Investing 102

[SSLance]

If I wanted to go to no more than 5% in any stock, I just picked the next 10 best performers using the same method and I could just pick up half as many shares of each and spread myself out a bit more.

The top ten work out to about 5% dividend based on todays price as a purchase point and last years dividends. I'll take that. The second ten calculate out to a 3% dividend return figured the same way.

[toy71camaro]

hmm... Personally, I think your spending too much time simply crunching numbers rather than learning their business.

What's been preached here over the hundreds of pages is to
1. Buy "Best of breeds"
2. Buy "what you understand"

To me, just looking from the outside here, you're buying strictly on last years performance.

Now... you could do just fine with that theory. However, the first time Stock "X" is taken to the ringer, You'll be scrambling to figure out if you picked the bad one, if you should sell, or what. You don't understand the fundamentals of the company. What makes them profitable, and what can bring them down.

Personally, I would find 10 sectors of the market. Find the top 3 "best of breeds" in those sectors, then compare them against each other. Both looking back and forward as well as understanding their business model.

I'm no expert by any means. That just what I feel I've learned here. Not to simply look at the last year worth of numbers, but a bigger broader picture.

[SSLance]

I guess I should have clarified a bit better how I picked the first 30 stocks to choose from. They are all stocks that I'd own...the best of the best if you will.

I was more looking at how I should ration myself amongst those stocks that which ones to pick out of the blue. I'm concerned about diversity, so I initially picked a 10% number, no more than 10% in any one stock, then doubled that down to 5% picking another 10 stocks for a total of 20. And trying to even them out based on share price and prospective dividend income.

Sorry, I'm a number cruncher by nature...that part is NOT going to change.

I'm also a planner, and like to think out my moves well in advance of actually making them.

[GregWeld]

Lance --- I like your strategy.

We all have to hang our hats on "something".... And as long as you seem to understand the best of breed --- and INCLUDED in your calculations TOTAL RETURN (not Just the dividend)...

20 stocks is all ANYONE needs -- 20 gets you 5% regardless of 100K or 1MM... I actually own fewer than that! But I've owned some of them for a very long time... and I own many other non stock investments.

Averaging in every MONTH is good enough - if you're a long term investor.

I would add one other critical criteria to get a handle on ----- EX Dividend dates (subtracting at least 3 BUSINESS days) ==== Might was well time your purchases to either pick up the dividend ----- or buy they EX dividend when they typically drop the equivalent of the dividend payout. It just feels better to do this --- it's all mental --- but investing is more mental than anything. Getting a dividend payment just after purchasing is like an endorphin! Although sometimes it can be an enema in a market like we're in right now... Which is why we have to have a longer term horizon. Try to "time" it and you'll never be in.


Less than 100K ---- 10 stocks are okay ---- 15 would be better.


5% dividend rate is what I kind of plan for. The dividend is just one criteria -- coupled with the more magic Total Return -- coupled with "sleep at night" and some higher paying "risk on".

Also -- have diversity between "retail" vs "Industrial" vs "sin stocks" etc....

None of this kind/style of investing will get you bragging rights around the office cooler.... But while the braggers are still having to hang around the cooler because they're working.... you'll be at the track pounding your car... collecting money every quarter come hell or high water. Once you start to see that -- that is what has us sleep well. We can count on that income.

By the way --- good for you.... I think you've come a long ways from when you first posted. I also hope this works like you want it too. Because that mental doubt can creep in and kill a guys best laid plans.

[GregWeld]

Originally Posted by CamaroMike

I think you are right Greg, there should be quite a bit of volatility this year. I didn't double up what I had earlier this week, going to wait and see how it plays out.

I have a very very small amount in my one gambling stock HEMP just to have a little fun and so far its been fun! It might crumble to nothing it might be the next big thing, nobody knows. It reminds me of your boat story Greg, I know when I sell it the price will probaly go nuts so I am holding it and waiting

If it's just a small amount -- I'd hold it! That is an area of great growth potential yet so much of it "depends" --- there will be many players - and it will have lumps and bumps.

There is actually a hedge fund headquartered in Seattle that was started by three big time guys that quit big jobs in the investing world to start the fund -- and it's goal is to invest in "marywanna"... I actually wrote to them to inquire about their structure and minimum investment etc. It's 100grand by the way. Not really very much - but it could be turned into millions if they invest in the right stuff.

Just a for instance on hedge funds and or angel investing. A $385K investment in a company got me 1% of all the shares outstanding. Yeah - it took about 6 years to pan out... but that company was sold in an all cash deal for 2.25 BILLION (not a typo) in 2010. Ownership of 1% of all the outstanding shares proved to be quite a nice total return. :>) Trust me when I tell you that there were several times when I figured the 385 was a big fat ZERO....


I no longer do any of that type of investing. It's a game of percentages and 90% of the time they're losses. They also take lots of input and calling people to get connections going - and it's a who knows who and on and on. Better lucky than smart... and knowing when to hang up the gloves is an important part of investing.

[SSLance]

Originally Posted by GregWeld

Lance --- I like your strategy.


I would add one other critical criteria to get a handle on ----- EX Dividend dates (subtracting at least 3 BUSINESS days) ==== Might was well time your purchases to either pick up the dividend ----- or buy they EX dividend when they typically drop the equivalent of the dividend payout. It just feels better to do this --- it's all mental --- but investing is more mental than anything. Getting a dividend payment just after purchasing is like an endorphin!


5% dividend rate is what I kind of plan for. The dividend is just one criteria -- coupled with the more magic Total Return -- coupled with "sleep at night" and some higher paying "risk on".


By the way --- good for you.... I think you've come a long ways from when you first posted. I also hope this works like you want it too. Because that mental doubt can creep in and kill a guys best laid plans.

Thanks Greg...for the compliments and the help through this. I mean it.

Looks like I just missed the dividend on OLN so I'll be looking to pick it up on the cheap just after (so to speak).

My calculations were basically just to figure the return of the dividend. I had to come up with a way to figure out how many shares of each I'd be purchasing, then how much dividend each share would pay and then carry it out for a year.

It's an interesting exercise. What was interesting to me was the listed P\E ratios didn't jive at all with my calcs...like I thought it would. Shows that some companies really do pay more back in dividends than others, which is what I went looking for.

Total return including share price growth is just so much of a different animal I didn't want to muddy the water with that for this exercise. I know it is important, but market swings either way can effect a share price while not really changing anything with the way the company operates.

I guess it might not be too hard to go back into my google portfolio and change the purchase dates to a year ago at the share price then and see what my total returns might have been. Now that I'm armed with the dividend info I may try that just to see.

I'm also thinking of weighing my top 10 picks a bit heavier than 5% of the total and taking a bit away from my second 10 picks, like down to 3-4% of the total each. Going to sort them by sector and evaluate them more on that level then decide.

[GregWeld]

I had posted about a TWITTER trade that I made a while back... I made a quick flip out of it... and here's the reason for my post today. PIGS GET FAT AND HOGS GET SLAUGHTERED. I ended up buying double what I was going to - when it went up way more than I expected - I sold it all.

Had I held --- I'd have a large loss instead of the 40K profit I made.

Here's another thing that I've said before. I consider myself mister joe average. I'm not smart. I'm not some all knowing wall street big shot. I'm just an average car loving idiot. I killed my own personal Twitter account because I wasn't using it - and the things I signed up to follow - I wasn't really following. I didn't see the need for it. I like INSTAGRAM and look at it and comment on it..... I didn't even check in to Twitter.

Glad I got out a pig and didn't hang around to get slaughtered. :>)

[GregWeld]

Originally Posted by CamaroMike

What is your instagram name? Mine is @michaelelsea. Mainly all car pictures on my page

@gregweld33



I'd own Amazon long term... they're still growing -- and have a huge cloud business... and everyone loves shopping there. If it paid a dividend I'd buy and hold it. Too expensive (as in too much money to tie up) in a none dividend payer for me personally. 1000 shares is a quarter million --- and while I'm a fan and think it's still growing -- I'm living on my money and what it generates - so it's a different ball game for me personally.

[GregWeld]

Originally Posted by CamaroMike

I think Amazon could be the next google in time but like you said its too much money to tie up. Im still trying to get traction with my dividend returns so thats all I really own at the moment. I love getting FREE shares of companies!

Investing is fun when it starts to work for you. I don't care if it's commercial real estate -- or a rental house or two -- or stocks that pay you to own them. GROWTH is fun - but is hit or miss... and while we'd all like to be some big time stock guru that doubles their money every year... for most of us - that's just not the case.

Frankly -- I don't even see this strategy as SLOW growth.... many dividend paying stocks double or so every 5 to 7 years. That seems like a long time but isn't -- and the part that works is the time and the doubling of the doubling.

100K goes to 200k goes to 400K --- that's in 14 years or so! WTF is wrong with that? The next double is 400k goes to 800K -- 21 lousy years...

[SSLance]

Does anyone have a decent watch list setup that includes a column for Dividend Yield?

If so, how and\or where?

I can get to the dividend yield of a particular stock 6 ways from Sunday, I just can't seem to get it to show in a list of the equities with all of the other fundamentals...