Investing 102

[GregWeld]

Yes -- Coke (KO) split TWO for ONE --- so the share price drops to half what it was --- and also the dividend is now cut in half (from where it was) so is now .255 per share per quarter.... BUT of course - you have twice as many shares.


Con Ed (ED) went EX dividend today... so it will most likely trade down.... but of course.... it also is sending you .605 per share dividend. Note that this name is highly "defensive" and is a "blue haired old lady stock" IMHO... Utilities are like that... cause even if you're broke ya gotta pay your electricity bill! This stock is UP 55% in the last 3 years -- most likely because people have flocked to the "safety" of names like this. I'd expect a "rotation" out of this name - if the economy heads UP...

ROTATION is a very important factor in the stock market. Remember that while we want to pick great names.... NOBODY can fight market trends. The HERD mentality can and does affect your holdings. Make no mistake about this. A market is up when more people want to buy what you have than sell it.. and the reverse is also true! So if the HERD (big money) starts to think they can make a better return in TECH over "steady eddy" Con Ed... then they'll sell ED and buy "X" tech company. You can substitute various names here but that is what a market is.

There never seems to be more money = the money just rotates. Most people need to sell something to buy something else whether it's houses - cars - or stocks. So IF the economy is seen as turning around --- then we'll see a ROTATION out of steady eddy dividend payers to "cyclicals" - and the "industrials" and "tech" etc.

Here's the way I think about this... so let's just use Con Ed (ED) as an example.

Every quarter these guys send me .60 cents per share... ($2.40 per year). If the share price goes down $5.00 I don't really care (right now) because I own it for that check they're sending me. I really only care about the share price when I'm ready to SELL it. If I'm nowhere near selling it... then it's just a placeholder. That placeholder still owes me money though! And pays right on time. If I'm holding it for 10 years... then they've sent me $24.00.... and my guess is 10 years from now - the price per share should be higher than what I paid for it AND I've gotten $24.00 in cash on top of that. (dividends in IRAs should be re-invested but either way - you got the money).

[Sieg]

Originally Posted by CRCRFT78

I noticed KO has split just in case some of you are wondering about it being in the red this morning.

Now climb that ladder!

[GregWeld]

Originally Posted by CRCRFT78

I noticed KO has split just in case some of you are wondering about it being it in the red this morning.

Yeah buddy... got to love a good split!

Just FYI -- I had 6,000 shares -- that went to 12,000... and I bought 3,000 more this morning for a total of 15,000

The dividend isn't great at 2.8%... but generally Coke ads stability to an account and has pretty decent growth (21% one year - 74% three year - 66% five year total return).

[Bucketlist2012]

If you look at pictures of the poorest countries on Earth..

Some you have never even heard of. What are they drinking and what do they have in their hands ?......

A Coke.

[Sieg]

Originally Posted by GregWeld

Just FYI -- I had 6,000 shares -- that went to 12,000... and I bought 3,000 more this morning for a total of 15,000

Thanks, that should drive the price down.

[toy71camaro]

Just got back from Vacation.. first day back at work (Reno's Hot August Nights last week. Woot!).

Anywho, just caught back up, and yes, I still check this thread multiple times a day, (when not on vacation, lol). Even tho I'm not posting, I'm still reading, learning.

[GregWeld]

Originally Posted by toy71camaro

Just got back from Vacation.. first day back at work (Reno's Hot August Nights last week. Woot!).

Anywho, just caught back up, and yes, I still check this thread multiple times a day, (when not on vacation, lol). Even tho I'm not posting, I'm still reading, learning.

Fair enough! Just want to make sure people are still interested.

As long as this thread is, it's harder for me to find "points of interest" to use for educational purposes. I can only hammer Best of Breed - and dividend investing about 10,000 times before that's boring.

So I'm trying to find things that peak my interest -- and then I have to remember to use them as a post.


Hot August Nights is a hoot... went there every year for about 15+ years! My grandparents lived in Carson City - so it was a good excuse to visit! Then I got bored with it and elected my sister to figure out where else we could go within a 1200 mile radius of Seattle/Portland. Frankly - I got tired of getting ripped off by the hotels that are $49.99 a night the week before -- that are $499 the weekend of HAN. So we've been to Wheels and Waves in Santa Barbara - Cruise to Yellowstone - L A Roadsters Show - Cruise to the Coos (Oregon) etc and have been having a blast going "anywhere else than Reno".

[toy71camaro]

Originally Posted by GregWeld

Fair enough! Just want to make sure people are still interested.

As long as this thread is, it's harder for me to find "points of interest" to use for educational purposes. I can only hammer Best of Breed - and dividend investing about 10,000 times before that's boring.

So I'm trying to find things that peak my interest -- and then I have to remember to use them as a post.

Yeah.. I hear ya. But your doing a great job. Keep filling us in on the highs and lows of it all. So hopefully everyone is prepared for when the $h!t hits the fan, we are smart enough to go on a buying spree.

Originally Posted by GregWeld

Hot August Nights is a hoot... went there every year for about 15+ years! My grandparents lived in Carson City - so it was a good excuse to visit! Then I got bored with it and elected my sister to figure out where else we could go within a 1200 mile radius of Seattle/Portland. Frankly - I got tired of getting ripped off by the hotels that are $49.99 a night the week before -- that are $499 the weekend of HAN. So we've been to Wheels and Waves in Santa Barbara - Cruise to Yellowstone - L A Roadsters Show - Cruise to the Coos (Oregon) etc and have been having a blast going "anywhere else than Reno".

We've been going a number of years too. But only the last couple we've put a car in it (always drove my dads car up there, but wasn't entered in it). We've been lucky enough to get rooms for $30-40 a night at Circus Circus, as long as you book way in advance, but this year, it was crazy cheap. Around new years day they emailed some special out (I always check their email specials). They had Mon-Thurs for $20/night, and Fri and Sat nights for $49. CRAZY cheap. So we booked then. That's around the time I normally find good deals for them, but never that cheap. Normally Thurs its $49 and fri its a bit more (like $79), We don't normally stay Sat night. We like Circus Circus cuz its cheap (see above ) and they block off a floor (or more) dedicated to classic cars, and have security in/out of that floor for parking, and then also security riding around those floors on bikes just to keep an eye on things.

Would love to check out those other venues... This vacation is one I take my Son (6.5 yrs old) and go with my parents. We cruise "Grandpa's hot rod" (65 Chevelle Malibu). Hopefully I'll get some pics up soon of the vacation.

Back on to Investing 102... Finally still a tad in the 'green" overall on my ROTH, I've finally overcome the "flop" of a purchase from a few years ago of SCEUF (Storm Cat Energy) that tanked and went bankrupt right after i bought it. What did i fail to do? Research. Now the company. And I took a "friends advice" that's "been a good stock for many years".. Then BOOM. tanked. LOL. That was my "live and learn"... I didnt touch anything with stocks much again til Last year, when i started back into it and found "dividend investing".. Then early this year I was shown the light of this thread (thanks Mike!) and now on my slow road to a decent retirement (I hope!).

[Bucketlist2012]

Albert...You are welcome..

You are one of the few that I have helped get started on their future.

Maybe Ace/Stace, will read this thread too.

But most just don't do anything about investing and hope for the best..

I do not understand those people...They do not plan for the future...

You are on your way. Good Job...

[GregWeld]

So today was a real mixed bag -- and while the market was a total "ho hum" -- when I looked at my Schwab account it was way mo better than ho hum! So what gives?

I call it the law of large numbers - and I've written about it before... but here's where it starts to affect YOUR accounts... BALANCE. And I don't mean your account balance - but the balance of the shares you have in your accounts -- and also the diversity.

Since I have outsized positions in this account by NUMBER OF SHARES in certain names -- they can really affect your day - either GOOD or BAD... and that's why I mention the balance of number of shares....

I have (again - just using my own real life as an example here) 20,000 shares of Altria (MO).... so when it moves a whopping .23 a share (like today) the LAW OF LARGE NUMBERS takes hold.... 20,000 X .23 = $4,600 BUCKS! A nice days work if you could get it! BUT -- Dang that big butt in the room -- it works on the way DOWN as well....

This balancing act is far harder to achieve for "newbs" or smaller accounts - let's say "smaller is anything under 100K". It's just almost impossible to own 500 shares of everything in your account because of the share price differences.... So you end up with 500 shares of something at $20 a share -- and only 125 of something at $125 a share.... Obviously the 500 shares have a larger affect on your account when they're up or down because of that pesky "law of large numbers". So this brings me to the more important way to look at money. Money is about PERCENTAGES.... and when you open your account and see it's down $500 for the day and you swallow hard --- but if you have 50 Grand in the account -- that's not a very large PERCENTAGE... ditto, of course if it's going up.

A better gauge is how your account is doing OVERALL.... and how it's doing RELATIVE to "the market". There is no way on god's green earth that you can own 15 or 20 stocks and have GREEN in every one of them all the time. And they're never up evenly. So better to look at how your account is doing OVERALL AS A PERCENTAGE rather than a number (10% vs $1000 dollars) and make that percentage be your goal - then the numbers will take care of themselves.

To get back to balance --- when you have a good day or a bad one --- look not just at the dollar amount -- but which stock affected your account the most -- and is it down/up big? Or is it the law of large numbers that made it look "outsized". The biggest number of shares in your account might have only been down a dime... but the multiplier is what makes it look bad/good rather than the percentage of move.

Not much you can do to change that - cause you'll never achieve a perfect balance. It's just another point of THOUGHT when you're looking at your account and brings a little better perspective when you sort out the details.