Birchtree's Account Talk

[mayday]

Re: Birchtree's account talk

This year's buyout boom means companies and private-equity funds are gobbling up corporate shares like never before. But the buyback boom is having a huge - and less noticed - impact.
In the third quarter, companies in the S&P 500 index bought back an estimated $110 billion of their own shares. When a company uses cash to buy back its own shares from investors, it effectively raises the value of those shares by reducing their supply on the market. The third quarter rash of buybacks came on top of $117 billion in the second quarter and $100 billion in the first . The combined $327 billion was up 33% from $245 billion in the first nine months of 2005.
Investors tend to look on buybacks favorably, often seeing them as an efficient way to return value to shareholders. Insofar as earnings per share are higher, and therefore price to earnings ratios are lower, there is a lot to like. That is especially true now, when companies have plenty of excess cash to distribute. Maybe they'll be buying today - I think I will.

That last bit {I think I will} is very encouraging Birch

 

[Birchtree]

Re: Birchtree's account talk

My good news is (and sugar you will like this) I caught the hammer to the tune of negative $24,000. When I actually thought and was prepared for a loss of up to $30,000. We'll see if my purchases yesterday will help any today if we get a rebound. I'm good for a pain level of at least $138,000 on a serious correction approaching 8%. But it always comes back even stronger. We are in a strong bull trend - be right and sit tight.

 

[sugarandspice]

Re: Birchtree's account talk

You totally don't understand. I'm not about you losing money. Nothing to do with that. Someone questions you and you get into your fightin' stance. I'm not with or against you. And I don't want to see anyone lose money. You seem to always have to put your thumb down on everyone so we will be under it and you can make your specifically chosen words to try to belittle others. But you must stay relevant here. That's why you visit everyone in the talk threads. Don't worry Birch, you will always be somebody. At least in here.

 

[Birchtree]

Re: Birchtree's account talk

You're right sugarbear, I totally don't understand. But I'm OK if you're OK. We make this part of our micro-universe appealing. Play with your money as you deem necessary and I'll continue to do the same. Are you ready to chase today?

 

[fabijo]

Re: Birchtree's account talk

My good news is (and sugar you will like this) I caught the hammer to the tune of negative $24,000. When I actually thought and was prepared for a loss of up to $30,000.

If I lost that much in my TSP, that'd be about a 98% drop!

 

[ChemEng]

Re: Birchtree's account talk

You and me both fabijo...

 

[Birchtree]

Re: Birchtree's account talk

It's excellent that you are both starting early - you will be pleasantly surprised how fast your accounts will grow and how much you will learn. Sooner or later you will probably branch outside of TSP and then you are in a free zone - a completely different animal. But TSP will help provide good training until you are ready. If this market turns around before year end I may be looking at a $100,000 year in my TSP tugboat account. That would include my contributions and multiple DCAs. And I'm a slow boat buy and holder.

 

[Birchtree]

Re: Birchtree's account talk

Here is an example why individual stocks should be given consideration in any retirement program.

At the Annual Meeting it was announced that the Board of Directors declared a quarterly cash dividend of $0.175 per common share, a 9.4% increase over the previous $0.160 per common share. This action marks RPM's 33rd consecutive year of cash dividend increases, which places RPM in an elite category of less than one percent of all 19,000 publicly-traded U.S. companies. Only 79 other companies, besides RPM, have consecutively paid an increasing annual dividend for this period of time or longer. Now to be honest I never knew that. This is just a demonstration of the income potential that stocks can deliver when you are retired. I own this company and have a long term profit in it by I am in no way pumping it for purchase.

 

[tsptalk]

Re: Birchtree's account talk

Hey Boss,

I've built my own fund over 30 years and still adding stocks that mostly pay dividends. I suspect there are now probably at least 190 individual stocks in the heap. I'll be doing some profit taking after the first of the year - taxes you know. I'm certainly having a good time - that was a great ride this fall and I fully expect more good times to come. Exploit the current weakness to get value pricing - no fear here.

Just as a comparison, the Vanguard Dividend Growth Fund has $1.2 billion invested in it and 63 stocks in total in the fund. 1000 times more value and a third of the number of stocks.

If your diversification makes you feel safer, that's cool. I just don't think it's necessary to own 190 different companies.

JMO,
Tom

 

[fabijo]

Re: Birchtree's account talk

If your diversification makes you feel safer, that's cool. I just don't think it's necessary to own 190 different companies.

:laugh:

Why not? Let's own the world. I remember playing Monopoly as a kid. My strategy was to buy any property I landed on, no matter how little cash I had. After a while, the other players were forced to give me their properties since they could not pay rent.

 

[Birchtree]

Re: Birchtree's account talk

I wonder how many employees Vanguard has to help select those 63 companies? I'll be working my portfolio for hopefully another 25 years anyway - and when I give stock to the grandchildren it will be at step up basis - no tax to them. They won't be taxed for many years. And when I take capital gains for myself it'll be 95% tax free unless the Dems change the rules. I still have 148 free trades to burn before yearend - so if the rally continues into December I'll glean some profit and reinvest into other wall flowers. Then in 2007 I start all over again with another free 400 trades.

 

[Birchtree]

Re: Birchtree's account talk

The pattern traced out in MER's chart (Merrill Lynch) is reminiscent of what happened back in late 1994 to early '95. The bull market in MER didn't peak until 1998. Historically, when ever MER rallies for at least five consecutive months from its most recent correction bottom it means the broad market tren will be up for several more months. MER has been in a broad upward trend since the June bottom and hasn't looked back since. With $5 trillion in cash on the sidelines this is the most liquid stock market ever. Currently stocks are 33.7% percent undervalued and at an historic long-term low. I still expect to see a strong melt up that will blind side the bears in the very near future - would over 200 points suffice?

 

[FundSurfer]

Re: Birchtree's account talk

You said earlier that you have 75+ stocks? I don't know how in the world you could do justice to that many stocks in an individual retirement account.

This really doesn't make sense to me at all. With that many stocks I think you'd be better off in a mutual fund. I could be wrong. It just seems like you would have to have a bunch of money in these funds to make it worth while. Enough that you "power account" would not be worth talking about.

I said it before and I'll say it again. I agree with Tom, it is really tough to follow a bunch of stocks that closely. It still seems to me you'd achieve the same results with mutual funds. Considering how much time you have spent on this message board, it makes you wonder.

You'd almost have to be retired with managing your investments (and tsptalk) as a full time job. Seems like that would defeat the purpose of retirement.

 

[Spaf]

Re: Birchtree's account talk

Birch,
190 or so funds. Sounds like you have made up your own package of mutual funds........:nuts:
Your expense ratio should be near zero......
I guess the real question that we need to ask. Is the Birchfolio showing a profit? And are you happy with it?

If your happy, go for it!
Spaf

PS: Where do I mail my resume to be your accountant?

 

[ATCJeff]

Re: Birchtree's account talk

And what is your current tax burden if you were to sell all in one day. Yikes!:nuts:

 

[Birchtree]

Re: Birchtree's account talk

No one should ever retire and end up sitting on the porch - unless they are using their computer for various and profitable reasons. Managing my heap will be my second career. There are two distinct advantages that one has earned when approaching retirement: money and time. If you use money to make money and do it as a well informed investor (that's where time helps) you have a greater opportunity to be profitable. Having as many stocks as I do is no burden on me because I've been doing my homework for 30 years - some positions require no management time - just let the dividends do all the work. This many stocks allows me to be selective when it's time to prune and gather some crop - like gardening. You don't have that control of flexibility with a mutual fund - all you have is NAV. You only get to reinvest capital gains and dividends once a year - DCA does not exist internally. That's one big advantage of TSP - you can easily dollar cost average your way into happiness, and now with the current limits it's quicker. There will be many many more big time players over the next 10 years because balances will accumulate faster. I certainly like a positive A/D line and now you all know why.

 

[Birchtree]

Re: Birchtree's account talk

Economist Ed Yardeni points out that in Sept., U.S. exports were up 16.7% and 13.4% year over year, respectively. According to Yardeni, export growth was the highest since 1995. Indeed, the many similarities between 1995 and today, economically speaking, are quite startling. Don't forget that 1995 was the start of the economic super boom that extended into late '90s and was also the start of the acceleration phase of the stock bull market of the second half of that decade. In 1995 the C fund went up 37.41%. It's also important to remember that the 10 year stock market cycle is still up until 2009 and this will creat a strong underlying support and upside bias for the market in the next couple years. We are also feeling the 4 year cycle pressure during its first quadrant - pushing us up or pulling us up. As long as Goldilocks hangs around the bears will have fear. Snort.

 

[ATCJeff]

Re: Birchtree's account talk

Here comes a +100 point up day.... Up Volume holding 5 to 1 edge.

Double Snort

 

[Spaf]

Re: Birchtree's account talk

No one should ever retire and end up sitting on the porch - unless they are using their computer for various and profitable reasons. Managing my heap will be my second career.

Then thats your key!​

The goal to retirement is planning to do what ever makes you happy, i.e., investing, traveling, golfing, fishing or whatever.

The quest for the grail .​

 

[ATCJeff]

Re: Birchtree's account talk

Here comes a +100 point up day.... Up Volume holding 5 to 1 edge.

Double Snort

Hey I got one right!