Saturday, August 17, 2013

The day I met Jim Cramer: And his GOLDEN RULES for Individual Investors


A few months ago I had a Monday morning Jury Duty emergency. Long story short, I was able to postpone my “citizen duty” but not before having to show up to court that morning anyways.

So, what does jury duty have to do with this post? Well, this “out of the routine” event had me showing up for work a few hours later than normal. Before going up to my office I decided to pass by a store in the lobby of the building where I work to get some stuff. As I quickly searched for what I needed; my peripheral vision immediately spotted a familiar face:


Yes, ladies and gents! One of my investing “virtual mentors” Jim Cramer was by the cashier. Despite my sporadic shyness and introverted ways I pushed all that aside and decided to go up to him, introduce myself and ask for a picture. But not before informing him what a huge fan I am! I asked the cashier to take the photo (no shame in my game). And this quick moment, my friends, turned my entire day/ week/month around for the best! He is super humble and welcoming. 

Jim and I:




*Excuse the wild hair (mine, not Jim’s).

I have been a huge fan of Cramer for several years! I was introduced to him by the friend whom got me in to investing (see the ‘about me’ section). I have read several of Jim Cramer’s books but also watch his TV show on CNBC “Mad Money” on weekday nights.




Although I love all of his episodes; my favorites involve him talking about the fundamentals when it comes to investing. From time to time he likes to bring us back to the basics of being a successful individual investor. Last Friday’s show (aired 08/09), for example, fell in to that category. He spoke about “Golden Rules for the Individual Investor”. And here’s the outlined version:

1      Don’t own too many stocks: 10 is a good amount. Diversification is important but there is a huge difference between being diversified and holding 100 different kinds of stocks. As per Cramer: “More than 10 and you will likely start skimping on the homework, and that’s incredibly dangerous”. He recommends we hold 10 high quality diversified names. This is actually the kind of strategy I have been following in my investment career and I couldn’t agree more!

2.    Do your homework and your Investment Thesis: Speaking about homework; Cramer recommends we spend at least an hour per week on each stock we own reviewing earnings reports, reading news stories, looking over analyst commentaries, etc.  He uses the gathered information to determine profit margins, analyzing debt on the balance sheet, industry happenings and the caliber of the CEO of the company to carry it through successfully. It is extremely important that you “know what you own” and you should know your stocks well enough to be able to explain in 3 solid sentences WHY you own something. If you know your stocks well, you won’t be panicking or pulling your hair during a sell off or a down day. He explains: “You’ve got to know if your thesis remains intact on a big down day…and you have to know whether it remains viable after a big rally, too”. Hence, you should be able to confidently describe why you own something. Why do you own that particular company? Is the answer to that question a solid one?



3.    Don’t own too many “Dollar Stocks” at once: Dollar stocks refer to those that trade under $10. While it doesn’t hurt to put some money in speculative stocks once in a while (ie: potential for growth and price appreciation, being able to get a whole lot of shares for little money, potential for big profit, etc.) owning too many of those kind of stocks can also be scary because just like you can make lot of money in a short period of time the opposite is also true. You also run the risk of the stock going to Zero and loosing all your investment. Hence, as per Cramer “speculative stocks should only be a small part of the portfolio”. On a personal level, I traded MetroPCS (PCS) a few years back and made good profits but that was my only “single digit” stock at the time. Just like I enjoy risk from time to time I also like my sleep at night and I want to be able to sleep in peace!

4.    NEVER buy stocks on margin. Buying stock on margin means you borrow money from your online broker (or broker in general) to invest. DON’T DO THIS. NEVER. This can be a huge risk, especially if you don’t know what you are doing. When you invest on margin, you can’t afford to lose. If the worst happens you will owe the money you borrowed, interest on the money plus you make zero profit. This is not the way to go. I have explained over and over again that money in the stock market should be 1. Your money only 2. Part of your discretionary income (what’s left over after all your expenses have been paid).

5.    Stay away from Market Orders. I explained Market Orders on one of my initial posts. Basically, with a market order you are telling your online broker (or broker) to “buy” or “sell” at “whatever price”. You run the risk of paying too much when you buy and selling at a lower price than you could have. Hence, all buying and selling should be done with ‘Limit Orders’ which is where you specify the highest price you’re willing to pay when you buy and the lowest price at which you are willing to sell if you want to give up your position(s) on the stock. I explained type of orders in detail on this post.

6.    Don’t panic when stocks are down. There may be a lot of reasons for it none of which may be related to a specific company at all. As I mentioned before, the market has its mood swings and often times, down days may have nothing to do with specific companies but rather can be a result of news in the media and a thousand other reasons. Just look in to what exactly may be going on. Sometimes a “down day” can be a great opportunity to grab stocks from amazing companies at great prices.

7.    The SEC may not have your back right now so ‘watch your own’. For those who don’t know, the SEC (Security Exchange Commission) is one of the regulatory institutions that are supposed to protect the interest of individual investors. Cramer commented that “if we hear snoring on Wall Street is probably the SEC”. Basically, they have been supporting different kind of financial innovations which could present a risk for the “little guy”, one of them being High Frequency Trading. Hence, we have to watch out and protect our own interests because the SEC is currently taking a nap. (Gotta’ love his analogies ha!)

And there you have it! If you don’t know who Jim Cramer is just Google the name, check out some YouTube videos and tune in Monday-Friday at 11:00pm eastern time on CNBC. Check your local listings. (PS: The show actually comes on at 6:00pm on weekdays and then re-runs at 11:00 pm so I catch it then!).

PS: While doing some research for this post I realized you can catch any Mad Money episodes you miss on the CNBC website. Check out! Have a great weekend everyone!


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I was not compensated for this post. All opinions are my own. I am genuinely a big fan of Jim Cramer and an addict of CNBC investing shows.

Thursday, August 15, 2013

The Wonderful World of DIVIDENDS: Part III

Hello again! Hope everyone is having a great week so far! Here I am to continue our lesson on dividends. Hope you're ready!

So, when looking in to dividend-paying stocks is a smart idea to take your research a little further and also look in to their dividend payout ratio.

1.    What’s a dividend payout ratio?!

Well, remember that dividends come from earnings that a company has and wants to “share” with its shareholders in the form of payments every quarter. Well, lets say that a company “pays out” 100% or 110% of their earnings in dividends. Wouldn’t that scare you a bit? Well, it should make you raise an eyebrow!

 

At the very least it should be a red flag for further research on what exactly may be going on behind the scenes.

2.    So why should I care that a company wants to give up all their earnings to their shareholders?

Well, a company should have a “balance” on what it does with its earnings. It should set money aside for dividends by all means (we all know I am a huge fan of that!). However, they should also be setting aside part of their earnings for investments that can enhance the value of the company and keep it competitive. For example, they should be investing in research for development of new products, advertising, reserving some money for future expenses and/or investments, etc. I would be a little terrified if a company gives up ALL the money that comes in. Also, let’s say they are paying out a percentage larger than their earnings this can imply the company is borrowing money (ie: taking out loans) to pay dividends.  I don’t know about you but that would make me a bit uncomfortable. I’d be wondering where the future of that company is going and you better believe I’d be doing further “homework” on the stock!

Keep in mind that this is a general idea. Some older/more established companies may have a higher dividend payout ratio than others. Hence, if you are looking at a solid company that has been around for generations it might not hurt that they pay out more in earnings than others. One of the reasons being is that they may not have to invest as much to “grow” or “maintain” the company in comparison to a newer corporation. As I always say, just do your research!

3.    So, what’s a healthy dividend payout ratio?

Well, there is probably a plethora of opinions about that but, as a general rule, a healthy percentage should be no more than 60% of earnings to be paid out to shareholders. Anything significantly above that should be a red flag for further research to see if that’s really a company you want to invest in for the long term.

4.    How do I find out a company’s dividend payout ratio?

Another great question for Yahoo! Finance. Just go in to the site, type in the ticker symbol for the company you are interested in. For this particular example lets use Coca Cola (KO). Then, on the left side of the page click on “key statistics”. (Using KO, coca-cola, as an example on this one).

 

 
 

Subsequently, turn your attention to the lower right hand corner of the page and you will see a box with multiple ratios. One of them being the “payout ratio”.


 
 
 
And there you have it!
If you love math (and have time to spare) you can also calculate it yourself by using either one of the following formulas:
Yearly dividends per share/Earnings per share
Dividends/Net Income Yearly dividends
*But, who has time for that?! Gotta’ love sites that save us time! Technology and free information is quite awesome!
Additional info to keep in mind:
1.    A company that pays dividends usually attracts more investors and hence, increases the demand for it. Hence, this is a good thing for people that already own shares as we all know what usually happens when that occurs: the stock appreciates in value!

2.    Conversely, when a company decides to lower or eliminate paying dividends all together this hurts its popularity and its value in the face of existing and/or prospective investors whom might be tempted to sell the position (lowering the value of the stock). Something may be going on behind the scene. Hence why is so important to keep a close watch on your stock portfolio at all times and remain informed on whatever may be going on.
Thanks for reading! And until next time! Any questions, you know what to do. Comment below or email me.
Happy Investing!


Sunday, August 11, 2013

The Wonderful World of DIVIDENDS: PART II

Hello and welcome to Part II of my Dividend posts. Here I’ll present you with a few more important things to know!

How can you find out whether a company pays dividends?
Well, it’s very simple. All you have to do is go to a site such as Yahoo! Finance and in the "symbol look up" section type in the ticker symbol for the company that you are interested in. For example, if you want to know if Pepsi pays dividends; type in “PEP” in the box and you will get all the information relevant to Pepsi stock. It will look something like this:



Turn your attention to the bottom right hand corner of the box presented to you and look at where is says “Dividend & Yield.” If the company pays dividends, you will see a percentage and a number next to it. The percentage is the Annual Yield and the actual number is the actual dollar amount per share that you get in a year from that particular company:



Hence, if you have 100 shares of Pepsi, in a year you get 100 x 2.27=$227 which translates in to $56.75 every quarter!

Note: If a company does not pay dividends then you will see the words “N/A” in the “dividend & yield” box. A company like Google (GOOG), for example, does not pay dividends. It will look like this:


 Side note: You may wonder why a company as successful and well-established as google (with billions in reserves) doesn't pay dividends. Well, one of the reasons may be that they rather spend the money on research and development in order to remain competitive and ahead of the industry. It is true that Goog is #1 but in order to stay at #1 in a world where technology changes every second is quite difficult (and expensive). Hence, instead of directly giving money back to shareholders in the form of dividends they likely prefer to create value by reinvesting the money in company growth and staying ahead of the curve. This strategy continues to work for them as the stock price has increase significantly in past years and continues going strong! However, I would not be surprise if one day they start paying dividends. A similar situation happened with APPLE (appl) which just recently started paying dividends. So, moral of the story is that not every successful and established company necessarily pays dividends. So, do your research!

Another great website for dividend information is dividend.com. You have probably notice that I use that site a lot. I love that site because it presents you right away with the exact dates related to dividend payments (with yahoo! Finance you may have to dig a little deeper so I alternate between both websites depending on the information I am looking for). Check out dividend.com page for Pepsi:

Lets focus on the dates section for PEP:


Besides the dividend-disbursement date, for stocks I already own; another date I am interested in is the “ex-dividend date.” 

What the heck is the ex-dividend date?!

The ex-dividend date is important to me especially when it comes to stocks I am “eyeing” or interested in buying.  For example, look at the table above. The ‘ex dividend’ date for Pepsi stock is 09/04/2013. This means that if I want Pepsi to pay me dividends on their next “payment round” which is 09/30/13 (look where it says "Pay Date") I will need to own Pepsi stock before 09/04/2013. Lets say you forget to buy the shares before the ex dividend date and you pick up some on or after 09/04/13.; well, you will NOT be getting paid on 09/30/13 and will need to wait until the NEXT "round" of dividend payments in another 3 months. In the same idea, lets say you already own the stock but are thinking of selling it but still want to get your dividend payment before you do so, you have to sell your shares on or after the ex-dividend date. Hence, the reason why the dates are so important to keep in mind!

I will end the lesson right here and pick this up again in Part III of the dividend investing series. Let this information sink in and practice on your own doing research with the stocks of your choice. See how much they pay in dividends and play around with how much you would get per year if you have 100, 200, 400 shares and beyond.

Just for fun, lets say you have 400 shares of Pepsi (I wish!); that means that every year you get:
400*2.27= $908, which translates in to $227 every 3 months in passive income.

Simple math. Investing is NOT rocket science!

If you want a little bit more information on today's topic check out this great article on investopedia.com (another one of my go-to sites): Dissecting declarations, Ex-dividends and Record dates.

Have fun and see you soon! Thanks for reading!

*I do not currently own any shares of Pepsi (PEP) but I do own shares of GOOG. The stocks mentioned here are not a recommendation. Do not invest or cease to invest based solely on the information provided on this post.

Wednesday, August 7, 2013

The Wonderful World of DIVIDENDS: PART 1




First of all shout out to one of my readers: Ronald! Thanks for following the blog and your support.  And like I always say—if you or any of my followers have any questions about anything discussed on this blog please email me. This is a passion of mine and I am always happy to share my knowledge and learn even more myself! 



This post will be an overview as I plan to write at least one more post on the amazing world of dividends and dividend-investing.  As you may have noticed from my “earnings commentaries” I am a HUGE fan of stocks that pay dividends. I like to think of myself as an investor that puts most her money mainly in “quality” or ‘crème-of-the-crop” type of companies and thankfully, the majority of these companies pay dividends.

Some of the companies in my portfolio that pay quarterly dividends are:



KO (coca cola)
COH (Coach)
JNJ (Johnson & Johnson)
V (Visa)
CL (Colgate)
Ok so what the heck are dividends? Well when a company is well established and has money to “spare” they can choose to do one *or* ALL of the following:
1.   Give back portion of their profits back to their investors via dividends


2.   Buy back shares using said money. Buying back shares subsequently increases the price of the stock and creates value for stock holders. Why does the share price go up? Well, remember from initial posts that the world of investing and appreciation has a lot to do with supply and demand. Hence, if there are “fewer shares” (because the company “bought back” some shares) then, this decreases the supply which subsequently ups the value of the stock (this is the general idea).


3.   They may choose to invest the money back in to the corporation in order to continue its growth via research and development for new products, acquiring new companies, etc.


When it comes to dividends specifically (which is the topic of this post) you can think of it as something similar to the interest you get when you have your money in a bank with a couple of huge differences:


1.    Dividends are paid quarterly—every 3 months, instead of monthly.

2. Dividend yields are usually significantly higher than the interest you’d get from a bank. For example, with a company like MCD (McDonalds) you get $3.07 per share per year (they have a current annual yield of 3.13%) which is a lot more than the 0.01% APY an average bank would give you. If you don’t believe me, check out Chase interest and fee schedule.  I still cant believe these banks get away with giving people  0.01% annual payouts on their money! Before I go in to a rant let’s look at this example:


Let’s say you have $1,000 invested in MCD which translates in to roughly 10 shares (based on how much a share of MCD is worth today). 

This means that every year you get: 10 x 3.08= $30.80 simply for holding the stock! 


This is called “passive income” (you don’t have to do anything to get it other than hold the shares). The payment translates in to about $7.70 every 3 months.  This may not sound like a lot but is just a general example and trust me when I tell you these payments add up. Especially when you continue to add to your position which is something you should be doing in order to continue to grow your stake in a company that you believe in.
Obviously, the more money you have invested in a particular stock the more you’ll get in dividends. Also, lets say you have multiple companies in your portfolio and they each pay dividends you get to enjoy quarterly payments from all of these companies without lifting a finger. Also, remember this:


-->Dividends are paid REGARDLESS of whether the price of a stock goes up or down. It is a continuous payment which usually goes up every year! Using our McDonald's example, they have been increasing dividends at least once per year since 1977! And they even continued paying during the terrible bear market of 2008 when a lot of companies stopped paying. (Note: some companies did stop paying dividends temporarily during the financial turmoil of 2008. However, most of the quality companies that have been around for generations, and which I will discuss in future posts, continued paying dividends even during the hard times!)
--> As noted, quality companies usually increase their dividends on a yearly basis meaning every year you’ll get a little more money per share and the more shares you have the more money you’ll get.
Lets go wild and say you have $10,000 invested in MCD which translates in to about 90 shares.


90*3.08= $277.20 a year, or $69.30 every 3 months! And you can just sit back and collect this money. And lets say the price per share increases and your investment is now worth more than what you initially paid then you are getting dividends PLUS the stock price appreciation!

There is also something I like to call the "money machine" and its called DRIPS (Dividend Reinvestment Plan). Basically, every time a company pays you dividends it uses the money to buy you more shares of that same company. So, next time dividends are paid you have more shares hence, you get paid more. This is an option that you have and you have to call your online broker to set it up, usually at no charge! Otherwise, the money you get just sits in your account and you can use it as you please. Don’t you just love stocks?!


Now, lets look at how much you’ll get with $1,000 or $10,000 sitting in the bank at 0.01% interest:


With 1,000*.0001= .10 


With 10,000 *.0001= $1


And remember: that is PER YEAR. So, divide that by 12 and let me know how many pennies u are getting per month. So sad! Dont get me wrong, money sitting in a bank is safe and it serves its purpose. For example, money for an emergency fund or money you need for bills should be in the bank. However, discretionary income set aside for investing should NOT be sitting in your bank account!


So, obviously, your money works a lot harder for you when its invested in a quality company in comparison to it just sitting in a bank somewhere.  That’s one of the amazing powers of dividend investing! And let’s not even get in to the fact that while a bank is giving you back 0.01% for your money they are charging borrowers 15% and 20% and even more (simply look at the interest charge information in your next credit card statements to see the reality of it all!).


You work hard for your money and you deserve that your money works hard for you. Educate yourself! As cliché as this may sound: Knowledge is in fact power! As I read on a book by one of my "virtual mentors" Julie Stav:

"Investing can make the difference between walks in the public park for leisure and strolls along the beaches of the Bahamas".

Remember: Like everything else, investing comes with risk and stock prices fluctuate on a daily basis. So, make sure you do your research and your homework before you buy a position in any company. 

Stay tuned for a subsequent post about the companies  that are considered crème of the crop when it comes to paying dividends.


TELL ME, What are YOUR thoughts on dividend investing?

Until next time my friends!





Disclaimer: Although I hold positions in the stocks mentioned, this is not a recommendation to buy. Dont invest or cease to invest solely based on the information provided here. This blog is for educational purposes only.

Saturday, August 3, 2013

Earnings Commentary: Procter & Gamble (PG)


Adjusted closing price per share on 7/31 (night before earnings): $80.3
Adjusted closing price per share on 08/01 (after earnings): $81.64
Closing price on Friday 08/02: $81.29

Hello my dear readers!

Earnings commentary season (AKA earnings season) is shortly coming to a close so I will be wrapping up my final commentaries this upcoming week. I only have one more stock to report on and then we will move on in to other investment-related topics which I am very excited to blog about. As a reminder, this blog is dedicated specially for my investors just starting out or the seasoned ones who may want a reminder and/or refresher on the basic (yet so important) topics of investing. So, stay tuned and thank you for stopping by!

PG is up over 19% in less than one year (purchased around November 2011) and again, it is a solid stock which pays dividends (big shock there! ha!).

So, im sure you've heard the name but did you know that PG is one of those companies that make products that people need no matter whats going on in the economy?! I'm sure you need toilet paper, laundry detergent, and toothpaste (at least I hope so). Here are just some of the most common brands made by PG: 



Just a reminder that we never know what can happen in the market (if I knew, I would be a billionaire right now). So, although a stock may continue to increase in price doesn't necessarily mean it will continue doing so indefinitely so is important to do your homework and remain aware of the important news that surround any company where you own shares. 

PG wrapped up fiscal year results during their recent earnings report on 08/01/2013. Results were a bit lukewarm. Nothing 'overly exciting' was noted. However, management did their job and thankfully had nothing alarming to report. Here are some highlights:

-A 5% increase in annual earnings 
-Organic sales growth of 3% (they had provided an estimated range of 2-4% during last year's forecast, and fell right within expectations).
-Strong volume growth in their health, baby, and home care segments which showed increased in gains of about 4%
-Slight loss on profitability due to expenses exceeding costs of production

It's important to know that PG is going through a transitory period where they are working hard to regain market share (one of their main competitors is Uniliver). During their earnings call it was announced that PG was able to maintain or grow market share on most of its brands during the last quarter especially in the U.S. 

PG also takes good care of its shareholders. They reported spending $12.5 billion (110% of earnings) on dividend payouts and share repurchases. It also announced plans to continue this trend for the next year. This sounds amazing. However, I have to admit I am a little apprehensive considering that they should also be putting earnings back in to the company to assist in the restructuring. A good chunk of their earnings should be targeted towards research and development, creating new products (and/or increasing advertisement on existing ones) in order to continue regaining their market share. PG has a lot of cash on their balance sheet and is a solid company that has been around for ever. However, when I see a company giving back more than earnings to shareholders it makes me wonder where the extra 10% is coming from. I will be taking a look at some of their financial statements in order to further my research and see what exactly may be going on. Sometimes homework needs to be taken a step further!

 All in all, the current CEO, Mr. AG Lafley,  was honest and straight forward with shareholders in admitting that  2014 will continue to be a transition period for PG. Hence, I will be keeping a close watch on the stock as it moves along. 

PG is still another one of those solid companies for the long term and which hold a very respectable brand. This is not a "new" company by any means. PG was established in 1837 and has been paying dividends since 1957! Like any corporation (specially one that's been around for over 100 years) there are always cycles that they have to go through and is normal for corporations. Hence nothing to panic about here in my personal opinion. Just do your homework and stay on the watch!

DIVIDEND PAYOUT INFORMATION:
Annual dividend yield: $2.96 %, which translates in to an annual payout of $2.41 per share. 

QUESTION: Look around your home, how many products made by PG do you own? How would you feel about a company that gives back 110% of their earnings to shareholders? 


Disclosure: I do not personally have a position in PG at this time but did acquired it for a client's diversified portfolio. This is NOT a recommendation to invest in PG. Do not invest or cease to invest solely on the information contained in this post.

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Sources:
Dividend.com for PG
Yahoo! Finance PG
Fool.com Procter and Gamble

Friday, August 2, 2013

Earnings Commentary: COACH (COH)



Adjusted closing price day before earnings 07/29/13: $57.85
Adjusted closing price after earnings on 7/30/13: $53.30
Current price 08/02/13: $53.85

 COH announced earnings this past Tuesday 07/30 and lets just say that what happened to the share price thereafter wasn't pretty. I have been a COH shareholder for over a year now. I’ve mentioned before that I am a strong believer in the quality of the company and optimistic about their future and despite their recent struggles, that has not changed.  This is another one of my long term acquisitions. Thankfully they pay dividends (you guessed it!) so at this point I just have to forget that I even own shares in this company until the “storm” passes (more on COH dividends towards the end of the post).

 Here are some highlights of their earnings callà

 Some of the Good:

1. Earned an adjusted $0.89 per share, up 3.5% from the $0.86 per share it reported during the same quarter last year.

2. Sales rose 5.8% year-on-year to $1.22 billion. Coach’s profit was in line with analyst estimates; however, revenue came up short of the consensus estimate of $1.24 billion.

3. Amazing international results with a 35% year-on-year sales increase in China and new stores opening in Japan as they continue to work towards increasing international market share. They are also re-structuring stores in Europe to gain full control of operations.

 Some of the not-so-good:

1.    A drop in same store sales (specifically in North America) which declined by 1.7%  (quick concept check: same store sales refers to the profit generated in existing stores that have been opened for at least a year. It doesn't factor in new store locations that may have opened their doors just recently. The figures help analysts differentiate between revenue growth that comes from any new outlets and growth that is a result of improved management and operations at the existing outlets. Source)

The silver lining in same store sales is that direct-to-consumer sales increased by 5% which means more purchases were made online rather than the actual stores—which might continue to be a trend as we all know online shopping’s popularity continues to increase.

2.    Beyond the numbers, there’s also a lot of re-structuring going on internally with the company. Two of the top executives (one of them being the COO and creative director) are leaving and some new ones are coming in. One thing you should probably be aware of is that just like us humans, the market (and Wall Street) hate uncertainty. Not matter how great a company may be; not knowing what will happen next brings fear in to the picture and fear can sometimes cause a sell-off which is what happened after COH's earning's call yesterday.

Let me tell you a little story about investing…
Beyond the thrill of choosing stocks and making a profit; Investing is a learning experience—especially when your goal is to be successful. Hence, you have to take the good with the bad and learn from every experience that comes your way! I purchased COH near its all time high during the very beginning of last year. I was confident in their prospect and I bought shares with the goal of making a profit and buying myself a new coach bag (yes sometimes I invest to buy something. We all have our goals. ha!).

Well, let’s just say that within the first couple of weeks of me buying the stock I was making a really nice profit. The profit was significant enough for me to be able to sell and get on with my life.
Well guess what: Greed took the best of me and I decided to keep the stock and see how much higher it would go. I forgot about the infamous quote by one of my “virtual mentors” Warren Buffet: “Bulls make money, Bears make money, pigs get slaughtered”<---remember this amazing piece of advise! I decided to be a pig and next thing I knew the share price of COH began tumbling down. I didn’t know what was going on and I just simply "stopped looking". Next thing I knew price per share was down significantly and with that my profit (and my hopes of a new coach bag). The price has yet to fully recover since that happened.

However, like I mentioned, I am on this for the long term. My experience with COH is worth pure gold considering that I am now more cautious about my investments and have a better idea of what to do when a stock begins to depreciate in value significantly (and rapidly). I admit that maybe I should have taken action a long time ago and sold off my position. However, had I done that, perhaps I wouldn’t have gained the same experience I obtained from this. So, I am grateful either way.  Ive been able to save myself a lot of headaches (and money) since then and I’ve been able to apply what I learned to my investment career going forward.
As I wait to see what happens with COH, I get nearly $275 in dividends per year which sure beats the $2.50 I would probably get from a regular savings account. Not to mention that the company has been increasing dividends per share at least once per year since 2009. This is one of the differences between having your money sitting in a bank account Vs.  Investing! And like I mentioned before, dividends are paid regardless of whether a stock price goes up or down.

Dividend info at a glance: Current Dividend Yield: 2.53%, Annual Payout: $1.38 per share

Thank you for reading! If you want to know more specific information about this particular experience feel free to email me!

Tell me, what are your thoughts on what’s to come for COH?

Additional sources: fool.com