Investing 102

[GregWeld]

Originally Posted by captainofiron

Hows everyone doing on oil?

I must say I was tempted to sell back when I was under ~25%

But I didnt and instead threw a grand at it from my former companies 401k

so far looks like it helped, with the lower cost basis as of this morning I am "only" -1.6%

Just wanted to say thanks to Greg and the other financial wizards posting on here, if not for you guys, I would have sold it when the pressure was on

So this is exactly what I just wrote about when I responded to Jay's question above. You AVERAGED DOWN your cost -- getting them closer to where the stock is currently trading. This way it only has to go up a little to get your loss smaller or maybe even turn it into a gain. THIS DOES NOT ALWAYS WORK THIS WAY. Trust me -- I've lost plenty of times trying to catch the falling knife!! But you have to TRY -- and you have to have CONVICTION about the name and be willing to take some risk like this once in awhile. It's HOW YOU FEEL about the names your investing in - that keeps you from folding like a blubbering little school girl when things aren't so rosy! That's when you make some money!! Is it HARD to do? Oh hell yeah. Will you lose sometimes? Oh hell yeah! But we have to look at our pile of money as just that -- the pile -- if the pile is growing overall --- then we're okay. So if you're winning on 6 out of 10 investments -- and even on 2 - and losing on 2 - it's okay! You'll rarely if ever have all 10 firing all at the same time.

[GregWeld]

Originally Posted by GregWeld

So this is exactly what I just wrote about when I responded to Jay's question above. You AVERAGED DOWN your cost -- getting them closer to where the stock is currently trading. This way it only has to go up a little to get your loss smaller or maybe even turn it into a gain. THIS DOES NOT ALWAYS WORK THIS WAY. Trust me -- I've lost plenty of times trying to catch the falling knife!! But you have to TRY -- and you have to have CONVICTION about the name and be willing to take some risk like this once in awhile. It's HOW YOU FEEL about the names your investing in - that keeps you from folding like a blubbering little school girl when things aren't so rosy! That's when you make some money!! Is it HARD to do? Oh hell yeah. Will you lose sometimes? Oh hell yeah! But we have to look at our pile of money as just that -- the pile -- if the pile is growing overall --- then we're okay. So if you're winning on 6 out of 10 investments -- and even on 2 - and losing on 2 - it's okay! You'll rarely if ever have all 10 firing all at the same time.

I'm going to have to add to this ----


ALWAYS go back and redouble your research before investing more!! Go back and really make certain this is a company that's "okay" and you're comfortable holding. Make sure there's not news you missed about the companies outlook etc.

In other words --- DON'T JUST GAMBLE. Don't just make a bet that you'll buy more on the dips and it will reward you!! You'll feel way better about investing if you've atleast done your homework and think that you have a really good understanding of where you're money is going to work. If you still feel it's a good investment - then go ahead and add to your holdings while it's down.

[chichirone]

Thanks Greg for the guidance on research tools and how to best use the resources to educate oneself.

How do you feel about holding 2 of the top 3 or 4 companies in a segment when the indicators show positive growth charts (low on the left and higher on the right) for the segment?

For example: does it make sense to hold both Verizon and AT&T as they both are fighting for the same/similar marketshare, have slow to moderate growth outlook and an above average dividend yield around 4.5-5.5%? It seems they trade punches but continue to expand the overall market, re-invest in infrastructure (bought, built or rented) and pay a decent dividend. Definitely a longer term holding but not sure if its better to select one or carry both, since competitively, they seem to make one another stronger. Thoughts?

[GregWeld]

Originally Posted by chichirone

Thanks Greg for the guidance on research tools and how to best use the resources to educate oneself.

How do you feel about holding 2 of the top 3 or 4 companies in a segment when the indicators show positive growth charts (low on the left and higher on the right) for the segment?

For example: does it make sense to hold both Verizon and AT&T as they both are fighting for the same/similar marketshare, have slow to moderate growth outlook and an above average dividend yield around 4.5-5.5%? It seems they trade punches but continue to expand the overall market, re-invest in infrastructure (bought, built or rented) and pay a decent dividend. Definitely a longer term holding but not sure if its better to select one or carry both, since competitively, they seem to make one another stronger. Thoughts?

Great question Jay ---- and it's one that has an "it all depends" answer. Depends on how well you think you are diversified overall... accounting for your TOTAL investment portfolio.

I used to hold both... mostly because of the dividend payout and safety I think they BOTH offer. But my personal investments are one to two million per name -- and at one time I had about 1.7 million in these two.... and realized that I wasn't really "gaining" anything. So I cut Verizon (VS) simply because I'm a long term AT&T customer (the go with what you know).

To me -- it's like owning Coke and Pepsi.... or Altria and Lorillard.... I just think you're better off owning the one you like the best --- and then pick some other area to cover.