Investing 102

[96z28ss]

Originally Posted by toy71camaro

I'm curious as to this as well. I was going to post up a question on peoples thoughts of their current situation. With the passing of their main man, feds changes, and now buyout, is it a desperation move, or a good move. They expect the stock to hit the $13ish mark now. I bailed (last week) before this last big dip because i didnt fully understand it and wasnt comfortable with it. I took a $3 loss. So I'm ok with that. LOL.

But I'm curious to see what their future holds (or what people expect).

I got out of NLY a couple weeks ago and took a $70 loss. which is better than thousands at the current price. The mortgage rates keep dropping and these companies become alot less profitable. Also their dividend will become less and less.

[GregWeld]

I'm thinking you all need to go back and re-read Investing 102 again.... you're starting to think and act like traders. Not Traitors - traders...

Annaly Capital Management (NLY) is now paying almost 14% dividend... and what happens on your old price that you paid too much for? Your dividends BUY MORE shares at LOWER prices... so not only are you buying a higher dividend payer -- you're bringing down your first cost as you go along... and that dividend (at 14%) is HUGE compared to other investments.

NOW --- I WARNED all along that NLY and JNK and HYG etc - or shares of their ilk -- ARE NOT FOR THE FAINT OF HEART! I said this repeatedly. These shares are to be bought for one reason only --- to boost your overall dividend percentage. So you own a Coke (KO) that pays 3+% -- IF you want to boost your dividend percentages -- you can stir the pot with the likes of the NLY's - the JNK's - the HYG's...

If you look at their charts -- they're RANGEY --- they move up and down -- not much in $$ terms but the percentage move is up or down 10% or said another way -- up 10 and down 10 is a 20% move! But ---- the big BUTT ---- even down 20% --- it's paying you 12/13/14% ANNUALLY....


I'm not defending this stock - nor any other... we're not about trying to pick the perfect shares... We're using EXAMPLES ---- and we're LEARNING about how to think about stocks - about how to use them - about dividends - etc ---- all things that many folks didn't know anything about a few months ago. So I'm saying to REMEMBER why you bought something in the first place... 'Cause the market will move up and down many many times in your lifetimes. You'll have to go back at times and really question why you bought what you did.

[GregWeld]

Originally Posted by Payton King

If everone is thinking that dividends will be taxed at a higher rate, say 25% instead of 15%. Would you change your strategy? I know you are living off the dividend stream, but would you change the dividend to purchase additional shares instead of taking the cash payment?

Either way - you're paying the same tax. Whether you dividend is "re-invested" or is taken in cash (as I do)... the tax treatment is the same.



My "market sense" take on the changes in taxes is another story altogether!


The percentage of taxes paid on dividends or capital gains etc is really paltry compared to the returns they can make you over a multi year period of time.

Stocks -- compete for your money -- along side many other investment choices. So as an investor -- your choice could be Bonds - Real estate - Stocks - CD's etc. Money is going to go where people THINK they can make an adequate return factoring in taxes. Just as they do now.

My tax free muni bond portfolio makes about 4% tax free... so if you compute what you need to "make" after tax on a dividend stock -- then you just do the math and see what that takes. Obviously at 15% it's one percentage and at 25% it's higher! But then you also have to factor in the TOTAL RETURN.... so bonds that have no growth (held to maturity) ONLY pay their 4%.... A stock that I buy might pay 6% dividend -- but I have to factor the growth of capital into the equation too.

So the real answer is.... nobody knows what the idiots are going to do with the tax rates and THAT is a larger problem right now than if we actually knew. Because right now - we can't really plan - we don't want to invest and get caught making the wrong move etc... and that tends to tear up the "market". I think that's where we are going to be until we have a definitive answer.

[toy71camaro]

Originally Posted by GregWeld

I'm thinking you all need to go back and re-read Investing 102 again.... you're starting to think and act like traders. Not Traitors - traders...

Annaly Capital Management (NLY) is now paying almost 14% dividend... and what happens on your old price that you paid too much for? Your dividends BUY MORE shares at LOWER prices... so not only are you buying a higher dividend payer -- you're bringing down your first cost as you go along... and that dividend (at 14%) is HUGE compared to other investments.

NOW --- I WARNED all along that NLY and JNK and HYG etc - or shares of their ilk -- ARE NOT FOR THE FAINT OF HEART! I said this repeatedly. These shares are to be bought for one reason only --- to boost your overall dividend percentage. So you own a Coke (KO) that pays 3+% -- IF you want to boost your dividend percentages -- you can stir the pot with the likes of the NLY's - the JNK's - the HYG's...

If you look at their charts -- they're RANGEY --- they move up and down -- not much in $$ terms but the percentage move is up or down 10% or said another way -- up 10 and down 10 is a 20% move! But ---- the big BUTT ---- even down 20% --- it's paying you 12/13/14% ANNUALLY....


I'm not defending this stock - nor any other... we're not about trying to pick the perfect shares... We're using EXAMPLES ---- and we're LEARNING about how to think about stocks - about how to use them - about dividends - etc ---- all things that many folks didn't know anything about a few months ago. So I'm saying to REMEMBER why you bought something in the first place... 'Cause the market will move up and down many many times in your lifetimes. You'll have to go back at times and really question why you bought what you did.

yeah.. i hear ya.. I really shouldn't of bought it to begin with. As i didn't fully understand the whole mREIT thing, and that's why I bailed before I lost money.

i let the talking heads get to me on something i didn't understand. but at least i didn't let it get me at a point i was out money. heh.

I instead bought something i felt more comfortable with while it was on sale; MCD.

[GregWeld]

Originally Posted by toy71camaro

yeah.. i hear ya.. I really shouldn't of bought it to begin with. As i didn't fully understand the whole mREIT thing, and that's why I bailed before I lost money.

i let the talking heads get to me on something i didn't understand. but at least i didn't let it get me at a point i was out money. heh.

I instead bought something i felt more comfortable with while it was on sale; MCD.

Nothing wrong with that Albert! Nothing at all.


My take on the NLY's of the world.... They're better left for people like me that do this stuff on a daily basis. I don't know more than you - but I'm on top of it more - as in - 20 hours a day....


Having said that.... when I see stuff like this going down - I have to look for the reasons WHY... and then I try to look out a little longer and see what material affect I think that might have. Right now -- the market is in a spooky place.... The tax issue - europe - the economy. So what I am TRYING to do is to say -- where are we going to be 4 years from now? Will we solve the tax issue - yeah probably.... will europe still be a mess? Sadly I think it probably will be - too many democrats and socialists to fix it..... our economy? I think we're swinging back to looking at more investment here in America - less in China - more American jobs... not building toasters but energy - auto - roads - bridges. I think we'll put some of the dough that we're spending on Iraq and Afghanistan into our own infrastructure maybe. At least I hope that's where we're headed. I see interest rates holding steady (because the government that controls them - doesn't want to pay more for the USA to borrow!).

What I WON'T do -- is to take any long term illiquid positions.... i.e., unless I can STEAL an apartment building - I'm not buying.... I'm not renewing any bond buying. I'll stay sharp - stay loose - and keep my head on a swivel. I won't be afraid to invest - I'll just make sure that those investments can be liquidated in a flash if we get some big ass unforeseen melt down somewhere.

[GregWeld]

Can you guys tell I love this stuff??

[Bucketlist2012]

Originally Posted by GregWeld

Can you guys tell I love this stuff??

If you want to be Wealthy, you have to study Wealth....You sir, are a Top student in the class...

Thanks for all the insight...It helps my self taught Brain to process and analyze info...

My Wife doesn't want to know, it scares her...I am the one keeping her from buying certain non liquid assets right now...We bought Real estate in 2009, and I told her we are staying liquid right now until we know more about the uncertainty.

[GregWeld]

I hear ya Mike!


We just bought this condo in Sun Valley --- and against my better judgement and the way I "normally" do things -- we'll take a mortgage on it. The cost of money is too cheap not to. I'm using Schwab "influence" via their loan offering and getting a pretty sweet rate.

Just a little "funny". I like funnies.... This guy calls and asks me "how much do you want to finance"? I said -- I don't know - what are my options? He says how much do you want to put down? I said - I don't know... I'll put down whatever I have to until I'm happy with the rate etc I guess... This raised another question. What happens if it doesn't appraise for the sales price? I said - well - then I guess I'll just have to throw more money at it until the numbers work.

What I ended up with is a "conventional" mortgage - I think they call it - No --- wait --- it's called "conforming". We settled on that amount and whatever money I need to bring to close the party is what I'll bring.

My take on the whole process.... super easy.... WHY? Because I have lots of cash! If I didn't - we'd have had to have a whole different discussion - and I'd be sitting on pins and needles wondering what the end result would be. Now -- I'm just telling him "you put in this much - and I'll just bring all the rest!"

By the way -- Gwen's credit score is way higher than mine! We've been married for 33 years this month! Go figure that one out! I pay all the bills. Why should hers be higher than mine by like 50 points!?!? Both are quite high -- but I did get a good laugh out of that. Like her credit quality is any DIFFERENT than mine! Geez --- we're hooked at the hip!

[Bucketlist2012]

Haha..

My Wife's score is higher than mine too..I pay all the bills, and love to pay them early..She likes to leave them for the last minute..

But yet, she has the higher FICO, go figure..

I don't have a lot of wealth, another funny is that back in December 2008, we were looking at the Home we have now, it was an REO that sold in 2006 for 660,000 Dollars...I was buying it for 275,000 plus getting a 9000 Tax credit.

When I went to get a loan, they asked how much do you have to put down ?

I said all of it... But I want to finance 50% at these rates...You should have seen their face.

If the rates were high like in the 1990's , I would have paid cash, but now ? No way...at 4%, I can invest the rest and pay the payment with Investment profit.

[96z28ss]

Originally Posted by GregWeld

I hear ya Mike!


We just bought this condo in Sun Valley --- and against my better judgement and the way I "normally" do things -- we'll take a mortgage on it. The cost of money is too cheap not to. I'm using Schwab "influence" via their loan offering and getting a pretty sweet rate.

Just a little "funny". I like funnies.... This guy calls and asks me "how much do you want to finance"? I said -- I don't know - what are my options? He says how much do you want to put down? I said - I don't know... I'll put down whatever I have to until I'm happy with the rate etc I guess... This raised another question. What happens if it doesn't appraise for the sales price? I said - well - then I guess I'll just have to throw more money at it until the numbers work.

What I ended up with is a "conventional" mortgage - I think they call it - No --- wait --- it's called "conforming". We settled on that amount and whatever money I need to bring to close the party is what I'll bring.

My take on the whole process.... super easy.... WHY? Because I have lots of cash! If I didn't - we'd have had to have a whole different discussion - and I'd be sitting on pins and needles wondering what the end result would be. Now -- I'm just telling him "you put in this much - and I'll just bring all the rest!"

By the way -- Gwen's credit score is way higher than mine! We've been married for 33 years this month! Go figure that one out! I pay all the bills. Why should hers be higher than mine by like 50 points!?!? Both are quite high -- but I did get a good laugh out of that. Like her credit quality is any DIFFERENT than mine! Geez --- we're hooked at the hip!

Cause you wife had a job, and a steady stream of income. it adds to the score.