Awhile ago I contemplated if it was time to sell Netflix (NFLX) since the stock had done so well after I bought it where I believed it had outrun itself with a way to high price to earnings ratio.
I didn’t sell it. At the time I was contemplating it the price of NFLX was $101.01.
Right now it’s going for $132.80 in after hours trading.
So far this seems like the correct move, although there’s going to be a time when I’ll indeed sell this stock.
There is arguably no more successful investor than Warren Buffett. His Berkshire Hathaway stock has soared and its A shares are in the six figure range.
Its B shares, however, are a lot less following its split early this year.
While the broad market has been about flat year to date, Berkshire Hathaway is up 20% despite a less than thrilling earnings report recently.
While I’m sure Buffett, who turns eighty at the end of this month, isn’t going to be running the fund for decades to come, this is a pretty attractive stock for me. I’m still considering it, but I’m leaning toward it.
The S&P 500 is the benchmark index for this blog and myself personally. That’s how I decide whether or not the market is up or down for a certain period of time.
So I decided today to see how it’s done year to date.
Based on Friday’s adjusted close, the S&P 500 is up .455% for the year.
So yes, the market is up year to date–by a very slim margin.
One of the things I’ve noticed in Hawai’i is that florists–of which there are many–almost never seem to go out of business.
That got me wondering if a floral business would be a solid investment.
Trust me, I know very little about this field, so there’s no way I would buy a flower shop. That got me looking for stocks. The first thought that came to mind was FTD, which allows flowers to be delivered long distance very quickly.
In my research I discovered that FTD merged with United Online, a company I had never heard of before, in 2008. I don’t know a lot about this company still, but they have a rather low price to earnings ratio of 9.05 and they pay a hefty 6.20% yield, with a stock price that’s lower than I like at 6.32–within shouting distance of penny stock status.
This is, at this point, a great example of something I don’t know enough about. And so, there’s no way I could justify investing in it without knowing more about it.
June was certainly a downer of a month for investing; our model portfolio was not doing so well that month. July, however, was an absolute reversal from the June debacle.
The Vanguard Total Stock Market Index Fund (VTSMX) was up a stunning 7.41% while paying a decent 2% yield. Its international counterpart, the Vanguard Total International Stock Index Fund (VGTSX) was up an even better 9.64% and pays an even better 2.71% yield, so the stock part of our portfolio soared this month.
In our fixed income section, the Vanguard GNMA Fund (VFIIX) was up 0.73% for the month while paying a 3.19% yield; the Vanguard Total Bond Index Fund (VBMFX) was up 0.65% while paying a 3.62% yield.
It was a great investing month following two months of losses–especially June’s dramatic losses. Let’s hope things continue moving up in August.
I’ve blogged about my belief in Coinstar for a little while now–my feeling is that in particular, their Redbox DVD kiosks were winners, and so far this year the market has agreed–it’s up 68.19% year to date.
So I’ve decided to go in, slowly. I will alternate this as my monthly investment with Google (GOOG), which I’ve been putting money into the last year or so–and unfortunately, at least this year, Google’s stock price has not done well.
We’ll see how all of this goes.
It’s been my largest holding for awhile–so large I stopped investing in it because I didn’t want to be overly concentrated in one stock. I love the products (for the most part) and the company has been wildly successful, especially in the last few years.
And after this quarter’s results, I can honestly say that Apple, Inc. (AAPL) is the best investment I’ve ever made.
It ought to be a given that a company that’s profitable and is best in the world at what they do is a great investment for someone who believes in their products.
And for me, it’s turned out that way.
Despite that, I’m not tempted to break my own rule about limiting myself to 5% of my total asset allocation being in a single stock. I’ll keep the Apple stock right around there.
One of the numbers I look at when I think about buying a stock is the price to earnings (or P/E) ratio. It’s a simple formula: the stock price (or market value per share) divided by the earnings per share.
For instance, if we take Coinstar (CSTR), today’s closing stock price is $53.88; its earnings per share is 1.87. Taking 53.88 and dividing by 1.87 gives us a P/E of 28.81. Comparing this to, say, Netflix (NFLX), which closed today at 123.50 with an earnings per share of 2.21 providing a P/E of 55.9, we see that the P/E of CSTR is considerably lower than that of NFLX.
The P/E is sometimes called the multiplier, as it tells you that an investor is willing to pay an amount multiplied by the earnings per share for the stock. For instance, for every dollar of earnings, an investor is willing to pay $28.81 for Coinstar. The P/E is therefore a kind of indicator of value. Given how much stock prices vary, P/E can help to level the field and give investors an even playing field on which to compare stocks.
Check the P/E on some of your favorite stocks and see what you think.
While the market is currently fully in correction mode (down 16% from its recent highs), I’m really not all that concerned.
Honestly, I’m never all -that- concerned, but right now I’m not since the recent profit reports from companies have been so positive.
While it doesn’t always happen (nothing -always- happens), typically, stock price gains follow corporate earnings. When earnings are doing well, so does the market. When earnings do poorly, so does the market.
Earnings have been doing well.
I’m hoping the market does too.
Yes, I have historically loved dividends, and in fact, it’s always been a consideration when evaluating a potential stock buy. One of the great things about dividends recently has been the preferred tax treatment that the federal government has given what it considers “qualified ordinary dividends”: a maximum federal tax rate of 15%.
In 2011, unless legislation changes things, that’s all over.
Starting then, qualified ordinary dividends will be taxed as ordinary income.
This doesn’t mean I’m going to stop loving dividends, but I’ll want to buy those dividend paying stocks in sheltered accounts, rather than ordinary brokerage accounts, for some time to come.
