I am freaking out! It is not a pleasure watching my holdings evaporating and showing a loss. It is also difficult to hold and sit tight. It is even harder investing more money into falling stocks. Some people say "do not try catching the falling knife..." others say it is a great opportunity to buy more shares, some are crying sell, sell, sell! Which way are you going with your investments? Are you sitting tight, raising cash, trading options, or selling like crazy? I am trying to sit tight, talking myself into not panicking and hold. I hold dividend payers. Those are the companies which should sustain any similar sell off better than others or growth stocks. But my concerns and double guessing are growing and doubts are increasing. Will those stocks really hold and will they recover? Or are we seeing rich people really fleeing out of dividend stocks due to Obama's policies on rising taxes on dividends for rich people. Does he realize that this drop will damage middle class although he is claiming that it wouldn't? Or is it a drop because of many other fears we experienced in the past; because of Europe, fiscal cliff, and many others and the stocks will recover? Does it even make sense seeking the answer? In times like this I am trying to remind myself what dividend investors and professionals say about investing into dividend stocks: When is time for selling the dividend paying stocks? Many experienced investors will tell you, that there is only one reason when you should considering selling dividend payers. If you answer yes to any of the following questions, then you should consider dumping your stock:
- Is the dividend in jeopardy?
- Has the company changed its dividend policy?
- Has the company failed raising the dividend?
- Has the company cut the dividend?
- Did the stock spiked up (climax top) too much?
None of it happened recently. Many of my holdings are just out of favor due to either increased investing, or market panic. So why liquidating a money making machine, which is currently paying me $550 annually in dividends? I am sticking to my plan, sitting tight, saving more cash to buy more holdings and as time comes, buy more when those stocks are quite cheap. What will be my next plan? I still am working towards saving 10,000 of dollars into my Lending Club account (my current value is $7,600) and as soon as I save I start focusing on my TD account. The goal will be to raise cash up to another 10,000 dollars, keep 30% in cash, invest the rest, buy more shares on my current holdings (to reach 100 shares on optionable stocks, which would allow me start selling covered calls) and after raising the cash, start selling puts on current holdings (buy in thru the puts). As Mr. Miller says it in his book "The single best investment"
"Holding successfully requires a kind of spartan attitude, a kind of warrior attitude, in which you hold your ground, never tromping away, through thick and thin, through storms and sun, never becoming excessively excited or happy by profitable rallies, never sinking into gloom or depression or second thoughts when prices are on wane. A warrior attitude in which feelings may be felt, even deeply felt, but not necessarily acted out... As a warrior you understand that there are many ways to win the battle of investing, there are many ways to come out on top in the end."
So what helps when the mood becomes gloomy? I take my dog and go out! I am getting my cash ready to buy more shares of ABT)" target="_blank" rel="nofollow">ABT, O, JNJ)" target="_blank" rel="nofollow">JNJ, PPL)" target="_blank" rel="nofollow">PPL, or MCD)" target="_blank" rel="nofollow">MCD, T, WMT. Most likely it will be O)" target="_blank" rel="nofollow">Realty Income stock, since I will have 100 shares and will be able to sell covered calls (although options on this stock aren't those among best, but we will see when time comes). Happy Trading!