Investing 102

[GregWeld]

Originally Posted by clill

You can all go broke with me...

You do know that "pump and dump" is illegal right?? LOL

[GregWeld]

I've reminded on many occasions for you all to "remember" when the market went up daily... and making gains was easy and fun. You want to remember those periods - when we're in a stinky market like we are right now. These stinky periods are when I LOVE the dividend. Those checks are a great antiseptic to the pain of the losses of those easy gains. For those of you that are in dividend reinvesting - they're also buying shares at lower prices automatically... bringing down your average cost - and building dividend payouts in the future.

Funny how the psyche works -- if I put a '69 Camaro up for sale - and I cut the price from 100,000 to 65,000 you'd be happy! And you'd be unhappy if I raised the price from 100 to 110,000! But not if we're talking about stocks. LOL

It's summer - stocks always suck in the summer. Add to this the possible slowing growth of China -- and a possible FED interest rate hike - and this is the kind of market you get.

I'm a buyer in these kind of markets - but I ALWAYS have plenty of cash kept on the sidelines because it can always get worse! It will help your thinking - if you tip toe in rather than dive in and then watch the shares you just bought go lower.... Keep some buying power "dry". You'll feel better about it.

I'm going to spend a week rafting the middle fork of the Salmon river.... and I won't care one bit about what the stock market is doing.... thanks to the dividends.

[Sieg]

Originally Posted by GregWeld

You do know that "pump and dump" is illegal right?? LOL

[Vegas69]

CPST chart over the last 15 years. Looks like they have been struggling for a long time. Greg, this doesn't look like the kind of chart you have recommended. ha ha

[Sieg]

Originally Posted by GregWeld

I've reminded on many occasions for you all to "remember" when the market went up daily... and making gains was easy and fun. You want to remember those periods - when we're in a stinky market like we are right now. These stinky periods are when I LOVE the dividend. Those checks are a great antiseptic to the pain of the losses of those easy gains. For those of you that are in dividend reinvesting - they're also buying shares at lower prices automatically... bringing down your average cost - and building dividend payouts in the future.

Funny how the psyche works -- if I put a '69 Camaro up for sale - and I cut the price from 100,000 to 65,000 you'd be happy! And you'd be unhappy if I raised the price from 100 to 110,000! But not if we're talking about stocks. LOL

It's summer - stocks always suck in the summer. Add to this the possible slowing growth of China -- and a possible FED interest rate hike - and this is the kind of market you get.

I'm a buyer in these kind of markets - but I ALWAYS have plenty of cash kept on the sidelines because it can always get worse! It will help your thinking - if you tip toe in rather than dive in and then watch the shares you just bought go lower.... Keep some buying power "dry". You'll feel better about it.

I'm going to spend a week rafting the middle fork of the Salmon river.... and I won't care one bit about what the stock market is doing.... thanks to the dividends.

The key for me personally is to not be greedy or get too 'attached' to my stocks and 'make hay when the sun is shining bright' by selling some of my less desirable 'gainers' near the top of the hill thus creating a cash reserve that allows me to capitalize on the pending market downturn.

[GregWeld]

Originally Posted by Vegas69

CPST chart over the last 15 years. Looks like they have been struggling for a long time. Greg, this doesn't look like the kind of chart you have recommended. ha ha

Todd --- You're a good student. Drive downtown - put 100 grand on Black or Red - your choice.... and you'd stand just as good of a chance.

Everyone has their own special reasons for buying this or that. What I've tried to "preach" on here is that there are fundamentally great companies to buy - that are making money hand over fist - and are willing to share those profits with their shareholders (the owners of the company)... why not own companies like that FIRST - and then - if you're a gazillionaire and can afford to gamble (and lose)... go for it.


Years ago when I was day trading with a 3 million dollar account (separate money I could afford to lose).... I bought 10,000 shares of a company - they went down - I bought 10,000 more - they went down and I bought 20,000 more..... Each time I was reducing my cost basis... in the theory of -- Get the current cost basis closer to where the shares are trading - that way they have to come back "less" to make me whole. I eventually sold the 90,000 shares I held at a $1.00 per share (each) loss. The trade thus costing my 90 grand. But I'd only lost a dollar per share. LOL

Funny right? My original purchase - had I just sold it all at a loss would have cost me about 5 grand.

Back then - I was making 10 or 20 grand per day, day trading that 3 million so I really could have cared less (pre-1999!) - But I've never forgotten the lesson.

[Vegas69]

I looked at a bunch of the stocks in my portfolio that are strong brands over the last 15-20 years. I have to admit that it's a bit alarming to see a majority of the stocks I researched gain 2, 3, 5 times their value in the last 2-4 years. A majority plodded along a majority of the time the last 20 years until around 2008. I'm really in this for the long haul but it sure looks like a major adjustment must be coming?

For example, look at Altria. If I wasn't in this for the next 30 years, I'd have to be seriously considering pulling the plug on some gains. Am I way off track here? Especially if dividends aren't fueling enough of your income.

[GregWeld]

Originally Posted by Vegas69

I looked at a bunch of the stocks in my portfolio that are strong brands over the last 15-20 years. I have to admit that it's a bit alarming to see a majority of the stocks I researched gain 2, 3, 5 times their value in the last 2-4 years. A majority plodded along a majority of the time the last 20 years until around 2008. I'm really in this for the long haul but it sure looks like a major adjustment must be coming?

For example, look at Altria. If I wasn't in this for the next 30 years, I'd have to be seriously considering pulling the plug on some gains. Am I way off track here? Especially if dividends aren't fueling enough of your income.

Nobody ever went broke taking a profit....


But it depends on your goals and timeframe. If you're (anyone) is still needing to diversify - then trimming some gain - to re-invest in something else, is a nice way to get there.

Here's the dilemma. If the shares drop (which means the MARKET drops) your dividends will buy new shares at the lower prices. Over time - that's a good thing as it's on autopilot. PEOPLE are reluctant to buy shares on sale... and tend to miss the better prices because they're waiting for them to go lower....

You also want to re-invest the "gains" in something... and IF and WHEN the market falls - it takes everything with it. Ditto with gains - a rising market tends to take most everything up.

The problem with any of this is "trying to time the market". It never works. You won't find Warren Buffett doing it that way. That may be why his Coke (KO) dividend pays him annually what his original investment was...

So --- I would only trim SOME of the gain -- if you need/feel you need to diversify. Keeping in mind you're creating a taxable event - be aware of he length of time of the holding - whether or not it's in a taxable account or tax deferred account etc.

[ErikLS2]

It's definitely not an easy decision to make. I'm in the same boat with Under Armour (UA), earned 52.5% in less than a year and it's in a tax deferred account, but it's at a 90 P/E now!! I've made the mistake of not paying the tax on a huge real estate gain (even though I was pretty sure things had peaked, and they had) and re-investing the proceeds in another property, which ultimately tanked. Problem is where else would I have put it, in the stock market? And, that was in 2006, and look what happened 2 years later!!

Greg, I really wish you would just stop eff'n with all of us and just tell us what companies are going to earn 30-50% a year over the next 20!

[GregWeld]

Originally Posted by ErikLS2

It's definitely not an easy decision to make. I'm in the same boat with Under Armour (UA), earned 52.5% in less than a year and it's in a tax deferred account, but it's at a 90 P/E now!! I've made the mistake of not paying the tax on a huge real estate gain (even though I was pretty sure things had peaked, and they had) and re-investing the proceeds in another property, which ultimately tanked. Problem is where else would I have put it, in the stock market? And, that was in 2006, and look what happened 2 years later!!

Greg, I really wish you would just stop eff'n with all of us and just tell us what companies are going to earn 30-50% a year over the next 20!

That's always the issue when you sell a gainer... now what do you do with it. Obviously - we want to buy another name that gains. But that's my caveat... because in a down market - most things go down not up. So all you traded was a tax bill...

Those that sold in 2007 / 08 / 09 -- took losses.... probably were scared out of the market - therefore didn't trust getting back in until most of the turn upwards was "done"... HAD THEY JUST STAYED IN -- they would never have suffered the losses -- and would be 200 and 300% ahead now. That's why people advise NOT trying to "time" the market. You'll be out at all the right times - and in all of the wrong times... This is why I say - collect the dividend - let it buy discounted shares - building more dividends going forward - and you'll still be in great stuff when the market rebounds. When these occur and how long they last is anyones guess - and you'll never get it right.

I only wish I could predict a 10% gainer! Let alone 30%!

If I was that smart - I'd have bought 100% of the apartment building that just returned a 300% gain instead of only a little slice. Hind sight... it's a beautiful but useless trait. LOL