Friday, October 17, 2014
Anyway, what I am here to discuss is dumb betting. Because it happens all the time, both in casinos and real life. I am not just talking the people glued to a slot machine or the joker who bets on insurance at the blackjack table, because we all know that is a mistake. I am talking about chasing high yields and shaky companies.
As far as high yields go, I chased one and did not get burned. However, people get torched by these sorts of things all the time. A friend of mine bought some stock in a foreign company, the name escapes me, and told me he was banking a fat 10%+ dividend. Only to get smoked by it later as they slashed it and the share price fell heavily. He sold, recovered 80-90% of what he put in and that was that.
With shaky companies I have two good examples, one of me and one of another friend of mine. The one for me was when I was just starting out. I've worked in alternative energy (AE) a bit in my career so I figured I would buy some stock in it. At the time AE was hot in the news following on the heels of the massive bailout funding. The economy was in a slump, but my company was still installing AE at an impressive rate. So I bought some stock in CSUN. A Chinese solar PV manufacturer. Thank god I only spend $50, and sold it for $39 (includes commissions, ouch). News has come out recently CSUN might be done and their CEO just resigned. Over the past few years their stock has gone from $3 to almost $9 to now less than $3 per share. Really gambling on CSUN would have been quite a ride. The key here is how I screwed up; I did barely any research and I did not worry about dividends, ratios, or any other indicators of stability.
The second example I have is a friend who bought stock in Sony (SNY). SNY recently announced they were getting rid of their annual dividend, which was a paltry $0.26 per share to start. He got lucky and sold after they had some success with their recent PS4 platform release. If he had held onto it, there would be no annual thank you for owning and a recent loss in share price.
Each of these stories has a element of luck and not losing it all or very much. Still if you lose 80% of your money often, you eventually have nothing. Too often people put faith in companies, like dice and expect an outcome. Good investing avoids that and you bet on solid companies that deliver products and services that need to be use early and often. These are also good lessons in diversification. Even if each example was a bet on a blue chip stock, and they all fell apart you will likely still have 20 to 40 other stocks handling the load.
These are a big part of my investing strategy. I don't like getting torched by a fool, and neither do you. It happens sometimes, but if it is happening repeatedly what is the point? All this work is so one day I don't have to work, why extend the working period?
Side note, if you are going to throw the dice at craps, the least you can do is keep them on the table!
- Dividend Gremlin
Friday, October 10, 2014
|Those are not 3D glasses, but they sure are awesome!|
I digress, WLs are an important part of dividend investing. For me they are used to organize and track potential future investments. Those investments might take place this year, in the near future, in 10 years or never. They do a lot of the work for me in tracking the basics of several companies. They go back in time and allow me to look up trends and historical norms. They also allow me to quickly look up stocks in an industry that I might like to add to my account, especially to build in diversity as I go.
My key to using WLs effectively is to categorize stocks in a way that makes sense. The brokerage I use (Sharebuilder), instantly creates a general WLs for stocks. If you so desire you can add types of lists. Currently, I have ten (10) different WLs created. Is that a lot or too many, maybe, but it works for me. I use it primarily for stocks I do not own, but I have included stocks from Loyal3 not yet merged into my main account. What do my WLs have on them? Glad you asked so here they are in alphabetical order:
Banks - A list of banks, pretty self-explanatory. Examples include: BK, BMO, BNS, OZRK, and MTB.
Bio and Technology - Biological and pharmilogical research companies and hi-tech players make up this list. Neither one is full of enough players to merit its own list, and despite their differences as a science person I find they have more in common with each other than anyone else. The list does also contain numerous healthcare players. Examples include: A, ABT, BAX, CA, GSK, IBM, and MRK.
Energy - Petroleum, coal, and natural gas can all be found here. Example include: CVX, PSX, RDS.B, RIG, and XOM.
Food - You are what you eat, and what you own. Examples include: CAG, CPB, GIS, SJM, and YUM.
General - What do you call everything else? It also takes into account companies that span several industries. Examples include: ADP, COH, MAR, OMC, and PM.
Industrials - The most unsexy stocks ever. It includes basic materials, heavy manufacturing, and processing. Nothing cool here, but excellent staying power. Examples include: APD, CLX, DCI, DOW, MMM, and PX.
Insurance - Formerly with banks and part of the financial sector, but not quite the same as is the same with REITs. All types of insurance are considered here from personal needs to large shipping, everything can be insured. Examples include: AFL, AHL, CB, KCLI, LNC, and TRV.
REITs - Fomerly part of my bank list, REITs are part of the financial sector, yet they are their own animal. Examples include: ARCP, DLR, HCP, and OHI.
Transportation and Equipment -Once a member of Industrials, it had to be split off because it is a very unique niche. All types are considered here - Planes, Trains, and Automobiles. Examples include: BA, CAT, DE, CSX, KSU, NSC, R, and UNP.
Utilities -Typically I do not like electric utilities, but those are included here along with my more favorable water, gas, and other utilities such as trash collection. Electricity has a big hurdle ahead of it the next few decades, but the others are always in demand. Telecom has some challenges, but looks like it will adjust nicely to the future - minus landlines. Especially water in the arid Southwest and in the congested Northeast. Examples include: AWR, MSEX, NJR, RSG, SO, VE, and VZ.
Wednesday, October 1, 2014
Between a wedding and moving there will be some significant costs. I know we can absorb them, and with the help of our families throw a kick ass party to celebrate. I have also booking our honeymoon adventures, which will be at the lovely island of St. Kitts (hence that will be added to the travel destination page). Travel Gremlin is super excited about this. Never been to the Caribbean before!
Investment and portfolio wise my growth will be slow. Each time I get paid some money is siphoned off into my investment pool. That pool will not be able to do much of anything, but on the bright side it is a bonus month (I get paid once every 2 weeks), which means an extra pay check will be occurring this month, and it could not come at a better time. In addition, I will be adding to my positions in UL, K, and TGT this month for sure, with possible additions to MCD as well. I also have a mind to start a position in PEP. No matter what happens those positions along with MSFT are my targets for growth over the next 2 months. Once the wedding is over, I will likely be able to add a little bit more to those positions as well.
Beer wise, fall is a great time. Everyone knows there are about a ton of new pumpkin beers, which are usually pretty good. Oktoberfest also starts to show up too. My real interest though will be the likely early appearance of awesome winter beers. Those tend to be my favorites of all the seasonal beers. Otherwise, I have been drinking less beer; a suit was tailored for my wedding, so ruining that would be a big mistake.
Sports wise, my teams so far are doing good for the most part. I have no BPL team, but I must say I am partial to Leicester City after watching them earn unlikely draws and a win over Manchester United - no one saw that coming. NFL wise my team is 3-1, which is awesome. NHL wise hockey starts soon. Lastly, fantasy sports wise my one team is awesome, my other is total garbage.
Goal wise for this month:
1 - Write a few more sports entries.
2 - Get all that wedding and moving stuff done early so I can enjoy both to the extent I can.
3 - Score a goal in my soccer league, seriously its been a long time since that has happened.
Let's see how this goes.