DJIA

[Jeff Matthews]

I've been keeping an extra tab open to watch updates on the DJIA. Will it go below 11,000? GM Stock at 50 year low. Grandma sez, "Sure glad we bought all that GM stock 50 years ago. Didn't make a dime on it." Kind of scary.

[jacksonbart]

This aint the 90s anymore. its more like the late 70s. I think I am going to throw a key party and bank on my international investments.

[Coytee]

Been a fun year huh?

[oldbuckster]

It's not over yet, still got the Fall !!!!!!! ................. [bs] ................

[IndyKlipschFan]

Been a fun year huh?

Aint over yet..LOL

It's at times like this, you prove your self worth too. (In this investment business, and as a investor.) Just because your house dropped in 15- 20% value, do you go OMG sell this place (BTW where you gonna live anyhow? The next place is also down 20% too.) That is IF you can sell it too? It is an awesome time to BUY a house.. Record low interest rates and the market is down?

But what do we do??? We talk bad about our builders and/ or the "crooked" loan officer or worse.... ask the government to get involved LOL Can we go after those people who in the 50's and 60's who made "unfair profits on their houses too." Stop with the blame game!!!! I just watched the movie "Maxed Out" These crazy jerks with so much credit on their credit cards is just insane!!!!! Take some self responsibility people!!! (I know hard to morally teach that today!!) We live in the "I want it now" generation... Live within your means...geeeeeze!!!!

I know not all of you in here, but some people really need to take a (CHILL PILL) and and get longer term approach and step back relax.. Please look at the fundamentals of the company itself, not hype. Is it profitable, and have a good outlook into the future? GM several years ago was a fantastic stock... But the industry has changed a LOT since then.

Keep the good, throw out the bad... somewhere in here is a GREAT time to buy long term. I know I am now starting to do so now and into this quarter - rest of the year.

[Jeff Matthews]

Been a fun year huh?

Aint over yet..LOL

It's at times like this, you prove your self worth too. (In this investment business, and as a investor.) Just because your house dropped in 15- 20% value, do you go OMG sell this place (BTW where you gonna live anyhow? The next place is also down 20% too.) That is IF you can sell it too? It is an awesome time to BUY a house.. Record low interest rates and the market is down?

But what do we do??? We talk bad about our builders and/ or the "crooked" loan officer or worse.... ask the government to get involved LOL Can we go after those people who in the 50's and 60's who made "unfair profits on their houses too." Stop with the blame game!!!! I just watched the movie "Maxed Out" These crazy jerks with so much credit on their credit cards is just insane!!!!! Take some self responsibility people!!! (I know hard to morally teach that today!!) We live in the "I want it now" generation... Live within your means...geeeeeze!!!!

I know not all of you in here, but some people really need to take a (CHILL PILL) and and get longer term approach and step back relax.. Please look at the fundamentals of the company itself, not hype. Is it profitable, and have a good outlook into the future? GM several years ago was a fantastic stock... But the industry has changed a LOT since then.

Keep the good, throw out the bad... somewhere in here is a GREAT time to buy long term. I know I am now starting to do so now and into this quarter - rest of the year.

Interesting response. I didn't start the thread to declare doomsday. Just very interesting times, for sure. It makes me wonder where we are headed over the next two years or so.

You can't, however, just declare "It's allright." Take GM stock, for example. 54 years ago, someone like you said the same thing you are saying today. Yet, 54 years later, their GM investment has not grown. There's a lot of luck in the stock game - both good luck and bad luck. The old "You gotta be in it for the long term" approach is appearing to show itself as a flawed theory.

[oldtimer]

Bravo Jeff! Those are the kind of statements that define a bottom. Now if we can only hear more just like that. Long term does not mean one stock, you must stay diversified.

[jacksonbart]

I have only sold stocks when I needed the money or the fundamental story has changed to the point that liquidation makes sense given my invest time frame or some major doom and have only brought stocks when they looked like a good value. Clearly there are plenty of stocks off their highs, but many are still not a good value. If you can monitor up to date market changes you can perhaps play more of the market efficiently. I have a full time "J.O.B" so that makes it difficult.

[Jeff Matthews]

Long term does not mean one stock, you must stay diversified.

That, and you need to cross your fingers for good luck. Even diversification does not eliminate the risk. True diversification is probably more theory than anything else. In practice, it's hard to accomplish. You can't just buy a bundled mix of varying stocks of companies in various sectors and hold forever. You need to know how to manage the mix. However, managing the mix is a task that requires more luck than anything. Nobody has time to really study and understand a particular business, with particular accounting practices in a particular industry, facing its own particular issues. Those who do have the time are still very often just guessing and are as likely to make poor choices as they are good ones. It's almost a fool's game.

[IndyKlipschFan]

Interesting response. I didn't start the thread to declare
doomsday. Just very interesting times, for sure. It makes
me wonder where we are headed over the next two years or so.

Neither did I. Coytee and myself are in this business. Thought I might comment to those in fear, or maybe worried a little too and use something they can relate to.... such as their house is all.

I do tend to be longer term in my outlook too. So 3, 5, 10 years out or more IS my horizon.

Must be a "it's alright" moment for some.. I guarantee Warren Buffett is buying some opportunities in here.. It is a business cycle and economic cycle were going through is all, if you step back. The key is to look where it is going.

I love the someone like you said GM 54 years ago story..... look at it today, too, Roger. Yes, todays price is about the same? But can we also add the splits and spin off company shares value too. It would take some major research to really look at say 100 shares in 1950 what is worth today if you just held it and all of the spin offs and its value too?? Just a peek into that..

=========================================================

Common Stock Splits/Spin-offs/Stock Dividends Since 1950

GM	Link	Type	Amount
October 1950	–	stock split	2 shares for 1
September 1955	–	stock split	3 shares for 1
December 1984	Tax Basis Info (HTML)	stock dividend	1 share of GM Class E for each 20 of GM $1-2/3
December 1985	Tax Basis Info (HTML)	stock dividend	1 share of GM Class H for each 20 of GM $1-2/3
March 1989	–	stock split	2 shares for 1
December 1997	Tax Basis Info (HTML)	Hughes Transactions1	0.06377 shares of Raytheon Class A (RTN/A) for each GM $1-2/3
May 1999	Tax Basis Info (HTML)	Delphi spin-off	0.69893 shares of Delphi common stock (DPH) for each GM $1-2/3
May 2000	Tax Basis Info (PDF)	Hughes Exchange	1.065 shares of GM Class H for each GM $1-2/3
GM Class E	Link	Type	Amount
June 1985	–	stock split	2 shares for 1
March 1990	–	stock split	2 shares for 1
March 1992	–	stock split	2 shares for 1
June 1996	–	EDS split-off2	1 share of EDS common stock (EDS) for 1 GM Class E
GM Class H	Link	Type	Amount
March 1988	–	stock split	2 shares for 1
December 1997	Tax Basis Info (HTML)	Hughes Transactions1	0.5624 shares of Raytheon Class A (RTN/A) for each GM Class H
June 2000	–	stock split	3 shares for 1
December 2003	Tax Basis Info (PDF)	Hughes Transactions3	As a result of the Hughes Transactions, GM's former Class H stockholders received 0.8232 shares of Hughes common stock (HS) and 0.0921 News Corporation Preferred ADSs for each share of GM Class H

¹Includes the spin-off and merger of Hughes
Electronics' defense electronics unit with Raytheon Company, the transfer
of Delco Electronics to GM's Delphi Automotive, and the recapitalization
of GM Class H common stock into a new class of GM common stock.

²GM Class E Common Stock was exchanged for
EDS common stock in conjunction with the split-off of EDS completed on June
7, 1996.

³"Hughes Transactions"
On December 22, 2003, GM simultaneously (i) sold 19.8 percent of the Hughes
common stock to the News Corporation Ltd ("News Corp") and
(ii) exchanged all of the remaining 80.2 percent of the Hughes common
stock it held for all of the outstanding shares of GM Class H common
stock. Immediately thereafter, the former holders of the GM Class H common
stock exchanged 14.2 percent of the outstanding Hughes common stock for
News Corp Preferred American Depositary Shares ("Preferred ADSs").

=======================================

Something tells me it is worth more? I might be wrong, this is my 10 min search on Google and the corp GM site..

So say I bought 100 shares of Walmart in 1975, and despite the "friendly" accountant and every other investment "PRO" and armature told me to sell it and diversify it..... And yes, held it throughout long term, and yes in up and down markets that a "Flawed Long Term approach" too, you seem to call a failed theory, didn't work? WHAT YOU OWN is what makes a great 15- 20 stock portfolio. I might even argue Bill Gates never really became a millionaire in MSFT and diversified.... He held on to a great company, MSFT that grew tremendously long term in good and bad markets and became a BILLIONAIRE.. Warren Buffet bought smaller companies, now that he is bigger in his fund he needs bigger ones.. But did it, as a investor too. And again against your long term theory that you think is flawed. I could name other names like Peter Lynch etc etc different opportunities... I guess were all flawed. All those people that bought a day late on Google, too, at 89 dollars a share.. They were all wrong too....LOL.

If you personally look at the investment field as a "STOCK GAME" your not doing your own homework. Yes, there is luck...to a point. But you can also surround yourself with a ALL PRO ALL STAR team of investments that might beat the pants off of the other guys longer term. (Think the best Pro Bowl Athletes verses a regular NFL team over the course of a season... I bet the pro bowlers would win more during the season out.. LONGER TERM, I will stick with them. Each year at the end of the season you might add a few players, and drop a few that have not done well. NOT DAILY And if they are performing well, (Like your companies in revenues and earnings...) leave them in!!

Sorry, if I take this personally, you seem to think people that do this for a living are in a "stock game" of some sorts. And we need a lot of luck..Were not always right 100% of the time...And as in GM, the field they are in has changed with much competition and gas prices, and face it the cars and trucks are just too expensive and not moving. (OK I will say some luck would be nice, but this longer term approach is a flawed theory?) My friends who all wanted to become day traders in the late 1990's and early 2000's are all out of the "stock game." And most all of them lost their "trading money " and then some, and seem to have a better understanding of what I try and other professionals like Coytee try to accomplish on a daily yet you feel longer term flawed approach... It is OK, I will stick with it.. My father developed this approach in the 1960's, (it has been tweeked some over the years) but the fundamentals have remained in tact. I will stick with it for a good portion of my investments, it is what I do.

I will stick to the long term approach in rapidly growing, profitable companies, with good management, and a valid products... LONG TERM..anyday!

[IndyKlipschFan]

And Jacksonbart.. Great reply from you too..

[Jeff Matthews]

Indie, your post precisely indicates the problem I experienced in the stock game. Back when I entered, the market was much like real estate was three years ago. Any fool got an "order taker/b.s.-er" license. These guys would do very little except take your money and grab a quick commission. They didn't study; they didn't care. They had mortgages and car payments to make. It was not a profession at all.

Obviously, by your post and the type of information you listed, you are more the "do your homework" type. Us regular folk can't do that, and the odds of us regular folk finding a person of your type is not high. It's kind of like you have a few very good doctors who really want to dig in and find out, and then, you have a great many that will just shove you through the line and give a prescription for antibiotics since they tend to treat so many things.

Anyway, it was a good post.

[Jeff Matthews]

Indie, I do have one question for you, though. Whenever I read the graphs showing price trends over periods of time, I always assumed they were price-adjusted for splits, etc. Is this not the case? Are you suggesting this price chart is just the raw price only, unadjusted over time?

Example fro GM (all data):

[oldtimer]

It depends on the chart. A good chart will tell you exactly how it was put together. Indie, a 20 stock portfolio is enough for diversification as long as you are not overly concentrated in one or two sectors. Maybe my reply was a bit terse before, but I really feel no need to debate modern portfolio theory with anyone today, and you already know it anyway.

[oldtimer]

Everyone has their own assumptions for sure. There is gambling, and there is investing, gambling is never investing, investing is only gambling if you treat it that way.

[IndyKlipschFan]

Thanks Jeff...

Every hot industry for a time goes through that. When I first graduated from college I went into sales. What I sold were fax machines and copiers for Cannon. At the time, hate to say it, but it was true Xerox owned the business for sure.. They (The salespeople) never did any cold calling because they spent all their time with in house calls (leads) and replacing older machines... (I had friends that worked for them, I know the stories..) But their products were so so...And XEROX had so many on the market that service was a nightmare. Enter their Ken and Barbie type sales people, fresh out of college, where you would think would get great sales experience??? They didn't. (Well "real world" experience IMO.)

After all, XEROX owned the copier business, almost as easy as "Here is my card, I am "Suzie" "Everything is on back order.. So you better place a order now..Call me if you need me!!!!! See ya, I am busy." That kinda thing. It just appalled me. I hardly EVER lost to Xerox unless is was a HUGE machine at that point. Later Ricoh , Minolta, Savin, and others just took the business away from the arrogant big guys and the order taking days are long since gone.

(Sorry if I offended anyone working for Xerox in here... but come on... until the middle to late 80's you ruled this business and NEVER taught your guys how to cold call, (100 real cold calls....per week) how to get appointments, set up and do demos, negotiate a deal, and most important... CLOSE the deal too!!!!. You were order takers.) Xerox was sooo huge it took years to self implode. They were too busy writing books on customer relationships and the "superiorness" of the "Xerox System" than changing with the times. (Kinda reminds me of GM... The market changed for your services. If you do not change with it... you will fail. The unions did not want to make smaller, more efficient cars, because that would be less time to make and = less money to them? Change? The fat cat owners on the board and management didn't have the balls to force it too.. Everyone lost, and now what was a proud great company and institution may be gone forever.. It certainly is in world dominance. Don't get me started.. (Sorry to be political... But you have to move with the times..)

I later went into Medical sales... LOVED the job, but I hated being gone Sunday night till Friday afternoon on the road. I knew being husband and later a dad that was away that much, the job was not for me. I take my hat off to guys that are able to do that. I am gone usually 3-4 days at most per month now. You still need to go out and talk to companies in person, a research report only sais so much. LOL I have been doing this (Investing) business since 1989. My father was brilliant at taking complex things and breaking them down to be understandable ideas. He went into the investment business in the early 1960's. Most everything I know and strategies really comes from his beliefs.

It is funny you call it homework, I still call it homework or research myself too. My peers probably hate that. People in any industry try to elevate themselves in a culture language where it gets so out of hand sometimes too. hahahahahaha Some are "intellectually constipated" for sure!!

BTW, Your doctors description is 100% correct. Good ones, are always worth your money and time.

[IndyKlipschFan]

Jeff asked.... Indy, I do have one question for you, though. Whenever I read the
graphs showing price trends over periods of time, I always assumed they
were price-adjusted for splits, etc. Is this not the case? Are you
suggesting this price chart is just the raw price only, unadjusted over
time?

You would hope so.. but say you got shares in a spin off company, that is no longer GM.. Some of those spin offs are highly profitable later too. This is especially true in the medical - pharmaceutical industries.

Another issue might be "Stock Dividends" where you reinvest those automatically. I have clients where they have done this all along and the companies over time have split so many times...Those dividends now represent a LOT more than the origional investment. And that has a MAJOR impact on the real return as well.

As for your chart on GM. There was sooo much hype around the year 2000 that GM and others had these really cool cars n trucks coming and the economy was good, and gas was cheap...GM, FORD, they both missed a fantastic opportunity IMO.

Good charts will adjust to price splits yes.. Just need to know all of the spin offs I guess?

[IndyKlipschFan]

mdeneen said.. "I once passed an enormous billboard on Hwy 80 leading into Reno, and it
summed up everything as neat and tidy as I had ever seen. In ginormous
bold letters it proudly bragged, "OUR SLOTS PAYBACK 97%!" The road was
jammed with cars on their way in to town."

If enough people, say, gave you 100,000,000 a day.....And you gave them back 97%.... as though you were proud to do so...those pennies add up? Can we all get in this game? Good point Mark.

The Kennedy family was famous for manipulating things.. (Or is that seeing and taking advantage of good deals before the public could?)

What is the true source of the Kennedy family's wealth?

01-Jun-1990

---

Dear Cecil:



What is the true source of the wealth of the Kennedy family of Hyannis, Massachusetts? I
have heard several stories about Joe Senior having made a killing in Prohibition rum,
sleazy stock market practices, or the Boston construction industry. I heard the other day
that he made the seed money for all this by selling opium to China, and that takes the
cake. Also, what is the Kennedy money doing today? Besides the Democratic party, is there
a family business? Do they have a foundation or something? Why don't I see the Kennedy
Trust as a sponsor of quality public television? --Peter Greenberg, Jackson Heights, New
York



Dear Peter:



Cecil doesn't ordinarily go in for this People magazine stuff, but Lord knows I
like dishing the dirt as much as the next guy, and Joe Kennedy is a target the size of all
outdoors.



J.P. was what we call an operator. He made his money by (1) pulling various hustles before
it had occurred to anyone to make them illegal, and (2) possibly pulling other hustles
that were definitely illegal but generally winked at. His stock-market shenanigans were an
example of the former, his Prohibition liquor business (never proven, by the way) an
example of the latter. That said, let's not get ridiculous. He didn't sell opium to the
Chinese; the British did. Nineteenth century. Very famous. Trust me.



Joseph P. Kennedy was the ambitious son of a prosperous Boston saloon keeper and ward
boss. He married the mayor's daughter, went to Harvard, and generally made the most of his
ample connections and talent. He ran a bank (admittedly two-bit) at 25, and was number-two
man at a shipyard with more than 2,000 workers during World War I. At 30 he became a
stockbroker and made a fortune through insider trading and stock manipulation. He was a
master of the stock pool, a then-legal stunt in which a few traders conspired to inflate a
stock's price, selling out just before the bubble burst.



Kennedy may also have traded in illegal booze, although the evidence is circumstantial.
His father had been in the liquor business before Prohibition, and Joe himself got into it
(publicly, that is) immediately after repeal. Some believe the family business simply went
underground during the dry years. He may have been strictly a nickle-and-dimer; Harvard
classmates say he supplied the illicit booze for alumni events.



But there might have been more to it than that. In 1973 mob boss Frank Costello said he
and Kennedy had been bootlegging partners. Other underworld figures have also claimed Joe
was in pretty deep. At least one writer (Davis, 1984) thinks bootlegging enabled Joe to
earn his initial financial stake, but that's hard to believe; he had plenty of chances to
make money more or less legally.



Whatever the truth of the matter, Kennedy's real strength wasn't his alleged criminal ties
but his business smarts, notably an exquisite sense of timing. In the mid-1920s he became
a movie mogul (taking time out for a celebrated dalliance with Gloria Swanson), then
organized a merger and sold out just when the industry was consolidating, clearing five to
six million dollars all told. He pulled out of stocks early in 1929 and sold short
following the crash, actually making money while others got creamed. Just before
Prohibition was repealed he lined up several lucrative liquor-importing deals.



By the 1930s Kennedy was rich, but he didn't make serious money by modern standards until
he got into real estate in a big way during World War II, raking in an estimated $100
million. In 1945 he made the deal that remains the centerpiece of the Kennedy fortune: for
a measly $12.5 million he bought the Merchandise Mart in Chicago, a huge wholesale
emporium that had cost $30 million to build. Within a few years the annual gross in rent
exceeded the purchase price. In 1957 Fortune declared Kennedy one of the richest men in
America, with assets of 200 to 400 million bucks.



The Kennedy family's wide-ranging business affairs are now run by hirelings at Joseph P.
Kennedy Enterprises in New York. Joe did establish a number of charitable ventures,
several of which help retarded children (his daughter Rosemary was retarded). But he put
most of his money in trust for his family. Being the odd combination of stud and
monomaniacal family man that he was, he figured his real legacy to the country was the
fruit of his loins.

[pauln]

Here is an IT perspective of the DJIA...

The green line represents the slow steady growth of business productivity from office machines and the developement of mainframe computers.

The red line shows the impact of the introduction of the personal computer in 1982.

The purple line shows the impact of the internet and commercial web browsers.

Seems that the internet bubble was unsustainable and unrealistic. I think the DJIA is headed for a more natural level of 8000.

Please return your trays and seats to their upright position...

[Colin]

The first bull market of the new millennium is over. We are still in a stock market downturn.

On the monthly DJIA charts, there is no real solid line of support, except at 10,500 and congestion at 10,000. The bottom is not in yet, meaning that there is more downside than upside potential right now.

On the other hand however, there are a dozen large companies paying very good yields, yes, the list includes GM

Highest-Yielding S&P 500 Stocks

Symbol Company Name Previous Day's Closing Price Prev Day's Mkt Capitalization Industry Name S&P Index Membership Current Dividend Yield MBI MBIA Ord Shs 4.28 1.17 Bil Titleinsur S&P 500 31.78 SSP E W Scripps Co 3.01 491.2 Mil PublshNews S&P 500 18.61 ACAS American Capital Strategies Ltd 23.59 4.786 Bil ClFundDebt S&P 500 17.47 CFC Countrywide Financial Corp 4.25 2.479 Bil CreditServ S&P 500 14.12 KEY Keycorp Ord Shs 11.37 5.516 Bil MonCentBnk S&P 500 13.19 RF Regions Financial Corp 11.59 8.053 Bil StheastBnk S&P 500 13.12 BAC Bank of America Ord Shs 23.81 106 Bil MonCentBnk S&P 500 10.75 FHN First Horizon National Corp 7.90 1.002 Bil StheastBnk S&P 500 10.13 CMA Comerica Inc 27.02 4.066 Bil MidwestBnk S&P 500 9.77 WB Wachovia Corp Ord Shs 16.13 34.48 Bil MonCentBnk S&P 500 9.30 HBAN Huntington Ord Shs 6.03 2.208 Bil MidwestBnk S&P 500 8.79 CZN Citizens Comms Ord Shs 11.63 3.771 Bil TelecomDom S&P 500 8.60 STI SunTrust Banks Ord Shs 36.05 12.66 Bil MonCentBnk S&P 500 8.54 GM GM Ord Shs 11.75 6.652 Bil AutoManu S&P 500 8.51

So, as an income investor, do you want to buy bonds when interest rates are low (relative to inflation), or when the market stops falling, buy huge U.S. corporations with high yields and upside potential?

Jeff, research a mathematical concept called Stewart’s box, you will see that a ½ dozen stocks/positions can indeed give you diversification

Read Vanguard founder John C Bogle. He advocates buying 25 of the largest companies and holding them…forever.

Stock charts show price per share. They do not chart market capitalization. Too bad. If you saw a company that consistently growing more valuable, you might be a lot more interested in it. In fact, studies show that a stock that splits has a 60% chance of recovering its previous price rather quickly (which is why they do stock splits)!