Investing 102

[pw2006]

Originally Posted by GregWeld

That's what I've been trying to PREACH -- get started -- post it up if you feel like it - let's all discuss it -- rip it apart - or learn from it (MSFT?) etc. but get started is the KEY point.

WITH THAT IN MIND -- I'd love to see "you all" post up some names and the reasons you think they're a good candidate for ownership.... let's get it up to 10 names -- a basic "portfolio" if you will.... and see what that looks like??

Kind of a "on paper" investment club??

Let's get this discussion going with a few stocks I am in. I included the ticker/name/industry/forward PE and dividend yield. Take a look at some of the stocks below, do your research and be comfortable with the company/charts before you buy. As Greg said, as soon as you press the buy button, someone out there knows and will drive the stock down.

VOD- Vodaphone primary owner of Verizon- (telecom)- 10.4 PE, 5.3% yield. I am looking for international smartphone growth exposure. Downside is I can't reinvest dividends in the form of stock. Alternative is VZ (Verizon)

BBEP- This is an MLP (oil/gas pipelines) with a forward pe of 7.7 and current yield of 9.1%. An alternative that i have owned for years is KMP, but you might wait for a little pullback.

F- Ford (automotive)- 5.8 PE, ~2% yield (kinda weak yield, so you may want to look at GE)

COP- Conocophilips (oil/gas)- ~8.5 PE with a 3.6% yield

LLY- Eli Lilly- (biotech)- 9.6 PE with a 4.7% yield
MRK- Merck- (biotech)- 10 PE with a 4.4% yield

PM- Phillip Morris (cigs)- 16.2 PE with a 3.9% yield (alternate is Altria ticker MO)

KFT- Kraft (food) 16.6PE with a 3% yield.

So with the above, stocks you are covering people that use cell phones, drive cars, heat their house, smoke cigs, have a prescription and eat.

[GregWeld]

Originally Posted by 69x22

So Greg, all my money is tied up in 401 retirement accounts, but I have after tax money built up as well. My question is if I take some of this after tax money and open a Quiken account how will I know how much taxes I owe each year? Will Quiken send me a form or will I be stuck with figuring it out on my own? I appreciate all of the info.

I didn't know that Quiken was in the brokerage business -- So I'm going to assume this is a typo and you meant if you opened a discount brokerage account -- and used Quiken to do your tax accounting??

All brokerages will send you tax reporting information - Schwab breaks it down and sends me every trade - long term vs short term gains - they show wash sales info - dividends qualified or non qualified etc. I hand that paperwork to my accountant and he handles it for me. I get this type of breakdown from every brokerage I'm in so they all do it.

For those of you in IRA's and that type of tax deferred accounts - you don't have anything to report (yet)... because all your gains etc are "deferred" until you withdraw. And if you have a ROTH IRA - there is no tax ever since these are funded with after tax dollars (these are the best plans ever IMHO).

[Woody]

Originally Posted by GregWeld

That's what I've been trying to PREACH -- get started -- post it up if you feel like it - let's all discuss it -- rip it apart - or learn from it (MSFT?) etc. but get started is the KEY point.

WITH THAT IN MIND -- I'd love to see "you all" post up some names and the reasons you think they're a good candidate for ownership.... let's get it up to 10 names -- a basic "portfolio" if you will.... and see what that looks like??

Kind of a "on paper" investment club??

Other than the stocks you have identified in prior posts as good candidates, I have three that I would like your thought on.

United Technologies (UTX)
10 year price increase 135% (good chart); Dividend increased 291% over last ten years, and good EPS growth rate. Dividend rate 2.65%

Lockhead Martin (LMT)
Like it for the same reasons as UTX, but has even larger increases in price, dividend growth and EPS growth than UTX. Dividend Rate higher than many of the stocks that were discussed at 4.95%. However, this company relies heavily on government contracts. Does that make it too risky?

Travelers Group (TRV)
Insurance play; Has had less of a price increase and dividend increase than either UTX or LMT. Dividend rate 2.77%.

[GregWeld]

Originally Posted by pw2006

Let's get this discussion going with a few stocks I am in. I included the ticker/name/industry/forward PE and dividend yield. Take a look at some of the stocks below, do your research and be comfortable with the company/charts before you buy. As Greg said, as soon as you press the buy button, someone out there knows and will drive the stock down.

VOD- Vodaphone primary owner of Verizon- (telecom)- 10.4 PE, 5.3% yield. I am looking for international smartphone growth exposure. Downside is I can't reinvest dividends in the form of stock. Alternative is VZ (Verizon)

BBEP- This is an MLP (oil/gas pipelines) with a forward pe of 7.7 and current yield of 9.1%. An alternative that i have owned for years is KMP, but you might wait for a little pullback.

F- Ford (automotive)- 5.8 PE, ~2% yield (kinda weak yield, so you may want to look at GE)

COP- Conocophilips (oil/gas)- ~8.5 PE with a 3.6% yield

LLY- Eli Lilly- (biotech)- 9.6 PE with a 4.7% yield
MRK- Merck- (biotech)- 10 PE with a 4.4% yield

PM- Phillip Morris (cigs)- 16.2 PE with a 3.9% yield (alternate is Altria ticker MO)

KFT- Kraft (food) 16.6PE with a 3% yield.

So with the above, stocks you are covering people that use cell phones, drive cars, heat their house, smoke cigs, have a prescription and eat.

That is a great looking group of stocks! I like the diversity - the yields - and they are mostly names you know and can describe their businesses.

The one EXCEPTION IMHO IS:

BBEP -- BreitBurn Energy Partners is what's called an MLP - that is a Master Limited Partnership...

When you compare charts of this - against KMP (Kinder Morgan Partners) it will make you want to throw up a little. BBEP has been DOWN 50% (vs KMP UP 123%) and then back up to "even" and for awhile it suspended it's dividend. And when it resumed it's dividend, it did so at a lower payout than the previous payout and is still paying out way lower than where it was (.44 now vs .52 in 2007). So for our INVESTING 102 -- this stock would be scary to own and has virtually no capital growth. Compared to XOM (EXXON) - CVX (Chevron) - KMP (Kinder Morgan Partners) just to pick 2 or 3 - with very nice charts - I'd prefer to own one of the steady eddies over this name. Just my opinion.


+++++++++++++++++


FORD (F) -- I like to sprinkle my account with some "pure growth" plays. Not many but they're fun to gamble on - and this is IF you already have some of these other good names paying you these nice fat dividends. I own Apple for that reason (bought at $85) and have owned Ford several times since the $2 mark - and just sold my Starbucks (SBUX) for a nice gain. So IMHO it's OKAY to play with this kind of stuff because it gets you interested and you can make (or loose) some money. I'd bet on FORD in the long run and sleep well at night doing it.

[GregWeld]

Originally Posted by Woody

Other than the stocks you have identified in prior posts as good candidates, I have three that I would like your thought on.

United Technologies (UTX)
10 year price increase 135% (good chart); Dividend increased 291% over last ten years, and good EPS growth rate. Dividend rate 2.65%

Lockhead Martin (LMT)
Like it for the same reasons as UTX, but has even larger increases in price, dividend growth and EPS growth than UTX. Dividend Rate higher than many of the stocks that were discussed at 4.95%. However, this company relies heavily on government contracts. Does that make it too risky?

Travelers Group (TRV)
Insurance play; Has had less of a price increase and dividend increase than either UTX or LMT. Dividend rate 2.77%.

Woody ---


All good picks....

So here's just "my thoughts".... because you raised the question. UTX and LMT "rely" on government spending (defense spending) and we're trying to wind down Iraq and Afghanistan... and we're in a huge budget crisis... so I might loose a bit of sleep worrying about cuts here. So - remember that I am retired - I don't like to worry and go for a higher dividend payout (which really affects your compounding over time)... and so for me personally - I'd pick other names without the POTENTIAL for downside risk. BUT when you look at their charts -- they're good charts... so maybe that worry is all much ado about nothing. BUT - I always try to tell myself - if there is other stuff to buy that DOES NOT have that component - then why wouldn't I just buy the other stuff and leave these alone? It's only a game I play with myself - but it is the way I think. For INVESTING 102 - I'm trying to just type out some THOUGHTS a guy should ask himself.

TRAVELERS INSURANCE (TRV) - Nice chart - big name - I understand the business.... and would certainly feel comfortable owning this. It would be a "steady eddy" purchase for a portfolio - counter balance to something else I might buy that is a higher paying dividend but with more "risk" (to use one or two names for comparison sake -- JNK - HYG - NLY that all pay big dividends but have higher risk!)... so that's how/why I'd own this. I use Johnson and Johnson (JNJ) and Kraft (KFT) and AT&T (T) for this kind of "balance".

[Stuart Adams]

This has been a very good and interesting thread.

Greg,I know it feels good to help others, you da man.

[GregWeld]

Originally Posted by Stuart Adams

This has been a very good and interesting thread.

Greg,I know it feels good to help others, you da man.

Thanks Stuart! I love this stuff. Hot rodding, and investing, are something I'm passionate about. SO this thread is right up my alley - I'm on Lat G - discussing stuff that helps others whether it's car parts / welders / or investing. What's not to like?

Being useless and retired - my day starts out around 6AM with coffee - the computer on my lap - and CNBC on the tube... eventually I mosey on out to the shed...

EEEEEEEEEEEEEEHHHHHHHHHHHAAAAAAAA

[Stuart Adams]

Originally Posted by GregWeld

Thanks Stuart! I love this stuff. Hot rodding, and investing, are something I'm passionate about. SO this thread is right up my alley - I'm on Lat G - discussing stuff that helps others whether it's car parts / welders / or investing. What's not to like?

Being useless and retired - my day starts out around 6AM with coffee - the computer on my lap - and CNBC on the tube... eventually I mosey on out to the shed...

EEEEEEEEEEEEEEHHHHHHHHHHHAAAAAAAA

That's fantastic. You have a great job..

[NOVA]

WSSix Thanks for starting this thread and Greg for your extremely well spelled out info,excellent Job.
Also Thanks to the others who have contributed, I see this thread staying up towards the top! Keep it coming, Great stuff.
Thanks again all, two thumbs up

[CRCRFT78]

Ok because I believe this thread has provided a lot of good information I am willing to put myself out there and hear what some of you have to say. At this point in time this is what I have in my Rollover IRA (Fidelity):

Stocks
Apple (AAPL) P/E-14.75 Div/Yield-Not listed 10YR-+3788%
Caterpillar (CAT) P/E-14.03 Div/Yield-0.46/2.00 10YR-+256.89%
Disney (DIS) P/E-14.94 Div/Yield-0.60/1.60 10YR-+81.87%
Harley (HOG) P/E-20.28 Div/Yield-0.12/1.29 10YR--28.24%
Nike (NKE) P/E-20.94 Div/Yield-0.36/1.47 10YR-+248.03%

Mutual Funds
Fidelity Freedom Fund 2045 (FFFGX) 10YR--8.63%
Spartan Total Market Index Investor Class (FSTMX) 10YR-+23.73%
Vanguard Total International Stock Index Fund (VGTSX) 10YR-42.13%

The mutual funds I basically picked because of a book I was reading at the time. The stocks I picked because of popularity and brand name at the time. Again, all of this was done when I had absolutely zero knowledge about investing. I'm not happy with HOG and DIS performance and have begun rethinking holding onto those. The mutual funds are also something I'm contemplating selling off to buy into some of the stocks mentioned throughout this thread. I believe I have a high risk tolerance and can withstand the ups and downs of the market. And now that I've got a better understanding I'm wondering if I should hang onto what I have or switch it up. What do you all think?