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Discussion in 'Investing' started by MrMike, Feb 9, 2021.
Hoping things are still working in your favor.
Thanks @Rustic1. It is ... I've found that my strategy and the stocks I've picked make Investing.... boring haha I mean it's good but mostly it's the same month and after. And most of my dividends come in at the beginning of each month so when that happens and I reinvest.... there's nothing to do for 30 more days haha But ya, each month I get $780+$4.50 each month (generally, that's the amount the reinvested money raises it by). and I pay $270 each month in interest.
I do make a video to document what happens but unless something does change.... which rarely does (dividend cut/raise, new strategy, crash etc..) I can't make video's too often. If there's no news, I may wait 3 months just to give an update.
I told my friend, investing is kind of boring haha you invest but the majority of the time, you do nothing. I need to find another hobby.
Thats great news. Be bored while your plan works. Find a hobby to keep amused.
Always like to hear the winning stories.
Our REITs maintained their dividends through the global financial crisis of 2008. One of our REITs was paying 103% of net profit and maintained that level for over a year before increased profit reduced the payout ratio.
I owned an oil company for a couple of years that stopped the dividend during relatively good times. They decided to divert the profit into an expansion. By the time I read about it in the financials, the stock had already crashed.
Dividends aren't magic. Any company with volatile income will have a volatile dividend.
What are your thoughts on borrowing money to invest?
MR. Mike seems to be doing great, obviously he chose better options.
Some perform better in the markets than others.
I held CIM,DSU,GAIN, IEP and a bunch of others since the day of the flash crash in 2010. Dividends compound to the max if you don't stress the dips and ride the storm.
If you remember SHOOTING STAR from the HSM days there was a thread called, build your own paycheck. We made some serious bank.
Why do you say that? Sounds like there's a story here.
I've said this before but I think it's really important - It's not fair to ask "Is it a good idea to borrow to invest?". I think it really depends on what you are investing in, and possibly how much. And even then, some other factors should be considered.
Edit: I just did the calculations and if i don't write this down, I'll forget Because I borrowed money and invest last August 2020 and again in October 2020, to date I've made:
~$4,000 in dividends
~$21K in capital gains - that amount is contributed to the timing, re: Covid drop
It's free world - you can do what you want. The "NO" is just my advice.
In the mid "20 of the last century many people borrowed a lot of money for stock - and today it's the same with bitcoin, Tesla, GME and some other stuff. Some people even sell their home to get bitcoin.
As long as you win - you're always right.
To play devil's advocate, it sounds like you're basing your advice on only the terrible scenarios that have happen. Have you never had a good experience borrowing money? For a mortgage? A car? Any investments?
Rather than saying a hard "Do NOT.", you could say something like "It could be a good idea but stay away from getting too much in debt, especially for stocks like bitcoin, Tesla, GME, etc... "?
Sounds like he is upside down in AAPL,PLTR and several more.
all my stock are in the green zone.
@andyvds I'm interested in your thoughts on the above. Thanks
When someone borrows money and gets rich quick, they are considered a genius.
When someone borrows money and loses some or most of it quickly, they are considered a moron.
There are some extremely wealthy people who took huge chances to get where they are. Good for them. I'm happy for them but I do not respect their wisdom. When they talk about the market, I consider their wisdom to be akin to a lotto winner telling me what numbers to pick.
Someone like Jack Boggle, Warren Buffett, Peter Lynch, who have systematically made money over a large number of years are the people I have studied the closest.
You reasoning only accounts for half of the possible outcomes. How about: When someone borrows money and gets rich slowly? what would you think of that?
As you mentioned:
Now I don't know for sure but aren't they using other people's money too? It's not all theirs or all their company's money? I could be 100% wrong though I imagine they use, at least in some part, "borrowed" money to invest.
From your post, it sounds like you're against getting rich quick - not against borrowing money.
Borrowing money isn't just "get rich quick", you can leverage money to put you further down the path than you otherwise would have been. My buddy has been investing for 8 years now. I have only been 4 but because I borrowed, I'm at the same spot of he is (aside from the fact I owe the bank $100K of my equity). This doesn't mean I'm getting rich quick. I'm on the same long-term path they are but I got their quicker.... in terms of dividends per month we're receiving, not equity because like I said, I really have $100K less than what my account shows.
This is no different than trading on margin.
If you do it and its working, then its working.
Everybody knows the risk, everybody has their own risk tolerance, so good luck and make big bucks!
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I understand you mean to say it's similar to trading on margin, but there are difference. Here are 2 reasons why HELOCs are better than using margin at a brokerage:
High interest rate - Questrade, the brokerage I use, charges 6% interest where my HELOC charges 3%. If I've done my math correctly, that's double. This also means that you need riskier, high yielding stocks to make a profit.
Margin calls - When you borrow on margin, you need to keep a 70% of assets; meaning if your portfolio falls 30% or more, your brokerage has the right to sell you stocks until that 70% margin ratio is met. You do not get a say in which stocks they sell.
Which stocks do they sell first?
I just talked with questrade. I asked how do they determine which stocks to sell, I was thinking maybe the ones with the highest capital gains or the more expensive stocks. They replied "They just sell random stocks if you are in a margin call to get out of it. However we try to sell the most volatile ones so another margin call does not automatically happen again"
All possible outcomes were covered, from my perspective.
You will have to read my first post, if you wish my thoughts. I'm not typing it again.
There is a large contingent of people who ignore all input, except that which supports their ideas. Are you in this group?
I have stated many times, objectivity is important to success in business (which long term investing is).