PSEC was a closed end fund that Seth and Erik have championed for a couple of years running, and it's maintained a 10-20% dividend through that time, but there are significant risks to your principal, in all of these cases.
up a solid 7% in the week since you posted this. thanks - everyone at NA must be buying! haha! be careful with these. you cant buy and hold, unless you buy when they are sooooooooo low that your principal isnt really a problem. it's nice to collect the big dividends, but historically i would rather trade stocks like this. however, with that said, i am currently sitting on a long position on both ARCC and PSEC due to the fact that i got in really cheap, have yields in excess of 12% each, and am up 25%+ on my principal. score!
as i said, historically, these have been rollercoasters, but lately, they have been extremely stable. i wouldnt really reccommend buying them at the current prices.
In 125 @ $12.005 for TNK today. Absolutely ripe buy-in opportunity on a 10% dividend stock that will inevitably rebound as oil prices increase.
Looks like that price drop was directly due to them being downgraded to "underperform". Not really sure that's a "buy-signal" in my mind, without picking through the specific analysis and seeing why they're doing so much worse than the rest of the sector.
it is taking a risk for sure, it can easily fall to $11 or less. IF, IF, IF i did the research and felt that the company and its financials were solid, then i would definitely wait for more than just today's drop. in the long run, it may end up working out, and you could make (for example) 15%. however, if you buy at $11, that 15% turns to 25%, which is a big difference. however, when you are playing with peanuts (125 * $12 = $1,500), it doesnt really matter. i threw down a $1,000 investment in a greek telecom company a while ago. even if i am up 20%, it only amounts to $200. not even worth selling. i will hold onto it until either greece fails and my $1k disappears or until europe as a whole gets back on its feet and the stock jumps back to its previous levels which would easily get me a 100-200% gain. if jone likes it at $12, let him throw down some chump change on it and hope it goes back up eventually... however, i wouldve definitely waited till it showed some signs of stabilizing
He's being sarcastic. Hence the 9% drop on SOL today reference. After all this is Seth talking about Jonas here...
Ah, thanks. I need to check the batteries in my sarcasm detector.
Yeah, SOL got kind of creamed today, but that looks like the "usual" swings. Whereas TNK specifically has bad news out about it dragging it's name through the mud.
Erik/Seth, serious question for you guys, since you actively trade way more than I do, how long do downgrades typically marinate before things level out? Is there a typical cooling off period, at all? (assuming a stock doesn't have downgrades pile onto themselves and eventually turn into a rush for the exits)
if jone likes it at $12, let him throw down some chump change on it and hope it goes back up eventually... however, i wouldve definitely waited till it showed some signs of stabilizing
Yeah, I didn't mean my comment to be a "nobody should ever buy this stock", just more of a "why now?" since the drop he bought in on was specifically in response to the news.
Back in 98 my dad was big into day trading. He used e-trade on our 48k internet connection.. His initial investment was 10k and worked it up to 38k in 3months. Not too bad, but stressful. Most trades were small amounts few thousand here and there, but sometimes he'd dump a large amount of his capitol into one stock after believing the stock would go up that day. One morning after researching one particular stock he purchased 28k worth of shares. That particular stock crashed that day,don't even know the details, but he was putting in his sell order to minimize the loss and the good ol internet connection failed... lol, by the time our shitty modem got him back online and he was able to sell he'd lost 10k. THis was in 20 or so minutes. ouch. Even though he still was up 18k that was enough to scare him out of the day trading game.
Jeez guys, if we want to argue every single swing in the market, we can all post "I told you so" comments every other day when stocks swing. Also, yes $1,500 may seem like peanuts, but obviously I'm not going to throw 10s of thousands of dollars at a stock when I am admittedly a new investor.
Playing with fake money is a good learning experience and all, but you have to lose real money to learn lessons. Yes SOL is down 9% today which is even worse than the usual 3-4% swing, but I'm still sticking with it. I'm cost averaged at $9.20 a share, and now I'm only up $400 instead of $1,000. Once again "peanuts" to some of you guys, but $400 profit is still more than $220, which would be a 1.1% ING Savings return on $20k. I might as well play with extra savings rather then let it waste away.
Not trying to argue with you, I just thought you created this thread for discussion, and I was attempting to discuss the stock you mentioned.
Also, for anything less than $25k (or really, less than $100k, since most people can generate 40-80 transactions per month) the risk free benchmark should be 4%, with rewards checking accounts, and the general benchmark should be the S&P 500 (down 1% today)
I was talking about other knuckleheads in this thread.
My personal benchmark is 1.1% because that's where my savings is parked... I don't do 40-80 checking transactions a month. Though my true personal benchmark is 4.875%, because that is the rate on my mortgage. I tell myself if I can beat that return, it is making sense to only pay the minimum and keep investing in the market. If not, I probably should be making some extra principle payments here and there.
If you only do 10-15 transactions per month, then you can still get 4% on $25k.
Personally, I'm not dealing with the hassle right now, either, since I'm in a mode of maxing out all of my, and my wife's, long-term tax shelters.
ETA: don't let the extra principle payments be an "either-or" situation. It's a guaranteed 4.875% return. It's worth having some part of your extra income go to that, IMO.
Agree with Arch. But you do have to also consider the tax advantage of writing off the interest you are paying as well. But that is probably getting too complex here. I always pay extra on my mortgage too and it's at 4.75%. It's just too good to me to see that balance go down when it is the only debt I have. I hate thinking about it but the first house I bought was back in 2000. I bought it for $112,500 and sold it for $179,000 when I had the balance owed down to $60,500. It really hurts me sometimes to think that if I hadn't sold that house and bought a new one then sold that and built a new one that I live in now, I'd have no mortgage and no debt at all right now. But I'd live in an old crappy house with no A/C. So I try to see the good. UGH
Everybody loves to bring up the "tax advantage" but best case, you discount your mortgage rate by your top marginal bracket (and only if you itemize), and that's still a decent risk-free return, at this point in time.
I know it's not the most savvy way to handle it, but personally I don't let the tax write-off impact my mortgage pay down. Also, later in the game, when you're more than half-way paid off, the mortgage interest is probably not high enough to exceed the standard deduction. Hell, in my case, if I didn't have other charitable deductions, my mortgage interest and property taxes combined barely squeeze me into the territory of needing to itemize.
ETA: and you know this from other threads, Erik, but I'm in the camp of having a 30-year fixed that gets paid ahead like a 15-year fixed. I seem to recall you having a similar sentiment.
Though once I have kids and my wife stops working for awhile, that will probably change!
I wasn't going to post here again, but I chuckled when CIB came up on my scanners as having some pretty bearish technical indicators. CIB could bear-rally if it loses 57; will blow through 20-day-acceleration-band immediately after passing 200DMA @ 57. I like this set up.
Think I might take my profits on SOL today and buy back in at the resistance levels. Going to be an interesting next couple of days, would like to see the volume behind the moves as well.
Erik/Seth, serious question for you guys, since you actively trade way more than I do, how long do downgrades typically marinate before things level out? Is there a typical cooling off period, at all? (assuming a stock doesn't have downgrades pile onto themselves and eventually turn into a rush for the exits)
there is no set period. every downgrade is different, really. as for TNK, if you look at its dividend history, it is all over the place. just this past dividend represented a 10% decrease from the prior dividend. not a good sign.
as for jone, if you sold SOL this morning, what happened to your "im going to stick with it until this summer" attitude. this entire thread is a bunch of horseshit, dude. you were called out on your exit strategy with SOL earlier, and now that it has lost about 13% from its recent high on 1/12, you are leaving? and this is about a week after you gave the recommendation to buy buy buy at $10.00??? you are selling at $9.75? you make me laugh.
erik, this is one of my most favorite threads of all time i think.
Well, there is some good advice about portfolio investing and RCA's for balances under $25k
Seriously, though, my only complaint about the thread is that Jonas didn't share the actual details of his exit strategy or the mechanism behind how it would work. I thought they were both valid questions, and could have actually been informative.
Yup, I got scared, sold at $9.69 and now I'm sitting here blown that it is rebounding. I was hoping to get back in at the $9 support level, didn't think it'd bounce back so strong past $10.
Obviously I'd be better listening to myself and not listening to people second guess from the sidelines. But hey, at least I got out with a small profit and a lesson learned, hopefully can catch this one on another dip somewhere.
Unfuckingbelievable. Today is going to be a GREAT day at the gym, I wouldn't be surprised if I set new personal highs. I feel like I could punch through a cement wall right now.
5. Never enter a stock without a clear exit strategy. If you buy it at $10, you need a pre-set plan like "I'm getting out if this drops below $9.50" to minimize losses. Don't let your emotions control your trades.
And rule number 5a) Do not ever listen to anyone else regarding a stock if you believe your own opinion. Don't let others cause you to second guess yourself.
5. Never enter a stock without a clear exit strategy. If you buy it at $10, you need a pre-set plan like "I'm getting out if this drops below $9.50" to minimize losses. Don't let your emotions control your trades.
And rule number 5a) Do not ever listen to anyone else regarding a stock if you believe your own opinion. Don't let others cause you to second guess yourself.
Except you never said what your exit point was on SOL other than "riding it until summer".
5. Never enter a stock without a clear exit strategy. If you buy it at $10, you need a pre-set plan like "I'm getting out if this drops below $9.50" to minimize losses. Don't let your emotions control your trades.
And rule number 5a) Do not ever listen to anyone else regarding a stock if you believe your own opinion. Don't let others cause you to second guess yourself.
THAT is a good rule. it doesnt matter what other people say. IF IF IF you do you research and YOU believe that something looks good, go for it.
Comments
PSEC was a closed end fund that Seth and Erik have championed for a couple of years running, and it's maintained a 10-20% dividend through that time, but there are significant risks to your principal, in all of these cases.
up a solid 7% in the week since you posted this. thanks - everyone at NA must be buying! haha! be careful with these. you cant buy and hold, unless you buy when they are sooooooooo low that your principal isnt really a problem. it's nice to collect the big dividends, but historically i would rather trade stocks like this. however, with that said, i am currently sitting on a long position on both ARCC and PSEC due to the fact that i got in really cheap, have yields in excess of 12% each, and am up 25%+ on my principal. score!
as i said, historically, these have been rollercoasters, but lately, they have been extremely stable. i wouldnt really reccommend buying them at the current prices.
is there a difference in buying say... sony stock on NYSE vs buying it on the Nikkei?
(not actually buying sony stock, just for example)
In 125 @ $12.005 for TNK today. Absolutely ripe buy-in opportunity on a 10% dividend stock that will inevitably rebound as oil prices increase.
Looks like that price drop was directly due to them being downgraded to "underperform".
Not really sure that's a "buy-signal" in my mind, without picking through the specific analysis and seeing why they're doing so much worse than the rest of the sector.
nathan, it is a buy signal, just like SOL is a solid buy too (down 9% today)
If it just got downgraded, don't you think it has further to fall, than a single day of trading?
Why buy-in after the first drop when it's potentially on the way down for longer, at least based on analysts' expectations?
He's being sarcastic. Hence the 9% drop on SOL today reference. After all this is Seth talking about Jonas here...
Ah, thanks. I need to check the batteries in my sarcasm detector.
Yeah, SOL got kind of creamed today, but that looks like the "usual" swings. Whereas TNK specifically has bad news out about it dragging it's name through the mud.
Erik/Seth, serious question for you guys, since you actively trade way more than I do, how long do downgrades typically marinate before things level out? Is there a typical cooling off period, at all? (assuming a stock doesn't have downgrades pile onto themselves and eventually turn into a rush for the exits)
if jone likes it at $12, let him throw down some chump change on it and hope it goes back up eventually... however, i wouldve definitely waited till it showed some signs of stabilizing
Yeah, I didn't mean my comment to be a "nobody should ever buy this stock", just more of a "why now?" since the drop he bought in on was specifically in response to the news.
Playing with fake money is a good learning experience and all, but you have to lose real money to learn lessons. Yes SOL is down 9% today which is even worse than the usual 3-4% swing, but I'm still sticking with it. I'm cost averaged at $9.20 a share, and now I'm only up $400 instead of $1,000. Once again "peanuts" to some of you guys, but $400 profit is still more than $220, which would be a 1.1% ING Savings return on $20k. I might as well play with extra savings rather then let it waste away.
Also, for anything less than $25k (or really, less than $100k, since most people can generate 40-80 transactions per month) the risk free benchmark should be 4%, with rewards checking accounts, and the general benchmark should be the S&P 500 (down 1% today)
My personal benchmark is 1.1% because that's where my savings is parked... I don't do 40-80 checking transactions a month. Though my true personal benchmark is 4.875%, because that is the rate on my mortgage. I tell myself if I can beat that return, it is making sense to only pay the minimum and keep investing in the market. If not, I probably should be making some extra principle payments here and there.
Personally, I'm not dealing with the hassle right now, either, since I'm in a mode of maxing out all of my, and my wife's, long-term tax shelters.
ETA: don't let the extra principle payments be an "either-or" situation. It's a guaranteed 4.875% return. It's worth having some part of your extra income go to that, IMO.
I know it's not the most savvy way to handle it, but personally I don't let the tax write-off impact my mortgage pay down. Also, later in the game, when you're more than half-way paid off, the mortgage interest is probably not high enough to exceed the standard deduction. Hell, in my case, if I didn't have other charitable deductions, my mortgage interest and property taxes combined barely squeeze me into the territory of needing to itemize.
ETA: and you know this from other threads, Erik, but I'm in the camp of having a 30-year fixed that gets paid ahead like a 15-year fixed. I seem to recall you having a similar sentiment.
Though once I have kids and my wife stops working for awhile, that will probably change!
Erik/Seth, serious question for you guys, since you actively trade way more than I do, how long do downgrades typically marinate before things level out? Is there a typical cooling off period, at all? (assuming a stock doesn't have downgrades pile onto themselves and eventually turn into a rush for the exits)
there is no set period. every downgrade is different, really. as for TNK, if you look at its dividend history, it is all over the place. just this past dividend represented a 10% decrease from the prior dividend. not a good sign.
as for jone, if you sold SOL this morning, what happened to your "im going to stick with it until this summer" attitude. this entire thread is a bunch of horseshit, dude. you were called out on your exit strategy with SOL earlier, and now that it has lost about 13% from its recent high on 1/12, you are leaving? and this is about a week after you gave the recommendation to buy buy buy at $10.00??? you are selling at $9.75? you make me laugh.
erik, this is one of my most favorite threads of all time i think.
this entire thread is a bunch of horseshit, dude.
Well, there is some good advice about portfolio investing and RCA's for balances under $25k
Seriously, though, my only complaint about the thread is that Jonas didn't share the actual details of his exit strategy or the mechanism behind how it would work. I thought they were both valid questions, and could have actually been informative.
Obviously I'd be better listening to myself and not listening to people second guess from the sidelines. But hey, at least I got out with a small profit and a lesson learned, hopefully can catch this one on another dip somewhere.
5. Never enter a stock without a clear exit strategy. If you buy it at $10, you need a pre-set plan like "I'm getting out if this drops below $9.50" to minimize losses. Don't let your emotions control your trades.
And rule number 5a) Do not ever listen to anyone else regarding a stock if you believe your own opinion. Don't let others cause you to second guess yourself.
5. Never enter a stock without a clear exit strategy. If you buy it at $10, you need a pre-set plan like "I'm getting out if this drops below $9.50" to minimize losses. Don't let your emotions control your trades.
And rule number 5a) Do not ever listen to anyone else regarding a stock if you believe your own opinion. Don't let others cause you to second guess yourself.
Except you never said what your exit point was on SOL other than "riding it until summer".
A 9% drop is a hell of a trailing stop, IMO.
5. Never enter a stock without a clear exit strategy. If you buy it at $10, you need a pre-set plan like "I'm getting out if this drops below $9.50" to minimize losses. Don't let your emotions control your trades.
And rule number 5a) Do not ever listen to anyone else regarding a stock if you believe your own opinion. Don't let others cause you to second guess yourself.
THAT is a good rule. it doesnt matter what other people say. IF IF IF you do you research and YOU believe that something looks good, go for it.