Investing 102

[Sieg]

You just started to get through the consumer rubber into the race rubber and swapped them out?!

Looks like you were having a real good time!

[96z28ss]

Blame it on the wife driving.

[GregWeld]

Well --- opened up the account after a long day at SEMA -- and see Kinder Morgan Partners (KMP) is down hard (a buck seventy) === but of course a quick check to see why === and it's because they went "ex" dividend today... so they pay $1.26 per share....

Now only my feet hurt! And not my wallet (so much).

[GregWeld]

With the Obama "win" (to me it's like he backed into it AGAIN - with barely half in favor) we wake up to a sell off in the market. No surprise here. So if you're wondering what should you do.... My advice would be to just sit back and watch for buys.

Remember -- if you're invested for the long haul - and that's a KEY STATEMENT -- then you will see your investments not be in the green column some times. BUT if you're invested in dividend stocks then they're going to keep paying - and they're going to be re-invested.... and over a 15 - 20 - 30 year timeframe you will be rewarded regardless of the taxes etc that people will stew over in the short term.

If you're living off the dividends - as I do - I sold half off all my holdings this morning. I have HUGE gains so want to lock in the long term capital gains at 15%. I will have a large pool of cash to begin to redeploy when I have more certainty in how my gains and income will be treated. Please remember that my holdings (that I use for this thread) are pretty large. Positions are in the 15 or 20 or 40 thousands of SHARES.... these are large numbers so if I sell half of a 40,000 share position - I still have 20,000 shares of "XXX". Again - I'm not trying to say "look at me" - I'm trying to show you and share with you all "my" thinking. It's easy for me to pull cash and profit out of the market temporarily and still have income and gain/loss and keep on truckin'. I still have a large Muni Bond portfolio which pays tax free income and I haven't done any moves there. I would - but the income that laddered bond portfolio pays - couldn't be re-invested in anything that's "as safe" and produces that 4% tax free. But as they mature (annually) I won't re-invest them in lower rate bonds...

So here's where the Obama "anti wealth" / "anti success" / "tax and spend" stance has a DIRECT AFFECT on someone like me.

I have an opportunity to invest in a 244 unit apartment complex in Tucson, AZ.... it would pay about 7%... but I WON'T make that commitment (which means I won't invest in it) because that investment doesn't pan out IF I'm going to pay 30 or 40% income taxes on the income stream. My guess is that the deal doesn't get done. Therefore the seller won't have a sale - and the potential investors will just sit on their cash because they're "uncertain". The sales people won't get the commissions so won't pay any taxes... and down the bowl the water flows.

That's why the USA NEEDS investments/investors and people that CREATE income. When you have income - you spend it - which creates income for others - and then every time that buck changes hands - the government takes a little cut of it. No spending - no changing hands - no taxes created. Real simple.

[XLexusTech]

Originally Posted by GregWeld

With the Obama "win" (to me it's like he backed into it AGAIN - with barely half in favor) we wake up to a sell off in the market. No surprise here. So if you're wondering what should you do.... My advice would be to just sit back and watch for buys.

Remember -- if you're invested for the long haul - and that's a KEY STATEMENT -- then you will see your investments not be in the green column some times. BUT if you're invested in dividend stocks then they're going to keep paying - and they're going to be re-invested.... and over a 15 - 20 - 30 year timeframe you will be rewarded regardless of the taxes etc that people will stew over in the short term.

If you're living off the dividends - as I do - I sold half off all my holdings this morning. I have HUGE gains so want to lock in the long term capital gains at 15%. I will have a large pool of cash to begin to redeploy when I have more certainty in how my gains and income will be treated. Please remember that my holdings (that I use for this thread) are pretty large. Positions are in the 15 or 20 or 40 thousands of SHARES.... these are large numbers so if I sell half of a 40,000 share position - I still have 20,000 shares of "XXX". Again - I'm not trying to say "look at me" - I'm trying to show you and share with you all "my" thinking. It's easy for me to pull cash and profit out of the market temporarily and still have income and gain/loss and keep on truckin'. I still have a large Muni Bond portfolio which pays tax free income and I haven't done any moves there. I would - but the income that laddered bond portfolio pays - couldn't be re-invested in anything that's "as safe" and produces that 4% tax free. But as they mature (annually) I won't re-invest them in lower rate bonds...

So here's where the Obama "anti wealth" / "anti success" / "tax and spend" stance has a DIRECT AFFECT on someone like me.

I have an opportunity to invest in a 244 unit apartment complex in Tucson, AZ.... it would pay about 7%... but I WON'T make that commitment (which means I won't invest in it) because that investment doesn't pan out IF I'm going to pay 30 or 40% income taxes on the income stream. My guess is that the deal doesn't get done. Therefore the seller won't have a sale - and the potential investors will just sit on their cash because they're "uncertain". The sales people won't get the commissions so won't pay any taxes... and down the bowl the water flows.

That's why the USA NEEDS investments/investors and people that CREATE income. When you have income - you spend it - which creates income for others - and then every time that buck changes hands - the government takes a little cut of it. No spending - no changing hands - no taxes created. Real simple.

Not to get political but since al of my friends are pissed about the election outcome I am scratching my head as to why... On purely a finical basis if you income is sub 200K (like most of us) why would one say Obama over Romney or Visa versa? Asked another way if you were making 199K in income would your investment above still be a loser?

[GrabberGT]

Originally Posted by GregWeld

With the Obama "win" (to me it's like he backed into it AGAIN - with barely half in favor) we wake up to a sell off in the market. No surprise here. So if you're wondering what should you do.... My advice would be to just sit back and watch for buys.

Remember -- if you're invested for the long haul - and that's a KEY STATEMENT -- then you will see your investments not be in the green column some times. BUT if you're invested in dividend stocks then they're going to keep paying - and they're going to be re-invested.... and over a 15 - 20 - 30 year timeframe you will be rewarded regardless of the taxes etc that people will stew over in the short term.

If you're living off the dividends - as I do - I sold half off all my holdings this morning. I have HUGE gains so want to lock in the long term capital gains at 15%. I will have a large pool of cash to begin to redeploy when I have more certainty in how my gains and income will be treated. Please remember that my holdings (that I use for this thread) are pretty large. Positions are in the 15 or 20 or 40 thousands of SHARES.... these are large numbers so if I sell half of a 40,000 share position - I still have 20,000 shares of "XXX". Again - I'm not trying to say "look at me" - I'm trying to show you and share with you all "my" thinking. It's easy for me to pull cash and profit out of the market temporarily and still have income and gain/loss and keep on truckin'. I still have a large Muni Bond portfolio which pays tax free income and I haven't done any moves there. I would - but the income that laddered bond portfolio pays - couldn't be re-invested in anything that's "as safe" and produces that 4% tax free. But as they mature (annually) I won't re-invest them in lower rate bonds...

So here's where the Obama "anti wealth" / "anti success" / "tax and spend" stance has a DIRECT AFFECT on someone like me.

I have an opportunity to invest in a 244 unit apartment complex in Tucson, AZ.... it would pay about 7%... but I WON'T make that commitment (which means I won't invest in it) because that investment doesn't pan out IF I'm going to pay 30 or 40% income taxes on the income stream. My guess is that the deal doesn't get done. Therefore the seller won't have a sale - and the potential investors will just sit on their cash because they're "uncertain". The sales people won't get the commissions so won't pay any taxes... and down the bowl the water flows.

That's why the USA NEEDS investments/investors and people that CREATE income. When you have income - you spend it - which creates income for others - and then every time that buck changes hands - the government takes a little cut of it. No spending - no changing hands - no taxes created. Real simple.

Originally Posted by XLexusTech

Not to get political but since al of my friends are pissed about the election outcome I am scratching my head as to why... On purely a finical basis if you income is sub 200K (like most of us) why would one say Obama over Romney or Visa versa? Asked another way if you were making 199K in income would your investment above still be a loser?

I'd also like more info here. I've been tossing this around for a while regarding the proposed tax hike on Capital gains and such and am curious why you would choose not to make that investment. Receiving a dividend check regardless of size as a result of your investment is still more money in your pocket. Just not as much now that you're paying 30% tax rather than 15%. Im not saying its right or wrong or that Im in favor of tax hikes but just trying to wrap my head around it.

[toy71camaro]

I'm GUESSING based off what i read in Greg's comment, that he's not going to tie up that amount of cash in an investment that only is going to return 7%, and then be taxed 30-40% of that money, netting him a 3-4% return. I'm guessing there will likely be a better ROI to be had out there than that 3-4% for the amount of money to be tied up for that amount of time.

But i could be totally wrong. thats just how I understood it. lol

[GregWeld]

Originally Posted by XLexusTech

Not to get political but since al of my friends are pissed about the election outcome I am scratching my head as to why... On purely a finical basis if you income is sub 200K (like most of us) why would one say Obama over Romney or Visa versa? Asked another way if you were making 199K in income would your investment above still be a loser?

Like most POLITICAL discussions -- it's about IDEOLOGY rather than actual fact. With this particular POTUS... you're either with him - or against just about everything he stands for. When you have that - you have people that are either elated or they're PO'd.

Frankly -- and I don't want to turn this into a political discussion because nobody "wins" those and there really is no agreement to be had... but the Republican PARTY is to blame here. For the second election in a row they have given us someone that can't win... thereby delivering a victory to the Democrats. You can't run an "ultra rich/lilly white/Mormon" guy that even part of the lilly white rich guys can't get behind... and win. I believe that if you would have taken ONE of the two negatives out (pick one - Rich - White - Mormon) the outcome might have been different.

[XLexusTech]

Forgetting the political.. the pending legislation/climate (next 4 years) will it effect those who make 199K and less from a PURE tax impact?

What I have read thus far is the people who are effected are those who benefit from handouts and those who make over 200K... is that wrong?

[GregWeld]

Originally Posted by GrabberGT

I'd also like more info here. I've been tossing this around for a while regarding the proposed tax hike on Capital gains and such and am curious why you would choose not to make that investment. Receiving a dividend check regardless of size as a result of your investment is still more money in your pocket. Just not as much now that you're paying 30% tax rather than 15%. Im not saying its right or wrong or that Im in favor of tax hikes but just trying to wrap my head around it.

Property investments - and in particular INVESTMENT/COMMERCIAL properties are valued solely based on the return. The return is weighed against other returns offered elsewhere. It's just math. The only real way to invest in these types of properties is the combination of the cash flow and the increase in value when sold - so just like stocks - it's the TOTAL RETURN.

So two things come into play here. These are multi million dollar investments.... 7% return tied up for 10 years or so looks great if you think interest rates and returns would be "sub" that. But if we are going to tax these types of investments at ordinary income rates - then you have to take 40% off that 7%... and if we go to sell - and normal interest rates are lets say 5% 10 years from now - then the selling price of the property would be less than we paid... because the sales price will be based off the income the property can produce.

Now - if over the holding period we can raise rental rates - fine - then there's more cash flow etc - but then that would also mean that we're most likely seeing INFLATION... that inflation rate baked into the final sales price to another investor group would also affect the asking price.

Basically -- I'm making a 10 year "bet" on interest rates - property values etc. Since I'm not certain about much of that.... then I'll choose NOT to make that bet and stay more liquid rather than lock up a couple million into an investment that is NOT liquid at all and that I can't call the shots on because I'm not the managing partner - I'm only along for the ride.