Investing 102

[GregWeld]

Kevin O'Leary is on CNBC.... says he ONLY buys companies that "return capital" i.e., pay a dividend.


71% of all accrued market gains are due to the dividend.

[CRCRFT78]

I have a question for you Greg, reading quite a few pages back (I can't remember the page number) you discussed what I believe was called a "wash sale." Given that I bought KMI while down to average down my cost per share basis and sold my long-term shares to achieve that, would adding to my position now while the shares are down negate the tax benefit IF I was doing this in an account not slated for retirement?

This activity is in a retirement account but am curious if it applies differently in a regular investment account. Can I buy new shares, sell the old shares and buy new shares again or must you sell all of your shares, clear the position and then buy again to avoid a tax hit. I'm sure I am overthinking this again but does the manner in which your transactions take place make a difference?

[GregWeld]

Originally Posted by CRCRFT78

I have a question for you Greg, reading quite a few pages back (I can't remember the page number) you discussed what I believe was called a "wash sale." Given that I bought KMI while down to average down my cost per share basis and sold my long-term shares to achieve that, would adding to my position now while the shares are down negate the tax benefit IF I was doing this in an account not slated for retirement?

This activity is in a retirement account but am curious if it applies differently in a regular investment account. Can I buy new shares, sell the old shares and buy new shares again or must you sell all of your shares, clear the position and then buy again to avoid a tax hit. I'm sure I am overthinking this again but does the manner in which your transactions take place make a difference?

A wash sale applies -- and crosses accounts.... so you can't use a different account say to sell and take a loss - and then turn around in another account and buy....


A "wash sale" is ------- you sell at a LOSS..... you can not buy the same exact stock within 31 days. Or you lose the ability to take the loss.

Sell at a loss -- mark your calendar - make damn certain there's 31 or more days between transactions... and then do your buying.


It IS NOT a wash sale -- if you sell (example) Conoco (COP) at a loss - and within seconds BUY Exxon (XON).... they're in the same business but they're not the same stock!

[Woody]

Originally Posted by SSLance

Anyone else considering adding to or starting a KMI position today?

You might want to read some of the articles on Seeking Alpha about KMI. There is quite a wide range of opinion about KMI. The most concerning thing about KMI to me is their debt issue. This http://seekingalpha.com/article/3609...tory-of-icarus is a pretty good article if you want to read about some of the reasons to be cautious of KMI. There are plenty of positive articles as well. I don't know which side is right, but due to some of the issues brought up in the negative articles, I think that KMI has quite a bit of risk. It could be a great time to buy, but it could also continue to slide downward.

[SSLance]

Thanks...and yes, I've been reading all them.

I by no means bet the farm on KMI, but I like the model and think I have an understanding on the direction Richard is trying to steer the company. If he's able to pull it off, it should pay off big time. Meanwhile, I'll sit back and collect the dividends.

I view those articles like this...for the most part. Whenever someone is trying to "sell" me on something, I look at what they are saying very critically and I try to figure out why they are trying to sell me. If I can find ANY ounce of potential gain to them in regard to what they are trying to sell me, I hugely discount the advice.

That is somewhat difficult to do when reading the articles posted on SA, but after a while you get used to reading those written by people that think like yourself and you listen more to them that others that...might have an alternative agenda let's just say.

[WSSix]

I agree you do have to read multiple viewpoints and consider the motivations of an author/seller. I've got KMI simply because I owned KMP. I would prefer to be getting into KMI now since I'm/it's down so much. Regardless, I think KMI is a good example of having to know the segment/market the company is in since its numbers will look different. I tend to agree with the people that bring that up repeatedly because it's brought up repeatedly that their numbers are "bad" when looking at them as if they were a normal retail company. KMI's business is very debt heavy because it's a long term model. I personally am not worried at all about them. Though, admittedly, I would prefer to see movement towards the positive sooner than later.

For a funny look at responses to an article, find the MCD article from the guy saying MCD was a poor choice on the very day that MCD jumped due to earnings beat. Read his article and then read the comments. I think too many people dismiss a contrarian view too easily and for very weak reasons.

[GregWeld]

What "makes a market" is some sellers and some buyers.... every single transaction big or small - involves a seller and a buyer. Obviously both have opposing views.

It pays to keep an open mind and listen to both sides.... and then make up your own mind. We all are guessing that we're right when we buy and we're guessing we're right when we sell. In the meantime - you have to sleep well at night with your decisions... whichever side you're on.

[CornHusker4Life]

I was just looking up stocks of stores I frequent and wow was I surprised.
Take a look at O'Reilly's auto parts stock, not a dividend stock but wow what a 5 year growth (ORLY).

[CRCRFT78]

Wow look at the growth is right, ORLY would've been a great growth stock. Holy sh** did you look at AutoZone (AZO)?

[GregWeld]

Originally Posted by CRCRFT78

Wow look at the growth is right, ORLY would've been a great growth stock. Holy sh** did you look at AutoZone (AZO)?

Classic examples of -- buy things you know - where you shop - what you can keep track of.... no different than comparing a Home Depot or Lowe's etc