Investing 102

[68 stang]

Greg, what do you think about all the talk surrounding Tesla Motors. I know that they are a growth play. I knew Tesla might have something when I kept seeing their sedans around.

[toy71camaro]

We've discussed them a bit a while back..

They were on par with the likes of Apple.. they are a "perfect" company... as in. If they arent "perfect" their stock's gonna dive. lol.

More along the line of a gamble versus a long term hold. Thats my thoughts anyway. I've seen it swing both ways with them, and I'm personally not comfortable with that.

Now if I had some "play money" leaking out my back pocket, I might toss it that way. But I would then be OK with losing it. lol

[GregWeld]

Originally Posted by 68 stang

Greg, what do you think about all the talk surrounding Tesla Motors. I know that they are a growth play. I knew Tesla might have something when I kept seeing their sedans around.

With companies like this you just never know.... I think their current sedan is fantastic... their first car - not so much....


IF -- and only IF -- you have money you can afford to loose --- then I'd buy some. Why not if you like the products and think they're a winner. I think they're winning right now.... but I ONLY buy dividend paying stocks -- so won't play that game. But if I was still a gambling man - I'd be a buyer.

Remember that it's not "investing" -- it's gambling.... and we've covered all that here many times. Nothing wrong with gambling if you can afford it IMHO.

[GregWeld]

Ah...... July...... Seems the buyers have all fled the market -- and you all are probably asking yourself why you're invested. HA!! I've been telling you for months --- remember these good days where the market seems to go up every day!

It's summer.... summer always sucks. It usually begins in May -- but this year it started later. People just seem to be doing everything other than "the market". It's a good time to pick away at putting some employees to work -- just know that after you buy - the stock will take a dollar dump the next day.

My guess is -- we continue the death of a 1000 cuts -- thru August. I know personally -- I'm doing a bunch of fun stuff rather than looking outside and seeing the rain fall and buying stocks. The market goes up when more people are buying than selling.... the market falls when, even if people aren't really selling in earnest -- but there's nobody around to bid 'em up. Learn the difference of a market sell off ---- and a period when there's just no interest in buying. They're markedly different.

[GregWeld]

So I know you guys are probably all tired of me harping about dividends...


But today is another day that reinforces why I like them over a similar name to invest in that does NOT pay a dividend.... in other words ---- why choose to put money in a stock that doesn't pay a dividend -- when there is probably a very similar stock that DOES pay one? Oh sure --- when the market is humming along and going up every day -- you're making money regardless! I like that too.... but after about 20 plus years of doing this (daily) I KNOW that the market doesn't always just hum along churning out daily gains in price. Some times you might be 2 and 3 YEARS running at a loss. If you're getting a dividend --- at least you're getting paid to sit on your hands (sounds like a union job huh? === Sorry Union guys!)


I write this today because -- the market sucks -- it's down almost 200 points this morning - and was down yesterday --- BUT --- I looked at one of my accounts and I got a check yesterday from Kinder Morgan Partners (KMP) for $13,200 -- That's real cash I can spend. Do I care what the market is doing today?? Not really (okay sure I do)... because I can pay my bills with the CASH the dividends give me.

If you're re-investing (DRIP - Dividend re-investment plan) then it's great that the market is DOWN during a dividend payout -- because your dividend will buy more shares (or parts of a share - whatever)... so it's to your BENEFIT!!

[WSSix]

I'm also quite alright with it dropping a little lower right now. I'm getting ready to dump some money into stocks. Nothing major but I'll take any little amount I can.

[sik68]

Maybe this is obvious to everyone else, but I just caught on so I am hoping to make some sense of it...In my Schwab, stocks set for "reinvest dividends" the dividend payouts add to the cost basis of the stock, and are not counted as gains.

For example, say you bought 10 shares of MCD @ $100. 3 months later say the share price is still $100, but you've been paid a div. 10x$0.80 = $8. In your "Gains / Loss" tab, the report will show a ZERO gain, but changes your cost basis to $1008.

This is the case with all my stocks...but I want to see my total return (share price delta + dividends)! So I emailed Schwab, and their response was murky: "for tax purposes, dividend payouts are added to the cost basis of the stock, and are not included in the unrealized gains of the holding."

Any tips for using the Schwab site to show my actual total return? Or am I going to have to track my buys and total return manually in a spreadsheet?!

Thanks guys.

[WSSix]

With Vanguard, I simply do the math because it's the same way. Reinvested dividends are counted as a cost. I understand why it's listed that way but for me, I like to do the same thing you're doing and count it as a return. With Vanguard, it's line itemized though so it's very easy math.

[GregWeld]

Life -- according to Schwab....



Average cost basis is one method to determine the cost of mutual fund shares at the time the shares are sold or redeemed. Schwab uses the single-category method, which simply divides the total dollar amount invested in a particular fund position by the number of shares held prior to the sale trade date. Reinvested dividends are considered actual fund purchases and are included in the cost basis.


In other words -- you'll have to do the work yourself. But remember this.... There's the IRS rules of engagement -- and Schwabs way of calculating for it's retail customers... and only your accountant can tell you (once you have a real actual realized gain/loss) what is correct. Most people just use an "average cost" to determine their cost basis. Because for many folks -- their stocks are held in IRA's etc for LONG periods of time -- and the thing gets so jumbled up that it doesn't pay to have an accountant try to determine the actual cost for stocks you bought 30 years ago - and have been receiving dividends (re-invested) all these years.

It makes no difference for accounting purposes NOW -- other than YOU want to know.... IF your shares are held in tax deferred accounts.... because there's no capital gains taxes to calculate until after you start to withdraw. Then - because this money (IRA/401k's) was "TAX DEFERRED" it is assumed that you now owe taxes on all of it at the current income tax rate. The old "Gotcha".

[GregWeld]

Steven ---


Have you tried using "Portfolio Performance"


That will give you some info - but it's based on your total portfolio rather than broken out by stock. It will show you contributions -- and total gain/loss etc for various periods.