Investing 102

[XLexusTech]

Originally Posted by So Cal Camaro

Right now I would be careful with new positions in stocks other than drip into positions, at the current valuation of this market I personally am profit taking some of the bigger winners and will watch for a pullback that appears to be coming in the near future just based on past experience...

+1 on that plus November elections could hurt... What I am doing is selling off profits that are not subject to any short term gains tax (any is strong... I have a few at +100% that I Am going to take advantage of) will buy back on the correction ...

[GregWeld]

Originally Posted by So Cal Camaro

Right now I would be careful with new positions in stocks other than drip into positions, at the current valuation of this market I personally am profit taking some of the bigger winners and will watch for a pullback that appears to be coming in the near future just based on past experience...

Donnie..... We've discussed "trying to time" the market for a couple years here now in this thread.

A couple of things come to mind when I read statements such as yours.

#1 - Lets examine the origin of statements such as "wait for a pullback".

Doing this is smart if a guy is trading 10's of 1000's of dollars - and is on top of his game daily or weekly etc.

But what does this say to a guy that is going to save up $1,000 and buy 30 shares of GM. If the shares "pull back" $1.50 he'd save $45.... but he might forget the cash is sitting there and loose out on the next move up.


#2 - This throws out every thought process which says you're an "INVESTOR" and believe in the long term viability of the market(s) - because that "mentality" is training someone to try to catch a bargain - vs - just invest for the long haul and forget about trying to bend over to pick up pennies.

Now --- I'm not slamming your statement. Nor am I slamming what you are feeling as stated etc. I'm just trying to put in to perspective - statements such as this.

For ME personally -- when I'm buying $100 - $500 or 1MM in a name.... yeah - I try to pick off the buys on down days - but that's just a game really isn't it. Because I'm really not after trying to make .50 a share..... I'm trying to make 100% over the next FIVE years... That's where my focus is.

[So Cal Camaro]

Greg, I am an investor, but I want good value for a stock I am purchasing or holding and when that stock becomes overvalued, it is ridiculous to say that taking some profits off the table to wait for a pullback is a bad idea. I also have a list of stocks I would like to own and prices I would pay for the given stock, only when appropriate valuation is there will I buy them.

What you seem to be preaching here is buy whenever you have the money, that is a good way to fall into the usual main street investor trap of buying too high. If that's what people want to do, then more power to them, but just like looking for the best deal on car parts, or whatever, I am going to do the same when buying stocks.

[WSSix]

You're both correct. There's a balance that must be achieved in my opinion. Is it something that can be or should be discussed in Investing 102? I don't know. I think not as it can get very deep quickly but at the same time it could be. I think it should definitely be something think about a little.

What I believe Greg was alluding to in terms of waiting can be illustrated with JNJ. I've been reading people say it's overvalued and overpriced all year and to wait for a pull back. Maybe they will be right. They've been very wrong all year. So what do you do as a long term investor? Wait for a day that never comes? Temper your pull back/entry level expectations? Get in now on a good stock and not worry about short term dips and bubbles? Balance. It's going to be different for everyone.

[SSLance]

I tried to do the old "what I think a stock should be valued at" trick for years, sometimes I got pretty lucky and did very well, other times I had my arse handed to me.

What I discovered is there are way too many other forces out there affecting the value of said stock, some of which made no sense whatsoever.

I 100% prefer this dividend stock investing program we have going on here. I don't worry about my stock holdings when they are 30% down in in asset value and I don't worry about them when they are 30% up in value either. The not worrying part is priceless to me.

[68Cuda]

Originally Posted by WSSix

You're both correct. There's a balance that must be achieved in my opinion. Is it something that can be or should be discussed in Investing 102? I don't know. I think not as it can get very deep quickly but at the same time it could be. I think it should definitely be something think about a little.

My personal approach - input welcome -

I have a half dozen or so stocks that I have researched that I fundamentally like that I would not mind owning in addition to my current holdings. I have money that goes into the retirement account with each paycheck. Once the cash has built up to a comfortable level I look at the dividend payout % and 52 week high / low of the stocks on my list. I also look at my current holdings and consider if I want to increase any of them. I don't like to have any individual carry too high a percentage of the whole. I weigh the price / dividend rate, and etcetera then choose the one that I like the best at that moment and then buy. I rarely sell anything anymore. And I don't buy anything that pays less than 3% dividend.

Like I said, this is my approach, and it has worked pretty well for me.

My purchasing strategy is similar to the "Dogs of the Dow" method. The "Dogs" method only considers DOW and you simply pick the highest dividend rate stocks. Differences include that I rarely rebalance or sell, I do not limit myself to the DOW stocks, and I try not to build too much of the same sector stocks. For example, I only own one oil stock.

[WSSix]

Sounds reasonable to me, Michael. If you're ok with it and are producing the results you like, then keep at it. Only thing I would recommend is consider total returns and not just dividend payout as part of your research. Costco has been working well for me and Halliburton has too. They both are well below 3% dividend.

Good luck!

[GregWeld]

Originally Posted by WSSix

Sounds reasonable to me, Michael. If you're ok with it and are producing the results you like, then keep at it. Only thing I would recommend is consider total returns and not just dividend payout as part of your research. Costco has been working well for me and Halliburton has too. They both are well below 3% dividend.

Good luck!

VERY CRITICAL --- TOTAL RETURN.... it IS the measure of money making.

[avewhtboy]

No rate hike just announced this is great for the div stocks.

Utlilities and Telecom been in favor ever since Brexit trend could continue into next year given the political climate world wide.

Until they start raising interest rate.

[captainofiron]

Havent posted in a while, but I wanted to thank all the posters on here.

My Rollover IRA has been kicking butt in the past year. Im up 22% since rolling over (taking into account the dividends and reinvesting into my positions).

Right now I am accumulating dividends to make more significant buys and take less of a "hit" on the commission.

BUT how much cash on hand is too much?

Would it be smart to put that free cash into a low fee mutual fund so its not just sitting there earning 0.00000001% (exaggerating) interest?