Investing 102

[GregWeld]

Originally Posted by chichirone

Greg, wondering if you can simply explain a master limited partnership (MLP). They seem to be a discount (falling), as is the entire oil/gas market, but how do these differ from a stock such as KMI? Is it an alternative tool or how does it complement a dividend investing strategy? Just curious on your thoughts as I feel I am over-analyzing the tool.

I have looked at: Alerian MLP (AMLP) or Kayne Anderson (KYN)

Master Limited Partnerships (MLP's) "dividend" is actually structured as a "return of capital" rather than a dividend or interest. Therefore the taxes on the "dividend" which is really a return of your capital is treated differently ---- UNTIL YOU SELL!! Of course this is over simplified...

90% of the income of an MLP by definition must be derived from REAL ESTATE - or NATURAL RESOURCES or COMMODITIES. Thus there is no "bank" MLP etc.


The two you mentioned are not themselves MLP's but rather ETF's (exchange traded funds) that INVEST in MLPS to drive their own income and thus declare a dividend to the shareholders.


Of the two mentioned - I'd personally invest in KYN (Kayne Anderson) over Alerian (neither of these are actually MLP's - they derive their income from MLP's).

It's important to note AND UNDERSTAND an MLP (where you are not a shareholder but rather - you are a PARTNER) versus being a STOCKHOLDER in a publicly traded company... So I'd direct anyone interested in these (MLP'S) to go here and make sure you "get it".



http://www.naptp.org/PTP101/Print/Ba...Principles.pdf

[GregWeld]

SO --- many of you guys have now been invested for a year or more.

What I'd love to ask you to do is to review your FEELINGS about being invested and more importantly.... HOW MANY OF YOU WOULD HAVE BEEN FREAKING OUT with the market this last week? How many of you would have panicked and punched the SELL button? Versus - sitting back and saying - Hmmmmmmmm I see some stuff to buy.


Interesting to review your mental status and see what you have or haven't learned with time.

[Payton King]

I know this is a little off track, but consider it company research. My step dad just sent me this video of the Tesla factory. Talk about cutting edge technology and cubic bucks spent on the factory. I was impressed.

https://www.youtube.com/embed/8_lfxPI5ObM?rel=0

[SSLance]

I've said just recently how much different I look at the market and my investments now as compared to in the past...thanks mainly to this thread.

The main difference for me is things are scaled way down with only a handful of really stable companies in my portfolio. This lets me be clearer with things going on, keep a closer eye on things, and more importantly the quality companies in my portfolio do not take the wild up and down swings with the DOW that the investments I held before used to take. This is comforting and exciting to me. I do look for down spots to invest more as I'm still less than a third reinvested, thankfully though, all of my companies are still up over where I originally bought them starting early last year. XOM is toeing the line but with dividends is still in the green.

Many thanks to Greg Weld and the rest of you touting this thread over the years, it has made a difference in my life and many others I'm certain.

[Vegas69]

The biggest difference for me is taking on more responsibility for my retirement. I had a little to much faith in my buddy which is my advisor and that's a poor excuse. I've analyzed all those moves and made adjustments and like the self managed stocks as part of the pot.

[captainofiron]

oil stuff and ATT has me feeling uneasy, but the others arent too bad. I guess that means I picked well

Unfortunately I lost my job right before Christmas, so no more investing for the time being.

I did get my 401k rolled over and bought some Conoco to bring down my cost basis on that one, actually its the first time I have used the limit function. I put it like 1.50 less than it was trading in the morning and amazingly (or not) it filled later in the day.

[GregWeld]

Originally Posted by captainofiron

oil stuff and ATT has me feeling uneasy, but the others arent too bad. I guess that means I picked well

Unfortunately I lost my job right before Christmas, so no more investing for the time being.

I did get my 401k rolled over and bought some Conoco to bring down my cost basis on that one, actually its the first time I have used the limit function. I put it like 1.50 less than it was trading in the morning and amazingly (or not) it filled later in the day.

So awesome! Here's the deal about using limit orders... over the long run - given the amount of shares to be bought or sold the actual total amount doesn't really make much of a difference. Where the difference comes into play is that you FEEL good about it. And that's very very important for people. Never underestimate the power of feeling "successful" regardless of the size or dollars. Even scoring $20 on a bet can be a far more powerful feeling than being on the losing side of that $20.

Beware of the pitfalls though of using limit orders when they DON'T get filled - and then RISE and you can end up paying more. So they can swing both ways on you and they do so quickly. You also have to stay on top of these kinds of orders... you can't just push BUY and then forget about them. If you're trying to capture the next dividend - you can miss out on something like that if you get too cute.

[captainofiron]

Originally Posted by GregWeld

So awesome! Here's the deal about using limit orders... over the long run - given the amount of shares to be bought or sold the actual total amount doesn't really make much of a difference. Where the difference comes into play is that you FEEL good about it. And that's very very important for people. Never underestimate the power of feeling "successful" regardless of the size or dollars. Even scoring $20 on a bet can be a far more powerful feeling than being on the losing side of that $20.

Beware of the pitfalls though of using limit orders when they DON'T get filled - and then RISE and you can end up paying more. So they can swing both ways on you and they do so quickly. You also have to stay on top of these kinds of orders... you can't just push BUY and then forget about them. If you're trying to capture the next dividend - you can miss out on something like that if you get too cute.

Yea I wasnt trying to get too cute or too smart for my own good

Well I set aside some cash to invest in oil while its down, call it a gamble if you will. But I used half one day with the limit order and it dropped about 0.50 less than what I got it for, so the next day I did the same thing, but it dropped again, today its up, so I definitely feel good about it, I was down like 10% with all the oil price drops on my energy sector, but after I used that limit stop, its only like 7%
Feels like a winning move to me, haha

thanks again

[gearheads78]

Originally Posted by dhutton

I tell folks that I get my investing advice on a car forum and they think I am crazy. Crazy like a fox as they say....

Thanks Greg,
Don

LOL I get crazy looks when I tell people too

[chichirone]

It is a fun conversation with others when we start talking lat-g investing 102 thread. Their faces always crack me up when the topic of dividend reinvesting comes up and the valuable information shared here. Most commonly we receive blank stares and deer in headlights looks.

Buy when others are selling and sell when others are buying.

Thanks to all for the sharing and willingness to educate! It's opened up another world to generating income, wealth, and the ability to pass it forward to family and friends.