Investing should be really simple - you buy low and sell high. The problem is that when the 'low' is available, stocks are about as attractive as the girl who did the 100 meter dash in the 90 meter gym. Has the five letter word 'S-T-O-C-K' become a four letter word yet...?
As Canadian Dream: Free at 45 put it, I have been buying up a storm since the S&P 500 index (NYSEARCA:SPY) plunged really hard in early October. I thought I'd summarize the additions I've made to my non-registered portfolio since the sky came crashing down.
Oct. 6 Alcoholic Beverage Firm, Diageo PLC (NYSE:DEO) at $58.61 [BEER].
Oct. 9 Integrated Energy Co., Husky Energy (OTCPK:HUSKF) at $33.85 [GAS].
Oct. 16 Utility Firm, Fortis Incorporated (OTCPK:FRTSF) at $31.31 [LIGHTS].
Oct. 22 Financial Services Co., Sun Life Financial (NYSE:SLF) at $29.37 [RETIREMENT].
These stocks were all yielding at least 4.7% at my time of purchase. This means that I'll be paid at least 4.7% of my money back annually in the form of dividends for my investment in these companies.
It is no secret that the reason I am doing a great deal of buying right now is because I feel there is a lot of really good long term value in the stock market right now. Many of the stocks I've purchased and attempted to purchase were trading at or near multi-year lows, and I feel that their potential to grow their earnings and dividends in the long term are very good. Near term there are currently countless hurdles and issues such as write downs, economic pain, and consumer and investor fear, that are keeping many companies from growing their earnings. It is my belief that the companies in which I am investing will move through this period to excel in the future.
I must take advantage of these low valuations and high volatility in order to truly 'buy low.' Has the market bottomed? Who knows, but I will do my best to buy whenever I see value that is hard to resist when I look out long term. Hopefully I can stagger my purchases enough that when we look back at this period I'd have done at least some buying at the most opportune times to do so. If I'm wrong, my significant income in the form of dividends will be my solace. As long as dividend cuts are rare I'll be quite happy in the long term. I'm no Warren Buffet, but even Warren himself could give you a list of what he is buying right now.
Disclosure: The author has positions in DEO, HUSKF.PK, FRTSF.PK, and SLF.