Investing 102

[SSLance]

I use Quickbooks for my company's books and Quicken for my personal bookkeeping. Quicken is much more user friendly than Quickbooks. I describe it this way, Quickbooks is more two entry accounting style whereas Quicken is more single entry accounting.

If you purchase a copy of Quicken, make sure you get the upgraded version that tracks investments (think mine is 2014 Home and Business). Setup is pretty simple and you can use it for as much or as little as you want. I download all transactions straight into it from my banking and investing institutions with one click, review and accept them. Once you get all of your regular transactions memorized inside, transaction entry goes pretty quickly.

I track every banking transaction...want to know how much I spent on gas in 2004...takes me about 30 seconds to run the report. You don't have to go to that detail, but it's good to know you can if you want too.

[Woody]

Originally Posted by glassman

Can anybody here give us "spreadsheet illiterate's" a quick example of one?

I know thats the best way too track it, but thats where i'm having a hard time..

Lance, how do you use quicken? i use quick books pro at work, its way above my head. My accountant and our data entry people and general ledger manager (wifey) use it.

I have an idea, and i'm the bottom line kinda guy, but i'd be interested in how u use it with quicken. I do know that Pam(wifey) often transfers my reports from quickbooks pro into spreadsheet form and there pretty easy to read (she used to teach Excel in the 80's and early 90's when she was in her early twenties) but her and i just "never" get it done(spreadsheet), which is why i handle the personal investments....

thanx all, good discussion as usual...

If you mean an example on how to set up a spreadsheet. I can try to show you an example below.

A B C D
1 Stock Name No. of Shares Price per share $Amount
2 Apple 100 +D2/B2 $10,000

The columns are labeled at the top of the spreadsheet as A, B, C, D.....
The rows are labeled vertically along the left side 1,2,3, .....

Say you buy 100 shares of apple for $10,000. Enter 100 in cell B2 and $10,000 in cell D2. Enter the formula "+D2/B2" in cell C2 which will calculate the price per share for you at $100.00. The formula will take the value you entered in cell D2 ($10,000) and divide it by the value you entered in cell B2(100).

Just note that in cell C2 the actual figure of $100.00 will be shown and the formula will only be shown in the formula window.

Say you buy 50 more shares of apple at $7,000. You have added 50 shares to your portfolio, so enter 150 in cell B2. Your total cost is now $17,000, so enter $17,000 in cell D2. C2 will automatically recalculate your average cost per share at $113.33 (17,000/150). Your spreadsheet should now look like this:
A B C D
1 Stock Name No. of Shares Price per share $Amount
2 Apple 150 +D2/B2 $17,000


If you get a dividend of 1.5 shares,You have added 1.5 shares to your portfolio, so enter 151.5 in cell B2. Your total cost has not changed. C2 will automatically recalculate your average cost per share at $112.21 (17,000/151.50). Your spreadsheet should now look like this:
A B C D
1 Stock Name No. of Shares Price per share $Amount
2 Apple 151.50 +D2/B2 $17,000

Hopefully, I have not oversimplified this, but I am assuming you don't have much experience with spreadsheets. If you have any questions let me know.


Edit: the formatting did not show up as I had hoped. I had spaced out the columns so it was much easier to identify what was in each column. If my example is too difficult to make sense of maybe I can attach an actual spreadsheet. Let me know.

[GregWeld]

I've written about watching for "FUNDAMENTAL CHANGES" in the stocks you own. While minor ups and downs and rolling with the punches - is what a business NEEDS to do... Often if not done well/correctly - you'll see a change in leadership... which can be a "fundamental change" (Let's use the example of when Steve Jobs came back to Apple! Or when Microsoft gave Ballmer the boot) Sometimes it's just age and personal issues. Here's the point... (There's a couple actually)

I NEED to pay attention to the companies I invest in. This is one of the reasons I generally urge people not to get spread too thin in an effort to "diversify". You can't keep your eye on that many balls (no pun intended). 20 or so companies is A LOT....

I own Conoco-Phillips (COP). It's a small holding (5000 shares) - bought more recently in an effort to position myself for decent dividends while HOPING that oil stabilizes and makes a come back in the future. I don't know what's going to happen in the future - so when making "bets" like this... I "dabble". I buy a little - if it works - I may buy a little more... etc. Right now I'm 50 grand down in this holding. I'm patient. I can afford to be down and I've been doing it long enough to have gained some confidence in my reasoning. When I buy - I EXPECT my pick to go down. I generally never chase the big front runners (The Allibaba's and GoPro's etc)... I like to pick good companies that might be down due to circumstances that are not of their own making. This is harder for newbies to do - sometimes doesn't work well - and it's not what I'm suggesting for you all to do. It's scary and cause's ulcers. I'm in a much different space than "most" and can tolerate investments like this.

Here's where the "Fundamental change" comes into the discussion. COP reported earnings this morning. I pay attention to such things. I try to find the "nuggets" which may or may not make my thinking change. Sometimes the nugget of info is a ho hum - sometimes it's an OMG REALLY? I'm selling - and sometimes it's an "okay then - that seems like a smart move to me" and I'll add to a position. Sometimes it pays to just be a holder and do nothing and see how it plays out. But KNOWING what's going on is important! And you need to be minimally aware of what's going on with your holdings!

Here's what I liked about the COP "change" today... And I'm not saying anyone should buy or sell -- I'm just using this as an example of what I mean by FUNDAMENTAL changes.


Copy and pasted....

Selling Assets
Lance has reshaped the one-time energy conglomerate, selling more than $14 billion in assets to tap prospects in North America. He is staking the company’s future on U.S. and Canadian oil and gas plays, betting they will generate cash at low prices and allow the company to ramp up or halt output quickly.
ConocoPhillips has said it’s continuing layoffs while it strives to slash $1 billion in spending over two years. The company has cut close to 1,500 jobs since the downturn began in June 2014, according to Graves & Co., a Houston-based adviser that has closely tracked the cutbacks.



Me again....


I would expect the oils to be having a hard time with "earnings" - the collapse in oil prices was sudden and unexpected. It's really a price war between producers trying to price each other out of the market. I get it. It's a battle and there will be blood spilled. There'll be cuts and layoffs and earnings will suffer. MAYBE there's a dividend cut coming down the road... I don't know. And that is why I'll tip toe instead of betting the farm. At some point they won't be able to cut "enough" and will look to save cash expenses.. but most boards are reluctant to cut the dividend - it's usually the sacred cow... but you never know. I'm betting that oil recovers enough to save the dividend - and in the meantime the smart companies will adjust the business and will be better off for it when things turn around.



McDonalds (MCD) has a fundamental issue with having the wrong kind of food for today's consumer... that's THEIR problem. The "industry" is doing fine. Chipotle is growing - Panera is growing etc. With OIL - Everybody sucks... there's just too much production and not enough demand. The trick will be to bring costs in line with the price at which they can sell and make a profit. That is easier to TRY to fix than "nobody wants what you have".

[glassman]

thanx Lance i think thats what were goin to do on a personal note as my wife is a quickbooks pro guru...

and thanx Woody, i get it, just haven a hard time actually doing it....

[SSLance]

If your wife is adept at QBs, Quicken will be a breeze to setup. I'm not saying it's the end all and great at everything as it does do some things in regard to investments that aggravate me, but it's pretty good and is very easy to setup and use.

What Woody is describing above is one of those things, when reinvesting dividends, Quicken adds the cost of the shares the reinvested dividend buys to the overall cost basis of the stock. I guess for income tax reasons this is the proper way to do it, but for performance results calculations it skews the numbers.

Your total cost basis in the stock keeps going up even though you aren't putting any more money into it.

[sik68]

Thanks guys; you've motivated me to set up this spreadsheet for myself finally.

And GW, that's good advice on how to view the oil industry right now. I've taken a pounding in CVX lately, but I know we're going to be drinking earth's milkshake for a long time.

[XLexusTech]

Realising this is not good form for this thread... but also knowing that you make money when you buy low... If you are a DRIP investor not looking at XOM right now might be missing out on a good opportunity..

[booah]

"Here's what I liked about the COP "change" today... And I'm not saying anyone should buy or sell -- I'm just using this as an example of what I mean by FUNDAMENTAL changes."

COP is transitioning from doing business like an integrated Upstream and downstream company to a real Independent Exploration and production company. I see the changes they're making and areas their cutting are required to suit the business, and be sustainable for when the prices crawl back up. I think its a bargain for the long term too.

[GregWeld]

Originally Posted by booah

"Here's what I liked about the COP "change" today... And I'm not saying anyone should buy or sell -- I'm just using this as an example of what I mean by FUNDAMENTAL changes."

COP is transitioning from doing business like an integrated Upstream and downstream company to a real Independent Exploration and production company. I see the changes they're making and areas their cutting are required to suit the business, and be sustainable for when the prices crawl back up. I think its a bargain for the long term too.

Booah --- I've tried to keep the thread about LEARNING how to think about stocks/companies etc -- so people can "catch their own fish" - rather than recommendations of what to buy - when to sell etc.

The use of COP as an example of what I mean by "fundamental changes" just managed to present itself in their quarterly report. Companies that institute large scale changes can fail at them, just as easily be successful. As an investor - people need to do a minimal amount of "work" to understand the investments they make - and what can help or hurt their investments.

People that blindly "invest".... only to wake up one morning to find they've lost their ass and they don't understand "why"... That's just dumb and lazy. I don't care if we're talking about buying investment property or stocks. You'll stand a far greater chance of success if you understand what you're getting in to.

The other thing I urge people to do is to understand "the market". Sometimes - when we're looking at a large scale fundamental change - such as this dramatic dip in crude oil - that is taking everyone DOWN... and we really don't know what's going to happen in the future. It can pay to just stay on the sidelines - be watchful - be aware - and wait for a bottom - and not buy until things begin to meaningfully turn up. Nobody has to guess the bottom - or the top... and you don't have to buy at the absolute bottom in order to have meaningful gains. You also don't have to buy on the way down and suffer thru the angst of the unknown. This is investing 102 - beginners investing. It's more about learning and being able to stay in the game and be comfortable with "the market".

[glassman]

Originally Posted by XLexusTech

Realising this is not good form for this thread... but also knowing that you make money when you buy low... If you are a DRIP investor not looking at XOM right now might be missing out on a good opportunity..

What is "XOM?"