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  • Retirement Strategy: The Oil Crash Could Be A Dividend Growth Investor's Best Friend Of The Decade [View article]
    I really have no idea. I figure they can hold the dividend steady, and have some room to grow it even if oil stays in the 48 range. I also figure that the price of oil will change, sometimes higher, sometimes lower, but looking at XOM's dividend payment history in past instances of oil price volatility, they seem to be adept at keeping the dividend fairly consistent (and growing) throughout all sorts of market conditions. Overall, I think XOM is a good source for stable, growing retirement income - but I guarantee that I have absolutely not even the slightest clue about what the stock price might do in the next month, year, even decade. If my theory about XOM paying a safe and growing dividend is correct, I won't care what the stock price does. In fact, I'd be happiest if the stock price FELL over the next decade, so I could keep buying more and growing my dividend income that much faster.

    If XOM has to cut the dividend at some point, well, then I'm going to feel dumb.
    Jul 28, 2015. 07:23 PM | 2 Likes Like |Link to Comment
  • Retirement Strategy: The Oil Crash Could Be A Dividend Growth Investor's Best Friend Of The Decade [View article]
    Barron de Rothschild famously said "the time to invest is when blood is running in the streets." I suspect the same could be true when oil is running in the streets. Oil could get worse, it could get better, nobody knows. All we do know is that XOM has survived huge oil price declines in the past, they will survive this one, and the next one to come. Prospects for XOM certainly look bleak, but that's why the stock price is low. You don't usually get to buy cheap stocks when the market is looking at the company's future with rose tinted glasses.
    Jul 28, 2015. 06:41 PM | 1 Like Like |Link to Comment
  • How Much Kinder Morgan Is Too Much For A Dividend Growth Investor? [View article]
    I recently purchased KMI (as in, I'm buying it over the last two weeks). Obviously, I see it as a strong investment, but 6% of your portfolio income is quite a lot - I'd be nervous too. But you left out ANOTHER option: instead of selling KMI, reinvest your dividends into other areas. By doing so, KMI will account for a smaller and smaller portion of your portfolio income. Ask yourself, why are you suddenly uncomfortable with KMI accounting for 6% of your income? You probably weren't a year ago when KMI was higher. So, now that the price of KMI is lower, are you simply falling for the same mistake that many investors tend to make - watch price drop, throw in the towel, and then kick yourself when the price recovers. I don't see what the rush is to reduce your income reliance on KMI. I see the temptation to want to click a button, and now your portfolio is more balanced, but why can't you spend the next three years or so bulking out your other income producers, and get to the same result without having to sell you KMI into the waves of panic selling that currently are gripping the energy sector?
    For my part, I see a high quality company at a lower stock price, I want to buy, not sell. I don't need to tell you this - I've read your articles before, and you're a smart cookie. I just wonder if emotions like fear are motivating you.

    Oh, right, the ratings agencies. Yeah, so these were the guys who gave AAA ratings to those pools of collateralized junk loans that eventually were trading for 60 cents on the dollar because they were complete garbage financial products. You mean THOSE rating agencies? Before you take their ratings as some sort of gospel, just remember that these are the dudes who couldn't get a job at an investment bank. They don't run money, or know how to evaluate risk like someone who does run money. They just have a standardized checklist they run through, and that's how they come up with ratings. A new deal comes in, a junior associate is asked to go pull a model, it gets marked up, and if anyone says "hey, here is a new way to look at things" they are quickly shot down. Anyone who actually knows how to evaluate credit works for a hedge fund or private family office buying and selling debt and credit derivatives. They do NOT work at rating agencies.
    Jul 28, 2015. 04:53 PM | 6 Likes Like |Link to Comment
  • Retired Dividend Growth Investors Are Lulled Into A False Sense Of Security [View article]
    2Reb - you are making a far more important point than even the author of this article does when it comes to investing. No single position I own accounts for more than 2% of my entire portfolio income (with the exception of a couple of passive index funds). If the dividend on one of my positions is suspended entirely, I stand to loose around 1% of my total portfolio income on average. I wouldn't like it, but I can live with that result.

    I like to picture what it would be like to be Santa Clause, except that the little elves run around the workshop making MONEY instead of toys (or whatever else it is that Santa's elves are supposed to do. I lost track of that years ago). Some of those little elves are going to be very, very naughty little elves indeed. Santa knows this. The nasty rotten little elves are not going to make as much money as they are supposed to. Worse, they might even make NEGATIVE money for Santa. But does Santa care? No he does not! He's got like 200 little elves running around, so if one flakes out, big whoopty doo. Let the other 199 pick up the slack. Why do you think Santa never FIRES elves? Easy. He doesn't have to. Santa can take the hit to his income from elf deliquency, and if he can, SO CAN YOU.

    The moral of the story: invest like Santa Clause. Ho Ho Ho.
    Jul 27, 2015. 09:42 PM | 2 Likes Like |Link to Comment
  • Retired Dividend Growth Investors Are Lulled Into A False Sense Of Security [View article]
    Imagine you owned a fund like VBINX, the Vanguard total US bond and total US stock market index. Suppose you owned enough shares that the dividend income on VBINX more than covered your living expenses. How about the average distributions over the past 5 years account for only half of your average spending. My question: would you sell the fund ever, under any conditions? If so, why? If not, read on:

    If you would never sell shares of VBINX, what if you created your very own version of VBINX, except it is a fund that you made entirely with your own own two hands. It is a passive index fund, only, it holds only dividend paying companies which have at least a 20 year dividend payment history. Would you sell it ever under any condition? If so, why? If not, read on.

    If you would never sell your custom made index fund, why would you ever sell any of the components of that fund?
    Jul 27, 2015. 08:02 PM | 1 Like Like |Link to Comment
  • RoseNose's Adventure To Reacquire Shares Of 3M Company... And Buy Now! [View article]
    The axe hath fallen! I have been literally stalking MMM for two years, ever since I started reading David Fish's dividend champions list like a desert menu. And to my delight, finally a few shares of PID that I bought a while ago were actually flat, enabling me to prune it back with aggression, and to plow the proceeds into CVX, DD and, last but certainly not least, MMM.

    I don't like to do tax loss harvesting with individual stocks (no two companies are the same), whereas I'm quite happy to do so with funds (I will sell shares of one ETF and buy identical index funds put out by other issuers). These days, I eschew funds for the simple fact that they have fees and turnover. I'd rather just build my own zero turnover dividend growth ETF comprised of the finest businesses money can buy. MMM certainly fits that bill.

    Happy investing, Rose, and it's lovely to see that you've taken the step to become a full fledged author. Your commentary has always been exceptional (I believe you were recently named one of the top comment writers on SA?). You'll probably become a top contributor as well - for my part, I look forward to your next article.
    Jul 27, 2015. 10:42 AM | 2 Likes Like |Link to Comment
  • RoseNose's Adventure To Reacquire Shares Of 3M Company... And Buy Now! [View article]
    Peace and Rose, these are useful insights. You have inspired me to take a hard-nosed look at the floozies in my portfolio as we speak, and there are more than a few. I've got my axe at the grinding stone now, and in particular am zeroing in on some of those dividend growth ETFs I bought in 2009. I saw funds like IDV and PID, and thought "ah, dividend growth. I love it. With diversification to boot!" Well, these things are high turnover, management fee monsters. I feel like, "oh, so you want to go flitting around with no sense of commitment to any stocks you own? Well, take this!!!!" Dump a cold drink on their laps, that's what I'm thinking.

    See, I have held onto IDV and PID for years now because sadly, I bought them at a time when the stock market was more or less giving these things away for free. Those built in capital gains are evil, and I feel only ninnies pay capital gains taxes. Appreciated positions are like a cancer in this regard, and even harder to get rid of. But thankfully, international stocks are getting flushed down the toilet as we speak, and with luck, IDV and PID could fall a bit, and if so, maybe, just maybe, pretty please, I will have some lovely, wondrous losses to harvest. Just imagine: give PID the boot entirely, and replace with MMM. MMM rhymes with MMMMMMMMMMM, as in, tasty good. PID, by contrast, sounds more like the sound you make when you spit hours-old, spent, flavorless chewing gum onto a sunny patch of the sidewalk on a hot summer's day.

    This has been very useful, so thanks to your both. Back now to sharpening my axe.
    Jul 27, 2015. 10:05 AM | 4 Likes Like |Link to Comment
  • Retiring Abroad [View instapost]
    Thank you, Robert. I plan to add updates if and when interesting things continue to happen. My goal is at least one interesting thing per month. If that doesn't happen, then I'll sprinkle on some literary flourishes (not "liberties" mind you) in an effort to try to transform otherwise dull experiences into more interesting sounding ones. Stay tuned.
    Jul 27, 2015. 09:39 AM | 1 Like Like |Link to Comment
  • RoseNose's Adventure To Reacquire Shares Of 3M Company... And Buy Now! [View article]
    I've wanted to own MMM for some time now. That, and also Sherwin Williams. Two great companies that make timeless products, excellent products, diverse products with wide moats in the form of brand loyalty and niche expertise. And then there is the exceptional dividend growth, which for me is crucial since Im in my mid 40s and aspire to never sell one single asset after I buy it for any reason ever. You see, I don't date - I marry. And MMM looks just as eligible and nubile a life partner as can be.

    But here's the problem. Polygamy. Yes, I am married to almost 85 other positions. I am devoted to most of them. Yes, it is true, a couple of these positions are nothing more than mere dalliances. I have a wandering eye, and at times, I am drawn to new, shiny companies trading at PE ratios I would never ordinarily consider. Expensive, unknown, unproven, but oh ho ho, they are shiny. I can't help but have a little tryst now and then, and when I do, I buy $1,000 or less worth of stockm just so I can say I have some.
    But most of my stable are the real deal. Companies I've pledged to own until I kick the bucket or loose my marbles. And this is the tricky part. I can't follow more than about 85 companies. I probably can't follow more than 65, but I am where I am. That said, should I buy MMM and boost that number up to 86? But given my wandering eye, once I get to 86, why not hit Sherwin Williams too, and make it 87? Then why not a round 90? Or a round 500? One begins to feel a bit like one is the S&P500 at some level. I swore I'd never end up like that. But I see myself going there, unless I draw some lines in the sand and tell myself in a stern voice: "this far, and no further".
    SO where is the line in the sand? Do I walk down the aisle (yet again) with yet another company, buy MMM, and pledge my soul to keeping this thing for my great great great grandchildren? Or, should I settle for a boozy tryst with MMM, buy a few shares just so I can boast of my weekend conquest to my incredulous friends? Or, as MMM comes up to whisper in my ear, do I just tap the 85 rings on my ring finger and say "hey... sorry, hot stuff. I'm a married man."

    MMM is so shiny and..... uxorial, though.
    Jul 26, 2015. 10:39 PM | 9 Likes Like |Link to Comment
  • Buy And Hold Vs. Selling Shares: A Study Of Capital Preservation Methods Within A Dividend Growth Portfolio [View article]
    I would like a tattoo that says "it could be a lot worse." At a minimum it deserves a t-shirt. In my world of favorite quotes, I put your mom right up there with "What could possibly go wrong?" and "Stand Back! I'm getting ready to do science!"
    Jul 26, 2015. 07:56 PM | 2 Likes Like |Link to Comment
  • Buy And Hold Vs. Selling Shares: A Study Of Capital Preservation Methods Within A Dividend Growth Portfolio [View article]
    That's interesting, Ted. I wish I knew your secret to selling. That has a nice ring to it, doesn't it? Ted's Secret to Selling. I'd buy a book with that title.

    But the "too early to purchase" syndrom - I wonder what that's about. Could it be an instant gratification thing? You see a great company, and you just have to have it, and have it NOW? A certain great value investor who shall go un-named is notorious for buying a few hundred dollars worth of shares of companies that he is interested in but that are wildly overpriced, because he simply must buy them now. He has said that if he doesn't own at least a few shares, he won't follow the business and will feel miserable that he doesn't own just a taste.

    I needed some new socks about a year ago. I went into Mo's sporting goods no less than five times to review the socks. They were these Nike socks that are really colorfull, and seemed to have great cushioning without too much bulk. The guys in the store must have thought I was a freak. I wanted to know for sure that these were the right socks for me. I will devote a month to getting decisions of this magnitude perfect.

    I find out about shares of a company I haven't thought about before, but that sounds up my alley, and I will become unable to sleep at night unless I buy it IMMEDIATELY. Picture a starving pit bull dog standing in front of a bloody hunk of raw steak. How long it takes that dog to scarfle down that steak - I'm buying shares of my latest love interest company ten times faster. And as the doggie is loath to part with his steak once his jaws are clamped around it, so too am I loath to part with one single share after I've bought it.

    Do I jump in too early? You don't know "too early" until you see my buying patterns. The only thing that saves me from taking massive losses of principal is that I don't look at my net worth (if a tree falls in the forest and nobody is there to hear it.... same concept applies to a falling portfolio). That, and I am nothing if not consistent. I buy the same things over and over and over every month with every spare dividend check I can muster. One of those serial purchases will be at the exact bottom, enabling me to ignore the 50 previous purchases that were made at prices up to 30% higher.

    And then the dividends end up bailing me out eventually, too. I've been known to hold things for over 20 years, and over a time period like that, whatever sickening losses I took when I first bought the company are distant memories (assuming I even do remember them, which mostly I don't).

    See ya in Vegas.
    Jul 25, 2015. 09:54 PM | 2 Likes Like |Link to Comment
  • Buy And Hold Vs. Selling Shares: A Study Of Capital Preservation Methods Within A Dividend Growth Portfolio [View article]
    I really struggle with this topic, Matt. George Soros (whom I respect tremendously) once said "if you are having fun investing, then you probably aren't making any real money." Or words to that effect. His son, Jonathan, reported that his dad's investment behavior correlates closely to bouts of stress-related back spasms and other market-induced physical ailments. You can understand why someone like me who venerates George Soros would want, more than anything, to HATE INVESTING. Not just find it boring. I mean, HATE IT.

    I have a problem, though. I love it. My mental state is clearly nothing like the investors I respect most.

    So, I'm thinking about trying a new approach to make myself hate investing a little more. One option: bonk myself on the head with a hammer while I read shareholder presentations. Over time, I may come to associate investment activity with extreme discomfort, and develop the sort of aversion and revulsion that I seek when engaging in investment related activities. Think of the movie Clockwork Orange and the use of Beethoven's 9th on the character known as "Wittoo Alex." I want to train myself to become physically ill when I hear the words "Dow Jones."

    It seems like a promising, value-enhancing approach, so I shared it with a good friend of mine who is well aware of my financial predilections. His observation was nothing short of horrific. He pointed out that every time one of my investments takes a 20% loss, I seem to revel in it. It's true. I am gleeful when facing down the prospect of a stock market beat down. My friend (perhaps aptly) observed that I'm the financial equivalent of a John, except instead of fetishizing the act of being humiliated by domitrices in thigh-high black leather jack boots, cracking whips over my head and making me whimper like a puppy, I fetishize the act being humiliated by the market. My friend, bless his sole, pointed out (perhaps correctly) that if I go around bonking myself with hammers while I program my spreadsheets and read the economist, I will actually start to love investing MORE!!!! Not Less!!!!

    It's hopeless. I talk the big talk about investing shouldn't be fun, but look at me. Pitiful. Pathetic. Worm-like.
    I love it.
    Jul 25, 2015. 09:38 PM | 4 Likes Like |Link to Comment
  • Buy And Hold Vs. Selling Shares: A Study Of Capital Preservation Methods Within A Dividend Growth Portfolio [View article]
    Great response, Nicholas! After re-reading my comment and your response, I am brought back to the only guaranteed, fixed truth when it comes to investing: don't ever become doctrinaire. Would I really want to hold a company trading with a PE ratio of 30, like Visa. Sure, I'd be unenthusiastic, wouldn't buy more, but I wouldn't panic. I remember owning Cisco in the late 1990s, and the PE ratio was something absurd - I can't remember. Over 100 I believe. And I sold. Sure glad that I did, too.
    The problem for folks like us is that the stock market offers prices that quite simply have absolutely nothing to do with value. Prices can become so flagrantly insane, so completely and utterly preposterous, it almost seems criminally foolish to not sell.

    Maybe the test is not whether a stock is trading "on the high end" - like a 5 year average PE ratio above 30. Maybe the test is "can I say with almost 100% confidence that Mr. Market is smoking crack." That happens sometimes. I guess if Mr. Market is high on drugs and will pay you 100xs earnings, okay, maybe time to toss out the rule book and sell.

    But this leaves us with a sticky question. How many times is it 100% obvious that Mr. Market is binging on crack? I can only recall two times - the 1990s and the 1920s. The market has certainly been grossly overvalued many times besides those two eras, but completely, utterly, impossible to dispute lunacy in the market? It's rare. I think we need some sort of test for whether the market is offering you a once every 20 years opportunity to sell at a preposterously high price. Maybe a five year average PE ratio of 50? Or 75? Dunno - where do you draw the line? I am not sure where I would draw it. Watching the stock market is sort of like watching hard core porn: you know it when you see it. But you can't exactly explain WHY.
    Jul 24, 2015. 02:49 PM | Likes Like |Link to Comment
  • Retirement Strategy: There Are Dividend Aristocrats That May Be Bad For Your Health [View article]
    Jeep5ter, I agree. Nobody should take a risk that they either (1) cannot afford to take; or (2) that they can afford to NOT take. That's why turnaround stocks are not appropriate for most investors, and why generally, what you want to own are unimpeachable businesses.

    The issue is what happens when your unimpeachable business becomes... impeachable. Will it get better or worse, and what's the time period? You never know. I sure don't. That's why I keep a level of diversification where if one of my investments drops 100%, I only take a 1% loss. That's about how much my portfolio makes or looses each day. If I can live with that, I can live with the risk of MCD dropping 100% too. And I think the chances of a 100% loss on MCD are remote compared to the risk (indeed, high probability) that my portfolio lost 1% today. That gives me even less reason to sell MCD.

    Overall, the combination of diversification and the SUPREME idiocy I have shown over the last 20 some years when it comes to guessing the direction of stock prices leads to just one conclusion: in my case, selling is worse than irrational. It is what Einstein described as "insane" - doing the same thing over and over again, and expecting a different result.
    Jul 23, 2015. 04:41 PM | 5 Likes Like |Link to Comment
  • Buy And Hold Vs. Selling Shares: A Study Of Capital Preservation Methods Within A Dividend Growth Portfolio [View article]
    Maybenot - that's not even the full extent of it. So, I heard about this experiment with a toddler and a baby chimp. You put a treat in a clear plastic box, tap the box with a want, turn it around three times, tap it again and open the box and get out the treat.

    Hand the wand to the toddler. He or she will tap the box, turn it around three times, tap it again with the want, open the box and get the treat. Next, hand the wand to the baby chimp. The chimp will toss the wand away, open the box and eat the treat.

    Who do YOU think makes the better investor?
    Jul 23, 2015. 04:27 PM | 4 Likes Like |Link to Comment