Investing 102

[LS1-IROC]

Originally Posted by JoeliusZ28

Well this is my first post on this site, I've been a lurker here for a while but James (LS1-IROC) pointed me to this thread. Just finished reading through it all, very good information, thanks! Right now I happen to be about halfway through the book 'bogleheads guide to investing.' I'm 25 and looking to get an index fund setup soon, I'm just wondering if anyone can offer some opinions on schwab vs vangaurd? Seems like they are both good, should I just pick one and roll with it, or could it be beneficial to have an account with both?

This thread definitely has piqued my curiousity in dividend stocks, now too

Welcome Aboard Joel!

[GregWeld]

Originally Posted by billscamaros

So I can say that this thread has motivated me to look a little bit at the existing investments that I have ..... and I use the word "investments" loosely.

I have a long neglected Fidelity IRA with some cash sitting in cash reserve. As you might guess, my gain on cash sitting in reserve over the past few years has been .000000000000001%. I'm one of those guys who knows absolutely nothing about stocks or invesments; nothing beyond how to log into the account and see my balance. This stuff has always been so confusing!!

So .... due to Greg's obvious excitement about this investing stuff .... I decided to take the time to become familiar with my account. I've been poking around on the Fidelity website, using their research tools and reading their investing info. I decided to use the Fidelity account as my "test bed" for learning the basics. A few days ago, I bought some Nike and McDonalds stock out of my IRA cash. As Greg had mentioned in one post, the stock price immediately dipped into the red and I thought "crap ...... now I've made Greg loose millions!!" But after a day or so, it was back into the positive numbers. (Why does that initial price dip happen??)

Although I realize that it's all "paper", my Fidelity account has increased in value more over the past few days than it did in the past two years. I still have some cash left in reserve, and I've been Google Financing virtually every name that comes into my head ... I've even made up a few acronyms! Eventually I'll spread the cash out into small chunks of stocks that follow the "10 year gain" and "dividends reinvested" rules. Since this Fidelity IRA money is left over from a previous employer IRA that I rolled into another fund, I can't/won't "co-mingle" any other cash into it. And this is seperate from my current employer 401K where most of my retirement money is sitting.

Next up is to get my "emergency/regular savings" up to where I want them, and then I'll look at a seperate brockerage account.

Anyhow ..... thanks to this thread, I've learned a ton over the past week or so. And continuous learning is a life goal.

Thanks guys!!

And that folks is just how it works - and it truly is just that simple.

Will the account go straight up day after day ---- NO --- It is like a stairway -- up - maybe back a couple - then up - then sideways - then back - then up a little... kinda like our car builds. Eventually we finish. Right?

XOXO to all!

[GregWeld]

Another thing that I hope everyone will/can begin to see -- when staring at all of these charts and stuff that I've been hammering on..... YOU DON'T HAVE TO CATCH THE NEXT GREATEST, BIGGEST INVENTION OR THE HOTTEST STOCK TIP in the stock market!

This is why I wanted everyone to see names like McDonalds - Kinder Morgan - Phillip Morse etc.... that these BORING old stodgy "names" actually can have some pretty stellar charts! And they can have some pretty darn good dividends!


FORD was a pretty GIANT GAIN... for those with the guts to see the sky wasn't falling and they could see the DIFFERENCE that FORD didn't have to borrow from the government (us) to stay alive... if you caught that (bought that) at $2 and rode it to $10 -- that is a 500% gain!

So let's use this as an example. BE CAREFUL about taxes! If you bought at 2 and sold at 10 -- within ONE YEAR AND A DAY - you'd OWE regular income tax rates on that GAIN.... but if you held it ONE DAY AND A YEAR - that becomes LONG TERM CAPITAL GAINS and is max tax rate of 15%

If it's within the IRA or 401K - then there is NO TAX DUE YET --- that tax is when you WITHDRAW. So hopefully - when you retire - your tax rate is LOWER than when you're working. If you bought that within a ROTH!! Katie bar the door -- those gains are TAX FREE. PERIOD. That's the beauty of a ROTH IRA. Everyone that qualifies should have a ROTH IRA.

[GregWeld]

Originally Posted by billscamaros

I bought some Nike and McDonalds stock out of my IRA cash. As Greg had mentioned in one post, the stock price immediately dipped into the red and I thought "crap ...... now I've made Greg loose millions!!" But after a day or so, it was back into the positive numbers. (Why does that initial price dip happen??)

There is a little man on the floor of the stock exchange -- the minute you BUY -- he yells at his buddies.... "Bill's in, TAKE 'ER DOWN!"..... and the minute AFTER you SELL -- he yells "Bills out, TAKE 'ER UP!"

Actually --- the down days are to test your faith in what you just "invested" in. When that happens -- go to the "alter of the chart" and refresh your brain by looking at that stellar growth and dividend and see WHY YOU BUY....

If you just gambled and bought something without having done the research... and you never had any faith... then you sold your sole (your shoe sole not your soul) to the devil and he'll eat you alive... and you'll sell at a loss. A few of those and you're out and you've failed. (Just having fun here with the alter and devil stuff).

[billscamaros]

Merry Christmas guys!

[CRCRFT78]

Greg is the Lat-g Santa. He has given us all an early Christmas gift that can last a lifetime if we apply the knowledge wisely. Thanks again for your insight into this investing game.

[RECOVERY ROOM]

I was up till 3am the other night going over info, Im rethinking a lot of things now. Once you read the advice and start understanding what you see it makes sense. Everybody that makes a profit is going to owe G.W. dinner at SEMA next year. LOL

[Musclerodz]

Originally Posted by RECOVERY ROOM

I was up till 3am the other night going over info, Im rethinking a lot of things now. Once you read the advice and start understanding what you see it makes sense. Everybody that makes a profit is going to owe G.W. dinner at SEMA next year. LOL

Greg may enjoy that alot! And you would have to have been to dinner with Greg to know what I am talking about. ( 6 adults in a Honda Civic after leaving an all you can eat steak house does not look cool btw ) It might even qualify as DIVIDENDS?

[GregWeld]

Just don't blame me when it all goes horribly wrong!!!


Remember -- this is all just THEORY.... Good theory - and it does work over time.... but you'll hate me in the down markets we will all suffer! But with those dividend payments -- they're a whole lot easier to take.



Mike -- I still get a good laugh about that "scene" at SEMA every time I think about it! Those times are what good memories are made of!

[GregWeld]

Remember not to get caught up in "irrational exuberance"! And with the highs will come lows... the market doesn't go straight up. It's more like a dance. Like building a high end build -- a lot of time is spent taking stuff apart!

This is what I just read on one of the websites I visit for market info/news - and I thought it pertinent to post here....

A Santa Claus rally phenomenon usually occurs during last 10 trading days of the year, along with the opening week of the new year, where trading volumes are lighter and there’s a bias to raise prices to “window dress” returns for fund managers.The rally continues into the new year due to inflows of new pension money from 401(k)s and IRAs buy into equities.

The point of this is --- don't forget that oldest of rules... the minute you buy - they will fall... and you MUST remember why you bought - your time frame (really? Was it only a one week time line?) - refresh your brain with a look at those charts... and if you've kept some powder dry - if it's a stock you like long term - BUY MORE it just went on sale! But don't buy more unless it's gone down 10% or more (that's a BIG move!)...