Investing 102

[GregWeld]

Originally Posted by sebtarta

Greg please send me a PM with your Paypal address, amazon wishlist or something so I can send a present to you for all your help here. Be it with beer, ONE racing glove, something! I have been reading here since I posted back then about MNKD. I have learned a lot.

What?!?!?!


You finally learn about chicks with cold sores?? LOL

[toy71camaro]

LMAO. Some great discussions here the past couple days. I love it. I could read, talk, learn, BS about this stuff ALL day. hahaha.

[toy71camaro]

Question from us "Young guys" (I still consider myself young. LOL)

If we were to "gamble" on something like Alibaba, or GoPro, etc. Which account would be best to do this in? A Personal Brokerage account or within a ROTH IRA?

I'm guessing a PB account. If it fizzles out it could be counted as a loss. But then again, if it goes to the moon, it wont be taxed in the ROTH, but then its also tied up for another 30 years... heh.

I'm not sure that even a question we can really answer.. But maybe just discuss and we'll have to weigh our own options individually.

[dhutton]

Originally Posted by GregWeld

Now -- Since I'm on a roll this morning...


Let's not forget what the STOCK MARKET really is. It's a MARKET. PERIOD. At the end of the day -- for a stock to rise - more people must want to own it than want to sell it. End of story.

There are "popular stocks" -- no different than the popular girl in high school... everyone wanted to (use your imagination)... She had no problems finding a date. Stocks are the same way. The ones everyone wants to own are the easy ones.

In the end however -- it's about people and people are fickle.... and we're lemmings... if housing is hot - we all want to be in housing. If gold is hot we all want gold. When these things go "cold" (like when the hot chick shows up with a cold sore)... then "nobody" wants them and the price drops.

Some times - if you're lucky - the fact that you hit on the cold sore chick - and the sore goes away - she loves you for life and you're rewarded. Some times that cold sore is just the beginning of a far "lower" (get it) problem that isn't readily visible. Let's call this -- trying to catch a falling knife. If you're lucky you get the handle... if not - you get sliced and diced. I prefer not to play that game. It's gut wrenching - it's gambling - it works and you're a hero - it doesn't work and you're a zero.

Alibaba is on everyones target.... This is not only THE HOT CHICK - This is the hot chick that puts out! And it seems that people want in and don't want to get out. i.e, people want to hold it. That means the price SHOULD go up. I'm hearing on CNBC that most of the shares offered are going to institutional investors rather than retail customers ala (get it?) FaceBook (FB). People EXPECTED FB to double or triple on the first day and their plans were to get in and get out. A one night stand. The difference that I'm sensing is that people want to marry Alibaba for a far longer term and that can only be good for the shares.

ME? I'll wait and see.... but you young guys... this may be something that goes viral and It wouldn't hurt you to put $500 or $1000 into play. IF you do that -- be prepared for "whatever". Understand your expectations and your reactions if your expectations aren't met.

That right there is classic. I forwarded this to a few guys here at work who are always chasing the latest hot stock/chick.

Thanks Greg,
Don

[bigtyme1]

Originally Posted by GregWeld

Okay -- only because Tracy said I had to chime in -- I will do as I'm told.


So -- this answer is one that I say to you -- well.... it all "depends". So without writing a book -- let's take a real BASIC look at savings.

A person needs to think of savings as various BUCKETS of money.

A bucket of money needs to be for "emergencies" -- and this bucket - just like the other buckets we'll get to - needs to be 'adjusted' to meet the needs of the owner. I don't need an emergency bucket. I have plenty of money. Most need some kind of "quick and easy to get to money" -- that needs to be taken care of first. Whether it's $500 or $5000... is up to you. This really needs to be funded by the people that can afford it the least - i.e., the guy with maxed out credit cards!

Another bucket is the retirement bucket.... you seem to be working on that. BTW -- Don't be afraid to put more into this bucket. You do not need to be limited to the 15% you're doing at work. The only thing you're doing to fund more than your limits is that you're putting in AFTER TAX money. Dude - when you retire - and you're all set for life - you won't give a damn what you're living on - the point is that you will have it! So max your workplace and then see if you qualify for a ROTH IRA... which is after tax savings that comes OUT tax free...

THEN -- you really asked about INVESTMENTS.... again - this depends - real estate is ILLIQUID... so unless you have a bunch of dough and are just looking to diversify - fugedaboudit. If you want some liquidity -- with GROWTH in your capital - and get paid to "wait" - get yourself a Schwab account - or some other discount broker - and buy yourself some big cap dividend paying stocks. The rule of investing is to never put more than 5% of your TOTAL INVESTABLE MONEY (all of your investable money not just what's in this particular account!) into ONE investment. That way - if you lost it all (all of one investment) you're not hurt. Pigs get fat - hogs get slaughtered. Ask the builders that loaded up on dirt before the real estate crash - because they ain't makin' any more of it they'd tell ya! Dumbasses...

I'd buy STOCKS for dividend AND growth... so look at a CHART of any company you're interested in... see that over the LONG RUN (like 10 years) the chart is lower on the left and rises as it goes to the right! Forget about the dips in 07/08 - every stock you look at will have that. But lets look at Kinder Morgan Partners - NYSE symbol KMP - there is a nice chart... AND it pays 5.86% (based on todays price) which is $1.16 per share per quarter. So if you bought 50 shares - every 3 months you'd get a dividend of $58 (you're getting paid to wait - you're waiting for the share price to appreciate!). Yeah I own it.

I'd also look at AT&T (symbol T) - pays about 6% dividend. Is "steady" price wise. Great place to park money and be relatively sure it's going to still be there - good market or bad. Again - you get paid to wait. Yeah I own it.

So that's what I'd be doing. Diversify - don't buy TWO oil stocks -- buy ONE - Then get a consumer food stock -- Coke (KO) or Pepsi (PEP) or McDonalds (MCD). Funny -- people laugh when I tell 'em to buy McDonalds -- the stock is UP 125% in the last 5 years! AND you get a .61 a share per quarter dividend! So here's the deal -- it's what I ALWAYS look for.... if they don't pay a dividend - I'm not a buyer - and if the dividend is "low" (like MCD's is) then I want the growth to be there.... I'll take STEADY (AT&T) but then I want a higher dividend. Does that make sense?

Then --- DO NOT GET CAUGHT UP IN TRADING - DO NOT PANIC - DO NOT LISTEN TO THE GROCERY STORE CLERK TELLING YOU ABOUT THEIR LATEST BIG MARKET HIT.... RUN AWAY from those people! DO NOT BUY GOLD... IF THEY MAKE A TV SHOW ABOUT SOMETHING (House flipping?) RUN FOR THE HILLS... DO NOT INVEST IN IT. YOU'RE ALREADY TOO LATE!

There is no get rich quick scheme. Steady Eddy whens the race. LONG TERM is not 15 minutes. Buy good quality big names that you know and understand - with good charts and good dividends. Then sit back and laugh at the losers when they're broke and you're not.


Oh -- and make sure you check the little box when you buy "REINVEST THE DIVIDEND". That way every time they pay you - they buy more of their stock automatically for you - more shares - more dividends - which buy more shares which pay more dividends...

If you buy a stock and it's value DOUBLES (just an example) then sell the "gain" and buy something else. Nobody ever went broke taking a profit. It helps you to diversify - and keeps each investment in that 5% bracket.

There's a lot more to it -- and more details etc - but them's the basics. Stay thirsty my friend!

wow Greg, I learned more from this post then my own broker tells me. My issue is I don't trust the brokers. I always feel they have a hidden agenda. Thanks for sharing

[chichirone]

Originally Posted by Vegas69

I agree with Greg, some good names, some others I would wipe off the list. You certainly have the discipline to sock away such a substantial amount. Clearly you have a big income, but that doesn't mean you had to save a penny! Good luck on the sale of your car.

I've owned Pfizer for a year. It's been a snoozer. Always hanging around even. CVS has been a solid performer. They are a drug dealer. ha I picked them as I see the baby boomers consuming more and more pills, unfortunately.

Greg, have you covered your philosophy on International stocks? Picking them to the make up of your portfolio.

Thanks Todd. CVS is an interesting pick as they recently acquired a home infusion/home care business which aligns them to the entire patient pathway once discharged from the hospital. Their growth over the past 10 years is 254%. Their model is also creating a network of "doc in the box" locations across the US. Patients/consumers can go get a flu shot, advil for their headache or knee pain, their blood pressure medicine, a prescription from the on call physician assigned to the location for their sinus infection filled in 20 mins or less, a cold compress for their back pain and a pint of Ben & Jerry's to "help" with the healing in less time than hanging out in the waiting room trying to see the family practitioner, or God forbid go to the ER and wait for 3 hours just to be told you need a prescription for an antibiotic to treat your sinus infection. My only concern was the dividend yield and the uncertainty of Obamacare. They have had a good run but are they (and other healthcare stocks, specifically Rx companies) at a bubble.

Per Greg's suggestion to look for higher yields, I have been looking at healthcare specific REITs such as Healthcare REIT (HCN), Ventas (VTR) as an alternative to the drug dealers and manufacturers. The baby boomers you mention will have to go someplace as they age and assisted living, nursing homes, SNIF's, and senior care facilities will be a key component of elderly care over the next 20 years. Medical offices are popping up all over the place. ER clinics, CareNows and minute clinics are popping up in every neighborhood their is even the slightest level of population density. Look at HCN and VTR's chart. 10 yr gains of 80% and 120% growth, plus at or around 5% dividend yield. It's not the growth scale of CVS, and the buy in is close to peak, even tho they are somewhat depressed the past year, but one thing is for sure...we are not getting any younger. The demands on healthcare will continue to be a need as long as humans are on this planet. And, they are looking to expand across the ponds. India and China are target rich environments for these companies. 3 to 5 times the population in the US with massive demand for infrastructure. Not saying its the right strategy, but an alternative to consider. CVS is more of a steady eddie performer with lower yield, and the REITs diversify without having to physically buy a building.

Greg and Todd, thanks for the guidance to look for closer to 5% yields and think about my "comfort zone" a little differently. It was your nudge Greg, that made me research my strategy a bit differently the past couple days versus going in with all "sleep well at night" stocks I proposed on my list. Now tell me if I'm crazy or if this type of diversification is more aligned to your guidance from previous responses!

[GregWeld]

Nobody can have the right answer for this question because it all depends.

As you pointed out - if it goes to the moon and makes you a millionaire -- then inside the ROTH would be the best place!

But some people don't have ROTH IRA's --- and some don't have self directed 401's etc.

FORGET ABOUT TAXES... they don't count. Making money counts. If you make some - you pay taxes - be happy about that. Dead serious here. I don't do ANYTHING because it might have a possible taxable event. I do things to just make as much money as humanly possible. They get a small percentage -- I keep the rest!

Originally Posted by toy71camaro

Question from us "Young guys" (I still consider myself young. LOL)

If we were to "gamble" on something like Alibaba, or GoPro, etc. Which account would be best to do this in? A Personal Brokerage account or within a ROTH IRA?

I'm guessing a PB account. If it fizzles out it could be counted as a loss. But then again, if it goes to the moon, it wont be taxed in the ROTH, but then its also tied up for another 30 years... heh.

I'm not sure that even a question we can really answer.. But maybe just discuss and we'll have to weigh our own options individually.

[GregWeld]

Dumbass! Now you only have 450 more pages to read!! You'll then fire your sorry ass broker... and make yourself some money without him/her.


Love ya buddy! See ya at SEMA????

Originally Posted by bigtyme1

wow Greg, I learned more from this post then my own broker tells me. My issue is I don't trust the brokers. I always feel they have a hidden agenda. Thanks for sharing

[chichirone]

Originally Posted by GregWeld

Jay -- Yeah -- I've shared way too much personal info on here -- but figure WTF -- if it gets one person going on the right track - then I've done good. So I throw myself on the sword for all. LOL


I figured you had to be "in the industry" or close to it.... There is LIFE outside of work you know. Drive up and down the street and look at all those viable businesses that are just waiting for you to be a partner with them.

5% dividend doesn't have to come with risk. AT&T pays over 5% and I wouldn't classify it as risky. Altria (MO) pays 4.66% and that's not very risky... so there's plenty out there.

Philip Morse (PM) pays almost 5%... Both MO and PM are sin stocks -- I like MO because of the booze component... I don't smoke or drink -- doesn't keep me from making money off the people that do.

MCO is Moody's (the ratings agency) and I ASSume you meant McDonalds (MCD). I sold MCD awhile ago based on my belief that they're losing the fast food battle... and that the general public they appeal to has shifted to healthier restaurants. Their sales continue to slip -- and that's a "Fundamental" change I can't sleep with. Their down almost 8% in the last 3 months... that's a nasty dip and I'm glad I've moved on. If it paid a dividend - I'd be in Chipotle Mexican Grill (CMG) versus MCD. CMG is growing and MCD is shrinking.

Greg, thank you for your sword diving and WTF attitude. LOL! I've read nearly all 400+ pages in this thread and you continually share personal stories, opinions, ways to think differently. It's sincere counsel to get others on a track, and I don't mean the kind we all love to drive on. (BTW, you do a darn good job of that for us as well.)

Healthcare/Med Devices is what I know. Thinking back to your other posts, look at what you eat, where you shop, what you buy, and what you consume. I can't remember the last time I went to Sears so I don't own it. I drink Coke products which is why we like KO vs Pepsi and own it. You have made me realize I need to take the blinders off and look beyond what I work on and expand the horizon to research and identify alternative ways to generate wealth, demonstrated by T, low growth, well run and good payer.

MCO should have been MCD. Good ASSumption. Like Sears, I cannot recall the last time I stepped foot in a McD's. No wonder I sort of missed on that one, especially when we eat at Chipotle with more frequency than I care to admit. Just reinforces your point to reflect on your consumption behaviors. This is a really good learning point if one is just starting out.

What's your opinion of chasing 2-3 high growth stocks, not a fad stock, but one that has a shorter growth chart, is a little less mature like GPRO than the likes of T or COP as a part of a start up portfolio? Reason I ask, would a little higher risk tolerance on growth make sense to balance the "sleep well at night" buys? I believe I know the answer but am not 100% sure so that is the reason for the question.

[chichirone]

Originally Posted by GregWeld

Now -- Since I'm on a roll this morning...


Let's not forget what the STOCK MARKET really is. It's a MARKET. PERIOD. At the end of the day -- for a stock to rise - more people must want to own it than want to sell it. End of story.

There are "popular stocks" -- no different than the popular girl in high school... everyone wanted to (use your imagination)... She had no problems finding a date. Stocks are the same way. The ones everyone wants to own are the easy ones.

In the end however -- it's about people and people are fickle.... and we're lemmings... if housing is hot - we all want to be in housing. If gold is hot we all want gold. When these things go "cold" (like when the hot chick shows up with a cold sore)... then "nobody" wants them and the price drops.

Some times - if you're lucky - the fact that you hit on the cold sore chick - and the sore goes away - she loves you for life and you're rewarded. Some times that cold sore is just the beginning of a far "lower" (get it) problem that isn't readily visible. Let's call this -- trying to catch a falling knife. If you're lucky you get the handle... if not - you get sliced and diced. I prefer not to play that game. It's gut wrenching - it's gambling - it works and you're a hero - it doesn't work and you're a zero.

Alibaba is on everyones target.... This is not only THE HOT CHICK - This is the hot chick that puts out! And it seems that people want in and don't want to get out. i.e, people want to hold it. That means the price SHOULD go up. I'm hearing on CNBC that most of the shares offered are going to institutional investors rather than retail customers ala (get it?) FaceBook (FB). People EXPECTED FB to double or triple on the first day and their plans were to get in and get out. A one night stand. The difference that I'm sensing is that people want to marry Alibaba for a far longer term and that can only be good for the shares.

ME? I'll wait and see.... but you young guys... this may be something that goes viral and It wouldn't hurt you to put $500 or $1000 into play. IF you do that -- be prepared for "whatever". Understand your expectations and your reactions if your expectations aren't met.

Holy crap! This is hysterical! I'm reading this on a plane from SEA to DFW LMAO and dude next to me is wondering what the heck is so funny. Both cracking up at your "roll". Might be the best "investing" advice ever...HA!HA!