Building on IMB

Well IMB started to grow again but then dropped a bit more; it hasn’t gone as low as it did on the 25th, so it still looks strong. Hopefully it keeps fighting for a while; I want to try to pick up 200 shares (yes I’m poor) before it starts its aggressive growth.

For those who don’t know, IMB does mortgage loans. The current state of the housing market has knocked down most mortgage brokers for the moment; part of this stems from fear of people not having the money to keep up with their mortgage payments. The market should come back soon, so I want to get in now.

IMB seems to have dropped to almost $12 today; if it goes down enough maybe I can pull $360 from savings and $150 from my personal spending to push tomorrow’s buy to maybe 40 shares instead of my planned 25. That’ll put me at 190 shares instead of 175, leaving just 10 more to buy next pay to hit the requisite 200 share buy-in I want. Yes this will hit me with extra commission costs (4 buys, $12.99 each, $51.96 total); but with 25, 50, or 100 share buy-ins at $1 or more difference these costs don’t amount to much.

My interest in this stock comes not just from its growth potential. IMB has a habit of paying out $0.50 dividends per quarter, plus a few 5.75 cent ones in between. So consider 200 * $0.50 giving $100, plus maybe two or three occurrences of 200 * $0.0575 giving $11.50; now consider the whole thing happening four times a year. $125 * 4 gives $500. Each dividend payment causes a DRIP, so more shares get bought, and that 200 figure goes up, pulling everything up with it. Good deal?

These kinds of structures work like compound interest; you really have to go in for the long haul, but it … well … compounds. Every time you make money, that money makes you more money next time; recurse. Right now, if you have a couple thousand to dump into it, you should really think about taking the risk. If the stock grows, you get a good return and can pay for college for your kids (or get scholarships and give them an inheritance instead!); if if drops, you’re out $2000 or so, which means nothing in the long run (college costs a lot).

In other news, MSFT seems to have had some really good growth in the past couple days. It gained positive growth this whole month, but the last few days have seen some real 1-3% growth rates. AAPL and NOVL have gone down a slight bit so far; NOVL likes to stay stable (too bad, no dividends), but AAPL will experience much steady growth over longer periods.

Edit:  IMB put up a fight at the end of the day!  It actually spiked up and gained some, then dropped back down to the -5% range.  Hopefully tomorrow it holds around $12.50, maybe drops a bit more.  We will see.


~ by John Moser on November 1, 2007.

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