Team Alpha Retirement Portfolio: Buying The Dips Will Make You Money

Includes: CVX, MCD, O, XOM
by: Regarded Solutions

Recently, I wrote this article in which I urged investors to buy some shares of stocks that were on sale. The machinations of our friends in D.C. caused the markets to recoil. Even though an issue such as the debt ceiling and default sound cataclysmic, far too many investors will run or scurry, and hide out in cash, dumping perfectly good stocks.

That is precisely what transpired.

Hiding under the covers over a man-made issue that will obviously be resolved is not a sound strategy. What will make money is you buying those great stocks, when they are artificially on sale.

The Team Alpha Retirement Portfolio consists of Apple (NASDAQ:AAPL), AT&T (NYSE:T) BlackRock Kelso Capital (NASDAQ:BKCC), Cisco (NASDAQ:CSCO), CSX Corp. (NYSE:CSX), Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), Ford (NYSE:F), General Electric (NYSE:GE), Intel (NASDAQ:INTC), Johnson & Johnson (NYSE:JNJ), Coca-Cola (NYSE:KO), McDonald's (NYSE:MCD), Newmont Mining (NYSE:NEM), Procter & Gamble (NYSE:PG), Realty Income (NYSE:O), and Wells Fargo (NYSE:WFC).

If You Bought The Dip Here Is How You Would Have Done

Here is the list of stocks I suggested to buy on the dip just one week ago and their share prices today:

% Gain STOCK 9-Oct TODAY
4% CSX 25/shr 26/shr
4% CVX 115/shr 119/shr
3% XOM 85/shr 87/shr
4% GE 23/shr 24/shr
11% JNJ 85/shr 91shr
3% KO 37/shr 38/shr
3% MCD 93/shr 95/shr
3% PG 76/shr 78/shr
4% O 39/shr 41/shr

Simply by adding shares to existing positions, an investor would have had an increase in the added shares of roughly 5% on average, in one week.

The strategy will result in the following positives:

  • More shares of existing mega cap blue chip stocks.
  • A potentially higher yield on cost over the long run.
  • An increase in actual dividend income immediately.
  • More dollars being put to work to increase the overall value of the portfolio.

One other advantage for investors is that the added shares COULD have been a quick turn around trade, to increase capital gains, and add to cash reserves. The obvious benefit of that is to have even more dry powder when the NEXT dip occurs.

Keep In Mind What Your Ultimate Goal Is

For retired investors, or those looking ahead towards retirement, the goal of this portfolio is to maximize income. By buying on the dips, when basic fundamentals have not changed in the stocks we own, we will increase our income immediately.

Depending upon how many shares of each an investor added, will determine how much more income they will have. The Team Alpha Portfolio actually added shares of XOM, O, CVX, and MCD. The result is that we have now gone from a yearly dividend income of roughly $6,600 to a bit over $6,800. Team Alpha currently has roughly $137,000 invested now, with nearly $6,000 in cash reserves.

Not only that, but we increased the value of the portfolio by a few thousand dollars and the next update will reflect the actions we took.

The Bottom Line

In one of my more "direct" articles (check it out here) I emphasized actions that should be avoided. In this case, savvy investors will have taken advantage of the folks that did not heed my advice.

Be proactive and buy the dips...especially when it is very clear that by doing so, you will profit quite easily.

Disclosure: I am long AAPL, BKCC, CSX, CSCO, CVX, F, GE, JNJ, KO, MCD, NEM, O, T, WFC, XOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.