Mike Nadel

Long-term horizon, dividend growth investing
Mike Nadel
Long-term horizon, dividend growth investing
Contributor since: 2012
Not sure I would buy BP at gunpoint.
I'd say, "Just pull the trigger and get it over with; it would be less painful than owning BP!"
Mike
Thanks mjt.
Mike
Mick:
I LOVE that Peter Lynch quote. I may have to steal it sometime myself!!
Mike
Namron:
Yes, my wife has secure employment, and she plans to work another 4-5 years before joining me in retirement.
Having received the highest scores they give to nurses, she just received the max raise for 2016 -- 2.25%. The CEO of her "non-profit" hospital group (the largest in the Southeast) just received a 25% bump to $6.6 million. So I'd rather she be CEO!
Mike
Well, my Panthers laid an egg.
The Broncos' defense was far superior to the Panthers' offense. It happens. I still enjoyed the season. Cam & Co. will be back.
Congrats to the Broncos for earning the title.
Mike
RS:
This is an interesting time, and I'm glad you sparked interesting discussion about it.
I am not 60% cash like you, but I do have some cash, which makes me different from some of my DGI colleagues who never hold cash.
I learned the value of cash a few years before I had ever heard of DGI. In 2007, my wife and I sold our Chicago house. We signed a short-term lease at an apartment and put all of the cash from the sale in an interest-paying money market account because we were certain we would be buying a replacement house within 4-6 months.
As the housing market headed down, we thought it might be prudent to wait a while longer, so we added a year to our lease. In Sept 2008, the housing market was in full freefall, so we decided to rent for another year. And by now, the stock market also was declining big-time. Our money from our house sale remained in the money market fund.
A few months later, with the economy in tatters, I was laid off. I sure was glad we hadn't overpaid for a house or put the money in the stock market. Later in 2009, with me unable to find anything close to the kind of job I had, we signed yet another one-year lease -- and even negotiated a rent decrease.
A year later, we decided to move to North Carolina, where my wife got a good nursing job. Unencumbered because we had no house to sell, the move was easy. So what we thought would be 4 months of renting ended up being 40 months.
Six months after moving to N.C., we bought a house at a bargain price and paid cash for it. With the market picking up, I gained some confidence and began researching a better investing strategy. Eventually, I landed at SA, learned about DGI and began putting my cash to work.
Yes, I wish I had started investing in March 2009, but I had nowhere near the comfort level or experience to do so. I also was not in the right place psychologically, having just been laid off two months earlier.
I sure was glad we had a huge chunk of our net worth in cash when the you-know-what hit the fan.
Having said all of that, I am not nearly as concerned now. Maybe I'm naive, I don't know. And yet, again, we do have some cash and consider it a viable asset class.
Mike
AA:
That 9th-grade teacher should see you now, ruling Seeking Alpha!
Go Panthers! Keep Pounding!
Mike
Miguel:
I guess the amateur stock-picker in me is just frustrated because it's difficult to really calculate a price for XOM based on EPS, P/E, historical P/E, cash flow, and other traditional metrics I usually like to use.
I definitely believe XOM will recover one day.
Mike
AA:
I can agree with all of that about today's sports stars. Again, though, the Mickey Mantles and Jim Browns and other heroes from days gone by often were every bit as whiny, highly compensated (for their era), egotistical, cheating, non-team-players. Many were drunks and/or druggies who cheated on their wives, were racists, were violent, etc. They simply were caught less, and the media fawned all over them.
Many football fans think the Panthers are "too happy" -- they celebrate too often, and they smile too much. Most of the complainers are my age or older. "Hey you kids ... get off of my yard!"
I have absolutely no problem with it and think it's nice to see players actually enjoying their time in the No Fun League. But then again, I AM a Panthers fan -- and I'd love to see Cam Newton celebrate about 6 TDs tomorrow!
Mike
Cyclones:
For long-term investors, flat markets are a gift. They let investors buy additional shares of great companies at a fair (or better) price and let people reinvest dividends at a fair (or better) price.
When the market does finally swing higher, as it pretty much always does eventually, the patient, long-term investor has more shares of great companies -- and now those companies are appreciating significantly in price. Time to celebrate!
Mike
Miguel:
That's part of what I said: I won't consider topping off my position until it hits the 4.25% yield mark -- $68.70.
But that isn't really determining a valuation.
Mike
Adam:
I would submit that it's not a case of fewer sports idols but a case of much closer scrutiny in traditional media and social media. If you think the idols of your youth were "pure as the driven snow," you're probably wrong. And if you think some of today's athletes are as "bad" as often portrayed, that's probably wrong, too.
All of which is OK, because athletes shouldn't be role models. I know that some are, and I know that's how they are viewed. But they shouldn't be. They're just human beings, with the same frailties the rest of us have.
Mike
at:
So far, I've been surprised that KMI has edged upward rather than down to single digits!
I hold little hope of KMI doubling in the next year to get me back to break-even, and I certainly hold little hope of KMI restoring a decent dividend, but I suppose stranger things have happened.
My position is small enough now that I don't really even worry about it any more. Bigger fish to fry, and all that.
Mike
Butterfly:
Your advice to me about the advice I should give her is very good advice!
Mike
Fred:
Well, I guess if I were really intelligent, I would have sold the day of that one penny hike!
Mike
Placebo:
Thank goodness we all have you to set us straight on ... well ... pretty much everything all the time.
Mike
RAS:
Thanks for the explanation. I wish you good fortune.
Mike
Any corporation that actually pays a 35% effective tax rate should fire its accounting staff immediately.
Mike
AA:
Agreed re XOM. And yet I still don't know how to price it for purchase.
Mike
Rose:
I did an excellent job of getting out of a little more than half of my KMI. Still holding the rest, doggone it!
Mike
Oh my goodness ... my college journalism profs would have flunked me if they saw me use the word "infer" when I should have said "imply."
The first sentence in my second paragraph should have read:
"I didn't mean to imply that I would sell all of those."
Now that I've made that correction, I can sleep well tonight!
Mike
Robert:
I remember that article but I was talking about something more specific: this situation, this sell decision, these buy decisions. Hey, I always get a chuckle when people give me "homework" -- a.k.a. article suggestions. I was just telling you I'd be interested and I think others would, too.
As for trimming ...
In your portfolio, are all of your positions equal in dollar value? If not, why not? For me, mine definitely are not. Those in my core are worth much, much more. I have greater confidence in them and I want more of them.
Well, if I own XYZ and decide along the way that I want less of that but more of ZYX, I might trim XYZ and buy ZYX. Or maybe I still like the fundamentals of XYZ enough to own some of it but that I want a little more income that ZYX can provide. So I might trim XYZ and buy ZYX. Just a couple examples.
Richjoy often trims overvalued positions because he is not a pure DGI and he likes to pay himself "instant dividends" through capital gains and then invest those $$$ in stocks with better valuations. But he still wants to own the company, so doesn't sell it all.
Still, I agree it isn't always easy to make a "correct" trim decision.
For example, in Sept 2013, I sold a chunk of MMM at $93 because I convinced myself it was overvalued and because I was concerned about the political shenanigans at the time. Last summer, I sold a chunk of KMI at $34 because I was concerned about its long-term viability (among other things). Both ended up being "bad" decisions -- I should have kept every share of MMM because it was still a fundamentally outstanding company; and I should have sold every share of KMI because, well, we know why.
Mike
Div Nut:
No offense taken, believe me. We're all here to learn from each other.
I didn't mean to infer that I would sell all of those. I am confident in saying I will never sell a single share of MO, and I have trouble believing I will sell MCD. Both are core holdings.
O is the lone REIT in my "core," and I have never sold any of it, but I will admit to being concerned about its valuation here and I wonder if a trim would be prudent. I have made no decisions in this realm.
My NNN position is relatively small and I bought it in my first months doing DGI. I could sell half of it and still be playing with "house money," and I might just do so. If I did, I'd probably use the funds to replenish my dry powder, as I don't see much I "need" right now.
I am human and therefore have emotions, and I do see the price swings. But I didn't sell KMI and COP because of the price swings, and I have yet to sell a single share of XOM or CVX. Or, for that matter, EMR, DE, AMGN and GILD.
Though willing to sell if I don't like something about a company's future, I am a reluctant seller. And many of the times I have sold because of perceived "overvaluation," I have been burned, a fact that makes me think twice (or four times) before selling the likes of MCD or O.
Mike
Great comment, Rich. Very thought-provoking.
You and I agree on much but not everything, and that is OK. We don't have to!
I am more buy-and-holdish than you are, but I am learning that selling (or trimming) can be prudent in some instances.
One thing I most definitely am not is "cocksure"! I know you weren't saying any particular individual is; I'm just saying I ain't!
I never pretend to know it all, or even a fraction of it all. Learning, learning, learning all the time, and you have been among the handful here who has been a good teacher. For that, I thank you.
Mike
over:
Run! Run for the hills!
Mike
Interesting, Robert. I wish you good fortune.
It might make a compelling article for you to go into greater detail about why you sold O (and if you had some internal struggles in making the decision to sell it all rather than just trim) and then also to say what you bought instead and why.
I know I would find it compelling, anyway. I love "thought process" articles involving real decisions and real money.
Mike
More good thoughts, Adam.
I have come up with buy zones for the companies on my daughter's list, along with explanations of how I got there. I will then leave it up to her if she wants to buy XYZ at the top or bottom of the zone (or ignore my advice all together).
My biggest struggle was providing a buy zone for XOM, the only Energy sector stock on her list. I hold a full position in it, and bought a few times on the way down, most recently at 72. I think it's very possible that the pain is nowhere near over. Even S&P Capital IQ lists "NA" as its Fair Value Calculation -- and if they can't calculate a fair value for one of the world's largest companies, how can I? I will just tell her I personally wouldn't touch it higher than 70, and that I don't think she really needs it in her portfolio, but again I'll leave the decision up to her.
Talk to you later,
Mike
Wondering if my O and NNN positions have grown TOO splendidly .... well, that falls in the category of "nice problem to have." I wish KMI and EMR had given me such pleasant predicaments!
Leaning toward staying the course with O and maybe doing some trimming with NNN, but not moving too quickly. I hate selling anything, but I will if I believe it is prudent.
One thing I am NOT interested in doing is buying anything even remotely riskier than OHI, which is a small position for me. I don't "need" big yield, so why add risk?
Mike
Hi Adam.
Intriguing article for me, as I find myself in an interesting place as an investor.
I mostly use DGI, as about 60% of my portfolio is dividend-growing companies. I also have some bond exposure through Vanguard Wellington, a bond-like stable value fund from a former employer and cash.
I just turned 55 and have been semi-retired for a while now. My wife, a year younger, plans to work full-time for another 4-5 years. I am a pretty conservative investor and I don't believe I "need" to go for much more than solid singles and the occasional double into the gap. When my past self has reached for yield or gone for trendy growth names, I have been burned.
Also, I am mostly a buy-and-hold guy, but I am starting to learn the folly of sticking with a company "just because"; for example, I am happy to say I sold COP before the blood-letting, and doubly-happy that I sold a huge chunk of KMI before the Kinder Krash. (I do still have some KMI, as well as BBL, XOM, CVX, EMR and some other underperformers.)
So while I am not looking to add much, I do have HON, SBUX, V and a few others on my radar screen. Meanwhile, I also struggle with companies such as O, NNN, MCD, even MO, which have had significant run-ups. I hate selling winners, and my past self was burned many times for doing so. Then again, really, how much higher can these go (especially the REITs)?
Additionally, I am just now helping my 29-year-old daughter get started in investing. She has some funds available from a 401k rollover after a job switch and has sought my advice. She wants to be as passive investor as possible and has settled mostly on blue-chip companies. Many of them, including MO, PEP and V, trade at pretty high multiples. Do I advise her wait to buy them at prices I'd pay if I were buying them for my portfolio? Or do I figure, "She's got 25 more years to go before she really needs the money," and let her pay somewhat more "premium" prices? Unlike my wife, my daughter does want to actually learn about the investing process, but she still needs significant hand-holding right now.
Anyway, this was a long way of saying your article provoked thought and also resonated with me ... as your articles usually do.
Mike
Gotta admit that I've been thinking about selling or at least trimming my NNN position. It has gotten so pricey. I own quite a bit more O, and that's starting to make me a little nervous too!
I am a very reluctant seller of any stocks.
Mike
OK, Psycho. Sounds like you have a plan that works for you. We should all be able to say that.
Mike
Mark:
<<If investors can't due their own due diligence, then they have no business investing by themselves, and should hire someone to do it, or invest in an index fund.>>
This is true. Thankfully, with COP, I did my due diligence and got out before the storm.
Mike