Revenge investing…

You’ve heard of Revenge Porn – post compromising pictures of a former boy/girl friend on Internet site. A guy got 18 years for that about a month ago.

There’s also – http://www.cnbc.com/id/ or this – https://books.google.com/books?id=Lt28RNH2biYC&pg=PA138&lpg=PA138&dq=revenge+investing&source=bl&ots=urFtzNVWDl&sig=Y1eW1H6f0gFl75ojUvMpxAdlR4U&hl=en&sa=X&ei=U5RvVZCqCNjmoATs9IHwBg&ved=0CD4Q6AEwBA#v=onepage&q=revenge%20investing&f=false

IFO is not thinking of either of those kinds of revenge, though both links are intriguing. It’s just a phrase she invented for herself to describe getting back at a company that is charging more than you think is right for the product or service it is selling.

Examples:

Gasoline/petroleum companies – Problem: you are angry at the evil oil companies making billions of dollars while you are paying $3 -$4 per gallon for gasoline. Solution: Buy shares in one or more of them, then laugh when the price of gas falls and you start saving money driving. Meanwhile, you can be laughing at every dividend check they have to send you.

ConocoPhilips (COP) is paying dividends yielding 4.6%, sounds good, but the price has been going down for weeks. That’s because the price of oil went down. This is a hard one.

Phillips 66 (PSX) is paying 2.8%, price plunged, then rose, now is stable. Not for the faint-hearted.

Chevron (CVX)  pays 4.2%, and price curve looks much like COP’s curve, more of a ski slope, actually.

Exxon Mobil Corp (XOM) – pays 3.4% and curve, while much like the ski slopes, is not quite as steep.

Drug companies – Similar reasoning and approach. Buy some shares, then laugh when you have to/want to buy their products because they ARE PAYING YOU their usually generous dividends. Hahahaha!

Utility companies – If you are getting your natural gas, electricity, telephone, Internet, television service from a publicly traded company, see Drug companies, above. Most  utilities are  regulated by the state, so price improvements usually track the overall economy and yields are conservative, but generous.

During the period of “deregulation” some companies tried to be “more entrepreneurial” and added non-regulated services, usually by buying smaller companies. Since upper management had been “protected,” which is the real meaning of “regulated,” they had no idea how to run their new, supposedly more nimble and profitable divisions.

After a period of massive confusion, managers figured it out, or went bankrupt, or were fired. Now except for communications, the utilities have returned to their boring, safe selves. There’s always the possibility an idiot will find his/her way into the CEO’s chair, though, so you still need to keep an eye on them.

Regulatory agencies regularly grant rate increase requests with built-in dividend increases. Your increasing utility bill won’t annoy you so much if that company has to pay YOU increasing dividends, too.

As always, no matter how old, big, well-established a company is, you should still do your due diligence before you make any purchasing decisions.

Full disclosure: IFO owns shares in CVX, PSX, COP. She is not buying or selling any companies mentioned in this post in the next year.

 

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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