Investing 102

[WSSix]

Good post, Greg. It's going to be interesting for the next few months or year I think.

[GregWeld]

Anyone in here still playing with BITCOIN?? I see today it's down to $364 USD.... that's a long hard downward slope from people talking about it being $1000 plus per coin.

My point here.... Most of you had already forgotten the name of the thing... and had I not brought it up here - you would have. OUT OF THE NEWS -- The Talking Heads on CNBC quit mentioning it... the clerk at the store quit talking about it. DONE. GONE. Bubble popped.

Not the kind of "investment" where I want to put my money. Lucky for me - I've lived long enough to have seen many of these kinds of "investments" come and go. My job is to have you guys (and gals) all watch this and learn from it. Better to learn from the sidelines rather than the far harder lesson of losing your money.

Oh sure - there's money to be made "while it lasts" - on the way up - and the mania that ensues.... just like people made money flipping houses. The problem is they lose it all because people don't get out at the top. Most likely they finally got IN at the top...

[toy71camaro]

Originally Posted by GregWeld

You - having paid a lower price per share - are getting a higher percentage of dividend rate on your money invested. So you always need to do your own calculations on what YOU PAID - and what you're currently receiving. I don't know what you paid so can't calc that for you.

The MATH for doing that is:


The ANNUAL DIVIDEND amount (4 times the quarterly amount) in this case the annual amount is .80 (4 x .20) DIVIDED by the share price. And move the decimal two places.


So let's use this actual stock and price.


.80 dividend by 82.63 = .009681

Move the decimal point -- and you have .97 %

This brings up a good reminder. When you log into your brokerage accounts, your not going to see your "Total Return", and this could play tricks on your mind! hahaha.

I ended up writing my own tracking spreadsheet using Google Docs. Where I document each purchase I make for each stock (price/qty/total amount), and also note each dividend payment. It then calculates my total shares, my Avg Cost on those shares. Then it automatically grabs the current share price. I then have a "Summary" tab/sheet (I have a "sheet or Tab" for each stock), where it monitors the daily basics such as todays price +/- %, todays Dividend %, MY dividend % based on my original purchase, plus the TOTAL RETURN.

Just as an example, when I log into my brokerage account and take a quick peek at my page, it shows I'm DOWN 0.22% on my AT&T. Bummer right? Well, not really. My Total Return for it is actually 28%. There's a HUGE difference there.

Once again Greg, thanks for taking time out of your day to keep us all on the Up and Up and moving forward with this stuff. It's made a huge difference in my retirement accounts since starting this within the last 2 years.

[GregWeld]

You're more than welcome Albert! I'm so happy this is working out well for you.

Correct data - and correct thinking are CRITICAL Albert. Good for you for doing the work on the spread sheet.

The thing with stocks - versus other types of assets such as housing etc... is that we tend to look at them all the time. It's like a moth to a flame... we like to see our investments all going green all the time. Of course - it doesn't work like that. But really understanding where you're at is key.

I've said it here many times -- if you're UP 30% over a two year period -- and suddenly the market "tanks" and goes down hard (10%)... you must put that in perspective. You can't open your account and go HOLY CRAP! I'm down 10K! When in fact --- you might be up 40 over all.

[silvermonte]

I would like to ask some theoretical questions. Lets say a year or even 2 years from now a stock has has no growth and the dividend payout has not increased at has been a low value. My money could be put to better used in a best of breed. Now assuming the company is not doing anything wonky behind closed doors, what would be a reasonable time frame for a person to wait on a stock to start doing something again?

I can use my CASY stock as an example. I bought in 2 years ago and it has had great growth and I'm well in the green on it. So if for some reason it was to just go stagnant and nothing would change for a year, how long should I wait if there is no news coming in from their side on what is going on.

That's not what is going on with this but I was just using it as an example. I could see myself saying well I've made X and if I wait a bit longer I might make more. That would be the emotional side taking over with investing. What clues should a person look for to know its time to move to greener pastures?

[GregWeld]

Originally Posted by silvermonte

I would like to ask some theoretical questions. Lets say a year or even 2 years from now a stock has has no growth and the dividend payout has not increased at has been a low value. My money could be put to better used in a best of breed. Now assuming the company is not doing anything wonky behind closed doors, what would be a reasonable time frame for a person to wait on a stock to start doing something again?

I can use my CASY stock as an example. I bought in 2 years ago and it has had great growth and I'm well in the green on it. So if for some reason it was to just go stagnant and nothing would change for a year, how long should I wait if there is no news coming in from their side on what is going on.

That's not what is going on with this but I was just using it as an example. I could see myself saying well I've made X and if I wait a bit longer I might make more. That would be the emotional side taking over with investing. What clues should a person look for to know its time to move to greener pastures?

Good / fair question. Selling is probably the hardest part to figure out - particularly when the name is a winner. That in itself brings up LOTS of quandaries. Why would you want to sell when it's done exactly what you wanted it to do? Has there been a FUNDAMENTAL change in the business which now changes the reason you invested in it originally? Are sales flattening or headed down? Are margins shrinking? Has another player come in to the market and taken market share? Has the position grown to be too much of your overall portfolio?

Now - here's a harder unknown question I always ask myself. If I sell - I now have cash to invest. What makes me think I can do "better" or even as well as what I'm in and just sold? Usually I don't trim or sell unless the name is a loser -- or I have my eyes on something that I need/want in the portfolio. Or the position has done so well that I just need to trim a little off the top.

Your question is actually unanswerable with a "pat" do this style answer. The reason for this is because you can't just take a particular name and what's it's doing in a vacuum. What has it been doing relative to the market? Is the whole market flat or down... or is the whole market UP and the name you're looking at down or flat. Thus not keeping pace with the overall market.

The other thing is to pull it up on Google Finance -- and then scroll down to where the page shows other names which Google adds as "comparable" businesses. Where is it compared to those?

By the way -- I never worry about stocks that have done what I thought (hoped) they'd do. The ones I worry about are the ones that don't. That's when I start looking at why -- and why did I choose the wrong one. Right now - we have a FUNDAMENTAL change in Oil... all my oil related stuff is getting killed. I KNOW why that is - there is nothing I can do about that. I then have to make a judgement as to whether or not I think this change is permanent or temporary in nature. I then check the dividend yield on my cost basis and decide if that's enough to keep me holding the investment... how much pain am I willing to accept and what's the future (crystal ball) say.

In other words -- there's a hell of a bunch of factors to think about before hitting the sell button. And I guarantee the day you sell - the stock will take off upward again. Just like the day you buy it will go down. It's the nature of the market to test you.

[GregWeld]

The "oil complex" is just killing the market here... and of course -- a DOWN market can have a MARVELOUS affect on your investments down the road. You'll have to be long term thinkers in a down market. Harder to do than many people think it is. To put money to work when you're almost certain you're going to feel pain... ain't easy.. but here's my point.

AS PRICES FALL --- the DIVIDEND PERCENTAGE rises.... and some very very great companies are starting to peak my interest. STARTING doesn't mean I put every dollar I have to work tomorrow.... Starting means I'm researching - building my plan - and preparing to put that plan to work with buying.

When you have big companies like Conoco Phillips (CON) paying almost 5%... Exxon (XON) is at 3.11%.... Chevron (CVX) is paying over 4%.. British Petroleum (BP) is over 6%

These are just some EXAMPLES to use to show as prices drop - dividends rise. The question is how SECURE is the dividend etc. NEVER buy a company just because of the dividend percentage -- that's known as a "value trap" where all you're focused on is the percentage. That CAN BE a mistake. Make certain your buys are always something you want to own come hell or high water. Don't get lazy and just see one metric.

Class dismissed! LOL

[96z28ss]

Originally Posted by GregWeld

I just hope everyone made a little money this year!

You just had to jinx us all didn't you!

[GregWeld]

Originally Posted by 96z28ss

You just had to jinx us all didn't you!

Yeah -- I shoulda kept my big yap shut! Actually I've done real well... but this oil dropping like a rock is either a blessing or a curse. We just don't know yet.


This is why we always have to keep our eye on the FUTURE - not this week or next month. We have to say - where do I need to be 15 years from now.... for many - even way longer!


Interesting statistic I heard today --- there were FOUR stocks that accounted for the DOW being down over 80 points. I've written about this earlier... that there is a weighted average... and some days it appears to be a blood bath - and you open your account and didn't do all that bad. Right now I own too much of the oil complex and it's not helping me one bit. LOL

[So Cal Camaro]

Originally Posted by GregWeld

Yeah -- I shoulda kept my big yap shut! Actually I've done real well... but this oil dropping like a rock is either a blessing or a curse. We just don't know yet.


This is why we always have to keep our eye on the FUTURE - not this week or next month. We have to say - where do I need to be 15 years from now.... for many - even way longer!


Interesting statistic I heard today --- there were FOUR stocks that accounted for the DOW being down over 80 points. I've written about this earlier... that there is a weighted average... and some days it appears to be a blood bath - and you open your account and didn't do all that bad. Right now I own too much of the oil complex and it's not helping me one bit. LOL

You have to be confident in your selections are solid companies with good management/financials to stay in and buy more at a discount...I own Conoco and Exxon for a very long time, buying more as the dip continues...look to the companies that are dependant on oil/gas to operate for the pop in those stocks, airlines, UPS/Fedex will improve with lower fuel costs...open your eyes and you will see lots of opportunity to get into good companies when volatility comes around...