Investing 102

[GregWeld]

Originally Posted by Sieg

And Charles Schwab ratings rank Altria as a D.

Have an opinion on that? Political?

I NEVER use anyone else's rankings - or ideas. I'll use their ideas only to use to take a look at the idea. THEN I make my own decisions. I make my decisions based on that total return - my guts - the dividend... whether or not I KNOW the company and what they do... and whether or not I like the company and the businesses they're in. I don't smoke - I don't drink - that does not affect my decision... I went to Europe == I've been to Asia... they smoke and drink like mad! I thanked them for paying for my trip.

Originally Posted by toy71camaro

Right.. which is why i threw in my measly $ amounts to show what kind of "profit" i had. And show the cost side that would be incurred IF I acted upon trying to "take" that profit. (ie. Bad idea).

Good explanation.

They're not "measly" --- they're a beginning. You pooped your diapers before you learned to pull your pants down. You skinned your knees learning to ride a bike... you babbled before you spoke... YOU STARTED... and that makes you a winner in my book!

[sik68]

Speaking of profit-taking...

Chicago Bridge and Iron (CBI) was a stock I've owned for a while now, but didn't really know WHY other than I read some articles a while back. I don't follow the industry, don't know the company, doesn't pay a dividend, and and it's not one of those companies that makes enough headlines to keep track of it easily.

The price skyrocketed in the last 3 months, so I sold out Tuesday after a 62% gain. More importantly I learned 3 things:
1) Don't be greedy
2) This was luck, and for every stock that I rely on luck to make me money, I will be AT least as unlucky for another stock.
3) I freed up money to invest in a 'steady eddy.'

It felt really good to learn a lesson and make money at the same time. I am seeing more and more that knowledge of a company is more valuable to my sanity than the share price. I rest easier knowing that I reduced my exposure to what I don't know, if that makes sense.




Greg, do you you think a young guy like me (29) should take an interest learning to "scale in and out" of the market? My sentiment is that this recent run may be a good time to see what scaling out (say 30% out) of my mutual funds can do, but remain all-in on my steady-eddy dividend stocks. My reason is, with all my money tied up now, I don't have any for periods when the market "goes on sale." Timing the market is bad I know, but I think I need some on the sidelines if I ever want to take advantage of a market on sale. Am I being logical? I am reading Ben Graham's "The Intelligent Investor" right now and it's drilling into my head that "money is made on the buy," so I am feeling more compelled to actually be ready to buy.

Thanks!!

[GregWeld]

Originally Posted by sik68

Speaking of profit-taking...

Chicago Bridge and Iron (CBI) was a stock I've owned for a while now, but didn't really know WHY other than I read some articles a while back. I don't follow the industry, don't know the company, doesn't pay a dividend, and and it's not one of those companies that makes enough headlines to keep track of it easily.

The price skyrocketed in the last 3 months, so I sold out Tuesday after a 62% gain. More importantly I learned 3 things:
1) Don't be greedy
2) This was luck, and for every stock that I rely on luck to make me money, I will be AT least as unlucky for another stock.
3) I freed up money to invest in a 'steady eddy.'

It felt really good to learn a lesson and make money at the same time. I am seeing more and more that knowledge of a company is more valuable to my sanity than the share price. I rest easier knowing that I reduced my exposure to what I don't know, if that makes sense.




Greg, do you you think a young guy like me (29) should take an interest learning to "scale in and out" of the market? My sentiment is that this recent run may be a good time to see what scaling out (say 30% out) of my mutual funds can do, but remain all-in on my steady-eddy dividend stocks. My reason is, with all my money tied up now, I don't have any for periods when the market "goes on sale." Timing the market is bad I know, but I think I need some on the sidelines if I ever want to take advantage of a market on sale. Am I being logical? Thanks!!

Number ONE!!

Good for you for learning. Knowing what and why you own something is CRITICAL to being a decent INVESTOR.... and that's why I preach to know and understand what you own. It really really helps when the market SUCKS.... Nobody cares what they own when the market is hot -- but it's invaluable when you're dying the death of a 1000 cuts!


Number TWO...


Scaling in and out is not a good thing in the way you're "thinking". You'll be out when it goes up and you'll be in when it sucks and so on...

Scaling in and out is more about MENTALLY doing a checks and balances --- i.e., If you plan to invest 5,000 dollars --- or you intend to buy 1000 shares of something. It FEELS better to buy HALF.... and wait... watch - learn - is the stock doing what you thought or did you jump before you really did your homework etc. So give it a FULL quarter.... then buy another quarter.... OR maybe you made a mistake on the intial buy -- and lucky you! You only put in half!

It's a thing so you don't end up with buyers remorse. Same way selling. You can get sellers remorse... 'cause just after you sold half -- the SOB shoots up $3 a share on a better profit report (or something - whatever).


NOW ---- If you have no NEW MONEY -- then you just need to SAVE that new money.... so that your new money is actually new money - not the same money you already had invested. Selling to buy something else is EMPLOYEE RETRAINING - but you still have the same amount of employees! You need NEW employees.

This - of course... is in ADDITION to repositioning because you have a big loser --- or because a stock you owned doubled or something -- and you're just retraining. But you don't want to sell one stock just because it's going up to buy something else you think MIGHT go up. Do that with new money.

AND --- if you're a real investor -- stay 100% invested with all your long term funds. When the stocks go DOWN -- your dividends will be buying you more shares at lower prices -- but if you don't own the stocks - you won't get the dividends! Your dividends being reinvested for you each quarter is also an automatic scale in.

[sik68]

Originally Posted by GregWeld

Number ONE!!

Good for you for learning. Knowing what and why you own something is CRITICAL to being a decent INVESTOR.... and that's why I preach to know and understand what you own. It really really helps when the market SUCKS.... Nobody cares what they own when the market is hot -- but it's invaluable when you're dying the death of a 1000 cuts!


Number TWO...


Scaling in and out is not a good thing in the way you're "thinking". You'll be out when it goes up and you'll be in when it sucks and so on...

Scaling in and out is more about MENTALLY doing a checks and balances --- i.e., If you plan to invest 5,000 dollars --- or you intend to buy 1000 shares of something. It FEELS better to buy HALF.... and wait... watch - learn - is the stock doing what you thought or did you jump before you really did your homework etc. So give it a FULL quarter.... then buy another quarter.... OR maybe you made a mistake on the intial buy -- and lucky you! You only put in half!

It's a thing so you don't end up with buyers remorse. Same way selling. You can get sellers remorse... 'cause just after you sold half -- the SOB shoots up $3 a share on a better profit report (or something - whatever).


NOW ---- If you have no NEW MONEY -- then you just need to SAVE that new money.... so that your new money is actually new money - not the same money you already had invested. Selling to buy something else is EMPLOYEE RETRAINING - but you still have the same amount of employees! You need NEW employees.

This - of course... is in ADDITION to repositioning because you have a big loser --- or because a stock you owned doubled or something -- and you're just retraining. But you don't want to sell one stock just because it's going up to buy something else you think MIGHT go up. Do that with new money.

AND --- if you're a real investor -- stay 100% invested with all your long term funds. When the stocks go DOWN -- your dividends will be buying you more shares at lower prices -- but if you don't own the stocks - you won't get the dividends! Your dividends being reinvested for you each quarter is also an automatic scale in.

Thanks GW, it always takes me 3-5 times of reading what you say until I 'get it' but that makes total sense.

Trading is fun until Gotta keep learning how to be an investor.

[Sieg]

Originally Posted by GregWeld

I NEVER use anyone else's rankings - or ideas. I'll use their ideas only to use to take a look at the idea. THEN I make my own decisions. I make my decisions based on that total return - my guts - the dividend... whether or not I KNOW the company and what they do... and whether or not I like the company and the businesses they're in. I don't smoke - I don't drink - that does not affect my decision... I went to Europe == I've been to Asia... they smoke and drink like mad! I thanked them for paying for my trip.

Agreed, I just don't understand the basis of Schwab's ratings at times compared to other sources and personal experience with given stocks.

Altria is one of the stocks in my portfolio I'm considering adding to the position, then I see that D rating from Schwab and it creates doubt in my strategy.

[Sieg]

Here was a decent read from today regarding Coke, and dividend investing.

http://seekingalpha.com/article/1210...ticle_readmore

[GregWeld]

Originally Posted by Sieg

Agreed, I just don't understand the basis of Schwab's ratings at times compared to other sources and personal experience with given stocks.

Altria is one of the stocks in my portfolio I'm considering adding to the position, then I see that D rating from Schwab and it creates doubt in my strategy.

I own 40,000 shares of Altria (MO) --- valued at 1.4MM --- it pays me $5,866 per MONTH... AND I have an unrealized gain of $183,996


IS THAT A "D" stock to you??

[Sieg]

Originally Posted by GregWeld

I own 40,000 shares of Altria (MO) --- valued at 1.4MM --- it pays me $5,866 per MONTH... AND I have an unrealized gain of $183,996

IS THAT A "D" stock to you??

I KNOW! Why does Schwab have it rated D!!!!! Their rating system baffles me at times......so it's typically discounted which isn't a bad thing.

[sik68]

Hey Greg I'm today's pest

What do you think about Public Storage (PSA). The 5 and 10 year is very steady eddy-esque, and they have a 2.89% div yield. And storage is one of those very easy-to-understand industries....everybody is accumulating too much stuff and that will never change. It's one of those human behavior 'habit' stocks like Altria

[GregWeld]

Originally Posted by sik68

Hey Greg I'm today's pest

What do you think about Public Storage (PSA). The 5 and 10 year is very steady eddy-esque, and they have a 2.89% div yield. And storage is one of those very easy-to-understand industries....everybody is accumulating too much stuff and that will never change. It's one of those human behavior 'habit' stocks like Altria

You know -- it looks okay... there's a long history of growth... and they just reported a 23% increase in profits for the quarter AND increased their margin. They've doubled the dividend payout since 2007.... and that tells me that the company is "pro" shareholder.

My only quibble is the low 2.89% dividend based on todays price. It's a low dividend -- so you're relying on share price growth for your gain. It's also a relatively expensive stock solely based on per share price. So depending on how much $$ you've got to buy it - you may not be getting very many shares. Remember that the dividend is paid as a Dollar amount PER SHARE... so if you only have 10 shares - you're really not getting much of a payout.

So that's just some things to think about. It's why I own a lot of MO vs Philip Morse (PM) which is twice the share price.


So -- this is NOT a recommendation - that's not what this thread is about - and I'm not the resident stock picker.... I'm just trying to arm you with enough food for thought that you become dangerous all on your own.

PSA is a REIT (Real Estate Investment Trust)... if you compare REITS - there's a bazillion of them and they are all basically real estate plays. I own National Retail Properties (NNN). PSA is into renting storage space - NNN is into renting shopping centers but in the end they're real estate investments.

NNN pays a higher dividend @ 4.68% -- BUT has less share price growth... BUT the share price is far lower... So what I'm saying is -- I like your basic idea (real estate) but just be sure you go out and do a bit of homework to make sure that is the one that's the best bet for YOU.