Investing 102

[toy71camaro]

Originally Posted by GregWeld

How many of you are learning to only buy on down days.....???

If i had new money to put to work.. i would. LOL. But then again, it all depends on where the market is "headed" which, of course, is some what of a crap shoot.

For me, its more important with my smaller budget, and longer long term horizon to just "get it in" the market, than trying to time a good/bad day. As a "bad day" might be a while down the road and i'd miss the good days between now and then...

[GregWeld]

Originally Posted by toy71camaro

If i had new money to put to work.. i would. LOL. But then again, it all depends on where the market is "headed" which, of course, is some what of a crap shoot.

For me, its more important with my smaller budget, and longer long term horizon to just "get it in" the market, than trying to time a good/bad day. As a "bad day" might be a while down the road and i'd miss the good days between now and then...

DING DING DING DING ---- right answer!! Good for you!

[nicks67ca]

I love this thread. I am maxing out my company match program and there is nothing better than a rate of return of 16% right now and 3% of 9% of salary contributions in the account was free!

[toy71camaro]

Originally Posted by nicks67ca

I love this thread. I am maxing out my company match program and there is nothing better than a rate of return of 16% right now and 3% of 9% of salary contributions in the account was free!

sure wish mine would re-instate our company match policy.... we lost it when the economy went sour and its yet to return.

[GregWeld]

So here's my "thinking" given new information today on Lululemon (LULU) ---- and as you all know -- I don't recommend stocks by name -- I use them for examples -- and for you all to kind of gain a small insight of how "I" think when I'm investing. The actual purchases etc are just used for thought process rather than "you need to own or sell this". Forget that! YOU buy or sell what you think fits YOUR criteria and needs!


Today - LuLu announced they plan to open MEN'S stores.... They already successfully sell men's and woman's in the same stores. I buy stuff there.

Now -- UnderArmor and NIKE already have the lions share of MEN'S workout business.... LuLu is considered a WOMAN'S like of workout clothes... I go there because my wife goes there and if I'm with her - I'll shop the 10 men's items and pick up a pair or two of shorts.... but I'm the lone man in the store! Not that I mind checking out the hardbodies inside! LOL


So my guess is that the CEO was against the BOARD on this decision to expand into MEN'S.... and quit over it. She's not going to say that - because you can bet she has a bunch of options on the shares - and has large personal hoard of shares as part of her pay package etc. She's still working there until they find a replacement.

BUT --- Here's the big butt --- and the reason for this post. This is a FUNDAMENTAL change in the company --- and perhaps it's a FUNDAMENTAL change in the reason you'd either buy more --- or sell. This of it as you own Home Depot (HD) and they announced they were going to expand into FOOD.... would that make you happy or would you think they're nuts.

Personally --- I think I'm about as average a guy as there is.... and therefore -- my thoughts are probably similar to others. I'm not smart. I'm not dumb. I'm average. I do average stuff. I wear blue jeans and t-shirts and tennis shoes. Usually with some kind of stain on them. In short - I don't give a sh!t about how I look as long as it's functional.

Would I go into a LuLu to buy without my wife dragging me along? Probably not.

Will I hold the stock and watch how it plays out. Yes. Their sales are stellar... their profits are stellar. I EXPECT that to grow... and that's why I bought in the first place. I don't agree with this decision -- and it's my guess they run some test stores and find out one way or the other before they just blindly open 1000 retail shops (think Microsoft - in their "ME TOO" stores to compete with Apple..... BALMER is an idiot and continues to prove it --- I've thought that since he was a nobody and we used to worked out together. He was dumb then and hasn't changed. The last 11 or 12 years of stock price proves this.)

[GregWeld]

I had written about the fact that I bailed (sold) on about 4MM in tax free muni's I had laddered out... and I brought that all over as cash to invest in stocks. Remember that I think (as do many) that interest rates are going to creep up... when that happens -- fixed income (i.e., bonds) would take a nice capital hit. I had nice long term capital gains in my bonds -- so thought I should capture that as well as the June payments...

I've been buying on these down days. I hope this is the "sell in May and go away" down that normally would have occurred earlier... and that we are in the typical summer swoon. I hope so because I don't have much dry powder going forward.

That might sound scary to you.... but to me -- I look at the balance sheet and see my income being built in stocks rather than bonds... and while I'll have a higher income tax bill... I'm fine with that part... What I'm investing in is that quarterly dividend ---- and then hoping I have capital gains as icing on the cake.

I know that I'll never buy at the lowest prices of the year - day - week - whatever. I'm okay with that knowledge. I'm buying good stuff... and I KNOW the market will/can/surely will - go lower AFTER I buy. So be it. Right now -- I have a lot of red... minor -- but red non-the-less.

Next Wednesday is a FED announcement... and maybe I could have waited on some of the buys until there was a little more "clarity" on which way they're headed on the QE (the big FED buying of bonds)... as this could be another big leg down... but if they say they're going to continue to be big bond buyers - then the market moves HIGHER and I miss my chance for some slightly lower prices.

I've added Caterpillar (CAT).... a low paying div stock for sure -- but if housing and the economy are getting better -- then I want to be in front of that as they will benefit from that... and if Europe and China get better - then again CAT will benefit. In the meantime I get paid to sit on my hands.

I added Wells Fargo (WFC)... because if interest rates rise -- their mortgage business will benefit with better loans and maybe a better spread. They also pay a minuscule dividend but I think they'll raise it as they can.

I added Ford (F).... again -- a better economy - more sales - more income... and a tiny dividend might gain some traction going forward.

I then put some money to work in Northern Tier Energy (NTI) a small refiner with direct retail stations in Minnesota (mini soda)... a HUGE dividend and the way I do things -- Ford - WFC - CAT dividends suck - so I'll offset that with an outsized dividend payer to bring up my "average".

I added Terra Nitrogen (TNH) because their price seems to have calmed down to around the $200 level... and they pay a sweet dividend. This is a fertilizer business but their really a natural gas play. It takes Nat Gas to make fertilizer -- if that price stays low -- then they make better spreads (is that a pun?)

I built Chevron (CVX) to 3000 shares.... buying on dips... it's a steady eddy and I have to own these for my own mental stability. They offset the NTI's and the TNH's in my portfolio. LOL

I'm now up to 40,000 shares of Annaly Capital (NLY)... which I've written about a zillion times -- I use it to park cash and make a nice dividend... so to me -- this is still a cash position rather than a long term investment... and I'm still in iShares High Yield (HYG) and Junk Bonds (JNK) ---- again these are cash positions in my mind. They pay really well.... I'm comfortable holding positions in these names because I'm on top of my game. I'm not a buy and forget and these aren't names you'd do that in.

I added much more to my Prudhoe Bay Trust (BPT) which is a royalty oil trust... it's also more of a cash parker --- and pays a really nice dividend. I hope they don't run out of oil while I'm sleeping one night. :>)


Again -- I'll caveat with Please don't take these as some recommendation to buy or sell. THEY ARE NOT. This is just a way of blogging/posting... what I'm doing and why and what I'm thinking. Remember that my goals are completely different than yours (whoever and IF anyone is reading this drivel)... as my goal is monthly income -- and I pay attention the market everyday all day. That in no way means I know more than someone else - or have some f'n crystal ball.

[WSSix]

So I found out something that's a little odd, to me anyway, but might be something the rest of you may come across as well. A little while ago I decided to gamble with a purchase into Mid Con Energy Partners, MCEP, which is a Master Limited Partnership. They are a dividend paying stock and a fairly new company. Apparently, I'm not allowed to reinvest my dividend immediately. I'm with Vanguard and that's what the brokerage service person just told me. He indicated it's up to a manager to decide this but that it's most likely because trading volume on the stock is low. I'm thinking it's because it's a small and fairly new company since after all, I have KMP as well which is also a MLP but I roll my dividend over immediately ever quarter.

It kind of sucks because it takes away that second compounding effect that we get investing in dividends but I'm still getting paid cash and pretty good cash at that, 0.51 a share. I wish I would have known this before I bought the stock but then again, it is nothing more than a gamble for me. I also imagine that if it's because the company is small and new that I shouldn't really have this issue occur with future acquisitions that will be into larger established companies, ie less of a gamble on my part.

Just thought I'd pass along what I learned.


As for Lululemons, unless they come up with a different more "manly" logo for their men's line, their name alone screams feminine. I think that would be a hindrance but that's just my opinion. Best of luck to them but honestly, until your first mention of them I had never heard of them at all.

[MattA]

We are reading and learning from your "drivel". I personally want to thank you, Greg and everyone else that has contributed to this thread. I have changed my way of thinking due to this information.

I have recently purchased a home and am working hard to get the rest of my outstanding debts paid so I can begin to work on some investing. I recently established a mock portfolio on Seeking Alpha with 1k each of about 15 companies that I am interested in. I have been following my pretend purchases and watching the news stories just as a way of becoming familliar with everything.

I know I have a long way to go but now I feel I am headed in the right direction, only wish I would have started sooner.

Thanks again

[GregWeld]

Originally Posted by MattA

We are reading and learning from your "drivel". I personally want to thank you, Greg and everyone else that has contributed to this thread. I have changed my way of thinking due to this information.

I have recently purchased a home and am working hard to get the rest of my outstanding debts paid so I can begin to work on some investing. I recently established a mock portfolio on Seeking Alpha with 1k each of about 15 companies that I am interested in. I have been following my pretend purchases and watching the news stories just as a way of becoming familliar with everything.

I know I have a long way to go but now I feel I am headed in the right direction, only wish I would have started sooner.

Thanks again

Awesome!!



Funny about wishing you'd have started "earlier". I only wish they'd begin this education in High School.... so that people would start to budget and save as soon as they start to earn. If they would -- people could retire earlier - with more - and generally have a better life. NOTHING -- and I mean NOTHING -- beats having some extra dough. Not to spend... but to save and invest... because the sense of SECURITY is unbeatable... and the sense of SATISFACTION only leads to better decisions and even more investing.

Congratulations on buying a house! Smart move. NOW --- Don't use it as your ATM like so many millions of Americans have done. The goal here is home OWNERSHIP ---- not making the bank your master! Ownership means YOU have the title. A very nice feeling after years of hard work -- not having to make a payment! The guy across the street might LOOK like he's living better -- but you can bend over and pick up your newspaper, smile a bit -- and know that you OWN your house.


Put extra money on that mortgage beginning the first time you have some extra.... and cut that 30 years of payments down to 20.... that $500 you toss at it now -- will save you THOUSANDS in interest later. The sooner you whittle away at that principal due - the better off you'll be when you're too old to earn.

CHEERS!!!

[GregWeld]

A good article -- in which I agree with 100% (sold my bond holdings "early" - while I still had a gain!).


Here's the takeaway for me ----- IF you have an adjustable rate mortgage -- GET OFF YOUR ASS AND REFI into a fixed rate NOW!


Rates are not going lower....


http://www.latimes.com/business/la-f...,7850511.story