Stock Thread 2018

[E.HONDA]

I sold my Amazon that I bought in 2013 a few months ago. Up like 4x-5x in that time, figured I’d call it good and move on. The individual picks are maybe 10-15% of portfolio, I certainly don’t think I’m smarter than the market but it’s nice to play a bit. Biggest discrete stocks right now are Tesla (why the hell not) and my employer, who gives us a 33% share buying bonus.

I bought NVDA at $80 and sold at $120



One of my favorite long term holds is Boeing. I think I got in middle of last year.

Pricing going up and P/E going down. Fantastic, although it is still very high

http://www.nasdaq.com/symbol/ba/pe-ratio

 

[SteelerFanatic]

Question of curiosity for you guys...

It was announced that my company was going to be bought and taken private. They are offering $45.25 per share. At the time the public share price was around $36. So it made sense that the public share price jumped to $45 after the news was announced.

It has stayed there for 2 weeks since the news was released. Except in the last two days or so the public price has creeped over $46. That means someone is buying up the shares at a premium over what they will be paid when the buyout is executed. (Supposedly after the 30-day "open sale" period closes if there are no better offers).

What reasons would someone have for paying more than the shares are about to be bought for?

These are the things I could think of:
1- Someone wanting a loss on their books for writeoffs, probably not probable
2- Someone wanting a bigger chunk of the pie for better negotiating?
3- People think that the price will close higher than the offer price, maybe due to the litigation firms raising a stink that my board could have got a better price

Let me be clear, it's not actually "MY" company. I have just worked here for nearly 10 years. Feels like mine. lol I'm just a worker-bee.

 

[afm199]

All of the above? That's a thing that happens often. And often the price drops after the acquisition. I doubt that it's much more than perception of value, which is either correct or incorrect.

 

[SteelerFanatic]

Yeah, I just found some news that other "potential suitors" have been identified and the company buying us may not have made their "best price offer" speculating the raise in share price.

2 more weeks. should be fun.

 

[Removed 3]

afm, they say bond prices and their yield go in opposite directions. so i've noticed the price fluctuation of a bond fund in my 401(k) portfolio. The price of a share of the bond index fund goes negative like by -$.02 sometimes. So is it a good thing the price is dropping because you can buy more shares and earn more interest or is it not a good thing because the total value of that fund in my portfolio is less than yesterday?

 

[afm199]

afm, they say bond prices and their yield go in opposite directions. so i've noticed the price fluctuation of a bond fund in my 401(k) portfolio. The price of a share of the bond index fund goes negative like by -$.02 sometimes. So is it a good thing the price is dropping because you can buy more shares and earn more interest or is it not a good thing because the total value of that fund in my portfolio is less than yesterday?

It is both and neither.

The simple mechanics: If a bond yields 5%, and interest rates go up to 6%, the 5% bond price will go down. Yield up, price down. The extreme situation would be massive inflation. Bond pays 5%, interest rates go up to 10%. The 5% bond is now worth significantly less than it was when interest rates were 5%.

Bond funds are short, medium, long term or combo. If the short term rates change (overnight) that will affect the short term prices much more than the long term, as the rises and falls in interest rates do not match each other.

Your fund will constantly be buying and selling bonds. They will buy some at the new price and you will get some of the benefit. But they will lose principal when the sell the lower interest rate bonds, so you lose. Most people don't buy bond funds for capital appreciation, but income. I have a couple that I have owned for years. They are "underwater", or trading at a price below what I paid. Nonetheless, the return on investment ( interest dividends) has been enough over the years to make them very nice investments that I intend to hold onto.

Bond funds tend to be stable, we are just at the tail end of massive decades long bond boom. We probably won't see significant upward movement in bond funds for some time. However, if you are happy with the yield, who cares? The real danger is quick inflation, which is a bond killer.

 

[Removed 3]

It is both and neither.

The simple mechanics: If a bond yields 5%, and interest rates go up to 6%, the 5% bond price will go down. Yield up, price down. The extreme situation would be massive inflation. Bond pays 5%, interest rates go up to 10%. The 5% bond is now worth significantly less than it was when interest rates were 5%.

Bond funds are short, medium, long term or combo. If the short term rates change (overnight) that will affect the short term prices much more than the long term, as the rises and falls in interest rates do not match each other.

Your fund will constantly be buying and selling bonds. They will buy some at the new price and you will get some of the benefit. But they will lose principal when the sell the lower interest rate bonds, so you lose. Most people don't buy bond funds for capital appreciation, but income. I have a couple that I have owned for years. They are "underwater", or trading at a price below what I paid. Nonetheless, the return on investment ( interest dividends) has been enough over the years to make them very nice investments that I intend to hold onto.

Bond funds tend to be stable, we are just at the tail end of massive decades long bond boom. We probably won't see significant upward movement in bond funds for some time. However, if you are happy with the yield, who cares? The real danger is quick inflation, which is a bond killer.

thanks for the insight afm. i can always learn from what you have to say. the only reason why i have any bond funds in my 401(k) is due to the objective of having diversification. everything has gone up, just like for everybody else, so i cannot complain.

i'll leave it to the federal reserve to keep inflation in check.

 

[Entoptic]

So what is everyone's stock trading method here?


Long term investor, day trader, swing trader?

I like to set it and forget it when it comes to stock. However with the recent dive into crypto I'm looking at my stock in a different light.

 

[Entoptic]

thanks for the insight afm. i can always learn from what you have to say. the only reason why i have any bond funds in my 401(k) is due to the objective of having diversification. everything has gone up, just like for everybody else, so i cannot complain.

i'll leave it to the federal reserve to keep inflation in check.

AFM is truly a wealth of great info when it comes to investing. I for one enjoy reading his info on the market.

 

[E.HONDA]

I am getting out of most of positions by the end of next week. I agree with everyone here that the market is way too overvalued.

I'd rather miss profits instead of selling when everything is crashing.

 

[afm199]

I am getting out of most of positions by the end of next week. I agree with everyone here that the market is way too overvalued.

I'd rather miss profits instead of selling when everything is crashing.

I'm not really a cash out guy, I do take so money off the table. It's also possible this market could go up another 20%. There are a lot of things on the table.

 

[Blankpage]

Its a favourable business environment with benefits to them coming from the new tax plan. I'm betting stock are going to have a good year or two.

 

[E.HONDA]

I'm not really a cash out guy, I do take so money off the table. It's also possible this market could go up another 20%. There are a lot of things on the table.

I am keeping three-four forever positions and cashing out the rest for the short term.

 

[E.HONDA]

Its a favourable business environment with benefits to them coming from the new tax plan. I'm betting stock are going to have a good year or two.

I agree about the new tax plan, but with a lot of company's EV at 40-90 it is getting a bit much.

Just my opinion but playing it safe, at least for the short term.

 

[afm199]

Its a favourable business environment with benefits to them coming from the new tax plan. I'm betting stock are going to have a good year or two.

This is definitely an issue. Whether two years or two months, I don't know, but this certainly has something to do with it.

Corps all over are celebrating and repatriating money. This could be a very good year. Though I suspect that there will be some scary moments no matter what happens. l can't see this huge lift continuing without some kind of selloff.

 

[rodr]

Aaaand it just keeps going up. My portfolio was up over 1% today. arty

 

[jt2]

My timeline is 30 years so for now I am in aggressive growth index funds with lowest fees. As my timeline gets closer I will transition towards dividend index funds.

6% is what I consider to be the annual average growth of the market, so any return over that I am happy.

6% is not an unrealistic expectation of long term growth, but a 6% withdrawal rate is a relatively risky plan. OTOH, I think the conventional wisdom that says you should stick with 4% is overly conservative.

There are two ways to fail at retirement planning: Saving too little, and saving too much. Sure the former is far worse, but the latter means that you've worked too long when the goal is generally to get out and enjoy the fruits of your labor.

My opinion (which I realize you didn't ask for) is that you should consider S&P500 for the long haul rather than try and go with shifting allocations over time as the conventional wisdom says you should. SPY ETF is my favorite.

Here's a calculator of S&P500 returns over time. Distilled to a single take-away: "Over the very long run, the stock market has had an inflation-adjusted annualized return rate of between six and seven percent."

Here's a really good article by the authors of the Trinity Study on Safe Withdrawal Rates, where they take it one step further and look at success rates against asset allocation and timeframe. https://www.onefpa.org/journal/Pages/Portfolio Success Rates Where to Draw the Line.aspx

Skip the egghead math stuff and look at the tables.

Now if you really want to geek out and crunch the numbers yourself, you have to start with what you expect to spend, and then plug it into Firecalc, one of the best tests out there for your plan.

 

[afm199]

Good stuff. I like the 4% figure.

My lifestyle depends, pretty much, on my investment returns. I don't take more than 4%. If the portfolio income falls below that, too bad for me. As a rule, spending capital, as opposed to earnings, is a huge no no.

 

[bikeama]

For the old farts on BARF who are getting close to RMD withdraws on their tax-deferred accounts. Run an RMD calculator, this one is Schwab's

I am lucky that I have SS, pension and rental income that covers my living expenses. Have investments that are not tax-deferred BUT a lot in tax-deferred accounts. thumbup) I have been doing a 4% taxable withdraw that brings me up to the top of my current tax bracket. After looking at the RMD table I might need to buy a new motorcycle. $70K RDM at 80 Damn don't care for Trump, but will like his new tax rates.

 

[JesasaurusRex]

For the old farts on BARF who are getting close to RMD withdraws on their tax-deferred accounts. Run an RMD calculator, this one is Schwab's

I am lucky that I have SS, pension and rental income that covers my living expenses. Have investments that are not tax-deferred BUT a lot in tax-deferred accounts. thumbup) I have been doing a 4% taxable withdraw that brings me up to the top of my current tax bracket. After looking at the RMD table I might need to buy a new motorcycle. $70K RDM at 80 Damn don't care for Trump, but will like his new tax rates.