Investing 102

[Sieg]

Originally Posted by GregWeld

So now try to convince me why the author (and anyone else you talk to that supposedly knows all about money) thinks that BONDS are less risky to own.

That my friends is complete nonsense!

.........and that somewhat summarizes why when looking to reduce the cash portion of my portfolio (I've been holding too much cash for too long - my security blanket I guess) I re-positioned 33% of my "Soldiers" to KMP's battlefield on Thursday where they will certainly see more action than the barracks they were cowering in.

http://seekingalpha.com/article/1917...nergy-partners

[glassman]

Originally Posted by GregWeld

SPREAD = difference of what you paid and what you sell for. It could be minus or positive.

So you bought for $1 and sold for $2 -- the spread was $1. Normally this would be called gain... but when you're buying futures -- etc - the term changes to "the spread" because it is moving and variable and it isn't a "gain" (or loss) until the contract closes for you.

Thanx Greg, makes easy perfect sense!!!

[GregWeld]

Not pitching this or any other stock name... Everyone needs to do their own work and decide what THEY are comfortable owning! Please -- don't think for one moment that what I - or anyone else does - is what you should do!


Sieg,

That's why I own 10,000 shares of it! The dividend is "solid" (nothing is guaranteed of course)... and I have down side protection - because as the price decreases the percentage the dividend pay INCREASES - so becomes more attractive to new buyers/investors (given the return % based on their cost).

I currently have a "loss" in this name (my average cost per share is $84.27) - actually a pretty good sized one on a percentage basis (almost 5%) --- but that doesn't bother me one bit! A small percentage move up in price will have me even - and in the meantime I'm getting a very nice cash flow from it (I'll save you all doing the math and research -- I pick up $4,500 PER MONTH in dividend off this holding).

[Sieg]

Originally Posted by GregWeld

Not pitching this or any other stock name... Everyone needs to do their own work and decide what THEY are comfortable owning! Please -- don't think for one moment that what I - or anyone else does - is what you should do!

Key words!

When you see this type of information and it looks compelling, then it's time to do your own research and analyze your positions to see if it enhances the objectives of your portfolio.

In my case it strengthened the portfolio's earning potential compared to the cash sitting idle. The stock was at a reasonable price point vs the last 2 year period and opinions indicated it should be relatively stable in 2014.

[GregWeld]

Since we have just discussed "FUTURES" ------ and this is also an automotive website... I found an article about GAS/E85/Futures all wrapped into one piece!


Now this is what I was talking about when I said trading futures is best left to the professional... because you need to REALLY be on top of your game and following every little nuance -- lest you get your arse handed to you by some completely out of left field "event". Just a RUMOR will send futures up or down...





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Ethanol requirements for U.S. gasoline appear to be losing friends and influencing the wrong people, with calls growing to reform or scrap the government mandates altogether.
The Environmental Protection Agency in November proposed reducing the amount of renewable fuels, including corn-based ethanol, that oil refiners must blend with gasoline. The rule is a centerpiece of government efforts to curb carbon emissions, while jump-starting alternative forms of energy.

The draft rule would impact the 2014 requirement for renewables to fall between 15 billion and 15.52 billion gallons from 18.15 billion gallons. But the proposal to reduce ethanol requirements for 2014 has done little to quell the groundswell of complaints about the practical effects of using corn-based fuel in America's gasoline supply.

Earlier this month, California Democrat Dianne Feinstein joined forces with Oklahoma Republican Tom Coburn to introduce a Senate bill to strip ethanol completely from the Renewable Fuel Standard, also known as RFS. Although Feinstein continues to champion renewable fuel, she has expressed concerns that excess corn-based fuel production—mainly due to the RFS requirements—is "really not wise," and that the standards may hurt the Golden State's livestock producers.

The bipartisan nature of that bill, combined with the EPA's proposal, sent corn futures reeling on the Chicago Board of Trade in early December.

[GregWeld]

I'm not sure who was selling "GOLD" as an "inflation hedge".... but I sure do remember EVERYONE on the TV saying that "you should have it in your portfolio as an inflation hedge". REALLY???


So it's gone from 1800 down to under 1200..... That sounds like DEFLATION to me. OUCH.

See -- the problem with that kind of investing is that the only way it goes UP -- is if someone is willing to pay more than you did. That's a grand idea that usually winds up not working out real well. We were all supposed to have a chunk of gold in our safe somewhere in case the world went to hell.... Hey! Good luck with that kind of thinking. When the world goes to hell... (it won't)... you'll have far larger problems to deal with. I just don't want to live my life worrying about something that isn't going to happen. Oh yeah - It makes good talk. But it isn't going to happen.

Personally -- I'd rather have $1800 of something that's going to be $2000 over time even if no one else wants to pay me 1801. The dividend will still buy me stuff.

I think all the "gold bugs" moved on to BitCoin. We'll see how that turns out. I'd rather put a down payment on a house or a duplex -- which might not seem as interesting - but I'm guessing in the long run will serve my purpose better.

[GregWeld]

I had to cut and paste this from an article this morning -- this was the opening paragraph.


Really? RISKIER ASSETS? I love that kind of line. So GOLD wasn't risky at all -- the fact that it's DOWN over 30% in one year. Sounds pretty risky to me!!



Gold held steady in thin year-end trade on Tuesday, on course for its biggest annual decline in 32 years as prospects for global economic recovery prompted investors to switch to riskier assets.


AMAZING......

[GregWeld]

Originally Posted by CamaroMike

I sold all my gold a couple years ago. I think I did ok considering the basis was from 1993.

I would love to buy some KMP, just waiting until January to see if prices fall like the "analyst" say they will

In order to figure out if you did "okay" (and not saying or implying that you didn't!) you'd have to factor in the holding period - and the inflation over the holding period.

Luckily we went into a deflationary period for awhile -- when gold was going up and everything else was going down (houses etc).

Here's the deal --- and this IS INVESTING 102 --- so it's why I pull this stuff out and try to get people to open up their view of all things money....

Investments need to be looked at as competing for what COULD have been if the investment choice was "X" or "Y".... during the same period. Investing shouldn't be STAGNANT... money needs to be working and pulling the wagon ALL of the time. And only some minor analysis needs to be done to make sure a guy is seeing that thru. Buy and hold and forget is not a strategy that will win. Winning is critical. More critical than anything else you'll ever do... Money DOES buy happiness -- the guy that said it couldn't or wouldn't never had any.


So just for fun --- I looked at the 10 year chart of GLD (a gold ETF) from 2004 to present.

GLD is UP 160% for that period.


Apple (AAPL) is UP 2916% for the same period


Kinder Morgan Partners (KMP) was only UP 77% for that period


So I think you did okay with your GOLD --- but only if you'd have sold it well up near it's top. The problem is on the way down. But even if you'd have held til now -- you did pretty well.

What you'll read about on here is that MOST people buy as something becomes the "hot" investment... unlike you -- were you bought for whatever reason at the time and held on. Your buy was near the "bottom" before gold took on the speculative aura. That's what I'm trying to get people to understand on here. Like flipping houses -- like the dot com era -- gold became "the hot ticket"... and that usually ends poorly because most don't get in until the gig is just about up.

[CamaroMike]

I see what you are saying, my rule of thumb is if the people at work are talking about it (bitcoins) its too late to catch that train

[GregWeld]

Originally Posted by CamaroMike

I see what you are saying, my rule of thumb is if the people at work are talking about it (bitcoins) its too late to catch that train

EXACTLY!!!



Lucky you (anyone) that can get on the train when it leaves the station... but that's really hard to do when you don't know where that train is going! Easy to see in hindsight.. and the problem with the ghost train is you don't know where it's going and you don't know when it's going to stop. It might be a fun ride with great scenery along the way - but who the hell knows that. Thus my "gambling" statements.

When it's RETIREMENT money - or money you're saving for college - or a house etc - gambling might get you there real quick! But it might also wipe you out... and we don't want to be the wipeouts.

If it's money that's completely EXTRA - you're already set - or already well on your way to retiring --- THEN BY ALL MEANS play a little. It's made me a fortune a couple of times -- so I'm not against gambling at all. I just don't want people to confuse that with actual investing - and they are very very different.

But mostly why I pick on certain items -- is because I want people to be able to tell the difference because that might save them from a big loss. Money is too hard to come by, to loose it foolishly.

You're new here -- and there's about half a zillion pages in this thread -- but the recurring theme is INVESTING wisely - cash flow - building that nest egg you can count on - so we can all go build cars and race together or play golf or whatever else it is people see themselves doing down the road. So it's about time - compounding - averaging in over time - and real savings that are paying you and ADDING to your savings without you ever having to worry about that. So I'm mostly a fan of dividend investing. Not trendy investing. Not gambling. But whatever you choose to invest in == it should have some cash flow paying you to hold it. Rental property - dividend stocks - whatever... Not BitCoins.