Finances - which stocks to buy?

[waynehartwig]

Wifey and I have discussed it, and we're probably going to take our ~$5k tax returns and invest all of it in stocks.

If it was your $5k, which stock would you choose and why?

Currently I own:

200 shares - CERAGON NETWORKS LTD REG SHS (CRNT) -27%
200 shares - GAMESTOP CORP NEW CL A (GME) +460%
400 shares - MERITAGE HOMES CORP (MTH) -27%
200 shares - SHUFFLE MASTER (SHFL) -56%
400 shares - SIRIUS SATELLITE RADIO INC (SIRI) -11%

IMO Ceragon is a good one, and I'm tempted to buy more while it's down. I'm down about 27%.

IMO Gamestop is a killer, and VERY tempted to buy more while it's 'down' - I'm still over 460% (purchased 10/04) on this one

IMO Meritage is a good one, and I'm again tempted to buy while it's down. They are leaders in home builders, have a fantastic board and have a lot of personal investment back into the company. Housing market right now sucks, so they are trading low - $10-15 a share. 1.5 year ago before the crash, they were up in the higher $80-100's. I'm only down right now about 27%.

IMO Shuffle Master is a lost cause and I'm only holding it because I'm already down 56% and I dont' see it getting any worse. The CFO quit a few months back and that should have been my cue to cut my losses, but I didn't and it really hasn't changed since. They were really up there about a year ago, but then they bought out a competitor that was in bankruptcy and have never recovered. Then the CFO quit.....

IMO Sirius is a keeper, but not sure if I want more of it. I bought another 200 shares when the Sirius/XM merger began a while back, but now it's appearing that the merger may not happen. XM's stock is trading about 10x higher than Sirius. Sirius has a lot of revenue, not so much debt, good board, but the merger dragging out is killing them - both them and XM. Either the merger will have to happen soon, or both companies will have to stop the merger before they both go bankrupt.

I'm thinking about some more GameStop and maybe some Dolby Labs, Activision, Marvel or Vasco Data Security.

Vasco IMO is goign to go up here pretty soon... THey had some deals slip out of 4Q last year and should happen 1 or 2Q this year and I think when they do, they're goign to go up. Right now they are the lowest they have been the past year.

The others are just good buys....

THoughts?

 

[RockMonkey]

FWIW, I would buy good mutual funds instead of individual stocks. The potential for very high returns is lower, but the risk is MUCH lower. If I were in your shoes I would use it to fully fund my 2008 Roth IRA, but that's just the strategy that matches my goal. Your goal is probably different.

 

[waynehartwig]

FWIW, I would buy good mutual funds instead of individual stocks. The potential for very high returns is lower, but the risk is MUCH lower. If I were in your shoes I would use it to fully fund my 2008 Roth IRA, but that's just the strategy that matches my goal. Your goal is probably different.

I do have a mutual fund - one personal and then several little ones from different places I and my wife have worked through the years that had 401's - none of them have been rolled since we left the companies.

But a Roth is a good idea and one I didn't really even consider.... IRA's are good and solid, but I think I can get more returns out of stocks - more risk, but we are both young and aren't going to return for at least 20 years or more. I really start poo pooing on IRA's when I have stocks that outperform them. But then I have stocks that suck and think if only I had my money eleswhere.... Also with the Roth, we can use that on our taxes... Good call.. Really got me thinking there...

 

[waynehartwig]

FWIW, I would buy good mutual funds instead of individual stocks. The potential for very high returns is lower, but the risk is MUCH lower. If I were in your shoes I would use it to fully fund my 2008 Roth IRA, but that's just the strategy that matches my goal. Your goal is probably different.

The more I think about it, the more I want to hear more.. If you will, indulge me with more info. I really know little to nothing about Roth's....

 

[Bart]

Roth's rock.

 

[RockMonkey]

The more I think about it, the more I want to hear more.. If you will, indulge me with more info. I really know little to nothing about Roth's....

http://www.rothira.com/

Basically, you contribute after-tax money (not pre-tax like a 401k), and the Roth IRA grows tax-free. The 2008 contribution limit is $5000. You can still choose your own investments. It's a good way to hedge your bets with your 401k if you're not sure what tax bracket you'll be in when you are withdrawing money in retirement. 401k withdrawals in retirement are taxable income.

 

[RockMonkey]

One more thing. If you didn't fund a Roth IRA in 2007 you can still use $4000 of your tax return to fund your 2007 IRA until some time in April (not sure of the exact date), then contribute the other $1000 towards your $5000 max 2008 contribution. You never know when you might want to contribute more, so it's best to fund the earliest possible year.

 

[waynehartwig]

One more thing. If you didn't fund a Roth IRA in 2007 you can still use $4000 of your tax return to fund your 2007 IRA until some time in April (not sure of the exact date), then contribute the other $1000 towards your $5000 max 2008 contribution. You never know when you might want to contribute more, so it's best to fund the earliest possible year.

I was thinking about that... getting the benifits of max contrib this year...

The 401k's we have are small and not really worth moving around. I bet all together there isn't more than $15k total. I guess still worth moving to a Roth now.....

 

[gijohn40]

not serious here but kinda of goes to this thought.. I was doing work at a new starbucks that wasn't even open... I had my car in the drive thru loading up my wire and tools... the one side of the drive thru had a big container in it and there was construction everywhere... well I come out with my tools in hand and there is two cars behind me... I had to go tell them that the starbucks wasn't open yet and they would have to back out of the drive thru....

Since then I have worked on 3 other starbucks and had simular experiences... so I joke that If I had any money I would invest in starbuck due to the great amount of stupid people that are so dedicated to their product...

And then today I see that they are laying off 600 workers and will be closed for a full day for training of the rest of the workers...

 

[wally]

try looking into options or puts on a company.

 

[waynehartwig]

not serious here but kinda of goes to this thought.. I was doing work at a new starbucks that wasn't even open... I had my car in the drive thru loading up my wire and tools... the one side of the drive thru had a big container in it and there was construction everywhere... well I come out with my tools in hand and there is two cars behind me... I had to go tell them that the starbucks wasn't open yet and they would have to back out of the drive thru....

Since then I have worked on 3 other starbucks and had simular experiences... so I joke that If I had any money I would invest in starbuck due to the great amount of stupid people that are so dedicated to their product...

And then today I see that they are laying off 600 workers and will be closed for a full day for training of the rest of the workers...

Starbucks I think is still a great buy right now... Chairman Howard Schultz is restructuring, in a good way, to eliminate those jobs to increase revenue. If you were once interested in buying, I would still do so as I don't think it's going to devalue anytime soon....

 

[Bodine]

FWIW Boeing will be doing the first flight of the 787 soon stock is around 82 a share I would suspect (has almost always happened in the past) the stock will go up significantly when this happens due to the fact that they have pushed the first flight date out twice due to supplier problems.

Theres talk the stock may even split but its all a gamble IMO.

 

[waynehartwig]

FWIW Boeing will be doing the first flight of the 787 soon stock is around 82 a share I would suspect (has almost always happened in the past) the stock will go up significantly when this happens due to the fact that they have pushed the first flight date out twice due to supplier problems.

Theres talk the stock may even split but its all a gamble IMO.

Boeing is another good one, but I like buying stocks that are $10-30 ($40 maybe) a share, not $80+. That way I can buy more at the time...

 

[RockMonkey]

Shouldn't somebody have suggested investing in Iraqi Dinar by now?

 

[STPPINZ]

I heard somewhere at this point in time that you shouldn't be investing in your 401K, you should be paying down your debt. It will be a better pay off in the long run.

Just a different take...

 

[Cody]

Just a note on Sirius VS XM and why the prices are so different. Sirius has way more shares outstanding. They have similar market caps, and are similar sized companies. Stock price is just the value of the company divided by shares outstanding (and then price determined by simple supply and demand on an open market). Company "A" could have a price of 10 cents while "B" is worth $1,000 per share and that would tell you absolutely nothing about the value of the company and stock.

That being said, I would be careful with SIRI or XMSR. I know their frequencies are dangerously close to some WIFI bands that larger companies (google for instance) would like to have blanketing the entire US. There is more money in internet service than DSR so the DSR companies would lose that fight I think. Also, other technologies (such as HD Radio and personal audio devices (iPods)) will contiue to cause consumer resistance to DSR equipment--especially now that the government has limited DSR equipments ability to record/store/copy music files like they are on ipods and such.

I've been watching producers of worldwide comodities recently (GE for example) because I think there will always be a market for those manufacturing consumables and hardgoods and any company that has worldwide presence will be in an excellent position to spread their wings as trade barriers continue to come down.

I also read some interesting information about the bottling industry where many major companies are buying up all the smaller bottling and soft drink distributerships world wide. One of the largest ones in mexico is FMX and it's up 21.5% since mid january when I marked it (to 42.78 from 35.5). Of coure now that it's gone up that much I'm afraid to pull the trigger on it (I always have good hunches but seldom act on them until it's too late (ask me about when I should have bought XMSR when it projected to be held 70% short at $2.25 per share back in 02--damnit))

As for IRA's and mutual--low risk low reward type stuff. It depends on what stage in life you are in. You should have different strategies at different points in your life. As you're younger, you should have your investments placed more heavily in stocks and other investments that have potential for higher growth (i.e. higher risk)....say 70/30 but as you age that ratio should switch and you should have more $$ in safer positions as you get older. Of course, everyone has their own level of risk adversity and their own strategy. Everyone has their own theory and knowing enough to formulate one is probably better than just doing what you're told to do.

 

[RockMonkey]

I heard somewhere at this point in time that you shouldn't be investing in your 401K, you should be paying down your debt. It will be a better pay off in the long run.

Just a different take...

If you have any consumer debt I would agree that is a better use of your tax return. Many companies match your 401k contribution, up to a specific amount. So contributing to your 401k is the same as earning 100% interest on your investment instantly. That's hard to beat. For example my company matches 100% of my contribution up to 6%, plus I get another 3% contribution every year. There are few investments that can compare to that.

 

[RockMonkey]

I think people are confused about what IRAs, 401Ks and Mutual funds are. IRAs and 401Ks are simply the names that determine how the money is treated when you take it out or put it in to the account. Mutual funds are simply you putting your money together with a large number of other investors and allowing a fund manager to decide on the specific investments to make. The vast majority of mutual funds are still invested in stocks, and the type of fund you choose determines what types of stock you are in, the potential risks, and the potential rewards. Just because you have your money in 401Ks, IRAs, or Mutual funds doesn't mean you are not invested in stocks, or the stock market. You have to know a lot about a company, it's business plan, it's market, and it's competition to have a really good idea if it's a good investment. I don't have time for that, but I do choose my mutual funds very carefully, and I'll let my fund managers spend their time knowing all those things about the individual investments. I average 12% to 20% interest per year. My 401k will have 1 million dollars in my mid to late fourties, even if it were to earn significantly lower interest than it historically has.

I think you need to assign a goal to your investment. What do you want from it? My investment goal is to retire as early as I can with enough money in the bank to live very comfortably off the interest. I invest with that goal in mind. If your goal is different your investments will be different.

 

[OREGON85]

I've been watching producers of worldwide comodities recently (GE for example) because I think there will always be a market for those manufacturing consumables and hardgoods and any company that has worldwide presence will be in an excellent position to spread their wings as trade barriers continue to come down.

I bought GE last month because I learned the same thing though my own research. So far its down 3.7% but I think it will do well in the long run. I also bought Bank of America a couple months ago because it is also projected to do well, but so far it hasn’t but it does pay a large dividend which way more than made up for the short term loss. I always reinvest my dividends to expand my portfolio.

If you have high interest debt ALWAYS pay that off first!

 

[waynehartwig]

I heard somewhere at this point in time that you shouldn't be investing in your 401K, you should be paying down your debt. It will be a better pay off in the long run.

Just a different take...

THe only debt we have is the house, Jeep and camp trailer. We have no credit card debt. We do have some 0% stuff, like HOme Depot and a furniture card, but those will be paid in full before they start collecting interest (0% for x amoutn of time).