richjoy403

Rich's first exposure to investing began with his employer's Savings & Stock Plan 1964. However, since 1973 (40 yrs), he has been a self-directed investor in stocks, bonds, mutual funds, options, and ETFs. He was sufficiently successful that he was able to retire at age 53 (1995). Since 2008, he invests only in dividend-paying stocks bought at fair value or below, so as to benefit from their attractive total return with lower market volatility.

Strategy & Goals

Best fit--Growth & Income. A long-term investor, of any strategy, is first buying a stock's earnings stream...thus Rich first focuses on operating earnings (it is this significant distinction that separates Rich from the typical ...More Dividend-Growth Investor, who focuses almost exclusively upon the stock's dividend history) for there can be NO string of successive dividend increases without increased earnings, nor in the long-run, can the rate of dividend growth exceed the rate of earnings growth.



Two stock portfolios

(1) INCOME (2008)--The first portfolio favors income, and consists of 40 positions--including a core of 28 traditional low-beta dividend-growth stocks found in the Consumer Staples, Healthcare, Utilities, and Telecom sectors. This core portfolio is supplemented by dividend-paying/interest rate sensitive cyclical and financial stocks from the remaining sectors. Also included are a few REITs & BDCs. This portfolio has a beta of <0.80, and produces a very attractive total return (including a Yield on Invested Capital (or YOC) greater than 5%). It features low volitility, and recently, somewhat surprising price appreciation, given the low beta.

(2) GROWTH--In December 2012, Rich accepted a lump-sum buyout of his former employer's defined benefit pension, and has constructed a second portfolio concentrated in dividend-paying stocks having lower current yield, but greater rates of dividend growth. This portfolio consist of 16 positions (of which 7 are non-core), and has a beta of about 1.0.



Rich's goals: #1, wealth preservation and loss mitigation; #2, growth of portfolio value, with dividend income sufficient to meet his IRA's Required Minimum Distribution.

Rich watches the business cycle, and intents to begin selling-down his non-core positions near its peak, so as to generate cash to re-invest in the bargains to follow.

Investment philosophy

Rich is no cult-member, zealot, or evangelist for dividend-stocks. His experience indicates there are many successful strategies suitable to investors of various ages, interests, and risk profiles...and ALL strategies that have passed the test of time will have periods of out-performance, and under-performance.

An important objective of any retiree's portfolio is SWAN (sleeping well at night), and toward that end, Rich employs a number of techniques to moderate risk. A low-risk portfolio will underperform in bull markets, but will outperform in bear markets...thus he often refers to "the smoother ride" provided by such a portfolio.

Until Treasuries rise to +/-4.5%, Rich is comfortable holding only dividend-paying stocks.

Rich strongly believes there is no substitute for monitoring each portfolio position for any news (or ‘market chatter’) indicating a potential problem affecting its earnings, dividend, and valuation. It is also important to stay closely connected to news affecting the U.S. and world economies. In other words--being a self-directed investor requires considerable TIME. The investment of time represents the critical difference between being a 'saver' and a successful 'investor'. (fortunately, large-cap core stocks tend to require less monitoring than do the cyclicals and other non-core positions).

Other interests

Reading about the economy, markets, and stocks, occupies much of Rich's time. He also volunteers in his community, and has served on a number of committees. Having been blessed by years of excellent investment returns, he and his wife have been avid world travelers and have covered 1+ million travel miles to over 50 countries over the last 30+ years (his avatar reflects the Taj Mahal in his sun glasses in 2010).

Though a few destinations remain on their 'bucket list', they presently enjoy spending winters in Naples (FL).

Conclusion

Rich's message to all...being self-directed Investors has blessed their lives beyond anything they could have imagined...but more important, his success serves as evidence other middle-income investors need not be either super-intelligent, nor buy high-risk stocks, to build sufficient wealth (several millions in investment assets) so as to become financially independent over several decades and retire to a higher living standard.

Start young, control your expenses, stick with your investing plan through recessions and crashes...and you too can be successful beyond your dreams.

Concern one-day my favorite d-g stocks might mimic the than favorite 'nifty-fifty' stocks of my younger investor days. Sep 25, 2012