield...look for more risk
4. MAKE IT HAPPEN!!!! The first step is to get the Schwab account set up and get rolling.

Your insight is valuable. It is not often that one is wiling to share, educate, and also call bull**** on another's thinking. On another note, is PM and MCO still on your "sleep at night" list? I left these off my list.

Jay -- Yeah -- I've shared way too much personal info on here -- but figure WTF -- if it gets one person going on the right track - then I've done good. So I throw myself on the sword for all. LOL


I figured you had to be "in the industry" or close to it.... There is LIFE outside of work you know. Drive up and down the street and look at all those viable businesses that are just waiting for you to be a partner with them.

5% dividend doesn't have to come with risk. AT&T pays over 5% and I wouldn't classify it as risky. Altria (MO) pays 4.66% and that's not very risky... so there's plenty out there.

Philip Morse (PM) pays almost 5%... Both MO and PM are sin stocks -- I like MO because of the booze component... I don't smoke or drink -- doesn't keep me from making money off the people that do.

MCO is Moody's (the ratings agency) and I ASSume you meant McDonalds (MCD). I sold MCD awhile ago based on my belief that they're losing the fast food battle... and that the general public they appeal to has shifted to healthier restaurants. Their sales continue to slip -- and that's a "Fundamental" change I can't sleep with. Their down almost 8% in the last 3 months... that's a nasty dip and I'm glad I've moved on. If it paid a dividend - I'd be in Chipotle Mexican Grill (CMG) versus MCD. CMG is growing and MCD is shrinking.