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[eyeofdrtj_eckle]

United Parcel Service is one of the most respected Companies in The United States of America, and rightly so. They move an unbelievable volume of packages with a margin of error that approaches zero. Impressed yet? You should be. The work is very hard and the pressure is always on. You are young so here is my two cents. GO for it. Be positive, work safely, learn as much as you can and obey the rules. UPS is well on the way to becoming the technological leader and the Logistics end of the business will make UPS a very exciting place to work.

Did I mention it was hard work?

 

[upsadvisor]

Cheryl,

Diversity by its very nature is less risky than concentration.

HYPO's with the sole purpose of taking money does nothing more than reduce your cash flow, and actually increase your risk.

You have essentially borrowed money and are getting nothing with earnings potential in return
and you have exposed yourself to a potential margin call should the stock decline below your
pledge requirement.

Why would you borrow money and not put it into something that will grow in value in excess of your borrowing costs and reduce your exposure
to the underlying collateral ?

The strategy here is to reduce this risk of having a concentrated position, I cant stress
enough that taking a loan against your stock
without having a hedge can really hurt you.

Just look at what happened to all the Dot Com
millionaires who bought homes and planes, illiquid investments. If they had had some kind of hedge against their stock they would have avoided alot of the pain when their stock went south.

Again this is just advice not a lecture.

Best regards

 

[upsadvisor]

Reired1

Using UPS to aquire more UPS would completely defeat the purpose, if I understand you correctly.

For a person who is retired the main goal of any investment should be income and protection of principal.

Diversifiaction in this case would be heavilly weighted towrds Tax Free municipal bonds and Corporate AAA bonds with a limited exposure to common stock.

This is still diversification, additionally there is the question of Estate planning so the IRS doesnt stick their dirty little hands in your pockets.

Hopefully the Government will permenantly abolish the Estate tax but without any new legislation the estate tax will come back in 10 yrs so it is esential that if your estate is over 2 million dollars you start planing now.

 

[upsadvisor]

dannyboy,

The 8 - 10 % is an average 10 year return, in any given year as we have seen markets can be up big and can be down big. This strategy as with all good strategies is one that wins over time.

Even in a down market there are good places to invest, biotechnology stocks, food stocks and defense stocks were sectors that did well even while the market was declining. On the fixed income side if you owned bonds prior to the Fed int rates cuts you are probably pretty happy right now as the value of your bonds has increased nicely.

The point is diversification smooths out the bumps in the road and over time will increase the value of your assets.

I know its hard to do but forget the last 3 yrs and focus on the last 10 - 15 years your overall rate of return would have been close to 12 % even including the last 18 months.

UPS is a great company that is not the question the question is will the stock grow at 8 % a year for the next 10 years.
( at $55 a share thats 4 1/2 dollars a year )
and over the next ten years how many union contracts will need to be negotiated ?
what will be the price of fuel ?
There are too many variables to consider and that is the risk you take when you hold one concentrated position.

Better to participate on the upside and protect yourself on the down side.

 

[upsadvisor]

dannyboy,

sorry one last comment.

The hedge strategy is such that if the value of the underlying stock should decline to a point below what is needed to cover the HYPO the assets
that were purchase are used to cover the shorfall and not your UPS stock. This after all is strategy that looks to protect the UPS position first and foremost.

 

[upsadvisor]

my2cents

Boy you guys are making me work
( good job always question everything )

This hedge is 100% liquid as you are not hedging
the UPS stock you are leveraging the stock thru a HYPO and using the funds to diversify your holdings.

This is not a margin loan where the UPS would be at risk and it does not involve a conversion of the shares form class A to B.

Any calls would be covered by the assets in the diversified portfolio again the idea is to protect the UPS.

The hedge stratey that would involve actually using the UPS stock would be a collar or pre paid forward.
In these instances you are directly putting the UPS in play.

In a collar you pick a ceiling and a floor on the stock and if it should hit either price you would be executed. What you are doing is protecting yourself on the downside but you are also limiting your up side. This strategy is usefull for holders of greater than 10 million in value of a stock.

A pre paid foward is essentially the same thing except you take payment on the stock sooner rather than later.

As far as how much to hedge it depends on the clients needs not the stock.

 

[upsadvisor]

legs,

I think what you have done with the margin loan to buy some stocks is potentially a good move.

What I would suggest is that you remove the emotional involvement from the equation and remove the need to pick stocks as well as when to buy and sell them.

If you have enough in UPS stock I would talk to your Schwaab advisor about getting an money manager that will manage the account.

If you borrow money thru a margin loan or a HYPO and buy stock yourself you are reducing your risk of concentration but you have taken on added risk of trying to run your life as well as your portfolio.

I cant think of anything harder than trying to pick stock on a consisten basis without a goal or a discipline.

Why did you buy food and drug stocks ?
What return are you looking for ?
Do you have a target price on the up side and the down side ?
What is your goal ?
Why you are investing is more important that what you are investing in.

Are your investing for retirement ?
if so is this too much risk and should you be buying bonds ?
How much can you stand to lose ?
What is your tax bracket ?

Etc...

Ther are many questions you need to ask yourself before you buy anything.

Good advice is based on your needs not a stock.
You need to get an examination by your doctor before you can get any medecine.
So it goes with investing.

 

[legs]

Investing isn't brain surgery, it is absolutely something that an individual can do themself if they read the Wall Street Journal and Smart Money magazine. I've got portfolio worth a couple of million much of which is in UPS stock. I manage it myself and have done much better than many of my friends that rely on their brokers. A couple of my collegues have their money managed for them and their returns have not even beaten the S&P this year. Their brokers put them on margin and then sold them mutual funds that have nice fat loads so that they could earn a commission. My advice for them was to dump the brokers and take responsibility for their portfolio themselves. For a well diversified no brainer they could buy a no load S&P index fund.

 

[cheryl]

A diversification suggestion from Jim Cramer of the Street.com, he likes Clorox:

52 week range: 28.3750 - 48.6250
Earn/Shr 1.63
22.16 P/E
Mkt Cap 8.557B
Div/Shr 0.84
2.33 Yield

 

[ontheups]

I have been employed at UPS for 11 years. I started as a part time employee on October 29, 1990. My main goal,since I have been employed with UPS, was to obtain a full time position. After nine years as a part time employee,
I finally achieved this milestone on October 29, 1999. Sometime thereafter, UPS was ordered to create a portion of there 10,000 New Jobs. When these jobs were created, these employees were given a seniority date retroactive to August 1, 1998 or August 1, 1999 and back pay retroactive to the according date. Since these jobs should have been created while I was a part time employee, why wasnt I given the opportunity to sign these bids for a full time job? Now, approximately 26 people in my building have full time seniority dates of August 1, 1998 or August 1,1999 some of whom have only been part time with UPS for 2 years.

As a result or this, I (an 11 year employee) get laid off before them (a 2 year employee). They (a 2 year employee), pick when they want to take their vacation before I (an 11 year employee) do. They can win bids on new jobs before I can. They got a lump sum, retroactive pay check for a job that I would have obtained and was never given the opportunity to have. Is there something wrong here, or was I misrepresented by the Teamsters Union? What is my next coarse of action?

 

[jbul_ups]

What gives . It is now the 13th of the month, shares are supposed to be purchased on the last day of the quarter. First Union at first told me the shares would be posted to my account by the 5th, then the 8th, then the 11th. Now I get this from First Union:
Thank you for contacting First Union.

The purchase was made and recorded just not posted. UPS has not authorized
First Union to post the payroll. UPS apologizes for any inconvience this
may be causing. The payroll purchase hopefully will be seen soon. Sorry for
the delay.

UPS has not authorized?The payroll purchase will "HOPEFULLY" be seen soon? where the hell has my money been going each pay? My understanding was, that money was forwarded to First Union? UPS apologizes? Send da money already..it's my money damn it!!!

 

[upsadvisor]

Legs,

You did not answer my questions.

What is the goal ?

And if you say your friends money managers have not beaten the S & P I would be curious as to what type of money managers they were.

I would be willing to bet they are Large Cap Growth managers with too much exposure in technology.

If you hire one type of money manager your not getting diversification, and its not about a money manager its about diversification.

The only way to get the correct diversification is to have all asset calsses.
( Bonds & Growth & Value equties )

Putting the money into a mutual fund I agree is not a proper way to diversify.

Why buy someone elseses stock with their cost basis and tax exposure.

As far as this not being brain surgery, how is the Wall Steet Journal or Smart Money magazine going to help you if you are using information evey one else has to make your decesions ?

What you are doing is following the herd and moving to the next hot hand, and this is not a plan but a reaction.

A good long term plan ignores day to day noise from the markets and does not care what the Dow is doing on any given day.

Would you perform brain surgery out of a newspaper if it is not what you knew how to do ?

There is nothing wrong with seeking the advice of a professional this is what we get paid to do because this is what we are trained to do.

Just as with all things let the buyer beware.

Shop around, get the professional to talk to you at length, meet if possible so you can look into their eyes and see if they are their for you or for them.

Belive me there are professionals out there that truly want their clients to make money and not just line their own pockets.

P.S. buying an S&P index you will always underperform that index because the fund can not match the sector weighting of the index and the mutual fund is performance driven. In addition funds withdrawals negatively effect the funds performance as the manager will have to sell positions in the portfolio to raise the funds.
Also you still are not getting diversification as there is no exposure to bonds which is a key element as it produces income and is a hedge againt declines in the equity markets.
As far as the no load aspect the fee is charged every year and it comes directly out of the funds perforance ( 12B1 fee )you never have to write a check but you pay all the same.

One last comment if you have managed your portfolio and have had good returns that is awesome !! I hope you continue to do well and good luck in the future.

 

[upsadvisor]

Cheryl,

How is buying Clorox diversification ?
Ask yourself

Why I am buying Clorox ?
What will I do if it goes down 10%?
What will I do if goes up 10% ?
Is that level of risk worth the reward ?
What is the real rate of return after taxes
if it were to go up 10% ?
How long do I want to hold this stock ?
Do I know what they do ?
What kind of management do they have ?
Are they leaders in the markets they compete in ?
How much debt do they have ?
How much cash ?
What are the long term prospects for the industry ?

Will this stock help me reach my goals ?
Am I willing to risk this money ?

 

[cheryl]

ups advisor,

Your argument that we are making poor decisions if we invest without a full service broker would really be more convincing if proved your superior knowledge by giving some advice instead of asking generalized questions.

You wanted to know why I mentioned clx...

Since clx has a market cap of $8,444MM it is a small cap stock so it would be a canidate to diversify a heavily large cap portfolio.

What is the company's Return on Equity? Why is it important?

Return on Equity (ROE) measures how well a company generates income on its shareholders investment. (Note that it is not the return on the company's stock.) In its simplest form, ROE reflects a company's profit margin, its efficiency in the use of assets, and its financial leverage. In general, look for a return on equity higher than the industry average, indicating that the company is generating higher income on shareholder investment.

Return on Equity (Provided by S&P)
CLOROX CO Industry Market

122.7% 29.4% 13.7%

Is the company Profitable?

Profitability largely depends on a company's marketing strategy, cost efficiency, and competition. In general, look for companies with higher profit margins than the industry average. There are exceptions to this general rule. For example, some new businesses may sacrifice short-term profits in order to invest in future growth.

Profit Margin (Provided by S&P)
CLOROX CO Industry Market

8.3% 9.1% 5.9%

How well is the company managed?

Consider return on assets and sales per employee. Return on assets (ROA) measures how well a company generates income on its assets. Look for companies with higher ROAs than the industry average.

Return on Assets (Provided by S&P)
CLOROX CO Industry Market

7.5% 9.9% 2.7%

Also, examine sales per employee, which measures the productivity of a company's workforce. This is especially important when evaluating a business with fewer physical assets, such as a financial services or software company. In general, look for companies with higher sales per employee than the industry average.

Sales per Employee (Provided by S&P)
CLOROX CO Industry Market

$-- $636,400 $284

What is the company's debt strategy?

The debt-to-equity ratio measures a company's financial leverage. Different industries tend to have different levels of debt. Therefore, compare a company's debt-to-equity ratio to its industry. If it is dramatically different, it may signal a red flag. If it's too high, the company may be in financial trouble. If it's too low, the firm may be missing an opportunity to increase returns for shareholders. Why?

Debt-to-Equity (Provided by S&P)
CLOROX CO Industry Market

2.6 0.7 0.8

By the way, I don't own this stock but was considering it for the future. Happy Investing!

 

[upsadvisor]

Cherly,

I never said that any one was making a poor decision by not working with a broker, nor did I ask why you mentioned Clorox.

It seems as if you have had a bad experience but I would ask that you not paint every one in the industry with the same brush.

What I am suggesting is that you ask yourself the questions I listed as part of your process whatever the investment.

Further you still have not answered the original question of how does buying one equity equal diversification ?

Also if you are going to mention ROE it is important to know that any company can improve their ROE simply by re purchasing their stock or by retiring debt among other accounting measures.

There have been plenty of companies who had what looked like great numbers until things slowed down.
Lucent , Cisco , Sun what happened to their great numbers.

Finally if you have been reading my comments you would see that I have been offering advice and that is a way to diversify to protect and grow your assets.

If you are asking for a stock pick I am sorry to disapoint you.

I will say this again, this is not for every one and if you are doing something that is working stick with it.

Finally it is not about being superior this is not a contest I am trying to offer up an idea that is effective, conservative and cost efficient
if you dont like it or agree with it thats fine after all being able to disagree is one of the things that makes our country great.

Best regards

 

[cheryl]

upsadvisor,

I don't mean to be argumentative, I get cranky when people come to my web site and advertise their services on this board. Please forgive me if I overreacted.

I used to manage a private trust and met all kinds of unethical brokers interested in a piece of the pie. It made me very skeptical about your industry, which must be apparent in my post. You are an unknown person who came here and posted your interest in working for the users of this web site using the name UPSadvisor, which speaks for itself. Feel free to continue sharing your ideas. Our UPS community includes many of my friends and family so I'm a little overprotective of them.

 

[upsadvisor]

Cheryl,

No need to apologize,I thought I had made my intentions clear when I had posted my first comments, I am not here to pitch a product or my services.

My intent is just to share one idea that I have used with some of you fellow UPS alums and I though this would be a good forum to bring it to.

I must be honest I did look into Clorox after you metioned here, and I am hoping to get some ideas here as well that I can share with others.

As far as the moniker of UPS advisor call it lack of imagination, no insult meant it just made sense that I have advised some UPS people and this is a UPS board so....

Please dont read any thing into it, and on behalf of honest reps I apologize for your past experiences.

All we have is our reputation and the trust of our clients that we are doing what is best for them.

I take it as a personal insult when I hear about things like this. What sense does it make to do something to jeporadize a relationship, I would much rather have a client for life and one who would be willing to recommend me to his or her friends and family because I have demonstrated
my credibility through honesty and integrity and built up that level of trust over time.

No one knows every thing and any time someone tells that they do walk away and any time someone tries to sell you something without getting to know your needs they can not possibly have your best interests at heart, how could they when thay dont know what you need.

I hope UPS surprises us all tomorrow with their earnings.

Best regards

John

 

[corb]

I was recently forced to resign from UPS for health reasons. I was under light duty, forced by my manager to go on disability, the claim was denied by Cigna(UPS insurance carrier) and forced to take a full time hub job or quit. UPS will see me in court. I was a long time loyal employee for UPS and got booted because of my health. They tried to force me to sign away my rights to sue, etc. I was not dumb enough to fall for that. I just wanted to let all you know who you really work for. If UPS feels it can't squeeze enough out of you then they will force you out. I saw it happen to others and guess I didn't feel it could happen to me. I learned the hard way.

 

[retired]

Get a grip jbul, do you really think that this is a plot to keep your $100 a month for a few more days? They told you that the purchase has been made. Those paper statements we have all gotten over the years take a few weeks to reflect purchases. If the paperwork is too much stress for you then maybe you should pull out of the payroll deduction plan and put keep your money under your mattress.

 

[retired]

GO TO SCHOOL

UPS is a great place to work but you will regret not going further with your education. UPS part time work is perfect for a student. Then when you are old enough to be a driver you will have a degree too.