Investing 102

[GregWeld]

Originally Posted by rustomatic

A quarter of a percent increase in mortgage rates deters no one.

Not to argue with you.... but you don't apparently understand the correlation of FED rates and the subsequent market rates that it affects.

A "quarter point" rise won't affect home sales could possibly be correct - except that real actual mortgage rates will go up MORE than that... and since the FED is talking about possibly raising rate FOUR TIMES this year - that would be ONE full point this year alone....

The FED FUNDS rate affects every single thing you do.... food prices - cost of doing business - cost of borrowing - credit card rates. What happens - eventually - your car payment goes up - your insurance costs go up - your food prices rise - and your mortgage payment rises. That creates INFLATION - which then causes businesses to have to increase their prices to cover the rising costs of everything they do... Rates are incredibly important.

[im4u2nvss]

Originally Posted by rustomatic

This looks just like 12 years ago

This is exactly how my area feels.

[Vegas69]

It seems when things have been going well for quite some time I see these mindsets:

"I need to get in before it's too late."

"I need to get in because everybody else is doing it."

This can go against values and long term financial sense.

The more calculated will base decisions of facts and comfort levels. Rising rates may not deter the former in the short term, but it certainly could deter the latter.

[GregWeld]

I didn't want to copy and paste the whole article.....



https://www.cnbc.com/2018/02/28/pend...y-4-years.html

[rustomatic]

Greg, the great research authority that is CNBC is definitely doing a good job of trying to show how things are looking a lot like 2006. The house I bought in 2006 (in Arkansas, not CA) came with a 6% interest rate. It wasn't a bad deal, even though the one I have now is at 4%. As the mortgage bubble burst, rates went up, along with gas prices and everything else; Priuses were being bought above market, and dealers in the Midwest were literally giving away Dodges and Chryslers (if you bought one). Everything's a pattern that can be found in the past (as your experience has undoubtedly demonstrated), short of trying to track Goldman Sachs' trading algorithms . . .

It would be interesting to see the world with the crazy interest rates from the late 1970s/early '80s. The thing about that would be a completely different economy . . .

Originally Posted by GregWeld

Not to argue with you.... but you don't apparently understand the correlation of FED rates and the subsequent market rates that it affects.

A "quarter point" rise won't affect home sales could possibly be correct - except that real actual mortgage rates will go up MORE than that... and since the FED is talking about possibly raising rate FOUR TIMES this year - that would be ONE full point this year alone....

The FED FUNDS rate affects every single thing you do.... food prices - cost of doing business - cost of borrowing - credit card rates. What happens - eventually - your car payment goes up - your insurance costs go up - your food prices rise - and your mortgage payment rises. That creates INFLATION - which then causes businesses to have to increase their prices to cover the rising costs of everything they do... Rates are incredibly important.

[GregWeld]

Originally Posted by rustomatic

Greg, the great research authority that is CNBC is definitely doing a good job of trying to show how things are looking a lot like 2006. The house I bought in 2006 (in Arkansas, not CA) came with a 6% interest rate. It wasn't a bad deal, even though the one I have now is at 4%. As the mortgage bubble burst, rates went up, along with gas prices and everything else; Priuses were being bought above market, and dealers in the Midwest were literally giving away Dodges and Chryslers (if you bought one). Everything's a pattern that can be found in the past (as your experience has undoubtedly demonstrated), short of trying to track Goldman Sachs' trading algorithms . . .

It would be interesting to see the world with the crazy interest rates from the late 1970s/early '80s. The thing about that would be a completely different economy . . .

I couldn't disagree more --- what they --- and including my personal team of bankers and hedge fund managers are saying ---- is to "keep a heads up". We are speaking in this particular forum thread about INVESTING 102.... which is information relating to being relatively new at investing - the relationships - the things that can cause ups and downs. It's not an advanced econ class.... that would be a different thread.

[GregWeld]

This is not a pitch to buy or sell or do anything --- it's just an investing 102 "thought"....


I've owned Altria (MO) for a very long time.... the reason I own it is not for the "current" dividend (in other words - if you bought it today). I own it for the CONSTANT dividend increases this particular stock produces. A couple days ago - they announced an increase to .70 per quarter. Doesn't seem like much does it? A lousy .04 per quarter.... BUT --- big Butt --- that's a 6% increase! So if inflation is running 3% - you just doubled that amount.

Now -- if you calculate YOUR dividend - at the price YOU paid.... this begins to be a serious cash cow. It takes TIME to have a relatively low paying (<5% currently) dividend stock become a cash cow - and not all companies increase their dividend payout annually -- but god bless MO -- they just keep pumping out the cash. If you're young - and this is in your IRA/401 - and that dividend is plowed back in to buying more shares (DRIP) -- when you get ready to retire in 20 years.... yeah - that's a nice holding.

[toy71camaro]

Had MO since I started in this thread several years ago. To elaborate more on your comment, I've seen the following yearly increases to the dividend:
2012: 7.32%
2013: 9.09%
2014: 8.33%
2015: 9.62%
2016: 7.02%
2017: 8.2%
2018: 6.06%

My current yield based on what I paid (and my drips): 6.96% Which translates from me getting 0.41 a share in 2012 to 0.70 now (well, soon). Nearly doubled!

I have a pretty nifty spreadsheet that tracks all this for my "investing 102" holdings thanks to all you guys.

[GregWeld]

Originally Posted by toy71camaro

Had MO since I started in this thread several years ago. To elaborate more on your comment, I've seen the following yearly increases to the dividend:
2012: 7.32%
2013: 9.09%
2014: 8.33%
2015: 9.62%
2016: 7.02%
2017: 8.2%
2018: 6.06%

My current yield based on what I paid (and my drips): 6.96% Which translates from me getting 0.41 a share in 2012 to 0.70 now (well, soon). Nearly doubled!

I have a pretty nifty spreadsheet that tracks all this for my "investing 102" holdings thanks to all you guys.

That is how people make money folks!


Think about a 20 or 25 year run like that...... you start when you're 40 and retire at 65 and the dividends just keep taking care of you... for another 25 years.


Or you can buy Bitcoin and have someone steal it from you.... LOL
You guys see the latest heist? $530 MILLION from another brokerage....

[glassman]

Originally Posted by GregWeld

You guys see the latest heist? $530 MILLION from another brokerage....

So, speaking of which, WTH is CNBC showing a "bitcoin watch" window? Fascinating to them? just curious....