Investing 102

[JKnight]

Looking at this from a consumer perspective, I find that Chevron is usually significantly more expensive than conpetitors with no perceived (by me) difference in quality. This is the problem with choosing a company that deals in a commoditized product. When I look at CVX, I'm not inclined to think they have a competitive advantage.

[Vegas69]

Originally Posted by GregWeld

If you click a chart of the SPY --- 10 years out.... this is a ETF that is the S&P 500 stocks.

What you'll see is a peak in '07 and a price of about $149 a share.... then a big decline... then the rise to current value. Current value is $212. That's a 56% rise ==== not 200%

You can't use the bottom to calc a gain like this - because you first need to get back to it's old high.


The market is "high" because there's little opportunity elsewhere to put money. But I don't see any bubble - except in certain stocks. Go back to the P/E of your stocks and see where they are individually. That's a price to earnings multiple. I would call the market "normal" if the average P/E was about 17 ish. The current P/E is at 20 so slightly high. But you have to look at this as a WORLD market.... and money flows to safety and return. Right now - the USA looks pretty damn good compared to the rest of the world.

Thanks for the info. A majority of the stocks in my portfolio are well above the 17.

[blue04.5]

I have nothing to add, but I would like to say thank you for this thread and those who continue to contribute to it. For the first time in my 33 years I am looking to learn more about investing so I can get started. I guess I am a late bloomer, very late....

[MPM IV]

It got quiet in here.

I'm hoping this is a buying opportunity as I'm utilizing money I don't intend to need in the near future.

Since my last post I've added Coke (KO) and Kimber Morgan (KMI) bringing me to a total of six positions. I previously had:

Altria Group (MO)
ATT (T)
Southern Company (SO)
Royal Dutch Shell (RDS.B)

Here is my question for you more knowledgeable and experienced investors. I'm coming to the end of my available funds. RDS has dropped significantly since I invested. Would I be better off creating another position in a different sector, or buying down my price per share of RDS?

I appreciate any insight you gentlemen can provide, but please provide the reason you would do one or the other with your answer.

[96z28ss]

Things are too scary for me I'm selling everything tomorrow!!
Using the money to build my underground bunker.

[Woody]

Originally Posted by MPM IV

It got quiet in here.

I'm hoping this is a buying opportunity as I'm utilizing money I don't intend to need in the near future.

Since my last post I've added Coke (KO) and Kimber Morgan (KMI) bringing me to a total of six positions. I previously had:

Altria Group (MO)
ATT (T)
Southern Company (SO)
Royal Dutch Shell (RDS.B)

Here is my question for you more knowledgeable and experienced investors. I'm coming to the end of my available funds. RDS has dropped significantly since I invested. Would I be better off creating another position in a different sector, or buying down my price per share of RDS?

I appreciate any insight you gentlemen can provide, but please provide the reason you would do one or the other with your answer.

Not an easy one to answer, especially not knowing how much of each position is in your potfolio and if these are your only holdings. I am by no means an expert but here is how i look at it.

I am going to assume the six stocks comprise your total exposure to the stock market and you are fairly evenly weighted in each position? If that is the case, The conservative approach would be to open a new position in a sector that you do not have a position in. The reason is it will make your portfolio more diversified which will lower the liklihood of one position having a big negative impact on the portfolio and lower the overall risk of your portfolio. You also said that you have a position in KMI which is in the energy sector as well. Buying more RDS would really put you heavily weigted in energy.

You mentioned that you are at the end of your available funds. The only way I would consider buying more RDS was if I knew I had more funds to continue adding to the portfolio with which i could diversify with when the next buying opportunity arrives. I Think it is difficult to remain equally weighted at all times and there will be times when you are overweighted in one position, especially when you are starting out. The important thing to keep in mind is to not get too heavily weighted in one position or one sector.

[GregWeld]

Originally Posted by MPM IV

It got quiet in here.

I'm hoping this is a buying opportunity as I'm utilizing money I don't intend to need in the near future.

Since my last post I've added Coke (KO) and Kimber Morgan (KMI) bringing me to a total of six positions. I previously had:

Altria Group (MO)
ATT (T)
Southern Company (SO)
Royal Dutch Shell (RDS.B)

Here is my question for you more knowledgeable and experienced investors. I'm coming to the end of my available funds. RDS has dropped significantly since I invested. Would I be better off creating another position in a different sector, or buying down my price per share of RDS?

I appreciate any insight you gentlemen can provide, but please provide the reason you would do one or the other with your answer.

Sorry for the delayed responses. I was on a rafting and kayaking trip down the Middle fork of the Salmon river for the last 6 days....


So to me, this is a "guts" question. It's always hardest to "invest" in areas that are getting their asses handed to them. It's even harder to put fresh money to work when you're seeing a sea of red in your holdings. "Averaging down" is a very worthwhile "technique" if you're investing in GOOD/GREAT companies. It does NOT work if you're just chasing a stock that's falling for the simple reason that you "think" (HOPE) will turn around and save your butt.

The ONLY way this works is if you have the guts to hold LONG ENOUGH for the strategy to play out. You can put yourself in a position of adding new money and seeing that also turn red. We never know what the bottom is. We don't know when the MARKET will turn... this could be a number of years! Typical BEAR markets last 3+ years... that doesn't seem like a long time... until it's your money! LOL

Personally --- I WILL continue to buy more oil and oil related investments. I'm not going to put money to work that I need - and I won't just blindly pound money in, in the hopes that it will turn around one day. Oil could be down for a number of years until the worlds economy turns more robust and the demand rebounds to equal the supply. In the meantime - the dividends are good (for now). That's the key! At some point the dividends might be cut -- so this is when you need to pay strict attention to cash burn rates - profits - future statements about operations going forward etc. In other words - if you're investing in a troubled segment - then your ears need to perk up!

In this market ----- I'd be patient ---- and since you're young (guessing) --- and trying to diversify and grow your money.... I'd try to pick up ONE growth stock "on sale". A Facebook - or a NetFlix - or Apple - something along those lines. The "high fliers" like this - will get sold off pretty hard when the market finally enters a phase of "capitulation" (the weak stupid hands toss in the towel). PICK AWAY if possible. Don't plunge...

Pay attention to CHINA.... They've been the big buyer of OIL -- and COPPER - and WOOD - and many building commodities for the last several years. If they're not buying - then those prices will get hammered... We'll want to see good news out of China for many market segments for GROWTH.

[GregWeld]

Originally Posted by 96z28ss

Things are too scary for me I'm selling everything tomorrow!!
Using the money to build my underground bunker.

Classic buy high and sell low strategy!! LOL


I know you're kidding - or - I certainly hope you're kidding.


This kind of market is EXACTLY WHY I push the DIVIDEND INVESTING theory! You get paid (or the dividend buys more shares) to hold thru bad markets.


I just posted that I was on a 6 day - very rugged - rafting/camping/kayaking trip in the wilderness..... and what happened while I was completely out of touch? The market had some nasty selloff.... but more importantly three companies deposited over $30,000 in my account (dividends). APU paid me $11,960.00 -- ETP paid me $15,525.00 and KMI paid me $7350.00

THAT is why I urge you to build a base of great DIVIDEND paying companies!!! Did I have losses in the face value of my shares? Sure! But I'm not selling so the value this moment means little to nothing to me. They're MAKING ME MONEY every quarter.

[Vortech404]

Hey Greg,
Let's say COP or CVX or whoever cuts thier
Dividend. Do you sell?

PS nice raise from MO.

John

[ironworks]

Originally Posted by GregWeld

Classic buy high and sell low strategy!! LOL


I know you're kidding - or - I certainly hope you're kidding.


This kind of market is EXACTLY WHY I push the DIVIDEND INVESTING theory! You get paid (or the dividend buys more shares) to hold thru bad markets.


I just posted that I was on a 6 day - very rugged - rafting/camping/kayaking trip in the wilderness..... and what happened while I was completely out of touch? The market had some nasty selloff.... but more importantly three companies deposited over $30,000 in my account (dividends). APU paid me $11,960.00 -- ETP paid me $15,525.00 and KMI paid me $7350.00

THAT is why I urge you to build a base of great DIVIDEND paying companies!!! Did I have losses in the face value of my shares? Sure! But I'm not selling so the value this moment means little to nothing to me. They're MAKING ME MONEY every quarter.

Yeah me to. KMI gave me 1/3 of share....... SWEET