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Retired recently and have been a self-directed investor for the past 5 years. Prior to that I had no real experience. Like many, I put money away in my 401k and IRA selecting mutual funds and purchasing company stock. While dating a financial planner she recommended I start investing because I... More
  • That's Why We Play The Game - A Beginner's Attempt To View Investing

    "Just Win Baby" - Al Davis

    Last week the NFL Draft had been going on which reminded me of my initial strategy for picking stocks. Previous to starting to study stocks I was involved in a few seasons of Fantasy Football. Now I'm a Dallas Cowboy fan (please continue to read) but Fantasy Football honed me in on individual players of teams that weren't in the NFC East or for that matter the NFC. It opened up my eyes to great players and great teams in the AFC also.

    The analogies between a portfolio and fantasy football are numerous : (Here are a few)

    1) Each team in the draft is trying to add to their team to make it the best.

    2) Portfolios are like a football team in that stocks take on positions as players do for teams.

    So here is my team by position

    Quarterback - BIP

    Running backs - BMY COP SCCO

    Tight Ends - LINE EPD

    Wide Receivers - AAPL SDRL

    Offensive Line EMR PG UPS

    Defense - MO T AEP EXC PVR

    Kicker - NLY

    Punter - AGNC

    3)The NFL is a business. The decisions made determine the direction, the value, the growth and success of the team - same for our portfolio.

    So without to much detail my team:

    Quarterback - (NYSE:BIP) : A gem in the rough and when first picked up was a bit of an unknown. BIP has a good head on his shoulders (NYSE:BAM) and seemed to be picking up the right things in order to grow and add to his value. BIP seemed to be all over the place when he was a rookie but he has been able to make all the throws. BIP went deep in acquiring PRIME which is another weapon added to his overall strength.

    Running backs - (NYSE:BMY) has been a steady EDDIE holding his own with a good dividend and growth where a lot of others in his field are fighting a myriad of problems. (NYSE:COP) has been hitting the weights and felt he was a bit bloated. So he is shedding some weight (NYSE:PSX) verses P90X and we will see if this brings out his value. (NYSE:SCCO) is as volatile as a copperhead. He can be up and down but carries a lot of potential. SCCO dropped the ball a little in the last quarter with the partial cash/stock dividend payment.

    Wide Receivers - (NASDAQ:AAPL) When first brought under contract he was a rookie and I didn't see his potential so he was traded. After the trade I watched his ability to talent to innovate which cost me more to resign him. Since then he has grown in his position and made some extra-ordinary long gains. Many were surprised when he ran over the middle to catch a dividend. (NYSE:SDRL) has potential with day rates rolling up to catch some intermediate passes. He has gone through some extensive physical rehab but it looks as if his legs are like new. This has put him into some debt but potential growth could increase 10% for the next few years and carrying an 8% dividend as his jersey number.

    Tight Ends - (NASDAQ:LINE) has been solid utilizing his hedging technique through the years to get open and raised his distribution lately to $2.90 although he did miss last quarter on his EPS by .15. (NYSE:EPD) had a tumble last year and when the naysayers were on his back I decided to add to his contract and he has moved up through the ranks to close near a 52 week high while maintaining a good dividend.

    Offensive Line - All big boys with long arms in their individual positions. (NYSE:PG) has been struggling with pricing as of late but if he drops off I'll do what I did with EPD last season and add to our contract. (NYSE:EMR) needs to move its feet a little better but has been solid on the dividend front. (NYSE:UPS) recently bought into a new European supplement, TNT in order to bulk up against one of his main opponents DHL.

    Defense wins Championships and (NYSE:T) is my Safety. Unfortunately, he was fined for 4 billion and it looks as if we won't be using the T-Mobile defense. Don't sell him off. He is pretty tough like (NYSE:MO) and they have both been through a lot over the years but always seem to find a way to move and reward the fans. Both (NYSE:EXC) and (NYSE:AEP) were picked up on the cheap. EXC is the ying to (AEP)'s yang in that whole coal thing that the commission can't quite figure out yet. They are both unwanted like (NYSE:PVR), but PVR surprised recently by acquiring a pipeline helping it to have better lateral movement.

    Kicker/Punter - (NYSE:NLY) and (NASDAQ:AGNC) can both put some leg into the ball with a 13% and 16% dividend respectively. NLY has been solid and dependable over the seasons and AGNC has been consistently putting the ball in the coffin corner over that last few seasons. You have to watch those two closely because if interest wanders they could lose their focus.

    Some teams would have cut SCCO,NLY and AGNC for the drop in dividends but as the owner and general manager I've decided to hold on to all three for the time being to see how they respond to the pressure.

    Now it should be said that this is just a overview of my team and its players. I've used professional scouts from Brother In Arms, Inc. - (David - the Knapper , Dave - Who Sleeps with the Fish, Norman - I only wear Tweed, YoYoMamma-(one of her many aliases), David - the Croissant, RSS - the Solution and Timmy I'll Lean Onya). I cannot review or reveal all that goes on in the War Room within a single article but let me say that as the owner of each of these players the final decision was my responsibility.

    The major difference between Fantasy Football and Portfolio Investing is that investing isn't 16 games. The investing season goes on. Th players keep playing and the owner is constantly looking at his/her next move.

    When the football season rolled around everyone asked, "Are you going to play?" The answer was NO. There was a point where the excitement of learning more about the game, the teams, the players and the strategies to win baby were overcome by those same factors in my portfolio.

    That is why we play the game.

    Like the draft, we all have our own War Room between our ears. In that room we all have made some bad picks. That pick was going to be a game-changer because he had all the numbers. Those numbers vanished because the player had an injury, got in trouble with the law, took the money and ran, or was just overrun by a hungrier player.

    See there are a lot of analogies .

    Since this is my first attempt at writing anything beyond comments on SA (Sports Alpha - not to be confused with that other magazine and their swimsuit edition) your comments are welcome for further discussion and my personal refinement. Please add all the analogies you want.

    Disclaimer: All of the scouts names have been changed so that any association with this writing can easily be disavowed.

    LONG : AAPL, AEP, AGNC, BIP, BMY, COP, EMR, EPD, EXC, LINE, MO, NLY, PG, PVR, SCCO, SDRL, UPS. (plus others on the board in the War room).

    May 08 5:46 PM | Link | 20 Comments
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