................................

[C.Ann]

:confused3

[Jodi1980]

I purchased Disney stock through the company for the minimum of $1000 during the month of January 2002 - it cost $21.47 per share. When I saw it going down this past month, I mailed in another $200 and got 11.35 shares at $17.15 a share. If I could purchase more, I would!!

If you could come up with $1000, go to the Disney website and buy some!

[All Aboard]

Jodi, I'm very interested to hear what makes you think DIS is going to be a big winner. It's at $15.31 now, down nearly 30% from when you made your first purchase just 6 months ago. Is it the "heck, it must go up theory?" S&P is considering a downgrade. I am really interested what is driving your DIS purchase decisions right now.

And I'm being serious about the next statement. Are you a professional stock analyst? Because if not, I think your last sentence is a bit irresponsible. Sorry to sound harsh, but you never know who will read it and how they will react.

[manning]

What's that old saying? Buy on the bad news, sell on the good news!

If you think Disney has potential, dollar cost averaging makes sense.

[Jodi1980]

I have 20 years to retire - I'm counting it will go up again!

[PamOKW]

I don't think people should let their Disney enthusiasm cause them to invest money in Disney that they will need in the short-term. It needs to be looked at from a business standpoint. Disney is more than just the theme parks. Look at the other parts of the business and how they will do in a slow and/or wartime economy. Disney, like other stocks, may be bargains. But it's hard to time the market. It would be better to put money in mutual funds (maybe one that has Disney in it) to spread the risk or to make consistent purchases over a period of time of Disney stock. Disney has been inexpensive for quite awhile now.....and it keeps getting more inexpensive. I'm hoping that things will turn around again soon. Consider this, the stock was at an 8 year low at one point Friday. Money that has been in Disney stock for 8 years has earned nothing but the dividends.

[Tony P. IL.]

entertainment does well. I am not a broker but have watched and listened to investment programs where the said people look to entertainment to relieve some of the everyday stress during bad times (military action). During one of the programs they said Movies (shows) do well. I myself think this makes sense.

[toefungus]

NO matter what, the stock market will ALWAYS go up. Right now we're just in a little downfall, but eventually it will haev to go up. These people drive me crazy when they sell their stocks when it goes down and they lost a lot of $. BUY NOW! I just did, IT WILL go back up.

[manning]

I wouldn't look at it as short term. any equity investment should be looked at as a minimal 3-5 year term. In other words buying and holding for 3-5 years minimum. There's no way to time the market. Some will argue differently, But they have been only lucky, extremely lucky. Studies have shown if you hold for a long time (don't hold me to it but I think in excess of 10 years) if you had to sell in a down market, you still make money.

Several things to remember:

1) Don't invest money that you will need to live on.

2) Invest long term

3) Don't act emotionally (tends to keep you from buying low and selling high) and on hot tips

4) If you don't have a large amount of money to invest, think mutual funds.

5) Diversify, don't put all you eggs in one basket.

Jodi1980, don't worry about the stock going up and down. You have 20 years to invest. Believe me, dollar cost averaging is your best friend.

That's my opinion for what it's worth.

[Jodi1980]

I also contribute each month to my first Roth IRA this year. It is invested in mutual funds. Plus I just purchased last month GE stock since you only needed to start with $250. I put it in my daughter's name so she can start learning about investing. I got it for $24.88 per share; Friday it closed at $29.50 a share. Also she has a lot more time until retirement since she is only 15 years old!

I also know you should not invest money you may need for more important things!

[toefungus]

Very well said manning. Those are the basics to make money off of stocks, mutual funds, bonds ect....Don't expect to buy Disney stock and make money overnight. It's going to take years 5+ to really make some money.

[manning]

Jodi180, Make sure she reinvests the dividends.

[Strawman]

I purchased my DIS stock 5 years ago at $35 (actually $105 then a 3:1 split), on the belief that "it has to go up". Well, now it's worth less than half what I paid, and I still don't see anything to jump up and down about. You're not buying Mickey Mouse, you're buying a giant conglomerate that seems to have lost its way.

[Bob O]

I own some disney stock and i wouldnt purchase anymore at the current time. The current management hasnt shwon me any proof that they can fix what is wrong with the company. There has been one debacle after another dince Well's death and nothing on the horizon that they have any idea to fix what ails the company.

[Goofyposter]

I believe that the current evaluation offers alot of folks who presently have a position in the stock to dollar cost average down with possilbly great effect. I've bot DIS as high as $42 before...I liked it then, I like it now. Everyone must adopt an investment methodology that's right for their particiular circumstance. No equity invest should be made (IMHO) with cash that's needed within a 5 year time horizon. My opinion is that DIS is a long-term core holding....long outlasting "current management"....When I look at the unbelieveable wordwide franchise of intellectual properties, the comparatively strong balance sheet, I personally have no conerns on holding and increasing my exposoure. Sure I "love" disney...that's one of the reasons I do hold the stock...I feel better informed and knowledgeable about it than say owning some company that test's moonrocks or sumpthing. I have a contradictarian streak in me...but if it's a quality company whoses products and services hold an enduring value...even if current management, or the economic environment may not be 'ideal'....I'm confident that 20 years from now I'll be whole and with a reasonable return on the underlying capital.

To be taken as investment advice....but, jurst consider the source! Uhyuck! ;) :teeth:

[PamOKW]

We have a big mix of people who read these boards. Some are very knowledgeable about investing, some know a little (raise hand), and some know relatively nothing. People should just keep in mind that while it's true that the stock market as a whole is generally the best investment, putting money into individual companies is far more risky. Look at folks who owned Enron or WorldCom. That stock is not coming back to the levels it was, if at all.

I was someone who always thought it was a good idea to invest in the company I worked for. After all, we were proud of our work. Luckily, someone explained the danger of that to me. The problem that has now hit many Enron workers. If you work for the same company that you also invest your savings with, you lose everything if it collapses. You lose your present job and your savings in one fell swoop. If your spouse is also an employee....it's even worse.


While it may be true that tough times cause people to turn to entertainment like movies, it's very clear already that it turns them off of traveling and destinations like WDW feel the impact. Corporate belt-tightening also scales back advertising....the lifeblood for the ABC cable and broadcast entities. I sure hope things turn around for Disney, and I'm confident that I will not lose my initial investment, but I have not made very much with them over quite a few years either.

GE is a much more diversified company than Disney. It is almost its own "mutual fund" with holdings ranging from medical equipment and broadcasting to military equipment and financial services to name only a few.

I took a quick look at the charts for GE and Disney. On 8/31/92 GE stock was at $6.10. It closed Friday at $29.50. That's much lower than it's been in recent years but is still a gain of nearly 400%. Disney, on the other hand, was $11.38 on 8/31/92 and closed Friday at $15.31. A 34% gain over the last 10 years. :(

All that said, most "experts" are still calling Disney a "buy". Here's a link to an Orlando Sentinel article

Disney Stock (http://www.orlandosentinel.com/business/tourism/orl-bizdisney03080302aug03.story?coll=orl%2Dbusiness%2 Dheadlines)

[manning]

Here is an example of long term investing. I looked at GE and Disney charts, both at the maximum charting available by Yahoo and the year year range. If you chart from 1996 to present it shows GE at about 25% gain and Disney at somewhere around 40% loss. (can't use exact numbers as the % lines are not uniform, i.e. if line is not on a % line, have to take best guess.)

If you chart them from 1962, Disney has a 12,000 percent gain and GE around 8,000 percent gain.

This shows several things. 1) the longer you're in the market (long term Investing) the better your chances. Beware it's not gauranteed). 2) Diversification. notice one went up, the other went down in the five year chart. (this is an oversimplified example, you need to be in more than two companies). and 3) the two companies are in different sectors of the market. GE is in conglomerates and Disney is in entertainment diversified.

Also if you noticed in the extreme short term just about everyone got hit.

Now someone comes along and says "the heck with this, I'm keeping my money in the bank". The problem there is, long term, inflation knocks down your buying power.

Money is a two edge sword. You spend a lot of time acquiring it, then you spend a lot of time preserving it.

[PamOKW]

If you chart from 1996 to present it shows GE at about 25% gain and Disney at somewhere around 40% loss

That's probably a pretty good read. SmartMoney has a comparison that can go back 5 years and gives and accurate percentage reading. GE rounds to +28% and DIS -38%.

I remember when I was a kid hearing that the stock market was where wealthy people could make money. One reason was it wasn't in there for this generation, but for the next. As more "every day Joe's" have entered the market, we have to remember that we don't all have that much time to leave our money in the market.

[Bstanley]

Careful boys and girls.

Please remember to take into account stock splits when calculating what a stock has done over the years.

I took a quick look at the charts for GE and Disney. On 8/31/92 GE stock was at $6.10. It closed Friday at $29.50. That's much lower than it's been in recent years but is still a gain of nearly 400%. Disney, on the other hand, was $11.38 on 8/31/92 and closed Friday at $15.31. A 34% gain over the last 10 years.

Disney Stock split 3 for 1 in 1998. So if you owned one share on 8/31/92 and kept them till today you would now own 3 so your value would be 3 * $15.31 or $45.93...so it would be worth more than GE by far - yes?

Maybe - as an exercise for the student - what did GE stock do during that time period? ;-)

[PamOKW]

so it would be worth more than GE by far - yes?

No. The historic charts adjust the price to accomodate for the splits. The cost of a share is the cost of a share. You just own more of them. For example, today a share of DIS is $3.00 if it splits three-for-one tomorrow you own 3 shares of stock worth a $1.00 each. You still have $3.00 worth of DIS stock. A split let's Disney bring down the price per share to a more affordable amount for new purchasers.

You are correct that a look at GE would show their splits for comparison. I'm guessing they may have had more.

[PamOKW]

Okay, did the quick search.

In a ten-year period, DIS split 4:1 on 5/18/92 and 3:1 on 7/10/98.

GE split 2:1 on 5/16/94, 2:1 on 5/12/97 and 3:1 on 5/8/00

So, for the last 10 years, each DIS share is now 12 shares and each GE share is now 12 share! How's that for coincidence.

[All Aboard]

Bstanley, Pam is definitely using apples to apples and considering splits.

Disney's adjusted closing price is right where it was in early 1994 - more than 8 years ago (when was it that Frank Wells passed away?). During that 8 year timeframe, the stock grew but has since lost all those gains. Are we at a price trough right now? Who knows. The market is so tenuous right now that snippets of bad or good news swing things wildly.

For Disney, they've reacted to softening trends with massive cost controls. That short term fix may have prevented even deeper price losses than they have experienced. But, what has it done to help them maintain some of their core customers?

Are the decisions to heavily cut back Imagineers, severly reduce feature animation and make significant cutbacks at the theme parks solid long-term strategies? Does Disney benefit from becoming a straight to video sequal clearing house? Do the losses from the failing network, the black hole money pit internet portal and the decision for drop $5 billion on the ABC Family Channel give you warm and fuzzies about the direction that current management is taking this company?

We can discuss dollar cost averaging and market trends all day long when we are talking about a diversified mutual fund. But, when discussing investment decisions about a single stock, all the questions in the previous paragraph are what are important.

[Bstanley]

In this case the source of the data was adjusted for the split(s), and the stocks themselves actually split the same. But nonetheless I felt compelled to point out that it needed to be considered, just call me finicky... ;-)

You should always be prudent when buying stock - but just because a company is down doesn't mean it's stock might not be a good buy. Often those stocks have the best opportunity for increasing.

The quote that someone was searchng for earlier is - "Buy on the rumor, sell on the news".

When the rumor that the Big ME is going to 'pursue other interests' gets so loud that you can't hear anything else, you might want to take a roll of the dice and see what comes up. As was pointed out earlier - don't gamble with money you can't afford to lose...

[PamOKW]

BStanely -- I'm with you. You always hear about the folks who bought a stock when it was low during a tough time like now and then sold it for the big bucks when it came back up. Of course, you have to know when it's time to cash it in. ;) (and which stock to buy). But, people need to keep you last line

don't gamble with money you can't afford to lose...

in mind as well. Because buying just because it's low is a gamble that it'll come up and you'll know when to sell.

Gcurling -- Thanks for the confirmation I was doing this correctly. I was starting to doubt myself. As I said, I only know "a little". :)

[manning]

PamOKW, you're doing ok!!

[Bob O]

When i think of the future of disney i think the future is not rosy because of the current management team which has caused problems for the company by the purchases they made ie abc/fox family channel and still pending lawsuits ie pooh as examles. Also the next management team wont have the luxury that eisner/wells had in that they had a vault of old disney movies that could be released every 5-10 yrs for more money. Also a untapped resource in all the vacant land at wdw that could be developed and become a revenuw source/also the admission price for wdw could easily be increased for more money and these things wont exist when their is a change in management. They have done little to restock the vault for easy revenue for the next regime.
I think when the managment change is made they will have to create more product to make money and not be able to mine the old products and with the amount of people who have left the different divisons be it movie/imaginerring etc it will take a while to regain their old creativity.

[manning]

That's why you don't try to time the market. There is someone on one of the oil company boards. He was proud that he sold on a high and was waiting for the low to buy in. The low was upper 30's. It's now around 44. He missed the timing. That's why you dollar cost average.

Here is a quote from an article from Kiplinger.com

"The sad fact is, virtually no one has ever been able to time the stock market well enough and consistently enough to outperform long-term holding. Says John Markese, president of the American Association of Individual Investors: “Good timing can’t be beat.” The problem is, “It just can’t be done.”"


Warren Buffet is worth 35 Billion dollars. He mainly buys and holds. A study was done to determine what he would be worth if he tried to time the market. He would have been worth only 5 Billion dollars. By the way, he bailed out of Disney before the Bass Bros did.

[TiggerFreak]

What the Bass family did was not "Bailing."

[Bob O]

I would agree dollar coast averaging is best for the average investor. But there are some who have done well w/timing the market and im sure that studies could be done where Warren Buffet successfully timed the market and could be worth more. Studies can always sya what you want them to, they are easy to be rigged to get the desired result.

[manning]

Some, like a very few if any, when they where lucky. Buffet, the best of the best stays away from it.

Refer to a study at http://www.towneley.com/star.pl5?page=study

In short it finds that between 1962 and 1993 95% of the market gains stemmed from the best 1.2 % of the trading days. That's 90 trading days out of 7,802 trading days.

The annual rate of gain was 11.83%

the annual rate of gain was 3.28% if the 90 days were missed.

Timing the market perfectly would yield very attractive returns. However the study concludes that it is virtually unreachable. If a market timer is right 50% of the time, the probability of executing a perfectly timed investment strategy is 0.5 raised to the 816th power -- or nearly zero.

I think I'll go out and buy $50,000 dollars of lottery tickets.

[Galahad]

Am also a Disney shareholder. Bought more after the fall after 9/11 and more last week when it hovered around 15. The P/E ratios for it have not been this good in a long time (though they could be better). And, like others, it is a buy-and-hold investment. My time horizon for that investment is at least 15 years. If you have a long horizon like that then I think it's a good buy.

[J&D]

You can purchase just one share of Disney stock at oneshare.com.
Mousesavers has codes for $ off purchase.

[manning]

Stock closed at 14.27. Moody along with Standard and Poors thinking of cutting long term credit rating.

(Rueters) Moody's expressed concern over Disney's theme park operations, viewership and advertising levels at the ABC networks, and Disney's $15 billion debt load. It said waning consumer confidence and geopolitical risks will "challenge" Disney to hold onto its current long-term ratings.

[PamOKW]

Manning -- I was just coming to say that Disney has gotten even more "inexpensive" today. I sure hope they kick something into gear to turn this around.

[raidermatt]

Take this for what its worth, as its just one person's opinion...

If you don't know a lot about investing in individual stocks, and are looking for a "buy and hold" long term investment, its probably best to get into a mutual fund or two.

The simple fact is, nobody knows if Disney (or any other company) will really provide good returns, even if your horizon is 5+ years. It has under-performed vs. the Dow and the S&P 500 for almost 4 years now. For at least the 6 years before that, it only matched the Dow and S&P.

[All Aboard]

That's a near 7% drop in price today, translating to a market cap of under $30billion. That puts the debt-equity ratio at 1:2.

[raidermatt]

I could be wrong, but I think the initial review was driven by the debt to earnings ration rising. (as a result of lowered earnings expectations in the 4th Q.)

Of course, that has driven the stock price down further, lowering the market cap.

[manning]

Radermatt, if you can try to but those mutual funds into a Roth IRA. If you don't have to take out the earnings you by age 59 1/2 or five years, whichever comes first, you will never have to pay taxes. You can take out the money you deposit any time because it is already taxed.

Also if you are in mutual funds that are not in IRA's you may want to look for ones that don't trade very much. As funds buy and sell you have to pay taxes on any profits, even if you don't take any money out.

[Galahad]

I agree about buying and holding mutual funds. That's our invenstment of choice too. But we do own a couple of stocks outright and one of them is DIS. Again, since my horizon is far off, I'd still be a DIS buyer right now.

[raidermatt]

Good tips, manning... Thanks...

[Luv2Roam]

I would buy it if I could move some of my money specifically to Disney.
The stock even where I work split earlier this year and was continuing to climb. It reached $50+ just a little over a month ago. It's barely over $40 now.
I am sure that will recover too.
It was very depressing to see how much ALL my stock has devalued over the last year.

[manning]

Hang in there, luv2roam, your taking a beating short term. Long term you should do ok. I assume you are talking about your 401-k plan. I hope all of it isn't only in your company. Diversify if you can!!! The idea is that some stocks will go up and some will go down, but overall the trend will be up.

Historically, stocks over the long term has beat inflation. The average annual increase is about 8-10 percent. That doesn't mean every year it's that. some years would be more, some less and some years like now would be negative. The trick is to have enough fixed income to draw on so you don't have to touch your equity in the down turns, and to be as debt free as possible. The ones mostly in trouble now are those who are in debt. Their income is going away or down, but the payments aren't.

It's funny, people want to get wealthy overnight. Little do they know that a vast majority of wealth was accomplished by compounding.