consumeronstrike

Cramer Does It Again with CIT Call

On Nov 05 06:04 PM pacalis wrote:

> If you care about dividend yield you should have discussed a dividend
> yield strategy. For example, I hold cash until I can realize x divided
> yield from company abc. That seems to me to be a good general approach.
> However that's completely different from the "win some lose some"
> approach that DCA takes to supposedly address price volatility.

I do not hold cash. And it makes all the sense in the world to me whether or not it does to you. In the area I live there's next to nothing in the way of jobs, and I make anywhere from $16K - $18K a year, probably closer to the lower range most of the time. Poor people trying to hold cash determined not to spend it unless they "really, really need to" find that life will throw just enough "little disasters" their way to nickel-and-dime all their savings away just about every time they manage to think they're finally going to have some. No. I. Do. Not. Hold. Cash. I look at the income in dividends I can get and think what that same money would get me in interest if I put it in the bank, where experience has taught me it absolutely won't be safe for very long, for the reasons I've given above. If I can get 3, 4, or 5 times as much in income from dividends as I would get sticking it in the bank, it looks good to me. Would it be an even better investment at a later point in time? Probably. So just because it would be a better investment later means it isn't a "good" investment now? This is where I differ. I buy income whenever I have the money. In my view, I'm better off increasing my income than I am having that money burning a hole in my pocket. So much better off, in fact, that by this time next year I expect my dividend income to provide the same boost to my standard of living that working a part-time job would. So this makes plenty of sense to me. Also, the extra income I've bought helps to insulate me from being forced to raid my "savings" by unexpected events.

Cramer Does It Again with CIT Call

Some people want to gamble and some people want to invest. I would much rather spend my time buying pieces of solid companies and building up my dividend income over time than speculating on price movements. During the times that one of my companies' price is depressed the dividend checks are still coming in. Your whole argument is moot because I buy shares in companies that I have no intention of ever selling anyway unless their financial situation deteriorates and my dividend is threatened. Losses on paper do not matter to someone intent on building a dividend income. Neither do gains - unless there is a better place to put the money which would result in a higher income, since that's what I am after. Plenty of people are playing your game and, as they put it, would love to "get back to even." I, on the other hand, enjoyed the downturn immensely and took advantage of it with relish. And the checks never stopped coming. If the market crashes again I'll do the same thing I did this time. Transaction costs? Nonsense. Not only are transaction costs small these days, but I only use direct stock purchase plans and my transaction costs are insignificant. All of my stocks are up significantly from my cost basis. So I could sell and take some good gains. So then what do I do? Do I have a better place to put the money where it will generate a reasonably safe yield of between six and seven percent? No, I do not. That money would sit in a bank account drawing a stupid 1% interest if I sold and took my gains. I'm getting more than six times that from my dividends. Income investors are not about capital gains. Their goal is to build a passive income that will replace the income they get from working.

Cramer Does It Again with CIT Call

Dollar cost averaging is so basic it doesn't need to be defended. Dollar cost averaging has worked VERY well for me. As a dividend investor, I look at it from the "other side" though - yes it averages my costs down, but viewed from MY perpective, it averages my dividend yield UP. If an investor invests the same amount of money on a regular basis, the same amount of money will buy more shares when the price is down, less when the price is up.
If you buy $100 worth of stock @ $10 a share
then buy $100 worth of stock @ $5 a share
Is your average price per share $7.50?
No. Your first $100 bought only 10 shares. Your second $100 bought 20 shares for a total of 30 shares. You have invested $200 and bought 30 shares.. $200/30 = $6.67....you've taken advantage of market volatility to minimize your cost basis, and if you're a dividend investor like me, using the market's volatility to your advantage in this way maimizes your dividend yield.

Cramer Does It Again with CIT Call

My nice, safe, dividend portfolio consisting of AEE, AEP, MO, OKE, PEP, PGN, PNW, SCG, and WIN will never make me sad. People who blindly follow Cramer without doing their own research and smugly tell everyone, "buy and hold is dead" probably often wish they'd chosen a different guru. I occasionally like to watch Cramer too, and consider anything he says that seems worth further investigation. I'm way ahead this year, and will be cheering if the market falls and puts dividends on sale again. Gambling will only beat smart buy-and-hold investing in spurts. As for those who will want to follow up my comment with the observation that "buy-and-forget" is dead, c'mon....what intelligent investor anywhere ever really did that?