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Re: How are we doing?
Old 10-21-2005, 08:08 PM   #21
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Re: How are we doing?

Quote:
Originally Posted by earlybird
Looks like we need to take care of some business huh? We are waiting for a little while, we have had a whisper in our ear that the stock is going to split . We'll hang in for that and let it climb up again and then pull out.
Don't wait long. Personally, I would start diversifying now. Right now. As others have said, you've placed almost all your financial eggs in a single basket -- oil.

Move a bunch into money market funds or CDs while you explore your options.
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Re: How are we doing?
Old 10-21-2005, 08:34 PM   #22
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Re: How are we doing?

I can't thank all of you enough.* I am getting more comfortable with hubby's retiring in a few.

Hubby immediately looked at vanguard target.* He says they've got a history of only returning 2% or so... but it would be safe, so that's the point right?

So, paying off the house is a good idea?* And the sooner the better?* We would have to use some of our stock options to do it.* Sound ok?

We have just so many questions.* Questions we even need to ask the company.* Like... the company lets you retire at 56 but we dont' know if we get the pension starting then or at 65.* *

John,* the company will put ZERO into our health insurance premiums if we leave early.* At 56 they will pay 90% of hubby's premium and 50 % of mine.... So I worked it out to 70% of the premium.* We are quite lucky in that the oil industry as a whole does NOT usually pay health insurance at all for retirees!* Disgraceful!* Also... We CAN move our 401k money into other options.* Stock in the company is only one option they give us.* We just chose it because it does so well.* We will find out what the options are and make a decision there.*

I am reading you all LOUD and CLEAR* * Stay away from advisors!* I would love to do that.* Call me stingy.* I want my money!* * but, I need to know a lot more, so does hubby, before we can make decisions on our own.* I will start reading.* And do it now.* We have no idea how to move the money into tax shelters, how to avoid paying huge amounts of tax, should we purchase a second home - will that help with the tax problem? Just so many questions ... but we can ask for help here.

I still want to keep the money in oil just for a little while.* We have taken a hit in the last couple of weeks, but we are waiting for a split.* I just won't move the money til it's grown a little there.* I don't think it's too risky.* We know the company well.* We know what they are doing, we know their reputation, we know their goals.* We will though, get out quick once this happens.* Someone asked what would happen if or when crude went to 30 a barrel... it just will never happen.* never again will it be 30 a barrel.*

I hope I don't end up wearing out my welcome here... I have so many questions, so much to learn.* I feel like I should have done this years ago, but ..... now is better than not at all.* We have been pretty stupid and lucky.* We put our money into the hands of the employers and let them invest for us.*

Wildcat, Cramer is very entertaining, isn't he?* Honestly, I don't understand 1/3 of what comes out of the man's mouth but he makes me smile with his ... intensity??*
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Re: How are we doing?
Old 10-21-2005, 09:22 PM   #23
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Re: How are we doing?

Quote:
Originally Posted by earlybird

I still want to keep the money in oil just for a little while.* We have taken a hit in the last couple of weeks, but we are waiting for a split.* I just won't move the money til it's grown a little there.* I don't think it's too risky.* We know the company well.* We know what they are doing, we know their reputation, we know their goals.* We will though, get out quick once this happens.* Someone asked what would happen if or when crude went to 30 a barrel... it just will never happen.* never again will it be 30 a barrel.*
That is the most stunning, scary comment I've about ever heard anywhere at anytime. Same as the old "its different this time". earlybird doesn't have a clue how bad oil stocks could get hammered with a $20 drop in oil price and it is entirely possible at any time without warning. Most of the runup in oil price is trader speculation. The FUNDAMENTALS don't warrant more than $30 oil at this time as most major worldwide projects will do just fine at $30.

I am in a senior position in the oil business myself and I would never say what was just said. I've been taking profits off the top for the past 12 months.
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Re: How are we doing?
Old 10-21-2005, 10:09 PM   #24
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Re: How are we doing?

Quote:
Originally Posted by earlybird
earlybird said: ... We are waiting for a little while, we have had a whisper in our ear that the stock is going to split . We'll hang in for that and let it climb up again and then pull out.
earlybird, you are getting some good advice here. I would just like to add a note on stock splits. Please, do not attach any significance to a split. People get excited about splits, but they mean very little. It is exactly like getting two $5 bills for a $10 bill. You still have $10.

Some people believe it indicates the stock is going to continue to rise, but the Board of Directors (who authorize the split) do not have a crystal ball either. If you doubt this (and you should question all financial advice), look at yahoo stock charts. They show splits. See if you can detect a pattern after a split. Your stock may or may not do well, but I would not count on a potential split to affect that.

Warren Buffet has not split his Berkshire fund, and it has been one of the best performers.

Good luck - keep asking questions, we can all learn from them!


-ERD50
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Re: How are we doing?
Old 10-21-2005, 10:41 PM   #25
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Re: How are we doing?

Quote:
We are quite lucky in that the oil industry as a whole does NOT usually pay health insurance at all for retirees! Disgraceful!
Throughout my entire career, I have never worked for a company that would pay health insurance for us after I retire. That's the way it is in most companies now.

I agree with our friends above ... at least sell 1/3 or 1/2 of the oil exposure, and diversify now. If you learn a hard lesson, it won't be a killer.
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Re: How are we doing?
Old 10-21-2005, 10:55 PM   #26
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Re: How are we doing?

Hi earlybird,

Here are some articles/papers on Diversification of Concentrated Positions from Eric Haas. I thought Persuading Clients to Diversify Successful Company Stock would be good for someone in your situation to read.

Here's a quote from Fooled by Randomness [page 10 of the hardback version]:

Quote:
... it does not matter how frequently something succeeds if failure is too costly to bear.
I have not died yet in my 30 years, yet I still have life insurance because my failing to continue living and earning money will be too costly to bear for my family.

Now, not loading up own your employer's stock will look extremely stupid when the stock is doing wonderful, and I'm pretty sure that tons of your DH's coworkers will be loading up, and telling everyone how smart [for whatever reasons] they are because they're loading up. This is exactly what has happened thousands of times before, most notably in the tech boom of the late 1990's, Enron, Worldcom, etc, etc...

Diversifying at this time will be extremely emotionally hard, just like not totally loading up on energy stocks and commodities is know [or tech stocks in the 1990's or the "transistor" stocks in the late 1960's]. Also, that employer stock may not ever tank, and you'll probably here it from various people about how foolish you guys were not too load up.

This is the difference b/w strategy and outcome. A good strategy [like diversifying] is a good strategy no matter what the outcome is [whether or not that one stock tanks or does extremely well].

Yet another wrench to throw in the works is that not only does the employer stock depend heavily on the company, but so does the pension. A triple whammy would be for the employer stock to tank, DH too lose his job, and then the company says "Oppsie, we're going to shed our pension plan off on the PBGC. But hey, thanks for all those years of making us money."

You can check out what the Pension Benefit Guarantee Corp [i.e. PBGC] guarantees, including the max they pay for pensions they take over.

Scared yet.

- Alec
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Re: How are we doing?
Old 10-21-2005, 10:59 PM   #27
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Re: How are we doing?

Quote:
Originally Posted by AltaRed
That is the most stunning, scary comment I've about ever heard anywhere at anytime.
I don't know anything about the oil industry or where prices are headed. But, I'd have to agree with AltaRed 100% !

Why risk everything for a bit more cash ? I think many people have done that, AND LOST.
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Re: How are we doing?
Old 10-22-2005, 02:25 AM   #28
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Re: How are we doing?

EarlyBird;
Living paycheck to paycheck is no fun.
1) Cut back on expenses...establish emg/rainy day fund,
in MM funds or Cds(laddering them..6mo.1yr..2yr)
2) How old are the kids?, and are you funding their
college ed.(529 plan,etc)
3) I would choose a much more diversified 401 plan, no
more than 10% in any company stock, if you plan
to work a few more years.
4) Health insurance as you know is a big exp. I think
the extra few years of working, for the % of paid
premiums is worth it, especially if it covers the kids.
5) There are several good books at the library/book
store on retirement/financial planing.
6) I recomend Kiplinger's Personal Finance magazine.
Good Luck...
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Re: How are we doing?
Old 10-22-2005, 07:05 AM   #29
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Re: How are we doing?

Quote:
Originally Posted by AltaRed
That is the most stunning, scary comment I've about ever heard anywhere at anytime.* Same as the old "its different this time".* *earlybird doesn't have a clue how bad oil stocks could get hammered with a $20 drop in oil price and it is entirely possible at any time without warning. Most of the runup in oil price is trader speculation.* The FUNDAMENTALS don't warrant more than $30 oil at this time as most major worldwide projects will do just fine at $30.

I am in a senior position in the oil business myself and I would never say what was just said.* *I've been taking profits off the top for the past 12 months.
Never say "It will never happen (again)". That is just silly.

JG
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Re: How are we doing?
Old 10-22-2005, 09:26 AM   #30
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Re: How are we doing?

Quote:
Originally Posted by ERD50
earlybird, you are getting some good advice here. I would just like to add a note on stock splits. Please, do not attach any significance to a split. People get excited about splits, but they mean very little. It is exactly like getting two $5 bills for a $10 bill. You still have $10.

Some people believe it indicates the stock is going to continue to rise, but the Board of Directors (who authorize the split) do not have a crystal ball either. If you doubt this (and you should question all financial advice), look at yahoo stock charts. They show splits. See if you can detect a pattern after a split. Your stock may or may not do well, but I would not count on a potential split to affect that.

Warren Buffet has not split his Berkshire fund, and it has been one of the best performers.

Good luck - keep asking questions, we can all learn from them!
-ERD50
Logically that would seem to be true, but statistically it's not.

First, a point about waiting for a split. Earlybird, you need to diversify. Your single-stock risk is astronomical and you have far more to lose than a little bit to gain. Any gain after a stock split will not affect your ER materially, but a loss could delay ER. So whether or not you think the stock is going up some more, you need to diversify now. End of sermon.

But ERD, why would a company waste time & money splitting its stock? The reason is that investors think the stock is more "affordable"and they rush in to buy it. It rises after a split as a self-fulfilling prophecy. Stocks don't split for a fundamental or financial reason-- it's all about the marketing, and studies have shown that just about every stock rises after it splits.
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Re: How are we doing?
Old 10-22-2005, 09:56 AM   #31
 
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Re: How are we doing?

One more voice: Diversify right away.* If you can't bring yourself to do it right now, at least diversify to some extent starting Monday morning.

You've made a lot of money by betting it all on one horse, so take your profits and get out of the casino.
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Re: How are we doing?
Old 10-22-2005, 11:12 AM   #32
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Re: How are we doing?

And yet another voice saying diversify, diversify, diversify.

Hubby's best friend had all his eggs in one basket. Yes, it was also the company he worked for. He watched his $500,000 401k drop to $15,000 and his pension go from $90,000 a yr to $30,000.

Needless to say he won't see early retirement. Heck he probably won't ever see plain ol' retirement!

And a side note. A few weeks ago I started getting a little nervous in ref. to my energy holdings. I took some $$ off the table and reinvested it internationally. I'd love to say I'm a genius but truth is I got lucky. Again. Diversify.
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Re: How are we doing?
Old 10-22-2005, 11:37 AM   #33
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Re: How are we doing?

Quote:
Originally Posted by earlybird

I will start reading.* And do it now.* We have no idea how to move the money into tax shelters, how to avoid paying huge amounts of tax, should we purchase a second home - will that help with the tax problem? Just so many questions ... but we can ask for help here.
I have had very good advice on tax related subjects like these from my accountant.* To me this type of advice is totally different from a financial planner, and well worth paying for.* *While I really enjoy learning about investing and financial planning myself, the tax code is not something I want to study in my free time!
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Re: How are we doing?
Old 10-22-2005, 12:44 PM   #34
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Re: How are we doing?

Your getting a lot of good advice. Take a look at this link. It will give you some good sound advice as well.*
www.coffeehouseinvestor.com

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Re: How are we doing?
Old 10-22-2005, 04:57 PM   #35
 
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Re: How are we doing?

And this: www.fundadvice.com.
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Re: How are we doing?
Old 10-23-2005, 08:10 AM   #36
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Re: How are we doing?

EarlyBird:

Where do you live to get a house on the water for $240k?

SWR
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Re: How are we doing?
Old 10-23-2005, 02:01 PM   #37
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Re: How are we doing?

Earlybird...my first post on this board. It seems to me you've gotten excellent advice regarding the portfolio issues. It might have been mentioned & I missed it, but The Coffeehouse Investor is a good, quick read about simple & diversified portfolios.

Count me in the camp that votes for hubby sticking it our for 4 more years. I don't know if all health your care benefits will be paid, but being self employed I have to purchase my own health insurance. My daugher is on a separate policy, but the policy for me, my wife & 21 year old son (in college) is just under $1k per month. Son's piece of that isn't much (wife & I are in our mid 50's). That's a $3400 family deductible, no dental or eyecare, no physicals. Just the basics. And it usually increases by 20-30% per year depending on who-knows-what if I don't meet by deductible. If we meet the deductible & the insurance company actually has to pay out, then it really gets ridiculous.

Enough of that. If it were me and working 4 more years will give me that for free or close to it, I wouldn't think twice about that decision.

Salecat
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Re: How are we doing?
Old 10-23-2005, 06:16 PM   #38
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Re: How are we doing?

Thanks everyone... lots to digest here, keep giving advice! I'm reading, sharing with hubby, we're thinking, talking... so post away, please! I like JohnP's advice the best at the moment, but that's just for the moment. We have 401k with merrill lynch that we can put our money into a bunch of other mutuals and we'll do that right away and decide later where to put the other half of the money that's in stock options.


ShokWave. Without giving away our location..... We are actually 4 houses off the water. We have a 30 ft. boat slip (comes with the house), dockage for about 85 boats, ramp, beach, pavilion, a community of about 75 houses out in the middle of nowhere on a major waterway. It's quite nice and gorgeous views. Many people had summer homes here and now live here full time. We have quite a large home too. 4 bdrms, 3 full bths, dine, fam, screened porch, lg. deck, and I probably underestimated the value of the house too. It's hard to believe the value property has just rocketed. So, I guess we have good value for the money here. Our dairy farms, cornfields and woodlands are slowly disappearing and being developed into $800 to 1 mil $ homes.
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Re: How are we doing?
Old 10-24-2005, 08:27 AM   #39
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Re: How are we doing?

Quote:
Originally Posted by earlybird

ShokWave. Without giving away our location..... We are actually 4 houses off the water. We have a 30 ft. boat slip (comes with the house), dockage for about 85 boats, ramp, beach, pavilion, a community of about 75 houses out in the middle of nowhere on a major waterway. It's quite nice and gorgeous views. Many people had summer homes here and now live here full time. We have quite a large home too. 4 bdrms, 3 full bths, dine, fam, screened porch, lg. deck, and I probably underestimated the value of the house too. It's hard to believe the value property has just rocketed. So, I guess we have good value for the money here. Our dairy farms, cornfields and woodlands are slowly disappearing and being developed into $800 to 1 mil $ homes.
Could you please give us an idea which part of the country you are in? NorthEast, SouthWest etc. and whether you are talking about Salt or Fresh water.

Oh! and does it SNOW

Thanks

SWR
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Re: How are we doing?
Old 10-24-2005, 09:03 AM   #40
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Re: How are we doing?

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Could you please give us an idea which part of the country you are in? NorthEast, SouthWest etc. and whether you are talking about Salt or Fresh water.

Oh! and does it SNOW

Thanks

SWR
Sounds like she is going to have a new neighbor
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