Every couple of weeks, I tally up our dividend savings, pay off any outstanding bills, and then, I invest the balance. This week, after moving some capital around in my accounts to purchase shares of Microsoft (NASDAQ:MSFT), Visa (NYSE:V), and CSX Corp. (NASDAQ:CSX), I also discovered some extra dividend income to invest. Shares of Coke (NYSE:KO) plunged spectacularly yesterday, so naturally I bought some more KO stock with my savings, doing my best to remain calm and composed all the while. Then, I dispassionately took note of the fact that Molson (NYSE:TAP) has plunged this week, in a dramatic (but all too familiar) market overreaction to some less-than-impressive earnings news.
Short-term or even medium-term corporate mishaps and mediocrities are of little concern to me, but frequently send share prices into a swoon of dismay and capitulation that has little or nothing to do with the intrinsic value of the company in question. And oh, how I do love a blue-chip stock trading at a PE ratio of 11! I bought more shares of TAP yesterday, and today, low and behold, yet more dividends have come seeping into the portfolio which can only mean one thing. It means that I am dashing into the stock market candy store again today, squealing with such delight as to be indistinguishable from a tantrum, shrieking "mommy, mommy, mommy, I want this one! I want that one! Gimmee, gimmee, gimmee!!!!!" while I hop up and down, flap my arms like a chicken, and then roll around on the ground while simultaneously running in place... all the while as the other adults in the room discreetly glance over their shoulders at me with politely-veiled (yet unmistakable) disdain and disapproval.
No. It is never a pretty sight when stock prices for companies like KO or TAP swan dive into the abyss, but not due to the fact that sellers are taking whopping losses. No, it's ugly because of all the wild-eyed buyers like me, who have abandoned the last semblance of decorum and are now braying with greed as they spam the worn-out "buy" button on their rickety keyboards.
It is true. Sometimes, I do sell shares and parlay the capital into what I see (often mistakenly) as better opportunities for future earnings and dividend growth. Whenever I do so, it is with a lurking sense of shame because I know only too well that by churning capital, I am merely increasing the odds that I will misjudge something and pay the iron price by underperforming the stock market (and I can think of no worse fate than that). But how rapidly does that sense of humiliation and rue dissipate whenever I redeem myself by doing the one thing, the only thing, that is virtually guaranteed (or, well, at least, very likely) to enhance my portfolio income and (more importantly) long-term dividend growth rate. Pushing that shiny, grease-stained buy button that's held onto the keyboard with worn out peeling duct tape until it rattles.
By the time you read this, I will have them. I will have bought more shares of TAP. But like a spoiled brat immediately after he gets precisely what he wanted, it never takes long before I start to glance with a pining sensation of wistful unfulfillment at all the other shiny new shares of stock that I didn't buy. My only consolation is that next week, next month, next year, and over the coming decades, more dividends will come, and more reinvestments will be made. You can't keep people like me out of the candy store for long, not when portfolio dividends continuously rise at a faster rate than personal expenses do. In fact, I chortle, thanks to the power of compound portfolio income growth, I should be able to afford to buy even more shares of TAP next time than I was able to buy this time. And yet, even THAT isn't enough to squelch my insatiable case of the investment gimmee-grabbies. Now I am praying for the stock price to continue falling so I can afford even that many more shares in the future. If TAP continues to drop after today and stay down until my next reinvestment round, that would be like, I don't know, compounding the power of compounding. Oh my lord. The prospect of that seems so delicious, I am already tugging and straining to get back into the candy store again. I sense the dour looks of disapprobation from all the grown-ups in the room, but I'm way too far gone at this point to either care or to comport myself. For it is a most special type of tantrum that I feel coming on. It is a Tantrum of Compounding.
The portfolio allocations (nearly unchanged from yesterday) are what follow:
Disclosure: I am/we are long TAP. 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.
Additional disclosure: I am long every position shown in the attached spreadsheet, and have no investment positions besides those.
Don't assume for one moment that this article is anything remotely like investment advice. It is most certainly not. Is it a recommendation to buy or sell or do anything about any stock or fund or bond or anything at all under the sun that has anything to do with investments? No. I am not an investment adviser. Nothing I say matters to anyone other than myself. Nothing I write is necessarily accurate (other than the fact that I really do throw tantrums and get the gimmee-grabbies. You may conclude, therefore, that I am not... shall we say.... reliable, and that you would be a fool to rely on anything that I write. And besides, you don't need to. You are free to make your own investment decisions and use your own judgment... and do not require mine.