My Mad Method And My Wife's IRA - February And March, 2013 [View article]
Can you elaborate on your comment, Sumflow?
I watched the Buffet clip. I just disagree with him. In terms of cost, I don't trade, I invest, and I get 100 free trades in my wife's account every year, which is more than enough for what I need to do to maintain it. My account is held at Interactive Brokers, where the vast majority of my trades only cost me $1.00 per trade. So, I don't see where "Low cost" is an issue in those situations...
chowder can give you a more eloquent response as to the value of only having 2% of your nest egg invested in any one company to avoid the risk of the hit that that company could take should something happen to it. Hopefully he'll chime in...
My Mad Method And My Wife's IRA - February And March, 2013 [View article]
Thanks, Med.
I figured there'd be some withholding. 10% sure beats what I was paying the French government for being paid dividends from FTE - 32% or more!
I'm mainly interested in seeing if MyMM is working properly, since DCM has been at or near the top since I added it to my watchlist some time ago, but there were concerns over the dividend getting cut for a while, so that held me off from buying it, and then there were timing issues with not wanting to get into it just after a semi-annual ex-div date. Now seemed like a good time to pick some up, especially being in the wife's account, which have smaller positions, so less risk to the household's bottom line... We shall see if DCM lives up to what MyMM says it should...
My Mad Method And My Wife's IRA - February And March, 2013 [View article]
Thanks! And thanks for making this the first article on which you've made a comment here on Seeking Alpha! Welcome to the community; it's a fun lot we've got going on around here... :-)
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Hi, kolpin, and thanks!
With regard to HRS, not necessarily overvalued. It just means that its current price is about 20% above the average of its 52 week Hi & Lo, and this is a "helper" indicator. Looking at its P/E of 9.4, I wouldn't say it's overvalued! LOL! (I really need to sign up for Chuck's F.A.S.T. Graphs so I can use those to get a better reading than just my Delta Ratio Reading and P/E...) The Delta Ratio Reading is more of a "weather vane" than an historical metric, looking at what's going on with a stocks price in relation to its 52 week numbers. I don't always "follow" its advice, it just helps me narrow down my choices between a larger number to a smaller group from which to choose in terms of what to buy next...
With regard to MyMM, I generally manually select stocks to put on my watchlist, as you put it. These come from ideas generated from a variety of sources, such as SA articles, comments on SA articles by folks who like something I've never heard of (or have started to see a pattern of people mentioning it), looking at the major players in an industy/sector, David Van Knapp's list of Top 40 Dividend Picks for the current year, and analyzing the CCC list. My most recent additions to both my watchlist and the replacements in my portfolio come from a combination of the last two, whereby I decided to poke around the CCC list and find the companies with the best CDR numbers, looked at their 1, 3, 5 and 10 year DGR numbers, and their current Yields, and then plugged them into MyMM. In some cases I used DVK's Top 40 List as a "filter", but not in all cases. That process brought some real gems to my attention, like CBRL, LO, WEC, TGH and DRI (some of which I bought) and also reinforced some others that I've been watching for a while, such as PM, OHI and RCI.
And yes, I have sold some positions that were formerly high ranking MyMM stocks for a variety of reasons, most of which had to do with the constant (although decelerating) evolution of my approach. I started out with what evolved into MyMM, then merged that with a more traditional DGI approach, and that shifted my focus in terms of what was important in what to select and keep. A couple, like MCD and MSFT, I owned previously and sold for various reasons (including lower-than-desired Yields and possible future fallout from new product launches), but later got back into because the price had dropped and the Yield had risen to the point where they were attractive again. (MCD I put in my wife's IRA, after selling it at a profit and keeping an eye on the price; when it dipped down to $87, I pounced, then pounced again when it hit $84; now it's at $98.83, so I'm very happy with how that turned out! At the same time, its yield improved from when I held it in my IRA, so best of both worlds!)
A lot of times I'll find something that looks interesting, only to plug in the numbers in the MyMM and find that it scores terribly, or there's a real glaring problem, such as an extremely high Payout Ratio or negative 5 Yr Div CAGR, so then it gets taken right off the list list again. But who knows what the future holds, and something that was a former MyMM loser might turn out to be a real possibility in the future, so I'm willing to take a second look at it at a later point in time if someone points out that its situation may have improved since the last time I looked at it...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Hi, Miz! Great to hear from you. I've been swamped with work and we've all been smacked with the cold & flu season at my place, so I haven't been as active in reading (or writing) SA articles, so that's why you haven't seen me commenting on all the great stuff that's been coming out of the regular DGI folks these past few months...
Freehold is an interesting case. The reason the CDR is lower than the Yield is because its 5 Year Div Growth CAGR is -4.36%. But with a 7.77% yield and a 12.42% increase in value in my portfolio (which translates into a Yield on Cost [YoC] of 8.74%), I'm willing to cut it a bit more slack than I might some other positions. Also, being a Royalty Trust, it "behaves" a bit differently in terms of how I look at its CDR and dividend history vis-a-vis other, traditional corporations. I think it's been "converted" to a corporation as a result of actions the Canadian government took a while back, so I don't think it's going to "expire" like a US trust (like MVO) would, so as long as it keeps cranking out those monthly dividends and maintains a positive Gain/Loss % in terms of value, I'm going to let it slide. :-)
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Hi, darkmoon_p.
Since it's an IRA, I don't pay taxes on Canadian or UK holdings. FTE came with a very large tax bill, something on the order of 32%, plus the French Government recently implemented a sales tax, which is one reason I didn't buy more of it (actually, I dumped it because it cut its dividend). I factored this tax bill into the yield that I display on my MyMM spreadsheet, so if you ever see yield for FTE from me, it takes this 32%-ish cut into account, as I'm only interested in my net.
Otherwise, because it's an IRA, I don't get to claim foreign tax credit when I file my 1040, but, c'est la vie!
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Thanks, VeteranNovice. Sorry it's taken me so long to get back to you (and everyone else); I was either frantically busy or sick over the weekend...
I just checked David Fish's latest CCC list, and HON doesn't show up as either a Dividend Champion, Contender or Challenger, which is probably why it hasn't shown up on my radar. Can you share with us why you like it?
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
@whitehead1: I've only been managing my own portfolio since October, 2011, so I don't have that many years worth of history to analyze... yet. That's a big part of this "MyMM" series, is to track my own performance and see where I've made mistakes and how I (and anyone else who cares to) can learn from those mistakes.
As far as performance vs an index, I do track that (because folks are interested in that, and that is something people can generally relate to), but my primary yard stick is and will be going forward, whether my portfolio continues to provide more income from dividends every year than the year before, and if that increase beats inflation. It's going to take a few years to get enough statistics to see whether this is the case, but I'm much more interested in that than I am whether or not I'm "beating the S&P 500" YoY. (I wrote a year end article for 2012 in early January that you might want to read through, if you haven't done so already).
Also, in terms of "puttin all that effort into it", it's definitely a labor of love! I really enjoy this process, and have been burned by so-called "professionals" too many times in the past to trust anyone else to manage my retirement funds anymore except myself. Seeking Alpha has been a great place to learn, and continues to be. So, it's more "hobby" than "work" as far as effort goes, with the end goal being having a portfolio that will generate enough income from dividends by the time I retire that I can replace my paycheck with that dividend income, and not have to worry about meeting my expense requirements in retiremment.
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
@BraveChicken:
It's a good question. In general, I have just been adding to existing positions, and haven't added any new positions other than to replace a position that has been completely sold.
For how I add to existing positions, there's a couple of factors I look at, starting with how far away from parity any position is, and focus on the ones that are the furthest away. However, if a stock that is below parity is also "Screaming!" in terms of its current price vis-a-vis the average of its 52 week Hi and Lo, I'm less inclined to add to it and will pick something else that is still below parity that has a better Delta Ratio Reading, and/or better chart in terms of current price vis-a-vis my cost basis. If a stock is totally tanking, I'm not necessarily going to autmatically add to it to get a better cost-basis; EXC is a good example of this. It had a "Buy More?" indicator on my main Dashboard worksheet in my spreadsheet (something I haven't written about yet), but it really wasn't, IMHO, a good candidate to add more shares to to bring it up to parity.
I have the same problem you're having with HAS, but with KMB. I'd love to bring it up to parity, and it's not too far off, but it's just been on an absolute tear since I bought it almost 18 months ago, and hasn't let up. So, since there are better candidates for adding more shares to in order to bring them up to parity (i.e., those that have lower prices than what I bought them for, or at least have not increased as much as KMB since I bought it, or (very important) have a higher yield than KMB), I allocate the available funds to those.
I'm looking to use new money (contributions to my IRA), plus a month or two's accumulated dividends possibly, to add more positions to my portfolio. In the meantime, I have enough positions that are below parity, but are not "Screaming!", and have decent yields, that I have room to add to those existing positions.
(BTW, I'm long INTC, and very bullish on the company. I just don't write about them here on SA because I have a business relationship with them and don't want to run afoul of any kind of situation that might be considered revealing "insider information", etc., so I just avoid writing about them altogether. But, it's a great company, that makes a product that is very important to pretty much everyone on the planet in some way or another, and with a P/E of around 10, appears to me to be undervalued...) :-)
In the meantime, just be patient, try to wait for dips to add to positions that are way below parity, and look at when you might want to add a new position, as by adding a new position you automatically reduce the parity % Allocation target number that every position is striving for, accomplishing "two birds with one stone", in some cases of other positions that are "just" below parity...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
@ScottU: Yes, keeping an eye on % of Income Produced is important. I track both, but at this point am more concerned with % Allocation. I think chowder made a comment to address this approach at some point in some previous article (not necessarily one of mine). (chowder, if you're out there, chime in, please.)
Going forward, once I've got more positions lined up, I will be adjusting to focus more on % of Income, in terms of which positions I add more to vis-a-vis any other. However, I still want to keep any one position below a certain threshold (currently 5%, but at 50 positions that might come down to 4%, or something else more appropriate), to protect against a double-whammy, where the price tanks, and the reason the price tanked is that the company froze, cut or eliminated its dividend, in which case I'd be looking to sell it and shift that cash into a better dividend payer. So if you balance too far in favor of % Income, you could be significantly exposed to taking a big hit in value, which will affect your ability to replace a tanked stock with one that still produces a solid dividend, and get the same level of Income from the new stock as you did from the old (tanked) one.
As for JNJ, yeah, I was a little surprised myself that I sold some, since it took me so long to acquire what I have. However, it has gone up substantially since I got it, and was approaching "overweighted" in terms of % Allocation, with a nice profit, so I did a little pruning. Really, it wasn't that many shares, just a slight pruning...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
@Viperman: I hadn't considered Harris a defense stock, but, so be it.
Before, folks were telling me I was over-exposed to energy; now you're telling me I'm over-exposed to defense. I have a solution to both concerns: Add more positions, and get my self from 28 positions to closer to 50 positions, and then I won't be as over-exposed to either energy or defense. LOL! :-)
Thanks for your comment, and your concerns. I think at this point, defense is OK ("safe"), as most of the rest of the world still hates us, and one never knows what the future holds, despite what Obama would wish (i.e., lower spending on Defense)...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Thanks, Viperman.
But I'm confused: How am I overexposed to defense stocks? I just picked up GD and LMT this past month for the first time. While NPK could be considered a defense stock, that's only 1/3 of their product line, and the other two are very different (and really, their defense-oriented product is just ammo, which isn't on the same level as fighter jets and submarines...). Just curious...
My Mad Method And My Wife's IRA - February And March, 2013 [View article]
I watched the Buffet clip. I just disagree with him. In terms of cost, I don't trade, I invest, and I get 100 free trades in my wife's account every year, which is more than enough for what I need to do to maintain it. My account is held at Interactive Brokers, where the vast majority of my trades only cost me $1.00 per trade. So, I don't see where "Low cost" is an issue in those situations...
chowder can give you a more eloquent response as to the value of only having 2% of your nest egg invested in any one company to avoid the risk of the hit that that company could take should something happen to it. Hopefully he'll chime in...
My Mad Method And My Wife's IRA - February And March, 2013 [View article]
I figured there'd be some withholding. 10% sure beats what I was paying the French government for being paid dividends from FTE - 32% or more!
I'm mainly interested in seeing if MyMM is working properly, since DCM has been at or near the top since I added it to my watchlist some time ago, but there were concerns over the dividend getting cut for a while, so that held me off from buying it, and then there were timing issues with not wanting to get into it just after a semi-annual ex-div date. Now seemed like a good time to pick some up, especially being in the wife's account, which have smaller positions, so less risk to the household's bottom line... We shall see if DCM lives up to what MyMM says it should...
My Mad Method And My Wife's IRA - February And March, 2013 [View article]
My Mad Method And My Wife's IRA - February And March, 2013 [View article]
:-)
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
With regard to HRS, not necessarily overvalued. It just means that its current price is about 20% above the average of its 52 week Hi & Lo, and this is a "helper" indicator. Looking at its P/E of 9.4, I wouldn't say it's overvalued! LOL! (I really need to sign up for Chuck's F.A.S.T. Graphs so I can use those to get a better reading than just my Delta Ratio Reading and P/E...) The Delta Ratio Reading is more of a "weather vane" than an historical metric, looking at what's going on with a stocks price in relation to its 52 week numbers. I don't always "follow" its advice, it just helps me narrow down my choices between a larger number to a smaller group from which to choose in terms of what to buy next...
With regard to MyMM, I generally manually select stocks to put on my watchlist, as you put it. These come from ideas generated from a variety of sources, such as SA articles, comments on SA articles by folks who like something I've never heard of (or have started to see a pattern of people mentioning it), looking at the major players in an industy/sector, David Van Knapp's list of Top 40 Dividend Picks for the current year, and analyzing the CCC list. My most recent additions to both my watchlist and the replacements in my portfolio come from a combination of the last two, whereby I decided to poke around the CCC list and find the companies with the best CDR numbers, looked at their 1, 3, 5 and 10 year DGR numbers, and their current Yields, and then plugged them into MyMM. In some cases I used DVK's Top 40 List as a "filter", but not in all cases. That process brought some real gems to my attention, like CBRL, LO, WEC, TGH and DRI (some of which I bought) and also reinforced some others that I've been watching for a while, such as PM, OHI and RCI.
And yes, I have sold some positions that were formerly high ranking MyMM stocks for a variety of reasons, most of which had to do with the constant (although decelerating) evolution of my approach. I started out with what evolved into MyMM, then merged that with a more traditional DGI approach, and that shifted my focus in terms of what was important in what to select and keep. A couple, like MCD and MSFT, I owned previously and sold for various reasons (including lower-than-desired Yields and possible future fallout from new product launches), but later got back into because the price had dropped and the Yield had risen to the point where they were attractive again. (MCD I put in my wife's IRA, after selling it at a profit and keeping an eye on the price; when it dipped down to $87, I pounced, then pounced again when it hit $84; now it's at $98.83, so I'm very happy with how that turned out! At the same time, its yield improved from when I held it in my IRA, so best of both worlds!)
A lot of times I'll find something that looks interesting, only to plug in the numbers in the MyMM and find that it scores terribly, or there's a real glaring problem, such as an extremely high Payout Ratio or negative 5 Yr Div CAGR, so then it gets taken right off the list list again. But who knows what the future holds, and something that was a former MyMM loser might turn out to be a real possibility in the future, so I'm willing to take a second look at it at a later point in time if someone points out that its situation may have improved since the last time I looked at it...
Hope that helps...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Freehold is an interesting case. The reason the CDR is lower than the Yield is because its 5 Year Div Growth CAGR is -4.36%. But with a 7.77% yield and a 12.42% increase in value in my portfolio (which translates into a Yield on Cost [YoC] of 8.74%), I'm willing to cut it a bit more slack than I might some other positions. Also, being a Royalty Trust, it "behaves" a bit differently in terms of how I look at its CDR and dividend history vis-a-vis other, traditional corporations. I think it's been "converted" to a corporation as a result of actions the Canadian government took a while back, so I don't think it's going to "expire" like a US trust (like MVO) would, so as long as it keeps cranking out those monthly dividends and maintains a positive Gain/Loss % in terms of value, I'm going to let it slide. :-)
Hope that helps! TTYL...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Since it's an IRA, I don't pay taxes on Canadian or UK holdings. FTE came with a very large tax bill, something on the order of 32%, plus the French Government recently implemented a sales tax, which is one reason I didn't buy more of it (actually, I dumped it because it cut its dividend). I factored this tax bill into the yield that I display on my MyMM spreadsheet, so if you ever see yield for FTE from me, it takes this 32%-ish cut into account, as I'm only interested in my net.
Otherwise, because it's an IRA, I don't get to claim foreign tax credit when I file my 1040, but, c'est la vie!
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
I just checked David Fish's latest CCC list, and HON doesn't show up as either a Dividend Champion, Contender or Challenger, which is probably why it hasn't shown up on my radar. Can you share with us why you like it?
Thanks...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
As far as performance vs an index, I do track that (because folks are interested in that, and that is something people can generally relate to), but my primary yard stick is and will be going forward, whether my portfolio continues to provide more income from dividends every year than the year before, and if that increase beats inflation. It's going to take a few years to get enough statistics to see whether this is the case, but I'm much more interested in that than I am whether or not I'm "beating the S&P 500" YoY. (I wrote a year end article for 2012 in early January that you might want to read through, if you haven't done so already).
Also, in terms of "puttin all that effort into it", it's definitely a labor of love! I really enjoy this process, and have been burned by so-called "professionals" too many times in the past to trust anyone else to manage my retirement funds anymore except myself. Seeking Alpha has been a great place to learn, and continues to be. So, it's more "hobby" than "work" as far as effort goes, with the end goal being having a portfolio that will generate enough income from dividends by the time I retire that I can replace my paycheck with that dividend income, and not have to worry about meeting my expense requirements in retiremment.
Thanks for the comment!
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
It's a good question. In general, I have just been adding to existing positions, and haven't added any new positions other than to replace a position that has been completely sold.
For how I add to existing positions, there's a couple of factors I look at, starting with how far away from parity any position is, and focus on the ones that are the furthest away. However, if a stock that is below parity is also "Screaming!" in terms of its current price vis-a-vis the average of its 52 week Hi and Lo, I'm less inclined to add to it and will pick something else that is still below parity that has a better Delta Ratio Reading, and/or better chart in terms of current price vis-a-vis my cost basis. If a stock is totally tanking, I'm not necessarily going to autmatically add to it to get a better cost-basis; EXC is a good example of this. It had a "Buy More?" indicator on my main Dashboard worksheet in my spreadsheet (something I haven't written about yet), but it really wasn't, IMHO, a good candidate to add more shares to to bring it up to parity.
I have the same problem you're having with HAS, but with KMB. I'd love to bring it up to parity, and it's not too far off, but it's just been on an absolute tear since I bought it almost 18 months ago, and hasn't let up. So, since there are better candidates for adding more shares to in order to bring them up to parity (i.e., those that have lower prices than what I bought them for, or at least have not increased as much as KMB since I bought it, or (very important) have a higher yield than KMB), I allocate the available funds to those.
I'm looking to use new money (contributions to my IRA), plus a month or two's accumulated dividends possibly, to add more positions to my portfolio. In the meantime, I have enough positions that are below parity, but are not "Screaming!", and have decent yields, that I have room to add to those existing positions.
(BTW, I'm long INTC, and very bullish on the company. I just don't write about them here on SA because I have a business relationship with them and don't want to run afoul of any kind of situation that might be considered revealing "insider information", etc., so I just avoid writing about them altogether. But, it's a great company, that makes a product that is very important to pretty much everyone on the planet in some way or another, and with a P/E of around 10, appears to me to be undervalued...) :-)
In the meantime, just be patient, try to wait for dips to add to positions that are way below parity, and look at when you might want to add a new position, as by adding a new position you automatically reduce the parity % Allocation target number that every position is striving for, accomplishing "two birds with one stone", in some cases of other positions that are "just" below parity...
Hope that helps...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Going forward, once I've got more positions lined up, I will be adjusting to focus more on % of Income, in terms of which positions I add more to vis-a-vis any other. However, I still want to keep any one position below a certain threshold (currently 5%, but at 50 positions that might come down to 4%, or something else more appropriate), to protect against a double-whammy, where the price tanks, and the reason the price tanked is that the company froze, cut or eliminated its dividend, in which case I'd be looking to sell it and shift that cash into a better dividend payer. So if you balance too far in favor of % Income, you could be significantly exposed to taking a big hit in value, which will affect your ability to replace a tanked stock with one that still produces a solid dividend, and get the same level of Income from the new stock as you did from the old (tanked) one.
As for JNJ, yeah, I was a little surprised myself that I sold some, since it took me so long to acquire what I have. However, it has gone up substantially since I got it, and was approaching "overweighted" in terms of % Allocation, with a nice profit, so I did a little pruning. Really, it wasn't that many shares, just a slight pruning...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Before, folks were telling me I was over-exposed to energy; now you're telling me I'm over-exposed to defense. I have a solution to both concerns: Add more positions, and get my self from 28 positions to closer to 50 positions, and then I won't be as over-exposed to either energy or defense. LOL! :-)
Thanks for your comment, and your concerns. I think at this point, defense is OK ("safe"), as most of the rest of the world still hates us, and one never knows what the future holds, despite what Obama would wish (i.e., lower spending on Defense)...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
My typical commission is just $1.00 per trade, so I don't think I can get much better than that. LOL!
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
But I'm confused: How am I overexposed to defense stocks? I just picked up GD and LMT this past month for the first time. While NPK could be considered a defense stock, that's only 1/3 of their product line, and the other two are very different (and really, their defense-oriented product is just ammo, which isn't on the same level as fighter jets and submarines...). Just curious...