Investing 102

[sik68]

Originally Posted by GregWeld

A good article that makes some very valid points. The only one I'd take issue with is the statement about the writers personal investing where he says he only buys stocks he thinks are undervalued (that generally means out of favor - or that nobody else likes them enough to lift the price). I don't personally like to think in those terms. Why go out of your way to find stocks that nobody else likes? Buy stocks in companies that you THINK have a chance to make you some money. That means more buyers than sellers.

Regardless of that point - it's worth a read if only for re-inforcement of basic principals.

Remember that - no different from my own "blogging" here -- these are just one persons opinion. They should all be taken with a grain of salt -- and are just "things to think about".


http://seekingalpha.com/article/1235...g_income&ifp=0

Good article!

It makes sense what you're saying about "why go out of your way to find stocks no one likes." As a small-fry investor, how can I expect of myself to out-think the think tanks on Wall Street and find something they don't like yet. You may get a lucky 'hit' every now and then by getting out in front on an 'unloved' industry...but over the diversified long haul, it is very hard to beat this industry. The best thing we can do is include ourselves in its best parts I suppose?

[GregWeld]

Another good article -- some of which states what most probably already know... but there's some decent info to think about here... Particularly that last line or two!



http://www.nbcnews.com/business/cant...yths-1C8601858

[GregWeld]

While this is not a TRADING thread -- nor am I a trader... I am "market aware" which to me is completely different than just the itchy trigger finger -- or just buy and hold and forget. As such I read A LOT -- and I listen A LOT....
And I look around at lots of various factors. So when I hear that auto sales have hit records - and housing is making a major recovery... and that the talking heads (TV people) are all talking about the RECOVERY rather than the depression, this signals a shift that I need to pay attention to. My friends are all talking about trips - and or - what they're buying or planning to buy. Thus the selling and discussion about selling this or that is over. Yippee is all I can say about that!

But what does this tell me about "the market" and or what I'm invested in. I've had a fairly large position "parked" for months now in JNK bonds... and this pays a great monthly dividend so it's been good to say the least. BUT a holding like this will get clobbered in share price (which would actually raise the dividend percentage if you buy at the lower prices) which would not be a good thing given the amount I hold. I want to be AHEAD of any such drama... and as I've preached here again and again -- I want to SCALE OUT of a position. So this morning I sold 1/3rd of my position. It (JNK) went ex dividend on 03/01 - so I get this months dividend (paid on the 11th)... I've got nice capital gain % in the name as well as collecting that magic dividend.

What I'll buy is yet to be determined. No rush. I'm shopping for a new position not adding to existing stuff. What I want is something that WON'T be interest rate (a rise in) sensitive - while still giving me a good dividend but that might also do well in a "good" economy.

Annaly Capital Management (NLY) is another candidate for scaling out of - although with it's much higher dividend % -- I'll scale out a bit slower... maybe 20% of the holding at a time. My position is not as large but it's certainly interest rate sensitive so I've got to keep on my toes. If the FED even hints that rates are going to rise -- or that they're going to start to reduce their Treasury purchases ---- Rates are going to start to rise. I just am trying to be "somewhat" ahead of that. Most likely - nothing will happen and I will be way early to that party. I'm okay with that.

[GregWeld]

I can't remember who posted here a couple weeks back (and don't want to spend the time going back to find it) -- and said they were on the sidelines WAITING for the market to come down so they could buy...

I remember responding with something along the lines of --- while you're waiting the market can run up rather than doing what you think it's going to MAYBE do. I also said though -- that with the whole Sequester thing coming up -- that who knows.... maybe that creates a buying opportunity.


Well.... Anyone see what the market has done SINCE the big mega event (NOT!) called the Sequester - which was going to cause the world to collapse?

[Tony_SS]

Greg, you might be referring to me... I still lack the knowledge but most of all, I think, the capital to risk really. But even if I did, I still think I would hold back...

I ran across this, I thought it was interesting:

The last time the dow was here, October 11th 2007
Dow Jones Industrial Average: Then 14164.5; Now 14164.5
Regular Gas Price: Then $2.75; Now $3.73
GDP Growth: Then +2.5%; Now +1.6%
Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
Americans On Food Stamps: Then 26.9 million; Now 47.69 million
Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
US Deficit (LTM): Then $97 billion; Now $975.6 billion
Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
US Household Debt: Then $13.5 trillion; Now 12.87 trillion
Labor Force Particpation Rate: Then 65.8%; Now 63.6%
Consumer Confidence: Then 99.5; Now 69.6
S&P Rating of the US: Then AAA; Now AA+
VIX: Then 17.5%; Now 14%
10 Year Treasury Yield: Then 4.64%; Now 1.89%
USDJPY: Then 117; Now 93
EURUSD: Then 1.4145; Now 1.3050
Gold: Then $748; Now $1583
NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

[GregWeld]

Ever hear the term -- The market climbs a wall of worry??


You've missed the most important "lessons" of this entire thread.... Not being an arse here. Just being honest.

Pick some of the best names that you know -- Home Depot - Phillip Morse - stuff like that - then pull up a 10 year chart.... and tell me at what point YOU would have thought it was okay - or not - to get in.

That's the point of this entire thread. LONG TERM INVESTING.... not in this week out next month... buying dips if you can - and if not - don't friggin' worry about it 5 years from now you'll be ahead -- by a long ways.

[silvermonte]

Im new to the forum, I spend all my time over at pro-touring and just recently found this place.I have a question for you guys and sorry if its been asked im only on page 25 of this thread at the moment and the great thing about this is because of this thread im ready to get back into investing. 10 years ago when I was 20 and single and in the military living in europe having the time of my life with no bills and no worries I thought I could become rich being a day trader and I blew 1000's and 1000's trying to do that. I lost it all in the long run and havent even looked at stocks since then. Now Im 30 married with a house and a stable job and its time to start investing and this thread is great.

Here is my question, I make alot less then most on this site and pro-touring, but its all relative really. I have all my bills paid off and I have 6 months of pay saved up for emergency. Only things I pay are house payment, health insurance and car insurance. I pay 10% of my paycheck to my works 401k and they add 5% on top of that.I feel that this should be enough for what i need for retirement but i would like some wiggle room. What should be my next step for investing, they rule seems to be to max out your 401k, but for me that wouldnt be possible giving the cap for that. Should I be aiming to pay the house off early my rough numbers say i could pay it off about 10 years sooner making me about 50 years old, or should i be putting money into a roth IRA, or should i be doing what greg suggest and do the dividend stocks.My thought would be the stocks as the compounding interest should pay off in spades 30 years from now giving me a very plush retirement.

[WSSix]

What is the interest rate on your home loan?

If you and your wife make less than $150k combined, you can put your money into a Roth IRA. I would do that. With Vanguard, you can pick your stocks or chose a mutual fund. That's who I have and I've done both with my account in case I choose my stocks poorly.

Regardless of what your interest rate is on the home, a simple way to help pay it off quicker is to take one month's payment and divide it into 12. Add that amount to each month's payment which will mean you'll make 13 payments in a year. I can't remember the number of years you'll pay off the loan quicker doing this but it's significant. I personally will do this even if I get a great interest rate. I simply hate having debt.

Oh, and welcome to the forum.

[GregWeld]

#1 -- Welcome to Lat G --- the BEST PT site...

#2 -- Glad you found this thread!


Sounds to me like you have your act together pretty good! So kudos to you.


I'm not a finanacial planner -- nor (I don't think) is anyone on here a professional investment advisor... this is just a good "Starter" thread that give people some stuff to discuss and think about.

Here's what I'd think about if I was in your shoes.

Max a ROTH IRA if you can....

If you have a FIXED RATE mortgage... and you'll be a reasonable age when it's paid off (some time before or at retirement) I wouldn't rush to pay it off. You're fixed rate mortgage will be mighty cheap 10 years from now... and if we're all lucky -- returns should far outstrip the interest rate on your loan. That's the "theory" anyway.

Now for that 401K at work.... It's not nearly as important how much you're putting in (and the match) as it is WHAT IT'S IN! Pay attention to that! You'll read here about Mutual Funds --- and you really need to have your money going into good ones -- because there's a 100 that SUCK and a very few that will get the job done for ya. So look into that.

Six months of savings is plenty in cash for rainy day fund.... so now it's time to start INVESTING... and keep reading this thread and you'll catch on real quick!!

[GregWeld]

Originally Posted by WSSix

Regardless of what your interest rate is on the home, a simple way to help pay it off quicker is to take one month's payment and divide it into 12. Add that amount to each month's payment which will mean you'll make 13 payments in a year. I can't remember the number of years you'll pay off the loan quicker doing this but it's significant. I personally will do this even if I get a great interest rate. I simply hate having debt.

Oh, and welcome to the forum.

I have two very low rate mortgages... and I round them both up every month... for the very same reasons you state. I just don't like mortgages. But I also know that at the rates I'm paying (I borrow cash on cash)... it's just flat ass stupid to do what I'm doing.

As you all know I'm in a different "place" investment wise... and don't have any reason whatsoever to "save" any money... but I still just can't stand "owing".