Investing 102

[toy71camaro]

Originally Posted by GregWeld

Joking --- but WE think everyone has a car!

Or 2, or 3, or 4... lol.

[96z28ss]

I just got a really good raise on PSX dividend up 28%.
it went from .39 a share to .50 a share.

[GregWeld]

Originally Posted by 96z28ss

I just got a really good raise on PSX dividend up 28%.
it went from .39 a share to .50 a share.

FREE MONEY!! LOL



I love dividends --- for all these kinds of reasons.

They (not guaranteed) pay you when the face value is down

They give you a raise once in awhile

In the end - Dividend payers generally have STELLAR capital growth over time

What's wrong with that!?!?!?




I was just looking at my AT&T (T) holdings this morning -- full discloser I own 40,000 shares -- because THEY pay a dividend over 5%.... but are spending 50 BILLION to buy Direct TV (DTV) which has NOT paid a dividend... and wondering how that will play out.

I don't want to get into a "stock" discussion ---- rather --- I mention it because I often talk about "fundamental changes" to companies - in both a good or bad way. And spending 50 Billion on an acquisition is pretty fundamental!!

Why is it important to INVESTING 102?

I would have to go with a Wait and See attitude - because I would ASSume that AT&T has a good reason - thus a plan - to make this pay off. So what to do in the meantime creates a dilemma. So I would look at BOTH companies and say -- Well -- AT&T is well run by smart people -- they're not merging because they're in trouble... They're acquiring. Direct TV is a well run company with a pretty good well known name... So there must be "bundling" and billing synergies.

Sometimes taking NO ACTION is the best course and just pay attention to what the market is saying - are they voting with their feet -- or is the news benign? So far there's no big move one way or the other... so I'll do the wait and see - which means to PAY ATTENTION.

[toy71camaro]

Thanks for the discussion about AT&T... I've got a position in them (a few 000's less than you. LOL), but, keeping an eye on them right now is a good thing.

It obviously wont break my retirement if it did go south. As I've only got 1.5% of my retirement in their bucket, but still worth keeping an eye on.

[GregWeld]

It depends on WHY you've bought a particular stock. Did you buy GROWTH -- did you buy a DIVIDEND - did you buy SAFETY... or some combination of these.


McDonalds and Coke and IBM's are about buying a dividend with some sense of "surety" about your capital.

Big companies used to be known as "blue haired old lady stocks" because people could count on them. They're the tortoise stocks...

Once you get to a certain size in sales -- it's very difficult to GROW by large numbers. That's where MCD is... Same store sales are "okay but sub par" single digets. Growth has to come from overseas expansion... or menu changes etc. It's a difficult business but MCD is very good at it. I sold my position because I simply don't eat that way anymore and like to own things that I keep an eye on as a customer... The Peter Lynch version of investing.

[CamaroMike]

Originally Posted by GregWeld

It depends on WHY you've bought a particular stock. Did you buy GROWTH -- did you buy a DIVIDEND - did you buy SAFETY... or some combination of these.


McDonalds and Coke and IBM's are about buying a dividend with some sense of "surety" about your capital.

Big companies used to be known as "blue haired old lady stocks" because people could count on them. They're the tortoise stocks...

Once you get to a certain size in sales -- it's very difficult to GROW by large numbers. That's where MCD is... Same store sales are "okay but sub par" single digets. Growth has to come from overseas expansion... or menu changes etc. It's a difficult business but MCD is very good at it. I sold my position because I simply don't eat that way anymore and like to own things that I keep an eye on as a customer... The Peter Lynch version of investing.

Does this correlate to how many shares are out there? Like you said about Microsoft and how it was hard for the price to increase because gates was selling so much of it every month.

[GregWeld]

Originally Posted by CamaroMike

Does this correlate to how many shares are out there? Like you said about Microsoft and how it was hard for the price to increase because gates was selling so much of it every month.

Great 102 question!


There has been NO DEAL announced yet -- it's "discussions" at this point.... so we won't know what the deal looks like until they reach one.

At that point it could be "dilutive" -- diluting the current shareholders value... or it could be "accretive" either immediately or in the near future -- which would be good for shareholders.

We don't know if it's an all cash deal -- a stock swap - or part of both of those. We just have to wait and see.

Also - there may be "regulatory" issues.... again - we don't know that now... but the government might make them sell off certain assets or divest certain markets so as to keep things competitive.

[GregWeld]

Originally Posted by CamaroMike

Makes sense. If its too dilluted then volatility is very slim so they buy back shares to increase the volatility? I think ford does this every few years as well to stay "competetive"

Diluted is an EARNINGS PER SHARE ISSUE.... too many shares divided into the earnings.


Volatility is NOT something you want in any stock --- if you want volatility -- watch TESLA (TSLA) -- it's a friggin yo-yo.


Companies buy back their shares to REDUCE the number of shares available (the float)... and increase shareholder value. Many times companies do this because they think they're shares are undervalued. Sometimes they just can't figure out a better use for the cash on hand.

[GregWeld]

Well --- I'm no market predictor -- and I don't "trade" the market.... but it certainly looks and feels like we're going to go into the sell in May and go away mode.

I ALWAYS hold a large pile of cash going into summer (May). Remember that I park cash in names like JNK and HYG which pay a decent monthly dividend... and most of the time - I also pick up some capital growth. I consider these holdings as "cash" - but in April I turn these into REAL cash and just sit tight waiting for stuff to pick on in August. Summer is more fun to go use the cars and trips etc - and not worry about what the market is doing.

The old saying is "you can't fight the fed" --- and I don't like to "fight" the market... and more often than not - the market takes a dump in May and stays that way until August/September.

DON'T take this as a "sell your stocks" message --- that is NOT what I'm saying. I never sell my normal dividend payers! You won't make any money with that kind of a strategy -- you'll just end up selling low and then re-buying them higher. I'm saying if you have cash -- sit tight a bit because you have MONTHS to put it to work and possibly at lower prices -- which will then YIELD more on a percentage basis in dividends.

[WSSix]

I intend to keep my eyes open and be ready to add to some of my positions. I wouldn't mind bringing my average costs down. I doubt I will add any new positions. I'm happy with the number of stocks I have right now.