All things STOCKS

[Majors]

I did pretty well yesterday. Mind you I'm still small potatoes by just about everyone's account, but still a win is a win.

Something I learned and never left, up is up.

I tend to invest on things I'm familiar with that are outside common household dealing with new technology or orphan disease. Just a few years ago I got in on CRISPR Therapeutics in 2018 and Moderna. Doesn't take alot of money if you hit it early.

 

[Majors]

Yep, easier said than done though. I knew people in their 50s that panicked and sold in the 08-10 depression. Their attitude was "I'm getting out while I still have something". Their attitude should have been "buy today while everything is down". And if it went down more buy even more. If it went up slightly buy more.
In the long term the markets direction is up,up,up. 1929 took a very long time to recover though.

Everyone in the market remembers those days. At my age then early 30's I knew I had time and it was a good thing. My father in-law, got out on a good bit of his portfolio (retired) and reinvested in new lower prices once it stabilized.

 

[Thunder Good-Oil]

If you had one or two nuggets of wisdom for novice investors concerning exponential returns and compound growth, what would they be?

It’s hard to pick just one thing, but diversification is huge. The broad market funds (like VTI, QQQ, DIA, SPY, VOO) can eliminate much of one of the two bigger risks investors face. Securities risk or risk that an individual company stock can collapse. Diversification protects against that. The other risk is unavoidable. Market risk. Markets can be volatile. They will fluctuate. It’s part of the reality of investing.

Patience is big. Don’t panic when markets fall. Don’t get too greedy when markets rise. Dollar cost averaging is a great concept. Invest the same amount on a regular basis and market pullbacks are beneficial. Shares get cheaper and the investor will get to buy more of them during those market pullbacks.

Be careful with leverage. Margin can make portfolios grow really fast, but also can send them to zero very quickly.

Discipline.

Define investment goals. Long term investors can take on more risk.

Let winners run. If an investment goes up a lot, don’t sell all of it. Maybe pull out the initial investment amount or a portion of it and let the profits run.

Understand the favorable tax treatments. Roth accounts are one of the best things individuals can participate in. If building wealth to pass on, the stepped up cost basis is another fantastic part of the tax code. Long term capital gains versus short term rates. Etc.

That is more general stuff. But exponential growth and compound growth work better and better over longer periods of time. Compound growth really needs income to work. Like dividends or rent or interest. Crypto, non-income generating real estate, and precious metals don’t really include a compounding element with the math.

 

[Majors]

It’s hard to pick just one thing, but diversification is huge. The broad market funds (like VTI, QQQ, DIA, SPY, VOI) can eliminate much of one of the two bigger risks investors face. Securities risk or risk that an individual company stock can collapse. Diversification protects against that. The other risk is unavoidable. Market risk. Markets can be volatile. They will fluctuate. It’s part of the reality of investing.

Patience is big. Don’t panic when markets fall. Don’t get too greedy when markets rise. Dollar cost averaging is a great concept. Invest the same amount on a regular basis and market pullbacks are beneficial. Shares get cheaper and the investor will get to buy more of them during those market pullbacks.

Be careful with leverage. Margin can make portfolios grow really fast, but also can send them to zero very quickly.

Discipline.

Define investment goals. Long term investors can take on more risk.

Let winners run. If an investment goes up a lot, don’t sell all of it. Maybe pull out the initial investment amount or a portion of it and let the profits run.

Understand the favorable tax treatments. Roth accounts are one of the best things individuals can participate in. If building wealth to pass on, the stepped up cost basis is another fantastic part of the tax code. Long term capital gains versus short term rates. Etc.

That is more general stuff. But exponential growth and compound growth work better and better over longer periods of time. Compound growth really needs income to work. Like dividends or rent or interest. Crypto, non-income generating real estate, and precious metals don’t really include a compounding element with the math.

Great readers digest version information here.

 

[Thunder Good-Oil]

Great readers digest version information here.

Note my typo. VOO, not VOI.

 

[Velo Vol]

 

[Carp]

And first buy of the year is gonna be INTC. I like Disney a lot too, but the dividend is too good to pass up here imo, particularly with the ex div date coming up.

 

[@1RBFjr]

It’s hard to pick just one thing, but diversification is huge. The broad market funds (like VTI, QQQ, DIA, SPY, VOO) can eliminate much of one of the two bigger risks investors face. Securities risk or risk that an individual company stock can collapse. Diversification protects against that. The other risk is unavoidable. Market risk. Markets can be volatile. They will fluctuate. It’s part of the reality of investing.

Patience is big. Don’t panic when markets fall. Don’t get too greedy when markets rise. Dollar cost averaging is a great concept. Invest the same amount on a regular basis and market pullbacks are beneficial. Shares get cheaper and the investor will get to buy more of them during those market pullbacks.

Be careful with leverage. Margin can make portfolios grow really fast, but also can send them to zero very quickly.

Discipline.

Define investment goals. Long term investors can take on more risk.

Let winners run. If an investment goes up a lot, don’t sell all of it. Maybe pull out the initial investment amount or a portion of it and let the profits run.

Understand the favorable tax treatments. Roth accounts are one of the best things individuals can participate in. If building wealth to pass on, the stepped up cost basis is another fantastic part of the tax code. Long term capital gains versus short term rates. Etc.

That is more general stuff. But exponential growth and compound growth work better and better over longer periods of time. Compound growth really needs income to work. Like dividends or rent or interest. Crypto, non-income generating real estate, and precious metals don’t really include a compounding element with the math.

There are good points here, as well as what others have added.

In no particular order, here are some of my thoughts. Others always need to decide what's best for them, however.

If I buy a stock or fund that has a dividend/yield, I have it automatically reinvested (called DRIP). That way I automatically get more shares with no transaction costs.

I generally try to keep my expenses to a minimum. That goes for buying stocks or funds. Mutual fund annual expenses can eat away at the return. If I buy and hold a fund for years/decades, there's a big difference in a fund that charges 0.20% a year and 1.20% a year. If I'm looking for an index fund, I look for which company offers it for the lowest expense ratio.

If you're starting out, maybe check out Investing for Dummies or Mutual Funds for Dummies. I don't mean this as a slight to anyone, but it might be a good starting point to learn. Off and on over the years, I've subscribed to the Motley Fool's Stock Advisor. I like to read and learn and they do a good job, IMO.

I talk to people who are smarter than I am and who are professionals (I'm not a professional). I confer with others almost all of the time (except that time I bought shares in the National Bank of Greece- I knew I was taking a chance).

I'm a buy and hold person. I don't use margin, I don't do options, and I don't do crypto (to each their own). For me, boring is good. I think of investing as a crockpot and not a microwave. I don't sell on bad news- in fact, I've sometimes bought. I bought Ford when a share cost about as much as a Matchbox Ford Mustang. Held it since, all dividends reinvested. I've held Apple for almost 15 years. I've had mutual funds for a long time.

Have I lost money at times? Absolutely. I've rode stocks into bankruptcy (further proof I can be wrong). I view investing as a learning process that will never stop for me.

If you pull up a chart of, for example, the DJIA and look at the past 30 years, you'll see how overall it's increased over that time frame, even with all sorts of calamities, wars, and a number of Presidents of both parties. I sure hope that upward trajectory keeps up.

 

[Velo Vol]

If I buy a stock or fund that has a dividend/yield, I have it automatically reinvested (called DRIP). That way I automatically get more shares with no transaction costs.

I hadn't noticed that you can set the brokerage account to do this automatically.

Good to know.

 

[Thunder Good-Oil]

I hadn't noticed that you can set the brokerage account to do this automatically.

Good to know.

Easier to manage inside of a retirement account. If not, hopefully if starting now the broker’s system keeps good track of the tax basis. The dividends get taxed even if rolled back into DRIP shares. Which also increases the tax cost basis of the shares. A portion of which will get short term treatment. The established brokers should be able to administer all of the record keeping requirements however.

 

[@1RBFjr]

Easier to manage inside of a retirement account. If not, hopefully if starting now the broker’s system keeps good track of the tax basis. The dividends get taxed even if rolled back into DRIP shares. Which also increases the tax cost basis of the shares. A portion of which will get short term treatment. The established brokers should be able to administer all of the record keeping requirements however.

Yes, online I can click on a stock symbol and it expands to show all purchase dates, amounts purchased, cost basis, amount of gain or loss and if it’s long or short term. My printed monthly statements show the same information. My accountant is satisfied with the tax forms I receive come tax time.

 

[Firebirdparts]

I actually never do that. transactions are free. There’s no benefit and plenty of headaches creating 4 taxable transactions a year buying a half a share at a time.

 

[Go aeiou]

I actually never do that. transactions are free. There’s no benefit and plenty of headaches creating 4 taxable transactions a year buying a half a share at a time.

Brokerage computers do all the work at tax time, And it's still just a dividend which is taxable whether you take cash or stock
But, that tiny percent of stock is not being bought when the price dips if you want to do that.

 

[mrorange211]

I bought some sbux yesterday. Still great margins and the company continues to expand. Plus, I see all the young people hold SBUX cups everywhere. LT for me.

 

[Velo Vol]

Easier to manage inside of a retirement account.

In the Roth account.

Fidelity has a page where you select all applicable holdings to receive as cash or re-invest in the security.

 

[Firebirdparts]

Down we go, wheeeeee!

 

[Thunder Good-Oil]

Facebook/Meta (FB) is an enticing buy. But there will be a whole lot of selling with any bounce upward. I might buy a couple of shares if it pulls back another 10-15%. Amazon is another stock worth buying to tuck away that is on sale.

Facebook going public was a missed opportunity by me. I sure didn’t see the huge share of advertising dollars about to go to that platform. Those ad impressions or eyeballs are certainly selling at a premium with their highly targeted, narrowcasting model.

 

[05_never_again]

Facebook/Meta (FB) is an enticing buy. But there will be a whole lot of selling with any bounce upward. I might buy a couple of shares if it pulls back another 10-15%. Amazon is another stock worth buying to tuck away that is on sale.

Facebook going public was a missed opportunity by me. I sure didn’t see the huge share of advertising dollars about to go to that platform. Those ad impressions or eyeballs are certainly selling at a premium with their highly targeted, narrowcasting model.

I'd have some patience with that one. The last time this happened the stock continued in an ugly downtrend for about 6 months before bottoming. The total drawdown ended up being 44%.

You might get a bounce if you bought today, but it seems like these stocks that spectacularly blow up in response to an earnings report need time to bleed out before finding a longer-term bottom.

 

[Velo Vol]

Facebook/Meta (FB) is an enticing buy. But there will be a whole lot of selling with any bounce upward. I might buy a couple of shares if it pulls back another 10-15%. Amazon is another stock worth buying to tuck away that is on sale.

As between those two, FB seems riskier right now. Almost all of its revenue is advertising, and what is it doing?

 

[Thunder Good-Oil]

I'd have some patience with that one. The last time this happened the stock continued in an ugly downtrend for about 6 months before bottoming. The total drawdown ended up being 44%.

You might get a bounce if you bought today, but it seems like these stocks that spectacularly blow up in response to an earnings report need time to bleed out before finding a longer-term bottom.

FB does have support from the big funds. When they are getting huge cash inflows they have to buy something. That 17-18x p/e is attractive as well.

I’d think that their biggest risk is the possibility of governmental interference and maybe even pushback from users getting fed up with their loss of privacy and FB’s attempts to control the narrative. Section 230 issues could (and should) disrupt their practices. They aren’t supposed to be a platform AND a publisher while shutting down some messages but also being shielded from civil litigation. But they do make “donations” to campaigns and other political organizations… so they might be able to get away with their crap for quite a while yet.

 

[05_never_again]

As between those two, FB seems riskier right now. Almost all of its revenue is advertising, and what is it doing?

Somebody on CNBC (maybe Guy Adami) I thought made a good point yesterday about how FB seems very distracted. Their business is online advertising, right? Over the last few years, they've had to devote attention to privacy concerns, inability/unwillingness to crack down on fake news and pressure from governments to do so, antitrust concerns, and expansion into the metaverse + the associated rebranding. Not to mention all the competition they have now.

Have they been focusing on their core business over the last few years? It doesn't really seem like it and maybe it is catching up with them.

 

[Thunder Good-Oil]

As between those two, FB seems riskier right now. Almost all of its revenue is advertising, and what is it doing?

Advertising is extremely high margin and doesn’t require matching CapEx spending. But it is an expense that struggling businesses will quickly cut.

Amazon’s model is pretty sweet when they only expedite the purchases without having to own the inventory. Amazon is a more diversified revenue stream. AWS is their cash cow creating the mother load of profits.

 

[Thunder Good-Oil]

Somebody on CNBC (maybe Guy Adami) I thought made a good point yesterday about how FB seems very distracted. Their business is online advertising, right? Over the last few years, they've had to devote attention to privacy concerns, inability/unwillingness to crack down on fake news and pressure from governments to do so, antitrust concerns, and expansion into the metaverse + the associated rebranding. Not to mention all the competition they have now.

Have they been focusing on their core business over the last few years? It doesn't really seem like it and maybe it is catching up with them.

It would be smart of them to avoid Section 230 issues by deciding to be a platform. But Zuck doesn’t get to control the messages and the politics if he becomes an unbiased platform.

 

[05_never_again]

Market seems to like AMZN's numbers.

 

[Velo Vol]

Somebody on CNBC (maybe Guy Adami) I thought made a good point yesterday about how FB seems very distracted. Their business is online advertising, right? Over the last few years, they've had to devote attention to privacy concerns, inability/unwillingness to crack down on fake news and pressure from governments to do so, antitrust concerns, and expansion into the metaverse + the associated rebranding. Not to mention all the competition they have now.

My not very-well researched impression is that FB is planning for a future that seems at odds with their current Boomerish user base. What, exactly, is this company going to be in ten years?