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Recommended Roth Stock?
Old 09-08-2010, 03:33 PM   #1
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Recommended Roth Stock?

I like dividend stocks, especially right now. we are too young to have so much of our nestegg in mutual funds (about 36%) so I am going to max my wife's roth out with blue chips this year I believe (mine is already maxed).


I am thinking LLY or BMY. I don't own any other pharma's. These ones cashflow well, have very low P/E's (like 5 for LLY i think) and good div rates, (about 5% for LLY). however the stock will not likely grow much.

Before I do this, does anyone have any recommendations or thoughts for me to ponder?
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Old 09-08-2010, 04:18 PM   #2
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Ummm, what exactly is wrong with funds? You can even get dividend stock exposure that way, if that is your bag.
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Old 09-08-2010, 04:22 PM   #3
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there are so many things that I find wrong with funds I won't even get into 1/2 of them. I will say that the fact that some funds almost brag about their internal corporate holdings turnover is disgraceful IMO, and I find that "playing the market" day trading to be unethical personally. That is exactly what funds do. Additionally, they are praised for protecting people from losses, but they are poor performers.

Lastly, like Buffett said... if you like a company, why not invest heavily into that company? Why must you spread it over 40?
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Old 09-08-2010, 04:30 PM   #4
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Lastly, like Buffett said... if you like a company, why not invest heavily into that company? Why must you spread it over 40?
You mean buy only one or two stocks - like those folks who invested everything in Worldcom or Enron?

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I'm 27...
Yes, and you'll be surprised at the investment education you'll get between now and the time you're 50.
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Old 09-08-2010, 04:32 PM   #5
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Ah, well, OK. Its your money, go nuts.

I have been buying LOW, CHK and F of late, FWIW.
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Old 09-08-2010, 04:42 PM   #6
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I find it interesting that I get more criticism than help but thanks for the feedback.
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Old 09-08-2010, 04:43 PM   #7
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The LOW is an interesting idea, thanks for sharing that. I have been trying to find companies that are doing well right now that are tied to construction and real estate.
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Old 09-08-2010, 04:48 PM   #8
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You mean buy only one or two stocks - like those folks who invested everything in Worldcom or Enron?



Yes, and you'll be surprised at the investment education you'll get between now and the time you're 50.

yes that is exactly what I mean, invest everything I have into one pipedream at a chance of getting rich quick.

Enron would not have been a company I would have invested in. it had a p/e of 51 just before it's crash. among other reasons. One historical site i found showed a p/e on worldcom of over 100.

so if you pick stock based upon what's popular, that's your choice. I look for companies with solid balance sheets, low p/e's, and an interest in increasing shareholder value via dividends and reliable growth, not a huge upward spike.

I otherwise find your post a little insulting, but after replying I realize maybe you're just shortsighted.
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Old 09-08-2010, 04:55 PM   #9
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This will be fun to watch.

I like SYY, too, but I want to buy below 25.
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Old 09-08-2010, 05:04 PM   #10
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As to your question about why you are better off owning 40 stocks instead of 2. Well, if 2 of them take a dump it wont hurt so much.

Oh Yeah, at 27 you need to get beat up a little. Old too fast and smart too late.
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Old 09-08-2010, 05:06 PM   #11
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This will be fun to watch.

I like SYY, too, but I want to buy below 25.
I can see where we are going here.
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Old 09-08-2010, 05:06 PM   #12
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people over diversify and just find a different way to kill their ROI. Between transaction and other fees, I just think there is a happy medium. I obviously am not a proponent of putting all your eggs in one basket, but I also don't see a reason to hold 40 different companies. at least for the average investor.
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Old 09-08-2010, 05:08 PM   #13
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Over diversify, please explain.
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Old 09-08-2010, 05:10 PM   #14
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I edited my post while you posted that 73ss. I see far too many people spreading their investments too thin and burning their ROI on other expenses.

you spread out your investments too much to protect yourself from losses, and what you end up doing is killing your returns on the flip side.
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Old 09-08-2010, 05:11 PM   #15
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Enron would not have been a company I would have invested in. it had a p/e of 51 just before it's crash. among other reasons. One historical site i found showed a p/e on worldcom of over 100.

so if you pick stock based upon what's popular, that's your choice. I look for companies with solid balance sheets, low p/e's, and an interest in increasing shareholder value via dividends and reliable growth, not a huge upward spike.
That's excellent. You've apparently learned from the mistakes of others and that strategy will serve you well with your investing strategy.

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I otherwise find your post a little insulting, but after replying I realize maybe you're just shortsighted.
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Old 09-08-2010, 05:12 PM   #16
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yes that is exactly what I mean, invest everything I have into one pipedream at a chance of getting rich quick.

Enron would not have been a company I would have invested in. it had a p/e of 51 just before it's crash. among other reasons. One historical site i found showed a p/e on worldcom of over 100.

so if you pick stock based upon what's popular, that's your choice. I look for companies with solid balance sheets, low p/e's, and an interest in increasing shareholder value via dividends and reliable growth, not a huge upward spike.

I otherwise find your post a little insulting, but after replying I realize maybe you're just shortsighted.
Titus - if you show a little respect to those that have been here quite a while you will probably get softer responses, although I'm sure the message will be the same.

You do come across as fairly arrogant for someone that hasn't lived through many economic/securities market cycles. You are asking for advice so don't be upset if the answer you get isn't what you want to hear.

At your age you can probably afford to take some risks. I don't want to spoil a good show for Brewer, but don't you think it would be prudent to put some of your assets in well diversified investments (try an index fund if you don't like 'day trading mutual funds') in the unlikely event that you end up in a stock that doesn't trade at 100x its current price in five years? Even the best run companies in the highest growth industries with the best financial statements around can face uninsurable catastrophes such as war, terrorism, shift in consumer trends, discovery of new technologies etc.
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Old 09-08-2010, 05:13 PM   #17
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I'm glad we've poked a little fun each way


I've learned from my own mistakes as well as others. I started investing when I was 14 or 15 with a joint account. I saw which stocks that performed well for me (usually a blue chip that could pay a div or a history of splitting/growth) and those which did poorly (those without positive earnings, 'get rich' type). I also saw the pains of splitting my investments too thin. What i have found is that solid cashflow low p/e stocks with dividends and nice balance sheets tend to be a great way to focus funds.
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Old 09-08-2010, 05:14 PM   #18
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I edited my post while you posted that 73ss. I see far too many people spreading their investments too thin and burning their ROI on other expenses.

you spread out your investments too much to protect yourself from losses, and what you end up doing is killing your returns on the flip side.
Do you mean too much in and out or expense ratios?

What does diversification have to do with expenses?
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Old 09-08-2010, 05:18 PM   #19
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Do you mean too much in and out or expense ratios?
yes i do. especially with those people investing smaller dollar amounts. i know these scenarios don't fit all, but I've seen a lot of people take small amounts of money, like $50/month and spread it over a couple stocks paying an 'auto fee' of only $5 per month. well that's 10% of their investment. If they are shooting for an annual 10% return, that's fantastic, they break even. until they sell, then they are at a loss.

I realize different dollar amounts change the formula, but it has made me aware of the damage fees and taxes can do to your overall ROI if you're not careful.
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Old 09-08-2010, 05:26 PM   #20
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This has nothing to do with a drip into a Vanguard fund.
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