Tag Archives: growth

What’s the Story With Snowflake?

So, yesterday was the first day for the IPO for Snowflake Inc. ($SNOW). I always wanted to try to get in on the ground floor for companies that go public. I figure that they start out small and as they prove their ability to perform and generate revenue their stock price tends to go up. When I heard about Snowflake Inc going public I started following in hope of being able to get in on the ground floor.

The first time I heard about the tentative stock price was when they were talking about it being around $23/share. Seems reasonable. I could afford that. That wasn’t an overly large amount of money and I could come up with a few dollars to buy some shares to try my hand at investing in a company just starting out trading shares. I couldn’t screw up too badly at $23/share.

But the day before the IPO and the day of the share price was scheduled to open at $120/share! What happened? Then when the market opened and I checked how it was doing I found that the stock price had climbed to over $230/share. What?!?!? What did I miss? I can’t understand how the price could have jumped that high. What was the new price based on? Were that many people buying the stock? I read all of the reports and articles about the company but I wasn’t able to determine which factor was the key to driving the price.

So, how does it work? The share prices are based on the company fundamentals up to a certain point and then it becomes like a religious thing and faith takes over? Or is it one of those deals where the big players get in on it early, wait for the share price to peak and then when it starts dropping in price start selling off their shares to insure profits? Is it all big money investors or are there any small investors? If so, are they able to keep up with the trade activity in order to not lose everything?

I’m still new at this investing game so I try to learn whateveer I can so I can better understand the way things work.

Diamond in the Rough?

A couple of years ago I came into a large sum of money. I didn’t want to waste it or just have it sitting around in a bank account while it was pissed away. So I decided I wanted to put the money to work for me. At that time I knew very little about investing and decided to go to my bank to seek out a financial advisor to help me out. As luck would have it my bank was running a promotion where they would deposit a small amount of money into your account if you invested a large amount of money through them.

Well, off I went. Again, knowing very little about investing (except that I didn’t want my money left in a statement account), i discussed my financial goals at the time with my new financial advisor. Since that time my financial goals have changed/evolved. I still am more on the conservative side and prefer safer investments with minimum risks but I also am looking for accelerated (not aggressive) growth. I want stocks & funds that grow but I want them to grow at a faster rate. Which is why I am now participating in DRIPs with all my investments. I prefer dividends be paid as often as possible; prefer monthly, will accept quarterly but reluctantly take semi-annually.

This past April when the last fund expired/matured/closed and liquidated the shares from that fund and invested in a unit trust (FKUVBX). I don’t know anything about these type of funds but the value of it has increased 26.37%. This seems good. Initially, I told my financial advisor (FA) that I wanted to be conservative and to protect my assets. I still do but my thinking that has changed is that I am now interested in compounding my funds. FKUVBX only pays dividends twice a year and I can’t find any information about it other than the value increased. I don’t find that much information on the fund. My normal sources of investment info come up blank and only place I find the ticker FKUVBX is on CNBC.

I know very little about this fund other than it is trading at the high end of its 52 week range. Right now it’s up 26.37% but what companies/industries make up this fund? What’s the dividend rate, if any? I guess I’ll stick with it until the end (2022).

More About My Investing Strategy

I’m going to expand on the details of my investing strategy. Previous posts I have stated which stocks I prefer and basic outline of my criteria in selecting specific stocks to buy. Again, I’m going to state that I am a dividend investor and not a value investor. In my mind, the essential difference is that the value investor focuses on share price of the stock. The dividend investor focuses on whether the company issuing the stock pays dividends or not. I know that this is a very simplistic view, but bear with me.

As a dividend investor the price per share isn’t ignored. But it isn’t the primary importance. Just like the value investor, the dividends paid are not ignored, either, it’s just not as important as the price. The value investor looks for pure growth (i.e. increases in share price) even though they may plan on holding the stock for years. That’s how they view their stock holdings.

Dividend investors, at least for me, look at stocks growing in value also, but I also look at increasing the number of shares increasing by reinvesting those dividends that I receive. Value investors look to increase their stock ownership by additional purchases of the stock, especially during a DIP (Drop In Price). Again, this is another oversimplification.

To me the goal is to increase the number of shares I won with the minimal cost to me. Like a value investor, I will buy additional shares of stock on a DIP, otherwise I maintain my Divident ReInvestment Plan (DRIP). Basically, maximizing benefits and minimizing costs. When I review any potential stock to purchase I look at many factors.

  1. Does the company issue dividends? If no, I then move on to the next potential stock.
  2. If the company pays dividends, how much does it pay?
  3. How frequently does it pay dividends? Quarterly, monthly?
  4. What is the 5 Yr dividend growth?
  5. How long has it been paying dividends?

Once I get the answers to these basic questions, I look at the stock price. I then go through the similar analysis that a value investor goes through to determine if it is a stock to invest in or not. The stock may be one that I don’t feel is right for me at this point in time so I may put it on my Watchlist. Additionally, my strategy doesn’t just deal with buying stocks, I also have a strategy for when I should be selling. Because I am a dividend investor, dividends are key. If a company cuts/reduces their dividends two (2) period in a row, it becomes a prime candidate to be sold. I will now review the numbers in a different light and look at the stock to determine if there is a chance for the dividends to rebound. If in the they reduce it a third time or eliminate dividends, it becomes an automatic sell.

That’s my strategy for dividend investing in a nutshell. You may agree with it or you may not, but it is MINE. I really don’t have a hard and steadfast set of numbers for any of the quantitative elements. It really comes down to what I am comfortable with when I look at the numbers. To me stock selection is a subjective process, unique to the person. I may decide one way about a certain stock and you may decide another way. It has to do with how much risk you are willing to tolerate. Part of my strategy is to avoid high risk investments. How much risk am I willing to take on? Again, it’s subjective. I prefer ETFs over individual stocks for that very reason. If I buy individual stocks, I prefer an established company to a start-up. My tolerance of risk is tied to my timeline, which is now short. So, I don’t have much time to recover from any massive losses that I may incur. And lastly, my investment strategy is a “living thing”. As I progress and learn my investment strategy evolves and changes.

You can look at investment strategies from multiple people and take-away what you feel comfortable with and what lines up with your goals. Don’t let anyone else dictate what your strategy should be because if you find someone that tries to pressure you into adopting their strategy, keep digging and you’ll find out what their hidden agenda is.