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Retirement Security: Exceptional Times Call For Exceptional Measures

Mar. 03, 2018 9:15 AM ETAT&T Inc. (T)ARCC, BTI, CLDT, LUMN, DIN, ED, EPR, GEO, GOV-OLD, IRM, MAIN, MO, O, OHI, RMR, SO, SUI, VGR, VZ, WPC241 Comments
George Schneider profile picture
George Schneider


  • Take a ride with me in the “way back” machine if you dare.
  • An introspective review can point out mistakes we can learn from.
  • A retrospective treatment might point the way forward.
  • Each stage of our investment careers represents an exceptional time calling for exceptional measures.

(Photo source)

Taking a ride in the “way back” machine is frightening for some folks. Some reflect on that “F” they got in math in third grade when the rigors of multiplication and division seemed just too much to absorb and process. Others reflect on the frustration and rejection of not getting invited to the high school prom, or are still upset about getting invited but not finding the perfect dress for the occasion.

Investors who experienced the fright of losing half the investment value of their portfolio at the depths of the 2008-2009 financial crisis have yet another reason they’d prefer not to revisit the past. It’s a form of denial, to guard the psyche against traumatic events that would cause more emotional trauma if we reflected upon them now.

However, if we can summon the courage, maturity and responsibility to revisit the various life stages of our investment careers, there is much we can learn. And once we confront these issues and use our own personal information and experience for our personal benefit, our investment outcomes can improve.

Think Back To When You Started Investing For Retirement

(Thinking Man - Rodin)

I don’t know about you, but as far back as the age of 11, I've been investing for retirement. For years before that, I sat beside my dad on Saturday mornings and entered closing prices on his stocks into an accounting book as he dictated them to me from the New York Times financial listings.

From these early beginnings, my interest in the markets was kindled and I religiously invested money earned every weekend playing in a rock 'n' roll band I formed with buddies called “The Islanders." Yes, this was before the Islanders Hockey team existed and stole our moniker.

Exceptional Times Call For Exceptional Measures

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George Schneider profile picture
Feel free to email me with any questions you may have at: geoschneider@hotmail.comAside from free articles available to the general public, additional early-access, value-added ideas and deep-dive articles are offered to paid subscribers on my premium newsletter platform, "Retirement: One Dividend At A Time" . This exclusive RODAT Portfolio has performed even better than my popular FTG Portfolio, with higher dividend income growth and greater capital appreciation.I'll be happy to send you subscription information and a couple of free, exclusive articles so you can judge for yourself if my service is for you.We now offer three subscription tier levels, all very affordable, one for every pocketbook.Just send me your email address and I'll send you all the information you need to decide if my service is suitable for you. Send your email to:geoschneider@hotmail.comIf you are interested in any of my very popular and easy to use digital utility solutions to add to your investing tool box to improve your investment outcomes, please visit my site:http://safeseller2.ecrater.com You'll find elegant applications that make it simple for you to track your portfolio in real time, make a watch list to follow in real time, track your dividend income and growth, and other applications. These applications will allow you to set alerts at prices you choose in order to obtain the yield and income that you want. They function as real time trade assistants and will improve your investment performance. You can even mirror the successful FTG Portfolio with "My FTG Mirror Calculator", and subscribers can mirror the premium subscriber portfolio with "MY RODAT Mirror Calculator" if they wish to emulate the out performance we've achieved in capital and income growth.I am a retired clinical psychologist, and administrator and owner of a rehabilitation clinic we founded 40 years ago. For over 55 years I have managed several portfolios composed of investments accumulated over our professional careers. Since the financial crisis of 2008, I have employed specialized, customized dividend growth strategies aimed at enhancing and growing a dividend income stream.Since December 24, 2014, I have demonstrated on Seeking Alpha the ongoing construction and portfolio management of the Fill-The-Gap Portfolio aimed at highlighting strategies investors may utilize to close the gap between an average Social Security benefit and the much greater costs faced in retirement.This portfolio has outperformed all of the broad market indexes by a very wide margin, growing dividend income and total portfolio value consistently while the broader indexes struggle in negative territory all year.Let me show you how to build and grow your portfolio and dividend income, step by step, towards a comfortable and secure retirement.Feel free to email me with any questions you may have at:geoschneider@hotmail.com

Analyst’s Disclosure: I am/we are long ALL FILL-THE-GAP PORTFOLIO STOCKS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (241)

Mary531 profile picture
good question.
MissG808 profile picture
I have seen some negative articles about GOV and a potential dividend cut. Any concerns?
Retired at 50 profile picture
I agree with you on all but 2 things:
1. On $3k deduction: You can deduct as much as capital gain from your capital loss carryover, not just $3k. If you do not have capital gain to deduct from, then it is correct that you can only deduct $3k.

2. On AT&T: I worked for T and its subsidiaries until I took my early retirement in 2012. T was a great company, but today is in a very difficult business. It won't go away anytime soon, but will to gnot rise to glory with its current businesses. Its businesses are very cap-ex (and even op-ex) intensive... it had been trying to grow by acquiring other telecoms service companies, but add more debt to its balance sheet in the process... The businesses that it acquired or in the process of acquiring are not growing businesses, but have their own problem. Sell some covered calls, if I were you.
vantuckman profile picture
Wurlitzer: Thank you for your service. Sincerely, V. Tucker Kirk
Wurlitzer profile picture
Van, I appreciate your comment..........
Wurlitzer profile picture
Many Americans ignore a military career because of its obvious drawbacks such as 1) long separations from family which severely strain marriages for many, 2) having trained killers with highly lethal weapons placing you in your sights, 3) possibility of crippling wounds, 4) public thinking most military are dumbbells who couldn't do anything else, 5) frequent moves making it very difficult to build up equity in a house and for the kids to develop friendships, 6) degradation of benefits when the shooting stops.


1) You have a reliable retirement system which can start after 20 years service, 2) increased retirement pay tied to cost of living increases, 3) medical and pharmacy benefits following you after retirement, 4) continual education opportunities while on active duty, 5) the pride of doing something for your country, 6) commissary and exchange benefits forever, 6) meeting and establishing relationships with a lot of very smart people throughout active duty and after retirement, 7) gaining an understanding of what the world is like by being assigned through the US and overseas - much better than watching "news" on the tube.

My 26 years in the Army were sometimes difficult but often filled with wonderful experiences I would never have been able to get in any other career. And, I have a secure retirement.
jeteske profile picture
Wurlitzer, I admire ground pounders who were always willing to step in front of a bullet - you have my vote and appreciation. I got to run and hide for 20 years in the submarine force - my family and I experienced your first 6 issues, and are enjoying the benefits of the last 7 issues. Very articulate description of our service. The good news is at 20 years plus one day I retired from the Navy and was lucky enough to have remained in one place (Charleston, SC) for the last 8 years of service...so we at least got started on paying down the house! I just transitioned to Tricare for Life, we live about 10 minutes from the local air force base and its wonderful facilities. I applaud your service...it's much harder to stand in front of bullets than it is going down a hatch and disappearing for months at a time.
Speaking of Taxes:
Consider retiring in a "community property" state. If one spouse passes away the living spouse gets a 100% step up in basis on all co-owned assets (as in a revocable Trust). Residents of other states get a step up basis of only 50%.

Since I don't need all my dividends for living expenses, I have a large portion of my investment in Berkshire Hathaway (BRK.B) which pays no dividend to pay tax on, but instead increases in price.
When both spouses have passed away your children inherit at 100% step up in basis in all states.
AZ Bill

Yes, BRK.B does keep the dividends. But as I learned the hard way, I don't
have any access to my share of the dividends. BRK.B does report the
dividends under intrinsic value but I am only eligible to get the
market price of BRK.B.

When the market price is up I like it a lot and I dont sell, In hard times
i.e. 2009 if I need my dividends I need to sell at rock bottom prices and
permanently leave behind my divis.

I have since bought underlying high yield public holdings of BRK.B.
George, I originally bought 50 shares of SO because you pointed it out. It now has a yield over 5%. I figure the business model of SO is stable and I can count on the dividend if not the share price. So I may add to my core holdings. The payout ratio is high. I will check on growth stability as part of my decision. Do you really have only 62 shares? T, otoh, is pivoting to entertainment, and this pivot strategy is too complex to ponder, so I shed 1000's of shares at 39. I might add some T back after their crystal ball clarifies. Or if T goes below 32.
Great article! Quite helpful I gotta say...
Great article! Quite helpful I gotta say...
George. a fun story on ftg holding wpc, bought a1000 shares a16 and a 1000 at 17 plus 6000 more along the way , at $4,00 per year i know the current yield but dont have the skill set or time to figure the yield on cost but assume its nice , now hoping for a big bump when cpa 17 is merged into the reit, 10 11 12 14 15 and 16 all were a fun experience to watch unfold, What do you expect the increase to be when the next merge takes place perhaps this year, thanks if you see the question and have an opinion.
George - are you holding on to GOV?
Cuip99 profile picture
I have many of your selected issues but not all of them. All of my investments produce cash dividends like XOM, KO, BP, F, GE, JNJ, NYLD, VLO plus a few preferreds. The point is they produce cash income. And I am retired but unlike a lot of others I have two pensions, Military and SSN plus I get VA Compensation. So most of my dividends get reinvested in selected stocks. I am well diversified with annuities, paid of up house, real estate fam income and mineral investments. Life insurance is paid up participating. I am at relatively low risk and thus concentrate on cash income from investments.
George, I hold OHI in my monthly based income profile which has st of the stocks that is recommended by FTG. I am concerned for OHI. I am confused as it is not doing good based on the issues of the tenants. The dividend has been frozen for a year . Things are not looking good . I have been holding OHI for long time . But want to have your advice before I make my own choice.
I think the most difficult part with investing is figuring out what to buy. As the market has become more and more expensive, the margin of safety has shrunk. It’s much more difficult to make gains with more recent purchases.

I could buy the index, but it’s already at ridiculous highs. How much of a future return can I expect?

What I have found is that the more I invest the more I realize what I don’t know.

I do expect gains to be down for the next decade, but I’m not sure how to adjust for that reality. We seem to have good decades followed by bad ones. And I’m really bad at timing.

The problem today is finding adequate margin of safety, where it’s likely rates will go up 2pts.
Wurlitzer profile picture
To me, the most difficult part of investing is figuring when to sell. As a result, I have held some real clunkers which would have brought a profit had I not procrastinated, and sold some which had been vacillating wildly when they recovered to their peaks - and then rose substantially more after I sold them. At times, I have thought that the best strategy is to sit on one's hands. At times.

Now when a stock seems to have made a better-than-expected price, I won't liquidate most or all of the position, just take some off the table.
Selling is easier for me, but I do make mistakes.

When I look at my positions, I think about the future cash flow those stocks will generate. As long as I feel good about their ability to generate good growth relative to price and interest rates, I stick with them.

When the price gets too expensive relative to the cash flow, I will sell. For example, I held NVDA for a little over a month. It went up over 20%. That irrational bidding made no sense to me, so I sold. I had originally bought them because I liked their moat around machine learning.

I also bought DIS around the same time I bought NVDA. I’m down about 6%. However, I think, when you take into consideration their future cash flow post the tax cut, the valuation looked ridiculously cheap. Now, I know they’re having problems with ESPN, but I have to think this company can figure it out. And I’ll give them a year or two to do it. If they don’t, then I’ll exit my position.

I also have a huge position in MO, which is down 10% YTD. They have a lot of regulatory headwinds and a business model that is slowly shrinking its volume. I’d like to exit half of my position, but right now it’s actually priced at near the discount dividend model price. I should be adding, but my position is already too big. I could have sold some early last year, but I’m not in any rush.

However, I really don’t know what I want to buy now, so I’m slowly accumulating cash on the sidelines.

What’s your criteria to sell?
#CloudsOFLie profile picture
T is a terrible stock
At 12/31/17, T had cash of $50 billion to debt of $165 billion
That is my metric for telecom stocks. T’s dividend is safe. Verizon is under stress with a low cash to debt ratio. I own T and sold Verizon.
your article analyzing your long term experience is a welcome breath of fresh air in an industry with hot air guidance. .. your not fickle but the market is... since we are all smarter than each other we believe in cheerleading our hopes and insightfulness to validate our brilliance by immediate hyper preformance...pointing this physcology out highlights that the majority of small investors are missing discipline that is more certain than market fear n euphoria cycles... I know too like you cause we are smarter, good looking, funny and scared of the reality of out living our money!
I am approaching retirement in about 5 years and have just sold off one of my small companies for good money, retirement money. I do not know how so many live off of a 4 or 5% Dividend!! Remember , it is taxable income so that does not work for me. Yes, the stratedgy depicted here is sound enough, but looking forward with real estate prices historically high and the market historically high, we all know we are near the top and the Fed is rising rates! All these stocks will fall in pricing and did anyone ever think that GE would stop paying a dividend? Yes, there is risk in everything we invest in today, but i feel Treasuries, corporate bond and even munis in the years to come will be paying alot better yields. At 8-10% I can retire comfortably and the key is being able to lock into those yields. Yes, you will have to wiat and in the meantime there are many good investment options that historically that have done well [ eaton vance tax managed call writing funds ] look at this fund what it did for return in the WORST OF TIMES [ 2008 ] and it's consistency. I dont know about all ofm you but 5% doesnt cut it for me and I certainly am not going to chase ATT etc... here at their all time highs etc..... Bottom line, there are many options present to us all and the market and our economics are changing rapidly. The good old ways are no longer secure and dependable looking forward.........Give me a long term 8- 10% treasury and that is fine with me. By the way, when inflation gets ugly as it will soon, you can buy non callable bonds...........it is all a waiting game and its time to look at investing for rising interest
rates...........my two cents!
why on God's green earth would you want to invest in GEO group? How do you sleep at night? I ask that not only ethically due to the company being one of the largest operators of private prisons with a reputation for some of the worst and most unsanitary conditions, but financially since said terrible and unsanitary conditions have led and continue to lead to massive multi-million dollar lawsuits and judgements against the company and the forced removal of the company from several jurisdictions in which it operates...
TGC004 profile picture
I enjoy reading your articles and learning from your insight. While about 10 years from retirement, I have been saving since I was about 8 and investing since I was 24 or so.

Once my wife and I started a family (3 children 4 years apart each) we really started socking it away. 401k, Keogh, IRA, 529s and also taxable investments that generate income. The goal was to produce an income stream in our taxable accounts that would pay for college for each of the kids solely from income so as not to deplete any of the corpus. This way when we were done paying for their education, we would still have the core investment and the future income !!!

Something I never heard from any investment professional that I talked to and I talked with many.

So while our oldest child attends a very expensive private college, and the income stream only covers about 85% of the $65k/yr tuition bill, the whole experience isn't going to put us in the poor house. Our next child who goes to school in 2019 will most likely be at a less costly place which will let us reinvest some.

End of the day - I think we share some common themes and goals. Keep up the great work!
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