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chowder

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ABT, AFL, APD, ARLP, AT, BDT, BF.B, BMO, BP, BRK.A, BRK.B, C, CBRL, CINF, CL, COP, CTL, CVX, D, DE, DRI, ENB, EPD, EXC, FSP, FTR, GD, GE, GILD, GIS, GPC, HCBK, HCN, HGIC, IBM, INTC, JNJ, KMB, KMI, KMP, KO, KRFT, LEG, LINE, LNCO, LO, MAA, MCD, MDLZ, MDT, MHR, MKC, MMP, MO, NFLX, NHI, NLY, NNN, O, OHI, PBI, PEP, PG, PM, PNY, PSX, RIG, RY, SBSI, SDRL, SDY, SNY, SO, SPY, SYY, T, TE, TGT, TIP, TOT, TUP, UHT, UNP, UNS, UTX, VIG, VVC, VZ, WAG, WEC, WM, WMT, WU, XLU, XOM
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  • Market Strategies - Benchmarks [View instapost]
    Big Thunder ... >>> What if our investing judgment isn't sound enough to deliver the goal we're aiming for? <<<

    First of all, make sure that what you are aiming for is believable and achievable. The next step is to read, read and read some more. Then you have the SA community to count on.

    >>> What if I'm exiting index investing at precisely the time when it would have been the smarter move to stay? <<<

    You handle this the same way you eat an elephant, one bite at a time. Each year move 20% or some other number you are comfortable with out of Index Funds and into high quality companies.

    As you gain knowledge, you will experience, and then you'll gain confidence.
    Feb 27 12:48 PM | 3 Likes Like |Link to Comment
  • Why Kraft Is Not A Buy [View article]
    Hat trick, I used to own KFT and sold it because of the CEO. She froze the dividend, took on the Canterbury merger, which Warren Buffett himself said made him feel poorer, and she was more interested in empire building than sharing the profits with me. She evidently didn't enjoy raising those dividends as much as I enjoyed receiving them.

    I waited for the split to invest back into the company the CEO did not operate. ... Ha!
    Feb 27 12:07 PM | 1 Like Like |Link to Comment
  • Market Strategies - Rules Of The Game [View instapost]
    Thanks for the kind words Zalach.

    My next blog is going to be about comparing our results to a benchmark. This has really been eating at me and I want to get that out of the way first. Once that is completed, I will do a blog on entry points and show you what to look for. That will be a week or two away. It takes time for me to gather my thoughts and try to present it in a way where it halfway makes sense. ... Ha!
    Feb 27 03:33 AM | 2 Likes Like |Link to Comment
  • Why Kraft Is Not A Buy [View article]
    I bought KRFT because of it's low growth potential as long as growth means expanding, as the confectionery side of the business was trying to do.

    KRFT is a cash cow, just like MO is. KRFT was supporting the confectionery unit and that will no longer be a drain on their cash flow.

    The growth I expect to see will be in the dividend. Since I'm looking for safe companies to own and hopefully not have to sell, my focus is on the safety of the dividend and the growth of it.

    I think we'll see share price slowly rise as we go along because an asset is as valuable as the income it produces. As the income it produces continues to rise, demand for that asset will push share price higher, just as it has done with MO.

    MO has no growth potential, but ask share owners who have held MO 5 years or more if they are happy with their total return. I know I am.

    I put KRFT in the same category going forward. At least that's the way I see it today.
    Feb 27 03:28 AM | 2 Likes Like |Link to Comment
  • Market Strategies - Rules Of The Game [View instapost]
    I didn't post the PG chart to provide an example of strong relative strength. When I click on Stockcharts, it's the chart that shows up. I just posted the chart to show you can get a 3 year history of relative strength.

    I suppose the easiest way to explain this is that I sub contract a lot of my analysis out. I let others track most of my holdings. It's why I subscribe to Value Line.

    With regard to relative strength, Value Line has a Timeliness Rating. It goes from 1 to 5. Companies that rate a 1 or 2 for Timeliness is VL's measure of the expected price performance of a stock for the coming 6 or 12 months relative to the rest of the market. Those rated 3 are expected to be average. Those rated 4 or 5 are expected to underperform.

    PG has an upgraded Timeliness rating of 2 as of 12/28.

    When it's time to make a purchase, I'll look my list over and try to identify those who are rated 1 or 2, in other words relative strength is in their favor, and that's what I will purchase. If none are rated 1 or 2, then I'll step down to a 3, knowing not to expect great things this year, but I do expect them to provide good long term results.

    I just purchased DRI with a 5 rating. I know it isn't going to do much the next couple of years, but I purchased it to start building a position now.

    Relative strength can help break a tie when you are unsure between two companies. We need to keep that in mind as well.
    Feb 27 02:07 AM | 1 Like Like |Link to Comment
  • Transitioning To A Dividend Growth Portfolio [View article]
    @Mike ... >>> I know somebody who works in mid-management for Starbucks and can buy company stock at a 15% discount. If it was me, I probably couldn't resist loading up - <<<

    I'm all over it! A 15% profit from day one? Gimme some! As long as it is a quality company, and SBUX is.

    As long as you can sell the shares, I would rotate blocks of shares out and into other investments every year or two. But, I'd keep adding.
    Feb 27 01:39 AM | 3 Likes Like |Link to Comment
  • Market Strategies - Rules Of The Game [View instapost]
    I dropped my charting services since I don't trade anymore. I simply use the weekly charts at Stockcharts. I can get a view up to 3 years. It's free.

    http://bit.ly/YysXRb
    Feb 27 01:30 AM | 1 Like Like |Link to Comment
  • Master Limited Partnerships And Your IRA [View article]
    Thanks for sharing that Harold. I appreciate it and I respect the way you came back and admitted you were incorrect. Too often people discuss a point, they were wrong, you never hear from them again.

    So again, thanks.
    Feb 27 12:41 AM | 1 Like Like |Link to Comment
  • Market Strategies - Rules Of The Game [View instapost]
    Thanks to all for your kind words. I appreciate it. If it's okay with ya'll, Percy and I are going to share a cold one now. ... Salute!
    Feb 27 12:37 AM | 1 Like Like |Link to Comment
  • Market Strategies - Rules Of The Game [View instapost]
    Hilo, I don't use the CCC list to see whose price hasn't been performing. I use it to determine dividend growth.

    When I look at the CCC list, the information I focus on is the section on dividend growth where David shows the 1 year, 3 year, 5 year and 10 year growth rates.

    I look for the companies that have the most consistent high single digit, or better dividend growth. Those are the ones I purchase, or put on a watch list for potential future purchases.

    Example:

    KO -

    1 year ... 8.5%
    3 year ... 7.5%
    5 year ... 8.4%
    10 year ... 9.8%

    I like, and count on that consistency. I don't look for the highest yields, I simply start with the Large Cap companies that sell a product or service that people will use regardless of economic conditions.

    I owned LEG at one time because of their double digit dividend growth. Here are their latest numbers.

    LEG -

    1 year ... 3.7%
    3 year ... 3.8%
    5 year ... 10.1%
    10 year ... 8.7%

    Since LEG did not keep the dividend growth consistent, and the dividend growth dropped below 5% for more than a couple of years, I sold my position in LEG.

    Since my goal is to build an income stream that is reliable, predictable and increasing, KO supports that objective where LEG no longer did.

    That's the part of the CCC list I use the most. That and the Chowder Rule, which I was using before it became a part of the CCC. It was the CCC DGR numbers that I used to formulate the Chowder Rule and apply it.

    To answer the second question, when you have high relative strength, the yield may be down due to price performance, but that doesn't mean the yield still doesn't qualify. Yield may have dropped from 5% to 4% or from 4% to 3%, but the yield isn't the focus. Company fundamentals are, the "safety" of the dividends are, and the growth of those dividends are. I don't focus on a high yield. I will use a minimum yield requirement, but whatever yield I do choose, it must be safe and it must be growing. Relative strength doesn't undermine that.
    Feb 27 12:36 AM | 2 Likes Like |Link to Comment
  • Market Strategies - Rules Of The Game [View instapost]
    Be Here, I forget what the equation is. Those things aren't important to me. Most charting services provide a relative strength indicator, so that's all I need, a way to measure the performance.
    Feb 27 12:22 AM | 1 Like Like |Link to Comment
  • Market Strategies - Rules Of The Game [View instapost]
    >>> Unfortunately, often DGi-s propose and use untested rules. <<<

    That's why we're here SDS! We're here to help smooth out the learning curve. Others were kind enough to help me when I started out, I have an obligation to keep that spirit alive.

    >>> It is correct at annual basis and not correct for long-term investment when dividends counted for more than 90% of the market return <<<

    I think 90% equals more than half. Ha! Ha!

    >>> Please note contradiction between “The most successful strategy over the long term was small cap growth that included "all stocks”" and “50 stocks [of “the larger well-known companies”], equally weighted, with dividends reinvested, and rebalanced annually fared best. <<<

    There is no contradiction here. One strategy was more successful in absolute return, the other more successful on a risk adjusted return, and yes he did own dividend paying companies. In fact, one of the strategies he recommended, if one wants a Dog of the Dow type strategy, was to buy the top 10 utility companies in yield that rated a 1 or 2 for safety by Value Line, or a financial rating of BBB+ with S&P, and rotate based on a highest yield concept.

    >>> Yes and time horizon of Momentum Investing (MI) is usually less than 1 year while DGI time horizon is at least 1 decade IMO. So, are MI and DGI compatible? <<<

    Yes, they are compatible if you place them in proper perspective. Relative strength is being used here as a timing device, as something to prevent one from buying a falling knife. It's a tool to get you to purchase after the bottom is in. That way, you aren't fighting for the same ground twice, since you didn't lose any ground to begin with. It also keeps one from buying the dogs that aren't going to be hunting for a couple of years. It will help people from yield chasing to buying companies who are in a position to start moving forward at a faster pace.

    Nothing is guaranteed of course, but like anything else, you want to place the odds in your favor.
    Feb 27 12:21 AM | 1 Like Like |Link to Comment
  • Transitioning To A Dividend Growth Portfolio [View article]
    Inzkeeper, when I look at the CCC list, the information I focus on is the section on dividend growth. David shows the 1 year, 3 year, 5 year and 10 year growth rates.

    I look for the companies that have the most consistent high single digit, or better dividend growth. Those are the ones I purchase, or put on a watch list for potential future purchases.

    Example:

    KO -

    1 year ... 8.5%
    3 year ... 7.5%
    5 year ... 8.4%
    10 year ... 9.8%

    I like, and count on that consistency. I don't look for the highest yields, I simply start with the Large Cap companies that sell a product or service that people will use regardless of economic conditions.

    I owned LEG at one time because of their double digit dividend growth. Here are their latest numbers.

    LEG -

    1 year ... 3.7%
    3 year ... 3.8%
    5 year ... 10.1%
    10 year ... 8.7%

    Since LEG did not keep the dividend growth consistent, and the dividend growth dropped below 5% for more than a couple of years, I sold my position in LEG.

    Since my goal is to build an income stream that is reliable, predictable and increasing, KO supports that objective where LEG no longer did.

    That's the part of the CCC list I use the most. That and the Chowder Rule, which I was using before it became a part of the CCC. It was the CCC DGR numbers that I used to formulate the Chowder Rule and apply it.
    Feb 26 12:03 AM | 1 Like Like |Link to Comment
  • Market Strategies - The Philosophy [View instapost]
    Eddie, I loved it too when he said the pachyderms. Alabama vs Tennessee were some of my favorite Leonard prognostications.

    My best friend had a business association with the University of Alabama when Gene Stallings was the Head Coach. Coach Stallings used to have an annual golf tournament and the proceeds went to a charitable organization that had something to do with the illness his son suffered from. I forget what that was.

    Anyway, the Asst Athletic Director, Coach Gerald Jack invited us down to Alabama, all expenses paid, for a few days. They put us up in a nice hotel which was on the campus grounds.

    We got to tour the entire facility with Coach Jack. I was amazed at the state of the art weight room they had, and the size of it was incredible. A bunch of the ball players were in there lifting weights. It was summer time and Coach Jack said they couldn't oversee the ball players or work with them, due to NCAA rules, during that time of year. But, he said a coach will take a short cut through the weight room to make a mental note of who was working out. ... Ha! Ha!

    We were down in the equipment room where all of the uniforms are stored and hanging neatly. I noticed a bunch of Tenn. uniforms. I asked Coach why they had Tenn uniforms. He said the squad that gets their starters ready for the game wear those uniforms in practice to fire up the team. I said, Coach, I thought Auburn was your rival. He said we don't need to get fired up for Auburn, that's automatic.

    We got to visit the Bear's tower. We were given all sorts of Alabama sports wear and an autographed picture of The Bear.

    We got to visit the secret room that nobody is supposed to know about. That's where my buddy, Percy and I got to hang out with some of the staff, if you know what I mean.

    Coach Jack found out I was from Boston and tried to recruit me as a fan. I told Coach that I went to South Carolina for a short time and my loyalty was to them. I told Coach I was also a Boston College fan and couldn't turn on my city. I told him I would root for Alabama as long as it wasn't against those two teams. Coach Jack said that would work for him. So, I've been rooting for Alabama ever since.

    When Alabama played Notre Dame for the National Championship, I had a problem. I grew up watching Notre Dame. I forgot to tell Coach Jack though. My family called me a traitor because I was rooting for Alabama. I told them about Coach Jack and Coach Jack passed away several years ago, so he didn't know I rooted for Notre Dame growing up. I told my family I had to keep my promise to Coach Jack and his spirit lives on with this recruited Bama fan. ... ROLL TIDE !!!
    Feb 25 11:38 PM | Likes Like |Link to Comment
  • Transitioning To A Dividend Growth Portfolio [View article]
    I agree with Eddie. I too enjoyed the article and I like your disciplined, well thought out approach to investing.

    As a former swing trader myself, I know the importance of high probability buy and sell set ups and the need for near perfect entry.

    It's not as delicate with long term investing. As Eddie said, if a company you want to own is undervalued, and it meets all of your other criteria, go ahead and buy it. No need to wait in my opinion.

    Since you are investing for the long term, it's important to get the dividends flowing and compounding. You will probably be adding to these positions over time, so again, a perfect entry isn't necessary, just a good entry.

    I think you are on the right track. Thanks for sharing.
    Feb 25 05:42 PM | 6 Likes Like |Link to Comment
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