Investing 102

[Sieg]

All poking aside - Greg..........you're awesome.

Barney Frank on the other hand...........

[GregWeld]

Originally Posted by NOVA

Greg, First I truly commend you and all the others that have contributed to this thread, simply awesome and the discussion is very easy to understand, I wanted to comment on Apple, my 401K is switching out one fund and adding (Ticker PRWAX - T.Rowe New America Growth) there biggest holding is Apple, then Google, it is going to be available to us March 22nd, I knew that I was going to get in, this just confirmed it. (now I have not decided how much just yet, but I am putting some in for sure!)

My 401K is very similar to others we can only pick funds that are in there (we have about 12 choices of Large, Medium, Small caps, a bond fund and a basic money market fund) but I check them and I try and make sure I am in the ones I feel are the best for me, I have about 25 years until retirement so my risk level is higher then someone who is 5 years away from retirement.

Thanks again Greg (and WSSix for starting this thread) for putting your time into this thread and educating us on this subject it is truly very rewarding and interesting, I check it daily!

Appreciate the fact that YOU appreciate this thread!


Remember -- BALANCE.... Your AGE should have you in more "risk"... you have a very long time on your side. Remember that just because you retire in 25 years -- you don't DIE in 25 years! You're not going to suddenly stop all your investments and draw down every dime to cash. You're going to live another 20 years -- so your time horizon is FAR longer than most think!

You can not separate RISK from GROWTH.... You can however, balance your risk / growth scenario with compounded dividends... some steady eddies.. etc. No bonds at your age -- ZERO.

[Bucketlist2012]

Originally Posted by Sieg

All poking aside - Greg..........you're awesome.

Barney Frank on the other hand...........

I agree..


An edit to my post would be although i am looking long term of where the investment will be long term, i do look at the medium term trends set by policies, feds, ect... But i am not with my finger on the trigger..It is more thought out than that... Things changing overnight are not the concern, as much as the longer term..

Greg, you are the Man... The thread Gorilla Glue...

[GregWeld]

Okay --- so I had this crazy thought for the newbs this morning. We were discussing interest rates and the FED etc...


This is investing 102 (wasn't 102 a cheap beer years ago??) so let me paint an "interest rate rising" scenario for you.


Here's how you pay attention and react in a MACRO (large picture) environment:


You're in a movie theatre - packed full of people.... you're looking around and checking everyone out and making your judgements about them (don't BS me - we all do this).... and in the corner you notice a 4 year old... no parents around.... no big sister. You also notice that nearby (him) on the stage there's a book of matches... If you're me -- I now keep an eye on this little monkey... I'm not afraid of him... I just know what a 4 year old could/can do with a book of matches.

Now.... I'm still looking around and waiting for the movie to start - a movie I've waited for 6 months to see.... This is when I notice the little monkey making his move to the matches...

Do you wait for him to strike the match before you get up and depart? Heck no! I know exactly what is going to happen when he lights them up! Panic! F-I-R-E!!! and everyone is running for the exits.

Nope -- If I even THINK the little monkey sees those matches -- I'm outta there! I'll stand by the door - and wait to see if a parent is also watching and kicks his sorry little butt... then I'll re-take my seat.


SO......... If the matches are INTEREST RATES.... and the little MONKEY is the FED/CONGRESS.... I'm keeping my eye on them! I'm not going to be out of the market because the minute you make that move -- the market will shoot up 10 points and you'll have missed the move. My point is to KEEP YOUR EYES OPEN... don't bury your head in the sand and hope everything works out for you! Be proactive. Proactive doesn't mean ACTION -- it means staying alert and understanding the relationships (the boy near the matches - doesn't mean he's going to do anything with them - but you KNOW what happens IF he gets his hands on them).

SO if YOU can look around your little piece of the world -- and things are looking up -- the company you work at just hired 10 more guys -- and you're working overtime... and prices of cars at Barrett Jackson just exploded to the upside... and there's less talk about all the houses in your neighborhood for sale... and you're lazy ass sister in law just got a job... DUDE! It's time to start rethinking your high yielding stocks -- 'cause if YOU can see this -- then so does the FED and they'll raise interest rates.

Now there's TWO ways to think this game through! If things are getting that much better! Then sales should also be better... housing picking up - so too will appliances and car sales - which means raw steel and aluminum will start to rise (and copper)... and Caterpillar will sell more backhoes and dozers... So what you do when all this is booming through your little pea brain -- is you start to move those directions. Lighten up (scaling out) of the crazy high yields... and start to move into (scaling into) the areas of the market that will BENEFIT from a booming (or far better) economy. Home builders - banks (lending!) - machine makers (CAT and Cummings) etc. This is why they call them WHAT?? CYCLICALS -- because that's where they are - they cycle up and down good times and bad. Out of them (early) in bad times - (in early) in good times.

Ya don't sell everything and panic and run for the exits.... ya just stay fluid... keeping your ears open... try to hear the winds rustle... before everyone else.

To me it's like house flipping. By the time the grocery store clerk is telling you about the 400K they made flipping a house -- it's just about to come crashing down!

So listen to your instincts... DO YOU see that things are getting better? Interest rates are NOT going DOWN from here... there's no room left at the bottom -- so they're either holding steady or they're going to HAVE TO go up from here... it's just for you to be ahead of that curve. Nobody has a crystal ball. I'm going to make money as long as I possibly can in my current holdings - but I'm also paying attention to the details.

[GregWeld]

Originally Posted by Sieg

(Pssst, he's the guy that sold Apple for $410 a few months back)




Of course I'm the guy (idiot) that sold 100 shares of Nike at $10 after I'd doubled my money back in 1978.

Did I ever mention that I got to buy into the Starbucks IPO at IPO insider price? Yep -- bought 1000 shares at $17.00

That was on like Thursday or a Friday.... by Monday they went up THREE FIFTY ($21.50) and I sold the whole enchilada! Wow! I thought to myself -- I just scammed those poor suckers for a quick THIRTY FIVE HUNDRED BUCKS!! I'm a frigging GENIUS!


Oh -- Total return on Starbucks.... since it went IPO.....



TWENTY THOUSAND PERCENT. That's right... 20,000% since 1992


Yeah -- I'm a real genius!

[toy71camaro]

very good point.... i was "wondering" what to think about that situation. That helps.

[Bucketlist2012]

To Greg's point..

I am in position to make money no matter which way the winds blow.

You bet i am keeping an eye on the little monkey, but I will make money...

If things go as they say, I am not so sure about that, but if they do, Oh happier days for me...

But if something goes sideways, I am ready for that too..I won't have to make any sudden moves, I am just in a position of not "all or nothing', too much risk in all or nothing .. so a move one way or another will not stray my path..

[GregWeld]

Now that I just sat down and paid all my bills... which is another key to investing... i.e., GET IN CONTROL OF YOUR SPENDING. Make money FIRST - then you'll have some to spend!

Yeah - I know - easy for me to say.

Not the reason for this post though.....


My BOND broker called this morning -- mostly because we're friends (and have been for a very long time) but also because he was "pinging me" on any "new" money I might have for him to invest.

Fred has been in the biz for 40 years! I trust him - he's a great person - I know his family - He works for (an SVP) a big local brokerage (I will NEVER IN A MILLION YEARS GIVE AN INDIVIDUAL CONTROL OF MY MONEY OR MY ACCOUNTS --- NEVER! EVER! NEVER!)

We discussed "bonds" and the market and I said I'm NOT buying any more bonds, that I have enough of my investable assets in bonds and that's plenty (for me) and that I'm kicking his sorry ass in the "market"... He says to me -- and here's the SALESMAN/BROKER talking --- Well -- you've made 4% gain on your bonds!

NO -- I remind him -- I have NOT made 4% on my bonds because the entire reason to own them is for the TAX FREE INCOME -- and that I'm HOLDING TO MATURITY.... therefore -- I will have held them for 5 years (laddered so actually this is not factual but for the furthest dated ones it is) and only get my money back! NO GAIN.... because I would have had to SELL THEM to capture the current gain. SO his salesman part overrode his BRAIN... and I'm not afraid to call him on it.

It's why I don't use brokers (except for this part of my holdings).... even if they're your friend... in the end, their wallet is more important than your wallet! They're trying to make money on my money... I'm just not willing to let them!

[Sieg]

Atta Boy Tiger!

[GregWeld]

Here's another reason I love that good old dividend stream...

My account (the one I use for examples here) was DOWN 17 Grand today --- but after the closing bell ---- Terra Nitrogen (TNH) sent me a nice little check for NINE GRAND....

Part of the reason I was down 17K today was because TNH was trading off... ALL stocks trade down near equally to what they pay out in a dividend. We've touched on this earlier... but that's just the way it works. Obviously the company can't be worth as much when they're paying out... But that dividend was $4.53 per share today (I own 2000 shares) and the stock was "only" down at the close $2.73 == so I'm happy with that!!

This stock ain't for the faint of heart I can tell ya! It goes bonkers - it goes down double bonkers - next time you look it's up triple bonkers.... I'm telling ya it's a wild one!