Investing 102

[Bronco]

Read a little bit of this thread a long time ago. Came back to it recently and really started reading it. Wow what an incredible amount of info in this thread. Thanks for all the work you guys are putting into this. Greg specifically, you have a great way of explaining your points and reasoning. I'm now going back and reviewing the few stocks I do own. Some I'm dumping and looking at new ones. Now I feel much more informed on the whys and hows on picking stocks.

Thanks
Mike

[GregWeld]

Originally Posted by Bronco

Read a little bit of this thread a long time ago. Came back to it recently and really started reading it. Wow what an incredible amount of info in this thread. Thanks for all the work you guys are putting into this. Greg specifically, you have a great way of explaining your points and reasoning. I'm now going back and reviewing the few stocks I do own. Some I'm dumping and looking at new ones. Now I feel much more informed on the whys and hows on picking stocks.

Thanks
Mike

Welcome aboard Mike! Much of the info it repeated - as new people come and go and ask similar questions etc....

The whole thread is mostly just about debunking the myths and trying to make investing "simple" - because at it's basics, it is.

[toy71camaro]

Originally Posted by GregWeld

You younger guys may want to look at NIKE (NKE).... They just raised their dividend 14% -- split the stock 2 for 1 -- and announced they'd buy back 12 BILLION dollars worth of their own stock.

I don't own it - and have never done any research on it - and this isn't really a recommendation since that's not what this thread is about.... but some of you are looking for "growth" stocks vs dividend payers.... and a company like this has some of both. It certainly fits the criteria of "best of breed" and "things you know".

LOL

They're quite the name in sports, always have been. Always used their gear. I need to research a little more, but now with my son playing sports I'm back into the sports world more. Thanks for bringing this one up!

[toy71camaro]

Originally Posted by Bronco

Read a little bit of this thread a long time ago. Came back to it recently and really started reading it. Wow what an incredible amount of info in this thread. Thanks for all the work you guys are putting into this. Greg specifically, you have a great way of explaining your points and reasoning. I'm now going back and reviewing the few stocks I do own. Some I'm dumping and looking at new ones. Now I feel much more informed on the whys and hows on picking stocks.

Thanks
Mike

Welcome Mike! Let us know if we can help ya out.

[ErikLS2]

Originally Posted by GregWeld

You younger guys may want to look at NIKE (NKE).... They just raised their dividend 14% -- split the stock 2 for 1 -- and announced they'd buy back 12 BILLION dollars worth of their own stock.

I don't own it - and have never done any research on it - and this isn't really a recommendation since that's not what this thread is about.... but some of you are looking for "growth" stocks vs dividend payers.... and a company like this has some of both. It certainly fits the criteria of "best of breed" and "things you know".

LOL

I was thinking the same thing Greg but then heard an interesting opinion on the radio today. It was a CNBC talking head (I think it was Kevin O'Leary) and his point was that all that cash for the buyback would far benefit the shareholders more if it was paid out in dividends. It kind of made sense in that a buyback lowers the number of outstanding shares thereby HOPEFULLY increasing the value of each one while a dividend is getting actual cash in the mail. He said he would rather get a check than simply a chance that his shares might become worth more. He also said that a buy back benefits the insiders of the company more than a dividend increase and somehow helps them in the options market too (that one is over my head). It is a good point if you think about it but what are your thoughts on it Greg?

[GregWeld]

Originally Posted by ErikLS2

I was thinking the same thing Greg but then heard an interesting opinion on the radio today. It was a CNBC talking head (I think it was Kevin O'Leary) and his point was that all that cash for the buyback would far benefit the shareholders more if it was paid out in dividends. It kind of made sense in that a buyback lowers the number of outstanding shares thereby HOPEFULLY increasing the value of each one while a dividend is getting actual cash in the mail. He said he would rather get a check than simply a chance that his shares might become worth more. He also said that a buy back benefits the insiders of the company more than a dividend increase and somehow helps them in the options market too (that one is over my head). It is a good point if you think about it but what are your thoughts on it Greg?

These are always debated points for the use of company cash. Whether or not it's better to expand the business rather that buy back shares.... or pay out a special dividend... or to try to create value in some other way. I don't know that any of us will ever know which one is "the best way". I don't own Nike (NKE) because of the small dividend... So perhaps if they'd raise the dividend to a point (what number? 3 or 4%) that it would make the shares more attractive to people like me... Would that create demand for the shares thus raising the price? As a dividend seeker --- yeah --- that would be my choice.

BUT --- always the big but..... if you look at TOTAL RETURN as a guide, over a long period of time. Then it's different. Because Nike has a terrific TR - and that is the truest test of making money on your money.

1 year TR -- 37% -- 3 year 188% -- 5 year 230%


So yes --- a lousy 1% divided -- but I wish I'd have bought a couple hundred thousand worth!!! LOL

[GregWeld]

On the road to Laguna Seca this morning (day 3)... and thought I'd check the market on Ferrari's IPO (RACE). Gee... who'd a thunk it.... it's DOWN almost 16% from it's market debut.

The IPO market just hasn't be rewarding. Seems the market isn't playing along - and actually wants to invest in companies that make money (earnings). So RACE - just like every other listed company - will have to report growing earnings/revenues/sales etc. Until then - it's just another pretty face.

[PDXFactory]

I ended up in KMI as a result of being a KMP share holder...and those of you who are Kinder Morgan holders know what has been going on over the past 8 months or so...a 50%+ drop in share price.

At this point I don't see a lot of reason to pull back at all, and I have been considering adding to my position since the stock is "on sale" these days and it would be nice to average down my price per share. I'm far from an expert though, and I'm curious if those of you with more experience see any reasons to be nervous (like the rest of the market seems to be with KMI!)?

[MPM IV]

I'm not the guy with more experience, but I'm curious to hear other's thoughts as well.

Of the seven positions I own two are oil, one being KMI. I started buying before I understood about keeping each position to 5%. I'm pretty far out of balance now which makes me hesitant to add more, but it would be a significant reduction in price.

[Woody]

Originally Posted by PDXFactory

I ended up in KMI as a result of being a KMP share holder...and those of you who are Kinder Morgan holders know what has been going on over the past 8 months or so...a 50%+ drop in share price.

At this point I don't see a lot of reason to pull back at all, and I have been considering adding to my position since the stock is "on sale" these days and it would be nice to average down my price per share. I'm far from an expert though, and I'm curious if those of you with more experience see any reasons to be nervous (like the rest of the market seems to be with KMI!)?

I made some comments on page 522 of this thread about KMI. I still think there are reasons to be nervous about KMI. Currently, right or wrong, there is a lot of uncertainty about the company. One concern is their current debt level. Related to that is the fact that their credit rating could potentially be downgraded. If that happens, their cost of borrowing will go up significantly and their ability to continue to grow could be impacted. Another area of concern is the ability to continue to pay the dividend.

KMI did come out today to reiterate their ability to increase the dividend, but that did nothing for the stock price. I think it initially went down even further when that announcement was made.

I don't think anyone really knows what is going to happen. Some believe the price is now near a bottom, but others think it could go much lower. My feeling is that with so much uncertainty, there is a lot of risk and I would only purchase KMI with money I had to lose.

There is a lot of information on KMI on the Seeking Alpha website if you would like to read different perspectives.