What Did You Buy Today?

[Main Street Stock Investor]

(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