Investing 102

[68Cuda]

Originally Posted by GregWeld

Just stay steady. Continue to buy when you're ready - continue to diversify - continue seeking dividends. You will be rewarded.

Yep. Have been following the thread for a while, I have not looked at my 401k/brokerage account in a month so I guess I will take a peak. I am not GW, I do not make that kind of cash and do not have millions socked away. I am just a guy who works too much and who has to watch the household budget and hopefully will get some time and money to do some work on the car again soon.

OK, so my progress to date assessment:

BP is my solo oil stock... I have "lost" 18% since I bought it a year ago, since it is about 4% of my holdings, no big deal. Besides at the current price the dividend rate (assuming they do not cut it) is about 7.5%.

I have been following the general concept of "Dogs of the Dow" for about 5 years now. I just apply it to the market as a whole, not just the DOW, and I typically do not sell as they suggest to rebalance, I just add new stuff as more money trickles into the 401k. I have sold a few that I thought were too volatile, or were at a high point and seemed overvalued to me. But, for the most part it has been buy, hold, and re-invest the dividends. My personal threshold is I won't look at a stock that pays under 3%. I generally look for stocks with a long history of dividend payments and growth (like PG for example) that usually pay just over 3% but for some unexplained reason are paying 4% (or close to that, depends on the company). Sometimes the market moves a group of stocks and a good stock drops because its neighbors do, not because it really deserves to. Then, over the course of a year it "corrects" by raising its price until the dividend is back to 3. Maybe I am being to simplistic, but it has worked for me so far. I also do not invest in products or companies I do not understand, just not comfortable buying them.

Since I started this strategy in 2011 with my E-Trade IRA account and my work "401k Brokerage account" the total balance of my retirement accounts has literally doubled in value. I did not buy any superstar stocks or anything exotic. Here is a list of my core group, the who's who of boring: KMB, PG, BP, CAG, GE, JNJ, MO, MRK, NUE, VZ, WM. My big loser along the way was BAC, just cut my losses on that one. My biggest "short term" gainer was owning INTC for about a year and selling it. Other than that, most of these stocks I have owned since 2011 and have made other small purchases along the way as money trickled in from my 401k contributions. About 15% of the value increase was contributions, the rest was growth and the automatic dividend reinvestments.

Maybe some of that was just luck because the whole market has gone up, but, even if the market stays flat the next 4-5 years I will still be getting my dividends on all these stocks and growing my base. I also have the HUGE advantage that this money is all in tax deferred accounts, so my "realized "gains and dividends are not taxed every year. This way the growth is not hampered. I will have to pay income tax when I withdraw the money 20+ years from now, but no payroll taxes on that money.

[GregWeld]

You've got this down pat Michael!! Good for you. It's so simple if you keep it simple.

Originally Posted by 68Cuda

Yep. Have been following the thread for a while, I have not looked at my 401k/brokerage account in a month so I guess I will take a peak. I am not GW, I do not make that kind of cash and do not have millions socked away. I am just a guy who works too much and who has to watch the household budget and hopefully will get some time and money to do some work on the car again soon.

OK, so my progress to date assessment:

BP is my solo oil stock... I have "lost" 18% since I bought it a year ago, since it is about 4% of my holdings, no big deal. Besides at the current price the dividend rate (assuming they do not cut it) is about 7.5%.

I have been following the general concept of "Dogs of the Dow" for about 5 years now. I just apply it to the market as a whole, not just the DOW, and I typically do not sell as they suggest to rebalance, I just add new stuff as more money trickles into the 401k. I have sold a few that I thought were too volatile, or were at a high point and seemed overvalued to me. But, for the most part it has been buy, hold, and re-invest the dividends. My personal threshold is I won't look at a stock that pays under 3%. I generally look for stocks with a long history of dividend payments and growth (like PG for example) that usually pay just over 3% but for some unexplained reason are paying 4% (or close to that, depends on the company). Sometimes the market moves a group of stocks and a good stock drops because its neighbors do, not because it really deserves to. Then, over the course of a year it "corrects" by raising its price until the dividend is back to 3. Maybe I am being to simplistic, but it has worked for me so far. I also do not invest in products or companies I do not understand, just not comfortable buying them.

Since I started this strategy in 2011 with my E-Trade IRA account and my work "401k Brokerage account" the total balance of my retirement accounts has literally doubled in value. I did not buy any superstar stocks or anything exotic. Here is a list of my core group, the who's who of boring: KMB, PG, BP, CAG, GE, JNJ, MO, MRK, NUE, VZ, WM. My big loser along the way was BAC, just cut my losses on that one. My biggest "short term" gainer was owning INTC for about a year and selling it. Other than that, most of these stocks I have owned since 2011 and have made other small purchases along the way as money trickled in from my 401k contributions. About 15% of the value increase was contributions, the rest was growth and the automatic dividend reinvestments.

Maybe some of that was just luck because the whole market has gone up, but, even if the market stays flat the next 4-5 years I will still be getting my dividends on all these stocks and growing my base. I also have the HUGE advantage that this money is all in tax deferred accounts, so my "realized "gains and dividends are not taxed every year. This way the growth is not hampered. I will have to pay income tax when I withdraw the money 20+ years from now, but no payroll taxes on that money.

[GregWeld]

Investors in these funds must be complete idiots..... Surely (don't keep calling me Shirley) The FED has been telegraphing it's going to raise rates... when isn't exactly certain - but there's no question it WILL happen. So to be in a junk bond fund -- or JNK or HYG -- knowing we're getting closer and closer to that "event" --- and then deciding NOW is the time to sell..... HELLO..... IDIOTS.


We all got caught with our pants down on the big and sudden oil price decline. This kind of thing happens from time to time. But not knowing that interest rate rise will affect your holdings is just plain being stupid.

Originally Posted by ErikLS2

So yesterday a mutual fund company, Third Avenue Management announced it would not allow withdrawals from a high yield (junk) bond fund saying something like it could not find enough buyers for the assets in the fund which were needed to raise the cash to pay the investors who wanted out. They have not said when they will give investors their money. This is the first time I believe in history that a mutual fund has blocked withdrawals.This is going to motivate other investors in high yield debt investments to want their money I'm sure. I hope this one doesn't get out of hand.

Today Stone Capital Partners, a hedge fund and bound by different rules than a mutual fund, also suspended withdrawals in its credit hedge funds. They also didn't say when investors' money will be returned, which is only going to make more of them want their money. A hedge fund hasn't done this since the financial crisis.

And off to the races we go.......possibly. Monday is going to be interesting for sure.

[WSSix]

Congrats Michael! Glad to hear it's working out for you.

[GregWeld]

I would HOPE that most of you are seeing the beauty of having a diversified portfolio - sprinkled with some "steady Eddies"... And that while it's always fun to own a couple of the "hot stocks" when they're going up - they suck when the market goes against you. Of course OIL and related *was* or could have been considered to be a steady Eddie - that has changed - and now we'd probably call these 'home wreckers'.... LOL

It's easy to be discouraged and stress over the ones that are killing you - rather than seeing your portfolio as a pot with a mix of goodies in it. In other words - rather than stressing over the one or two that suck - and how badly they're doing (% wise) - it's better to focus on your overall financial health... and to look at the total of $ invested and what percentage that number is up or down.

The guys that held McDonalds (MCD) have seen that holding go from suckola to hero status in just a few months.... Altria (MO) has been stellar... Oil sucks and it WAS stellar... this is a natural ebb and flow... and when you get it 100% right (where all your holdings are green) let me know - because in 30 years I've yet to have that.

[ErikLS2]

Originally Posted by GregWeld

... and when you get it 100% right (where all your holdings are green) let me know - because in 30 years I've yet to have that.

Ok, I'm certainly not bragging here but thought I'd share what a little common sense (learned here mostly), some research and a little Jim Cramer here and there can do. This is short term of course but still good compared to the S&P 500, it's up 11.59% since Oct 2014. This is my first venture into individual stocks and with all of these I am either very impressed with their product or visit them regularly. They all pay a dividend (all are reinvested) except for UA. I just hope the great investing gods will not come down on me and jinx this now (knocking on wood all over the place) but so far so good.

Stock Purchase Date Total Return

CVX 9/2/2015 19.08%

COST 9/17/2015 12.93%

HD 9/17/2015 12.18%

KR 9/17/2015 13.63%

SNA 10/20/2014 39.18%

LUV 10/21/2014 30.19%

UA 10/20/2014 27.55%

DIS 9/17/2015 9.02%

WFC 9/17/2015 (half) 2.55%
11/18/2015 (other half)

Total 20.96%

I also have one mutual fund that I've had a long time, POAGX, which I initially invested in on 4/26/2007, it's up 95.83% since then and beats its peer index by almost double so I keep it.

[GregWeld]

FRIGGIN' FANTASTIC ERIK !!!!!!



I bow in your direction!



I was being factitious when I said I'd never had all green.... because, of course, there are periods (such as the last 4 or 5 years) where not only have we had all green - but where we've had all green for months or even years. It's RARE to have such bull markets... and that was more my point. HOWEVER - to have your string - in the current market - being a fresh investor is just stellar!



I remind people daily (you'd be shocked how many calls and emails and texts I get) "look at the long term charts of the companies you own" when the days turn against you. Understand WHY a name or two you own might be in the dumper i.e., is it because of bad product - bad press - bad management or is it in a sector that for right now SUCKS?! The key here is to know WHY. When you know why - then you can make proper decisions.

Originally Posted by ErikLS2

Ok, I'm certainly not bragging here but thought I'd share what a little common sense (learned here mostly), some research and a little Jim Cramer here and there can do. This is short term of course but still good compared to the S&P 500, it's up 11.59% since Oct 2014. This is my first venture into individual stocks and with all of these I am either very impressed with their product or visit them regularly. They all pay a dividend (all are reinvested) except for UA. I just hope the great investing gods will not come down on me and jinx this now (knocking on wood all over the place) but so far so good.

Stock Purchase Date Total Return

CVX 9/2/2015 19.08%

COST 9/17/2015 12.93%

HD 9/17/2015 12.18%

KR 9/17/2015 13.63%

SNA 10/20/2014 39.18%

LUV 10/21/2014 30.19%

UA 10/20/2014 27.55%

DIS 9/17/2015 9.02%

WFC 9/17/2015 (half) 2.55%
11/18/2015 (other half)

Total 20.96%

I also have one mutual fund that I've had a long time, POAGX, which I initially invested in on 4/26/2007, it's up 95.83% since then and beats its peer index by almost double so I keep it.

[WSSix]

Congrats Erik!

[GregWeld]

So let's talk about "averaging down" --- even though this strategy has been mentioned a zillion times in this thread.... now might be a good time to bring it up again. Particularly as related to OIL and OIL RELATED holdings.

When you're entering a situation where the results are an unknown... such as we are with Oil. And that situation is not under any kind of control - in other words - the market isn't stable and continues to be a volatile and fluid situation regarding the over supply (Thanks to Saudi Arabia)... There is no reason to RUSH to average down or to buy on the dips or to load up the boat with names in this sphere. It's simply time to keep your antenna up.

By that I mean - if you already own this stuff, you have what's going to be called "dead money". Dead money can be resuscitated - but that's going to take some intervention. So until you can see some intervention - there's no reason to rush to own more just because you "think" there's aid on the way. You'll be better served waiting until such aid is on the scene and you KNOW what you're dealing with.

Patience is what I'm saying here. Don't be quick to just load up on more just because it looks good on paper - or because you'll think you're smart to buy some of these great names "cheap" (cheaper than where you bought them). THEY CAN GO LOWER. I prefer to put my money into something that's not in turmoil... and wait until there's some signals that say "all clear". THEN you have plenty of time to average down your position.

We can't see clearly (YET) where this is all going to play out. KMI - ETP - CVX - XON etc just to toss some names out there... They look cheap right now - but we maybe have yet to see the damage surface. So why stand on the tracks of the train? Just stand a little bit to the side and see if the things has brakes.

I'm not saying to sell - I'm saying to just sit a bit (months or maybe a couple years) and let em lay... all the while watching and waiting for better news and then you can pounce.

Some would advocate for taking the loss and moving on... But I don't think this "space" (oil et al) is going to zero... I just think we're in a political war with Saudi Arabia trying to bury our industry in a market share grab. The thing that happens along the way when stuff like that happens is it forces companies to change or find a better way or whatever.... and all of a sudden - BINGO.... we figure out how to pump oil cheaper and become profitable at the lower selling prices. They'll do that half an hour after you sell and lock in your loss. LOL

[ironworks]

Being on some what of the front lines of the oil I can say that things aint gonna get any better soon. Another big company is laying of 82 more guys next month.

And the market is getting bad enough that the companies are laying off good employees now. Not just the lazy worthless ones. I have picked up some really solid guys in the past 3 months I had no idea even existed.

But oil companies are bracing for this to not change till 2017. One customer I have sells electrical items and in 2014 they had a working budget of 160 million for maintenance and improvements. They have gone to zero in 2016.

If oil goes to 65 to 70 per barrel things will be just fine, maybe not as good as it was at 110. One local field makes money at 12 bucks per barrel.