My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Thanks for the info, Igor!
I'm long BBL, too, but was a bit concerned that I might have been chasing a falling price, and potentially falling into a "value trap", as NeedMoreCoffee mentions below. Also, it's just under a 3% allocation, and with parity being 3.33%, didn't seem like as good a choice for buying more shares than PM or UVE, despite having the #1 weighted MyMM ranking this time around...
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Thanks, ritr54! It's good to know that UVE has a solid history of dividend payments (at least in your case), despite not being a CCC stock. Thanks for your comment!
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
"Your approach also appears to lock you into buying only stocks you already own, which I think unduly limits your opportunities."
Actually, if you read my articles for this year, you'll see that I've added 9 new positions to my portfolio, netting a gain of 2 new positions overall to go from the 28 I had at the end of 2012 to 30 now. Adding new positions, however, requires a goodly amount of cash, which really I only get when I can make a contribution to my IRA, of which I am limited. So far I've contributed 50% of what I'm allowed to contribute for this year for someone my age, and looking at my cash flow (and the potential for a dip in the market over the summer months), I'm not in a hurry to add a 3rd quarterly infusion of cash at this time. The other way I can generate enough cash to pick up a new, additional position is to "trim" some profits from other positions that have performed very well and are well above the parity number AND have shown a profit. I did that recently, and am not ready to do that again with the summer looming and the potential for a seasonal dip in the market overall...
Thanks for the in-depth analysis of NPK. Personally, I'm well aware of NPK's product and risks, but I really like this company. Perhaps that's not a "rational" approach, but I love the management and their commitment to paying shareholders as much as they can, and the CEO's relatively low salary and relatively very high amount of skin in the game in terms of the number of shares she holds. As for their military contracts, their product(s) here are ammunition, the majority of which get consumed during routine training exercises, not actual combat, and even though there have been (and probably will be) defense cuts, I don't see the Pentagon pulling back on being prepared by cutting practice shooting too drastically. :-) Also, last I heard they were having some success in branching out in terms of the number of customers for their absorbant products. All-in-all, I like NPK, and have held it since 12/14/2011, and don't mind the risk that its 3.08% allocation of my portfolio's total value represents. Finally, while it took a big hit in price in early 2012 when it announced annual results and a lower-than-expected dividend, the price of NPK has been improving steadily since then, especially in recent months, such that I have made more from 2 annual dividend payments than I've lost from a drop in the share price from my cost basis, so it's "in the green" as far as I'm concerned, and doing better now than it was last year at this time...
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Thanks for your comments, inthedetails.
I actually am weighting based on income potential, by weighting Yield and 5 Year Dividend CAGR at 30% vs. the 5.88% of the other metrics.
The problem with looking just for "Buy" signals, is that with the run up the market has been experiencing for the last I-don't-know how-many-weeks, almost everything is Reading "Too High" at least. Some things slip into "Stable" as their 52 week highs catch up to their current prices just as a function of time passing, but it's not as easy as just buying the things that have a "Buy" Reading. PM and UVE are so far behind the rest in terms of % allocation that I feel compelled to concentrate on them, and some of the other stocks that are further behind in terms of % allocation, such as VOD (2.70%) and LMT (2.79%). The problem with VOD is that it only pays dividends twice a year, and we're approaching what I think is its ex-div date, and I won't have quite enough cash built up from collected dividends to make a good purchase prior to that, and then after that there's really less of a point of jumping into it when it's Reading "Screaming!", too. If it gets back to a position of being "Stable" or better, then it's going to move up on my radar of what to buy next, but other than that, once I miss this ex-div date (which is the bigger dividend payout of the two per year they do), then there's less of an incentive to get aggressive buying it. LMT, on the other hand, I just want more of, and will get around to it eventually.
At this point I'm waiting for the "Sell In May" effect to kick in, which it may have started to with today and yesterday's results in the market (at least so far today). Need to be patient and see if we get the same downturn for summer that history says we should, then I can look for bargains in the positions that are under allocated.
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Hi, zgb952. Sorry for the delay in getting back to your question.
I wasn't aware of GSBC. I hold NYCB (a small bank) in my IRA, and RBCAA (another small bank, in Kentucky) in my wife's IRA, so I'm not in a hurry to add any more small (or large) banks to my portfolios at the moment. I've tried to steer clear of the Financials, for the most part, although I do wish I'd gotten into WFC when I first started looking at it over a year and a half ago. I will add GSBC to my watch list and see how it fares there. Thanks!
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Thanks, and about the increase, I know! My first purchase was 4/17, and that was about in the middle of a good run up, and it's just kept going up from there. I wish I could've gotten more a bit sooner, and gotten a bit more, but I had to wait until the latter part of April to have all my dividends come in and make it worthwhile to make a purchase. It just keeps going up, too! Some folks, like Seth and 1caflash, have been positive about UVE for a while, but I had some other priorities and not an infinite amount of cash to work with. I'm happy I got in when I did, and hope I can get more, or that it takes a dip with the "Sell In May And Go Away" that hasn't happened yet, to pick up some more at a decent price. I have no clue what the top end will/should be for this stock, either. If anyone wants to venture a guess, please speak up! :-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Thanks, jjnagoings! Here are my attempts at answering your questions:
1) For the time being. I would like to eventually get to 50 positions, like my buddy chowder, so that the target parity for each position is 2.00%. But for the time being, I'm happy where I am at 30 positions, and I won't be adding any big chunks of cash to my IRA (aside from accumulated dividends) until Q3 at the earliest, so I really won't have enough to comfortably start a new position until then (and if then). I've got plenty of time (relatively) to get up to 50 positions, so for now I'm just concentrating on getting those that are well below parity up closer to parity.
1a) I have a watchlist, but it's gotten shorter as I've added new positions to my and my wife's IRAs; I currently have 15 stocks on my watchlist. I need to do some research and add a handful (or 2) of new stocks to my watchlist, but I'm just too busy with my day job and family life to take the time to do the necessary research to dig around and find some good, new candidates.
2) I have, but haven't come up with an approach that I'm comfortable with. One reason is, the stocks that pay much higher yields, such as mREITs and BDCs, tend to not appreciate in price as regularly as the CCCs such as JNJ, KMB, KO, T, etc., so even though a stock may be "underbalanced" in terms of the % of the total of what it contributes to my income stream, it's more likely to appreciate, which, in turn, lowers its yield. On a purely cash basis of how much does each position contribute to the income stream, I'm a bit out of balance. But I'm not sure how to balance that out and not get horribly skewed in terms of % allocation of the total value of the portfolio. It's something I noodle on every now and then, but for now, I'm just watching the % allocation, and keeping an eye on % of total income to try to make sure things don't get too out of whack.
Hope that helps, and thanks for your questions! (Sorry it's taken me so long to get back to you; I was teaching a class this week, and replying to comments here on SA took a back burner...)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Thanks very much, Jim.
Yeah, I added UVE to my watchlist as a result of some comments folks made here on SA, then pushed past my concerns over it being such a small player and went ahead and bought some based on other comments from more folks here on SA. I'm glad I did... :-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Hi, ScottU.
Sorry for the delay in replying. I'm co-teaching a class this week, and have limited time in which to respond.
To be brief, it's not that the MyMM Ranking shows the "best" option, as much as it shows the best Ranked stocks based on the weighted metrics of all the stocks in a given set. I often choose the "best Ranked", but not always; it's not an absolute "you must buy this next" result, but a tool to guide me in the right direction and narrow my choices down from a larger field to a smaller set, and then from that set I have to make a final decision, which can have a lot of different other variables affect it based on what's going on at that point in time and what my current short-term goals are with respect to reaching my long term goals...
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
LOL! Thanks, Seth! :-) It's certainly been on a tear lately; on the one hand, I hope that continues, but on the other hand, I want to add more shares to what I've got already, so... Yeah, not a bad position to be in... :-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Also, please see my response to JGC67 with regard to PM. It was a tough decision between PM and UVE, but in the end the deciding factor was the 34% better return in terms of future dividends. That seems like a pretty sound reason to me, and I've still got PM on my radar, and now that it's got the lowest percentage allocation of everything, and I think it has a great long term future, it's going to get a lot of attention from me. Unfortunately, I'm going to have to wait quite a while before I can make any more purchases, given that May will yield a very low amount of dividend cash, and I've already spent my Q2 allocation of contributions to my IRA, and don't want to (and don't have the cash to) make a 3rd contribution of $1,625 to my IRA for 2013... So, I wait, and I watch, and I fiddle with numbers, and in the end, time will pass and I'll be ready to make my next move. For now, I'm satisified with what I've done, and very pleased with the results my portfolio has yielded so far, and its prospects for future income...
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
@ScottU: I think I addressed what you just posted in a response I was writing to MintyFresh while you were writing your comment. Please read that and see if it addresses your questions/concerns on keeping parity in mind as I try to figure out where to spend the next batch of cash each month. Also, it's not that I took my fifth best option over my first, because the MyMM Rankings can't always (or often) be taken at face value; there are other factors that need to be examined, such as the details that go into the numbers that result in the Rankings. For example, a while back I was seriously considering TGH, as its Ranking was great, but upon examining the details I found that, based on how I evaluate companies, it didn't look like it could sustain its dividend. So, even though it was "#1 with a bullet", I chose something else...
In the end, I went with adding a bunch of more shares to the position that had the lowest percentage allocation over adding just a handful of shares to a position that was relatively closer to "parity".
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Thanks, JGC87! Yes, there is always some "intuitive" or "instinctive" side to choices, I think. If it were simply a matter of following a formula, everyone would be rich. Or so it seems to me. I really wanted to pick up some more PM this time around, and if its price had dropped a bit further, my choice may have been different, as I think have a solid position in PM will pay off in the long run. However, based on feedback I've had from others about UVE, I had the "feeling" that it was just beginning a good run up, and I've missed enough runs of other stocks I've had my eye on (like WFC, CBRL and OHI) that I felt the need to jump on some more shares of UVE sooner rather than later, and that the price of PM would continue to fluxtuate in a tighter range for a longer period of time. So yes, behind the method there is some "gut checking" that needs to take place, at least IMHO...
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
I'm sorry I didn't convey my method clearly, MintyFresh. I thought I had: I identified the top 6 candidates out of a field of 12 (so 50% of the field) based on their weighted MyMM Rankings, presented three possible objective options, selected one, narrowed down the field to 2 potential candidates (PM & UVE) based on the objective criteria (bring the positions with the lowest percent allocation up closer to the target, in this case the 3.33% parity), and then made my selection based on which of the two (which were virtually tied by other criteria) would produce the most in dividends per year at their current yields. That seems pretty methodical to me. :-)
And to me, at least, having all of my positions within a certain +/- range of parity is an important goal. I don't want to be in a position where one stock, which could have a much higher percentage allocation than many others, suddenly takes a dive, or cuts or even eliminates its dividend. The purpose of keeping everything close to the parity target of equal percentage allocation is to protect my capital from unforseeable circumstances.
So far the process is working rather well for me. The YTD return on my portfolio is currently 2.87% higher than that of SPY (which is the counter to the argument some present of "just put your money in an indexed fund; what you're doing is too much work!"), and I should realize 18.60% more in dividends (income) by the end of this year than I did last year, which is really the ultimate goal for this portfolio: To be generating enough income by the time I retire to replace my paycheck.
Thanks for your comments, though, and for taking the time to read my article!
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
I'm long BBL, too, but was a bit concerned that I might have been chasing a falling price, and potentially falling into a "value trap", as NeedMoreCoffee mentions below. Also, it's just under a 3% allocation, and with parity being 3.33%, didn't seem like as good a choice for buying more shares than PM or UVE, despite having the #1 weighted MyMM ranking this time around...
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Actually, if you read my articles for this year, you'll see that I've added 9 new positions to my portfolio, netting a gain of 2 new positions overall to go from the 28 I had at the end of 2012 to 30 now. Adding new positions, however, requires a goodly amount of cash, which really I only get when I can make a contribution to my IRA, of which I am limited. So far I've contributed 50% of what I'm allowed to contribute for this year for someone my age, and looking at my cash flow (and the potential for a dip in the market over the summer months), I'm not in a hurry to add a 3rd quarterly infusion of cash at this time. The other way I can generate enough cash to pick up a new, additional position is to "trim" some profits from other positions that have performed very well and are well above the parity number AND have shown a profit. I did that recently, and am not ready to do that again with the summer looming and the potential for a seasonal dip in the market overall...
Thanks for the in-depth analysis of NPK. Personally, I'm well aware of NPK's product and risks, but I really like this company. Perhaps that's not a "rational" approach, but I love the management and their commitment to paying shareholders as much as they can, and the CEO's relatively low salary and relatively very high amount of skin in the game in terms of the number of shares she holds. As for their military contracts, their product(s) here are ammunition, the majority of which get consumed during routine training exercises, not actual combat, and even though there have been (and probably will be) defense cuts, I don't see the Pentagon pulling back on being prepared by cutting practice shooting too drastically. :-) Also, last I heard they were having some success in branching out in terms of the number of customers for their absorbant products. All-in-all, I like NPK, and have held it since 12/14/2011, and don't mind the risk that its 3.08% allocation of my portfolio's total value represents. Finally, while it took a big hit in price in early 2012 when it announced annual results and a lower-than-expected dividend, the price of NPK has been improving steadily since then, especially in recent months, such that I have made more from 2 annual dividend payments than I've lost from a drop in the share price from my cost basis, so it's "in the green" as far as I'm concerned, and doing better now than it was last year at this time...
Thanks for your comments, though... :-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
I actually am weighting based on income potential, by weighting Yield and 5 Year Dividend CAGR at 30% vs. the 5.88% of the other metrics.
The problem with looking just for "Buy" signals, is that with the run up the market has been experiencing for the last I-don't-know how-many-weeks, almost everything is Reading "Too High" at least. Some things slip into "Stable" as their 52 week highs catch up to their current prices just as a function of time passing, but it's not as easy as just buying the things that have a "Buy" Reading. PM and UVE are so far behind the rest in terms of % allocation that I feel compelled to concentrate on them, and some of the other stocks that are further behind in terms of % allocation, such as VOD (2.70%) and LMT (2.79%). The problem with VOD is that it only pays dividends twice a year, and we're approaching what I think is its ex-div date, and I won't have quite enough cash built up from collected dividends to make a good purchase prior to that, and then after that there's really less of a point of jumping into it when it's Reading "Screaming!", too. If it gets back to a position of being "Stable" or better, then it's going to move up on my radar of what to buy next, but other than that, once I miss this ex-div date (which is the bigger dividend payout of the two per year they do), then there's less of an incentive to get aggressive buying it. LMT, on the other hand, I just want more of, and will get around to it eventually.
At this point I'm waiting for the "Sell In May" effect to kick in, which it may have started to with today and yesterday's results in the market (at least so far today). Need to be patient and see if we get the same downturn for summer that history says we should, then I can look for bargains in the positions that are under allocated.
Thanks for the comment! :-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
I wasn't aware of GSBC. I hold NYCB (a small bank) in my IRA, and RBCAA (another small bank, in Kentucky) in my wife's IRA, so I'm not in a hurry to add any more small (or large) banks to my portfolios at the moment. I've tried to steer clear of the Financials, for the most part, although I do wish I'd gotten into WFC when I first started looking at it over a year and a half ago. I will add GSBC to my watch list and see how it fares there. Thanks!
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
1) For the time being. I would like to eventually get to 50 positions, like my buddy chowder, so that the target parity for each position is 2.00%. But for the time being, I'm happy where I am at 30 positions, and I won't be adding any big chunks of cash to my IRA (aside from accumulated dividends) until Q3 at the earliest, so I really won't have enough to comfortably start a new position until then (and if then). I've got plenty of time (relatively) to get up to 50 positions, so for now I'm just concentrating on getting those that are well below parity up closer to parity.
1a) I have a watchlist, but it's gotten shorter as I've added new positions to my and my wife's IRAs; I currently have 15 stocks on my watchlist. I need to do some research and add a handful (or 2) of new stocks to my watchlist, but I'm just too busy with my day job and family life to take the time to do the necessary research to dig around and find some good, new candidates.
2) I have, but haven't come up with an approach that I'm comfortable with. One reason is, the stocks that pay much higher yields, such as mREITs and BDCs, tend to not appreciate in price as regularly as the CCCs such as JNJ, KMB, KO, T, etc., so even though a stock may be "underbalanced" in terms of the % of the total of what it contributes to my income stream, it's more likely to appreciate, which, in turn, lowers its yield. On a purely cash basis of how much does each position contribute to the income stream, I'm a bit out of balance. But I'm not sure how to balance that out and not get horribly skewed in terms of % allocation of the total value of the portfolio. It's something I noodle on every now and then, but for now, I'm just watching the % allocation, and keeping an eye on % of total income to try to make sure things don't get too out of whack.
Hope that helps, and thanks for your questions! (Sorry it's taken me so long to get back to you; I was teaching a class this week, and replying to comments here on SA took a back burner...)
:-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Yeah, I added UVE to my watchlist as a result of some comments folks made here on SA, then pushed past my concerns over it being such a small player and went ahead and bought some based on other comments from more folks here on SA. I'm glad I did... :-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
Sorry for the delay in replying. I'm co-teaching a class this week, and have limited time in which to respond.
To be brief, it's not that the MyMM Ranking shows the "best" option, as much as it shows the best Ranked stocks based on the weighted metrics of all the stocks in a given set. I often choose the "best Ranked", but not always; it's not an absolute "you must buy this next" result, but a tool to guide me in the right direction and narrow my choices down from a larger field to a smaller set, and then from that set I have to make a final decision, which can have a lot of different other variables affect it based on what's going on at that point in time and what my current short-term goals are with respect to reaching my long term goals...
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
:-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
In the end, I went with adding a bunch of more shares to the position that had the lowest percentage allocation over adding just a handful of shares to a position that was relatively closer to "parity".
Hope that helps... :-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
:-)
My Mad Method: What Next To Buy, And Why? May 2013 [View article]
And to me, at least, having all of my positions within a certain +/- range of parity is an important goal. I don't want to be in a position where one stock, which could have a much higher percentage allocation than many others, suddenly takes a dive, or cuts or even eliminates its dividend. The purpose of keeping everything close to the parity target of equal percentage allocation is to protect my capital from unforseeable circumstances.
So far the process is working rather well for me. The YTD return on my portfolio is currently 2.87% higher than that of SPY (which is the counter to the argument some present of "just put your money in an indexed fund; what you're doing is too much work!"), and I should realize 18.60% more in dividends (income) by the end of this year than I did last year, which is really the ultimate goal for this portfolio: To be generating enough income by the time I retire to replace my paycheck.
Thanks for your comments, though, and for taking the time to read my article!
My Mad Method: What Next To Buy, And Why? April 2013 [View article]