Investing 102

[GregWeld]

Originally Posted by WSSix

Why do companies split their stock and is there anyway to know it's going to happen etc?


Also, I just noticed that Halliburton pays a dividend on their stock. Even though I've bought my stock through the ESPP, I should still get that dividend payment too, correct? I'm pretty sure I checked reinvest any dividends with my account but I'll have to look. I'm kind of excited since I've never known how to look up stock performance information before. Google Finance is pretty cool, lol.

Well there -- see how you are! Next thing you'll be telling me what to buy!

Google finance or Yahoo finance -- both good for just poking around and looking at stuff. Glad you found it to be somewhat useful.


Companies split their stocks for a variety of reasons -- usually to keep the 'momentum' going in their stock (it creates excitement in the market) and - #1 - to keep their share price "affordable".... People can buy shares at $35 or 50 bucks -- they become "hesitant" when it gets up to $100....

They usually only split like this when the company is GROWING and doing well.

A sure sign a company SUCKS --- a REVERSE SPLIT.... when they take 10 shares and turn them into 1 (expressed as 1:10) !! Citigroup (C) did this awhile back.... because their share price had fallen to about a $1 a share -- at that price -- they get "de-listed". It didn't help.

We could talk about reasons for days - but basically it's (a stock split) a "reward" to the shareholders.... people love 'em!

Berkshire Hathaway (Brk.A) (Warren Buffett - heard of him?) has never split their shares - ONE share is $112,325.00 PER SHARE -- how many of those are you going to buy?

[pw2006]

Originally Posted by GregWeld

Well there -- see how you are! Next thing you'll be telling me what to buy!

Google finance or Yahoo finance -- both good for just poking around and looking at stuff. Glad you found it to be somewhat useful.


Companies split their stocks for a variety of reasons -- usually to keep the 'momentum' going in their stock (it creates excitement in the market) and - #1 - to keep their share price "affordable".... People can buy shares at $35 or 50 bucks -- they become "hesitant" when it gets up to $100....

They usually only split like this when the company is GROWING and doing well.

A sure sign a company SUCKS --- a REVERSE SPLIT.... when they take 10 shares and turn them into 1 (expressed as 10:1) !! Citigroup (C) did this awhile back.... because their share price had fallen to about a $1 a share -- at that price -- they get "de-listed". It didn't help.

We could talk about reasons for days - but basically it's (a stock split) a "reward" to the shareholders.... people love 'em!

Berkshire Hathaway (Brk.A) (Warren Buffett - heard of him?) has never split their shares - ONE share is $112,325.00 PER SHARE -- how many of those are you going to buy?

I like Buffet, I have owned his Brk.B shares for over 5 years. However, it doesn't have a dividend and it is about flat split adjusted since I have owned it. I sell out of the money puts and covered calls giving me a descent yeild. However, even with my options, I would have been much better off in MCD. How do we inverse hindsight?

[GregWeld]

Originally Posted by pw2006

I like Buffet, I have owned his Brk.B shares for over 5 years. However, it doesn't have a dividend and it is about flat split adjusted since I have owned it. I sell out of the money puts and covered calls giving me a descent yeild. However, even with my options, I would have been much better off in MCD. How do we inverse hindsight?

Oh god -- if I had a dollar for every one I've MISSED... There's so many high fliers... a guy could have made an easy million on a ten thousand dollar investment!

Yeah -- I'm not a fan of Buffet - and if you think you have flat returns now - wait 'til you get up one morning and read he's passed away! POOF!

NO THANKS! I wish him all the best - but I ain't counting on it. Talk about gambling?!?!?

It's amazing -- when I look at stocks -- which I do CONSTANTLY -- how many big moves I've missed in names you'd never guess in a million years had the kinds of moves they've had. McDonalds is just one prime example that everyone understands and "never knew".... I hate the product - don't eat there unless on a single guy road trip - but it's a great investment. Ditto the Terbacky stocks (MO - PM - LO)... I don't smoke - hate the smell - think it's DEAD wrong... but I'll invest in them!

[WSSix]

So given the choice between two stocks that both have done well over the years, would you recommend purchasing fewer shares of a more expensive stock or more shares of a less expensive stock? Does it even matter or is it personal preference?

[GregWeld]

Originally Posted by WSSix

So given the choice between two stocks that both have done well over the years, would you recommend purchasing fewer shares of a more expensive stock or more shares of a less expensive stock? Does it even matter or is it personal preference?

Dollar amounts are what matters --- so if you're going to invest $10,000 -- then I'd pick FIVE stocks and put in $2500 per... or 10 stocks and do 1,000 each.

I wouldn't match shares.... you'll never get it right and it's too hard to track!

If you put in 10,000 and next year your account is at 12,000 you know you're okay -- one stock will have done great - a couple okay - and a couple not so hot. If you've picked good names... don't do a thing... because I'll bet you that the next year you're mix will have different results and the one that was just "okay" might have moved up the ladder and be "the hot one".... that is WHY YOU DIVERSIFY! I'll guarantee that you can't have all 1O stocks (or 5) all up and you'll never be able to tell me in advance which one is going to be the star. Just pick 'em - re-invest the dividend - add money when you can into new names (more diversity) and pay a modest amount of time listening to the news or read the business page.

OLD RULE TO GO BY...... When INTEREST RATES ARE HIGH --- STOCKS WILL DIE.... So there will be a period when the "flight to quality" will move out of stocks and into bonds and interest bearing instruments... but if you try to "time" that - you'll always be behind and lose money trying to chase the market. Just diversify - pay attention... and buy more when they're down cause you get more shares and that brings your average cost down - over time - your TOTAL YIELD will be a home run.

[sik68]

Greg, big thanks and kudos to you...all this money talk started out feeling taboo for lateral-g but that's gone now and I'm learning a lot. I'm not even tired of reading about how rich you are anymore!

I have actually stopped reading my fresh copy of "Building the Mule" because of this thread. Weld's "Building the Portfolio" anyone?? Now I know how I am going to play this year's SEP.

Oracle seems like another one that fits the GW profile no? Albeit on the moderate side for dividend returns, but their 10+ year is solid.

[Van B]

Originally Posted by GregWeld

Dollar amounts are what matters --- so if you're going to invest $10,000 -- then I'd pick FIVE stocks and put in $2500 per... or 10 stocks and do 1,000 each.

I got my calculator out and no matter how hard I try 2500 does not go into 10000 five times...and you want me to take investment advice from you.

Honestly Greg I hope to meet you some day. You seem like a good guy.

Reading this thread has made me decide that I can't keep all my eggs in my 401k and employer's plans, especially at age 45. I plan to take $10k after the first of the year and get going in stocks. One question though, how do you identify which stocks pay dividends?

[raguemoe]

Greg, now that we got the basics out of the way. I'd like you to address the proper allocation of one's resources (ie wife, kids & cars). This seems to be my greatest downfall in saving for the long term. Meaning I give the wife & kids too much, spend a little on cars and know I should be saving more! I know nothing about you, but anyone building a car like the 62 must have done well for themselve (And I assume has paid their dues & made sacrifices when younger). Thanks-Morris!

[CRCRFT78]

This thread is becoming addicting. I just wish my cash was updated as fast as this thread so I could take advantage of "Professor Weld's" financial advice.

[MoparCar]

Greg,
Thank you for taking the time to educate us. I really appreciate it! I know it's something you wouldn't have to do. Very educational. My favorite thread right now!

Wes