Investing 102

[glassman]

Nice year end banter Greg! keep it comin, lookin, learning, and applying (a little at a time).

Started a pension fund for my employees a couple of months back. May i wish i could tell them to just do this, in fact i do but according to my accountant, "its illegal to advise them, you can get in trouble with the labor board"...so i dont "advise" them. I tell them to look listen and learn.

I have five funds now, i need to transfer three of them into "self directed" ira so i can do more of my own stock dividend paying pics....

[GregWeld]

There's many reason's why I won't tell someone what THEY should do... Everyone on here is different AGE -- they have different INCOMES -- they LIVE in different parts of the country... etc. What it takes to retire in Palm Springs vs Minot ND is completely different. Some may have parents that will leave them with a nice chunk and others (like me) will have had to take care of their parents needs. EVERYONE IS DIFFERENT.


Now - on top of that - I'm trying to teach people how to fish - not catch them a fish.

Even more importantly - I want people to become responsible for their own choices. That way they understand why they picked what they did - and it's THEIR choice not mine. This only comes in to play when things ARE NOT going so well.

This thread was started at about the time where almost any stock you picked was going to go up. We were coming off a pretty severe decline in asset prices so a guy could really do no wrong.... Now we're leveling off a bit and we'll start to see a different kind of market. And more importantly we'll start to TEST the investors strategy and his fortitude for those death by a 1000 cuts kind of markets. The kind were you start to question yourself daily. Maybe that's not on us now - maybe it won't come for a couple more years - but it will come.

What I'm hoping is that by that time - whenever the market turns and starts to go against you - is that people will have seen that this is temporary - it's part and parcel of investing in ANYTHING and that they'll also have nice gains to buffer the fallout. So if a guy is up 40% --- and we have a selloff and it takes 10% off -- BIG WHOOP -- you're still UP... and those dividends are still grinding away.

What I'm really hoping for is that some will also be able to take advantage of an investment opportunity they might have otherwise passed on because of their fears... the fear of losing. Part of investing is to become confident in yourself - not cocky - but confident that you can understand the difference between gambling and investing and that you'll have learned that sometimes stuff fails - so we don't want to go all in. We want to be able to lose and still play another day.

It's early and I'm on my first cup of coffee so hope this makes sense.

Originally Posted by glassman

Nice year end banter Greg! keep it comin, lookin, learning, and applying (a little at a time).

Started a pension fund for my employees a couple of months back. May i wish i could tell them to just do this, in fact i do but according to my accountant, "its illegal to advise them, you can get in trouble with the labor board"...so i dont "advise" them. I tell them to look listen and learn.

I have five funds now, i need to transfer three of them into "self directed" ira so i can do more of my own stock dividend paying pics....

[GregWeld]

Originally Posted by SSLance

I'm more and more convinced to do it my way, on my own though...than with my FA like I always have. He won't be happy, but I'm sure he'll get by.

My "take" on Financial Advisors or "brokers" etc... is this. They're trying to make a living off what you're trying to make a living off of. The only way they can make a living is to get commissions from transactions. Transaction fees eat into your dough... and fixed fees on a compounded basis can have a HUGE affect over time.

In so many words - THEY need to make a living too... how do THEY do that? They're not free... they also need to eat.. so someone is feeding them. It just isn't going to be me.

In the "old days" -- if a guy was buying tax free munis - in a fixed fee account - and the broker is getting 1 or 2 percent annually - it was okay because back then I might have been getting 8 or 9 percent tax free off them. But when the rates are under 4% and this azzwipe thinks he's going to get 1% ?!?!?!?! HELL NO!!

Now --- if they're not fixed fee -- then they make NOTHING off you unless you buy and sell. They use FEAR to get you to SELL ---- the very stuff they talked you into buying on the last call! WTF is with that? OH YEAH - it's called commission. I don't give a shizzle who you think you are - or how important of a client/friend/buddy you think you are... they have a mortgage to pay too! And when that's due - and they need to generate some income - they're calling with the next hot deal - or a reason why the thing you just bought isn't worth a **** now and you have to sell and buy something else (two commissions).

In other words - just hell no!

If you want to make money over the long run - just buy and do what I've been preaching on here - you don't need anyone to have this make sense to you. And you don't need the lion in the cage over there to feed and take care of. The only guy you have to take care of is YOU.

Trust me - you have no idea how many investment houses court me for my accounts - they take me to lunch - they invite me to seminars - and to private conference rooms with what would be "my team"... Frankly - they could offer to fly me in a private jet and I wouldn't waste my time. For my kind of account EVERYTHING is free! Yeah right -- there is no "free". Somehow somewhere they're making money off my money. Otherwise why would they do it?

What I've found is that they have a "vested interest" in themselves and when push comes to shove - their interest tops mine. No thanks! I'm really not that lame.

[glassman]

Crystal clear bud! What i appriecate about you Greg is you say it in a way that i can understand, so many "pros" that i've talked to cant make it clear. My brain and the way i think, over complicates things. I am a glass tech (glazier) by trade and due to my shoulder (mostly) I have to now be a CEO, one with vision, leadership, discipline, focus and etc.....I have to now read financial statements, create programs and create jobs, growth etc....I HAVE ZERO EXPERIENCE!!!!

But one thing i do know, is hard work merits good results, even if you fail or lose, you've "Given it your all". I'm not leaving anything on the "field".

And my fear is not of losing (as i've lost plenty) its of being financially successful and all that it entails. So keeping it simple (investing) is key for me!! And that, my friend, is what you've brought to the table, on this thread,, for me.

One day i will bring some actual "insight" to this here table, but for now, i dont mind being a student.

[GregWeld]

I can only hope that I've been somewhat helpful. This thread isn't about every possible point for success... that's still on an individual basis... and success for one is very different than success for another. I like your hard work statement because in America - that's what it's all about. Now this thread is trying to take that hard work - and turn it into something that can be rewarding when you're all done doing hard work! HAHAHAHAHAHA

What's the point if after all that hard work - you end up with nothing? UGH.

Small business is the hardest job EVER.. you have to wear every hat and you're expected to be good at wearing all of them. You have to be able to install a window and you're supposed to know what your accountant is telling you too.

Here's my problem with accountants. They just put the numbers on a page. The numbers are meaningful and I'm not taking anything away from their work... but the accountants can kill your SALES. Because they'll fill your head with what MARGIN (or markup) you need to pay your bills and make a profit. Fine. I get it. But if your margins are "wrong" (too high) - then you won't make many sales and nothing from nothing is nothing. Some small businesses get caught up in not understanding margins and overhead and GSA etc. And they loose sight of what needs to happen FIRST - and that's to make a sale, gain a happy customer, service that sale no matter what - because that's what leads to the next sale and so on.

It would take pages to explain what I'm saying in a more detailed way - but you get the point.

Originally Posted by glassman

Crystal clear bud! What i appriecate about you Greg is you say it in a way that i can understand, so many "pros" that i've talked to cant make it clear. My brain and the way i think, over complicates things. I am a glass tech (glazier) by trade and due to my shoulder (mostly) I have to now be a CEO, one with vision, leadership, discipline, focus and etc.....I have to now read financial statements, create programs and create jobs, growth etc....I HAVE ZERO EXPERIENCE!!!!

But one thing i do know, is hard work merits good results, even if you fail or lose, you've "Given it your all". I'm not leaving anything on the "field".

And my fear is not of losing (as i've lost plenty) its of being financially successful and all that it entails. So keeping it simple (investing) is key for me!! And that, my friend, is what you've brought to the table, on this thread,, for me.

One day i will bring some actual "insight" to this here table, but for now, i dont mind being a student.

Sorry for my RANT --- I just have a hard time with "professionals" that always want to tell you all about all the numbers but don't understand that sales have to come first and if you have enough sales - the numbers take care of themselves (unless you're giving the stuff away -- then you end up like Frank @ Prodigy). RANT OVER. LOL

[WSSix]

So I sat down and figured up my percentages for everything I own. My totals for all stocks since I've owned them is

Div Gains 4.76% Capital Gains 8.5% Total Gains 13.67%

Some of the stocks I have only owned a few months. Others, I have owned for 18 months. Should I be looking at all these as a lumped group or should I take into account the fact that a few stocks are only a few months old? Since I went for percentages, I think I have it calculated correctly. After all, we're looking at how much money my money has made. I'm trying to compare it to what my money that's being managed by Fidelity and Vanguard in two different mutual funds is doing. My Fidelity account has a year to date return of 16% where as my Vanguard account is up 25% from March 2012 which is when I bought my first stocks. It looks like I'm getting my butt kicked but I wanted to make sure I did my calculations correctly and my comparison too.

Thanks

[GregWeld]

Well -- first off a comparison has to be apples to apples -- the first half of this year brought most of the gains - the last half has just been "okay" --- so to really compare - you'd have to ONLY compare the stocks that you've owned for the same period of time ----- OR ---- see if the new buys compare IF you'd bought them at the same time as what you're comparing. The fact that you bought them later could be the difference.


Then - you have to see what the comps are against. So let's just say the mutual fund with the big (very nice btw!) gain -- might be mostly "tech" -- or some other sector fund that has done extremely well. Or is it just a general blended "big cap" or "small cap" fund etc. Typically a "sector fund" can outdo a more broad based portfolio IF -- always the big if -- it happens to be in the hot sector for that year. We can't see what you're in - and it's none of our business... so I can't look for you. Just give you some food for thought when you're making head to head comparisons.


I like to look at ALL of my money to really get a feel for how I'm doing overall... so how am I doing in the apartment business - how am I doing in the commercial real estate - how am I doing in stocks etc. Typically I could always find "something" that is weaker than the other THIS TIME --- next time -- that laggard is suddenly pulling the whole wagon. That's why anyone and everyone will stress "diversity" in your investments. RARELY will everything be pumping on all 8 at the same time. We'd like it to be that way - but it's rarely that way.

Now - the other thing - we don't know - is did you reinvest your dividends and are you calculating that correctly. The FUNDS all figure reinvested dividends to get their return or growth calculations.

Another thing I'd ask you to do - is to look at what makes up your funds top 10 holdings -- and see if they just happened to get one or two big hitters out of the whole mix. Let's say they held a big percentage (5% or so) of NetFlix which has been up like 305% year to date.... Dude that will kick ANYONES ass!

Originally Posted by WSSix

So I sat down and figured up my percentages for everything I own. My totals for all stocks since I've owned them is

Div Gains 4.76% Capital Gains 8.5% Total Gains 13.67%

Some of the stocks I have only owned a few months. Others, I have owned for 18 months. Should I be looking at all these as a lumped group or should I take into account the fact that a few stocks are only a few months old? Since I went for percentages, I think I have it calculated correctly. After all, we're looking at how much money my money has made. I'm trying to compare it to what my money that's being managed by Fidelity and Vanguard in two different mutual funds is doing. My Fidelity account has a year to date return of 16% where as my Vanguard account is up 25% from March 2012 which is when I bought my first stocks. It looks like I'm getting my butt kicked but I wanted to make sure I did my calculations correctly and my comparison too.


BTW -- if you'd just have put every dime into the QQQ -- which is the Nasdaq ETF -- you'd be up YTD 32.81% -- which makes your 25% look pee poor! LOL

The SPY -- which is a ETF of the S&P 500 -- is up 27.49%

There are professional fund managers who's income is based on them "beating" some index or another - they have crews of college edumakated calculators - and most don't make it and they're paid MILLIONS... so I think your almost 14% is doing pretty dang good. At that rate - you'll double your money in about 5 years!



Thanks

[WSSix]

Thanks for putting my gains into perspective, Greg. I like the percentages I'm earning, but I also like to make sure I'm not losing out some how.

I'll have to dig to see what my funds are invested in. Both are target retirement funds so there's some blending but I'm not sure of specifics off the top of my head.

I did my calculations as follows:

The Div gains are simply the percent difference between the total cost and what I paid out of pocket.

Capital gains are the percent difference between total cost and current value.

Total gains are percent difference between current value and what I paid out of pocket.

I know both Fidelity and Vanguard are only calculating the capital gains when I look at the individual stocks. How they are calculating the mutual funds, I don't know.

Even though I am reinvesting the dividends and I understand why they consider it a cost, I like to know what all my money has earned. My total gain matters most to me since it is everything that's been earned with the money I took out of pocket.

[GregWeld]

Hey Trey ---


You're all doing way too much work!! Way too much math!!


Okay - let's see if I can explain this.


Go to Google Finance..... call up the stock you want to check out your gain and get the chart set to say One year -- if that's all the longer you've owned it... now look at the top left of the chart... there's DATES there... if you click on the dates you can put in the date you want s -- so let's say SEPT 03, 2013 until todays date... Just change the date in the from box --- leave todays date in the other box alone... hit enter. MOVE YOUR MOUSE OUT OF THE CHART BOX and you'll see the percentage of increase (or if you suck - decrease) and the point gain.

[WSSix]

lol, I know it's overkill but I like seeing it. I check my stocks every week simply for the same reason. To me, it's fun to watch. I'm finally making really good head way(at least I think so) on a major goal in my life and I'm an observer by nature so I just sit back and watch it even though I'm not planning to make any sudden changes.