Investing 102

[GregWeld]

What I'm "HEARING" in here is very short sighted "investing".

It should be FUN and EXCITING to be able to get a chance to buy shares "on sale" --- but look at these prices on a longer term view both backward and forward. The fact that something is lower than it was last week... is really extremely short sighted. The fact that the market dropped --- TEMPORARILY ---- 1000 points... after it's run some 8000 points since early 2009.... come on. Put that into perspective!

If your house went up DOUBLE in 6 years -- and then went down 25% -- you're still WAY AHEAD.

Go pull up a chart of the DOW --- go to ALL --- look at that line. '08 and '09 was basically a "Great depression" with the complete collapse of the housing and financial markets --- jobs followed.... but this was a financial collapse because of the GAMBLING that was taking place with mortgages and debt and margin by the largest institutions in this country. 1999 was another "recession" for stocks - which wiped out the complete EXCESS in the IPO and tech market...

You must teach yourselves to look at the market with PERSPECTIVE and RELATIVITY... Years ago a 50 point day was a moon shot.... today it takes a 500 point move... I couldn't buy fast enough when the market was down 1000 points --- not because I was getting such good deals --- I paid MORE than my basis of cost in the names I bought two years ago! I RAISED my cost basis with the buys. But they were just lower than they had been LATELY (thus the relativity).

[XLexusTech]

Originally Posted by GregWeld

What I'm "HEARING" in here is very short sighted "investing".

It should be FUN and EXCITING to be able to get a chance to buy shares "on sale" --- but look at these prices on a longer term view both backward and forward. The fact that something is lower than it was last week... is really extremely short sighted. The fact that the market dropped --- TEMPORARILY ---- 1000 points... after it's run some 8000 points since early 2009.... come on. Put that into perspective!

If your house went up DOUBLE in 6 years -- and then went down 25% -- you're still WAY AHEAD.

Go pull up a chart of the DOW --- go to ALL --- look at that line. '08 and '09 was basically a "Great depression" with the complete collapse of the housing and financial markets --- jobs followed.... but this was a financial collapse because of the GAMBLING that was taking place with mortgages and debt and margin by the largest institutions in this country. 1999 was another "recession" for stocks - which wiped out the complete EXCESS in the IPO and tech market...

You must teach yourselves to look at the market with PERSPECTIVE and RELATIVITY... Years ago a 50 point day was a moon shot.... today it takes a 500 point move... I couldn't buy fast enough when the market was down 1000 points --- not because I was getting such good deals --- I paid MORE than my basis of cost in the names I bought two years ago! I RAISED my cost basis with the buys. But they were just lower than they had been LATELY (thus the relativity).

I agree 100%... everything I buy to keep, everything I am buying has a long standing track record.. (see Dave Fish) Hint hint... everything I am buying lowers my dollar cost average.... nothing I am doing now is "short sighted"

[ErikLS2]

I think you're mainly talking to me Greg and you should be, I agree with you. I shared what I did because I'm fascinated with the psychology of the market short term and get a kick out of seeing these changes, which often scare beginners out of the market at the exact wrong time. I never use them on their own to put money to work really. The last time I bought anything was last Oct. when this sort of drop happened, although not as bad. It's not even a year later and nothing I bought then, SNA, UA and LUV went below what I paid for it over these past few days (well except maybe for a few minutes Monday morning). In fact, collectively on those 3 names I'm STILL up 20% as of market close today. Makes quite an argument for buying on the dips. I ended up being a day or two late then and I may be a day late this time but I'm going shopping tonight!!

[XLexusTech]

Originally Posted by ErikLS2

I think you're mainly talking to me Greg and you should be, I agree with you. I shared what I did because I'm fascinated with the psychology of the market short term and get a kick out of seeing these changes, which often scare beginners out of the market at the exact wrong time. I never use them on their own to put money to work really. The last time I bought anything was last Oct. when this sort of drop happened, although not as bad. It's not even a year later and nothing I bought then, SNA, UA and LUV went below what I paid for it over these past few days (well except maybe for a few minutes Monday morning). In fact, collectively on those 3 names I'm STILL up 20% as of market close today. Makes quite an argument for buying on the dips. I ended up being a day or two late then and I may be a day late this time but I'm going shopping tonight!!

+1 on that... added to positions today... and will likely add to more every day this week....

[GregWeld]

Erik --- My comments are RARELY if ever to someone. Everyone is entitled to their thoughts and opinions - here - and everywhere! And are welcome!

What happens for me is that a post evokes thoughts... and I try to post - in a manor that evokes thoughts for anyone reading ALL of the posts collectively. I don't know who's reading - or what they're thinking - or what they're about to do (or not do). I'm mostly trying to be in an Investing 102 mode.... giving folks a base for consideration - calming newbs nerves when they might be asking themselves WTF am I doing - putting things into layman's terms - using my years of experience for a view or a different perspective.

During big moves up and down -- people get all worked up, and often do the exact opposite of what they should be doing, if they're truly investors.

Think about what the idiots feel like that sold down 1000 points --- all freaked out -- bailing out at any price.... and now today we're up 600 points... and they're freaking out trying to buy back what they just sold. They're the LOSERS -- and the folks that bought - are the WINNERS.... and the FOLKS THAT DID NOTHING are the winners... Thus my "take a longer view" post. And if you bought -- don't get too worked up about that either -- because in 5 more days we may have another "dip".... Buy when you can... if you can take advantage of a dip - awesome! If not - buy when you're ready - buy the best - collect the dividend - and years down the road the price you paid will look "cheap" - and they'll still be talking about the "market" being overpriced or overbought or oversold... I've been listening to that same BS every day for 30 F'n' years.

[ErikLS2]

I couldn't agree more. I have had fun listening to CNBC most of the day these last few, boy can they get some mileage out of some swings in the market. Even Jim Cramer, who I like a lot, changes with the market and only briefly slows down enough to say long term dividend growth investing is where you need to be (which most people miss I think) and mostly what he talks about is playing with "mad money" or "the houses money".

Greg, do you regularly listen to conference calls of companies you own shares in or do you just read the earnings reports? I do both but these CEO's and CFO's always seem to put on as positive a spin as possible during these calls.

[GregWeld]

Originally Posted by ErikLS2

I couldn't agree more. I have had fun listening to CNBC most of the day these last few, boy can they get some mileage out of some swings in the market. Even Jim Cramer, who I like a lot, changes with the market and only briefly slows down enough to say long term dividend growth investing is where you need to be (which most people miss I think) and mostly what he talks about is playing with "mad money" or "the houses money".

Greg, do you regularly listen to conference calls of companies you own shares in or do you just read the earnings reports? I do both but these CEO's and CFO's always seem to put on as positive a spin as possible during these calls.

I do when the market is turbulent -- or when I think I should perk my ears up to a particular name I own. For me - it's easier to scan the quarterly in a PDF format. However, I'm very much "in the game" daily. If you wait for the quarterly to come and don't have a good sense for what to expect - you can get hammered before you have time to sell... and you'll most likely be behind the curve if it's going to run up. For most of the companies I hold - I just don't have to care much. They chug along happily humming a tune - and rise or fall in lock step with the market in general.

In "the old days" I used to worry and wring my hands - and I'd sell just before the report... and then, of course, they'd report a stellar quarter and the stock would run a buck and a half - and I'd be chasing it up... having missed the move.

We should go back and reiterate the information that's been posted here a few times early on. There's a proven fact that most of a stocks GAIN happens on only a very few days in a given year. I'd have to look up the info again - but basically - if you're NOT in the market those couple days - you've missed all of the gain for the year. What I've found is that those days often are either in advance of or just after the quarterly report.

Funny thing this week. I was complaining to Ron Sutton (who comes to the track and manages ME and the race cars) that I was struggling with a particular turn at Sonoma... and that this struggle had me "off" on the series of turns after it (T7 at Sonoma sets up T8/9 esses). He tells me "you're behind the track".... which is EXACTLY what was happening! I modified T7 and 8 and 9 became much faster and easier.

The reason I mention this - is because this week - a guy could easily find himself "behind" the market. Just missing the big down day -- and then trying to catch the market as it zooms off leaving him behind. LOL But these events are for "trader" mentality. Do I love them? Oh hell yeah! Was I waiting for an event like this? Oh hell yeah! But is it important to the average guy?? NO! Is it FUN? You bet! Does it give us bragging rights at the office when we can say we caught the dip? Oh hell yeah! But in the LONGER SCHEME of investing... it's hardly important to your overall net worth.

For me - and this thread - it's more about LEARNING from watching... it's like being in class. If you're not invested - it's a meaningless lesson. If you are invested - then it really wakes your ass up and you pay attention. How'd ya feel? Were you "right" about your hunch on what the market was going to do? What made you "feel" you knew "something"? Did you loose sleep or were you more sanguine and comfortable with your holdings?

I will tell you right now -- that just about the time you're really comfortable with "buying the dips" -- the market will dip - and dip - and drip - and for a period of YEARS (2 or 3) we'll die the death of a 1000 cuts... where the market just leaks red. That's when you'll find out if you're an investor.

[SSLance]

I didn't get my full shopping list sorted until after the market closed last night, too busy at my day job...

I executed the trades this morning even with the big bump... Little ticked that I missed yesterday's prices but still overall very happy to add to the portfolio at sale pricing.

I struggled adding any to my oil stocks even though they looked very attractive on the sheets. I added to them on the last dip and felt overweighted this go around. Only one I added to this time was KMI.

[GregWeld]

Originally Posted by SSLance

I didn't get my full shopping list sorted until after the market closed last night, too busy at my day job...

I executed the trades this morning even with the big bump... Little ticked that I missed yesterday's prices but still overall very happy to add to the portfolio at sale pricing.

I struggled adding any to my oil stocks even though they looked very attractive on the sheets. I added to them on the last dip and felt overweighted this go around. Only one I added to this time was KMI.

The old saying "buy when there's blood in the streets" - while is easy to say - is hard to do. When I bought shares on Monday - none of it was oil... I own enough - they're mostly bleeders - and while they are compelling on a price basis relative to where they were.... other than the pipes... the dividends aren't really covering the possible continued downside risk. Risk needs to carry a comparative reward. My "feeling" in this space is that it's not going to be a sudden snap back where if you didn't get in you're going to miss out. This is a very large commodity and the prices inch up and drip down... A prudent investor - if he's already in - is probably better off watching and waiting. IF a guy is not already in - it's probably better to wait until there's real confirmation that oil is up and heading higher. The counter statement to "buy when there's blood in the streets" is "don't try to catch a falling knife" -- both are true enough - why not wait until the knife hits the floor.

[SSLance]

Agree completely Greg, the dividend yield on ETP is VERY tempting right now, but it's already my second largest holding even at today's prices... I still might add some to it...gradually.