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J.D. Welch  

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  • The Parity Conundrum [View article]
    Hi, rok.

    I think you're agreeing with me, but let me clarify: In the first 5 year phase, I'm going to pick up some more higher-yielding stocks such as a few BDCs, and use the higher revenue that they will generate over the next 5 years to slowly build up and add to other positions that are lower yielders, but "safer", such as the CCCs. So in the end, at the end of the 15 year window I've set for myself, I will end up with positions that are out of whack in terms of % Allocation Parity, but are more balanced in terms of Dividend Income Parity, thereby leveling out the income flow.

    This is a general statement; obviously there will be some tuning and adjusting, and not everything will be in perfect balance in terms of the parity, depending on the level of risk, etc, etc. But that's the idea; load up now on higher paying per unit (higher yielding) units to "accelerate" the income that will be coming in, and use that accelerated income to buy things that I haven't been able to break into, like PG, CL, CVX, for example (just an example).

    Hope that helps... Gotta run...

    As always, thanks for your comment...
    Feb 13, 2014. 05:12 PM | 1 Like Like |Link to Comment
  • The Parity Conundrum [View article]
    Interestingly, no one has commented on my statements and concerns about KO... Hmmm...
    Feb 13, 2014. 04:14 PM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    I have KMR in my wife's IRA, and it hasn't been doing so great. It's had some good days recently, but overall it's down from when I added it to her account. I still like it, and it pays great dividends. Thanks for the tip!
    Feb 13, 2014. 11:26 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    Thanks, SDS.

    1) Thanks for pointing that out. People do seem to get freaked out by the number of positions I have, and how many I aspire to. It's really not that hard once I've selected what I want in my portfolio to stay on top of where I'd like to put the next batch of dividends. The harder part is maintaining a worthwhile watch list and picking from it when the time comes to add a new position.

    2) IB charges $10 per month as a "service fee", but that is reduced by any commissions realized during the month, up to the full $10 of the service fee. In other words, if I have $9.08 in commissions at the end of my month, then the service fee charged will only be $0.92. If I have over $10 in commissions for the month, then there is no service fee.
    I did a calculation at the end of last year to see if I was in fact paying more in service fees than I otherwise would be paying in $7 commissions, and I can't recall the exact numbers, but based on the number of trades I made in 2013 and the amount of fees I paid (commissions + service fees + real time listing fee) I came out ahead. IB really is a great brokerage firm, and if you're doing any options trading at all, it really pays to use them...
    Feb 13, 2014. 11:25 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]

    The Seeking Alpha Team has replaced the old images of the "colorful" tables with the corrected ones. Sorry for any inconvenience or confusion that oversight on my part may have caused...
    Feb 13, 2014. 10:54 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    SDS: Don't have time to go into it too deeply now, but 1) commissions are super low, 2) it's all in an IRA so Uncle Sam can take a hike, and 3) I "kept my hands under my ass" for almost 20 years and it got me in the pickle I'm in now; can't do that, wasn't sleeping well at night, can't go back there now; now I SWAN very well...

    Thanks for the feedback, as always... :-)
    Feb 13, 2014. 01:16 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    That's a good suggestion, COBeeMan. What would you suggest for the "various risk factors" that could be used?

    And yes, to your last sentence, that's basically what I'm doing, is increasing my risk threshold (tolerance in my parlance, but the same thing) for the immediate future in order to "juice" my income, and then apply that accelerated income to buying more of (or initiating) less risky positions as time goes by, accelerating that process in return. The plan is for the near-term rapid acceleration of income as a result of somewhat riskier positions will fuel the purchasing of less risky positions, and eventually the see-saw will tip the other way, with what will hopefully be sufficient monthly income to keep me off the cat food diet. LOL.

    Thanks again. Always nice to hear from you... :-)
    Feb 13, 2014. 01:09 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    That's a good way to express it, learning, and that's basically what I was aiming for with the 3X5 Year Phases. Thanks for expressing it so succinctly.

    Feb 13, 2014. 01:00 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    Good point, Seth, but to that point I checked UVE's dividend history, and they have paid out an increasing "special" dividend for at least the last 3 years, and likely more. So I believe I am using the "regular" dividends figure in calculating its yield, but can't say for certain at this moment, as I'm not on my computer, and that's where the detailed numbers are...
    Feb 13, 2014. 12:57 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    Thanks for your feedback, Disturber, and I understand where you're coming from, it's just that it's not my style. ("Hubris", eh? LOL. Maybe....)

    One thing you probably don't know about me is that when I write about MyMM, I'm talking about my IRA, or my wife's IRA, but I have other irons in the fire. For example, I contribute to my 401[K] and there I am invested in 4 ETFs and one mutual fund that I trust. The ETFs are DVY, HDV, REM and XLU, so I've got a good amount of diversity, but also some very good coverage in dividend stalwarts, as well as utilities. The mutual fund is YAFFIX, which has done well for me, but in general I distrust mutual funds and the "professionals" that push them (not meaning you) for a number of personal historical reasons.

    Also, if you look up my 2013 EOY report here on SA, which I just published a few weeks ago, you'll see that I beat SPY by a fair margin, and my yield (again, income from dividends being paramount) just blows the S&P500's paltry <2% away.

    I'd love to address some of your other comments, all valid points backed up by your current results, but I'm typing this on my iPad, and it's a difficult thing to get very much written, so I will have to wait until I'm at my computer and have the time to properly address them.

    But thank you for the thoughtful and specific feedback. That's one of the great things about SA, is all the diversity of ideas and input and feedback that we can give to each other...
    Feb 13, 2014. 12:50 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    Hi, kolpin. Nice to hear from you.
    I think I'm going to end up doing what you're talking about in Phase 2, where I let the range between the low end and the high end of % Allocation parity expand a bit more.
    I'm pretty sure that the $3 Million Portfolio that chowder has published is for his son, and that in his own portfolio (or one of them) he has 50 or so positions.
    If you look at the first colorful table, you'll see that there are only a few stocks that have really tanked significantly, and those are all mREITs, which I'm now glad I held onto as I think they will start improving in terms of price. But, yes, they are somewhat high risk and have dropped significantly. And as I get closer and closer to retirement I will phase more into the solid 4%-6% yielders, but I've decided that for the next 5 years I need to turn up the heat on my risk tolerance a bit as a means of accelerating the size of my portfolio and providing the fuel with which to buy and build up those 4%-6% yielders. That was the point I was trying to get across; sorry if I didn't succeed at that. But I'll start dialing back on the risk in Year 6 and hopefully by then my portfolio will be generating sufficient cash on a regular basis that I can be steadily building up the CCCs even more.

    Thanks again for your feedback. I always look forward to it...
    Feb 13, 2014. 12:37 AM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    Thanks, Dude!

    (I think...)

    Feb 12, 2014. 09:49 PM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    Fair enough, MintyFresh. Good points.

    Please keep in mind that the genesis of this article was the question that was posed as to whether or not parity would be more appropriately applied to income rather than value. That led me to do the analysis, and I was rather intrigued by what I discovered, as I explain in the article.

    I think there's something to the value of keeping positions within a certain parity target in terms of value. I take that queue from chowder, and I respect his opinion a great deal, so I hope he reads this and chimes in. However, that's why I proposed potentially eschewing the value parity target in favor of an income parity goal, which (if I could do it) would significantly weight companies like JNJ, KMB, AFL, WAG, etc. I don't think any of those companies are in any real danger of having their share prices take a nose dive ~individually~, given that they're all pretty well run companies with competent Boards and Mgmt. There is a possibility of another 2008-like event causing ~all~ of them to tank, but then then whole harbor would be under the influence of that very low tide, and I'd do whatever I could to back up the truck for as much Dividend Champions as I could manage.

    I agree with you that each stock has a different risk profile, but keep in mind that the guiding principle, as Robert Allen Schwartz has recently pointed out, is the ~amount~ of income that the portfolio can generate. At this point, 15 years out from retirement, I can tolerate a bit more risk than I will be able to when I'm 5 years closer to retirement, and (without divulging dollar amounts) I really am in a bit of a pickle in terms of how far behind I am with saving for that retirement. So I need to take on a bit more risk in favor of generating substantially more income now, and for the next 5 years, and use that income to start some other positions with other CCCs that I can grow over time.

    The frequent trading of doing the "minute balancing", as you put it, really isn't a factor, since I'm paying $1.00 per trade, and not $7.95 per trade, with Interactive Brokers. And it's not like I'm trading 1 share at a time... If I try to "set it and forget it", which is what I did earlier in my working life, I'm afraid I'll miss something significant (again), and end up paying the ultimate penalty; while I generally like Saltines, I can't stand cat food, and I don't relish the thought of sleeping under a bridge every night. While that's a bit of a jest, it really is a real fear of mine, and I reasoned that if I can accelerate the amount of income that my portfolio can generate now, in the next 5 years, I can use that accelerated income to buy more shares of things that have a risk that's above what I'm now considering to be tolerable, and lay the foundation for those companies (CCCs) to be well funded, at least initially, starting Year 6.

    Hope that helps. Thanks very much for your comments. Always great to hear from you.
    Feb 12, 2014. 09:49 PM | Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    Hey, Folks. Minor correction to the colorful charts up above:

    In the 4th Column, Combined Rank, please take the number you see there and subtract 3 from it. By inserting the blank lines in the spreadsheet and ranking the entire portfolio, Excel determined that that blank lines were all tied for #1, which made the real #1, LO, #4, and everything else got bumped down by 3 as well. Very sorry about that; not sure how I can correct embedded images with SA after I've submitted an article, but I'll try to find out...

    Feb 12, 2014. 09:03 PM | Likes Like |Link to Comment
  • These 6 Stocks Made The 'Top 40 Dividend Growth Stocks' For 7 Straight Years [View article]
    Given what's been going on, I wouldn't exactly call it "having a life"...

    Feb 12, 2014. 07:09 PM | 1 Like Like |Link to Comment