The stock market

[Brock Beauchamp]

The primary purchase when I moved to dividend stocks was GM. I think I put in something like $5k. The stock has been neutral for me but I've received three dividend payments from it, I think.

[Willihammer]

The cash dividend income is nice, I wish I had more of it.

FOMC meeting on Wednesday. Almost certainly won't raise rates but we'll see how the market digests the minutes. An OPEC+Russia meeting a few days after that.

[gunnarthor]

I love dividends. We automatically reinvest the dividend into the stock so when it's down, we're automatically buying more anyway.  It can really grow a stock rapidly.  

[Willihammer]

https://www.youtube.com/watch?v=m9vG7xDVX1k

[Willihammer]

Huh, short-term bond yields are way down.

-18% on 3 month, -6.5% on 6 month.

[Willihammer]

Pretty dovish language I'd say. A graph was displayed showing Median projection for FFR to reach 3% "normal" long term rate in 2020 or later.

 

...And now some dummy is asking about Trump's comments re:Yellen.

 

Dollar is down a tick. Oil up. Good news for stocks.

Edited September 21, 2016 by Willihammer

[Brock Beauchamp]

Amazon continues to go bonkers, up about 10% on the month (again). Overall, I'm personally up about 130% on the stock since I bought in either 2013 or 2014 (can't remember).

 

I'm a bit concerned about the stock. Not Amazon's future, which is very bright, but the continued jumps the stock is taking. Amazon has committed to turning a profit from here on out, which is great, but the stock is trading at 200+ P/E.

 

I'll stick with them but honestly, I'd prefer the stock stay flat for awhile and let the P/E catch up as Amazon consistently turns a profit.

[Mike Sixel]

I try not to complain when my stocks go up......but I feel the same about nvidia right now...

[Brock Beauchamp]

 

I try not to complain when my stocks go up......but I feel the same about nvidia right now...

Yeah, too much success without the earnings to support it becomes troubling at some point...

[gunnarthor]

I think it depends on what you're trying to do.  Are you trying to time the market and sell Amazon while it's high?  Or are you buying stocks for the long run - 10+ years?  If it's the second, the only thing you should really worry about it is a bottoming out of your company.  (Citibank in 2008, for instance).  

[Brock Beauchamp]

 

I think it depends on what you're trying to do.  Are you trying to time the market and sell Amazon while it's high?  Or are you buying stocks for the long run - 10+ years?  If it's the second, the only thing you should really worry about it is a bottoming out of your company.  (Citibank in 2008, for instance).  

I'm keeping the stock for the foreseeable future so I'm not terribly worried about it, only wondering when it will stop because, at some point, it will have to stop.

 

It's also worth noting that in the future, Amazon is going to have to split their stock, which usually creates another small bump in valuation. Their stock price has topped $800 now.

[Willihammer]

Holding is probably the right call but as I'm sure you're aware, if we get another risk-off period like last Jan-Feb stocks like AMZN/NFLX/TSLA and others are going to have an outsided drop compared to the SPX. Most of those stocks took a ~15-25% hit greater than the rest of the market, although they rebounded as good or better in some cases.

 

Personally I would keep a close eye on the Deutche Bank business. Some people think there is a real chance of them going under.

[Brock Beauchamp]

 

Holding is probably the right call but as I'm sure you're aware, if we get another risk-off period like last Jan-Feb stocks like AMZN/NFLX/TSLA and others are going to have an outsided drop compared to the SPX. Most of those stocks took a ~15-25% hit greater than the rest of the market, although they rebounded as good or better in some cases.

I'm hoping this happens again, as last time I was caught in a bad spot and didn't have cash on hand to reinvest. Next time around, I'll be prepared.

[Brock Beauchamp]

So far so good on Polaris. The stock is up 6% since I invested 10-ish days ago.

 

I'm looking into Wells Fargo now. I was going to invest short-term into VW after the diesel fiasco but my wife complained about investing in such a deplorable company.

 

Well, I could have flipped that investment +25% in two months had I gone ahead and done it (when I made the plea to invest, they were around $95/share).

 

I think that's going to be my strategy for short-term investments, which I generally avoid... Find a company with strong peripherals currently amidst a crisis, wait for them to drop a significant amount, buy, and bail in 3-6 months.

 

I'm not confident enough in my evaluations to dive deeper than that kind of low-hanging fruit when it comes to short-term investing.

[Mike Sixel]

 

So far so good on Polaris. The stock is up 6% since I invested 10-ish days ago.

 

I'm looking into Wells Fargo now. I was going to invest short-term into VW after the diesel fiasco but my wife complained about investing in such a deplorable company.

 

Well, I could have flipped that investment +25% in two months had I gone ahead and done it (when I made the plea to invest, they were around $95/share).

 

I think that's going to be my strategy for short-term investments, which I generally avoid... Find a company with strong peripherals currently amidst a crisis, wait for them to drop a significant amount, buy, and bail in 3-6 months.

 

I'm not confident enough in my evaluations to dive deeper than that kind of low-hanging fruit when it comes to short-term investing.

 

That's what I did with linkedIn.....buy after a crash....

[Willihammer]

 

So far so good on Polaris. The stock is up 6% since I invested 10-ish days ago.

 

I'm looking into Wells Fargo now. I was going to invest short-term into VW after the diesel fiasco but my wife complained about investing in such a deplorable company.

 

Well, I could have flipped that investment +25% in two months had I gone ahead and done it (when I made the plea to invest, they were around $95/share).

 

I think that's going to be my strategy for short-term investments, which I generally avoid... Find a company with strong peripherals currently amidst a crisis, wait for them to drop a significant amount, buy, and bail in 3-6 months.

 

I'm not confident enough in my evaluations to dive deeper than that kind of low-hanging fruit when it comes to short-term investing.

The VW CEO Martin Winterkorn stepped down after the diesel cheating. I bought in last August when it tanked, sold half but kept the other half. Lots of upside remaining IMO. They're going to move hard into EVs and I think that might allow them to get around some of the fees. Even if they have to pay them I think they'll do okay.

 

I'm staying away from banks. I just don't see where they'll  have the margins for a few years yet. But if you want to get into financials I'd look at medium sized regionals like FRC.

[Willihammer]

Speaking of short-term play- should have bought into TWTR last spring. Damn I knew they seemed to cheap to stay down there. Should have pulled the trigger. Oh well.

[Brock Beauchamp]

Normally I'd avoid banks as well but WF is down 20% on the year and 11% since the scandal. If they drop another few points, I will probably invest. They're a strong enough company where they'll get back at least five points, probably more, in relatively short order.

[Brock Beauchamp]

Speaking of short-term play- should have bought into TWTR last spring. Damn I knew they seemed to cheap to stay down there. Should have pulled the trigger. Oh well.

I have zero faith in Twitter. The only reason their stock is up is acquisition rumors.

 

Great if you bought in low and sell but not so great if the acquisition rumors never materialize into an actual acquisition.

 

Twitter does not have a sustainable platform that will make them big money. Facebook had a strategy from day one and evolved their system to strengthen it. Twitter's format itself prevents monetization at even 1/10th that scale.

[Willihammer]

 

I have zero faith in Twitter. The only reason their stock is up is acquisition rumors.

Great if you bought in low and sell but not so great if the acquisition rumors never materialize into an actual acquisition.

Twitter does not have a sustainable platform that will make them big money. Facebook had a strategy from day one and evolved their system to strengthen it. Twitter's format itself prevents monetization at even 1/10th that scale.

I'm sure you're right but intangibles like the brand value count for something and you wouldn't have had to hold until an actual sale of the company. Just rumors of a sale were enough to cause the price to spike.

[gunnarthor]

As much as I hate WFC (see a few pages ago) it's a great stock and the dividends really make it worth it. I think people really underestimate dividend reinvestment and how much that helps build your portfolio.  

 

I also think short-term trading - unless you're a pro - is less successful in the long run.  Remember that you're taxed at a higher tax rate for stocks you've held less than a year.  

[Mike Sixel]

Short term trading should only be done in the same way blackjack is, as gambling for fun......it's no way to make money unless you can really make it your job and have a bankroll to start with. even then....

[Brock Beauchamp]

I'm sure you're right but intangibles like the brand value count for something and you wouldn't have had to hold until an actual sale of the company. Just rumors of a sale were enough to cause the price to spike.

Oh, sure, if you have the stock, rumors are great. It gives you a reason to exit the stock. My point was that you can't accurately predict acquisition rumors.

[Willihammer]

Oh, sure, if you have the stock, rumors are great. It gives you a reason to exit the stock. My point was that you can't accurately predict acquisition rumors.

No, it would have been speculative. But, hardly surprising with all the M&A going on that they did materialize.

[Brock Beauchamp]

I also think short-term trading - unless you're a pro - is less successful in the long run. Remember that you're taxed at a higher tax rate for stocks you've held less than a year.

I generally agree, which is why I don't short term trade.

 

But there have been a few struggling stocks that I followed and I've hit on them far more often than not. It's a small gamble but I won't be throwing big money at it either way.

[Brock Beauchamp]

If people don't mind sharing this information, what kind of gains do you see on a yearly basis?

 

I've been investing for about 3 1/2 years. I invest $6-8k per year for a total of $27k.

 

On that money, I'm currently at 42% overall gains, or just over $11k. This doesn't include dividends, which amount to maybe an additional $1k during that time but it was reinvested so I don't want to count the money twice. I've hit big on some stocks, had a few recent investments remain mostly neutral, and lost a few hundred on a couple.

 

I'm quite happy with that number, as it adjusts to something around a 20% yearly gain once you factor in the gradual rate of investment.

 

What kind of numbers are all of you seeing? I'm curious if I should stay the course or explore different approaches.

[Mike Sixel]

If you are making 20%, keep doing what you are doing!

 

I am making less than that, except for the company stock I buy, which is insanely up, and I get to buy it at 15% off....I have considerably more than you, but I'm like twice as old and I get stock as a bonus most years. Then again, I didn't really start until 9 years ago....give or take.

 

I'll look, but I'd guess I have been more in the 15% range for all the other investments. That said, I've been somewhat conservative on a few decisions, which has cost me. And, I badly timed various Apple purchases...

 

Hmmmm....in looking at the stocks I've picked (ignoring the conservative funds in retirement), I'd guess I'm making slightly more than you the last few years. Nvidia has been very, very, very good to me. But seriously, if you are actually picking individual stocks and making 20%....

 

1. It wont continue

2. Don't change your strategy

[Mike Sixel]

Well, those numbers looked A LOT better when I typed them, than they do now!

[Brock Beauchamp]

Yeah, I don't expect that 20% to continue at all, which is one of the reasons I was curious what kind of numbers others are seeing.

 

20% is great but the market has been generally bullish so I wanted a comparison point to know if I was way under what other people were seeing with their own investments.

 

Also, my yearly 20% rate has been dragged down recently due to conservative investments, just like you. My recent investments have been GM for dividends, Disney (partially for dividends, partially because I think they're going to continue marching upward), and Polaris (partially for dividends, partially because their stock took a hit that I believe is temporary).

 

Those three investments are about $7-8k of my initial $27k investment portfolio.

[gunnarthor]

We're a bit on the conservative side with our investments - as I've mentioned frequently, I love big dividend stocks.  We have a lot in index funds that track the S&P, which grow at about 7-8% but also reinvests in itself.   I think on average over the last 10+ years, we've probably done slightly better than the market (maybe in the 10+% range) but certainly not near 20% a year but over a two or three year period, we probably have.  Frankly, from 06-08 I'm sure we were well over 20% and then the banking crisis happened.  Over the last three years, I think we're probably in the 15% range because of a few specific stocks.

 

I would say that as we've gotten older, our investing strategy has shifted.  When we were young and dumb we bought a lot of stocks and carried a lot of debt - student loans, mortgages, car payments, etc.  Even though they were all low interest (we never carried much CC debt which will kill you) we still had real debt.  As we've gotten older, we've done a better job of mixing long term investing and paying off debt.  So even though today our investment portfolio has less $ in it than it had before the banking crisis (we lost a **** load, **** you Wachovia), we are wealthier b/c we don't have the debt anymore.  

 

edit - I know you didn't ask about the second paragraph but I wrote it anyway.

Edited October 4, 2016 by gunnarthor