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What Did You Buy Today? - Printable Version

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RE: What Did You Buy Today? - hendi_alex - 01-28-2015

I'm not suggesting that MSFT is a good or bad position, just that the goal is stated pretty strangely, and that there seems to be an absence of any relevant litmus test, at least as stated in the post.
Another example. Suppose that I buy shares of XYZ primarily for its 5% yield and for its safety of that distribution. The price goes goes up and the yield drops to under 4%. A quick survey finds company ABC that sports a 5% yield which appears to have an excellent coverage ratio. Given that my objective is a relatively safe 5% yield, XYZ no longer meets my objective nearly as well as ABC does. I would sell XYZ, harvest my gains, and plow the funds into the more appropriate choice, ABC. Someone who is caught up in the 'yield on basis' mode of thought would never even consider selling XYZ. From their point of view the stock still yields 5% on investment. The market reality in the example is that XYZ no longer provides the 5%, but a suitable replacement does. The key here is in always looking at market yields and anticipated future growth when making investment decisions. Value in the current market has nothing to do with what someone paid for a stock or for what it used to yield. It only has to do with current prices, current yields, and future prospects.

RE: What Did You Buy Today? - EricL - 01-28-2015

Sold out of my Mattel (MAT) position and added to my AT&T (T) position with the proceeds.

I think Mattel could be facing a dividend cut later this year while I thought AT&T had a great earnings report yesterday and a lot of positive catalysts ahead with the DirecTV acquisition and expansion into Mexico.

RE: What Did You Buy Today? - hendi_alex - 01-28-2015

I love T for a covered call play though am in the red on my current 600 shares. Value is down by $929, partially offset by $756 in call income from sell of June $35 calls. I had hoped that the favorable CC would have buoyed the price a little more. Hopefully gets closer to my $35 strike before June. Am up when counting the many dividends that have hit from these shares. My aim is for the call income to more than offset any price depreciation, leaving the dividend as real gains. Probably will keep this play going for a long time, as long as the dividend remains secure and the price doesn't run too much.

RE: What Did You Buy Today? - Main Street Stock Investor - 01-28-2015

(01-28-2015, 08:13 AM)hendi_alex Wrote: Strangely stated goal. Having 1000 shares sounds reasonable. But [with <$10 per share basis and yield on basis of >9%] would seem totally out of investor control. Whether that happens or not would seem to result purely from luck. Also I remain a little perplexed by this fuzzy math preoccupation that many have with yield on basis. Wouldn't the goal of holding a long term position involve the stock having to continually pass some currently relevant litmus test, one that suggests the stock is a better current pick than any similar alternative? An example would be that the stock continues to meet five year dividend growth of X%. Or stocks five year average total return remains above 10% per year. If the stock fails to pass the litmus test, then it it time to cut it loose if a better candidate exists, no matter how long current position has been held. There is no reason to keep holding a stock just because it has become a comfortable friend in the portfolio for many years.

Alex, Thanks for comment and sorry my investment style seems esoteric to you. Chasing yield is not what I do. I build positions in stable dividend achievers, dividend aristocrats and other blue chips by collecting and reinvesting dividends and reinvesting trading profit. I normally stay in a position for 10 years or longer, but continually trade partial positions based on market conditions and technical indicators.

I account for these profits in individual accounting sheets for each stock. I periodicaly trade at opportune times to lower the basis, build positions and build a safety factor. There is more than one way to invest in the stock market, and reading your posts, I believe that your method of investing is different than mine. Tell me, are you purely a trader or an investor or a combo?

As a simple example, if I bought 1000 shares of AAPL yesterday $109/share and sell 900 shares today when the stock popped $6.17/share, do you believe my basis in the remaining 100 shares of AAPL $109/share? You could look at it that way or you could look at it in a different way.

This trade would produce $5,553 in profit in one day and if it is accounted for as a reinvestment in the position, my new basis in AAPL $10,900-$5,553 = $5,347. So the way I look at it is I own 100 shares of AAPL with a new basis of $53.47/share. I only have $5,347 at risk, but own 100 shares of AAPL. The yield on my new basis is twice the published yield. This is a simple illustration to explain the more complex process. Using options, etc.

I treat all 100+ stocks in my 3 portfolios like this and by reinvesting dividends and trading profits, I continually lower my basis, build stock postions, build safety in those stock positions and realize exeptional returns.

I wrote a book about this strategy if you are interested.

M$$I

RE: What Did You Buy Today? - saimash - 01-29-2015

Pikced up 50 shares of HP @ $55.00 this morning.... This brought down my cost basis on my 87 shares to $64.96

RE: What Did You Buy Today? - Jimbo - 01-29-2015

(01-29-2015, 11:38 AM)saimash Wrote: Pikced up 50 shares of HP @ $55.00 this morning.... This brought down my cost basis on my 87 shares to $64.96
Considering hitting the same deal, Bought in at the $77.00 range a little time back.
Really just waiting to pull the trigger on some of the gas stocks, dont want to "time" but dont want to be too early or too late, just waiting to see what happens.

Good job on getting that cost down.

RE: What Did You Buy Today? - hendi_alex - 01-29-2015

buy:
1800 GORO @$3.27
250 KMI @$40.35
500 WILN @$2.79

RE: What Did You Buy Today? - EricL - 01-30-2015

Initiated a position in Visa (V) at the open. Still kicking myself for not pulling the trigger when it had the correction to $200 back in October. Its a bit overpriced, but I figured I have the position now and can add later if another opportunity arises.

Have AMGN on my watch list, waiting for a pullback and new funds to hit the account before I buy that one.

RE: What Did You Buy Today? - DividendGarden - 01-30-2015

Picked up some PSX and XOM.

RE: What Did You Buy Today? - Roadmap2Retire - 01-30-2015

EricL,
I am looking at AMGN too. Do you have a target in mind? I am kicking myself for not buying at $120 level last summer. Grrrr

RE: What Did You Buy Today? - EricL - 01-30-2015

(01-30-2015, 10:48 AM)Roadmap2Retire Wrote: EricL,
I am looking at AMGN too. Do you have a target in mind? I am kicking myself for not buying at $120 level last summer. Grrrr

I'd like to get in around $140 but that would be a 10% pullback. Chances are I'll just buy wherever its at when the cash hits my account in a few weeks.

At 16 times 2015 expected earnings its not terribly expensive considering the double digit growth rate.

RE: What Did You Buy Today? - Roadmap2Retire - 01-30-2015

I agree. The traditional valuation metrics dont make sense (for e.g., graham number works out to be $68.97). Looking at Forward P/E, it doesnt seem so bad.

Thanks for sharing. I have some cash ready to dip my toes in...just need to decide when.