Anyone Invested In Utilities?

OneEyedDiva said:
I've had a utility fund for decades even though it's performance may not be as spectacular as other investments. I just invested in another one. I've read articles that tout utilities funds as good choices for bear (down) markets as they are considered "defensive investments". I've experienced the cushioning of the economic blow through bear markets. The advantages of ownership: Performance not necessarily correlated to market conditions, no matter what the economic environment is...people will need to use utilities. They pay usually healthy dividends and capital gains. Disadvantages: Rises in interest rates have negative impacts on these funds and according to the article below "Utility funds also face difficulty at times in passing along changes in energy prices efficiently to consumers and investors due to price regulations". I was wondering if anyone here has utility mutual funds or ETFs in his/her portfolio.
https://www.investopedia.com/articles/mutualfund/08/utility-funds.asp
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Keep in mind, that in investing, there is something called Mean Reversion
https://www.investopedia.com/terms/m/meanreversion.asp
 
no , i wont bother with utilities as a sector . never did



electricity and natural gas consumption is predictable — we know that growth will likely be proportional to population growth. Seeing as this country adds new people quite slowly — the population expands at about 0.7% to 1% per year —so growth is much less than your average S&P 500 component. a balanced portfolio has provided better growth , better holding up in a recession and better diversification than buying a sector investment in just utilities


In a low-yield climate like we have now, investors snap up utilities like they’re going out of style. Currently, the utility industry trades at a 20% premium to the S&P 500 on a price-to-earnings basis.

Historically, it traded at a 20% discount to the S&P 500. Should valuations revert to the mean, stock prices will have to drop by 33%.
 

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mathjak107 said:
no , i wont bother with utilities as a sector . never did



electricity and natural gas consumption is predictable — we know that growth will likely be proportional to population growth. Seeing as this country adds new people quite slowly — the population expands at about 0.7% to 1% per year —so growth is much less than your average S&P 500 component. a balanced portfolio has provided better growth , better holding up in a recession and better diversification than buying a sector investment in just utilities


In a low-yield climate like we have now, investors snap up utilities like they’re going out of style. Currently, the utility industry trades at a 20% premium to the S&P 500 on a price-to-earnings basis.

Historically, it traded at a 20% discount to the S&P 500. Should valuations revert to the mean, stock prices will have to drop by 33%.
Click to expand...
 
mathjak107 said:
no , i wont bother with utilities as a sector . never did



electricity and natural gas consumption is predictable — we know that growth will likely be proportional to population growth. Seeing as this country adds new people quite slowly — the population expands at about 0.7% to 1% per year —so growth is much less than your average S&P 500 component. a balanced portfolio has provided better growth , better holding up in a recession and better diversification than buying a sector investment in just utilities


In a low-yield climate like we have now, investors snap up utilities like they’re going out of style. Currently, the utility industry trades at a 20% premium to the S&P 500 on a price-to-earnings basis.

Historically, it traded at a 20% discount to the S&P 500. Should valuations revert to the mean, stock prices will have to drop by 33%.
Click to expand...
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"Historically, it traded at a 20% discount to the S&P 500. Should valuations revert to the mean, stock prices will have to drop by 33%."

With their dividend I do not think that will happen. I have owned individual utilities for over 40 years and as a rule there stock prices and dividends keep going up.
 
oldmontana said:
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"Historically, it traded at a 20% discount to the S&P 500. Should valuations revert to the mean, stock prices will have to drop by 33%."

With their dividend I do not think that will happen. I have owned individual utilities for over 40 years and as a rule there stock prices and dividends keep going up.
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Everything is as compared to what ...looking at ppl as an example for taking on the risk of an individual company, the last 3 , 5, or 10 years gave you almost half of what the s&p 500 did and that includes dividends and that is with no individual company risk In the s&p ... in fact a 60/40 balanced fund blew the doors off ppl with less risk ......in the investing world just going up does not cut it , it is all about returns and risk taken
 
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mathjak107 said:
Everything is as compared to what ...looking at ppl as an example for taking on the risk of an individual company, the last 3 , 5, or 10 years gave you almost half of what the s&p 500 did and that includes dividends and that is with no individual company risk In the s&p ... in fact a 60/40 balanced fund blew the doors off ppl with less risk ......in the investing world just going up does not cut it , it is all about returns and risk taken
Click to expand...
 
mathjak107 said:
Everything is as compared to what ...looking at ppl as an example for taking on the risk of an individual company, the last 3 , 5, or 10 years gave you almost half of what the s&p 500 did and that includes dividends and that is with no individual company risk In the s&p ... in fact a 60/40 balanced fund blew the doors off ppl with less risk ......in the investing world just going up does not cut it , it is all about returns and risk taken
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PPL ..one stock and I do not or have ever owned PPL.

We own many utilities stock and it is about returns and risks.. that is why we have about 50% of our three portfolios in utilities.

It seems you have a problem with utilities, fine do not invest in them.
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I have no problem with utilities ...but I do try to give people enough of a view So they don’t run on myth and believing their own bull shit ,which is what most learn from other misinformed people ....investing in individual companies and being subject to the outcome of those individual companies no matter what the field takes on a whole other level of risk compared to broad index’s and just volatility .

once you can argue for and against an investment equally well , then you can evaluate that investment in a better light .... generally my experience is many of those who invest in utilities do so based on information they may have heard or read from others . They tend to be fairly weak in investing knowledge or they likely would have far broader diversified portfolios , but somehow got sold on them being safer or very confused as to what the dividend represents and think it is like interest.

for those who understand what they own and what the risks are great , but for those who are buying these things because they are gun shy investors , need to get better educated so they can make a better informed decision as to what is right for them , before they screw up and regret it.

the less you have the more important it is to get the investing part right ...like I said , it has no financial logicall sense to buying a ppl as an example when it is riskier than a balanced fund , which would be putting more money in your pocket with less risk and no individual company risk from missed earnings or what PGE is going through.

the biggest problem is Few understand dividends ....they think it is like interest ... it is not ..it is the company selling off a piece of your share value with every penny paid out ...this is a major misunderstanding that people have and it is a concept they fail to grasp ...there is no extra money like interest which goes on top of principal .

rather these utility dividends are no different than fund distributions.. you go to sleep with x amount and wakeup the next day with the exact same dollars only consisting of more shares at a lower price ..your dollars compounded on by markets has not changed if you reinvested or they are less then you had if you spend them ...it is never ever about dividends ,it is only about total return.....
Yet so few grasp this
 
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Got a good friend in New York who told me yesterday 'I'm afraid to look at my portfolio".

Gotta give it to my hub though...that pro poker player side came out in him when last month he said "you know,
if I was in that @#$% market, I'd sell everything out NOW! He said...how could you not see this coming.
 
Liberty said:
Got a good friend in New York who told me yesterday 'I'm afraid to look at my portfolio".

Gotta give it to my hub though...that pro poker player side came out in him when last month he said "you know,
if I was in that @#$% market, I'd sell everything out NOW! He said...how could you not see this coming.
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down turns are always part of the cycle . we just don't know when … no one sees them coming because what triggers them is not things on the radar .

once they appear these daily negatives are written off as just noise - that is until they are not .

then machine selling today drives us down in days what used to take months
 
mathjak107 said:
down turns are always part of the cycle . we just don't know when … no one sees them coming because what triggers them is not things on the radar .

once they appear these daily negatives are written off as just noise - that is until they are not .

then machine selling today drives us down in days what used to take months
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Well, hub saw it clearly . He'd have had a lot of bucks to invest back in...lol
He likes pro poker. Way less variables and more skill I guess ...lol.

Hey, its only money. Don't ever play with what you can't afford to lose anyway.
 
Liberty said:
Well, hub saw it clearly . He'd have had a lot of bucks to invest back in...lol
He likes pro poker. Way less variables and more skill I guess ...lol.

Hey, its only money. Don't ever play with what you can't afford to lose anyway.
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Long term no one ever lost a penny in any 10 or 20 year period with a 50/50 mix ...on the other hand many lost money via inflation hiding out in a bank
 
mathjak107 said:
Long term no one ever lost a penny in any 10 or 20 year period with a 50/50 mix ...on the other hand many lost money via inflation hiding out in a bank
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That's your story...lol. Know a lot of folks that have lost a lot of money in the market and a lot that didn't have 10 or 20 years to recoup. To each his own. Also know quite a few that have made lots of money in other enterprises rather than the market. Those sectors been very very good to them. They are living well and enjoying their elder years. Can only wish that for everyone, no matter what mode of investment choices they choose to make (or not). You can't take it with you, so enjoy it while you are here on planet earth.
 
IMO the big difference is in people who play the markets and people that invest in the markets.

When I was young I had my share of losses playing hot tips and sure things in the financial markets.

Now I invest in boring balanced mutual funds that grow steadily over time with very little blood sweat and tears.

I don't have any big wins but I also don't have any big losses, it works for me.
 
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Aunt Bea said:
IMO the big difference is in people who play the markets and people that invest in the markets.

When I was young I had my share of losses playing hot tips and sure things in the financial markets.

Now I invest in boring balanced mutual funds that grow steadily over time with very little blood sweat and tears.

I don't have any big wins but I also don't have any big losses, it works for me.
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Guess if you don't have to wait 10 years to get back the money you thought you did have then you are doing fine as frog's hair...lol.
 
I only have ONE mutual fund, an original pick in my IRA account, don't like them, am using it for my RMD withdrawals. I have a few ETFs and the rest are stocks. I like the ETFs, similar to mutuals, because of their safety and dividends, but I prefer stocks. With stocks you have bigger losses, but you also have bigger gains. I like some excitement, my life is already too boring. 🤪
 
Liberty said:
That's your story...lol. Know a lot of folks that have lost a lot of money in the market and a lot that didn't have 10 or 20 years to recoup. To each his own. Also know quite a few that have made lots of money in other enterprises rather than the market. Those sectors been very very good to them. They are living well and enjoying their elder years. Can only wish that for everyone, no matter what mode of investment choices they choose to make (or not). You can't take it with you, so enjoy it while you are here on planet earth.
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Bad investor behavior loses money ...markets and diversified funds have only gone higher long term so you can’t blame markets ...people panic , people use long term investments for short term needs
 
OneEyedDiva said:
I've had a utility fund for decades even though it's performance may not be as spectacular as other investments. I just invested in another one. I've read articles that tout utilities funds as good choices for bear (down) markets as they are considered "defensive investments". I've experienced the cushioning of the economic blow through bear markets. The advantages of ownership: Performance not necessarily correlated to market conditions, no matter what the economic environment is...people will need to use utilities. They pay usually healthy dividends and capital gains. Disadvantages: Rises in interest rates have negative impacts on these funds and according to the article below "Utility funds also face difficulty at times in passing along changes in energy prices efficiently to consumers and investors due to price regulations". I was wondering if anyone here has utility mutual funds or ETFs in his/her portfolio.
https://www.investopedia.com/articles/mutualfund/08/utility-funds.asp
Click to expand...
I own a utility ETF as well as shares in Southern Company, Dominion and Wisconsin Electric. We have been very happy with performance, even in the current selloff.
 

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