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  • Illustrating The DRIP [View article]
    To add a couple more reasons to the author's response. 1) DRIP avoids transaction fees. 2) DRIP keeps the funds working all the time, as opposed to having some money sitting idle. Since the long term trend of a market is upward, keeping the money working has the best chance of long term success.
    Feb 24, 2015. 02:39 PM | 1 Like Like |Link to Comment
  • American Midstream Partners LP: Be Cautious, Yield Moths! [View article]
    "Yield moths"--love it!!
    Feb 24, 2015. 07:31 AM | 1 Like Like |Link to Comment
  • Illustrating The DRIP [View article]
    "if I understand you correctly, you subtract back out what your broker has added into the cost basis of your position, namely the purchase price of the reinvested dividends right?"

    That's right. Except I don't have to do any actual subtracting. On my spreadsheet, "cost basis ex DRIP" changes only when I use external funds to buy additional shares. In contrast, DRIP shares change only the position's total share count, not its cost basis. Lot easier to do in practice than to explain!
    Feb 24, 2015. 07:20 AM | 3 Likes Like |Link to Comment
  • Illustrating The DRIP [View article]
    I keep track of the effects of the DRIP a little differently. For private accounting purposes, my aggregate cost basis for a position does not include the cost of any DRIP additions. Put differently, DRIP shares boost the total share count but not the cost basis. The effect of this is that the DRIP shares are treated as a return of capital, reducing the position's cost basis in just the same way that MLP distributions reduce cost basis. Of course the IRS does not allow my approach for corporations, so I must be careful not to use my private cost numbers for any official purposes.

    So why do it this way? At any given time it allows me easily to calculate the effects of the DRIP. I simply look at the difference between my private cost basis and the brokerage's official cost basis. For example, for my UNP position the difference between the two bases is now 4.1% and growing. I regard that as the portion of total return that is currently attributable to the compunding dividend. Significantly higher than what one would expect just by looking at the published yield on any given day, isn't it? And the longer I let it run undisturbed, the higher it will get.
    Feb 23, 2015. 09:53 PM | 3 Likes Like |Link to Comment
  • Deere & Co. Still A Disaster; Look Out Below [View article]
    The recent DE surge, both in price and volume, probably is due to the news that Buffett is buying it. It all depends upon one's time frame, and Buffett's is notoriously long (so is mine). At Friday's close, which was considerably higher than it was even a month ago, DE is still trading at about a 25% discount to its 10 year average multiple. That's not bad for an iconic brand that no one believes is in secular decline. Of course you might be able to get it still lower if you wait a while, but you might not. Long and holding.
    Feb 23, 2015. 09:55 AM | 2 Likes Like |Link to Comment
  • Wal-Mart Fourth-Quarter Earnings In Line With Expectations; U.S. Comparable Sales Rose [View article]
    The negative reaction to last week's WMT report was a bit puzzling. Take out the lowball forward guidance (which should always be taken with a grain of salt) and the rest of the report was encouraging. Not quite a buy yet, due to valuation, but definitely a hold.
    Feb 22, 2015. 02:59 PM | Likes Like |Link to Comment
  • Wal-Mart Increases Dividend 2%; I Wouldn't Have Increased It At All [View article]
    Dealey of course. No grass of either variety in Roswell. :)
    Feb 21, 2015. 10:06 AM | 1 Like Like |Link to Comment
  • Wal-Mart Increases Dividend 2%; I Wouldn't Have Increased It At All [View article]
    Grassy Knollers of SA unite!
    Feb 20, 2015. 01:11 PM | 7 Likes Like |Link to Comment
  • Explosion at Exxon refinery raises fears for California gasoline prices [View news story]
    Sadface, I understand that. But you should acknowledge that with complex engineering systems we have a long history of failing to understand the myriad ways things can go wrong until they do go wrong and we are left to pick up the pieces, which for a nuclear accident are magnitudes worse than for an oil refinery accident. We are just now approaching the fourth anniversary of the Fukushima disaster. The cleanup is ongoing and is expected to take decades.
    Feb 19, 2015. 08:37 AM | Likes Like |Link to Comment
  • Williams Partners: An Undervalued Growth-Focused Midstream MLP [View article]
    As a holder of ACMP, the merger increased my number of units by about 9%, but it decreased the market price a roughly comparable amount. I assume the same kind of explanation applies (moving the other direction) for pre-merger WPZ unitholders.
    Feb 19, 2015. 08:25 AM | 1 Like Like |Link to Comment
  • Explosion at Exxon refinery raises fears for California gasoline prices [View news story]
    Lake, I will take 50 oil refinery mishaps to one Three Mile Island.
    Feb 19, 2015. 06:52 AM | Likes Like |Link to Comment
  • Williams Partners: An Undervalued Growth-Focused Midstream MLP [View article]
    Same here, Energy. I got into CHKM just in time to benefit from the psychological boost that came from Aubrey McClendon's departure at CHK and the subsequent name change to ACMP. This merger has given the rocket a fresh supply of fuel.
    Feb 19, 2015. 06:34 AM | 1 Like Like |Link to Comment
  • SandRidge Energy: An Interesting, Yet Risky, Contrarian Play On Rebounding Oil Prices [View article]
    SD was created in the supposed run-up to $200/bbl oil in 2007-08, and has been touting its potential ever since. All buckle and no belt.
    Feb 18, 2015. 11:54 AM | 2 Likes Like |Link to Comment
  • Why Union Pacific Is My Favourite Railroad [View article]
    And it has the prettiest locomotives!
    Feb 17, 2015. 10:02 PM | 2 Likes Like |Link to Comment
  • When To Sell A Stock [View article]
    I divide my equity holdings into 3 groups: core (75%), core candidates (19%), and swing trades (6%). Core holdings are those that have consistently beat the S&P over the long haul, i.e., 15-30 years. I add on the dips and never sell or trim, barring a fundamental change in the company's story. Examples are CVX, DE, JNJ, PG, UNP, and WFC. Candidates are those I believe will one day become core holdings, but do not yet have the necessary longevity. Eg., KMI, UPS. I am committed to holding these, but not to the same degree as with proven core holdings. I would sell one in order to raise money to buy a more promising candidate or a truly exceptional swing trade bargain. And of course the swing trades are cyclicals. E.g., FCX, HAL. Love em and leave em.

    Another way of categorizing these groups would be marriages (I'm a polygamist!), engagements, and one night stands.
    Feb 9, 2015. 02:10 PM | 4 Likes Like |Link to Comment
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