Investing 102

[68ZClone]

The question of whether or not to time the market has come up several times during the course of this thread. The following article takes a look at investing now versus holding and investing in one year. The outcomes might surprise you.

http://seekingalpha.com/article/1278...s?source=yahoo

No doubt, in a longer view than 5 years, buying lower would eventually recoup and surpass the "buy it now" scenario. But, as the author points out, does anyone really know what the stock price is going to do? Is the 40% upside risk worth the 60% downside risk the article describes?

[GregWeld]

I got a good laugh this morning --- with the market opening up nicely --- the talking heads on CNBC were talking about General Mills (GIS) -- yeah.... the cereal company. I'm like -- okay -- really? Cereal... WTF!?! Cramer calling it
a "dividend monster". So...... Of course I go out to see for myself why he'd be calling a boring old lady stock like General Mills a dividend monster. Well.. it pays a whopping 2.82% dividend. That's a dividend monster?

BUT here's the deal -- I look deeper -- and we come up with that TOTAL RETURN... which is really what we're after... and now this little old lady stock starts looking better... and it split 2 for 1 in June of 2010... and the TR for 5 years is 88%.

The reason I chuckled to myself when I'm looking all this stuff up is ------ most "investors" are always talking about the get rich quick stocks... Everybody is trying to find the next Dell -- or Microsoft -- or Google.... While in the meantime -- the little old lady has doubled her net worth in CEREAL over the last 5 stinky short years. Go figure.

I guess my point would be... INVEST -- best of breed? Dividend payer? And total return (growth in capital) doesn't have to be the next hot deal..... Facebook IPO anyone???

[Sieg]

..........and I'm just waiting to dump my $35 dollar shares of Dell acquired in '99.
And have no intention of selling my old-school '69

[GregWeld]

Originally Posted by Sieg

..........and I'm just waiting to dump my $35 dollar shares of Dell acquired in '99.
And have no intention of selling my old-school '69

Well.... We have fresh powder here... so I'm headed for more vertical. But there's an old saying about "your first loss is your best loss". That stock has been "dead money" for 10 years -- ditto Microsoft... and I have MANY friends still into those stocks big time -- waiting for the "rebound". In the meantime they could have sold 9 years ago --- invested in General Mills cereal and they have 3 times more money.


Yeah --- I had a HUGE amount of MSFT shares.... but I scaled out of them on a regular basis and re-invested in other stuff. Sometimes I look back and say -- if I hadn't sold at "X"... I'd have had double the amount of dough.... and then I look at my friends that are still holding and rode it down to a third of "what they had"... I'm retired - they're not.

[Sieg]

Originally Posted by GregWeld

Well.... We have fresh powder here... so I'm headed for more vertical. But there's an old saying about "your first loss is your best loss". That stock has been "dead money" for 10 years -- ditto Microsoft... and I have MANY friends still into those stocks big time -- waiting for the "rebound". In the meantime they could have sold 9 years ago --- invested in General Mills cereal and they have 3 times more money.


Yeah --- I had a HUGE amount of MSFT shares.... but I scaled out of them on a regular basis and re-invested in other stuff. Sometimes I look back and say -- if I hadn't sold at "X"... I'd have had double the amount of dough.... and then I look at my friends that are still holding and rode it down to a third of "what they had"... I'm retired - they're not.

Dell & HP may end up cereal......

Yup, I'm a World Champion Bull Rider...........thought I was winning, until I realized the bull was dying.

[96z28ss]

Originally Posted by GregWeld

I got a good laugh this morning --- with the market opening up nicely --- the talking heads on CNBC were talking about General Mills (GIS) -- yeah.... the cereal company. I'm like -- okay -- really? Cereal... WTF!?! Cramer calling it
a "dividend monster". So...... Of course I go out to see for myself why he'd be calling a boring old lady stock like General Mills a dividend monster. Well.. it pays a whopping 2.82% dividend. That's a dividend monster?

BUT here's the deal -- I look deeper -- and we come up with that TOTAL RETURN... which is really what we're after... and now this little old lady stock starts looking better... and it split 2 for 1 in June of 2010... and the TR for 5 years is 88%.

The reason I chuckled to myself when I'm looking all this stuff up is ------ most "investors" are always talking about the get rich quick stocks... Everybody is trying to find the next Dell -- or Microsoft -- or Google.... While in the meantime -- the little old lady has doubled her net worth in CEREAL over the last 5 stinky short years. Go figure.

I guess my point would be... INVEST -- best of breed? Dividend payer? And total return (growth in capital) doesn't have to be the next hot deal..... Facebook IPO anyone???

I watch MadMoney whenever I get a chance and he is always preaching best of breed dividend stocks for long term investing.

[96z28ss]

Originally Posted by Sieg

..........and I'm just waiting to dump my $35 dollar shares of Dell acquired in '99.
And have no intention of selling my old-school '69

Isn't the owner of dell trying to take the company private?

[GregWeld]

Originally Posted by 96z28ss

Isn't the owner of dell trying to take the company private?

Yes --- at around $14 a share I think... That company is dead and dying IMHO --- Mobile computing is the growth area -- so they're left with the replacement desktop and laptop business --- Low margin requiring high volume... The world has changed... it's tablets - Apple - and smartphones.... Dell is none of those.

[silvermonte]

So im going to newb up this great thread by asking a silly question.Im on page 61 currently so I have have a understanding of what I should be looking for in a stock. I started out looking at local company's that i use. Casey's (CASY) is a gas station currently only in the midwest, in the last year they have purchased land in tennesse and kentucky, so i would think they plan to expand.When i got out of the military in 2006 and moved back here to iowa they bought out most of the other local gas stations, and they now have about 75% of the market here. What my question is, all the info that is in this thread says to not buy this stock. It has a annual dividend yield of 1.15%, thats horribly low, buts its growth has been great in the last 10 years. I would personally not have a problem owning this stock as i can see what they are doing every day but they are not best of breeds, so does the growth out gain the lack of a decent dividend, or should i be looking at something else.

They have an interesting market over a normal gas station, they make some amazing pizza that for the most part is a home made on a large scale that is priced cheaper and taste better then your normal papa johns,pizza hut,dominos and other pizza places.Why i think they are planning to be around for awhile is they just started adding a deliver service of their pizza to help get in on the food market and make a move on the "main" pizza joints.Im not sure of any other business that does something like that. I just got into this investing game again some im just in the research phase for the next few weeks till i get game plan going. Not that im trying to find the next get rich stock but i think over the long term of 30+ years this may be one to get and wanted to know if my thinking is in the correct spot.

I should probably add that I would not have a large amount to invest, so this is where im thinking i should probably go with a better steady eddie as greg puts it to start out, till i get more into the account and can then take this mild "risk" as i look at it.

[GregWeld]

Originally Posted by silvermonte

So im going to newb up this great thread by asking a silly question.Im on page 61 currently so I have have a understanding of what I should be looking for in a stock. I started out looking at local company's that i use. Casey's (CASY) is a gas station currently only in the midwest, in the last year they have purchased land in tennesse and kentucky, so i would think they plan to expand.When i got out of the military in 2006 and moved back here to iowa they bought out most of the other local gas stations, and they now have about 75% of the market here. What my question is, all the info that is in this thread says to not buy this stock. It has a annual dividend yield of 1.15%, thats horribly low, buts its growth has been great in the last 10 years. I would personally not have a problem owning this stock as i can see what they are doing every day but they are not best of breeds, so does the growth out gain the lack of a decent dividend, or should i be looking at something else.

They have an interesting market over a normal gas station, they make some amazing pizza that for the most part is a home made on a large scale that is priced cheaper and taste better then your normal papa johns,pizza hut,dominos and other pizza places.Why i think they are planning to be around for awhile is they just started adding a deliver service of their pizza to help get in on the food market and make a move on the "main" pizza joints.Im not sure of any other business that does something like that. I just got into this investing game again some im just in the research phase for the next few weeks till i get game plan going. Not that im trying to find the next get rich stock but i think over the long term of 30+ years this may be one to get and wanted to know if my thinking is in the correct spot.

I should probably add that I would not have a large amount to invest, so this is where im thinking i should probably go with a better steady eddie as greg puts it to start out, till i get more into the account and can then take this mild "risk" as i look at it.

Personally - without doing huge research.... I think it would be a great stock for YOU. Here's why.


YOU (any individual) are a good judge for what a business is doing. If you shop there - and YOU like it - and you see what they're doing - and your friends like the place... Then those are good points. You'll also be the first to read when there's a change in the business that you DON'T like... so the minute you sense something wrong -- then it's a tip off that maybe others are just like you, and you then have a heads up on when to bail out. We would hope that doesn't happen of course. But use your gut feeling for a stock/company the same going UP as going DOWN... pay attention to those feelings.


Now -- remember we want TOTAL RETURN.....so we can offset the low dividend with a higher growth rate. That's what this stock is doing -- it's growing nicely - and that can make you more money than just a higher paying dividend stock. Nothing wrong with this "combo" of low dividend as long as it's accompanied with high growth.

Then use all the other things we've discussed here ---- don't put all your eggs in one basket --- work towards diversification --- pay attention --- but get started.