Investing 102

[GregWeld]

Today - while the market was taking a dump.... and I was driving the 12 hours from Seattle to Sun Valley.... I listened to CNBC on the satellite radio... and thought ----- YEAH ---- This is why I LOVE dividend stocks... let the market be what it's going to be...


Note the dates --- while the market is a yo-yo --- I can continue to spend my "cash". That doesn't mean I don't keep a keen eye on what's going on -- but I'm not going to panic and sell my money makers. If I did -- what would I buy that would produce similar results for doing "nothing". :>)




04/10/2014 Qualified Dividend MO
ALTRIA GROUP INC
$14,400.00


04/09/2014 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,958.20

[GregWeld]

We hear the talking heads on CNBC and Bloomberg throw out terms, and they use them over and over... One that I heard yesterday "it's a stock pickers market".


Okay --- isn't every market a stock pickers market? I mean - you can't own every name right? SO you have to pick something. Well, of course, what they're saying is that even in a down market - there are stocks you can own that go against the grain -- or go down LESS than the overall market. The other day you heard me say that you can make the right bet on the wrong name. Your theory was right about the direction of the industry - but you got the wrong horse in the race. Okay -- Let's say you think "telecom" is a growth story ---- you picked BlackBerry instead of AT&T or Verizon.... You lose <buzzer>. Why am I bringing this up?

Because that's where I've been telling you to stick with "BEST OF BREED". Pick the top of the industry... Don't think you're a hero and know (or gamble) that just because this company you like is down and everything else is up -- so you can buy "cheap" and it will magically turn around. <BUZZER>


Leaders are usually leaders for a variety of reasons. Just go with it.


Now --- Sometimes it's FAR HARDER to pick the best of breed in an industry... Sometimes we just really don't know -- or we don't know enough and we really don't even know how to find out. Then what do you do?

Personally that's when I bet with someone else that I trust to "know" -- someone that really has put their money where there mouth is... That's not my barber... that's not my buddy at work.... I'm talking about real investors that do this stuff day in and day out and really know what they're talking about!

All this was brought to the forefront this morning when Wells Fargo (WFC) and JP MORGAN (JPM) reported earnings.... one sucked -- and one doesn't. WFC had good earnings.... JPM not so much. I own WFC. WHY??? I really don't know which bank I would have chosen to invest in ---- but I knew I wanted to be in "banking/financials" BEFORE the housing market recovered so I could what?..... Come on!..... BUY LOW.... But if I'm making a "sector bet" -- trying to get ahead of the market by betting that there is going to be a turn around... I have to pick the right name! So what did someone like me do? I went with WARREN BUFFET! He's HUGE investor in Wells Fargo. So I'm putting my money with Warren. BINGO --- winner!

I'm not saying I'm smart.... rather... I'm saying that sometimes you have to just trust other people that are! But you also have to pick what person you want to bet with. I'm not betting with Donald Trump because I think he's a smarmy idiot who I know has bankrupted many companies... I'm going with Iowa Warren who's been hugely successful and I'll just roll with it.

Does someone like this win every time --- hell no! But they win more than they lose. Good enough for me.

[SSLance]

That is pretty much the same reason I'm in KO instead of PEP.

[GregWeld]

I noticed this morning something that's important to Investing 102...


McDonalds (MCD) which I owned - past tense - is back up near $100 a share.... and where it pinged my interest - because this is more of a steady eddy than anything - is I wondered how many of you own it --- noticed you've received nice dividend INCREASES --- all the while those dividends buying shares AT LOWER PRICES when it was languishing in the low 90's.


THAT IS HOW YOU BUILD WEALTH OVER TIME... the re-invested dividend automatically buying shares - whether they're high or low at the time... and those shares paying a high PERCENTAGE of dividend - buying even more shares and so on. THAT'S CALLED INVESTING.

[GregWeld]

Here's something I forgot to add to the above McDonalds (MCD) post... I just haven't had enough coffee yet to get my act together...


If you go look at Google Finance -- pull up a chart of MCD -- stretch the chart out to ONE YEAR ---- You'll notice that the DIVIDEND bought shares almost at the bottom of every big dip.


The reason that's important is because many of you ask about buying on the dips - but it's so hard to try to time the market. Almost impossible -- yet here is MCD doing it AUTOMATICALLY almost as if though it was timed. Of course this doesn't always happen like that --- but this is plain and easy to see that for the last year (and that's FOUR QUARTERLY DIVIDEND PAYMENTS) it's really worked in your favor!

[CamaroMike]

I didnt even notice that about MCD, I have a small position in them. So far its been very very steady

[GregWeld]

Originally Posted by CamaroMike

I didnt even notice that about MCD, I have a small position in them. So far its been very very steady

That's why I'm here dude! LOL



The devil is always in the details.... and this just happened to be a PRIME example of how this IS SUPPOSED to work for you over time.


MCD -- is a "steady eddy" stock IMHO.... yet it's also a stealth grower --- certainly in the last 5 years - it's TOTAL RETURN is UP 105%. Who would think you've gotten a double out of MCD in 5 short years.

NOW --- CAVEAT --- Many 5 year Total Returns look good on paper because they've really RECOVERED from the '08/'09 LOWS..... But many of us (raising hand wildly) were buyers of stocks at or near those horrible dark days...

Remember -- You BUY when others are selling -- and you sell (which means trim huge gains etc) when they're buying. The problem with SELLING is that then you have to buy something else. When the market if flying high - then EVERYTHING is high priced. Yet you must train yourself to understand and acknowledge that even though those prices seem ridiculous now --- 10 years from now they won't seem too high and you'll have collected a nice dividend all the while. That's 40 QUARTERS of dividend payments.... HUGE! Just HUGE!

[GregWeld]

Originally Posted by CamaroMike

I will admit, I keep having to remind myself about this over and over again. Time goes by very fast which nobody really likes, but on the plus side the more time that goes by the more dividend/growth possibilities. So there is ONE good thing about time flying by!

The month isn't over yet --- and THIS is real money. The kind you can retire on and spend having a great time. LOL




04/20/2014 Cash Dividend BPT
B P PRUDHOE BAY RLTY TR ...
$33,099.41
04/10/2014 Qualified Dividend MO
ALTRIA GROUP INC
$14,400.00
04/09/2014 Cash Dividend JNK
SPDR BARCLAYS ETF HIGH Y...
$3,958.20

[96z28ss]

I bought MCD when it was $95 and it was red pretty much since I owned it. Like you said it was buying shares all the way down. Then I bought some more at $85 which helped bring my average down. So its in the green now.

[GregWeld]

Originally Posted by 96z28ss

I bought MCD when it was $95 and it was red pretty much since I owned it. Like you said it was buying shares all the way down. Then I bought some more at $85 which helped bring my average down. So its in the green now.

Such a much better outcome than the "norm" which would be buy at $95 --- freak out and sell at $85...



Good for you!!