Investing 102

[glassman]

Originally Posted by GregWeld

I was reading an article on MLPs - Master Limited Partnerships... Kinder Morgan (KMP) is one of these... which we've written about in the past. What was funny about the article was what the author tossed in near the end.


It has been my experience that it is not what you buy that matters - it is what you hold on to. When one has confidence that they know the key metrics, one tends to hold on to investments with superior performance metrics. When one buys based on borrowed opinions, both the confidence to pull the trigger on the right investments and the comfort to hold those right investments is lacking.



You've heard me say this a few zillion times now. INVESTING is about confidence. YOU ALL must invest in companies (stocks) that YOU have confidence owning - thru good times and BAD. In the long run that's how you make money. Not by trying to buy low and sell high week to week or this six months vs next year.

Very well put, both by the author and the way you explain it.

My brothers a very sucessful man, CFO of a large firm and great dad and husband, his quote that he uses to tell me and others is, "Its not timing the market, its time in the market"....

Had lunch with my dad last week, hes been trading his whole life, hes 66. Tells me last week he's "poor" (by his standards). I said what happened, he said i wasn't patient enough with my investments. He traded too much IMO, sad, same thing happened to his dad (although not with the stock market). But, and this is a big butt, he's still on this side of the soil, if ya know what i mean, In other words, its never too late....

[GregWeld]

Of course - nobody really fully grasps the reasons why markets do what they do... and there is endless blabber about what they're going to do. One guy is buying - one guy is selling.... THAT is what a market is all about at the end of the day.

So here's my take on the latest dips and hiccups.

Unless you've just bought shares recently -- you've enjoyed outsized gains. People are always looking to capture gains - and when you've made 10% in 6 months --- that's very tempting. So the big market players are no different than you and I. They just have more zeros behind their trades... and they move the market. Trust me - WE do not move anything.

Now -- hair trigger -- looking for any excuse to capture those nice juicy gains... the market sells...

Now -- What the hell do you do with the cash?? Cash is all about making money... not sitting on it. So where you going to put that cash?? Europe? China? Russia? Iran? <buzzer sounding> You going to buy 10 year treasuries that yield a whopping 2.5% PER YEAR after you just killed it with a 10% 6 month gain??

Nah.... it comes back into the stock market.


Think of a tree full of Doves.... Somebody shakes the tree -- all the doves fly up into the air -- circle a bit -- and land on the same tree on a different branch.

[Payton King]

That was a brilliant last post. Spot on in my opinion...which is not worth much.

[toy71camaro]

Originally Posted by GregWeld

Think of a tree full of Doves.... Somebody shakes the tree -- all the doves fly up into the air -- circle a bit -- and land on the same tree on a different branch.

I love that analogy. lol

[GregWeld]

Originally Posted by Payton King

That was a brilliant last post. Spot on in my opinion...which is not worth much.

Trust me -- neither is mine. I just spend more time posting mine than most. My wife calls it "in the brain - out the mouth". Pretty much sums it up.

[WSSix]

That may be true but you're correct about this. People don't suddenly stop investing. The doves analogy was a good way to explain the situation.

[GregWeld]

Originally Posted by WSSix

That may be true but you're correct about this. People don't suddenly stop investing. The doves analogy was a good way to explain the situation.

Actually --- the "RETAIL INVESTOR" which is what we are called in the industry - DO STOP investing in down markets.... Seems as a collective group we love to buy high and sell low.

This is what I've been trying to change in this thread. People need to see value in buying low if at all possible and NOT selling at every little hiccup.

I hope that most of you were able to do a little "gut check" when you saw the market down for a couple days here. You need to be able to handle -- and learn from -- your feelings when things aren't so rosy. That is what will save your bacon in the long run. Kind of a Fight or Fright training.

[XLexusTech]

Buy and short on the down... .

all my long term investments are purchased on the down... take Apple.. it hit 398... it may go down further.. but with the buy back plan even with the forecasts hitting 460 its still a buy.. my cost average goes down every time I buy more... so investing.. in down times... its when i look for deals to buy..

Are they taking about institutional investors holding?

[GregWeld]

Originally Posted by XLexusTech

Buy and short on the down... .

all my long term investments are purchased on the down... take Apple.. it hit 398... it may go down further.. but with the buy back plan even with the forecasts hitting 460 its still a buy.. my cost average goes down every time I buy more... so investing.. in down times... its when i look for deals to buy..

Are they taking about institutional investors holding?

Institutional investors are the market movers... because they trade in extremely large blocks of shares so they set the prices. Mutual funds etc are the big holders.

I don't think anyone is talking about institutions.... they're professionals and know what they're doing (supposedly). It's the "little guy" --- that sells his/her 401K out because the market is soft or is in a down period. Of course that's just exactly the opposite of what they should do. They should have upped their participation buying more shares in the soft patch....

Retail investors are reactionary.... and they just don't understand the market or even how to pull up a google chart and look at stuff. Just look at how they reacted in the soft housing market -- buying and pushing up prices at the top --- only to bail the minute the market went soft..... and the smart money came in and buys up the inventory at rock bottom prices... holds it for a year or two and sells for a nice gain or holds on and watches their rental income increase AND the value rise.

[XLexusTech]

Originally Posted by GregWeld

Institutional investors are the market movers... because they trade in extremely large blocks of shares so they set the prices. Mutual funds etc are the big holders.

I don't think anyone is talking about institutions.... they're professionals and know what they're doing (supposedly). It's the "little guy" --- that sells his/her 401K out because the market is soft or is in a down period. Of course that's just exactly the opposite of what they should do. They should have upped their participation buying more shares in the soft patch....

Retail investors are reactionary.... and they just don't understand the market or even how to pull up a google chart and look at stuff. Just look at how they reacted in the soft housing market -- buying and pushing up prices at the top --- only to bail the minute the market went soft..... and the smart money came in and buys up the inventory at rock bottom prices... holds it for a year or two and sells for a nice gain or holds on and watches their rental income increase AND the value rise.

OK so the "stop investing" is referring to the gamblers not the investors I guess...