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Rin spoke with his financial advisor

By Rin following x   2018 Sep 25, 3:00pm 499 views   29 comments   watch   sfw   quote     share    


Disclaimer: This is not financial advise, it's just my opinion piece.

Ok, since I'd cashed out 90% of my hedge fund equity, I've parked my earnings into dividend yielding equities, having them re-invest those earnings into buying more shares on a quarterly basis with minimal active management.

Now, after a long talk with my advisor, I've decided to cash out some of those blue chips, who haven't been able to control their debt to share ratios, during the past two to three years. In other words, the more leverage a firm has, the more likely it'll have to cut future dividends during the next downturn, since that debt overhang would still need to be serviced, and that's not a position one wants to be in.

That extra cash will sit in 2% CDs until the time comes to buy more shares. For now, my equities are only in those dividend yielding stocks where their corporate debt has been under control for some time. Examples of these would be Proctor & Gamble or Hormel Foods.
1   Aphroman   ignore (6)   2018 Sep 25, 5:34pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

I’m surprised you utilize a professional financial advisor. I figured you for a DIY type

I’m confident that I’ve performed an order of magnitude better than any pro financial advisor over the last twelve months, although here in the States they’re at a disadvantage by not being able to recommend Cannabis equities
2   Rin   ignore (3)   2018 Sep 25, 6:45pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Aphroman says
I’m surprised you utilize a professional financial advisor. I figured you for a DIY type

I’m confident that I’ve performed an order of magnitude better than any pro financial advisor over the last twelve months, although here in the States they’re at a disadvantage by not being able to recommend Cannabis equities


He's not a typical douchebag, I mean financial advisor (or consultant).

He works with my strategy and that is a capital preservation one, using dividends to grow one's equity profile. So in effect, what he does is analyze things like debt per share, cash flow markers, fluctuations against the broad indices, dividend maintenance, etc. The idea is that he runs through this stuff weekly, whereas I only look at my holdings, once per quarter.

So when we do meet up, it's more about things like if General Mills is over leveraged or if GE has hit bottom, or is it a fact that GE is really a former blue chip, now in the toilet long term. And yes. we're both in concurrence about GE, as I haven't invested in them for ages.

Normally, FAs are retarded beings who don't know squat. This guy, on the other hand, does and he treats my portfolio like a project, not a list of things to up sell.
3   Evan F.   ignore (0)   2018 Sep 25, 6:50pm   ↑ like (4)   ↓ dislike (0)   quote   flag        

Rin says
GE is really a former blue chip, now in the toilet

This happened the moment Jeff Immelt took the reins. That guy was an idiot
4   Patrick   ignore (0)   2018 Sep 25, 6:54pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

I own GE and PG. GE has been a disaster, but fortunately I hadn't bought much. PG's dividend is pretty nice, over 3%, and some appreciation as well.

Still looking for something to replace the cash out from SODA. Cannabis stocks are tempting, but are there any that actually make money?
5   Aphroman   ignore (6)   2018 Sep 25, 7:04pm   ↑ like (1)   ↓ dislike (3)   quote   flag        

Patrick says
I own GE and PG. GE has been a disaster, but fortunately I hadn't bought much. PG's dividend is pretty nice, over 3%, and some appreciation as well.

Still looking for something to replace the cash out from SODA. Cannabis stocks are tempting, but are there any that actually make money?


Make money as in are profitable? Or simply have sales/revenues?

I’m fine with my companies building out their empires currently, rather than attempting to be profitable. You have to put thrm in context: Canadian companies are only able to make medical sales until October 17th. US companies are under all sorts of restrictions so long as POS Republicans run the government, but things are changing and liberals are beating the fuck out of Republicans and their Failed Loser War.

I’m deep in

Green Thumb GTBIF
Aphria APHQF
iAnthus ITHUF
Liberty Health LHSIF
CannTrust CNTTF
CVSciences CVSI
Scythian Bio SCCYF
Cronos CRON
Kush Bottles KSHB
Constellation brands STZ
Canopy CGC
GWPharma GWPH
Aurora ACBFF
CannaRoyalty CNNRF
MPX bio MPXEF
Charlottes Web CWBHF
Alcanna LQSIF

Off the top of my head i think that’s the whole retirement portfolio. Trading a few other names but that’s short term plays
6   Rin   ignore (3)   2018 Sep 25, 7:04pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

Patrick says
PG's dividend is pretty nice, over 3%, and some appreciation as well.


PG has a sustainable business.



As you can tell, throughout the post-2008 correction period, PG has not ballooned its corporate debt to maintain its earnings and dividend payouts.
7   Aphroman   ignore (6)   2018 Sep 25, 7:15pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

I forgot about Village Farms VFFIF

Everyone always forgets about Village Farms. Don’t sleep
8   clambo   ignore (4)   2018 Sep 25, 8:43pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

At the risk of trolling Rin, herewith my two cents.

Mutual funds are the essence of investing. One doesn't need and may not really want to be choosing individual stocks (although it's fun and I do it with some of my $).

(Re: individual stock for Patrick: I bought some Deere (DE) recently and am very pleased with that little investment.)

The reason I dislike cash, e.g. CDs, is you are paid almost nothing to lend your capital to a bank. After taxes, a CD has a negative return usually.

The reason I would not get out of stocks, especially ones which pay dividends is you lose out on the compounding effect of those dividends. Over time, the compounding effect is very powerful.

I will own various investments based on my present needs and tax consequences. For example, I have a fund Vanguard Tax Managed Capital Appreciation which is hopefully not going to produce a large 1099 every year.

After Roth IRA, SEP-IRA, I have funds including those which are focused on dividends, others on income, others on capital appreciation.

One of the richest people I knew was a little old lady neighbor who had held blue chip stocks for 65 years or so.
9   Rin   ignore (3)   2018 Sep 25, 8:51pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

You're not trolling at all.

clambo says
The reason I dislike cash, e.g. CDs, is you are paid almost nothing to lend your capital to a bank. After taxes, a CD has a negative return usually.

The reason I would not get out of stocks, especially ones which pay dividends is you lose out on the compounding effect of those dividends. Over time, the compounding effect is very powerful.


I'm only divesting the dividend stocks, where the debt per share was highly increasing over the past 2-3 years, over those, who'd maintained their debt portfolio, over the same time period, while maintaining (or increasing) their dividends.

The reason for this is somewhat clear, companies who can't control their debt, eventually cut their dividend yields, during economic downturns. And thus, that cash on the side, is better spent, investing it once it's clear which companies can't maintain their annual dividends, once the downturn plus market corrections are factored in. So in effect, it's not about investing in CDs but in knowing when to steer clear of a downturn in the markets.
10   CBOEtrader   ignore (2)   2018 Sep 26, 6:35am   ↑ like (4)   ↓ dislike (0)   quote   flag        

Aphroman says
that’s the whole retirement portfolio.


This is a speculation, not a retirement account. It may be a great bet, but dude you need safety and diversification if you want to retire.
11   CBOEtrader   ignore (2)   2018 Sep 26, 6:40am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Rin says
So in effect, it's not about investing in CDs but in knowing when to steer clear of a downturn in the markets.


Knowing when to steer clear of a downturn is the hardest thing to predict in finance, unless you are talking about 1 to 3 days out and are willing to spend 5 to 10% of your portfolio on puts into a crashing market.
12   Aphroman   ignore (6)   2018 Sep 26, 7:26am   ↑ like (0)   ↓ dislike (2)   quote   flag        

CBOEtrader says
Aphroman says
that’s the whole retirement portfolio.


This is a speculation, not a retirement account. It may be a great bet, but dude you need safety and diversification if you want to retire.


It was speculation in 2016/17. Here in late 2018, it’s the retirement account.

I disagree that you need safety and diversification to retire, rather you need income producing assets and a good amount of money.
13   Rin   ignore (3)   2018 Sep 26, 8:50am   ↑ like (1)   ↓ dislike (0)   quote   flag        

CBOEtrader says
Knowing when to steer clear of a downturn is the hardest thing to predict in finance, unless you are talking about 1 to 3 days out and are willing to spend 5 to 10% of your portfolio on puts into a crashing market.


I think you're thinking of the whole cap gains thing.

When one's not an active trader, keeping an eye on out of control corporate debt, is a way to avoid the downturn, when it occurs because even if the S&P corrects, places like P&G or Hormel will still gives dividends which will allow one to buy even more shares, given the lower ticker prices.

On the other hand, since other firms will still be needing to service their debts, despite a general decline in the markets (& possibly their business as a result), the dividend checks will be on the chopping board to make those interest payments.

One can buy companies, which still need to get their balance sheets in order, after a general market decline but not before it.
14   clambo   ignore (4)   2018 Sep 26, 4:35pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

I will consider a Swiss stock fund for some of my investment. There are several ETFs that come to mind.

I don't think I will ever own much cash again.

When I first visited Switzerland, $1 USD=3 Swiss Francs. Today, $1 USD=1 Swiss Franc
15   CBOEtrader   ignore (2)   2018 Sep 26, 4:45pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Aphroman says
Here in late 2018, it’s the retirement account.


Well you have balls sir. I legit think your bet is a good risk, but highly cointegrated. One or two new laws would either make or break that account.

Rin says
One can buy companies, which still needs to get their balance sheets in order, after a general market decline but not before it.


You seem to have your affairs (pun intended) in order :)

I love the concept of having cash on hand to buy low into a market crash. Parking that cash over time is the opportunity cost that makes me cringe. Seems like you have a plan though, good on ya buddy
16   KgK one   ignore (0)   2018 Sep 26, 4:46pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Why not get Berkshire b stock 20% or more n let them do dividend investment for me?

Market has 33 PE so in general hard to find anything. I have lot in Cds also
17   CBOEtrader   ignore (2)   2018 Sep 26, 4:50pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Rin says
When one's not an active trader, keeping an eye on out of control corporate debt, is a way to avoid the downturn


I've never done much fundamental analysis. Are you predicting a downturn? We havent even had a real scare in a few years, unless you count that hiccup earlier this year (DOW down 666 has 4chan all conspiracized )
18   HeadSet   ignore (1)   2018 Sep 26, 4:58pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

I’m confident that I’ve performed an order of magnitude better than any pro financial advisor over the last twelve months, although here in the States they’re at a disadvantage by not being able to recommend Cannabis equities

Take care here, sir. From your posts, it seems you have quite the affinity for the pernicious weed. That may "cloud" your thinking, as you see a big take off in profits as pot gets legalized. I am a huge fan of solar, and thinking that many others share my passion, I was certain that investing in solar power companies was the way to go. Got my ass kicked by SunEdison, which seemed a great buy at the time.
19   RecentCost   ignore (0)   2018 Sep 26, 5:04pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Putting all available funds for retirement in a single emerging industry is extremely reckless. This may result in making a ton of money but unless the investor is very young and has time to build up funds again this can result in a personal financial disaster. Overall my investments are not well diversified as most of my funds are tied up in trust deed investments but at least these types of investments have some downside protection with a max loan to value ratio.

Please always remember to diversify. You don't know what you don't know.
20   Rin   ignore (3)   2018 Sep 26, 5:30pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

CBOEtrader says
Rin says
When one's not an active trader, keeping an eye on out of control corporate debt, is a way to avoid the downturn


I've never done much fundamental analysis. Are you predicting a downturn? We havent even had a real scare in a few years, unless you count that hiccup earlier this year (DOW down 666 has 4chan all conspiracized )


Not a downturn ... though it is possible that the broad indices may see a downward slide after the rate hikes settled in.

The point is more that in general, increasing corporate debt, without exorbitant earnings per share increases, doesn't bode well for a dividend stock, esp when lending parameters grow tighter over time. So when one's an investor, with the "buy, reinvest divs, & hold" forever concept, the idea of a company which can't manage its debt profile, is not one to have in one's portfolio, esp if one's in a rate hike epoch.

But sure, if a downturn does kick in, would you rather be using your now, up ticked 8-10% dividend yield (up from 4% during a bullish peak) to buy more meaningful equities than a company who may be cutting dividends, just to make their creditors happy during the same time period?
21   CBOEtrader   ignore (2)   2018 Sep 26, 5:47pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

RecentCost says

Please always remember to diversify. You don't know what you don't know.


Even more true when predicting legal environments. One or two new laws and these weed stocks could drop by 90%
22   Aphroman   ignore (6)   2018 Sep 27, 5:18am   ↑ like (0)   ↓ dislike (0)   quote   flag        

RecentCost says
Putting all available funds for retirement in a single emerging industry is extremely reckless. This may result in making a ton of money but unless the investor is very young and has time to build up funds again this can result in a personal financial disaster. Overall my investments are not well diversified as most of my funds are tied up in trust deed investments but at least these types of investments have some downside protection with a max loan to value ratio.

Please always remember to diversify. You don't know what you don't know.


A good Capitalist seeks information and acts on it. With great risk comes great rewards

I think it is more wreckless to sit on the sidelines and watch so much wealth be created without getting in the action. I could cash out now, but that would trigger a very painful tax event. And then where to go with all the cash? Most of my holdings are still undervalued, so I’d wind up looking to buy right back in.

I took out a cash advance from a credit card yesterday, 0% until next November. $330 cash advance fee. I told myself no more adding to Cannabis so either i
23   Aphroman   ignore (6)   2018 Sep 27, 5:25am   ↑ like (0)   ↓ dislike (0)   quote   flag        

CBOEtrader says
RecentCost says

Please always remember to diversify. You don't know what you don't know.


Even more true when predicting legal environments. One or two new laws and these weed stocks could drop by 90%


Which companies do you see facing the potential of a 90%?
24   Aphroman   ignore (6)   2018 Sep 27, 9:14am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Patrick says
I own GE and PG. GE has been a disaster, but fortunately I hadn't bought much. PG's dividend is pretty nice, over 3%, and some appreciation as well.

Still looking for something to replace the cash out from SODA. Cannabis stocks are tempting, but are there any that actually make money?


I think MedMens share structure sucks and they already have a lofty valuation, but they’re ready to open in NYC, i hear them pumping on SiriusXM regularly, they are now a vertically integrated producer in Florida, they are THE brand for high end Cannabis dispensary (whatever that’s worth), and some big money must think their current valuation is worth investing into, because they just closed a bought deal at C5.50(5.15 now) which maxed out the over allotment for aggregate gross proceeds of approximately C$86,250,000.

Have any of you Californians been in one?
25   CBOEtrader   ignore (2)   2018 Sep 27, 9:16am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Aphroman says
CBOEtrader says
RecentCost says

Please always remember to diversify. You don't know what you don't know.


Even more true when predicting legal environments. One or two new laws and these weed stocks could drop by 90%


Which companies do you see facing the potential of a 90%?


The entire marijuana industry is beholden to legalization in US and Canada (maybe elsewhere to a lesser extent). If this legalization trend reverses, you lose. If it continues, you win.

Like you said, great risk can equal great reward. You know exactly what fire you are playing with. I wish you luck, and if I had extra money I'd take a speculation w you.

Even w an extreme positive expectation I wouldnt bet the farm. I've had the financial rug pulled out from underneath me before. Trust me, that downside black swan exists, and can ruin your life for many, many years. Is the black swan risk worth retiring w $10 million instead of a more guaranteed $5 or $3 or even $2 million?

For me, it's not.
26   Aphroman   ignore (6)   2018 Sep 27, 10:35am   ↑ like (0)   ↓ dislike (0)   quote   flag        

CBOEtrader says
Aphroman says
CBOEtrader says
RecentCost says

Please always remember to diversify. You don't know what you don't know.


Even more true when predicting legal environments. One or two new laws and these weed stocks could drop by 90%


Which companies do you see facing the potential of a 90%?


The entire marijuana industry is beholden to legalization in US and Canada (maybe elsewhere to a lesser extent). If this legalization trend reverses, you lose. If it continues, you win.

Like you said, great risk can equal great reward. You know exactly what fire you are playing with. I wish you luck, and if I had extra money I'd take a speculation w you.

Even w an extreme positive expectation I wouldnt bet the farm....


Canada has already legalized. Not much risk of a black swan reversal there, obviously with multiple companies valued at multiple billions. Now a road block could potentially be geopolitics on Oct 17 when Canada begins adult rec use FREEDOM sales, they may come in violation with treaties, but I don’t think Rob Sands and Leon Cooperman are going to be blindsided by that. I don’t see that as a real downside risk (possible buying dip)

In the US, we already see many lifelong Prohibitionists crumbling under the weight of Liberals winning The Right War on Drugs. Nine of our larger, more significant States are already Adult Rec legal

Colorado
Washington
Oregon
Maine
Vermont
Alaska
Massachusetts
Wash D.C.
California

NJ is all but a done deal which means NY is also a certainty

Florida has a massive medical market with Democrats campaigning hard for Rec.

Michigan will vote their way to adult rec at the polls in November.

We’re already hampered by no access to the financial system and the onerous costs of IRS 280 E.

DEA just rescheduled CBD to SCHEDULE V this morning so they can sell Epidiolex in pharmacies.

Republicans and Libertarians are Failed Losers. How could they possibly regain any momentum and bring back their War on Drugs?
27   Evan F.   ignore (0)   2018 Sep 27, 10:50am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Aphroman says
Libertarians

Not sure these guys would oppose legalization. Just saying.
28   CBOEtrader   ignore (2)   2018 Sep 27, 10:51am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Aphroman says
Libertarians are Failed Losers. How could they possibly regain any momentum and bring back their War on Drugs?


I cant speak for republicans or anyone but myself.

Seems like a lot of the establishment on both sides of the aisle was scared to be smeared as weak on drug crime. In fact it was R's like Ron Paul, and the libertarians who were anti war on drugs far before any D.

You're welcome.

Dont know why you are so fixated on placing blame exclusively on the fantasy R's in your head. I find it bizarre
29   Rin   ignore (3)   2018 Sep 27, 11:21am   ↑ like (1)   ↓ dislike (0)   quote   flag        

KgK one says
Why not get Berkshire b stock 20% or more n let them do dividend investment for me?


My number one complaint about BRK is that it gives no dividends, despite earning nearly $100B per year with little active management.

So when retirement comes by and one is fully vested in BRK, the only way to make money is to sell shares. If you took a similar profile as Buffet, but periodically pruned the bad debt holders, taking on less risk than him, you can start with $1M, reinvest divs (say ~3%), and when you have your $2M pile, instead of selling, all you do it stop the reinvestments (or curtail them a bit) and pay yourself. In a way, you're then a true business owner and not a trader.




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