How Can One Trade Be Both Good For Me And Bad For Me? [View article]
"I ignored the stocks those cutting dividend for at least 2 quarters just because I always "hope" they will be strong again. Yeah, as Chowder "screams" to me "...hoping they will bounce back up....It's crazy thinking." I refuse to be a crazy person. So, I will take action." - Smallstep
That is the beauty of putting together a written plan. All the thinking is done at a time when you don't have a pressing decision to make. You get to take time to figure out how you want to handle a situation, then write it down in "The Rules".
Once "The Rules" are written, you simply do what they say. If you are uncomfortable with that, you can simply 'blame' The Rules (as though someone else had written them and it's not your fault).
Always follow The Rules!
If after some time passes you feel that The Rules are inadequate, you can sit down and think about changing them based on new knowledge, or different objectives, but only when you're not under the gun to decide what stock to buy or sell, or otherwise in the heat of the moment. Changes to The Rules should be considered dispassionately and rationally.
In theory, breaking The Rules should never happen (though it sometimes does).
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
"Which day is International Harp Day?" - Robert
I don't know if Harpists are as organized at Tubists, but there was an International Harp Festival which started on April 6, 2013 in Edinburgh Scottland.
Judging by your question I would guess you didn't offer to take your wife there. Maybe next year...
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
fludolph,
If you haven't already, you should real Chowder's instablogs. All of them. You will learn a great deal of useful information from a very sharp investor.
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
"What the heck, let's throw this comment stream off topic to tUbA pLaYiNg!" - Hilo
Spoken like someone who may never have witnessed the ubiquitous 'end-of-the-world' SPAM dialogues in the DG section of SA. Every now and then we like to have some fun too. :-)
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
Robert,
Regardless of the eventual outcome of the IBM / KMB trades, this has been a "good" trade.
1) You have learned that everyone can fall prey to impulsive actions at times and you have had the opportunity to learn from it without significant negative impact (other than thepain of a ruler across the wrists from Chowder).
2) You have learned a few alternate ways to structure such a trade in the future.
3) You have learned that perhaps you need to revisit your investing plan and consider making some subtle changes.
4) You are a lot less likely to make this mistake again, at a time when it might wind up costing you a great deal of money.
Nobody's perfect. We all stray from the intended investing path. Learn and move forward. That's all you can hope for.
For those reasons, even if your trade turns out to be less than optimal it has still been a "good" trade. The value of the knowledge you gained will outweigh any potential loss in economic opportunity you suffered. Next time will be a different story.
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
Nice review Robert. You raise an interesting situation that most DGI'ers will eventually encounter. What to do with an overvalued stock?
One area you didn't discuss was the potential for reducing your risk by selling and redeploying to multiple stocks. A possible alternative would be to sell your KMB (at 170% or 1.7x a 'full' position) and use the proceeds to buy three roughly half-sized positions in different stocks.
This 3-for-1 swap would further reduce the risk to your income stream by having more stocks, possibly in different segments of the market. Since the new positions would only be half-sized, you could add shares later on when they offered better valuations.
By beginning several smaller sized positions you might be willing to take a risk on less comfortable stocks like an mREIT or MLP and give your portfolio yield a little bit of a boost too, sort of with house money.
Just thinkin' out loud. There's always a different way to skin a cat if you consider the problem long enough.
Guaranteed Retirement Accounts: Good Idea Or Not? [View instapost]
"In 2007, an organization called The Economic Policy Institute issued a policy paper, ... titled: "Guaranteed Retirement Accounts: Toward Retirement Income Security. "
Title translation into layman's terms:
"How to get habitual savers to pay for the retirement of habitual squanderers."
Naturally not every so-called "poor" person is a squanderer. Some wind up there through no fault of their own and probably deserve a hand with necessary expenses (think widows, orphans, and those who suffer debilitating injuries or illnesses). Most likely this could be paid for by family members or via charitable contributions from those who have more than enough for their own needs, as it was throughout history.
However those who chose spending over savings when they had an option deserve to learn why squandering was a bad choice. Any expectation of a comfortable retirement on their part deserves little consideration on the part of savers.
Unfortunately a squanderer's vote counts every bit as much as a saver's vote and as we have seen in recent history, the people voted into office frequently cater to the squanderers at the expense of the savers, until the entire system implodes of its own weight.
There is no magic pixie-dust which pays for things we cannot afford the old-fashioned way, depite claims to the contrary by most of our elected officials. One day our country as a whole will regret the debt run up in our name by those elected to office.
Guaranteed Retirement Accounts: Good Idea Or Not? [View instapost]
"Certainly an investment council like Oregon's could do better than US Treasuries." - rnsmth
The eventual problem with any required Federal Government retirement system is that they WILL be investing most of your retirement money in special non-marketable Treasury issues, just like they do for Social Security.
Of course the "non-marketable Treasury issues" are really just IOUs. Your 'investment' money goes into the general fund and gets spent immediately, just like Social Security money does today. This is the only way the Feds can maintain the illusion of reducing the deficit, by 'investing' your retirement savings in nice, safe "bonds". Spending all the Social Security receipts isn't doing the trick any more, so they need another source of funding, and your retirement savings are now in their cross-hairs.
Guaranteed Retirement Accounts: Good Idea Or Not? [View instapost]
"It concerns me that someone who is called a "high earner", that is someone who makes $60,000 a year would get less in retirement under this plan than someone who makes $40,000 a year." - Dave Crosetti
The high earner will still have a larger total income, just a smaller percentage of pre-retirement income.
61% of $60,000 = $36,600 71% of $40,000 = $28,400 89% of $20,000 = $17,800
The truly sad part is that by saving $250 per month (5% of $60,000 pay), and investing it at a 7.5% CAGR (very do-able with DGI), the worker could accumulate more than enough money to pay dividends of $39,000 annually (at a 4% yield), without the need to also pay government "fund managers" to administer the program.
What an incredibly bad plan a government administered savings program would be.
Dividend Growth And Me, An Anniversary Story [View article]
Great update Mike. I'm about a year ahead of you, but less diligent at keeping on top of things. My 23 stocks are doing quite well with a minimum of effort on my part.
It's always enjoyable to help educate others that are just starting out on their own DGI journey and having more "real" experiences documented here on SA will help a lot of investors find a reliable long term methodology to follow in DGI. Keep 'em coming.
Norman - Any commodity position for a retiree at this point should only risk "play" money. I'm with you there.
I disagree regarding the application of the "bubble" label to gold, not its suitability for any particular investor. I personally believe that gold will be making new highs before it goes under $1,000, but it's not without significant risk.
Gold's recent slump has not been as bad as the slump the S&P 500 experienced in 1987.
Gold: Peak $1923 Bottom: $1350 Slump: 30%
S&P in 1987: Peak 338 Bottom: 220 Slump: 35%
The S&P continued upward nearly 700% from that low in 1987. I don't see gold's recent slump as anything more than an extreme in normal market variability. I bought my physical gold at $800 or less in 2009 so that small portion of my holdings is still doing pretty well despite the slump (CAGR over 15% at current prices).
I'll continue to hold until I see real interest rates turn positive, at which point I'll put a stop under my holdings and ride prices higher as far as they go.
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
That is the beauty of putting together a written plan. All the thinking is done at a time when you don't have a pressing decision to make. You get to take time to figure out how you want to handle a situation, then write it down in "The Rules".
Once "The Rules" are written, you simply do what they say. If you are uncomfortable with that, you can simply 'blame' The Rules (as though someone else had written them and it's not your fault).
Always follow The Rules!
If after some time passes you feel that The Rules are inadequate, you can sit down and think about changing them based on new knowledge, or different objectives, but only when you're not under the gun to decide what stock to buy or sell, or otherwise in the heat of the moment. Changes to The Rules should be considered dispassionately and rationally.
In theory, breaking The Rules should never happen (though it sometimes does).
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
I recently picked up some TCAP. Worth a look.
Here is a recent article which reviews the business:
http://seekingalpha.co...
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
I don't know if Harpists are as organized at Tubists, but there was an International Harp Festival which started on April 6, 2013 in Edinburgh Scottland.
Judging by your question I would guess you didn't offer to take your wife there. Maybe next year...
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
If you haven't already, you should real Chowder's instablogs. All of them. You will learn a great deal of useful information from a very sharp investor.
http://bit.ly/14QwcIB
One of his instablogs addresses portfolio weightings specifically:
http://seekingalpha.co...
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
Spoken like someone who may never have witnessed the ubiquitous 'end-of-the-world' SPAM dialogues in the DG section of SA. Every now and then we like to have some fun too. :-)
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
Hah!! What a timely comment...
Friday May 3rd is International Tuba Day!
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
Regardless of the eventual outcome of the IBM / KMB trades, this has been a "good" trade.
1) You have learned that everyone can fall prey to impulsive actions at times and you have had the opportunity to learn from it without significant negative impact (other than thepain of a ruler across the wrists from Chowder).
2) You have learned a few alternate ways to structure such a trade in the future.
3) You have learned that perhaps you need to revisit your investing plan and consider making some subtle changes.
4) You are a lot less likely to make this mistake again, at a time when it might wind up costing you a great deal of money.
Nobody's perfect. We all stray from the intended investing path. Learn and move forward. That's all you can hope for.
For those reasons, even if your trade turns out to be less than optimal it has still been a "good" trade. The value of the knowledge you gained will outweigh any potential loss in economic opportunity you suffered. Next time will be a different story.
How Can One Trade Be Both Good For Me And Bad For Me? [View article]
One area you didn't discuss was the potential for reducing your risk by selling and redeploying to multiple stocks. A possible alternative would be to sell your KMB (at 170% or 1.7x a 'full' position) and use the proceeds to buy three roughly half-sized positions in different stocks.
This 3-for-1 swap would further reduce the risk to your income stream by having more stocks, possibly in different segments of the market. Since the new positions would only be half-sized, you could add shares later on when they offered better valuations.
By beginning several smaller sized positions you might be willing to take a risk on less comfortable stocks like an mREIT or MLP and give your portfolio yield a little bit of a boost too, sort of with house money.
Just thinkin' out loud. There's always a different way to skin a cat if you consider the problem long enough.
Guaranteed Retirement Accounts: Good Idea Or Not? [View instapost]
Title translation into layman's terms:
"How to get habitual savers to pay for the retirement of habitual squanderers."
Naturally not every so-called "poor" person is a squanderer. Some wind up there through no fault of their own and probably deserve a hand with necessary expenses (think widows, orphans, and those who suffer debilitating injuries or illnesses). Most likely this could be paid for by family members or via charitable contributions from those who have more than enough for their own needs, as it was throughout history.
However those who chose spending over savings when they had an option deserve to learn why squandering was a bad choice. Any expectation of a comfortable retirement on their part deserves little consideration on the part of savers.
Unfortunately a squanderer's vote counts every bit as much as a saver's vote and as we have seen in recent history, the people voted into office frequently cater to the squanderers at the expense of the savers, until the entire system implodes of its own weight.
There is no magic pixie-dust which pays for things we cannot afford the old-fashioned way, depite claims to the contrary by most of our elected officials. One day our country as a whole will regret the debt run up in our name by those elected to office.
Eventually the Piper must be paid.
Guaranteed Retirement Accounts: Good Idea Or Not? [View instapost]
The eventual problem with any required Federal Government retirement system is that they WILL be investing most of your retirement money in special non-marketable Treasury issues, just like they do for Social Security.
Of course the "non-marketable Treasury issues" are really just IOUs. Your 'investment' money goes into the general fund and gets spent immediately, just like Social Security money does today. This is the only way the Feds can maintain the illusion of reducing the deficit, by 'investing' your retirement savings in nice, safe "bonds". Spending all the Social Security receipts isn't doing the trick any more, so they need another source of funding, and your retirement savings are now in their cross-hairs.
Count on it.
Guaranteed Retirement Accounts: Good Idea Or Not? [View instapost]
The high earner will still have a larger total income, just a smaller percentage of pre-retirement income.
61% of $60,000 = $36,600
71% of $40,000 = $28,400
89% of $20,000 = $17,800
The truly sad part is that by saving $250 per month (5% of $60,000 pay), and investing it at a 7.5% CAGR (very do-able with DGI), the worker could accumulate more than enough money to pay dividends of $39,000 annually (at a 4% yield), without the need to also pay government "fund managers" to administer the program.
What an incredibly bad plan a government administered savings program would be.
But we already knew that....
Dividend Growth And Me, An Anniversary Story [View article]
It's always enjoyable to help educate others that are just starting out on their own DGI journey and having more "real" experiences documented here on SA will help a lot of investors find a reliable long term methodology to follow in DGI. Keep 'em coming.
The Dividend Advantage Over Gold [View article]
I didn't say they wouldn't try, just that it would be very difficult to implement successfully.
It would be a sad day indeed if it were to come to that.
Choosing Charitable Stocks [View article]
I disagree regarding the application of the "bubble" label to gold, not its suitability for any particular investor. I personally believe that gold will be making new highs before it goes under $1,000, but it's not without significant risk.
The Dividend Advantage Over Gold [View article]
Gold's recent slump has not been as bad as the slump the S&P 500 experienced in 1987.
Gold: Peak $1923 Bottom: $1350 Slump: 30%
S&P in 1987: Peak 338 Bottom: 220 Slump: 35%
The S&P continued upward nearly 700% from that low in 1987. I don't see gold's recent slump as anything more than an extreme in normal market variability. I bought my physical gold at $800 or less in 2009 so that small portion of my holdings is still doing pretty well despite the slump (CAGR over 15% at current prices).
I'll continue to hold until I see real interest rates turn positive, at which point I'll put a stop under my holdings and ride prices higher as far as they go.