# The economy/market?



## Elan (Jan 6, 2013)

What are your thoughts on the economy and/or stock market for 2013?  Are you buying this new year rally?


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## BocaBum99 (Jan 6, 2013)

I have a lot of cash on the sidelines.  I took a lot of capital gains not knowing what was going to happen with the fiscal cliff.

However, I did buy a bunch of Apple stock between $500-530  and Facebook at $26.36 before the year ended.   With the potential increase in the dividend tax, I took profits and moved them into these tech stocks.

I started to buy more Gold as the price has come down and will continue buying through out the year.  Will probably go up to 20% of my portfolio.  Main reason is our politicians have proven they can't solve our fiscal problems.  If stalemate continues, the only way out is to print money, depreciate the dollar and inflate the economy.  That remains the long term outlook.

I have also been increasing holdings in various Oil stocks.  To me, oil is a good long term bet whenever it gets toward $80.  I invested in EOG around $90/share.  Sold 75% of it at around $100.  Then, it shot up to over $120.  I wish I got more or stuck with my initial investment longer.  I was sure that it was the right purchase at $90, but I didn't go all in with it like I should have.  Been nibbling at CVX since I couldn't get more EOG at a good price.

I feel good about dividend paying stocks given the resolution of the fiscal cliff.   I will ease my way back in there to get fully invested.

Staying away from bonds of any kind.   Doubled my monthly contribution to my children's 529 plan.


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## BocaBum99 (Jan 6, 2013)

Forgot to mention, last year, I went overweight with SLRC, the biz dev. company yielding over 10% annually.  I chickened out with the fiscal cliff and sold 25% of my holdings before the year ended to get it back in balance with my portfolio.  Then, it popped.   Oh well, as Cramer says bulls make money, bears make money, pigs get slaughtered.  I wish I kept it all.  But, at least I have a very nice gain in a very high yielding stock.


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## Passepartout (Jan 6, 2013)

I'm 'investing' in MFs and airline seats. 

And I'll give this thread, oh, maybe 20 posts.

Jim


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## Elan (Jan 6, 2013)

Passepartout said:


> And I'll give this thread, oh, maybe 20 posts.
> 
> Jim



  Yeah, I was going to add the "Please keep it apolitical" line, but figured that never keeps the same jack***es from ruining a thread.  3 posts in, we're doing fine.  

  I mainly wanted to get a feel for how TUGgers feel about the economy going forward, and how those feelings translate, if at all, into their investment decisions for 2013.  

  I have many of the same type investments as BocaBum99.  I am not counting on a quick turn up in the economy, but rather am acquiring economic sensitive stocks (oil, etc) for the longer term.  I may be early.  Time will tell.


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## vacationhopeful (Jan 6, 2013)

Real Estate is NOT improving in my area - Philadelphia/South Jersey.

There are MORE empty residential rental units. Fewer decent tenants. Less lookers. And real estate taxes are still rising WAY above inflation or cost of living.

Realtors are trying to NOT put signs on houses for sale or rent. People who had their houses listed, are letting the listings expire. Not moving. And not happy either. I see empty houses around, but the foreclosed ones have had the siding ripped off, lawns not cared for and litter on the front steps. 

One town is just boarding up everything they can find abandoned - every block has at least one placed boarded up. And this town is the county seat, with 5 bus lines (30 minutes to center city Philly) and 60% of it downtown stores CLOSED (nothing new opening, just more & more closings). Has 1 orf 2 local hospitals and its own high school (which should have been combined 15-20 years ago).

Need I mentioned the refinery CLOSED as the sale of Sunoco to ETP required ALL its active refineries be closed before the sale (except the PHL one as PHL city lawyers & union did some legal wranglings).

Added: As a "regular" attendee in the county's weekly EVICTION court, the docket is FULL every Thursday and it is taking 2+ weeks longer to get on the docket. Lots of senior lawyers are taking eviction representation verses the junior lawyer getting the work farmed out to them. It is a CASH in advance job ($250-350 per case). The apartment complex lawyers have a longer docket with almost all NONE being answered with "please dismiss" to the Judge. Less tenant attendance to try to work out a payment plan. Sheriff officiers who handle the actual lockouts added more staff and VERY BUSY (hard to get a quick date).


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## Tia (Jan 6, 2013)

I too hope this thread can stay open. Very unsure of where we are all heading and where to keep what we have in assets stable.


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## BocaBum99 (Jan 6, 2013)

There is also some type of play in healthcare and real estate.  Not sure what it is, though.

Last year, I dabbled a lot in SNY and LLY before the Obamacare ruling by the supreme court.  I thought SNY was undervalued and was hampered by the European debt crisis.  That stock was great because it traded wildly in a wide trading range.  So, I kept buying it when it dropped and selling it when it popped.  Did that about 10 times, then finally got out when it ran up for good.  I got out because it has a high dividend, but those high French taxes killed it.

Then, I rotated into LLY.  It had a great ride, tanked and the had a good run this week.  I lighted my holdings in that stock to buy more AAPL which dropped on the same day that LLY popped.

Also, been toying with a healthcare reit HTA since it combines both real estate and healthcare.  However, too early to judge that investment.   Decent yield.

Was too late trying to buy the housing developers.  Wanted to do it 2 years ago, but they started moving and I thought it was too late, but it wasn't.  Missed that opportunity.  I think its way overvalued now.  Fortunately, I bought a rental property 2 years ago on a short sale.  It has appreciated nicely about 30%.  Very happy with that purchase.


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## BocaBum99 (Jan 6, 2013)

vacationhopeful said:


> Real Estate is NOT improving in my area - Philadelphia/South Jersey.
> 
> There are MORE empty residential rental units. Fewer decent tenants. Less lookers. And real estate taxes are still rising WAY above inflation or cost of living.
> 
> ...



I am a contrarian.  I buy when everyone believes things couldn't get worse.  In the market you just described, that is where I would be looking for opportunities to buy.

By the way, I owned ETP for its yield and got burned by that Sunoco acquisition.  I got out of that dog stock.


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## Elan (Jan 6, 2013)

vacationhopeful said:


> Real Estate is NOT improving in my area - Philadelphia/South Jersey.
> 
> There are MORE empty residential rental units. Fewer decent tenants. Less lookers. And real estate taxes are still rising WAY above inflation or cost of living.
> 
> ...



  Around here real estate has definitely bottomed -- at least temporarily.  There are no houses for sale in my subdivision.  During the boom, always 2 or 3.  At the depth of the crash, over a dozen.  Now, literally zero.  The newest phase opened up about 18 months ago, and the houses are selling as fast as they can put them up.  Not going crazy with builds by any means, but a good steady rate of construction.  There have been no major employment developments in the area, so I'm not sure what's driving the growth.  Maybe just more migration from CA?


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## BocaBum99 (Jan 6, 2013)

Elan said:


> Yeah, I was going to add the "Please keep it apolitical" line, but figured that never keeps the same jack***es from ruining a thread.  3 posts in, we're doing fine.
> 
> I mainly wanted to get a feel for how TUGgers feel about the economy going forward, and how those feelings translate, if at all, into their investment decisions for 2013.
> 
> I have many of the same type investments as BocaBum99.  I am not counting on a quick turn up in the economy, but rather am acquiring economic sensitive stocks (oil, etc) for the longer term.  I may be early.  Time will tell.



Regarding the economy, I think it is ready to start growing again at a higher rate.  Lots of money on the sidelines is waiting to move and was frozen by the fiscal cliff negotiations. Now that income tax policy seems to be settled for a while, I think people will feel more comfortable investing again.

We will see what happens in the debt ceiling discussions.  I actually don't think it's going to be as hard on the economy as the tax issue was.  That's because we all know that the country will not default.  They will take it to the brink, but both sides will blink in the end.  I just don't see them allowing it.

I hope they can work on corporate tax policy and get some type of bi-partisan agreement on spending cuts and entitlement reform.  It is likely that increased taxes will be brought into that discussion again.  That part has the potential of freezing people again since entitlement reform is so politically charged.

Even thought the resolution to the fiscal cliff was focused mostly on increasing taxes, everyone had their taxes raised across the board.  Some more than others, but everyone was effected who works or invests.

If they can do something similar for spending and they can get a big enough deal with shared sacrifice, I think we will be in a decent situation.  We shall see what happens.


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## vacationhopeful (Jan 6, 2013)

BocaBum99 said:


> I am a contrarian.  I buy when everyone believes things couldn't get worse.  In the market you just described, that is where I would be looking for opportunities to buy.
> 
> By the way, I owned ETP for its yield and got burned by that Sunoco acquisition.  I got out of that dog stock.



I used to WORK for Sunoco and the cash out option on that buyout to Sunoco stockholders was OVER subsribed.  I bet ETP will continue to be SOLD by the those former SUN stockholders.

Sunoco closed the NJ refinery on the river (built by Texaco) less than a year after buying it and the Marcus Hook refinery in PA (Sun's original refinery). The PHL city refinery was brought from ARCO and is still running.  Sun had also brought Harbor Pipeline (the terminal, some tanks and lines run behind my parent's house). The Sun Toledo refinery was also closed. The Tulsa refinery I think was sold to Williams Bros. Duncan Refinery was sold or closed years ago. 

All I can say is, idiots were just churning Sun assets and "vision" for the last 30 years. The Sun Pipeline group was run pretty independantly and was truly a JEM; managed WELL ..IMHO. I knew the guy who ran it - Wharton MBA and his wife who was a major economist.


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## Elan (Jan 6, 2013)

BocaBum99 said:


> Regarding the economy, I think it is ready to start growing again at a higher rate.  Lots of money on the sidelines is waiting to move and was frozen by the fiscal cliff negotiations. Now that income tax policy seems to be settled for a while, I think people will feel more comfortable investing again.
> 
> We will see what happens in the debt ceiling discussions.  I actually don't think it's going to be as hard on the economy as the tax issue was.  That's because we all know that the country will not default.  They will take it to the brink, but both sides will blink in the end.  I just don't see them allowing it.
> 
> ...



  I agree that there is a ton of money on the sidelines.  In fact, this thought is what keeps me in the market.  I think if investor confidence is restored, the market could move up pretty quickly.  I do have a large percentage in cash (actually short term muni-bonds -- 2% tax free, LOL), but I refuse to go to all cash.  I figure even if we're in for our own "lost decade", we're about halfway through it now.  I can wait.  But I do monitor it closely, because I need to limit the draw down.


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## Kal (Jan 6, 2013)

BocaBum99 said:


> ...Staying away from bonds of any kind...


 
My financial advisor put me into some extremely good "Death Bonds".  These are 30 year bonds paying over 6%/year.  The fascinating feature is the bonds are held by me, my wife, and my Dad.  In the event of death of ANY owner, the bonds fully mature and are paid out.

"30 year" you say? My Dad is 93 yo.


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## BocaBum99 (Jan 6, 2013)

Elan said:


> I agree that there is a ton of money on the sidelines.  In fact, this thought is what keeps me in the market.  I think if investor confidence is restored, the market could move up pretty quickly.  I do have a large percentage in cash (actually short term muni-bonds -- 2% tax free, LOL), but I refuse to go to all cash.  I figure even if we're in for our own "lost decade", we're about halfway through it now.  I can wait.  But I do monitor it closely, because I need to limit the draw down.



I know.  However, as soon as I go into the market 100%, it will probably have another crash.  I am scarred by the crash of 2000.  And, in 2008/2009,  I lost about 50% in that crash.  Fortunately, my portfolio went green from that crash sometime last year.  I am so glad I didn't panic and jump completely out of the market in 2009. That would have been a disaster.   I don't really want to be in the market fully invested for a 3rd crash.  I'll bet a lot of investors feel the same way.


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## bogey21 (Jan 6, 2013)

A friend of mine in Las Vegas who was slowly moving his money from the stock market into real estate (condos for renting) tells me that availability of reasonably priced condos is drying up.  He tells me that the asking price for condos he was able to buy a year ago for about $40k is now closer to $60k.

George


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## Tia (Jan 6, 2013)

The construction around here is pretty poor. Existing housing inventory waiting to sell is low, mostly what sells is in the lower then 200K range. We have mostly a retired population and little industry other then service. Biggest employer is the school district   There are  businesses hanging on by a thread from word of mouth.


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## ricoba (Jan 6, 2013)

bogey21 said:


> A friend of mine in Las Vegas who was slowly moving his money from the stock market into real estate (condos for renting) tells me that availability of reasonably priced condos is drying up.  He tells me that the asking price for condos he was able to buy a year ago for about $40k is now closer to $60k.
> 
> George



Yup, the real estate market here is picking up and your friend is right about prices.  But some of the spike in prices is due to the lack of inventory. 

But I think that inventory is artificially being crimped so as to not flood the market with foreclosures and short sales.  The housing market here still has a lot of junk to work through, but it is starting to look up.  There are actually new houses being built now around town, which is a good sign.

We have seen some appreciation in equity on this house here that we bought a year and a half or so ago.  We wouldn't be able to get into this house any more for what we paid then.

RE: Portfolio.  I did a re-balance of our 401K late last year and currently we are at about 40% cash, 40% stocks and 30% bonds.  I have been thinking of moving the stock portion closer to 50% over the next little while, but we are taking it cautiously and moving slowly.


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## easyrider (Jan 6, 2013)

Bought silver last June, sold silver in late October, probably buy silver soon. Real estate in my area is doing well, especially investments like rental properties if they were bought right.

Most companies will wait to see how all of these new regulations and taxes are going to be handled before they commit to doing much other than staying in business. Big companies will have to figure it out and will have many more part time workers, small companies ( under 50 employees) will stay small and medium sized ( 50 - 300 employees) companies are going to have problems.

Other reasons Im a pessimist is that the European economy is not good, the middle east is still a problem, massive world wide layoffs this year, United States employment rate is high, 50 % of Americans are on government assistance such as food stamps, over 10 million people in other countries depending on the USA for food assitance and where does the list stop.

The world has reached debt saturation to the point these debts will never be paid back. Soon there will be a derivative bubble problem in the trillions. A new recession could tank the stock market and we could be see that soon.

Just call me Bill the bear.

Bill


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## ricoba (Jan 6, 2013)

easyrider said:


> Just call me Bill the bear.
> 
> Bill



OK, but I like your new avatar, so how about Bill the Peace Loving Honu!


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## easyrider (Jan 6, 2013)

ricoba said:


> OK, but I like your new avatar, so how about Bill the Peace Loving Honu!



chee pono brudah, lol.


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## wilma (Jan 6, 2013)

easyrider said:


> Other reasons Im a pessimist is that ...50 % of Americans are on food stamps
> Bill



not true, 50% of Americans are not on foodstamps, more like 15%.


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## wilma (Jan 6, 2013)

Real estate market in SF Bay Area is getting hot. Tech is hiring and housing prices are definitely going back up.


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## BocaBum99 (Jan 6, 2013)

wilma said:


> not true, 50% of Americans are not on foodstamps, more like 15%.



There are approximately 112M households in the US.  In June of 2012, there were about 22.3M households receiving food stamps.  Using those numbers, about 20% of households receive food stamps.

Usually, 50% (or anywhere between 47-50%) is used to refer to those households that do not pay Federal Income Tax outside of FICA and Medicare.


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## wilma (Jan 6, 2013)

BocaBum99 said:


> There are approximately 112M households in the US.  In June of 2012, there were about 22.3M households receiving food stamps.  Using those numbers, about 20% of households receive food stamps.
> 
> Usually, 50% (or anywhere between 47-50%) is used to refer to those households that do not pay Federal Income Tax outside of FICA and Medicare.



well however you summarize, individuals, households, etc., 50% are not on food stamps, that was a gross misstatement.


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## BocaBum99 (Jan 6, 2013)

wilma said:


> well however you summarize, individuals, households, etc., 50% are not on food stamps, that was a gross misstatement.



It was definitely a significant error.  I provided the data to show that he was probably referring to Federal income tax, not food stamps.


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## am1 (Jan 6, 2013)

I think people would be wise to look to other countries for investment opportunities.  Sure a lot of US companies will always be on top but 3rd world countries are closing the gap.


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## PigsDad (Jan 6, 2013)

My retirement accounts have been 100% stocks since before the crash, with 15-20% in foreign stocks. The only thing I changed after things started to go south was to increase my savings rate / contributions.  I was well into the black from pre-crash by the end of 2010.  Since then, the accounts have done extremely well. Last year the various accounts had returns of 25-40%. Call me a happy camper. . I have anywhere from 12 to 20 years until retirement, so I'm guessing I am less risk adverse than most posting here.

For individual stocks, I tend to like quality dividend stocks.  MO and T have been doing well for me.  I also like oil stocks, currently in CVX and COP. Drug companies PFE and MRK are paying a good dividend and performing well.

Kurt


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## easyrider (Jan 6, 2013)

wilma said:


> not true, 50% of Americans are not on foodstamps, more like 15%.



Sorry, I was in a hurry to watch the Seahawks. What I meant is about half of all Americans  recieve government assistance.

Bill


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## Passepartout (Jan 6, 2013)

easyrider said:


> I meant is about half of all Americans  recieve government assistance.



'I' before 'E' except after 'C'..... And I don't believe that allegation. At all. Go 'Hawks.


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## beanie (Jan 6, 2013)

The housing market is starting to pick up here . we actually have new construction going on


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## easyrider (Jan 6, 2013)

Passepartout said:


> 'I' before 'E' except after 'C'..... And I don't believe that allegation. At all. Go 'Hawks.



You could google it and see that it could be more true than we like. 

Right off the get go in the 1st qt I thought the Seahawks were done. WOW, what a come back. Lynch was really fun to watch. GO Hawks  

Bill


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## BocaBum99 (Jan 6, 2013)

PigsDad said:


> My retirement accounts have been 100% stocks since before the crash, with 15-20% in foreign stocks. The only thing I changed after things started to go south was to increase my savings rate / contributions.  I was well into the black from pre-crash by the end of 2010.  Since then, the accounts have done extremely well. Last year the various accounts had returns of 25-40%. Call me a happy camper. . I have anywhere from 12 to 20 years until retirement, so I'm guessing I am less risk adverse than most posting here.
> 
> For individual stocks, I tend to like quality dividend stocks.  MO and T have been doing well for me.  I also like oil stocks, currently in CVX and COP. Drug companies PFE and MRK are paying a good dividend and performing well.
> 
> Kurt



Maybe, maybe not.  My stock and bond portfolio is not my riskiest endeavor.    I needed liquidity in my stock portfolio in case any of my businesses failed to produce sufficient income.  It became my back stop to give me a couple years of run way to take much greater risks in my business.

My biggest risk was quitting my job with my wife as a stay at home mom and moving to Hawaii to start a new business that had no cash flow at the same time I had 2 mortgages and with 2 kids enrolled into private school.

With that cash burn rate, I had no appetite for aggressively investing into companies in which I had no control, especially since I lost several million dollars (mostly paper profits) in the 2000 stock market crash.

I have invested in most of the companies you quoted.  You must watch the same business programs I do.

Now that my businesses are well diversified, hardened and  producing steady income, I can get much more aggressive with my stock portfolio.


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## BocaBum99 (Jan 6, 2013)

PigsDad said:


> For individual stocks, I tend to like quality dividend stocks.  MO and T have been doing well for me.  I also like oil stocks, currently in CVX and COP. Drug companies PFE and MRK are paying a good dividend and performing well.
> Kurt



I currently own T, CVX and COP.  About 5 years ago, I owned PFE, MRK and MO.


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## artringwald (Jan 6, 2013)

I am a follower of CNN's Fear & Greed index:

http://money.cnn.com/data/fear-and-greed/

When it's on the greed side I try and sell. When it's on the fear side I try to buy. Since I started 5 years ago, I'm up 65%.


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## pjrose (Jan 6, 2013)

easyrider said:


> Sorry, I was in a hurry to watch the Seahawks. What I meant is about half of all Americans  recieve government assistance.
> 
> Bill



Almost all of us do.  Let's see.....subsidized milk, subsidized school lunches, grants and loans for college, small business startup incentives, the interstate system and infrastructure, etc etc etc. 

Now, back on topic.....what buys are you recommending for the second week of the new year?  Or are you selling, or sitting?


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## artringwald (Jan 7, 2013)

CLF and FTR and both on sale now. Even if they don't go up soon, they've been paying good dividends.


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## theo (Jan 7, 2013)

*Wake me when this is over...*

:zzz::zzz::zzz::zzz::zzz:


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## easyrider (Jan 7, 2013)

pjrose said:


> Almost all of us do.  Let's see.....subsidized milk, subsidized school lunches, grants and loans for college, small business startup incentives, the interstate system and infrastructure, etc etc etc.
> 
> Now, back on topic.....what buys are you recommending for the second week of the new year?  Or are you selling, or sitting?



Your absolutly right PJ. I googled it and found that 96% of Americans recieve government assistance,including me.  Make me wonder ?

Most of the time I buy or sell Im sitting. 

Bill


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## geekette (Jan 7, 2013)

I can't say as for Everywhere, but things are moving forward here.  However, I don't think we got hammered as bad in 'the downturn' as many areas, so didn't have as far to go for 'recovery.'

Hiring is strong, homes are moving, construction has started picking up in most areas.  Sure, there remain foreclosures, but plenty of those are in the ritzier areas where folks got a little too optimistic and couldn't meet the obligations.  I am currently eyeing one such home that I would otherwise not consider buying because the price tag should be well above my pay grade.  Someone's misfortune could likely turn into a massive win for me, and based on what's been happening in my neighborhood, I'm not overly concerned with being able to sell my current home.  I've talked to several Realtors the past few weeks and they all say the same thing:  homes are moving.  

I never left stocks, never will.  Call it a lost decade if you must, but since I hold mostly Blue Chips, all div payers, my return is not dependent on stock price, and in fact, I rarely look at the price except to buy (and eventually, someday, to sell).

My divs are strong so I keep getting paid, no matter where the stock price goes.  I am not concerned about a market crash because the companies I own will continue to do business, regardless of where investor sentiment takes the market.

When the market is in the crapper, I see buying opportunities, not paper losses.  My retirement accounts are always at least 90% stocks and I don't expect to change that.

I am generally an optimist anyway, but from what I've been seeing here the past year +, I am certain that the local recovery is well underway.


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## rapmarks (Jan 7, 2013)

easyrider said:


> Your absolutly right PJ. I googled it and found that 96% of Americans recieve government assistance,including me.  Make me wonder ?
> 
> Most of the time I buy or sell Im sitting.
> 
> Bill


 
I get $53 a month ss, so i guess I am receiving government assistance -


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## easyrider (Feb 7, 2013)

*Billionares are dumping stocks*

A lot of dumping and shorting. Watch your stuff. Might be a correction coming.

http://www.moneynews.com/Outbrain/b...-stock/2012/08/29/id/450265?PROMO_CODE=FE8A-1

http://investmentwatchblog.com/do-w...-big-to-happen-very-soon/#2yPY68Ri5LYcpker.99

http://www.etfchannel.com/type/most-shorted-etfs/


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## PigsDad (Feb 7, 2013)

easyrider said:


> A lot of dumping and shorting. Watch your stuff. Might be a correction coming.
> 
> http://www.moneynews.com/Outbrain/b...-stock/2012/08/29/id/450265?PROMO_CODE=FE8A-1
> 
> ...



That first article read as just a giant advertisement of Wiedemer's "Aftershock" book.  Sorry, anyone that tries to put credibility to a "90% drop in the stock market" is just a giant BS artist looking to sell copies of his book, IMO.

These articles read as some sort of "shock and awe" journalism (if you can really call it journalism).  Sorry, I'm not buying into it.  I'll stick to my tried and true equity play for the long term, thank you very much.  I'm quite positive that if I had tried to time the market for my long-term investments / retirement, today I would not be running scenarios of how I could retire in a few years when I'll be in my early 50's.

Kurt


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## geekette (Feb 7, 2013)

Yes, everyone should lock in their profits now so that my March dividends go further.


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## PigsDad (Feb 7, 2013)

geekette said:


> Yes, everyone should lock in their profits now so that my March dividends go further.



Yes!  When you continually and consistently buy, these dips are great little buying opportunities. :whoopie:

Kurt


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## geekette (Feb 7, 2013)

PigsDad said:


> That first article read as just a giant advertisement of Wiedemer's "Aftershock" book.  Sorry, anyone that tries to put credibility to a "90% drop in the stock market" is just a giant BS artist looking to sell copies of his book, IMO.
> 
> These articles read as some sort of "shock and awe" journalism (if you can really call it journalism).  Sorry, I'm not buying into it.  I'll stick to my tried and true equity play for the long term, thank you very much.  I'm quite positive that if I had tried to time the market for my long-term investments / retirement, today I would not be running scenarios of how I could retire in a few years when I'll be in my early 50's.
> 
> Kurt


Oh, you actually followed the links?  :ignore:  I agree with your assessment as we have similar views.  The articles will simply inspire fear-selling and then of course a contraction.  Inevitable.  

Good for you, retiring in early 50s!!!  

Glad to know the strategy worked for you as it bodes well for me.  Maybe when you are retiring, I can be planning my work exit!


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## CO skier (Feb 8, 2013)

PigsDad said:


> Yes!  When you continually and consistently buy, these dips are great little buying opportunities. :whoopie:
> 
> Kurt



Deja vu all over again.  Here is a post from August, 2007 when the Dow Jones Industrial Average was at 13,200 (give or take):




PerryM said:


> I am aware of NO other investment vehicle that averages 13% return for 73 years - none, zip, zilch.  This is the DJIA. Buy it via the stock DIA and you control your own future - just never sell it until you retire.
> 
> The Roth IRA is the best thing going - you put in money each year from your paycheck and that money cooks at 13% (on the average) and when you retire at age 50 or 55 (why wait for 65?) You pull the money out and don't pay a single penny to the politicians in Washington.
> 
> That's all you need for your retirement.  DIA and Roth.



On December 31, 2008 the Dow closed at 8776 (and ultimately went lower).

5 and 1/2 years after Aug. 2007, the Dow is at 13,944 -- not exactly the 13% average annual return over those 5 and 1/2 years (that would put the Dow at 25,852 today from 13,200 in 2007), but maybe in another 67 and 1/2 years the 13%  average historical return over 73 years will bail you out.

Of course, the buy-the-dips-and-hold investor did get the 2-3% dividend on the Dow over the last 5 years.


DIA in a Roth account is a good strategy, if well managed.  Buy-and-hold-and-pray for the right timing to sell for your retirement is a bad bet.   (Just ask all those buy-and-hold investors who retired in 2007-2010.  If they truly did "hold-on" they are back to break-even, except for what they had to sell to fund their retirement -- but how many retirees "held on" through that 45% "dip"?).  What would you do if you are retired and 15%, 20%, 30%, 40% even 50% of your retirement funds are gone when you get your brokerage statement?

There won't be any :whoopie: then.



The leading indicators are saying, "Beware," but the corporate bond market is saying things are OK for the next 6 months, or so (but it may be turning).  When the corporate bond market does turn down, get OUT.


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## Talent312 (Feb 8, 2013)

I've been investing for about 20 years, starting out with MF's. I've dabbled in a few stocks and did some DRIPS. As I age (and after a 28% loss in 1988), I started buffering with bonds. _Individual issues, if held to maturity, return face value, plus coupon._

From my POV, the Fed's is the elephant in the room - a major player. It's bond-buying has lowered yields on fixed income items next to nothing. As one adivsor I heard say, "It's far better to be a borrower than a lender of $$." These days, stocks are benefiting as the only other place for hot $$ to go.

I expect the Fed to keep Q-E going for the rest of the year. Their targets for economic growth will not happen anytime soon. But as the saying goes: "Don't fight the Fed." When the party stops, both bonds + stocks are going to suffer. Dividend stocks, natural resources & real estate will make more sense then... maybe even precious metals, but I've never caught the bug.
.
.


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## geekette (Feb 8, 2013)

CO skier said:


> ...
> Of course, the buy-the-dips-and-hold investor did get the 2-3% dividend on the Dow over the last 5 years.
> 
> 
> ...



Eh, I don't see the problem.  you can call it buy and hold And Pray but I don't.  That's only true if you buy risky investments.  

Take a look at the div payers and you will see some have increased their divs every year for over 25 years (the Aristocrats).  My risk is, what?  Price swings?  Suddenly stop of the dividend?

If the stock prices are in the toilet at retirement time, I can turn the spigot to receiving divs in cash vs reinvest.  I am well-diversified, so it is unlikely that Every Stock I Hold will be at historic lows all at the same time.  Plus, who sells All Of It right when they retire?  Not me, these holdings will be with me for most of my life, decades into retirement.  Selling at historic lows is a sure way to lock in a loss.  Fine for others...

My retirement plan does not hinge on where the Dow checks in at nor what's going on with corp bonds.  It's about accumulating assets that can provide a stream of income to me, and still having the asset to sell, or not, as I see fit.

Granted, it is not Guaranteed Income, but for "risky stock investments" I am way on the side of conservative vs Flavor of the Day.  No amount of doom and gloom conjecture by others is going to sway me.  

It would be far worse for me to jump in and out, having my profits eaten by trade fees and taxes.  Much later, I can control the profit vs loss by selecting for sale specific lots acquired over 30 years.  Or let it ride, gaining more shares to pay me ever higher dividends.

For those planning to Get Out Of Stocks Completely upon retirement, well, good luck with that plan.


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## PigsDad (Feb 8, 2013)

CO skier said:


> Deja vu all over again.  Here is a post from August, 2007 when the Dow Jones Industrial Average was at 13,200 (give or take):
> 
> On December 31, 2008 the Dow closed at 8776 (and ultimately went lower).
> 
> ...



There are some HUGE mistakes with your analysis.

First, just looking at the DJIA ignores dividends.  And it isn't just the current dividend rate, dividends increase over time so the effective dividend return over those 5 years was more than 2-3%.

Second, DJIA ignores dividend reinvestment.  Those dividends roll into more stock, which in turn rolls into more dividends.

Third, both Geekette and I are talking about continued, consistent investments -- not starting with one big lump sum 5 years ago.  Dollar cost averaging allows the steady investor to buy more when the stocks are down, and less when they are higher priced.  The more volitility, the better it is for DCA.

Even though the DJIA is approximately what it was 5 years ago, I guarantee my rate of return is not even close to flat. 

Kurt

ETA:  I think people tend to forget to look at the historic rate of dividend increases when analyzing dividend stocks.  For example, if a stock has a consistent 3% yield over 5 years, and the company increases dividends by 5% annually, that equates to a 8% annual total return.  If you reinvested your dividends as you received them, the return goes up even more.  It is not hard to find stocks with even these levels of div rates and increase rates.

There was a recent article on the Fidelity site that talks about this, and it is an interesting read.


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## CO skier (Feb 8, 2013)

PigsDad said:


> ETA:  I think people tend to forget to look at the historic rate of dividend increases when analyzing dividend stocks.  For example, if a stock has a consistent 3% yield over 5 years, and the company increases dividends by 5% annually, that equates to a 8% annual total return.



No, unfortunately, that works out to a 3.315% annual return over the 5 years.  Here, for anyone who may be interested, are the numbers for a 3% dividend that increases 5% per year for 5 years with dividends re-invested:

Year 1 3% dividend rate = $100 + $3.00 dividend = $103.00 at end of year

Year 2 3.15% dividend rate =  $103 + $3.24 dividend = $106.24 at eoy

Year 3 3.31% dividend rate = $106.24 + $3.51 dividend = $109.76 at eoy

Year 4 3.47% dividend rate = $109.76 + $3.81 dividend = $113.57 at eoy

Year 5 3.65% dividend rate = $113.57 + $4.14 dividend = $117.71 at eoy


Check work using 3.315% annual rate:

$100*1.03315= $103.315*1.03315= $106.74*1.03315= $110.28*1.03315= $113.93*1.03315= $117.71  (some rounding due to only 2 decimal places)


(If a company has a "consistent yield over 5 years," they are not increasing the dividend rate).


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## glypnirsgirl (Feb 8, 2013)

ricoba said:


> Yup, the real estate market here is picking up and your friend is right about prices.  But some of the spike in prices is due to the lack of inventory.
> 
> But I think that inventory is artificially being crimped so as to not flood the market with foreclosures and short sales.  The housing market here still has a lot of junk to work through, but it is starting to look up.  There are actually new houses being built now around town, which is a good sign.
> 
> ...



The banks have been much smarter with their REO properties. One of my former legal assistants does the drive by inspections for several lenders. She sees the same properties month after month. And the banks are only putting one or two on the market at a time. 

I am now advising my clients that have had their properties foreclosed to not move until they are requested to do so. The banks prefer that the properties be occupied as long as they are being maintained, so they are no longer evicting at foreclosure. I tell my clients the better that they keep up the property, the longer that they will be able to stay. I have several clients that have continued to live in their homes for more than 10 months after foreclosure. And, it would be more, if more had taken my advice to stay put.

Here, the foreclosures peaked at approximately 2000 per month in 2009, have gradually decreased to less than 1400 average in last few months. I am expecting to continue to see that decline.

My new clients are now people that are going back to work after being out of work for a long time instead of the totally out of work. 

Overall, from my seat, it looks like a slow and steady upward climb to recovery.

elaine


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## PigsDad (Feb 8, 2013)

CO skier said:


> No, unfortunately, that works out to a 3.315% annual return over the 5 years.  Here, for anyone who may be interested, are the numbers for a 3% dividend that increases 5% per year for 5 years with dividends re-invested:
> 
> Year 1 3% dividend rate = $100 + $3.00 dividend = $103.00 at end of year
> 
> ...



Wrong.  I stated that the stock had a 3% dividend FOR THE WHOLE 5 YEARS, and that the dividend rate increased 5%/year.  To maintain the dividend rate of 3%, the stock price would have to increase by the rate of the dividend increase.  *Total *return is 8% per year.

BTW, historically dividend rates are quite stable over the long term, so this analysis is very valid.  Read the article I referenced in my last post for more info.  Many people don't think about the affect of dividend increases on the stock price. -- they just focus (as you did) on the cash payments.

Kurt


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## Talent312 (Feb 8, 2013)

_What I said..._

*Is this market headed for a correction?*
February 07, 2013|Chuck Jaffe, MarketWatch

The market’s recent strong run has brought out the buyers, but also the bears — with a growing number of high-profile investing pros suggesting the better-than-expected results and a return to record high territory is leading lambs to slaughter. imco’s Mohamed El-Erian [recently] wrote that investors should be cautious in the face of the recent rally, arguing the market has been buoyed by central bank policy. His better-known colleague Bill Gross has tweeted skepticism about the Fed, suggesting that investors might want Italian bonds rather than U.S. stocks.

Jim Shepherd of the Shepherd Investment Strategist said recently that the Federal Reserve has now created “the most gigantic bubble in history,” noting that a change is inevitable, and likely coming soon. “People have come to the conclusion now that the market will continue to rise for as long as the Fed is in the game..."

With the Standard & Poor’s 500-stock index up nearly 6% this year, and 12% over the past 12 months, the question for investors is whether to follow the herd, or run from it. After all, history shows that optimism typically rises in the crowd at the worst possible time.

Lipper Inc. reported $34.2 billion in net deposits into stock mutual funds and ETFs over the four weeks ended Jan. 30. Several other industry researchers also reported high levels of cash flowing into stocks as the market climbed to five-year highs. January marked the first time in 11 months that deposits into domestic equity funds exceeded withdrawals.
.


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## PigsDad (Feb 8, 2013)

An interesting observation:



Talent312 said:


> With the Standard & Poor’s 500-stock index up nearly 6% this year, and 12% over the past 12 months,
> ...
> January marked the first time in 11 months that deposits into domestic equity funds exceeded withdrawals.



So basically, most people were pulling out of equities all while the market was heading up 12%.  And you wonder why I don't try to time the market. 

Kurt


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## geekette (Feb 8, 2013)

PigsDad said:


> An interesting observation:
> 
> 
> 
> ...



Yeah, exactly!  People buying high, selling low.  

those folks can feel free to laugh at buy and hold, I am not the least bit chagrined.


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## Tia (Feb 11, 2013)

http://finance.yahoo.com/blogs/breakout/etf-trading-no-way-invest-says-bogle-140924616.html

John Bogle talks about ETFs as investments


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## easyrider (Feb 11, 2013)

More insider dumping. With every recession the stock markets drop significantly. The average decline is 30% for the DJ and almost 40% in s&p. We have had 2 50% declines in the last decade.  

http://www.bizjournals.com/seattle/blog/2013/02/is-the-economy-heading-for-a-recession.html

More dumping.
http://www.zerohedge.com/news/2013-...s-price-after-close-insiders-rush-sell-retail


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## artringwald (Feb 11, 2013)

Scott Burns used to have a Couch Potato investing column in the paper. The easy way to time the market is to buy equal values of several funds based on stocks and bonds. If one gets higher than the others, sell some of it. If one gets too low, buy some more of it. That way you're always buying low and selling high. I started doing it early in 2008 and although is was scary to keeping buying funds as they kept going down, it helped me make good profits through the recession.


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## PigsDad (Feb 11, 2013)

easyrider said:


> With every recession the stock markets drop significantly. *The average decline is 30% for the DJ and almost 40% in s&p. We have had 2 50% declines in the last decade.*


Do you have and references for these numbers?  

At first glance, those stats didn't look right, so I spent a few minutes searching and didn't find anything to back up stats even close to that.  I didn't find much that included the 2007 recession , but here are a few links I did find:

From The Big Picture:





An article that contains S&P performance during, 1yr, 3yrs, and 10yrs after recessions since 1950.  

An article from The Tech Farm that has some table data (pre-2007 recession) and these quotes:








> The S&P 500 Stock Market return during these nine recessions has averaged -0.4% with a low of -22.9% (1973 to 1975) to a high of +16.4% (1953 to 1954).
> 
> If we look at the return of the S&P 500 six months before the Start of the Recession to the Peak, the S&P 500 during this period returned an average of -3.7%.
> 
> If we look at the return of the S&P 500 six months before the Start of the Recession to the Trough, the S&P 500 during this period returned an average of -4.1%



I know one can slice and dice the numbers to make them look different, but I just don't see _anything remotely close _to an average 40% decline of the S&P with a recession.  If you have some references, I would be very interested in looking at them.

Kurt


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## artringwald (Feb 12, 2013)

PigsDad said:


> I know one can slice and dice the numbers to make them look different, but I just don't see _anything remotely close _to an average 40% decline of the S&P with a recession.  If you have some references, I would be very interested in looking at them.
> 
> Kurt


Here's what the Dow and S&P500 (SPY) did over the past 5 years.






Down almost 50% early in 2009.


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## PigsDad (Feb 12, 2013)

artringwald said:


> Here's what the Dow and S&P500 (SPY) did over the past 5 years.
> 
> Down almost 50% early in 2009.



I didn't doubt that -- as I said in my previous post, most of the data I referenced didn't include the 2007 recession.  What I really doubted is the statement:


> The *average *decline *is 30%* for the DJ and *almost 40%* in s&p.



The data just doesn't seem to be there.

Kurt

P.S.  I love that 5 year chart.  It shows a great recovery, and if a person kept on track and was dollar cost averaging during the whole thing, their return would be quite respectable over the 5 years; after all, some of the purchased stock would be up almost 100% (the lots bought at the absolute low).  Plus, the chart doesn't show the effect of dividends, raising your returns even more.


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## artringwald (Feb 12, 2013)

PigsDad said:


> P.S.  I love that 5 year chart.  It shows a great recovery, and if a person kept on track and was dollar cost averaging during the whole thing, their return would be quite respectable over the 5 years; after all, some of the purchased stock would be up almost 100% (the lots bought at the absolute low).  Plus, the chart doesn't show the effect of dividends, raising your returns even more.



When I retired 5 years ago, I rolled over my 401K into 7 different Vanguard funds. I rebalance them several times per year, and they're up 33% since then. Of course in 2009 they were down 33%, so it was a pretty scary ride.


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## cotraveller (Feb 12, 2013)

Here's the S&P 500 data from Yahoo Finance for an even longer period of time.  You can adjust the curve to show any time interval you desire.

Historical S&P data


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## GregGH (Feb 12, 2013)

any zerohedge.com readers on TUG ?

anyone follow Chris Martenson's PeakProsperity.com or his original 20 part youtube series ?

Or what is your fav youtube clip ... mine is Michael Burry ( written in Michael Lewis book ( http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393338827 )  ..... got 20 minutes ...amazing guy ...  http://www.youtube.com/watch?v=1CLh...EEJjlSDexhoLTgZVGOy0Eo4o&feature=results_main

So - I tipped my hand on gold & silver .... eh...  keep printing money .... and countries keep devaluating their currencies ...

Greg


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## Czahara1 (Feb 12, 2013)

*Bubbles R US*

“Central Bankers Gone Wild, What Can Investors Do? – CNBC headline dated 2/12/13 

"All asset classes have an upward bias now - precious metals, stocks, bonds, real estate, art. That upward bias is robust and we have not experienced anything like it in our lifetimes," said David Kotok, chief investment officer at Cumberland Advisors. "The limit to which those prices can rise is beyond our normal imagination. It's huge."

Global monetary easing will continue to inflate asset prices despite high unemployment and wage earners losing purchasing power to inflation.  Eventually this will end badly, but that might be several years down the road.


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## CO skier (Feb 12, 2013)

PigsDad said:


> Wrong.  I stated that the stock had a 3% dividend FOR THE WHOLE 5 YEARS, and that the dividend rate increased 5%/year.  To maintain the dividend rate of 3%, the stock price would have to increase by the rate of the dividend increase.  *Total *return is 8% per year.



Here is a definition of "dividend rate" from various sources:

http://www.investorglossary.com/dividend-rate.htm
http://www.investopedia.com/terms/d/dividendrate.asp#axzz2Kk7I9n8A
http://www.wisegeek.com/what-is-a-dividend-rate.htm


"The dividend rate is the amount of dividends per share a company pays to stockholders over a period of time. If the board of directors of XYZ Company declares a quarterly dividend of 22 cents per common share, the quarterly dividend rate is $.22. Some companies pay quarterly dividends based on a stated annual dividend rate (in the example, the annual dividend rate would be $.88)." 

So in the illustrated example for a $100 stock that yields 3%, the annual dividend rate in Year 1 = $3.00, 5% increase/year in the "dividend rate" puts Year 2 at $3.15 , Year 3 = $3.31, Year 4 = $3.47 and Year 5 = $3.65.  (The calculated dividend distribution in each year is somewhat higher, though, due to the compounding of the re-invested dividends).


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## GregT (Feb 12, 2013)

glypnirsgirl said:


> Overall, from my seat, it looks like a slow and steady upward climb to recovery.



I totally agree with this statement (and I'm sorry I missed this thread -- this is an interesting thread).

Here in SoCal, it feels like we've turned the corner.  Housing inventory is low, REITs are getting formed to buy up distressed housing, the government continues to keep interest rates low to force us to take some risk, and the long-term fiscal picture appears brighter (which isn't saying much).

I think people are tired of sitting on the sidelines -- deflation appears off the table -- inflation HAS to be coming -- so what to do?

Like others on this thread, I remain a believer in real estate, and that's what we've been buying.  I hope I'm right (and I hope no earthquakes).  I admire the stock-saavy in our group, and will hope to learn more from their posts.

Good thread -- and thanks very much!

Best,

Greg


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## PigsDad (Feb 12, 2013)

CO skier said:


> Here is a definition of "dividend rate" from various sources:
> 
> http://www.investorglossary.com/dividend-rate.htm
> http://www.investopedia.com/terms/d/dividendrate.asp#axzz2Kk7I9n8A
> ...



You're still missing my point.  The fact that the dividend goes up by 5% per year (in our example) will put upward pressure on the stock price.  _Over the long term_, the stock price will tend to rise at the same rate of the dividend increases.  My point is to not overlook that very important statistic.

_Total return_ comes from both the dividend payout and price appreciation.  That is where the 8% comes from in my example. So the stock price at the end of year 1 would be $105 (new dividend rate of $3.15/yr would drive the stock price to $105: ($3.15/$105 = 3% yield)).  So after a year you would have $3 in dividends, and the stock would be worth $5 more, for a total of $8 total return.  $8/$100 = 8% total return. 

Of course, this will not work out perfectly every year, but over the long run and over more stocks, this is a very valid analysis.

I really don't know how to explain that any more clearly.

Kurt


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## CO skier (Feb 13, 2013)

PigsDad said:


> _Total return_ comes from both the dividend payout and price appreciation.  That is where the 8% comes from in my example. So the stock price at the end of year 1 would be $105 (new dividend rate of $3.15/yr would drive the stock price to $105: ($3.15/$105 = 3% yield)).  So after a year you would have $3 in dividends, and the stock would be worth $5 more, for a total of $8 total return.  $8/$100 = 8% total return.
> 
> Of course, this will not work out perfectly every year, but over the long run and over more stocks, this is a very valid analysis.
> 
> ...



Companies can only declare a dividend rate; they can't declare a yield.  So assuming a stock appreciates an average of 5% per year is no different than someone noting that the DJIA average appreciated 13% annually over 73 years.  The reality of the last 5 years, at least, is that the "stock market" as measured by the 500 stocks in the S&P 500 have had no price appreciation, and the return is due entirely to the dividend rate.  For retirees who have had to dollar-cost average out of the market to fund part of their retirement, it has not been a rewarding period of time.


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## Carol C (Feb 13, 2013)

BocaBum99 said:


> I am a contrarian.



How is buying GOLD "contrarian"?


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## geekette (Feb 13, 2013)

CO skier said:


> Companies can only declare a dividend rate; they can't declare a yield.  So assuming a stock appreciates an average of 5% per year is no different than someone noting that the DJIA average appreciated 13% annually over 73 years.  The reality of the last 5 years, at least, is that the "stock market" as measured by the 500 stocks in the S&P 500 have had no price appreciation, and the return is due entirely to the dividend rate.  For retirees who have had to dollar-cost average out of the market to fund part of their retirement, it has not been a rewarding period of time.



Yes, yield depends on price, which is why I don't pay any attention to yield.  Rate is declared, price goes all over the place.

retirees that *had to dca out* and found it not rewarding should perhaps have not put themselves in a position to Have To do anything of the kind.

I will always be heavily in stocks, but the idea is for that to be Icing on the Cake, not The Cake that I have to keep eating hunks of to survive.

Aggressive is one thing, I'll own that, but planning to sell stock quarterly or monthly to live is not a risk I'd take, and is a really bad idea.  those folks would have been better served by the bucket method previously mentioned.   Having no option but to sell at lows is a worst case outcome.


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## PigsDad (Feb 13, 2013)

CO skier said:


> Companies can only declare a dividend rate; they can't declare a yield.


Of course companies can only declare a div rate, not a yield.  But raising their dividend rate certainly has upward pressure on the stock price.  If a $100/share stock had a div rate of $5/share, and the company raised it to $10/share, the stock suddenly becomes much more valuable.  If you invest in those companies who have a track record of consistent div rate increases, you have a better than average chance that there will be decent stock price appreciation.

Of course you can point to one period of time where the stock market as a whole has been stagnant, but it would be interesting to look at how individual stocks fared whose dividend rates were consistently increased.  I would bet that group of stocks turned out a decent total return, and certainly did better than the market as a whole.

Now if you are dollar-costing out of the market, I agree with Geekette that you should have some "buckets" that you can draw from, so you aren't forced to withdraw from the market when it is down.

Kurt


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## BocaBum99 (Feb 13, 2013)

Carol C said:


> How is buying GOLD "contrarian"?



Buying Gold is NOT contrarian. Buying Gold when everyone is selling Gold is contrarian.

Let's take a look a AAPL, where I made a pretty bad decision at the end of 2012.  I bought 120 shares between $500 and $530.  My average was $519.

It had dropped from over $700.  Buying when the stock is falling is being a contrarian.

Then, when it fell to around $435, I did not panic and sell when everyone else is selling.  Instead, I waited until there was a bounce and I sold half my stake at $474.  I took a loss of $3400, but that is better than selling in the panic and losing over $10,000.

Now, I am in a position to buy back aapl if and when it drops again down to the low $400s.

I've found that when stocks get hammered like AAPL did, that people act too emotionally and after a few quarters, it isn't as bad as they thought.  At these levels, I think that AAPL is undervalued.   If the stock loses ground, I'll increase my stake to average down.

Then, I will alternatively sell when it is in the high $400s and buy when it drops to the low $400s to average down my cost basis.

If it just goes up again, then I'll find other investments and collect my 2%+ dividend on the stock which is more likely to increase over time.

I like stocks that have lots of volatility and trade in a price range.   This is a contrarian strategy because I buy when there are large price drops and sell when there are large price increases.


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## BocaBum99 (Feb 13, 2013)

There is another bet that I called, but didn't invest in.

That bet was the spread between Gold and Platinum.   For a long while last year, the price of Gold was higher than the price of Platinum.  Historically, platinum has had a higher price per ounce due to its industrial uses.

I thought about buying platinum and shorting gold.  The bet would be that as the spread between the prices narrowed or changed, I would win.

It did happen where platinum now has a higher price per oz than gold.  I made the right call, but didn't place the bet.

Right now, Gold is not having a great 12 months.  Prices have been slowly deteriorating.  I am looking to increase my Gold holdings by another 50% if it gaps down.

The main reason for this is that we are printing money to cover our federal budget deficit.  Given last nights State of the Union, it doesn't look like that is going to change any time soon.  That will eventually lead to inflation, devaluation of the dollar and the increase in Gold prices.  It will need to happen.  So, this is a good time to start looking at adding to your holdings in Gold since Gold is out of favor.  That is contrarian investing.


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## PearlCity (Feb 21, 2013)

What do people think the effect of sequstration will be on.the economy?


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## DanaTom (Feb 21, 2013)

*sequestration*

will not impact the economy...   what Washington does with it, is the question?

As for the economy, the slow steady stabilization is probably a benefit to a future healthier economy.   In my area housing has definitely rebounded.  low to middle market priced homes are flying off the market.   Upper end is slow, but inventory in both spaces is almost non-existent.   Home builders are ramping up again and selling quickly.   Upper level home builder near me is nearly sold out in one year, and just raised his prices $60K (or 10%), with build time now up to 15 mos out.   

In my business I am seeing increased activity this year that is matching last year.   I work in financing capital expenditures for companies across the country, and while there is some definite regional disparities, it's no longer about recovery...it's about growth.   

As a direct reflection of what I'm seeing, I do expect the stock market to have some continued upside.   A good down market has historically proven to be the best model for strong, well run companies to prosper in the next phase as the weak companies are no longer there to compete for business and drive profits down for everyone. 

My bet....   Dow 20,000 before you see the next correction.   (not this year, but quicker than one might expect). 

Call me the optimist...


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## easyrider (Feb 21, 2013)

PearlCity said:


> What do people think the effect of sequstration will be on.the economy?



The effects are the big investors are selling paper assets like crazy and buying gold. Morgan sold 26% of the markets paper gold yesterday and then purchased physical gold. With all of these big purchases of physical metals from people and governments it seems like they are getting ready for a market down turn. 

http://www.businessinsider.com/sequester-effect-on-economy-2013-2

Even though this is very predictable the consequences will be job losses and a good chance for recession. 

Bill


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