Investing 102

[GregWeld]

Originally Posted by toy71camaro

Thanks for the feedback guys.

I will look on Schwab to see what the show for the different sectors..

i was looking at utilities, and they seemed so up/down. I wasnt sure if i would be better off diving into a more "steady eddie" (ie. PEP) vs what i seen in the utilities sector (PG&E, Edison, etc).

Just kind of poking you here a bit... so please don't take this personally since we've never met -- and you have to know me to understand my "personality"....

For Investing 102 --- I don't care what anyone buys - or doesn't buy... and I'm never pushing or suggesting any stocks or bonds... only the way you THINK about investing -- and what to look for etc. I use my portfolio as examples only and try to incorporate a "here's a way to look at X".

To compare Pepsi (PEP) and Con Edison (ED) and say that they seem so up and down... kind of tells me that you need to keep reading this thread... cause you're missing something.

ED has a 1 year total return of 22.7% - 3 year of 92.5% - 5 year of 57% and pays a 4.15% dividend based on current price

PEP has a 1 year total return of 3.3% - 3 year of 47.5% - 5 year of 15.1% and pays a 3.29% dividend based on current price.

So --- over three years you'd have doubled your money in ED and only been up 50% in PEP... and over 5 years you'd be 3 times ahead of PEP...

I'm only picking on you here because this is a great example to use... so again -- please don't take this personally. I'm using it as an INVESTING 102 example for everyone that reads - because if we're not all learning something then we're just wasting our time. Right?

[toy71camaro]

LOL. What the hell was i looking at then...

I must of been comparing something else.. I dont have my notes in front of me at the moment.

Perhaps I mixed up ED in my head with a different one i was looking at. Since I've looked at so many lately.

And true, I am not looking to you for the solution (ie. WHAT stock to buy). with the last question i was merely trying to figure out if i needed more diversification to better "prepare" my investments for the "future".

And no worries, nothin personal at all. we are all learning here. I never mind being an example of either something good or bad.

I did feel that i was a little to "consumer purchase" heavy (MCD, PEP, etc), which is why i brought it up in the first place. heheh

Thanks again for your help.

[GregWeld]

Originally Posted by toy71camaro

LOL. What the hell was i looking at then...

I must of been comparing something else.. I dont have my notes in front of me at the moment.

Perhaps I mixed up ED in my head with a different one i was looking at. Since I've looked at so many lately.

And true, I am not looking to you for the solution (ie. WHAT stock to buy). with the last question i was merely trying to figure out if i needed more diversification to better "prepare" my investments for the "future".

And no worries, nothin personal at all. we are all learning here. I never mind being an example of either something good or bad.

I did feel that i was a little to "consumer purchase" heavy (MCD, PEP, etc), which is why i brought it up in the first place. heheh

Thanks again for your help.

Trust me --- I have the same issue and have to look and triple check myself all the time... This is just a great example to have used.

Yes you're a bit lopsided on consumer stocks -- but that can be okay IF we're truly in a turnaround in the economy. However... I wouldn't continue to add to your lopsidedness! Thus the diversify "push".

All of you - trust me when I tell you that you'll be happy to be diversified! You feel like a real sap when all your "tech" (substitute ANY sector here) is flying and you're looking at your "laggards" and questioning why you're in those POS names..... and then --- a year goes by and it's the sector that was flying that sucks and your laggards are saving your butt. The biggest problem is that we have real short term memory!

In 2011 - we had down 400 point days and up 500 point days.... On those big down days it was my BOND portfolio that was going UP. So I look at the money and think -- Okay -- I have "X" amount of dough - part of it was down X and part of it was UP X... so overall -- not too bad.

We go to some cocktail party -- and some guy starts yapping about how much he's made doing blah blah blah.... and you compare yourself to him and think "WTF! I'm only up 10% and this bozo is doubling his money". Ask yourself to make a note and check back on how well he's doing next year and the year after that. Usually they disappear into thin air and you never see him again. It's the classic tortoise and the hare.... Ya just want to win in the end - not just for tomorrow. Diversify. Invest, don't trade yourself to death trying to chase the next hot deal.

[toy71camaro]

excellent point... thats what i need to look into also, is the whole "yin/yang" thing... what "areas" should be looked into for a failing market to "pick up the slack".. like you mentioned, bonds were UP while market was done (and i presume, vice versa).

I'm going to take a look at Scwhabs website further and see if they offer any sort of guidance/classes/stuff on diversification amongst things "outside" of "just stocks".

[pw2006]

Hi Albert-
Here's the link to Schwab's workshops.
http://www.schwab.com/public/schwab/...nch_workshops#

Here's one that might be what you are looking for:
Advice at Schwab
Learn key concepts to build and maintain a diversified portfolio along with the range of investment help and guidance available through Schwab. From a managed mutual fund or Exchange Traded Funds to guidance from a local advisor, we will explore the level of investment help that may be right for you.

Speaking of diversification... my bond knowledge kinda sucks so I am taking the following workshops.

Practical Bond Strategies
As an investor, you may be asking: Should I invest in bonds? Should I worry if interest rates rise? How can I generate income? In this workshop, we'll address the potential risks and rewards of bond investing and provide a guidance framework you can use to build a sound bond portfolio.

Muni Bonds: Investing Wisely Today
Tax-free returns. Relative safety. Convenience. There are many reasons to include municipal bonds in your portfolio. At this workshop, we’ll provide an update on the current fixed income environment, with a special focus on the municipal markets. We’ll also review the risks and rewards of investing in municipal bonds, and share our fixed income tools and resources, so you can make well-informed decisions.

Bond Investing: Beyond the Basics
Concerned about the bond market and how it might impact your portfolio? Do you want to become a savvier bond investor? Learn about the structure of the bond market, sophisticated investing strategies, and tools to help you invest with confidence.

Other brokers likely have similar training, I just happen to be comfortable with Schwab's no sales pitch approach.

[toy71camaro]

Originally Posted by pw2006

Hi Albert-
Here's the link to Schwab's workshops.
http://www.schwab.com/public/schwab/...nch_workshops#

Here's one that might be what you are looking for:
Advice at Schwab
Learn key concepts to build and maintain a diversified portfolio along with the range of investment help and guidance available through Schwab. From a managed mutual fund or Exchange Traded Funds to guidance from a local advisor, we will explore the level of investment help that may be right for you.

Speaking of diversification... my bond knowledge kinda sucks so I am taking the following workshops.

Practical Bond Strategies
As an investor, you may be asking: Should I invest in bonds? Should I worry if interest rates rise? How can I generate income? In this workshop, we'll address the potential risks and rewards of bond investing and provide a guidance framework you can use to build a sound bond portfolio.

Muni Bonds: Investing Wisely Today
Tax-free returns. Relative safety. Convenience. There are many reasons to include municipal bonds in your portfolio. At this workshop, we’ll provide an update on the current fixed income environment, with a special focus on the municipal markets. We’ll also review the risks and rewards of investing in municipal bonds, and share our fixed income tools and resources, so you can make well-informed decisions.

Bond Investing: Beyond the Basics
Concerned about the bond market and how it might impact your portfolio? Do you want to become a savvier bond investor? Learn about the structure of the bond market, sophisticated investing strategies, and tools to help you invest with confidence.

Other brokers likely have similar training, I just happen to be comfortable with Schwab's no sales pitch approach.

awesome! Thanks! I was just reviewing their "learning Center" stuff. I ended up signing up for Schwab as well last week.

[lmnop]

Originally Posted by GregWeld

These "underwater mortgage" questions got me thinking about all the variations etc that must be out there... and I came to an interesting "investing 102" parallel....

Buying a house is a big deal. Huge. We sometimes don't treat it that way - but it is a MAJOR investment and commitment. So maybe the parallel is that a home is like buying a stock. You have to really like it before you buy it - it might not always go up - just because it did so in the past.... so, like a stock, you need to want to love it and want to be in it through good times and bad.

The Sector we mention all the time could be thought of as the city or neighborhood.... better think about the "hood" because you might be there awhile! And like a house -- you don't want to have to sell it in a down market -- so don't put all your cash into something that clearly might not be so "liquid".

In fact.... You may choose to (like a stock in a down market) add on to the house or remodel it because you're in it for the long haul and know that eventually it will pay off. And the dividend in a home is that you are living "somewhere" - regardless of the cash value at the time --- just like the dividend will pay you every quarter regardless of the stocks daily price.

All of this -- of course -- is based on having made a good purchase in the first place. So if you were in love with the home and city and neighborhood when you bought - then you don't mind living there for awhile. If you bough just based on you thought the house would immediately double - and you hate the place... and it didn't double... Well... then you're a weak holder and will sell at a loss the first chance you (you - being anyone, not a particular "you") get.

Greg
This is great advice and is exactly the way I have looked at investing in real estate. I have done okay by buying renovation projects and putting a ton of work in and selling them. But I have never purchased a property that I wouldn't live in and it has served me well. I am like your friend that you mentioned about a 100 pages ago who started out this way and now has apartments and a 12mil house. I am just minus the apartments and the mansion. Wanted to let you know I am still reading and learning I haven't invested in the market yet but I am getting closer. Thanks again for all the candid and great info.
Ray

[GregWeld]

Originally Posted by toy71camaro

awesome! Thanks! I was just reviewing their "learning Center" stuff. I ended up signing up for Schwab as well last week.

Don't think you need BONDS unless you're almost dead like I am... and retired.
They're far riskier than you think... unless you plan to hold to maturity (like I do). The returns - even though they're tax free - are ridiculously low... and if you hold to maturity you get no growth on your capital.

I hold them as a hedge - and for INCOME tax free which I need because of all my other "stuff"... otherwise I'd never buy them.

Just my .02 worth.

If I was younger and had the energy and drive and wanted to grow my dough and needed diversification -- I'd by loading the boat with cheap (200K to 250K) rental houses... with fixed rate mortgages... and let the renters pay the note down... while I wait for the market to come back. So I'd be in stocks -- and rental property (I already own a large apartment complex and the note on a commercial building) - because that is REAL ESTATE diversity. I also own a stock -- National Retail Properties (NNN) which is commercial real estate... and it pays 5.76% and has pretty good Total return numbers...

That's not a recommendation --- I'm just saying at you guys ages -- bonds are not for you -- and when people say diversify - it doesn't have to be just stocks... it can be lots of different assets.

[CRCRFT78]

Any chance the PDF version of this thread can be updated.

[Bucketlist2012]

Originally Posted by GregWeld

Trust me --- I have the same issue and have to look and triple check myself all the time... This is just a great example to have used.

Yes you're a bit lopsided on consumer stocks -- but that can be okay IF we're truly in a turnaround in the economy. However... I wouldn't continue to add to your lopsidedness! Thus the diversify "push".

All of you - trust me when I tell you that you'll be happy to be diversified! You feel like a real sap when all your "tech" (substitute ANY sector here) is flying and you're looking at your "laggards" and questioning why you're in those POS names..... and then --- a year goes by and it's the sector that was flying that sucks and your laggards are saving your butt. The biggest problem is that we have real short term memory!

In 2011 - we had down 400 point days and up 500 point days.... On those big down days it was my BOND portfolio that was going UP. So I look at the money and think -- Okay -- I have "X" amount of dough - part of it was down X and part of it was UP X... so overall -- not too bad.

We go to some cocktail party -- and some guy starts yapping about how much he's made doing blah blah blah.... and you compare yourself to him and think "WTF! I'm only up 10% and this bozo is doubling his money". Ask yourself to make a note and check back on how well he's doing next year and the year after that. Usually they disappear into thin air and you never see him again. It's the classic tortoise and the hare.... Ya just want to win in the end - not just for tomorrow. Diversify. Invest, don't trade yourself to death trying to chase the next hot deal.

Great points , as usual...

I rode that train last year, and to be honest, I think 2012 will be more of the same..

So , as today is going, I am getting a diversified hammering across the board..

So I always preach that it is not the balance at at given moments, but the dividends, and total performance of the portfolio over time, What will I do ??

Nothing...I will not watch the balance and go on with the day..Yesterday was Wine Country and Napa/Calistoga...

No Trading or running around...Last year had those 500 point ups and downs.

And i told you before , I was still up at years end, and I got to spend all this money too..

So today is not one of those days, but not a day to write home about..

So, I follow the course...And yes, slow and steady wins the race..With a dash of roller coaster in between..