Investment Opinions

Buy some good stock and when it goes way up, sell it. If it don't go up, don't buy it.

Now that's funny! I always shake my head when guys ask investment advice on a board like this.

Me too, even though I've learned that there are a few people here highly qualified to offer a perspective... if you've been around long enough to know who they are.

Regarding the debt ceiling discussions, that should be discussed everywhere. I apologize for injecting it here... but glad to see some thoughts posted. People need to wake up and get involved in the discussion because both parties are closed-minded.

For example, I kind of like Boner's view of a balanced approach - $1 in spending cuts for every $1 in increase of the debt ceiling. As a conservative, I can live with a general rule like that.

However, I also think the Democrats have some valid points. I think that the first cuts in spending as part of this 'balance' should be the oil company subsidies AND the Bush tax cuts for the rich. If the Republicans would agree to this, their proposal would be hard to attack. Otherwise, it's silly because it basically says 'protect our interests and cut yours'.

The military is an obvious target for cuts. Wars with our biggest enemies are not going to be fought by the military, they're being fought economically. And we aren't winning. Yet. Bring the troops home. Cut the military in half.

Now that's funny! I always shake my head when guys ask investment advice on a board like this. Originally Posted by slowmover

Title of the thread "Investment Opinions"....technically not advce. There's some smart people here. Just like anything else one should do their own research or consult a professional.

I think that the first cuts in spending as part of this 'balance' should be the oil company subsidies AND the Bush tax cuts for the rich. Originally Posted by Lust4xxxLife

I'm curious as to exactly what tax subsidies the oil companies receive. My understanding is that percentage depletion, IDC and similar items all vanished long ago for the big companies. I know that their profit margins certainly are a lot less than those in other industries.

Can someone please define "rich"? The going definition seems to be income greater than $250k. Does anyone really think that $250k/year is "rich"? It's nice, but it ain't rich.

I think that we should start taxing the tech companies a lot more. Google, MSFT and such have net profit margins that are well upwards of 30%, AND they keep a lot of money offshore to avoid US income taxes.

Has anyone else noted that, in the course of this fascinating dialogue on "debt reduction" (which is itself an amusing term, since it means only "reduce our annual deficits" and not "have an almost-balanced budget"), that a lot of the "reduction" is simply elimination of the war costs which are going away anyway? Do Congress and the White House really think that we're all so bleeping stupid that we cannot spot dishonest accounting? Apparently, they do.

And my rant ends.

I love all the talk about blaming Republicans...who last time I looked, controlled the House, Dems still control the Senate and Presidency. Additionally, last I looked, the Dems hadn't passed a Budget bill for more than 2 yrs. Lastly, when I look at the data from OMB, Under Pelosi/Reid and then adding in Obama, they racked up $5T in additional debt in just 4 years...with another $1.5T in 2011 to come....

So tell me again it's the Republican's fault for trying to reduce the rate of debt growth?

Sheesh.

We are ALL f*cked regardless of what decision is made in the next 5 days....UNLESS they stop all spending growth and find a way to reduce the long term liabilities in SS, Medicare, Medicaid. There isn't enough money to pay for all the promises. And that is assuming Interest rates stay at 2-3%....if they jump to 9%, you are looking at over $1T just to pay the cost of the debt....that money *isn't there*, "the rich" and "big Oil" don't have that kind of cake.

Get ready for the revolution, especially for those of you that think you are "entitled".

When is it lunacy to stop spending money you don't have. In 2008 the private sector cut hard. And I'm not talking about cutting built-in increases of 7% but real cuts (smaller than before). Look at wsj and you will see many have record profits. It's just being intelligent. The us will lose credit rating regardless bc Obama simply borrowed too much as did bush/democratic congress.

Im an Indy but I find it amazing to hear people blame the republicans when they have been the only ones who created a plan. Obama has no clue and offered nothing. In my opinion no plan to date will make a difference so just wait my friend you haven't seen losses yet.

I am 57 and could retire now. However a million bucks doesn't go as far as it use to. When I get in my 60's, I may look to a financial advisor to find tax benefits and investment options that pay me a salary I can live on. I do appreciate the advice. Originally Posted by cookie man

I don't suggest waiting until you are ready to retire, to find the tax benefits. Many of the tax benefits come from having your money in the right investments for a number of years. Once you retire, many of the tax benefits of such things are no longer helpful, as your taxable income drops so radically.

You've got little to lose by talking with a financial advisor, why not talk with several.

Regarding advisors and their fee structures... Some charge no fee, and are compensated based on the items they sell you. I do view some potential conflict of interest in this, but if you are astute, and willing to do the research on what is proposed, you may get a deal on the investment advice. In general, I have not seen an advisor that charges only for products they sell you, that I would suggest. In all such cases, I've seen that people who thought they were paying low fees, were either only getting the services of a broker, or were paying fees for investment vehicles well above street price, and the main driver of the choice of investment was commission rater than long term gain.

The next charges a fixed amount per year, or percentage of your investment with them. This is generally thought to be the best route, but you are paying all the amount for the service you get, and the amount you pay will generally be higher as a result. My general feeling is that if you are quite wealthy (over several million dollars), and have complex needs then a fixed fee planner will more than earn their money.

The last type is a hybrid of the two approaches. They charge some fixed fee, typically for some well defined services such as a financial planning document. They will then make some money on products they propose as well. This tends to be the mid cost option. For most people, I think this hybrid approach works well. This is the most common approach as well. They often offer things like accounts that charge no trade fees, but at a fixed percentage for dollars in that account. This gets rid of the worry of the advisor "churning the account" in order to make money on trading fees.

I've found an advisor to be helpful. It is useful to have someone who is familiar with my goals, time horizons, and tolerance for risk, available to discuss investment ideas with. It is also useful to have someone who takes a very pedantic approach to the planning aspect, so that a financial plan gets done, and reviewed on a regular basis. I know what to do, but just don't seem to find the time on my own. Yes, I can procrastinate with the best! But my advisor, refreshes the plan yearly, and we review it to see how I'm progressing with regard to my goals, and if the investments have made the gains we expected.

Good luck to you!

Thanks 69er...good ideas. I agree a financial planner can put you on the right path and remind you to "follow the green line". It takes personal discipline to live within your means and pay yourself first.

A large portion of my portfolio is in a professionally managed SEP and Rollover IRA....so it is tax deferred. Sadly I think I have enough losses to cancel out any capital gains.

I think the best investment a person can make is to invest in themselves. I started my own business about 24 years ago. I always put the maiximum amount into my 401K plan when I was working for my pervious company. I took the money from that to start my own business. The most scary and best decision I ever made.

It's hard to get rich in today's environment working for someone else. I use to believe in loyalty to one company and staying with them till you retire. That philosophy seems to be going the way of the dinosaur.

We've all become a little spoiled over the last 25 or 30 years. Since the Great Inflation of the 1970s was crushed by Paul Volcker's Fed, Americans got used to the notion that U.S equities, whether individually-owned or in 401k or other vehicles, offered near-automatic high-single digit (and at times, double-digit) average annual rates of return.

Then came the financial crisis and the Great Recession, shattering that notion.

Now where are we? In my opinion, and in that of many other market professionals, equity prices have recently been floated up on a virtual ocean of QE2, the purpose of which was in part to support the economy by disincentivizing the holding of cash and driving resources into risk assets. There's little question that equity prices were boosted somewhat by this, and that a number of commodity prices were boosted even more. Just look at gold, which recently skyrocketed past $1,600/oz.

But what happens when this unconventional monetary policy tool is ceased, as eventually must happen? Many fundamentals (profits, balance-sheet cash, productivity, etc.) seem sound, but then what is there to drive markets much beyond current levels?

I submit that over the next couple of years, downside risks are far greater than upside potential, largely due to our train wreck of a political process. (Full disclosure: I am a fiscal conservative -- which means that I cannot be either a Democrat or a Republican!)

Just look at what's gone on over the last decade. A Republican congress jettisoned PAYGO in 2002 so that they could commence a virtually unprecedented spending binge. Annual federal spending exploded from about $1.8 trillion to $2.8 trillion while George W. Bush was president. Even that wasn't good enough for Obama and Nancy Pelosi's congress, though, as they decided that the best course of action was to conduct an even more agressive fiscal kamikaze mission.

And we're all going to pay a very high price for all that recklessness. Now there's angst over the debt ceiling approval process, but a far bigger problem in my view is that no one is going to do anything even remotely serious about our out-of-control deficits. The entitlement state has grown to such an extent that changes large enough to make a real difference would cause people to riot in the streets, like in Greece.

Without virtually taking a chainsaw to the budget, the only way to pay for all this is with a very large tax increase. Everybody knows that. But Republicans have hardened their position, and virtually all have pledged fealty to Grover Norquist's anti-tax group.

Democrats, for their part, are not far from that position inasmuch as they oppose tax increases on anyone making less than about $250K/year. Many people seem unaware that there's surprisingly little difference between those two positions, since returning to the pre-Bush tax rates only for those in the top 2% of the income strata lands short of even covering a nickel of every deficit dollar.

Therefore, continuing concerns about deficits are likely to plague the economy -- and by extension the markets -- for years to come. It's going to be a turbulent, very uneasy period. I hate to do the metaphorical equivalent of tossing a skunk into this pleasant garden party, but I don't see any way around that.

Regarding U.S. equities, the only idea I would recommend unreservedly to almost anyone is big oil (The ExxonMobils of the world). That's where I have a fair amount of my equity-related "safe money." These issues are financial colossi and pay pretty good dividends. You can consider adding some shares every month, secure in the belief that in any event the long term payoffs are going to be pretty good, especially since central banks around the world have gone on unprecedented money-printing binges. And you can always figure that some geostrategical conflagration (possibly involving Iran) will spike oil prices from time to time.

A word about options:

There seem to be a number of people eager to sell various "systems" whereby you're almost guaranteed to make big bucks. Uninformed, poorly-prepared amateurs who do this sort of thing are just asking for it. Consider this: If you're a pretty decent amateur poker player, would you take a pile of your hard-earned cash and play Texas hold 'em at a table populated by successful participants at the World Series of Poker? I think not.

In my opinion, extraordinarily successful investing requires a certain amount of cold-bloodedness. You have to be willing to buy when everybody else is depressingly pessimistic, and to sell when there are ridiculous levels of sunny euphoria, such as in 1999-2000 and again in 2007.

There may not be another August 1982 or March 2009 any time soon, but I believe strongly that panic related to unaddressed fiscal concerns is already baked into the pie -- and will be forthcoming soon enough. If this -- and/or our apparently sinking economy -- cause share prices to drop precipitously, having the cash reserves to take advantage of unusual buying opportunities will look like a very smart decision.

When extreme pessimism sets in, always remember the negative sentiment that existed for a period prior to the equity market's low point in August 1982.

Sometimes it seems like the darkest hour is just before dawn.

Captain great post. This reads like something out of Business Weekly. I will definitely take your insights to heart.
I thought about buying EOM but instead invested in RDSA and CHK.

Several economists mentioned that we had a "once in a lifetime" rally in the late 90's, but now a few years later we had another one.

I hate to say it, but I felt we were heading toward 1982 pessismism and higher interest rates as the debt level increased and the housing market tanked. I'm guessing the reason it hasn't happened yet is because the Feds are keeping interest rates down.

I would like to think if we keep debt down, speculation in check, and watch Wall Street that capitalism will grow worldwide and good companies will be there for the investing.

It's against my nature to short stocks, but I'm thinking I should do more of it. Do you guys like to short- sell the market?