stock market was up today...

It wouldn’t hurt to go pick up an intro to accounting textbook. Even if it is decades old, the basic concepts don’t change. Assets, liabilities (debts owed), equity (or “capital”), expenses, and revenue (which includes sales sales) are the basic elements and it is a good idea to become very familiar with those 5 accounts that are on EVERY organization’s financial statements. The first 3 on balance sheets and the other 2 on income statements.

Dividends (paid) are an interesting account. Financial beginners tend to think of the dividend payments to shareholders as an expense to a company - when it’s really a decrease in the equity (or a return of equity to shareholders). The bad thing about dividends is that the company is not allowed to deduct those payments on their income tax returns, but a shareholder receiving the dividend must report them as income on their personal tax returns. Equity grows when a company has earnings (or profits) and equity is reduced when a company has losses or pays out cash dividends to shareholders. So the lesson with dividends is that there is the simple math of a yield (dividends paid divided by a companies share price) that is expressed as a percent. But you also must consider the dividend payout ratio in order to assess if the dividends being paid to shareholders is sustainable. It is comparing the dividends paid per share and dividing that dollar amount into a company’s earnings per share. A company with a higher dividend yield isn’t necessarily better if their earnings are low relative to the dividends that it pays. They can continue paying the dividend for a short while, even without the profits to cover the dividend payment - but eventually they will have to cut the dividend. Wall Street hates it when companies cut their dividends. The share price will crash.

The P/E ratio is a very important measure. It is simply a company’s share price divided by its earnings (or loss - yikes!) per share. A price/earnings (P/E) ratio above zero is always preferred (which translates to positive earnings instead of a loss). P/Es that get extremely high can indicate several things. A company’s share price has been bid up more than it is worth in equity markets. A company has excellent future prospects and the growth is worth paying a premium for. Also just the math - a company that just turned profitable might only have a few cents of earnings per share but is expected to easily grow to several dollars of earnings in the near term. A $100/share company that is widely expected (by stock analysts) to earn $5/share NEXT year has a reasonable FORWARD P/E of 20x earnings. But if it is only earning a penny per share in the current year then the P/E ration (or “earnings multiple” or simply “multiple”) would be $100 divided by $0.01 or 10,000x - which is an insane P/E if not considering the other facts. Sometimes you will see a P/E ratio published as NM (not meaningful) with an extreme like that.

P/E ratios can be compared to other companies in the same business (Ford, GM, and Tesla for example) or to the P/E calculated on a broad index average (S&P 500, the Dow Jones Industrial average (the Dow or the DJIA), and the NASDAQ 100 (the QQQs being a widely traded ETF that reflects the NASDAQ 100 “index”)), or PEs can be compared to historical PEs for the same company. .

Good places to scan for companies paying reliable, sustainable, hopefully growing dividends are the components of the S&P 500 and the 30 companies in the DJIA. Also, one of the large ETFs with the theme of including good dividend paying stocks. I’m not as familiar with the best of those funds but I’d start with the largest that are in the Vanguard, Fidelity, iShares (BlackRock), SPDRs (State Street), and Schwab fund families. Here is a good list:

https://money.usnews.com/investing/funds/slideshows/best-dividend-etfs-to-buy-now

The cool thing about ETFs is that they publish the list of companies that they own in their funds. Those lists are in their annual reports that can be found on the fund websites.

I’ll look for a few names later, but I’m not as interested in dividends/income as some of the other posters. I’m more interested in long term growth in investment values and short term trading profits. There could easily be an entire VN thread focused only on dividends and income producing investments.

Another concept that most brokers offer for their account holders is automatic dividend reinvestment programs. They will take your dividends and automatically buy more shares of stock in the issuing company’s shares for you. It is an auto pilot for investors that believe strongly in a company (or a fund) and just want to grow their investment without pulling out the cash or be hassled with managing their own investments as closely.

Good dividend paying companies are often those with a long established track record (DJIA component companies for example). Low dividend payers shouldn’t be considered bad investments. Warren Buffet doesn’t like paying dividends - but Berkshire-Hathaway is an outstanding, well established, huge company that does not pay a dividend. Its P/E ratio is also very high at 50x plus, but BRK stock is a great LT investment.

Large petro and drug companies are good dividend payers. XOM, CVX, JNJ, MRK, and PFE to name a few. Large defense contractors can be good as well - LMT, General Dynamics, NOC, RTX, LHX.
@marcusluvsvols this 👆is a good read again. You can also look at the ‘dividend aristocrats’ for ideas: https://money.usnews.com/investing/stock-market-news/articles/dividend-stocks-aristocrats These are companies that have been around for very long times. There are also ETFs comprised of these companies.

You should also consider doing a drip (dividend reinvestment program) with companies that pay out dividends. Instead of you directly receiving the money in your account from the dividends, the money is automatically invested in buying you more stock in the company. The best part about that is there is no transaction cost for you in the drip.

Also, be careful chasing companies that offer high dividends/yield. They may not have sound fundamentals, and may be in trouble.
 
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It wouldn’t hurt to go pick up an intro to accounting textbook. Even if it is decades old, the basic concepts don’t change. Assets, liabilities (debts owed), equity (or “capital”), expenses, and revenue (which includes sales sales) are the basic elements and it is a good idea to become very familiar with those 5 accounts that are on EVERY organization’s financial statements. The first 3 on balance sheets and the other 2 on income statements.

Dividends (paid) are an interesting account. Financial beginners tend to think of the dividend payments to shareholders as an expense to a company - when it’s really a decrease in the equity (or a return of equity to shareholders). The bad thing about dividends is that the company is not allowed to deduct those payments on their income tax returns, but a shareholder receiving the dividend must report them as income on their personal tax returns. Equity grows when a company has earnings (or profits) and equity is reduced when a company has losses or pays out cash dividends to shareholders. So the lesson with dividends is that there is the simple math of a yield (dividends paid divided by a companies share price) that is expressed as a percent. But you also must consider the dividend payout ratio in order to assess if the dividends being paid to shareholders is sustainable. It is comparing the dividends paid per share and dividing that dollar amount into a company’s earnings per share. A company with a higher dividend yield isn’t necessarily better if their earnings are low relative to the dividends that it pays. They can continue paying the dividend for a short while, even without the profits to cover the dividend payment - but eventually they will have to cut the dividend. Wall Street hates it when companies cut their dividends. The share price will crash.

The P/E ratio is a very important measure. It is simply a company’s share price divided by its earnings (or loss - yikes!) per share. A price/earnings (P/E) ratio above zero is always preferred (which translates to positive earnings instead of a loss). P/Es that get extremely high can indicate several things. A company’s share price has been bid up more than it is worth in equity markets. A company has excellent future prospects and the growth is worth paying a premium for. Also just the math - a company that just turned profitable might only have a few cents of earnings per share but is expected to easily grow to several dollars of earnings in the near term. A $100/share company that is widely expected (by stock analysts) to earn $5/share NEXT year has a reasonable FORWARD P/E of 20x earnings. But if it is only earning a penny per share in the current year then the P/E ration (or “earnings multiple” or simply “multiple”) would be $100 divided by $0.01 or 10,000x - which is an insane P/E if not considering the other facts. Sometimes you will see a P/E ratio published as NM (not meaningful) with an extreme like that.

P/E ratios can be compared to other companies in the same business (Ford, GM, and Tesla for example) or to the P/E calculated on a broad index average (S&P 500, the Dow Jones Industrial average (the Dow or the DJIA), and the NASDAQ 100 (the QQQs being a widely traded ETF that reflects the NASDAQ 100 “index”)), or PEs can be compared to historical PEs for the same company. .

Good places to scan for companies paying reliable, sustainable, hopefully growing dividends are the components of the S&P 500 and the 30 companies in the DJIA. Also, one of the large ETFs with the theme of including good dividend paying stocks. I’m not as familiar with the best of those funds but I’d start with the largest that are in the Vanguard, Fidelity, iShares (BlackRock), SPDRs (State Street), and Schwab fund families. Here is a good list:

https://money.usnews.com/investing/funds/slideshows/best-dividend-etfs-to-buy-now

The cool thing about ETFs is that they publish the list of companies that they own in their funds. Those lists are in their annual reports that can be found on the fund websites.

I’ll look for a few names later, but I’m not as interested in dividends/income as some of the other posters. I’m more interested in long term growth in investment values and short term trading profits. There could easily be an entire VN thread focused only on dividends and income producing investments.

Another concept that most brokers offer for their account holders is automatic dividend reinvestment programs. They will take your dividends and automatically buy more shares of stock in the issuing company’s shares for you. It is an auto pilot for investors that believe strongly in a company (or a fund) and just want to grow their investment without pulling out the cash or be hassled with managing their own investments as closely.

Good dividend paying companies are often those with a long established track record (DJIA component companies for example). Low dividend payers shouldn’t be considered bad investments. Warren Buffet doesn’t like paying dividends - but Berkshire-Hathaway is an outstanding, well established, huge company that does not pay a dividend. Its P/E ratio is also very high at 50x plus, but BRK stock is a great LT investment.

Large petro and drug companies are good dividend payers. XOM, CVX, JNJ, MRK, and PFE to name a few. Large defense contractors can be good as well - LMT, General Dynamics, NOC, RTX, LHX.


Awesome post. I got screenshots of this for permanent storage. Thanks for your time, my VOL brother. Oh..and F$%k Flarduh
 
@marcusluvsvols this 👆is a good read again. You can also look at the ‘dividend aristocrats’ for ideas: https://money.usnews.com/investing/stock-market-news/articles/dividend-stocks-aristocrats These are companies that have been around for very long times. There are also ETFs comprised of these companies.

You should also consider doing a drip (dividend reinvestment program) with companies that pay out dividends. Instead of you directly receiving the money in your account from the dividends, the money is automatically invested in buying you more stock in the company. The best part about that is there is no transaction cost for you in the drip.

Also, be careful chasing companies that offer high dividends/yield. They may not have sound fundamentals, and may be in trouble.


Thanks for your help also, my Other Vol Brother. Oh, and F$&k Flarduh.
 
I have read here before about stocks that perform decently but pay a good dividend...not anything real estate related either...IIRC the REITs commercial stocks paid a huge dividend like 10%...but with all the remote work etc those scare me. But i have read here before about some good stocks that pay maybe 5% annually in dividends, at least thats a hedge against inflation, right? I lean heavily on what a couple posters here recommend like @Thunder Good-Oil etc.... then try to research stocks on my own. I dont always know what i am looking at though, and it scares me.
I told you this about 5 years ago... had you done so, you would at a minimum keeping pace with inflation.

I've read most of the advice these guys have given you... now I will give you an alternative opinion. Take the $240 you have and buy 10 oz of silver. No counterparty risk. And there is nothing out there (outside of maybe oil) that is priced lower in dollars today than it was in 1980.
 
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Ok what’s everyone’s take on today? Short term pent up demand? Long term buy and hold signal? I’m still in the waiting until next CPI report on Oct 13 and then start stepping back in gradually.

The dot plot cannot be achieved with even two 50 bps increases it will take at least one more 75 bps to get to the median for plot value. And the market has been chasing the fed all year and losing that game of chicken badly. Likewise the fed has been chasing inflation and losing badly. But it has to turn soon I would think. At least flatten out on inflation.
 
Ok what’s everyone’s take on today? Short term pent up demand? Long term buy and hold signal? I’m still in the waiting until next CPI report on Oct 13 and then start stepping back in gradually.

The dot plot cannot be achieved with even two 50 bps increases it will take at least one more 75 bps to get to the median for plot value. And the market has been chasing the fed all year and losing that game of chicken badly. Likewise the fed has been chasing inflation and losing badly. But it has to turn soon I would think. At least flatten out on inflation.

A bottom is forming. But every rally will be sold. Bottoms are made on time, not prices.

Cheaper petro will trickle down to every other product. It will take several months.

Stock markets are forward looking. Waiting for interest rates to fall will miss out on a lot of capital gains.
 
A bottom is forming. But every rally will be sold. Bottoms are made on time, not prices.

Cheaper petro will trickle down to every other product. It will take several months.

Stock markets are forward looking. Waiting for interest rates to fall will miss out on a lot of capital gains.
I agree it’s forming yes. But even forward looking P/E needs one more revision to get any real look I would think. I will be back in by end of year I can’t see that not happening. But I’m in no hurry right now.

My rate comments are based on the reaction to every rate hike this year. We’ve always heard “don’t fight the Fed” while that’s exactly what the market has done each and every month if this year it seems.

Goldman Sachs was still at 4300 year end for S&P a week ago. They finally updated to 3600 this week. And the S&P has already tested that value going to a new low of 3623 yesterday
 
A bottom is forming. But every rally will be sold. Bottoms are made on time, not prices.

Cheaper petro will trickle down to every other product. It will take several months.

Stock markets are forward looking. Waiting for interest rates to fall will miss out on a lot of capital gains.

Please let me know when you think we have leveled out and its a good time to jump back in...i am still reading and learning while not in the market at the moment.
 
Ok what’s everyone’s take on today? Short term pent up demand? Long term buy and hold signal? I’m still in the waiting until next CPI report on Oct 13 and then start stepping back in gradually.

The dot plot cannot be achieved with even two 50 bps increases it will take at least one more 75 bps to get to the median for plot value. And the market has been chasing the fed all year and losing that game of chicken badly. Likewise the fed has been chasing inflation and losing badly. But it has to turn soon I would think. At least flatten out on inflation.

I've quit looking for the most part. It's up, but as a percentage it doesn't get me excited knowing Fed will likely raise rates again, so I'm going with just some short term pent up demand with people buying what they know will still be standing on the other side. I keep adding to what I know I'm going to hold for a long time, but also building my cash position to get ready for a confirmed move higher after the Fed backs off.
 
I've quit looking for the most part. It's up, but as a percentage it doesn't get me excited knowing Fed will likely raise rates again, so I'm going with just some short term pent up demand with people buying what they know will still be standing on the other side. I keep adding to what I know I'm going to hold for a long time, but also building my cash position to get ready for a confirmed move higher after the Fed backs off.
Right now I’ve got two huge chunks of cash on the sidelines in two different retirement accounts. Three if you count my smallest IRA but that’s actually invested.

So while I’d of course never try to time the market … I’m gonna try to time the market. 😂

My financial advisor is beating me up with a FOMO dialog and I’ve told her to knock it off. We’ll be back in soon but I’m not ready yet
 
Please let me know when you think we have leveled out and its a good time to jump back in...i am still reading and learning while not in the market at the moment.

That is speculation. There might not be huge moves for a while. But lots of volatility. The November mid-term elections (as the date approaches and then positivity if the Rs take the House) will support markets. But the coming rate hikes will bring sell offs. Unexpected news will result in big swings. An end in sight for rate hikes. Inflation coming down. One party not having total control of the federal government. All positives. Unexpected inflation measures. An all democrat Congess and POTUS. Possibly even Congress not being split. Putin ramping up his nonsense. All negatives. It’s a coin flip, but as harsh as most stocks have already pulled back I think most bad scenarios are already priced in. Putin is what concerns me the most. The head of Palantir just suggested that there is a 1 in 3 chance of a nuclear weapon being used. But that would be VERY profitable for PLTR , so I’m not buying his prediction.

Nobody always sells at the exact tops and buys at the exact bottoms.
 
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Right now I’ve got two huge chunks of cash on the sidelines in two different retirement accounts. Three if you count my smallest IRA but that’s actually invested.

So while I’d of course never try to time the market … I’m gonna try to time the market. 😂

My financial advisor is beating me up with a FOMO dialog and I’ve told her to knock it off. We’ll be back in soon but I’m not ready yet

There will probably be a lot of noise between here and early 2023. But the averages might not be far from where they are at today after it all settles down. Tax loss harvesting season is another big consideration that is looming. There will be a lot of that this year.
 
There will probably be a lot of noise between here and early 2023. But the averages might not be far from where they are at today after it all settles down. Tax loss harvesting season is another big consideration that is looming. There will be a lot of that this year.
Yeah and I’m sure that’s where she is coming from too. It isn’t likely to change much more. But that also tells me there’s no reason to hurry with a handful of reports related to the fed and inflation left this year so just ride it another few weeks. 🤷‍♂️

We get final Q2 GDP revision tomorrow morning at 8:30 eastern. I have to believe it’s still gonna be negative. And ATL Fed GDPNow is shallowing again towards 0% for Q3
 
I'm close to diving back in. I'm a big believer in a few index funds for an invest and forget portfolio like mine. I sold most of my S&P 500 investment in March at about 4400 and with the price it is today, that's a 15% discount to buy it back. I do think this time around I'll be a little more diverse and spend half on the S&P 500 and split the other on VTI and RSP with a heavy weighting on VTI.
 
Sell puts while you wait. Pocket a few percentage points while waiting. If assigned it will be at an even lower price. The risk is missing out if there is a big surge of appreciation that doesn’t retreat. But by keeping the expiry near missing a big upside is less likely.

Perfect textbook scenario for the case of averaging in. Picking an exact bottom is almost impossible.
 
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Sell puts while you wait. Pocket a few percentage points while waiting. If assigned it will be at an even lower price. The risk is missing out if there is a big surge of appreciation that doesn’t retreat. But by keeping the expiry near missing a big upside is less likely.

Perfect textbook scenario for the case of averaging in. Picking an exact bottom is almost impossible.
I don't think many people here understand puts and calls, and I myself aren't going to put my foot in that door now that I'm retired, unless it was just with play money. When I was working, I just rode out the fluctuations in the market and kept investing and did well at it. Most people just need to invest in index funds and forget about trying to time or beat the market with all the ways possible. Very few professionals even beat the S&P 500 index fund, why risk it?
 
I don't think many people here understand puts and calls, and I myself aren't going to put my foot in that door now that I'm retired, unless it was just with play money. When I was working, I just rode out the fluctuations in the market and kept investing and did well at it. Most people just need to invest in index funds and forget about trying to time or beat the market with all the ways possible. Very few professionals even beat the S&P 500 index fund, why risk it?

There are many risk levels with options. Buying puts and calls don’t historically do well. Most contracts will expire worthless. Selling naked calls is as risky as it gets.

Selling covered calls is a good way to enhance returns on shares owned as markets fail to move up.

Buying puts against positions owned serves as downside risk insurance.

Selling puts on stock that one would like to own is a great way to collect premiums while waiting for a pull back in the stock’s price. The two riskiest aspects are (1) missing out on huge surges of upward price moves in the shares of stock and (2) investment capital is tied up as you wait (but you can still get the typical short term interest rate on that cash). Much of the risk with (1) is avoided by keeping the expirations not too far out in the future. Selling puts is a good alternative to placing a buy limit order a few percentage points below the current market price of shares of stock. The advantage of using the buy limit order is that it can be cancelled at any time. Closing out a short position in a put contract before the expiration has a cost. But if the option price has fallen (as the stock price has risen) then the cost to close the contract drops.

When selling puts, as stock prices go up the premiums are pocketed as the options fall in value. If the underlying stock prices fall, you still keep the original proceeds after selling the contract and if you are assigned the stock it will be cheaper than it was when the put contract was sold. Not an extremely risky strategy.
 
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Sell puts while you wait. Pocket a few percentage points while waiting. If assigned it will be at an even lower price. The risk is missing out if there is a big surge of appreciation that doesn’t retreat. But by keeping the expiry near missing a big upside is less likely.

Perfect textbook scenario for the case of averaging in. Picking an exact bottom is almost impossible.
So this is all big chunks of pretax money. I don’t play with it, it will go into funds and bonds. It’s also professionally managed, we are just fighting about when to get back in is all. Nobody seems to think it’s moving anywhere very quickly thus why I am in no hurry.

I would play with some other side money as you are describing possibly but this money doesn’t get played with it’s my retirement savings. Regardless I can’t see how I won’t be back fully in equity funds and bonds by end of November.

Once I tell them go I don’t meddle. They have my risk level and I’m paying them to manage it
 
My PTFO is below its Average Market Rating Risk, so hedging to hit the highs and not be below the BTO. Buying the between and accruing gains.

Edit: I am trading illiterate.
 
So this is all big chunks of pretax money. I don’t play with it, it will go into funds and bonds. It’s also professionally managed, we are just fighting about when to get back in is all. Nobody seems to think it’s moving anywhere very quickly thus why I am in no hurry.

I would play with some other side money as you are describing possibly but this money doesn’t get played with it’s my retirement savings. Regardless I can’t see how I won’t be back fully in equity funds and bonds by end of November.

Once I tell them go I don’t meddle. They have my risk level and I’m paying them to manage it

When securities aren’t going to go anywhere it is a perfect time to sell put options. There are options on VTI, but they have monthly expirations instead of weekly.

Right now VTI is $185.80 a share. An Oct 21 2022 put contract can be written with a $180 strike and about $325 can be collected. The $175 strike fetches about $200.

SPY has weekly contracts. SPY is $370.53. The Sept 30 2022 put can be written with a $366 strike and $210 will be pocketed.

SMH is $194.01/share. The Sept 30 2022 (2 days from now) put option can be sold/written with a $191 strike and about $175 will be the premium received. Adding one week to expiration with the same $191 strike and it will pay between $385 and $400. That is almost a 2% return in 9 days without much risk. Most of the risk is that $19,401 of an ETF will have to be purchased for $19,100 in a week and a half. And the cost after adjusting for the premium is about $18,700.
 
This isn’t “playing with” an investment. It is enhancing the return on idle cash. It is a great alternative to setting up a limit order to buy shares a few dollars below the current market price. You get paid a percent or two if the share price fails to drop to your chosen strike price. Actually you get paid tgat premium no matter what happens with the share price.
 

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