Investing 102

[GregWeld]

Seems everyone has fallen asleep in this thread... Not much interaction - so maybe it's turned into a blog? If that's the case I'll quit posting to it?


I generate more cash than I can spend... laughing at this thought... but it's what I've been trying to get everyone here to try to do.

I used to use GE or MSFT (years ago) to park cash. No point in letting it sit in a Money Market sweep account that pays .01% (joking - but it's not far off). Now I use ETF's -- High Yield (HYG) or JUNK (JNK)... both of which pay real decent dividends.

The reason for todays BLOG post -- is that I want you to look at the DETAILS of the dividend before you just park cash. To use HYG as an example.... it just paid the dividend so won't be paying a dividend for another 3 months. Not much point in parking money you're going to invest next week or next month in this name today... All it takes is a simple look at the details to see when the next "EX" date is. Remember that you only have to own it until after the "EX" date to collect the dividend! Since this is a larger holding in my Schwab account - I choose to put the cash here today... but it's money that I'm not planning to spend - or invest - and if I do want to pull it out - I will check to see if I'm close to the "EX" date before making that decision. If I only have to wait a couple weeks or maybe even a month - to pick up that dividend I'll leave it alone and wait to get paid. Why not? It's CASH.... (.50 per share - on the 5000 shares I just bought is real money).

Now -- if I need to or wanted to use some cash beforehand - I'd just dip into the margin side of my account. I can write a check or buy stocks using MARGIN (about 50%) of my account total. There is a very very small % rate for doing this and it's far less than the 7% yield on HYG... so if I suddenly needed to buy a stock (really? Nothing I do is that "quick"... so I'm just using this as an example) or Charley was selling another car I just had to have.. I have this available to me. I do not -- and please please please -- do not use the MARGIN as an ATM! The minute you do - the market will dump and they'll sell your account out to cover the MARGIN CALL!

I actually had a friend that had a 33 MILLION dollar margin call. Understand that this meant he had to have had AT LEAST 66 Million in his account - in order to get 33 Million in margin! I asked him point blank -- DUDE! How f'n greedy do you need to be that you have to go to margin to try to generate a little more "return". He was using the margin to GAMBLE with - by buying more stocks etc trying to make a gain on his borrowed money. Guess what happened to his return when they called him and asked him to cover his margin (which means you have to bring them more money to cover) - and when he couldn't - they did it for him (they just sell stuff in your account to lower your margin back to the 50% level)... at a LARGE LOSS by the way! You literally only have about an hour or maybe half the trading day to "cover". IDIOT.

[Bucketlist2012]

What up Greg..

Sorry I missed you at Infineon.

My .02 cents is that people need to be invested and not scared.. So much gloom and doom in the news has people on the sidelines..

When the market dropped a few months ago, I had friends selling( at the bottom), and shifting things around. I just left my money on the plan that I have set and rode it out.

So what benefit did I get for riding it out ? I am paying cash for my 2008 Sierra with 21K miles on it with my profit from the last few months. Had I sold, I would have lost all that upswing...So my balance is still great, and I pick up my truck tomorrow..

So, long term, Investing is king, even though some months suck. in the end, it is better to own stocks, etc..., than to sit on the sidelines.

[GregWeld]

Well --- someone must be reading this poopie thread! The page view count jumped a 100 points since I posted this morning...
And I got a good question from a new reader about how to calculate Total Return.. He's mid 20's and is already a saver and investor! Don't some of you wish you'd saved and invested 25 or 30 years ago?!?!?! Then you could be a lazy azz bum like me and goof off all day!


Truth be told I never saved a dang dime -- We just got lucky and went from zero to hero in one fell swoop... but it's been a good 25+ years of reinvesting and making that initial windfall grow. So I guess I've managed to not be as big a bum as I think I am...

[Rybar]

Interesting, what was your initial windfall story Greg?

[GregWeld]

Originally Posted by Rybar

Interesting, what was your initial windfall story Greg?

Which one? We've had several!


I was a millionaire at 26 years old. I was the VP and partner in a multimillion dollar wholesale importing business in NYC... sold that business in 1983...

Gwen went to work at Microsoft in 1984... and was the Director of HR Worldwide and spent 19 years there...

The latest is a pre IPO investment we made in Isilon Systems which was sold to EMC for 2.25 Billion in 2010 (we owned 1% of all the outstanding shares which I'll save you the Googling and figuring was 660,000 shares sold for all cash @ $33.85)....

Gwen is also the main character in this horrible book....

http://www.amazon.com/Force-12-James...ords=Gwen+Weld

[Rybar]

Good for you guys, I'm hoping to be hit in the head with an opportunity like that some day

[glassman]

And yes, I haven't been "here" for a week. I have been in "alohaville" spending time with family (emphasis on spending lol). No cell phone, no computer, no workie. Took our oldest and his fiance for there college graduation, and my youngest for her high school graduation. And met my sister and brother and their families there for our birthday's (Aug 2, Aug 5, Aug 2). Seventeen of us. Great time.

Kinda off subject, but not really...any of you read the E-Myth? A business book. I have owned my company now for 15 years and probably have another 15 in me( i am 45 and like what i do, just the dealing with the "slow payers" and cry babys i dont like, but isnt that just life?) so i'm begining to draw my "exit strategy". The business may be a source of income or sold and considered "found monies" in my overall financial plan. Any thoughts from any of you that have sold companies and reinvested?

[Bucketlist2012]

Not everyone will become an Investor, but if just a few get the bug and start to take control of their future, then this thread is a success..

I have helped maybe three people, and to me, that is a good feeling...

Keep it up Mr.Weld.. We are still here..And with 100 people looking , and only a few posts, we have people reading, and maybe they will Invest wisely too.

I wasted years, but i caught up quickly with much study and a few great moves..Also i was on the right side of 2008...Better to be lucky, and a little smart..Than really smart and unlucky..

[XLexusTech]

Read daily and holding on to my hat... if I had one question it would be... will FB ever get near 40 again? I have a good chunk and it drags down my portfolio.

[GregWeld]

Originally Posted by XLexusTech

Read daily and holding on to my hat... if I had one question it would be... will FB ever get near 40 again? I have a good chunk and it drags down my portfolio.

Well --- so far you're only down about 50%.... my guess is that you could go lower.


This kind of stock is pure speculation - it's not really "investing".... it's just a pure gamble on an unknown. I sold the shares I had the minute it didn't do what I expected it to. Cut and run on that kind of stuff 'cause bad can easily go to worse.

Having said that -- it's a good lesson that people have to learn for themselves. You set a price - you set your expectations - and if that goes against you - then you MUST be prepared to take the loss and move on.

People have been waiting for 12 years for Microsoft to rebound.... think about that -- a DECADE of dead money.