Investing 102

[Vegas69]

Shoulda cashed out.

[GregWeld]

Originally Posted by Vortech404

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

PS nice raise from MO.

John

Great question John!

You never "want" to be in a stock that cuts it's dividend.... things have gone from bad to worse in that case - as companies never want to cut their dividend. They only do so to stop the hemorrhaging. Having said that.... Chevron (CVX) would most likely cut their dividend or their stock buy back or both well before Conoco Philips (COP). Chevron would / does have a classic double edge sword going in that they're a driller/explorer (UPSTREAM) and a refiner and retailer (DOWNSTREAM). The margins on refining/retailing can't hold up to the losses of the crude decline (cash machine). They also have huge DEBT service. Their return on average assets has taken a substantial decline... and their margin is only 1.65% as of last "report".... compare that to COP who's balance sheet is actually "worse" -- but they're primarily a crude production / oil field operator. The management there has already come out and made public statements about protecting the dividend. That's a good thing!

Selling is about taking GAINS -- or protecting gains.... once you have LOSSES -- then you either wait it out - or buy more to average down. This is why we invoke the 5% rule. No single holding - even if it went to zero - should hurt you too badly. Either way -- I wouldn't worry about HOLDING CVX or COP. That's the other golden rule -- buy GREAT companies - so you're not worried about them for the long haul.

[MPM IV]

I appreciate the responses. For clarification, I invested heavily in the first three positions I opened which were AT&T, Shell, and Southern Co., so I am a bit out of balance. I do have an IRA which is a mutual fund, but this is my first time purchasing individual stocks.

Greg, I hope you enjoyed your rafting trip. I'm in my early forties, so not as young as I'd like to be.

For today I bought a bit of IBM. I'm patient, and will watch for something I consider a bargain, though not sure what that would be. Three years is pretty short term in my mind, it's the + that worries me!

Thanks again for the insight, and have a great weekend.

[GregWeld]

Originally Posted by MPM IV

I appreciate the responses. For clarification, I invested heavily in the first three positions I opened which were AT&T, Shell, and Southern Co., so I am a bit out of balance. I do have an IRA which is a mutual fund, but this is my first time purchasing individual stocks.

Greg, I hope you enjoyed your rafting trip. I'm in my early forties, so not as young as I'd like to be.

For today I bought a bit of IBM. I'm patient, and will watch for something I consider a bargain, though not sure what that would be. Three years is pretty short term in my mind, it's the + that worries me!

Thanks again for the insight, and have a great weekend.

Hey! I turn 62 this month! Going for Social Security.... LOL



Bargains are RELATIVE! Earnings are what counts - and the forward looking statements companies state in their earnings releases. Higher P/E companies need to have great momentum going forward to show the market they can grow into their high P/E's.

Consumer sentiment turns on a dime -- but the "retail" consumer in the stock market isn't what counts. We're just along for the ride. The big "Institutional" investors are who run the markets. They have deeper insights and connections and have a far better feel for what's going on.

Here's what I always try to remember when the shizzle hits the fan.... for every guy that put his shares up for sale --- somebody else is buying them.

What "WE" have to do is to take a back seat - have a good time horizon - which means five years not five minutes - collect our dividends... and try not to get all schizoid over the latest news or market value. Because after doing this for many years (and I retired 24 years ago) the one thing I've learned is - the market takes a different turn just about the time you're convinced of the direction it's going. You could wake up Tuesday and the market is UP 400 points (by the way - that's not a big percentage number!).

The guy that makes all the money - is the guy that's the OWNER of shares when the market turns UP again - and it will... The weak hand holder that sells at the bottom - he's the loser as the ship blows right on past him. It's like driving a race car -- look where you want to BE not where you are.

[JKnight]

For those that haven't been in the market for long, today (8/21/15) was a seriously "bad" day. But as we've talked about, this may not something to be worried about when you have a long time horizon. For those with decades left until retirement, you really can look at this in a more positive light. I'd rather have my periodic investments buy in at a lower price.

Greg, since you mentioned it, what does a guy in your position think about taking social security at 62 vs. waiting until 65 or later? (I know this is one of those questions where everyone should evaluate their own situation, just thought it might be a good discussion topic)

[Mkelcy]

Originally Posted by JKnight

For those that haven't been in the market for long, today (8/21/15) was a seriously "bad" day. But as we've talked about, this may not something to be worried about when you have a long time horizon. For those with decades left until retirement, you really can look at this in a more positive light. I'd rather have my periodic investments buy in at a lower price.

Greg, since you mentioned it, what does a guy in your position think about taking social security at 62 vs. waiting until 65 or later? (I know this is one of those questions where everyone should evaluate their own situation, just thought it might be a good discussion topic)

Unless you need it to put food on the table or have been told by your doctor that you have ten years left to live, waiting to claim Social Security is an incredibly good "investment."

[GregWeld]

Originally Posted by JKnight

For those that haven't been in the market for long, today (8/21/15) was a seriously "bad" day. But as we've talked about, this may not something to be worried about when you have a long time horizon. For those with decades left until retirement, you really can look at this in a more positive light. I'd rather have my periodic investments buy in at a lower price.

Greg, since you mentioned it, what does a guy in your position think about taking social security at 62 vs. waiting until 65 or later? (I know this is one of those questions where everyone should evaluate their own situation, just thought it might be a good discussion topic)

#1 --- There are lots of "BAD DAYS" --- when you want reinforcement of what you're doing --- Take a chart of the stocks you own out to 10 years or "since inception" if possible (depends on who's charting service you're using) --- and you'll see LOWER ON THE LEFT AND HIGHER ON THE RIGHT --- with MANY MANY MANY ups and downs in between! Look at the larger picture!



#2 --- I don't want to get into a political discussion so let's leave this right here.

Social Security should be "means tested" --- Millionaires don't need Social Security. Don't care that I've paid in to it. It was designed as a social safety net. I should not be allowed to "collect" unless I was down to a preset level of net worth or income and net worth or whatever.

I'm a Republican.... but I have very Democratic views on many social issues. I'd far prefer to raise the level of SS for those that really depend on it -- at my expense (since I don't need it at all)... and raise their standard of living.

I'd also amend the tax law to eliminate the SS "cap". There shouldn't be a cap on when you quit paying into the system. Well-to-do people can afford to support the SS system.


#3 --- To respond to your question about when to start taking SS. I don't think anyone should ever have to take it. You shouldn't be dependent on it at all. That's what this thread is all about. To me - it's like Welfare... it should only be there for the truly needy. It should not be about raising your standard of living nor absolve a person of being self sufficient and providing for themselves in retirement. Having said that.... I would opt for taking the least amount over what I would HOPE to be the longest period of time. Should I decide to file for it.... mine would be donated to the causes of my choice.


#4 --- If you "have to work" until you're 65 or 70..... or beyond.... it's an epic failure of personal responsibility.

[AMSOILGUY]

Originally Posted by GregWeld

#1 --- There are lots of "BAD DAYS" --- when you want reinforcement of what you're doing --- Take a chart of the stocks you own out to 10 years or "since inception" if possible (depends on who's charting service you're using) --- and you'll see LOWER ON THE LEFT AND HIGHER ON THE RIGHT --- with MANY MANY MANY ups and downs in between! Look at the larger picture!



#2 --- I don't want to get into a political discussion so let's leave this right here.

Social Security should be "means tested" --- Millionaires don't need Social Security. Don't care that I've paid in to it. It was designed as a social safety net. I should not be allowed to "collect" unless I was down to a preset level of net worth or income and net worth or whatever.

I'm a Republican.... but I have very Democratic views on many social issues. I'd far prefer to raise the level of SS for those that really depend on it -- at my expense (since I don't need it at all)... and raise their standard of living.

I'd also amend the tax law to eliminate the SS "cap". There shouldn't be a cap on when you quit paying into the system. Well-to-do people can afford to support the SS system.


#3 --- To respond to your question about when to start taking SS. I don't think anyone should ever have to take it. You shouldn't be dependent on it at all. That's what this thread is all about. To me - it's like Welfare... it should only be there for the truly needy. It should not be about raising your standard of living nor absolve a person of being self sufficient and providing for themselves in retirement. Having said that.... I would opt for taking the least amount over what I would HOPE to be the longest period of time. Should I decide to file for it.... mine would be donated to the causes of my choice.


#4 --- If you "have to work" until you're 65 or 70..... or beyond.... it's an epic failure of personal responsibility.

Ouch that will be a stinger for some folks.

From what I learned this drop just means things are on sale!

[JKnight]

For my generation, I hope that the uncertainty surrounding Social Security, justified or not, will compell them to do as Greg said. Nobody of decent means should count on it to fund their retirement. As fiscally conservative as I am, I would agree with an upper bound for eligibility to take social security. Not sure it would fix the program, but it's the right thing to do.

[GregWeld]

Originally Posted by AMSOILGUY

Ouch that will be a stinger for some folks.

From what I learned this drop just means things are on sale!

If it spurs on ONE person to kick themselves into a different gear - then it was worth the "statement".

I can't tell you - all of you - how friggin' fast I've "grown old" (at 62).... and while I've been far luckier than most... Most people just don't do what they KNOW they should be doing as far as the "nest egg". My Mother in Law just turned 90 yesterday... that's 25 years past the retirement "age"... Her house is and was then - paid for - she had a few hundred thousand to live on. Live very modestly... and she's just about out of money. SS does NOT keep up with the cost of living.... and she chose ultra safety and tax free over growth and income. With the money she had - I could have made her a millionaire with the growth over the last 25 years and she'd be making 50 grand a year in income...

People fail to realize how fast the years go by and how long they're going to live in retirement.