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Ideas for Personal Account.
 

Johnny Ringo's picture
HF
 
Points)
 on 6/12/12 at 1:11pm
stocks

Ladies,

I have just came into a few thousand dollars from a relative's estate...Nothing life changing.

I am going to invest it and looking for a few new ideas in equities. Long only but I am not looking for a 10+ year Long idea but also not looking to day trade to get rich.

Figure a 2-3 year position that will give me some cash to play around with. Was given free chunk or change and would like to turn it into something good.

Serious thoughts only, and please give me why you like it.

Thanks all.

Eventus stultorum magister.
IlliniProgrammer's picture

What is wrong with the idea

ST
(Almost Human, 9,258
 
Points)
 on 6/12/12 at 1:44pm

What is wrong with the idea of buying a solid dividend stock and holding it forever?

Buy a large US oil company yielding between 3 and 4% and take home $10/month (inflation adjusted) for the rest of your life. Or buy a European oil company yielding 6% and collect $15/month.

Investors hate oil right now, but if you are just starting out, it is a reasonable certainty that you will always need to buy it for the rest of your life.

Work hard, play hard.

anon56's picture

I know its cliche, but... ‘If

 
Points)
 on 6/12/12 at 1:45pm

I know its cliche, but... ‘If you don’t feel comfortable owning something for 10 years, then don’t own it for 10 minutes.’

oR3DL1N3o's picture

AAPL FTW

IB
(Orangutan, 319
 
Points)
 on 6/12/12 at 1:55pm

AAPL FTW

In reply to oR3DL1N3o
turtles's picture

oR3DL1N3o: AAPL FTW It was

IB
(Neanderthal, 2,961
 
Points)
 on 6/12/12 at 2:22pm
oR3DL1N3o:

AAPL FTW

It was FTW back when I snatched it for under $50 a share

Just saying...

In reply to turtles
Macro Arbitrage's picture

turtles: oR3DL1N3o: AAPL

HF
(King Kong, 1,404
 
Points)
 on 6/12/12 at 2:25pm
turtles:
oR3DL1N3o:

AAPL FTW

It was FTW back when I snatched it for under $50 a share

You also trade with Investopedia Simulator brah?

"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."

Value_added's picture

Not the same upside but I

O
 
Points)
 on 6/12/12 at 2:26pm

Not the same upside but I think appl still looks pretty attractive. With a new iphone announcement later this year (likely to be a much more significant revamp than the 4s) plus some pretty cool updates of iOS 6 and their laptop lines I've been thinking of picking up some more shares.

RichardPennybags's picture

Tip 1: This has to be

ST
 
Points)
 on 6/12/12 at 2:28pm

Tip 1: This has to be Facebook.
Tip 2: Do not invest money based on stuff strangers tell you on some forum.

To counter everything I've said:

I find this website to a pretty good starting point, if you are not so familiar with other platforms

http://www.vuru.co

Has all the info about a stock in one place, with a very nice, clean interface.
Check it out, analyze some stuff and come back to ask for opinion = WIN.

"Every man should lose a battle in his youth, so he does not lose a war when he is old"

In reply to RichardPennybags
RichardPennybags's picture

Sorry, I haven't considered

ST
 
Points)
 on 6/12/12 at 2:34pm

Sorry, I haven't considered that you are serious.

FRX, China Mobile, TNH

"Every man should lose a battle in his youth, so he does not lose a war when he is old"

Spalding Get Your Foot Off the Boat's picture

Dividend paying stocks will

 
Points)
 on 6/12/12 at 2:48pm

Dividend paying stocks will crush you if it's not in a tax advantaged account... wouldn't go that route

In reply to Spalding Get Your Foot Off the Boat
IlliniProgrammer's picture

Spalding Get Your Foot Off

ST
(Almost Human, 9,258
 
Points)
 on 6/12/12 at 3:07pm
Spalding Get Your Foot Off the Boat:

Dividend paying stocks will crush you if it's not in a tax advantaged account... wouldn't go that route

See where you're coming from, but still disagree here. Dividends already enjoy tax advantages, including a 15% cap on the tax rate, and if your portfolio has a turnover rate of more than 25-30%/year, they're taxed at roughly the same rate as Capital Gains.

REITs, bonds, and royalty trusts, all taxed as ordinary income, should be held in your retirement accounts.

The big question I have is what is the point of income if you're not allowed to enjoy it? Why buy dividend stocks if they sit in a retirement account and need to get reinvested?

Dividend stocks in a cash account, along with my emergency savings, help form my comprehensive financial safety net. If the bottom falls out of the financial services job market, I tick one box in my cash brokerage account from "Reinvest dividends" to "Don't reinvest dividends" and $XXX gets deposited into my checking account every month. I cut back on my expenses, try to find some part-time work, and those dividends provide a nice long-term cushion on my financial situation. Utility bill? Dividends. Trip to the gas station? Dividends. Rent? Dividends.

The same can't be said for a retirement account. I need to pay a 10% penalty to get the money out. A very large penalty compared to the fairly small (0.5%) penalty I pay on my dividends tax by recognizing the gain every year over 3-4 year capital gains.

Yes, if you would hold Berkshire Hathaway in a taxable account and never sell it until retirement, dividend stocks start to look expensive by cutting your returns from 10%-(15%/40 years) to 8.5%. But most people are cutting their returns from 10% to ~8.6-8.7% anyways with turnover in their portfolios, and a company that respects its stockholders by paying a dividend will probably make up for that 20 basis point after-tax-loss in the long run with better management.

Not sure where you are in life, but having one or two professional gray hairs, I can say where the practice is different than the theory for me and a lot of wall street folks. In theory, you're right; 10% returns beat 8.5% returns, but in practice, it's a lot more fun to get a monthly check in your hands, and you'll be selling your non-dividend stocks every couple years anyways, bringing after-tax returns pretty darned close to 8.5% anyways.

Moral of the story: contribute to your retirement account, but dividends in a cash account make it a lot of fun to save money.

Work hard, play hard.

Canu's picture

Know you said equities but

 
Points)
 on 6/12/12 at 3:13pm

Know you said equities but get some Gold as well, and ARNA is worth to be considered. GMCR after Greenhorn crashed it is quite attractive. Leave FB alone.

Spalding Get Your Foot Off the Boat's picture

all else equal, for someone

 
Points)
 on 6/12/12 at 3:20pm

all else equal, for someone in their 20's, i'd encourage a long term time horizon and would strongly discourage using your investment income to cover your bills - the opportunity cost here is huge. scale your bills down so that they can be covered by your after tax income.

for someone with a short-mid time horizon (as given here), regardless of age, the case for dividend paying stock would be arguably lower vol and more predictable cash flows. it's a decent argument, especially for someone as bearish on bonds as i am. my personal advice would be to plow that capital into low p/e stocks with great returns on capital... the fruits of this strategy are well documented and generally realized within ~2 year time frame

TraderDaily's picture

Alpha Natural Resources...

(King Kong, 1,047
 
Points)
 on 6/12/12 at 3:57pm

Alpha Natural Resources...

animalz's picture

donno, I'd say JPM>C>BAC, but

 
Points)
 on 6/12/12 at 3:58pm

donno, I'd say

JPM>C>BAC, but both 3 interesting

I'd go with JPM for sure for the next few months at least

Spalding Get Your Foot Off the Boat's picture

interested to hear the case

 
Points)
 on 6/12/12 at 4:01pm

interested to hear the case for GMCR... i'm a buy low guy, and i do like the P/E (10) but the business case doesn't look good (expired K-cup patent)..........

Johnny Ringo's picture

I am willing to take a risk

HF
 
Points)
 on 6/12/12 at 4:09pm

Eventus stultorum magister.

Addinator's picture

NBG I'm kidding somewhat,

AM
 
Points)
 on 6/12/12 at 4:15pm

Contact: [email protected]
See my other blog posts

Spalding Get Your Foot Off the Boat's picture

i don't even love their

 
Points)
 on 6/12/12 at 4:34pm
In reply to IlliniProgrammer
sambotanman's picture

IlliniProgrammer: What is

 
Points)
 on 6/12/12 at 4:35pm
adapt or die's picture

It shows how clownish this

(King Kong, 1,265
 
Points)
 on 6/12/12 at 4:48pm
In reply to RichardPennybags
Macro Arbitrage's picture

RichardPennybags: http://www.

HF
(King Kong, 1,404
 
Points)
 on 6/12/12 at 4:56pm

"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."

In reply to adapt or die
TraderDaily's picture

adapt or die: It shows how

(King Kong, 1,047
 
Points)
 on 6/12/12 at 4:55pm
Spalding Get Your Foot Off the Boat's picture

I'm not buying apple, but i

 
Points)
 on 6/12/12 at 4:55pm
In reply to adapt or die
Value_added's picture

adapt or die: It shows how

O
 
Points)
 on 6/12/12 at 5:28pm
In reply to Macro Arbitrage
RichardPennybags's picture

Macro

ST
 
Points)
 on 6/12/12 at 5:31pm

"Every man should lose a battle in his youth, so he does not lose a war when he is old"

peepstache's picture

DELL looks undervalued ^btw

(Baboon, 140
 
Points)
 on 6/12/12 at 9:35pm
rufiolove:

When evaluating whether or not to post something on WSO, I think to myself, "would an idiot post this" and if the answer is yes, I do not post that thing...

In reply to RichardPennybags
sambotanman's picture

Wow, cool... The website is

 
Points)
 on 6/13/12 at 1:39am
TraderDaily's picture

Wow!!! Vuru is on point.

(King Kong, 1,047
 
Points)
 on 6/13/12 at 10:48am

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