Investing 102

[glassman]

Trey, how many (individual stocks) do you hold right now? managing.

Heard an interesting thing from Cramer today, he said he did the best when he went down to holding less stocks but best of breed, realizing that those were his money makers. Hmmm, where'd we hear that before????

I've got six best of breeds, adding as cash flow increases. Weirdly, my 401K , Roth, and a few Vanguards and T-Rowes are doing(did) pretty well.

Hate to say it, i'm up 54% on McD's, bought it cause "wifey worked there" and she wanted my to get it. She's my lucky charm, i wish a wife like that on everybody, shes a rock star.

[WSSix]

In the account that I manage, there are 9 stocks I do anything with. I have 13 total in that account though. 2 are gambles, 1 was given to me as the company split, and the fourth is my ESPP from my days at Haliburton. I don't touch it because I'm so overweight in it compared to the rest. I include all of them in my comment though. From the beginning of me starting this account, I'm still way up. It's just my gains from 2017 that went bubye now.

I don't bother to add more names because I have enough to watch as it is. I also have two other accounts that are managed by professionals mainly. I consider myself to be very diversified.

[WSSix]

Funny what a few days can do. I've already recovered 50% of what I've "lost". No I don't think this is the end of it. Point is, relax and let it play out a bit before freaking out. It goes up and down always.

[SSLance]

Consumable\retail companies taking a beating today... PG, MO, PM all way down. Such a strange market...

My buy itchy trigger finger is poised but may employ restraint and wait it out a couple days. Sure looks like a few good buys right now though.

[CJD Automotive]

Hey guys, I have a question, or more of a, "what do you think is best" question.

I am not a market investor, I've always been more comfortable with property, so please forgive any ignorance.

I have one property that generates roughly 70K a year in leases, but can sell for 800-900K right now. I think I am better off selling the property and then investing the money with an advisor (never used one). Even if I get a 10-12% return, it's still more than the property generates in leases. Just trying to weigh this out and figure it. I have my properties under a separate LLC, so not sure how that works investing as a company?

[nickcornilsen]

Originally Posted by CJD Automotive

Hey guys, I have a question, or more of a, "what do you think is best" question.

I am not a market investor, I've always been more comfortable with property, so please forgive any ignorance.

I have one property that generates roughly 70K a year in leases, but can sell for 800-900K right now. I think I am better off selling the property and then investing the money with an advisor (never used one). Even if I get a 10-12% return, it's still more than the property generates in leases. Just trying to weigh this out and figure it. I have my properties under a separate LLC, so not sure how that works investing as a company?

I'm not sure how to move your LLC's assets into some sort of fund or equities investment, but generally, I would never hold an real estate asset that could not bring in 1% of it's current value as rent per month; unless I was going to invest more money into to get that rate of return, OR was going to flip it. The liabilities and opportunity costs are too high. So I think selling it is the right thing to do.

As for your investments, be wary before putting it with an adviser. Know the fees... load fees, back end fees, expense ratios. You can't control the market, but you can control fees. Know that the difference over a couple decades between .01% expense ratios and 1% Expense Ratios can be 40%!

My philosophy has always been to do the index fund thing, ignore it, and let it grow. Day trading has always seemed like gambling to me, as I rarely have information that isn't already priced into the market.

[Vegas69]

The depreciation and capital gains taxes could make a 1031 exchange into a better investment property the way to go.

I'm with him, I would be hesitant to put it with an advisor. I also like an index fund for low fees and set it and forget it. Simple is good.

Personally, if I sold it, I would sit on the sidelines for a bit and see what happens. It sure feels like a climax is coming to me. Between personal debt exceeding bust times and the crazy and stupid crap I'm seeing in our real estate market, I wouldn't leap, I'd crawl into another avenue.

[JKnight]

I definitely agree with Todd that it seems we are waaay closer to the next downturn in equities than most are acknowledging. Just look at the crazy level of auto loan debt our country has gotten themselves into. However, by the rules of investing 102, you don’t want to sit entirely in cash wanting to time the market. But I’d suggest rolling in slowly and keep cash on hand to buy during/after the inevitable decline.

[GregWeld]

Originally Posted by CJD Automotive

Hey guys, I have a question, or more of a, "what do you think is best" question.

I am not a market investor, I've always been more comfortable with property, so please forgive any ignorance.

I have one property that generates roughly 70K a year in leases, but can sell for 800-900K right now. I think I am better off selling the property and then investing the money with an advisor (never used one). Even if I get a 10-12% return, it's still more than the property generates in leases. Just trying to weigh this out and figure it. I have my properties under a separate LLC, so not sure how that works investing as a company?

I need to be very careful here because of my level of Cancer meds on board.... but here's a couple thoughts having just gone thru this type of "review".

Property (actually all investments) really needs to be looked at with a view toward two things ---- Diversity of investments ---- Tax situation.

Real returns are based on individual situations and should only be calculated with an accounts input because he'll have important feedback on how the investment affects your total tax bill etc.

So --- Here's my thing on Real Estate..... it IS NOT a hedge against market moves. Typically the real estate market will suck right alongside the stock market if the market sucks. It is NOT LIQUID which is the #1 negative to me IF a guy doesn't have a bunch of other liquidity he can touch if needed. It is generally a great buy and hold investment.... and I think everyone should try to reach a point in their investments that they get to hold commercial real estate.

Some real estate investors are ill equipped to hold a property thru a long term recession when the property goes negative cash flow.... and of course --- that negative cash flow is what triggers the "I should sell" brain waves... and commercial real estate is valved based on it's POSITIVE cash generation over time. Guess what it's worth when you're feeding the SOB every month....

Now -- back up here somewhere is a post about an apartment complex we have that's up for sale. I pushed for the sale because of the current math.... the property is worth double... the income is fixed.... it's a nice return of capital in a pigs get fats and hogs get slaughtered kind of real estate market IMHO.

[CJD Automotive]

I appreciate everyones responses and advice. This is why I've never been a market investor, just so damn confusing with fees, etc...

I have a few commercial and residential properties (I know Greg hates residential!) and fortunately all paid for; taxes and insurance only, and I can sustain that even if left empty. This one properties value is high right now, so when I base my rent to value, it falls short and could be considered under performing.

I have friends that invest and keep telling me the market would return 10-12% and effectively double my principal investment in 7 years? My thinking is that the property returns less than 10%, and doubtful it will double in value in ten years. My principal market investment should continue to return more as the return is added to the principal and increase the investment? I don't know, that's why I'm asking you guys that are a whole lot smarter about this than me! Again, I appreciate everyones advice and opinions, lots of food for thought.