Most of my articles have been bullish and geared to maximize our portfolio value by adding shares of our core holdings on the dips. By doing so we have increased our cash flow from dividends and the number of shares held to capture some capital appreciation.
I absolutely subscribe to this strategy. There are also times when it is a BETTER idea to be prudent.
We have had a fairly strong run up in our "Retirement Strategy Portfolio" (read this) with an 11.7% increase with dividends and option premiums in about 2 months. Actually, the S&P has gone from 1161 to 1320 in the same time frame. A very cool 12.8% increase.
Our current portfolio consists of ExxonMobil , Johnson and Johnson (NYSE:JNJ), AT&T (NYSE:T), General Electric (NYSE:GE), Annaly Capital (NYSE:NLY), Exelon (NYSE:EXC), Procter and Gamble (NYSE:PG), Philip Morris (NYSE:PM), Intel (NASDAQ:INTC), Realty Income (NYSE:O), ConocoPhillips (NYSE:COP), Pfizer (NYSE:PFE) Chevron (NYSE:CVX), E.I. du Pont (NYSE:DD), Duke Energy (NYSE:DUK), PPL Corp. (PPL).
A huge part of our strategy is to think clearly, without fear, and to make decisions that might fly in the face of conventional wisdom. It is not panic, just prudent investing.
We also have just made some key maneuvers that has positioned our core portfolio into a sharper focus from my point of view. (Read this.) We are headed into the heart of the winter season, after earnings, facing some unknowns that could affect our performance in my opinion.
That does not mean we should sell our positions carte blanche, nor should we rush into the "bear" mode. I believe that now would be a great time to hold our positions and not add more shares, even if we see some of our favorites dip in price. A dip to me is a drop of about 2% in a day or two in which we add 10% more to our position with available cash reserves.
While I am referring to our portfolio here, I am also referring to each of our individual portfolios as well.
My "Prudent" Opinion
We would avoid adding to the following positions; Exxon Mobil, Pfizer, General Electric, E.I. du Pont, ConocoPhillips and Chevron.
We would wait until we see larger dips (5%or greater) to add to the following positions; Johnson and Johnson, Duke Energy, Proctor and Gamble, PPL Corp, Philip Morris and Exelon.
We would continue to add judiciously to the following stocks; Annaly Capital, Realty Income, AT&T , and Intel.
These stocks have had some positive price appreciation and could also face stronger headwinds as we move into the time of the quarter where there is less news here (Facebook (NASDAQ:FB) not withstanding) and there will be more news on the European folly, as well as a lull in campaign 2012 excitement.
Let me be perfectly clear; I believe we are in a bull market, and I believe that the Eurozone will have little to no impact on our bull market (and be resolved with the printing of money) aside from a few blips. With every bull market however, we do face corrections, and that is GOOD for the continuation of the bull market. Consolidation, sector rotation, and some profit taking will occur and I cannot time the market to say exactly when. I can only read the tea leaves, and use some common sense.
For the purposes of our portfolio that we track here, we will stand pat and make no moves until our next dividend payments flow in, beginning in the next month or so.
For your own individual portfolio, being prudent is also part of our strategy.