DGI For The DIY

[hendi_alex]

Tax treaty with U.S. keeps tax issues at a minimum. If held in an IRA, no problems at all. If held in a regular account, you will likely have to submit a form to your brokerage to get the 15% treaty tax rate, otherwise 25% gets skimmed. The form is no big deal, just one page for my TDA account.

[EricL]

(11-11-2013, 12:20 PM)hendi_alex Wrote: Tax treaty with U.S. keeps tax issues at a minimum. If held in an IRA, no problems at all. If held in a regular account, you will likely have to submit a form to your brokerage to get the 15% treaty tax rate, otherwise 25% gets skimmed. The form is no big deal, just one page for my TDA account.

Thanks Alex.

[hendi_alex]

Thanks to you! I had forgotten about adding POT to my regular account and had not yet submitted the form. I faxed them a copy just now.

[EricL]

Well, I made my move this morning.

Sold my MMM and VVC and purchased TAL and POT.

A little disappointed to find out that Schwab doesn't allow auto-reinvestment of dividends on POT because it is a foreign stock.

Also a little torn on selling MMM because I think it is a great company but with only a 2% yield and fairly pedestrian earnings and dividend growth rates I thought I could do better. Came down to selling MMM at a slight overvaluation to buying POT at what looks like an undervaluation and much higher yield.

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Forgot to mention I also made a purchase with new money, buying 12 shares of DLR at $47.75.

[EricL]

(11-15-2013, 12:55 PM)EricL Wrote: Well, I made my move this morning.

Sold my MMM and VVC and purchased TAL and POT.

A little disappointed to find out that Schwab doesn't allow auto-reinvestment of dividends on POT because it is a foreign stock.

Also a little torn on selling MMM because I think it is a great company but with only a 2% yield and fairly pedestrian earnings and dividend growth rates I thought I could do better. Came down to selling MMM at a slight overvaluation to buying POT at what looks like an undervaluation and much higher yield.

---

Forgot to mention I also made a purchase with new money, buying 12 shares of DLR at $47.75.

Already regretting my MMM sale. They announced a huge stock buyback and boosted the dividend by 35% today. So much for the recent history of pedestrian increases.

Sometimes I think I'd just be better off buying positions and then never selling them and just keep buying stocks I like when I find them rather than trading. Seems like half the time I end up regretting it down the road.

[TomK]

(12-17-2013, 11:12 PM)EricL Wrote: Sometimes I think I'd just be better off buying positions and then never selling them and just keep buying stocks I like when I find them rather than trading. Seems like half the time I end up regretting it down the road.

It is a tough game -- don't beat yourself up over it. Seems like folks are evenly split between buy and hold (mostly) forever and selling when fully or over-valued. For me, the buy decision is hard enough. I might consider selling if something got obviously wildly overvalued, but for now, I'm sticking with buying, holding, and collecting those dividends.

[rnsmth]

(12-18-2013, 03:10 PM)TomK Wrote:

(12-17-2013, 11:12 PM)EricL Wrote: Sometimes I think I'd just be better off buying positions and then never selling them and just keep buying stocks I like when I find them rather than trading. Seems like half the time I end up regretting it down the road.

It is a tough game -- don't beat yourself up over it. Seems like folks are evenly split between buy and hold (mostly) forever and selling when fully or over-valued. For me, the buy decision is hard enough. I might consider selling if something got obviously wildly overvalued, but for now, I'm sticking with buying, holding, and collecting those dividends.

Me too. I have some POT bought before the cartel collapsed. It is my smallest position and I am keeping it and reinvesting dividends.

[EricL]

Doubled my IBM position on Thursday with new money I had available in the account.

Love the long term prospects of the company and feel the stock is at an attractive price here.

[TomK]

(01-04-2014, 11:45 PM)EricL Wrote: Doubled my IBM position on Thursday with new money I had available in the account.

Love the long term prospects of the company and feel the stock is at an attractive price here.

I've been trying to understand IBM better for a while now. Can you expand on why you love its long-term prospects? It has essentially turned itself into an IT, software, and consulting business, right? So where is the moat and margin in that? Except possibly for scale, I just don't understand what IBM's market advantage is anymore. And I've heard several people say that EPS growth is largely due to the buyback and not revenue growth. So, I would love to hear the bull case for IBM from someone who has looked into it more.

Thanks!

[EricL]

I feel IBM is a core holding in my portfolio and based on its track record over the last twenty years it looks like a bargain to me at current levels. Revenue growth has slowed recently but between stock buybacks and growing higher margin parts of the business the earnings are projected to grow 10% per year over the next 5 years. With a current PE of just 11, I think its a great value.

Here are the historical growth rates over a few periods (numbers from fastgraphs).
20YR EPS = 20.2%
20YR DG = 9.0%

15YR EPS = 11.2%
15YR DG = 15.7%

10YR EPS = 13.9%
10YR DG = 19.2%

5YR EPS = 15.1%
5YR DG = 17.2%

With earnings expected to grow at 10% going forward and dividends likely to as well, I think the stock will do fine over the long run.

[ronn38]

I agree with the above assessment of IBM as a business, and am long in the company.

But on a more speculative note, I believe when they get Watson sorted out- it will be the beginning of 21st century computing.

And I think their power8 chip could give Intel's Xeon processors a run for their money.

Ronn

[EricL]

My 2013 recap has been posted on Seeking Alpha.

http://seekingalpha.com/article/1946771-...2013-recap