Building A 6% Income Portfolio For 2013 (Part 9b): Materials Sector 'Buy Zones' [View article]
Hi Chester - FCX is a high beta stock with a negative total return over the past 5 years and a volatile earnings stream. You can see the criteria that we use in our ranking system here:
Stable stocks with strong fundamentals tend to rate the best in our system. In our opinion, there are much better investment opportunities out there than FCX...
Building A 6% Income Portfolio For 2013 (Part 8b): Industrial Sector 'Buy Zones' [View article]
Hi canewkirk - Don't forget that capital gains are cash too! Contrary to popular belief, “Buy and Hold” is not a viable strategy. A proper exit strategy should not only establish a plan to exit a losing investment, but it should also include rules about taking profits on a winner.
Managing a long-term dividend portfolio is a constant balancing act between maximizing your income and protecting your capital base. Many dividend investors focus solely on the income number and that often puts their capital in harm’s way. Taking profits when you can will give your capital base some long-term stability (and put additional cash in your pocket)...
Building A 6% Income Portfolio For 2013 (Part 8b): Industrial Sector 'Buy Zones' [View article]
Hi toneguru - This shouldn't be a let down to you because nowhere in this article did we tell you to "buy" now. The title of this article clearly states that it highlights "Buy Zones" for some selected stocks in the industrial sector...not "5 Industrials to Buy Now"...
As we pointed out in part 1, our investment strategy is to buy good stocks on a dip. We believe that the stocks above are great stocks for a long-term portfolio, but not at the current prices. We establish low-risk entry points (i.e., "Buy Zones") for the high-rated stocks that we cover. We have a "Buy Zone" watchlist that we keep track of and when a stock enters its respective "Buy Zone", we consider it for purchase. This is the methodology that we use to build and manage our Model DIY Dividend Portfolio and that is what we are sharing in this article...
Building A 6% Income Portfolio For 2013 (Part 8): Industrials [View article]
Hi Bob - We aren't quite sure what your point is. It appears that you have just listed a bunch of large capitalization, "well-know" industrial stocks above.
There are many factors that could determine the future success of a dividend stock. Our dividend stock ratings are based on 28 key fundamental and technical data points for each stock, but we certainly don't purport this to be the "holy grail". The best we can do as investors is to try to put the odds of success in our favor and we feel that our ranking system helps us do this. That said, you are certainly entitled to your own opinion and our beliefs may differ from yours...and that's ok.
We stand by our rating system and we do not need a "do-over" with the editors...but thank you for pompously suggesting that....
Building A 6% Income Portfolio For 2013 (Part 8): Industrials [View article]
Hi Berloe - The maximum drawdown is the largest decline from peak to trough in a given stock. As you can see, these industrial stocks tend to be pretty volatile, so its important to patiently wait for a good entry point.
DIY Dividend Portfolio: Protection For A Correction [View article]
Hedging may not be for everyone, but as food for thought...wouldn't it be great if you could protect your downside AND buy stocks really cheap on a pullback. Hedging and buying the dip on great stocks is not mutually exclusive. You can (and should consider) doing both. If anything, when you have a hedge in place, it makes it that much easy to pull the trigger when stocks trade down...because if stocks go lower you are already hedged!
The only thing you are giving up by hedging is possibly a little upside. If stocks continue to rally, the capital gains in your portfolio should more than offset the cost of the hedge. Your dividend income will remain intact regardless of what happens, which is what dividend growth investors care about most.
It seems that the common argument against hedging in the comments below is that "short-term unrealized capital losses in a long-term dividend portfolio are irrelevant". However, in the same breath you say that you are unwilling to hedge because it affects your potential unrealized capital gain (if stocks continue to rally).
It's a little hypocritical to say that you care about the potential loss of capital gains, but you don't care about the potential for capital losses. In our opinion, you should care about both...and error on the side mitigating downside risk over and above trying to maximize capital gains...
DIY Dividend Portfolio: Protection For A Correction [View article]
Agreed, DVK - An investment plan should reflect the beliefs and goals of each individual investor. Sticking to that plan, whether it includes a hedging strategy or not, is the key to long-term success...
DIY Dividend Portfolio: Protection For A Correction [View article]
David - Thanks for the comments. We agree with most of what you have said above. We certainly aren't suggesting to liquidate your dividend portfolio over the possibility of a correction...we are just pointing out that a simple hedge will help you mitigate some potential downside risk (while keeping your dividend income fully in tact).
We agree that buying the dips in great dividend stocks is a phenomenal long term plan. The core of our investment strategy is to identify good dividend stocks and patiently wait for low risk entry points. It sounds like you have done a great job of that historically.
A hedge may not make sense for everyone, but it is one strategy that we use to mitigate downside risk...and the cost of protection is very cheap right now...
Building A 6% Income Portfolio For 2013 (Part 10): Energy [View article]
http://bit.ly/Kb3f0w
Building A 6% Income Portfolio For 2013 (Part 9): Materials [View article]
Building A 6% Income Portfolio For 2013 (Part 9b): Materials Sector 'Buy Zones' [View article]
http://bit.ly/RBKeZ1
Here is the breakdown of FCX (by sub-rating):
Risk/Reward Profile - 6
Financial Stability - 62
Dividend Track Record - 61
Dividend Sustainability - 6
Relative Strength -1
Stable stocks with strong fundamentals tend to rate the best in our system. In our opinion, there are much better investment opportunities out there than FCX...
Building A 6% Income Portfolio For 2013 (Part 9): Materials [View article]
Building A 6% Income Portfolio For 2013 (Part 9): Materials [View article]
http://bit.ly/Kb3f0w
Building A 6% Income Portfolio For 2013 (Part 8b): Industrial Sector 'Buy Zones' [View article]
Managing a long-term dividend portfolio is a constant balancing act between maximizing your income and protecting your capital base. Many dividend investors focus solely on the income number and that often puts their capital in harm’s way. Taking profits when you can will give your capital base some long-term stability (and put additional cash in your pocket)...
Building A 6% Income Portfolio For 2013 (Part 8b): Industrial Sector 'Buy Zones' [View article]
As we pointed out in part 1, our investment strategy is to buy good stocks on a dip. We believe that the stocks above are great stocks for a long-term portfolio, but not at the current prices. We establish low-risk entry points (i.e., "Buy Zones") for the high-rated stocks that we cover. We have a "Buy Zone" watchlist that we keep track of and when a stock enters its respective "Buy Zone", we consider it for purchase. This is the methodology that we use to build and manage our Model DIY Dividend Portfolio and that is what we are sharing in this article...
Building A 6% Income Portfolio For 2013 (Part 8b): Industrial Sector 'Buy Zones' [View article]
http://bit.ly/Kb3f0w
Building A 6% Income Portfolio For 2013 (Part 8): Industrials [View article]
There are many factors that could determine the future success of a dividend stock. Our dividend stock ratings are based on 28 key fundamental and technical data points for each stock, but we certainly don't purport this to be the "holy grail". The best we can do as investors is to try to put the odds of success in our favor and we feel that our ranking system helps us do this. That said, you are certainly entitled to your own opinion and our beliefs may differ from yours...and that's ok.
We stand by our rating system and we do not need a "do-over" with the editors...but thank you for pompously suggesting that....
Building A 6% Income Portfolio For 2013 (Part 8): Industrials [View article]
Building A 6% Income Portfolio For 2013 (Part 8): Industrials [View article]
http://bit.ly/Kb3f0w
DIY Dividend Portfolio: Protection For A Correction [View article]
The only thing you are giving up by hedging is possibly a little upside. If stocks continue to rally, the capital gains in your portfolio should more than offset the cost of the hedge. Your dividend income will remain intact regardless of what happens, which is what dividend growth investors care about most.
It seems that the common argument against hedging in the comments below is that "short-term unrealized capital losses in a long-term dividend portfolio are irrelevant". However, in the same breath you say that you are unwilling to hedge because it affects your potential unrealized capital gain (if stocks continue to rally).
It's a little hypocritical to say that you care about the potential loss of capital gains, but you don't care about the potential for capital losses. In our opinion, you should care about both...and error on the side mitigating downside risk over and above trying to maximize capital gains...
DIY Dividend Portfolio: Protection For A Correction [View article]
Building A 6% Income Portfolio For 2013 (Part 7b): Technology 'Buy Zones' [View article]
http://bit.ly/Kb3f0w
DIY Dividend Portfolio: Protection For A Correction [View article]
We agree that buying the dips in great dividend stocks is a phenomenal long term plan. The core of our investment strategy is to identify good dividend stocks and patiently wait for low risk entry points. It sounds like you have done a great job of that historically.
A hedge may not make sense for everyone, but it is one strategy that we use to mitigate downside risk...and the cost of protection is very cheap right now...