# The irony of stock market and dollar losses



## Victor (May 6, 2017)

It is ironic that people, including me, will fret over losing a dollar here or there or not taking advantage
of a little coupon, while losing hundreds or even a thousand dollars (or pounds) in the market in a single
day. My mother would lose thousands in the market and it didn't bother her but she was upset to lose a dollar
or forget a coupon. Technically the market losses are only on paper, people say, but in reality that loss
may be permanent. I could lose a whole semester (4 months) of pay entirely in a few days.
This scares me but you will not make much in other financial instruments (in U.S) like CD's.

Do you feel this way?


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## Aunt Bea (May 6, 2017)

I keep an eye on the ups and downs of the market but I don't figure that I've lost or gained anything until the day I sell.

I can't control the market but I can control other things, like using a coupon, turning back the thermostat, shopping at the thrift store, etc...

I remember 2008 and the white knuckle ride for a couple of months until we found the bottom and things settled down, scary stuff LOL!!!

For me the answer has been to keep a cash cushion so I don't have to sell in a down market.  Some folks would say that is foolish because if the cash was working in the market I would be better off over time, who knows.  We each need to manage our finances in a way that makes us comfortable.


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## Knight (May 6, 2017)

Victor said:


> It is ironic that people, including me, will fret over losing a dollar here or there or not taking advantage
> of a little coupon, while losing hundreds or even a thousand dollars (or pounds) in the market in a single
> day. My mother would lose thousands in the market and it didn't bother her but she was upset to lose a dollar
> or forget a coupon. Technically the market losses are only on paper, people say, but in reality that loss
> ...



I don't because I totally agree with Aunt Bea.
Quote
" We each need to manage our finances in a way that makes us comfortable."


I credit that comfort to a Fidelity employee that explained to me the advantage of converting 401k's into traditional & self directed IRA's. Other advice included not falling in love with a stock & holding it forever.


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## Bobw235 (May 6, 2017)

I have someone who manages my money and he has created a conservative portfolio that doesn't leave me too exposed if the market drops sharply. Knowing that it's well diversified and that we're very conservative, means that we may miss out on some large (temporary) gains, but are protected when the market takes an inevitable dive. When I retired I moved all my 401k money into an IRA. I don't have to worry about it day to day. That's what I pay the advisor for.


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## exwisehe (May 6, 2017)

Do you think we could have another 2008 stock market catastrophe?  Well, I didn't think so, but in the last few days I've begun to worry a little.

Especially since reading this:  https://www.nytimes.com/2017/05/05/us/politics/dodd-frank-finance-banking-regulations.html?_r=0

And this:   "It is an enormous package of gifts for Wall Street and the worst actors in finance,” said Lisa Donner, executive director of Americans for Financial Reform, who said the bill House Republicans passed would increase the likelihood of another financial crisis."

So, we'd better be very careful.


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## Bobw235 (May 6, 2017)

> Do you think we could have another 2008 stock market catastrophe? Well, I didn't think so, but in the last few days I've begun to worry a little.



Yes. My financial analyst has noted that the technicals on the market are cause for concern. The market is very expensive and ripe for a correction. The question is when it will happen.


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## mathjak107 (May 7, 2017)

our balance is our balance whether we sell or not .selling may be a tax event but that value is your balance at any given time .

yeah , we all  heard  the incorrect mantra that says it is only a loss or gain on paper until you sell but that is false .

it is all your money at any given time and whether you close a position each night and rebuy the same investment or another one the next morning is no different than deciding to keep the same money in play over night .

you may not care what your balance is at the moment but that does not mean it does not count . that investment may never come back .

in fact in retirement my yearly draw is based on my balance each dec 31st whether i sell or not .

investing in variable assets is no different than working on straight commission . there are bad years , good years and flat years . but in the end if your horizon is long enough temporary dips don't matter at the end of the day .

i have been using the fidelity insight news letter for more than 30 years and following the portfolio models .

the growth portfolio has taken 100k in 1987  and made it 2.20 million today without adding another penny using plain ole fidelity funds .

that is through crashes , recessions , the 2000 tech crash the 2008 financial crash and most important the lost decade when equities barely moved on an inflation adjusted basis .  

i have been up or down 5 digits in one day  exceeding my wifes yearly salary . but it is all part of the variable balance process .

today i am more conservative in retirement but i still maintain 40-45% equities .

i run 3 newsletter optimized portfolios .

5 years withdrawals in a conservative ,  income model which is 23% equities and 72% assorted bond funds for eating in years 1-5 , 5 years in a growth and income model that is 60/40 for eating in years 6-10 and all the rest in a 100% equity growth model for eating in years 11-30 plus .


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## mathjak107 (May 7, 2017)

Bobw235 said:


> Yes. My financial analyst has noted that the technicals on the market are cause for concern. The market is very expensive and ripe for a correction. The question is when it will happen.



actually stocks are high but not  by much when interest rates are considered .

p/e's are about 21 with the historical average about 19 . but historically bonds are in the 5-6% range . at these levels stocks are  not so high . in fact earnings have been very good with 3/4's of the s&p coming in better than expected .

bull markets do not end when pessimism is this high about them . most of us are pessimistic about things and that sits well for markets


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## Don M. (May 7, 2017)

Predictions for stock market performance, by the "experts", are all over the place....but more and more of them are predicting that the markets will continue to climb...with only minor corrections.  There are even some of these predictions claiming that the market will soar to previously unthinkable levels.

http://www.patientwealth.com/dow-150000/

Bottom line....there is no other mechanism, other than the markets, to allow a person to maintain, or grow their savings....money in the bank is growing dust.  A well balanced portfolio should grow nicely, over time.


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## Knight (May 7, 2017)

mathjak107 said:


> our balance is our balance whether we sell or not .selling may be a tax event but that value is your balance at any given time .
> 
> yeah , we all  heard  the incorrect mantra that says it is only a loss or gain on paper until you sell but that is false .
> 
> ...



You & I share the same thought process when it comes to money management. Having the patience to spend time learning for ourselves what works for what we want achieve didn't start a few years ago. Time has been our friend. I'm not knocking those that use an advisor just pointing out for those that may still have quite a few years before they retire that learning for yourself can pay off really well.


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## OneEyedDiva (May 7, 2017)

I have never panicked about stock market losses because I'm in it for the long haul and I know the markets always bounce back. Plus I may never need to touch the money because I have more than enough monthly income. Another thing is that even during the downturn, my investments did well. What's ironic is the ones I chose over the years with my crazy, unscientific method are the ones that did well. The one mutual fund and one stock that all the financial analysts were touting so highly are the two investments that tanked. So I will never listen to the "experts" again! Good thing I didn't pour a lot of money into either of them. 

I agree that if you lose a dollar or two, your wallet feels it immediately. If someone loses thousands but still has the principal to draw from or like me, has faith that the markets will rebound, it doesn't seem as "real". I just did an about face on my savings/investment plan after re-reading a financial article. I realized that it is worth the risk for me to put more into my relatively stable investments earning 10 to 14.5 percent on average annually than to keep so much money in a bank account paying less than 1% annually. Doing so is literally losing money in two ways. First lost growth and secondly being eaten up by inflation with no income to replenish what was lost. Gosh, I remember when a small savings and loan in our city that eventually closed it's doors, was paying 14% on CDs. That is unheard of now.


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## mathjak107 (May 8, 2017)

what we usually give up is more than what things typically drop .

just look at bonds the last year . many pulled out of bonds and bond funds because the rates went up .

we get about 2400 a month in bond fund interest from our bond allocation . we would have given up 28k because we sat in cash the last year had we feared bonds .

we could actually fall 11k and still be ahead of 1% in cash instruments waiting things out .

peter lynch was so correct when he said more money is lost or given up in preparation for the next downturn than has been lost in the downturn by markets .


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## mathjak107 (May 8, 2017)

one of the reason investors do poorly trying to guess markets is that it take a real nervous nellie to bail out now and go to cash when markets may very well go higher .

it takes balls of steel to buy when markets are plunging and while everyone is else is running for the fire exit you are running in .

rarely does one person possess both qualities . generally the nervous nellies bail , have visions of having all this cash and markets plunge .

but in reality they never act because they are afraid it is still going to fall .

in the mean time markets reverse course without any signs anything is any better .  they believe it is a suckers rally so they delay buying . it goes higher and higher and of course now they are waiting for the roll back to get in , which of course does not happen and they get left behind a 2nd time .


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## Don M. (May 8, 2017)

I've found that the best financial advice, for me, comes from watching CNBC, and their analysts...especially Jim Cramer, at breakfast every day.  Following their tips, and monitoring my portfolio myself has allowed me to keep our assets intact.  I've been pulling a monthly allotment from the IRA for almost 16 years, and as of this morning, I have slightly more than what I started with....essentially giving us over $400K of "free" money, since retiring.  The stock markets are certainly a bit of a gamble, but if a person pays attention, and reallocates as market conditions change, the "ride" is not that bumpy.


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## mathjak107 (May 8, 2017)

that means really nothing without numbers . cramer's track record is no better than a coin flip at best . reminds me of my aunt who used to buy individual stocks and tuck the certificates away . she would tell us how well the issues are doing . we would ask her what they were doing , she would say , they are up .

when we looked many years later a simple index fund would have given her 2x what these stocks did .


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## Catlady (May 11, 2017)

"Playing" the stock market is one of my hobbies/obsessions.  I even love stocks with high volatility, like TSLA and AMZN and NVIDA etc.  I only wish I had started investing earlier than my mid 50s.  And I wish I had known then what I know now, especially not to use margin.  Margin was my biggest downfall during the early 2000's and the dot.com crisis.  

I love ETFs because you can trade them like stocks but are safer than individual stocks, although they don't go up as much.  I figured that since this bull market is now 9 years old and stocks are expensive I sold some and have cash available for an impending crash.  Yes, you're not supposed to ''time the market'' but I simply could not resist taking some profits and have a wish list of stocks and etfs I plan to buy at discounts of 30% and 50% discounts.


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## Catlady (May 11, 2017)

"Playing" the stock market is one of my hobbies/obsessions.  I even love stocks with high volatility, like TSLA and AMZN and NVIDA etc.  I only wish I had started investing earlier than my mid 50s.  And I wish I had known then what I know now, especially not to use margin.  Margin was my biggest downfall during the early 2000's and the dot.com crisis.  

I love ETFs because you can trade them like stocks but are safer than individual stocks, although they don't go up as much.  I figured that since this bull market is now 9 years old and stocks are expensive I sold some and have cash available for an impending crash.  Yes, you're not supposed to ''time the market'' but I simply could not resist taking some profits and have a wish list of stocks and etfs I plan to buy at discounts of 30% and 50% discounts.


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## Catlady (May 11, 2017)

New to this forum.  I posted same post twice, how do I delete one post?


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## mathjak107 (May 11, 2017)

individual stocks take on a whole other level of risk .they take on individual company risk and market risk .unless you own enough of them you are not investing ,you are speculating .

you are trying to find just the right company ,in just the right market at the right time , in the right market sentiment.

the problem is even if you got all that correct you still don't know what the competitors have on their drawing board .

look at the pounding ibm and verizon just took because they missed earnings .

i do play with etf's and stocks but i am careful to keep that play very separate from my serious money which only takes on market risk .

i do very well trading in and out of stocks but i would never do that with my serious money .


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## Victor (May 15, 2017)

My stock broker man said I should get some safe mid-cap stocks in my portfolio.It is too
aggressive, so he says. Well, that is a lot of research. I have the time but not
the know-how to find them. A high yield,  medium share price solid company that 
is not in energy or retail sectors. Happen to know any?


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## Catlady (May 15, 2017)

Victor said:


> My stock broker man said I should get some safe mid-cap stocks in my portfolio.It is too
> aggressive, so he says. Well, that is a lot of research. I have the time but not
> the know-how to find them. A high yield,  medium share price solid company that
> is not in energy or retail sectors. Happen to know any?


Did he make any suggestions?  Just curious.
I would buy an ETF, since they are safe because they hold lots of companies, rather than put all your money into one stock.  Of course, they don't go up as much (or down) as the companies in it.  My favorites are the S&P etf SPY and the tech QQQ.  You can also get banking XLF and defense ITA and internet hacking HACK or CIBR.  Just a few ideas.  Of course, all of them are at or near highs so I'd wait for a correction to buy them.  All of the ones I mentioned are on my Wish List.


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## mathjak107 (May 16, 2017)

inexperienced people should not be buying individual companies . buy diversified index's , allocate to your temperament and goals and forget  about speculating in individual stocks .
there are enough lazy portfolio's to choose from . 

but you need to get clear in your own head just what your priorities are , as the best for you may be different than the best for me .

your goals may be you want the biggest gains ?  or you may want the least losing years or  low volatility so the swings don't bowl you over  .   they are not going to be all found in one portfolio so you need to pick what is important .

you can compare popular lazy portfolio's here .

https://portfoliocharts.com/portfolios/


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## Victor (May 16, 2017)

Most of my stocks were inherited. I chose a few myself, some are winners like Walmart and they all have high yields. That is
very important. I also use mutual funds.
I buy a small number of shares anyway, to limit possible losses. Some stocks went up and I wish I bought more.
. I try to analyze
the stocks the best I can and am not inexperienced...but  I have much to learn!
I know exactly what I want...your pie charts are easy to read but why call them lazy?


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## mathjak107 (May 16, 2017)

high yield is the least of importance .at the end of the day only your total return matters. if anyone doubts this i will happily pay you more than your highest yield but i keep the invested dollars .


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## mathjak107 (May 16, 2017)

Victor said:


> Most of my stocks were inherited. I chose a few myself, some are winners like Walmart and they all have high yields. That is
> very important. I also use mutual funds.
> I buy a small number of shares anyway, to limit possible losses. Some stocks went up and I wish I bought more.
> . I try to analyze
> ...



they are called lazy portfolio's because except for rebalancing they do not have to be tended to or acted upon  very often.

there are all called lazy or couch portfolio

https://whitecoatinvestor.com/150-portfolios-better-than-yours/


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## Victor (May 18, 2017)

I know that returns count. I was thinking of my dividends when I said yield.
They are a needed bonus to my income.


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## mathjak107 (May 18, 2017)

you do know there is nothing unique about dividends . for every dividend paid the exchanges automatically reduce the value of your investment left compounding by an equal amount .

a portfolio of non dividend payers with the same or greater return can provide the identical income stream and leave you with the same balance  .

dividends are not like interest which is on top of your existing balance . dividends take the price of the shares you had the night before , break off a piece of the share price and give to you lowering your dollars still invested  .

i accidently bought verizon the day before it went ex div . i gave them 20k  , i got a dividend of 235.00 and had 19,765.00 left for the market action to compound on . in the end nothing gained nothing lost .

to make matters worse they missed earnings and not only got the price reduction from the dividend but got smashed ay by market action


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## Trade (May 18, 2017)

I have no money in the stock market. 

I put a little deferred compensation in mutual funds back when I was working and what I found was that if my balance went down $100 I felt like I had taken a hundred dollar bill and burned it in my outdoor grill. So I decided it was not for me.


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## mathjak107 (May 19, 2017)

if it wasn't for the 30 years i spent investing in diversified funds i would not be retired today. in fact over a typical accumulation period spanning decades no one in our history in this country ever lost a penny except through bad investor behavior


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## Trade (May 19, 2017)

mathjak107 said:


> if it wasn't for the 30 years i spent investing in diversified funds i would not be retired today. in fact over a typical accumulation period spanning decades no one in our history in this country ever lost a penny except through bad investor behavior



I hung in for 31 years years with State Government in Florida so that I could get a defined benefit Pension. I would have never been able to put away enough myself to retire like I have. The State of Florida had a pretty good retirement system. Unfortunately two of the last three Republican Governors, Jeb Bush, and Rick Scott, have been trying their best to destroy it, because that's what Republicans do. Charlie Crist wasn't so bad, but the Republican Party drove him out.


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## mathjak107 (May 19, 2017)

the best of all outcomes is a pension and your own investing .


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## Trade (May 19, 2017)

mathjak107 said:


> the best of all outcomes is a pension and your own investing .



If you can build up enough so that you never have to concern yourself with running out of money. 

That's something beyond the means of most working class people.


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## mathjak107 (May 19, 2017)

i was working class all my life and lived in nyc (queens)  a high cost of living area . yet i made investing a priority .

as i got more and more i invested in different things and compounding is definitely your friend .

a penny saved is a penny earned -but it will always be a penny . good investing skills take the little bits we can save and magically make big numbers over decades out of it .

it took the first 50 years of my life to compound to a million dollars but only 13 years to triple it .


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## Aunt Bea (May 19, 2017)

I always fed the pig, just like he was a member of the family, and now he feeds me!!!

For the average person it is all about saving and investing small amounts of money over long periods of time.

_"Large streams from little fountains flow, Tall oaks from little acorns grow." - _D. Everett


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## nvtribefan (May 19, 2017)

mathjak107 said:


> it took the first 50 years of my life to compound to a million dollars but only 13 years to triple it .



How wonderful for you.  Are you familiar with the expression "humble brag"?


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## mathjak107 (May 20, 2017)

a well deserved humble brag i might add . i grew up in a new york city housing project and vowed never to return or ever raise a family there . a promise that kept me motivated and driven not to fail financially for a lifetime . but it is also an example of how powerful compounding can be on the bits we are able to save from our pay checks .


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## Bullie76 (May 20, 2017)

mathjak107 said:


> a well deserved humble brag i might add . i grew up in a new york city housing project and vowed never to return or ever raise a family there . a promise that kept me motivated and driven not to fail financially for a lifetime . but it is also an example of how powerful compounding can be on the bits we are able to save from our pay checks .



If I remember right, there was an article of you and your wife in Money Mag a few years ago. One of those success stories they do. Got a link for all to see? Didn't your wife also contribute a good chunk to the portfolio? If it was not you my apologies. He had a similar name on another forum.


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## mathjak107 (May 20, 2017)

very good memory , yes that was us . it was over 10 years ago actually back in 2006 .  very good remembering that .  actually the story was kept on  the cnn website for a decade and now that i went to link it   they only keep things up there for up to ten years .
my wife inherited i think 200k or so  which  we left as cash cash to cover our first 2 years in retirement .


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## Knight (May 20, 2017)

mathjak107 said:


> the best of all outcomes is a pension and your own investing .



50 years of investing probably isn't possible for most posting here. I don't think many companies offer pensions now since 401k's with a percent match became popular. But there probably is time for offspring to learn & even easier with tons of info available on the internet. 

Fortunately both my wife and I worked for companies that had pension plans & 401k's. Foolish to invest  in the companies we worked for was the "expert" opinion.  Didn't listen to the experts. Between company match in our 401k's & ESOP's at no cost to buy and a percent discount on the average stock cost, that long term advantage kicked. The way it kicked in was two for one splits, and even a 4 for 1 split. 

Best thing we did was to convert the 401k's into self directed IRA's. The traditional IRA's we have as a hedge are nice but  don't amount to much.

So out of the dumb luck to have a long time to prepare for our old age, we both have 4 sources of income. New goal is to leave each of our sons 15,000 shares of a stock that as of now pays $1.60 a year in dividends. With any luck those will split for them.


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## Don M. (May 20, 2017)

Probably the best two things the government has ever done for the working people was the implementation of Social Security, and the 401K program...I just wish the 401K's had been available when I first started working.  As time passes, more and more people are going to be responsible for their own financial security in retirement, and getting into a good 401K ASAP is probably the best thing today's younger workers can do for themselves.  The number of workers covered by a Defined Benefit pension plan has dropped to about 20% in the past few years, so that leaves 80% of the people with little other than SS and whatever they have saved and invested.


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## mathjak107 (May 21, 2017)

Knight said:


> 50 years of investing probably isn't possible for most posting here. I don't think many companies offer pensions now since 401k's with a percent match became popular. But there probably is time for offspring to learn & even easier with tons of info available on the internet.
> 
> Fortunately both my wife and I worked for companies that had pension plans & 401k's. Foolish to invest  in the companies we worked for was the "expert" opinion.  Didn't listen to the experts. Between company match in our 401k's & ESOP's at no cost to buy and a percent discount on the average stock cost, that long term advantage kicked. The way it kicked in was two for one splits, and even a 4 for 1 split.
> 
> ...



OH it is possible to invest for decades . most choose not to  . 

at one point in my career i had 3 jobs going on to make sure i always had money to invest . i was a drummer doing side gigs weekends , i had my regular hvac tech job and i ran my own service company on the side at night if i could get work .

it all depends on priorities and how dedicated to having some extra money to invest you are ..
as they say , those who really want to succeed at something will find a way- the rest will find an excuse


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## Knight (May 21, 2017)

mathjak107 said:


> OH it is possible to invest for decades . most choose not to  .
> 
> at one point in my career i had 3 jobs going on to make sure i always had money to invest . i was a drummer doing side gigs weekends , i had my regular hvac tech job and i ran my own service company on the side at night if i could get work .
> 
> ...



I agree that it is possible to invest for decades if you have decades left to be able to do that. I was reflecting on the fact this is a seniors site and the probability that most here are past having that time frame. 

The best I expected to do by posting about our long term investing was to show it can be done. But as you point out there is a truth in those who really want to succeed at something will find a way- the rest will find an excuse


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## Bullie76 (May 21, 2017)

Knight said:


> I agree that it is possible to invest for decades if you have decades left to be able to do that. I was reflecting on the fact this is a seniors site and the probability that most here are past having that time frame.
> 
> The best I expected to do by posting about our long term investing was to show it can be done. But as you point out there is a truth in those who really want to succeed at something will find a way- the rest will find an excuse



I have a couple of mid 60's friends who appear not to be worried at all about retirement. They spend money like it's going out of style. They do not even have a target retirement date. I think they feel a little inheritance from parents and SS will do the trick. These two had good jobs but also had several kids too. So I know they couldn't save like me, but no doubt they could have saved and invested enough to retire by late 60's. Not happening tho.


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## OneEyedDiva (May 22, 2017)

Don M. said:


> I've found that the best financial advice, for me, comes from watching CNBC, and their analysts...especially Jim Cramer, at breakfast every day.  Following their tips, and monitoring my portfolio myself has allowed me to keep our assets intact.  I've been pulling a monthly allotment from the IRA for almost 16 years, and as of this morning, I have slightly more than what I started with....essentially giving us over $400K of "free" money, since retiring.  The stock markets are certainly a bit of a gamble, but if a person pays attention, and reallocates as market conditions change, the "ride" is not that bumpy.


Jim Cramer was one of the experts touting Fitbit. I bought only 25 shares (thank goodness) at $45+ and 20 at $36+. Today the stock is $5.62!


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## mathjak107 (May 22, 2017)

cramer is an entertainer . his track record is a bit worse than a coin toss .


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## WhatInThe (May 25, 2017)

Buy low sell high which means you have to keep an eye on it. Never assume that stock or company will be there when you want to sell or cash in. Also think about stock and funds for income. The key word being funds because a fund can have a company/stock go bad and still be worth something unlike a person who holds that individual stock


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## OneEyedDiva (May 28, 2017)

Trade said:


> I hung in for 31 years years with State Government in Florida so that I could get a defined benefit Pension. I would have never been able to put away enough myself to retire like I have. The State of Florida had a pretty good retirement system. Unfortunately two of the last three Republican Governors, Jeb Bush, and Rick Scott, have been trying their best to destroy it, because that's what Republicans do. Charlie Crist wasn't so bad, but the Republican Party drove him out.


Trade...our N.J. governor Christie, also a Republican, tried to do the same. He had it out for retirees and teachers from day one. He stopped our COLAs, promised he would fully fund the plan, then reversed that decision even after a judge told him it was a mandatory obligation. I was so afraid he would cut our pension benefits and wreak havoc on our retiree health benefits but so far he hasn't. New hires face stunning benefit changes however.

Those of us who are getting defined pension benefits are blessed. We are a fading number. But like Mathjak...I'm glad I got into and stayed in the stock market. My investments are mostly mutual funds and ETFs (hand picked using my own unscientific method). I recently reversed my decision to continue to add to my savings so they would have more of a percentage in my portfolio because the growth is next to nothing, which means I'd lose money to inflation in the long run. BTW, my investments didn't suffer during the 2008 crash and recession and have _averaged_ 14% annually since. I am 70 years old and still investing. Unless there's a major catastrophic event or illness, I won't need to touch my investments.


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## mathjak107 (May 28, 2017)

WhatInThe said:


> Buy low sell high which means you have to keep an eye on it. Never assume that stock or company will be there when you want to sell or cash in. Also think about stock and funds for income. The key word being funds because a fund can have a company/stock go bad and still be worth something unlike a person who holds that individual stock



buying individual stocks adds a whole other layer of risk . it adds individual company risk and all the negatives that go with betting on a particular company .

i only fun trade stocks . my serious money has always been funds . dealing with just market volatility is enough without taking on  individual company  risk .


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## Victor (May 28, 2017)

Anyone know any high quality profitable midcap stocks? I am very cautious about this but I need to diversify.
Nothing in retail, energy or utilities or restaurants.


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## mathjak107 (May 28, 2017)

i don't buy individual stocks for my serious investing . in funds right now i much prefer the small cap growth arena than mid-caps .


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## Knight (Jun 5, 2017)

We had a family BBQ over the weekend that gave me a chance to talk to our sons about what they plan on doing with their gift. Invest some and fun with some said all 3.  They will do what they want. I don't tell them what to do just point out that looking ahead instead of what is hot now is in their best interest.

I gave them an example.
Back in 2002 I was reading about the amount of waste American's generate, amazing almost mind boggling. I did a little research and found a waste management company selling for around $14.00 a share. Frugal I bought 1000 shares. It went up to a point where I was going to sell and take the capital gain. But the company announced a 3 for 2 split. Since then it split 3 for 2 two more times. The splits plus dividend reinvesting brought the amount held to a little over 5000 shares. The stock is going to split again 3 for 2. I explained to our sons this time I'll sell the quantity gained & keep 5000 shares. The sale will go into the cash part of the self directed IRA. There it will sit tax free until it's drawn on. That stock closed down .63 cents today @$96.29

I advised them to look at companies developing Molten Salt Reactors (MSR). Those are expected to be cheaper, safer, and generate less nuclear waste when compared to traditional nuclear reactors. 

Why that? 

According to the World Nuclear Association, electricity demand almost doubled from 1990 to 2011, and is projected to grow 81% from 2011 to 2035. Not exciting be steady consistent growth & the potential of a decent dividend in an area where not many say screw it I don't want electricity. Between that and decreasing use of fossil fuels research should pay off for them.

Then I asked them about jobs. They have jobs so I got that look like what the hell do you mean. I asked what is impacting jobs? Manufacturing in China & other countries, technology, and the high corporate taxes here in America. I actually was surprised they thought about that.

OK what if manufacturing comes back to America because taxes are reduced? That still leaves technology replacing people doesn't it?  Yeah!  So what is used to make robotics and medical devices work without large components? No answer.

I told them to research companies that are using nano technology. Even if manufacturing doesn't come back strong in America companies will still be using advanced technology.

They have the time frame to look to what will be, whether or not they research and invest is their choice I won't be responsible for their decision making.


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## OneEyedDiva (Jun 7, 2017)

mathjak107 said:


> you do know there is nothing unique about dividends . for every dividend paid the exchanges automatically reduce the value of your investment left compounding by an equal amount .
> 
> a portfolio of non dividend payers with the same or greater return can provide the identical income stream and leave you with the same balance  .
> 
> ...


MathJak, most of my mutual funds and ETFs are dividend paying investments. True the share prices drop by the amount of the dividends but I've found that the share prices usually goes back up over the course of as little as a few days to a few months. Sometimes an investment may take longer but if someone is investing over the long haul, chances are their investment(s) will regain their share prices plus more.


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## mathjak107 (Jun 8, 2017)

the stock may go back up but unless the dividend is reinvested then all compounding going forward is on less dollars . if you reinvest it will always be on the same dollars you had .

as you saw i had 20k  compounding by the markets . they gave me 235 in a dividend and now the remainder is less than  my 20k being acted on by the markets  going up or down x-percent .

it is the fact we start each year or quarter with x-amount and it is compounded on that grows our money  .

20k going up 10% is more than  19,765.00 going up 10% .


it does not matter if at the end of the day a 8% gain is all appreciation or 6% appreciation and a 2% dividend .

dividends are only giving you back a piece of your share price . in fact the company could have lost money and still paid you a dividend . it is only a number voted on by the board .

dividends are convenient because the company sells a piece of your invested dollars off instead of you doing it but either way it is pretty much the same effect .

in fact doing it yourself may be better tax wise . you will only be taxed on the gains of that 2% you take . the dividend is taxed on the full amount .


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## OneEyedDiva (Jun 11, 2017)

Trade said:


> If you can build up enough so that you never have to concern yourself with running out of money.
> 
> That's something beyond the means of most working class people.



I was working class too Trade. And for half of my working life, I was a low wage earner. For the next half, due to changing from municipal to state which had the same pension plan I earned a pretty good salary with raises every year.  I started investing around the same time I transferred from city to state payroll but I had always been a saver. I bought a co-op apartment at age 24. Our boards have managed to keep our living costs well below the average for apartments in and around our area. I retired early with a pension, but took a 12% reduction because I was only 50 and full retirement was (then) 55 and great benefits. Unless there is a major catastrophe or I have to go to a nursing home long term , I won't run out of money. The fact is I'm still investing at age 70. My particular set of circumstances has served me well. I have read about other "working class people" who had different circumstances but still managed to save, invest and live well. I remember one elderly lady who had worked as a librarian. She managed to accumulate a million dollars!


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## OneEyedDiva (Jun 11, 2017)

mathjak107 said:


> the stock may go back up but unless the dividend is reinvested then all compounding going forward is on less dollars . if you reinvest it will always be on the same dollars you had .
> 
> as you saw i had 20k  compounding by the markets . they gave me 235 in a dividend and now the remainder is less than  my 20k being acted on by the markets  going up or down x-percent .
> 
> ...


Yes, all of my dividends are reinvested Mathjak. Also, a majority of my investments are in a Roth, so of course they don't get taxed. It has been my understanding that capital gains are what investors get when the company "sells a piece of ...investment" and dividends represent our share of a company's profits. I had to know about this because as a Muslim, I am not supposed have interest paying accounts (unless very, very minimal interest is generated) but can receive dividends and cap gains. I found out that some financial institution customer service reps did not know the difference and were labeling income as dividends when it was in fact interest.  Anyway....this is from Investopedia:
"Is there a differencebetweencapitalgains and dividend income? There is a differencebetweencapitalgains and dividend income. Dividends are assets paid out of the profits of a corporation to the stockholders, whereas capitalgains occur when an investment is sold for a higher price than the original purchase price."


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## mathjak107 (Jun 11, 2017)

companies have losses and pay dividends so you can't say they come from company profits  . a company like general motors paid dividends right to the grave  and there were no profits . a dividend is just a vote of the board to return  money that is already yours .

it could be from profits , borrowed money or your own money . i had a reit that borrowed money to pay the dividend when the business fell off and they did not cut the dividend for fear of the price plunging .

in any case if your stock appreciated or even fell  you still get a dividend . it comes right off the value of the dollars you had invested the night before as exchange computers are required to reset the price back by what you got .

in the end without  appreciation your share price is reduced to zero  .  dividends are not interest but most companies do invest in all sorts of cash instruments and receive interest which becomes part of their bottom line .


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## OneEyedDiva (Jun 12, 2017)

mathjak107 said:


> companies have losses and pay dividends so you can't say they come from company profits  . a company like general motors paid dividends right to the grave  and there were no profits . a dividend is just a vote of the board to return  money that is already yours .
> 
> it could be from profits , borrowed money or your own money . i had a reit that borrowed money to pay the dividend when the business fell off and they did not cut the dividend for fear of the price plunging .
> 
> ...


You make a good point Mathjak. But since most of my investments are mutual funds or ETFs you now have me wondering...do those funds glean most of their dividends from the companies that are doing well while others aren't doing so well? BTW...I didn't say it...Investopedia did  I know....that "you" wasn't personal.  Just curious, is your REIT in a tax advantaged account?


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## mathjak107 (Jun 12, 2017)

the reit was in a retirement account  but it is gone now .  the 6% dividend was attractive until you learned they were using money they were supposed to buy properties with  as well as borrowed money and partially your own money made it up  .

dividends at the end of the day is just the company handing you back money that is already yours whether you want it back or not . you have less invested in the stock or fund , plus money in pocket after the dividend .

if you reinvest you have the same amount .

receiving a 4% dividend as an example is no different than selling off equivalent dollars from a non dividend paying portfolio with the same or greater total return .

for anyone to think other wise is a case of the emperors new clothes .


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## mathjak107 (Jun 13, 2017)

one thing i want to point out is dividends can be very tax inefficient tax  if held in a brokerage account .

dividends are taxed on 100% of the dividend amount so if you get a 4% dividend you will owe taxes on it  if you are not in the zero percent tax bracket .

if the income is generated off a portfolio you only pay tax on just the gains not the entire draw .

the rules for what qualifies as a qualified dividend so you get special tax rates varies depending whether it is a stock or a fund . they both have different rules as to what makes them a qualified dividend .

also , even if you do get the special rate ,receiving as little as a 1% distribution over the long term wipes out the tax advantage .


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## Don M. (Jun 13, 2017)

I'm watching for any signs that Harbor Freight....presently privately owned....might go public with a stock offering.  With the continuing collapse of Sears, there is an ever present population of homeowners and "do-it-yourselfers" who are always buying tools, etc., and Harbor Freight is filling the void being left by the demise of Craftsman Tools, nicely.  They are opening stores all over the country at an increasing pace...mostly in small to medium sized cities, and gaining business nicely.  In our area, they have opened 2 new stores in the past 6 months...in Sedalia and Jefferson City, MO., and every time I go past those stores, the parking lot is quite full.  We will be in Sedalia Friday, and I have a list of items to get at HF.  If they ever decide to go public, I will buy some shares.


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## mathjak107 (Jun 13, 2017)

all my serious investing is in funds but i do a lot of speculating not so much in individual stocks but in sectors  or asset class etf's .
 ,    
i have traded in and out of gold 29x since january scoring 27k in profits . in and out of TLT  the long treasury bond etf,    same with uso for oil  . there is always something that propels them up and very quickly reels them back down .


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## Knight (Jun 13, 2017)

Don M. said:


> I'm watching for any signs that Harbor Freight....presently privately owned....might go public with a stock offering.  With the continuing collapse of Sears, there is an ever present population of homeowners and "do-it-yourselfers" who are always buying tools, etc., and Harbor Freight is filling the void being left by the demise of Craftsman Tools, nicely.  They are opening stores all over the country at an increasing pace...mostly in small to medium sized cities, and gaining business nicely.  In our area, they have opened 2 new stores in the past 6 months...in Sedalia and Jefferson City, MO., and every time I go past those stores, the parking lot is quite full.  We will be in Sedalia Friday, and I have a list of items to get at HF.  If they ever decide to go public, I will buy some shares.


I am way past having the time to invest in a company like this if it does offer stock. I sincerely believe your logic is right, because you are looking forward.

Where I live there are 6 stores and like you the one closest to me is always busy.  The ability to buy right now instead of ordering online and waiting I think is a huge plus.


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