Friday, October 30, 2020

Stock Market Falling: Has Some Masked Bandit Stole My Cash?

 The end of October 2020 is here. Some of you may be feeling a little low. As though a masked bandit has run away with your cash.

William in Guide dogs for the blind face mask and red baseball cap

But don't feel too bad. If you like me have been investing for years, you are not that badly hit by the last few days sell off.

If you began investing about one year ago, then you might just have broke even for the year. Or you may have a small loss if you went with only Dow components in your portfolio.

If you invested on March 23rd. Well you are probably happy.

Don't fixate on where your portfolio was in September. Even I am down about $6,000 in my whole portfolio.   Even with that loss my total portfolio is 23.4% above its low back on March 23rd. I am up 18.75% annualized over the past two years. That is going back to when my E*Trade account was moved over from Share Builder.

As is often said, it is all relative. I can look back one month to where my portfolios were at an all time high, and feel the pain or look back two years or seven months and see where I have come from the low days.

The Simple Path to wealth book amazon affiliate linkWhat do you think all the investment sales people do. Yes they pick weeks like this and at the appropriate time even today will appear on a growth chart and they will say.

"If you bought on October 30th 2020. You would have gained xxx%"  No they won't mention the highs of September, and we investors will all say "Wow! Why didn't invest then? I would be so much richer!"

I have been there and done that. So many, many times. It's not funny. But I just plod on. Putting in spare cash here and there. Re-investing my dividends.

Speaking of which. Today sees me with a nice dividend payout of about $50. Since it is all DRIP I will be getting some stocks at a nice sale price. See falls in the market can be good. When the market falls I can get more shares. 

 

That is why I like dividend investing.

A little word on Apple stock:

 I know  Much is being said about the reasons why Apple stock is falling after the results were published yesterday. 


Take the fall in price with a huge pinch of salt.  Apple Always falls on results.

I have invested in Apple since 2006, and I still own quite a few shares. I have only know three times in 14 years where Apple results have seen the stock rises immediately. Two of those were stock split announcements. Apple pundits always find a reason, low iPhone sales, no future notes on sales of X product, uncertainty.

 

The thing is Apple makes good products, people want good products and people buy Apple products. Plus Apple now has intangible businesses, cloud storage, Apple TV, and Music as well as the App store.

 

If Apple goes below $100, it could, it has in the past. I will buy, even in its current $100- $115 range it is tempting.

 

I hope you all have a fun Halloween. Those of you in the U.K. celebrating Bonfire Night on November 5th. Have a great evening.

 

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Monday, October 26, 2020

How to Set Your Child on the Road to Becoming a Millionaire

/Piggy bankp>

 It may seem to be a near impossibility,  setting up your child so they can become a millionaire. Many of you will scoff and snort.


Even a child who grows up to work tables in a restaurant or diner can learn the skills that will make themselves into a millionaire one day.


To begin with your child will have a great advantage on their side. They have time.


Time allows for compounding. An initial investment with a return of just 5% will double every 14.4 years.  To estimate the doubling time for any amount take the number 72 and divide it by the percentage interest rate.. This is the rule of 72. It is not perfect but gives a good ballpark estimation.


Cash, bank notes, savings

So $100 at 5% takes 14.4 years to double to $200, then doubles again in another 14.4 years, which doubles again  in the same period.  So after about 43 years our $100 invested at 5% would equal  $400.


Of course you don't just invest the $100 and leave it. You add to it over and over again. At a rate of just $10 per week you would be adding an extra $520 per year. Each of those $10 would double in 14.4 years too.


As you add more dollars they in turn generate pennies of interest which in their turn add up to dollars generating more pennies and dollars.


Teaching your child early about compound interest is possibly the greatest way to give them the tools to become a millionaire.

Teach your child about money as a tool.


Give them pocket money, pay them for doing chores around the home. Even consider adding extra to the pocket money that they save in lieu of interest.  Allow them to spend their pocket money if they wish, but teach them that when the money is spent it is gone. Don't buy something that they wanted and were saving for if they spend all of their pocket money on something else.


Encourage responsible spending. Allow them to learn to divide pocket money into spending on what they want, what they need and savings.


ATM Money boxSupport them in opening bank or credit union savings accounts. Accounts that pay a reasonable amount of interest on small balances. Let them see their money grow as the interest mounts.


Teach your child to invest. Help them buy a stock in a company they like. Even a small fractional position in a stock like McDonalds will pay a dividend and grow over time. Or maybe buy a share of stock for them at a birthday or holidays like Christmas.


You will give them the knowledge and experience they need to save and invest as they enter the workplace they will be kitted out for a life in the real world. They will know that money is an asset to be used wisely. Spent on what you need, saved for things that you want and invested to increase your monetary wealth.


Thank you.


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Saturday, October 24, 2020

My Latest Strategy Investing On M1 Finance

 In January 2020 I opened a brokerage account with M1 Finance. I chose the account in part for its fractional shares, I wanted to buy some Amazon and Google (Alphabet) and as that costs thousands of dollars for just one share of either the fractional share seemed the only option.

William Elliott and his black Lab guide dog Leif


A couple of months after I opened the account M1 made some changes to their purchasing policy, they increased their minimum purchase price increasing the minimum from one cent to $1. This meant that my account did not grow quite as quickly.


My aim initially with an investment is to generate cash flow. M1 doesn't work for traders, but should work for cash flow investors.


Recently I have increased my deposits into the account to $13 per week. Also dividends from several sources have started to come in fairly regularly. I am earning about 50 cents per week in dividends.


In July I began to buy a new share everytime I received a dividend. Taking one dollar from my cash reserve and the full value of any dividend received and using this to buy a high value dividend paying stock.


Some weeks in September I was able to reinvest several dollars per week as many stocks pay dividends in that month. In October I am making just one or two purchases per week, but this allows some cash to build and make larger purchases of stocks across the portfolio keeping everything balanced.


When I began in January I received just 1 cent in dividends. Today I am expecting to receive just over $9 between now and January, my first anniversary of opening the account.


I plan on using this strategy until my monthly dividend payments grow to over $13 per month, in effect adding an extra weeks cash input. When this happens I will just allow the portfolio to grow at its own pace with M1 making the investment decisions for me. That may take another two or three years but dividend investing is all about slow and steady.


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Tuesday, October 20, 2020

Hedging My Portfolio or A Bull On the Rampage?

 There are lots of things that tell me to think of hedging my portfolio.

Statue of a bronze bull on Wall Street


Death, viruses, lock downs and business collapses. Damn this year has been tough and you have to say not over yet.


Back in March, one of my portfolios lost over forty percent of it's value. My ROTH IRA luckily a little more defensive lost only eight percent. Thank goodness for those Utillities which bolstered a down facing couple of months.


I do love to buy though.  As well as reinvesting dividends in most of my companies I like to invest a couple of hundred dollars of "new money" each month. By the beginning of August I was generally fluctuating around my break even point for the year. 


Now, in October despite buying a couple of Apple stocks at their high point just before the four for one split I am now up twenty0nine percent in that big loser portfolio I mentioned earlier. My ROTH IRA is now up  seven percent on the year, up about fifteen percent from the low of March 23rd.


My ROTH IRA is pretty low volatile.

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 That brings me to my pet peeve for the year. The Youtube investors who vlog about finance and talk about Invesco S&P High Dividend Low Volatility stock (SPHD)  Ok before Mach it was trading in the high $40's and fell to below $30.  I own the stock too. I lost in the fall. But overall it did not lose as much as it could have and since April it has increased in value to the low $30's and has paid its dividend every month too.


So the Youtubers constantly go on about how the stock is not rising quickly. Er. People! It is doing what it says in the description. It is "LOW VOLATILITY" meaning it should not rise or fall quickly. Exactly what it is doing. It did not fall by a lot nor is it recovering quickly.


Read the F*****g description people, know what you are investing in.


I guess they are getting grief from those people who follow them blindly and bought SPHD back in the days of $40 per share and a nice tasty monthly yield. Though the monthly yield is still good it is tough to stomach the loses in the stocks value and a slow recovery. That's what you get with low volatility. Like my ROTH IRA no big gains, but no big losses either, slow and boring when it needs to be.


I am still a bull though.


Maybe not a raging bull. I am dabbling adding to positions that I already hold. A share here and there. I have put some cash into  covered call etf's. QYLD, and QYLG both buy and sell in the NASDAQ market. QYLG looks to save 50% of it's stock for growth of the portfolio too. I also bought stock in XYLD and XYLG which use the same strategies to invest in the S&P 500. Along with those I added a few RYLD which sells covered calls of Russel 2000 index stock as supplied by Vanguard.


I think 2021 will be pretty volatile. The virus will make it's moves and people will react and over react as usual. But I believe that things will get better before the turn of the year into 2022.


I cannot see a better place to be than in the stock market right now.  Hopefully some of my dividends should start to recover. We will definitely see global markets rise. Things will be better by Christmas. 


Where have we heard that before? 


Ah. Yes but I mean Christmas 2021. For certain, it's a promise. For what that's worth.


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Tuesday, October 13, 2020

More Stock Splits? Yes or No?

 In August we saw both Apple and Tesla make  the news with stock splits. I for one used the opportunity to add some Apple to my portfolio.



I have been an investor in Apple for over ten years, and have a nice holding. I do not hold any Tesla stock itself but am sure there is some of its stock in a Mutual Fund or two which I own=


AAt the time I went onto Quora and asked the question, Should other higher priced companies offer stock splits too. You can read the answers here.

 

Most of the answers said that stock splits are no more than smoke and mirrors. They mean nothing and merely dilute share holder equity.

 

I do not agree totally with these answers. Stock splits may not be logical. They may not be  creating more wealth. After all a $100 bill can be split many ways; two $50's, Five $20' etc. But you still only have $100 in your pocket.

 

What the answers miss out on is the psychology of the human mind. Where I had one of something, I have two, four or seven. That means I have more. Don't I?

 

Think in terms of marketing. How often do you see an advertisement for a sale, it offers you 50% savings if you buy today. Many people rush to buy without thinking.

 

But stop and think. You could save 100%  of the price. By not buying at all.

 

Humans work on emotion, not mathematical logic. I like Home Depot stock at #300, it is a nice buy, but I would rather buy three for #100 each. I would have more.  Foolish I know, but it is how the average human works.

 

You may also say, well with fractional shares you can buy the $100 of Home Depot. Ah. But. Then I would only have one third of a share. Not much good for my ego. Boasting at the office about my portfolio of fractional shares.

 

As an investor I want to be able to boast. Tell the world and his dog about how successful a stock picker I am. Stock splits help me do that. Successful companies can split their stock, not infinitely but on occasion and I can see my portfolio grow. 

 

A win, win situation don't you think? 

 

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Monday, October 12, 2020

Why Should I Invest in the Stock Market?

Many people before they begin to invest in the stock market ask themselves why they should do such a risky thing as buying stocks in companies.

 

I asked myself this very question over forty years ago.

 

My answer to myself back then was to make some money.

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How did I start, I read lots of books. Books like "The Little Book of Stock Market Investing"

 

Did I make money?  Yes. I have made a good amount of money. In the last ten years over $250,000. I have lost a good bit of money too. The crash of March 2020 saw my investments lose almost $70,000 on the worst day. But some investments made then, such as a purchase of MGM has made a return of over 100% in weeks.

 

I have had some successes over the long term too. I began buying Apple (AAPL) stock in 2008. Shortly after I came to live in the United States. Back then I paid less than $100 for a share. I traded the stock a little, back then there were trading fees too which ate into my profits, up to $20 per trade, ouch! I never had more than ten shares back then.  My average cost per share coming into the August 2020 stock split was $just over $80 per share. Following the stock split at four for one shares my average cost is now $19 per share.

 

Time in the market helped me generate those returns. I now after about a decade of owning Apple stock, have a cost per share of $19. A stock that trades in the last month at a low of over $105.

 

 Can you make lots of money quickly?  Yes.  But to make lots of money quickly you need events of the magnitude created by the pandemic. In my forty odd years these came along just four times. Once a decade on average you may think, but three of these events have happened in the last twenty years. The first just over thirteen years before the year 2000 and was mostly a localised crash in the United Kingdom.


 

At that time I panicked and sold out of the market at the bottom. Losing a decade of work investing and then having to start again in the 1990's.


It pays to stay in the market when stock markets fall. O.K. add to some of your best stocks in times of trouble as long as the stocks you buy are strong companies.  I recently sold out of my energy stocks. Because? Well although the markets took a tumble and the energy sector fell with the market. The energy sector looks to have more problems than just the pandemic. I still own an energy ETF but no major oil companies as single company stocks.


You always need to look out at what is happening to your investments. Constantly look to modify your strategy. I personally like dividend paying stocks. They pay me an income of $200 to $500 per month, it varies on a monthly basis the best months being March, June, September and December. My worst month January. But I also like to speculate a little, buying the occassional non dividend stock, an Amazon, or Paypal and even Pinterest. They add a little spice to my portfolio, along with my McKormick.


So why should you invest in the stock market? If you want to make money, create an income stream away from a forty hour work week. Are prepared to lose somedays, you will win on most days, the market rises on an average of two out of three days over the long term. Though in a long run of losing days it is hard to remember an up day.


Be prepared for the long run. Invest in low cost funds if you don't feel confident. Invest in your local market or globally as you feel. Look to the long term.  Over the years to come, you will get older, you will learn, you will make mistakes, you will have bad days, you will have great days. You will be a successful investor.


The laws of mathematics show, you can win at stock market investing.



All the best at your investment journey.


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Friday, August 7, 2020

August 6 2020. Back to Where I was in February 2020

It has been a hard six months.

I did not think in early April when my  stock portfolio had plunged by 30% that my recovery would be this quick.
a stack of used $100 bills
Cash

O.k. At the lowest lows I backed up the truck. Pulled out of bonds in most cases and bought either Single stocks. Apple, Microsoft, Johnson and Johnson and Costco mostly.

I did not believe that I would come back to being within $100 of my portfolio value on February 19th, a total of $103,000 in August. today just over $102,950.

Off course I have lost most of my regular monthly income. The bonds paid out monthly cash flow, but falling yields put pay to that. Some have such a low yield today that I earn less than one cent per month. Horrible for someone who loves cash flow.

Some of my REITS also suspended their dividends. They also lost up to 50% of their value. Eeek!

My rescue has come in the form of the likes of Apple and Microsoft. Apples balistic rise in the last two weeks has paid me back. Now a stock split too, will see my average cost per share for Apple fall from $160 per share to $40 per share. One reason to love a stock split that is never mentioned on YouTube.

I have lost about $1,000 in expected dividend income this year. That hurts, a lot.

But I reckon with some  careful buying I can build a stronger cash flow regime.

I have also put a little cash to one side, just one percent of my total portfolio in Gold, in the form of the GLDM exchange traded fund.







The GLDM fund does not pay a dividend but the gold is there for some stabilization if we suffer another rapid fall in the market. Not as a means of generating cash.


For some cash generation I have taken a small position in investments that sell covered calls. My largest position is in QYLD, a monthly dividend payer, that has a reasonable payout, about 15 cents per share on average. I received a nice payout last month for a one percent investment. So I will hold that stock which invests in covered calls on the NASDAQ top 100. I am looking for an S&P 500 equivalent too.







So there it is. Six Months to come back to where I was at the beginning of the year.

How have you done this year. Let us know with a comment or if you like this post, shre it with your friends on Twitter, Facebook or Pinterest.

Oh. By the way I also added a little position in Pinterest (PINS) too. So a share on Pinterest helps my prtfolio too.

All the best.