Having overspent for Intel (INTC) at $28.42 on April 16, I doubled down at what I knew was a great price, $26.56, on May 16.
D'oh! Maybe I'll get it right on June 16!
Though obviously not thrilled to have gotten sub-par bang for my buck -- Intel promptly retreated to less than $25 and is still trading at around $26 -- I'm confident it's a good company to own for the long haul. A decade or two from now, I like to think I'll point to all the INTC dividends I've hauled in, look at the triple-figure stock price, laugh and say: "Remember when I thought I was stupid for buying Intel at $26.56? Look at me now! I'm king of the world!"
Still, as I sit here today, I'm not feeling very kingly. I know I could have and should have been more patient.
I have used the experience to remind myself why I got into Dividend Growth Investing in the first place: to build a solid portfolio of income producers to help pay my bills (and pay for some fun) long after my wife and I have stopped working. Not overspending at my entry points will aid the process tremendously.
It's been a little more than a month since I wrote my first article for Seeking Alpha, The Long Road to a Dividend Growth Strategy.
Since then, aside from that Intel purchase, I've managed to mosey down that road. I see the destination far away, and I know full well that going too fast would be counterproductive.
These days, I'm selling some of the mutual funds in my Roth and rollover IRAs. The idea is to build up cash as I await good entry points to buy individual stocks.
The month of May has seen a pretty hefty market pullback, and I envision further market erosion throughout the summer. Cash isn't the worst place to be.
Acting mostly on the market's better days, I gradually have been selling my positions in both Vanguard Health Care and Vanguard Extended Market Index. I have divested my two international funds. Although the recent swoon had hurt my fund balances -- especially in the international funds, what with the shenanigans in Europe -- I was well ahead for the year on all of them, so I don't feel I made a panic sell at the bottom.
Right now, cash makes up about 40 percent of my total holdings, and there is room to increase that total. I still have roughly half of what I had in Health Care and about a quarter of my Extended Market fund.
I also could sell my rather large stake in Wellington, Vanguard's benchmark balanced fund. For now, I'm going to hold off because it gives me some bond exposure and because its overall yield is a respectable 2.5 percent. I'll reconsider down the line.
While building up my cash position, I'm thinking about the companies I will own. As I drool at the portfolios of some of my fellow Seeking Alpha authors, part of my brain is telling my right foot to hit the gas and speed to the party. The other part is saying, "Whoa, big fella. Let's do this right. The road to riches is a long one."
I am determined to avoid the kind of uninformed decisions that led to me buying too much Intel too soon. I know I will make mistakes -- even Warren Buffett makes mistakes, for cripe's sake -- but my aim is to limit those mistakes through education.
I have been reading books, magazines, Web sites and, of course, articles and comments here at SA.
Using a pencil with an industrial strength eraser, I'm starting to make my shopping list. I'm giving myself no timetables, no deadlines. If a company I want is fairly valued -- or better yet, undervalued -- I'll start buying in. If not, I can wait patiently for the right opportunities.
Future articles about my journey will detail some of my decisions. Feel free to come along for the ride.