Is it buy time? | Page 2 | TigerDroppings.com

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fishfighter
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re: Is it buy time?


Tough one for me today, but did buy GG again @ 23.97 early and sold it at 24.46. Yes, I did shite when it dropped way below today. I know it will be going up much higher in the next week, but I'm in for short trades.





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AUtigerNOLA
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re: Is it buy time?


Appreciate the analysis.


ETA: I'm curious, it appears you have been investing for a long time. During 2008 when the meltdown occured, did you sell? Based on your comments you love when there are bear markets so you can buy back cheap.



This post was edited on 6/21 at 2:30 pm


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ThaBigFella
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re: Is it buy time?


AUTigerNola what alot of people don't get is that when you buy a dividend stock you are buying an income stream that will hopefully rise every quarter as your dividend buys you more and more shares. See every quarter your dividend is paid and you own a bigger stake of a company which will in turn pay you a bigger dividend the next quarter and so on and so forth. Where it gets really interesting is the double compounding effect where you are getting new shares AND the dividend increases annually as it has for many blue chips around you. The dividend increase means an increase in your pay usually in excess of inflation. Let me give you an example.

I was born in 1979, take coca cola, which was the world leader then in soft drinks, no really an up and comer, if my parents had put $1000 into coca cola stock and never touched it again, id be sitting on $126,000+ today...a 12,000%+ return according to this calculator

LINK

well that would be incredible, but that's hindsight, had they put that same $1000 in 1979 and added $100/month on automatic investments, I'd be sitting on close to $1.1M today with a grand total of $40,000 invested over 34 years.

Dividend stocks double compound and its super powerful, most people don't really grasp it, but albert einstein once called compound interest the "8th wonder of the world"

So a crash in stock price doesn't mean a crash in dividend payment....in most cases, in the last recession I know GE cut their dividend but mcdonalds,coke,phillip morris, and many more all boosted dividends through that rough period, to these companies to cut the dividend is a big big deal bc they will lose lots of investors.

All I can tell you is you want growth + dividends thats why my pick is phillip morris I see that growth and high dividend, coke for instance has only returned 28% with dividends reinvested from 1998 till today. MO/PM has returned 745% in that same timeframe, like I said I like any consumer staple that has a global reach but to me, knowing the growth prospects available overseas and how inelastic people are to tobacco pricing and an enormous global population growing by the day......cigarettes are my pick

but there are many blue chips and you need to see your investment as an income stream and as you buy every new share you are adding income not just today but in the future. For me I have a gigantic postion in PM that pays me nearly $24,000/yr in dividends today, thats incredible at $3.40/share. 10 years from now that dividend is projected to be at close to $9 so without adding another share I'll make close to $60,000/year in a decade if they grow their dividend annually which they will barring some unforseen circumstance which i do not see considering world governments depend on tobacco taxes more than you could ever imagine.

So thats how you should look at dividend stocks, pretend you are buying a business that is paying you back an annual salary on top of capital appreciation. If the price goes down....awesome your dividend buys you a bigger stake, if the stock price goes up.....awesome you made capital gains

Either way as long as the companies stay in business and boost their dividend which some like coke have done every year for 50+ years, you will get a growing income

Im in 18 years into this dividend investment adventure and I'm seeing the rewards first hand, I was on pace to retire by 45 with a near $80k salary from dividends while never earning over $85,000in real life till this past year when I inherited a big business from an uncle

It's doable, it just takes time and understanding



This post was edited on 6/21 at 4:14 pm


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acgeaux129
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re: Is it buy time?


Probably not unless you can stomach a lot of volatility. The true "correction" won't happen for a while. They've already even hinted at the idea of further UE target adjustments below 6.5%. This week was ridiculous.

eta: talking about market as a whole, obviously not short term plays with attractive valuations.



This post was edited on 6/21 at 5:31 pm


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ThaBigFella
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re: Is it buy time?


but ACgeaux who cares? Dollar cost average if that's the case. I personally believe that some stocks like PM I mentioned won't correct by 20%, its already corrected 10% from the high of $96 down to $86 and with a september dividend boost, any shares bought at $86 will pay a 4.2% dividend then, could it go lower? Sure but there's a bigger chance it will go up from here.

Everyone that keeps calling for this correction isn't getting the big thing, companies have rock solid balance sheets today so any decline in price is a steal. How are exxon or chevron supposed to decline 10% from here, you want them to trade at 7x earnings? There are many companies that have run up beyond historic valuations and are probably going to correct, but I could give you a list of many blue chips trading at cheap forwards earnings valuations too

Chevron
Exxon
Conoco
Shell
BP
Phillip Morris
Visa(20x earnings for a growth stock is cheap)

Sure some stocks are overvalued but many are flat out buys today and if they go any lower, sell what you can to buy. Chevron is at 8.9x earnings and yielding 3.4%.....are you kidding right now? I wish I liked big oil more bc that has screaming buy all over it






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jimbeam
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re: Is it buy time?


Fella can you gimme a link or something to read up on all the terminology you use when it comes to buying individual stock.

Please and thank you






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ThaBigFella
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re: Is it buy time?


haha what terminology? I'll try to explain if you detail what you wanna know..

I read so much stuff everyday man, mostly barron's and seekingalpha.com.



This post was edited on 6/21 at 6:16 pm


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AUtigerNOLA
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re: Is it buy time?


Great info big fella, now I just have a few more questions:

How do you start investing in these types of stocks? How much do you start out with? Do you put a side some money each month to go into these stocks?






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ThaBigFella
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re: Is it buy time?


I mean, me personally? I add when I have spare money, as a business owner, there is no salary or set pay so every month after all bills are paid I add what I can and I have a big portfolio of many stocks but with a high concentration on PM but what I do when I have new cash available I look for whatever is the most beaten up recently definitely not looking to buy at the 52 week high unless there is a dividend increase on the horizon

I wouldnt put less than $1000 if i were you into any individual stock bc etrade charges $9.99 to buy and $9.99 to sell but I don't sell anyways so buy $1000 each in a few different companies you like, set it on dividend reinvestment and add when you have the additional funds



This post was edited on 6/21 at 6:25 pm


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jimbeam
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re: Is it buy time?


Price. Vs earnings ( guess this leads to knowing if its overvalued)





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ThaBigFella
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re: Is it buy time?


Ya P/E ratio is definitely how you know what you are getting bc what it says is take Apple bc its at a simple 10x earnings

That means in 10 years if if didn't grow earnings at all and they stayed the same you would make 100% of your money back.

10x earnings = 10%/year
20x earnings=5%/year
30x earnings = 3.3%/year

IF EARNINGS DONT GROW

but you can't look at just P/E bc its misleading, high growth companies like amazon or even visa trade at astronomical P/E ratios bc they have tons of growth factored into the price currently that hasn't been achieved. Big Oil trades at cheap valuations bc they aren't going to surprise you and triple in size anytime soon so they're very steady and under 10x earnings.PM in my book is a high growth company and at 16x earnings its trading like a solid company with little growth, hence cheap

In my book anything under 20x earnings is a potential buy,15x earnings is cheap, anything under 10x earnings is a steal as long as earnings can stay consistent and not decline, that's the issue apple is facing and why it's cheap at 10x earnings. Can apple make the astronomical profit it made last year? I don't think so, but they will still make a ton of money but the street doesn't feel they can match the insane year they had.

Companies like Coke,PM I like bc its easy for them to grow earnings, they simply add a penny or 2 to a can of soda or to a pack of cigarettes and voila earnings boost. Apple has to physically sell products, I spent $7,000+ with apple last year (1 imac,1 macbook pro, 2 iphones, and 2 ipads). Will I do it again this year? no, so that's the issue with tech companies, their products are hot and then they're not.Users don't consistently spend money every month with those companies. I consistently for my stores spend $500/day+ per store buying cigarettes and sodas, that's where altria and coke make the money from the business owner. As a business owner what I sell it for is my profit, the .22 per can i pay for a coke can that's the only profit coke sees, whatever they make on that measly .22 can. Same with MO/PM the only profit they see is on the $2/the distributor like sams buys the cigs for before state and federal taxes are applied. So companies like that have orders placed months in advance, no worries about month to month like say apple.

Coke,PM,MO,PG,JNJ sell products to big users like gas stations,grocery stores,etc and then raise the prices nominally every year.Hence the boosted dividend every year as income rises.



This post was edited on 6/22 at 10:10 pm


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jimbeam
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re: Is it buy time?








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AUtigerNOLA
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re: Is it buy time?




Much appreciated.






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acgeaux129
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We are BR
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re: Is it buy time?


P/E can be used as a rough approximation of a company's valuation relative to its past performance as well as the value of its peers. It gives you a decent idea, but the "E" part of it is carefully manipulated by management and is not necessarily a good proxy for cash flow.


This post was edited on 6/21 at 8:41 pm


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wegotdatwood
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Member since Aug 2009
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re: Is it buy time?


quote:

ThaBigFella



Should I transfer my wife's Ira to a Roth? We'll most likely never be over the income threshold.

The traditional is nice to lower taxable income. We'll be in 15% bracket with the standard deduction



This post was edited on 6/22 at 12:26 pm


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ThaBigFella
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re: Is it buy time?


Bottom line it's always buy time, maybe not for an index but there are always opportunities in individual stocks





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wegotdatwood
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re: Is it buy time?


Bump





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kjacksonp
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Mobile, AL
Member since Dec 2006
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re: Is it buy time?


I see no mention of Apple in this thread. It seems somewhat oversold with a price of around 413 and a estimated value of over 600 (according to Trefis.com).

Any opinions/thoughts?






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ThaBigFella
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Member since Apr 2006
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re: Is it buy time?


Listen, I used to have apple and i dropped it bc to me its not worth the risk. The issue apple is facing is serious, it's an issue of it's trading cheaply at 10x earnings bc frankly alot of people don't think apple can match the insane profit it generated last year. They already announced margins are dropping, they're slashing prices on certain model products, and the WWDC conference just happened with lots of refreshes but no announcement on cheaper iphone,iphone 6, or apple tv.

What I don't get is everyone saying other phones are cheaper, last i checked the Iphone 5 was $199 at ATT, the glaxy note 2 was $299, and I think the samsung S4 was $199 too. Apple earned $44/share last year and is projected to earn i think $39.15/share this year and trading at 10x earnings so the real issue is what if apple's sales really fall off to say $30/share in income that puts it at $310. The gigantic cash pile they have is awesome but Apple is facing stiff competition from samsung s4,nokia lumia,galaxy note 2, and all these other models that do the same stuff now.

The iphone is what I carry and I won't switch but many people will to try different things, some people want different operating systems, bigger screen sizes, etc. Apple isn't budging and making a bigger screen which isn't that important to me but to those who buy the galaxy note 2 it is.

So at this point apple is slowly decaying, but still turning a gigantic profit, just not as much as it did a year ago, and it can't be priced for growth when it's not growing so you see the decline in share price. Now, if apple pulls a rabbit out of its arse and does something to get people excited im sure they stock will zoom upwards but man you've gotta wonder what they've got planned with no announcements recently.

Tech is wild, it has crazy swings, makes alot of people rich, bankrupts even more and is one thing warren buffett will not buy.I wasn't interested in the risk reward anymore since it was such a small part of what i owned and went back to my inelastic consumer staples i love with the money.






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kjacksonp
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Member since Dec 2006
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re: Is it buy time?


Thanks. That was good info.





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