Investing 102

[GregWeld]

I have never been a fan of gambling with investment dollars. There's so many reasons for this I could write a book -- but #1 being - this (gambling vs investing) is the number one way to shake a newbie out of the game forever....

Is there money to be made taking on something like a Bitcoin? Oh sure there is! Is there money to be made shorting a stock you're sure is headed south? Heck yeah! But this is investing 102... it's about getting started and learning A strategy that will get you in the game and hopefully keep you in the game long term -- and with some success.

Ask yourself --- at what point you'd have put money in Bitcoin only to wake up to a 30 or 40% down move... and tell me straight up you wouldn't have panicked and blown out of the position with a startling loss... Check out this chart -- this is the THIRD time this year already for this stuff. Yeah - just no thanks for this cowboy.


https://lateral-g.net/forums/attachme...1&d=1510581308

[AU Doc]

I'm trying to catch up with this thread, but with over 5,000 posts it's going to take a while. In the mean time, do you guys have any suggestions for investment opportunities outside the stock market? With the meteoric run we've had recently, I'm starting to consider other options to hedge my bets a bit.

I've considered buying some rental property, but when I look at the day-to-day time and cost investment I'm not sure it really makes sense. As mentioned a couple posts back, investing in an property management firm would be a great alternative I hadn't considered, but I'll have to do some research there to better understand just what is required and what the risks are.

Any other suggestions for ways to diversify my retirement package?

[GregWeld]

Originally Posted by AU Doc

I'm trying to catch up with this thread, but with over 5,000 posts it's going to take a while. In the mean time, do you guys have any suggestions for investment opportunities outside the stock market? With the meteoric run we've had recently, I'm starting to consider other options to hedge my bets a bit.

I've considered buying some rental property, but when I look at the day-to-day time and cost investment I'm not sure it really makes sense. As mentioned a couple posts back, investing in an property management firm would be a great alternative I hadn't considered, but I'll have to do some research there to better understand just what is required and what the risks are.

Any other suggestions for ways to diversify my retirement package?

You'll find a lot of the posts are redundant --- because "new" people generally ask the same or similar questions --- so much of the info is repetitive.....


So here's an interesting thing --- and you'll see it in here repeatedly..... I love it when people cite the market is "high"..... Go to a charting site such as Google Finance.... Enter SPY - or QQQ (these are the symbols for the Dow and the Nasdaq tracking stocks).... and select the longest length of time the chart will allow (Googles is "ALL").... then come tell me when the market was too high.

I'm not trying to be a smart ass here -- my point is that while there are MANY ups and downs in the market ---- the point of this entire thread has been --- get in the market and STAY IN.... because OVER TIME -- the market (chart) is lower on the left and higher on the right.

You'll find this in housing and apartment investing as well.... you'll find it in Bond investing.... you'll find it in EVERY kind of investing. Things go up - things go down - but over time they'll be higher than where they are.

So with that in mind.... what you're really asking for people to do is to tell you where to invest that isn't going down from here. That, my friend, is impossible. You'll see me and others refer to the little man behind the curtain -- he knows when you've bought and he takes whatever you bought and takes it DOWN. LOL it's the way it works. It's a test to see if you're a real believer - or a trader - a weak hand or a strong hand.

I've found that over the last 30 years of my investing life --- when things go to hell -- EVERYTHING sucks. When the market is bad - so is the real estate market... etc. So to-date I've not found a way to be good when things suck. Rich people get richer buying from the weak hands when things suck. They have the ability to have cash on hand and take advantage of those that don't. Sorry to be blunt - but that is the way the world works. Now -- if you think -- well then..... I'll just sit on my cash and wait until the market goes south and then I'll strike. Mark my words -- it will never happen - because if you're afraid to invest now -- you'll be more so when the going gets bad. And in the meantime -- you'll have lost out on the rise in values while you wait.

Here's the way I look at it --- If I buy now - today - at some point I will be bleeding red.... #1 I'm not ever going to be "fully invested" -- I'm always going to have cash reserves.... and if I'm real lucky -- the market will go up from when I buy. Let's say what I bought appreciates 20% -- and then there's a vicious selloff and the market goes down huge - like 10%.... I'd be buying more - and I'd view that as lucky because I get to buy when something went on sale.

So I've just summed up the last 5000 pages for you. LOL

[AU Doc]

Haha! Thanks for the recap!

I started reading this backwards from the newest posts and saw mention of real-estate. It caught my interest because after researching rental properties a few times over the years I've always dismissed the idea as not fitting my investment style. Investing in a management company hadn't occurred to me before, so it's something new to consider.

After that, I went to the beginning of the thread and now I realize the predominant wisdom is more of a buy and hold stocks strategy. Interestingly, that fits pretty well with my investing philosophy. In the last 10 years or so I've probably sold about that many stocks, maybe double that (not counting rebalancing and the like). I still have positions in most of the stocks I've bought over the years. There are a few I should probably ditch, though.

That said, I like to hear what ideas other people have. There are without doubt diversification avenues I haven't considered.

[GregWeld]

Originally Posted by AU Doc

Haha! Thanks for the recap!

I started reading this backwards from the newest posts and saw mention of real-estate. It caught my interest because after researching rental properties a few times over the years I've always dismissed the idea as not fitting my investment style. Investing in a management company hadn't occurred to me before, so it's something new to consider.

After that, I went to the beginning of the thread and now I realize the predominant wisdom is more of a buy and hold stocks strategy. Interestingly, that fits pretty well with my investing philosophy. In the last 10 years or so I've probably sold about that many stocks, maybe double that (not counting rebalancing and the like). I still have positions in most of the stocks I've bought over the years. There are a few I should probably ditch, though.

That said, I like to hear what ideas other people have. There are without doubt diversification avenues I haven't considered.

Check with your accountant and lawyer about whether or not they know people in the Real Estate LLC (Limited Liability Corp) business. That's how I got started in them many many (25+) years ago. They've been staggeringly good investments for me. Caveat here -- they are NOT suitable for retirement accounts such as IRA and 401's etc. Do not invest in them with that money!

The other couple of great investments I use - again - via my accountant (their customers) or my law firm etc is mortgage investments - where I hold the mortgage secured, of course, by the Deed of trust.... These typically pay above market (the stock market - which I look for an average of 5% dividend) rates and after the people pay me monthly for years and years -- they still owe me most all of the principal. LOL

Caveat -- real estate is THE WORST EVER investment for liquidity. If you can't hold thru a 10 year bear market or longer.... don't bother.

By the way ----- you missed one extremely important investing strategy that is 100% important here --- not just investment in stocks -- but DIVIDEND PAYING STOCKS WITH GROWTH. You'll read more about why this is critically important along the way.

[LuxurySportCoupe]

From posts in the past, it seems like not too many people in this thread own GE, but at least as a newbie, I found this article very interesting. GE is cutting their dividend in half, and it sounds like they're trying to cut costs elsewhere. On the positive side, this kind of makes me wonder if this is signaling a turnaround in company culture that they need? Therefore, pick this stock up while it's down and hopefully the dividend rises over time as well. Or, on the negative side, is this just evidence that GE is in trouble, and staying away is the best choice? Food for thought.

https://www.washingtonpost.com/news/...=.560b20882041

[AU Doc]

I've been heavily invested in growth stocks, which has worked well for me, but I'm beginning to want something more conservative. Dividend stocks are another avenue I've been considering.

Wat do you consider a good dividend yield? 4%, 5%? I know it depends on how the stock price is moving, but in general I'm wondering where you set the lower bar.

[GregWeld]

Originally Posted by LuxurySportCoupe

From posts in the past, it seems like not too many people in this thread own GE, but at least as a newbie, I found this article very interesting. GE is cutting their dividend in half, and it sounds like they're trying to cut costs elsewhere. On the positive side, this kind of makes me wonder if this is signaling a turnaround in company culture that they need? Therefore, pick this stock up while it's down and hopefully the dividend rises over time as well. Or, on the negative side, is this just evidence that GE is in trouble, and staying away is the best choice? Food for thought.

https://www.washingtonpost.com/news/...=.560b20882041

It's best to not be early...... or in Wall Street parlance --- Don't try to catch a falling knife.


Let it play out -- and wait for them to begin to post a couple quarters of improved earnings and cash flow etc. You're only going to pick up a few pennies if you're lucky and catch it on the lowest day of trading.

Remember that there are LOTS AND LOTS of people holding this stock that are looking for any excuse to SELL it now with the low dividend and poor growth prospects.... Think about a Microsoft for 10 + years of going nowhere.... and then they finally get a new CEO and off she goes.

This is also known as "dead money" --- money that sits for years without a decent return in dividend, since it's a KNOWN % and you could have invested in something else with double or triple the dividend %)...

[GregWeld]

Originally Posted by AU Doc

I've been heavily invested in growth stocks, which has worked well for me, but I'm beginning to want something more conservative. Dividend stocks are another avenue I've been considering.

Wat do you consider a good dividend yield? 4%, 5%? I know it depends on how the stock price is moving, but in general I'm wondering where you set the lower bar.

When you finally find the time to read this thread --- you'll see a common theme discussed.

If you're going to accept a lower dividend - then there has to be growth with it - and you can take a higher dividend % - without as much growth. It's called TOTAL RETURN.... which is what is most important in investing. The total return you get on your money. Many times that's some combination of dividend and growth. I ALWAYS ALWAYS ALWAYS check the total return on a stock for a number of years (backwards) before investing. I'm looking for a 100% total return in something under 10 years and preferably in 5...


I want a blended return in cash flow (dividend) of at least 5%..... the growth is on top of that. Sometimes that growth is slower - or backwards or awesome -- but I count on the DIVIDEND to carry the investments when the market has gone south.

[AU Doc]

5% is the number that came to mind for me. Though it's likely because it's something I've read somewhere in the past. I doubt I'm clever enough to come up with that myself It does make sense for the return to be at least high enough to account for inflation, which is less than 3% currently if my Google search is to be believed.

So all in you're looking for a return in the range of 7% to 14%. I guess the gold standard is to do better than the market, which will depend on the time frame you're looking at. I think historically that's going to be around 12%, or doubling your money about every 7 years. I could certainly live with that!