Retirement Strategy: All's Well That Ends Well, Right?

Summary

• The markets are soaring with no signs of slowing down.
• The opening of the economy is bringing people out of hiding.
• Nothing to worry about, right?

As of this writing-6/5/2020-11:35 am, the Dow is up 900 points and the other indices are flying higher as well. Let's take a look:

Wow, we are looking at a 40% increase from it's low from 3 months ago and in my view it's a parabolic move, but who cares right? I mean if you are invested in the Dow stocks, and kept buying the dips as well as while it was rising you have done so well that every gloom and doom article written can be viewed at this point as fodder for the bulls and another opportunity to profit.

Let's look at another chart:

My goodness, this looks like a 45% or greater increase in the S&P 500! If you simply invested in this index when the bottom fell out you would be making a killing right now. Personally I have never seen anything like it and am ecstatic for everyone who has taken the risks and put their money where their mouths were! I didn't see this coming and kept pounding away at the risks, especially for those of us who are already retired. Shows you what I know right?

Here is one more chart:

Another 30-35% increase in 3 months. I am nearly speechless. According to these 3 charts if you were a blind donkey you could have picked almost any quality stock or invested in the indexes themselves and over the last 3 months you would have a portfolio that probably would have beaten just about any pro on Wall Street!

How About The New "Pandemic Retirement Portfolio"?

Launched only a few weeks ago, let's take a quick look at this hypothetical chart as of right now. For new (as well as existing dividend growth investors) we could not have asked for a better start!

The hypothetical new Pandemic Retirement Income Portfolio, or PRIP for short, consists of the following stocks right now:

Johnson & Johnson (JNJ), Procter & Gamble (PG), Microsoft (MSFT), Apple (OTC:APPL), AT&T (T), Walt Disney (DIS), PepsiCo Inc (PEP), Con Edison (ED), Exxon Mobil (XOM), and Realty Income (O), and Altria (MO).

For our dividend growth investors, this portfolio is already UP by nearly 6%! In less than 10 days! aside from ED, all stocks are up, and those yields that were locked in are looking even better! Everyone is a winner!

As you can see, there is still only one stock left in the "buy zone" and XOM probably won't stay there long. I mean greater demand now that more cars are on the road, as well as supply reduction is pushing the oil stocks higher and higher.

How Long Will This Amazing Trend Continue?

That is the million dollar question I suppose. If I was going to suggest buying anything right this second it might be XOM which is in the buying range and still has a dividend yield of about 7%! Based on the "facts" we are seeing right now, how long will it be before you miss this high yield dividend aristocrat bargain at these levels?

I would also look at AT&T, even though it is somewhat out of the buying range, the yield of 6.50% for a dividend aristocrat is hard to beat, especially in a "bond-like" equity that just keeps paying dividend growth investors to hold the shares! How long will this high yield aristocrat sell at a bargain?

None of us have the answers of course and anything can happen. IF this parabolic move turns around and re-tests the March lows, well then you will be hoping for another rebound. If the market keeps soaring will you continue to buy or take some chips off the table.

A Little About Me

I can remember when I was young and healthy and had no cancer issues or extended hospital stays and no serious surgeries! I was an optimist about everything, including the stock market - especially when it came to dividend growth investing.

Invest for the long term, get paid for holding quality dividend stocks and reinvest the dividends to add more shares until I need the dividends to support my lifestyle, and spend less than I have coming in.

That was my mantra in a nutshell until I decided to leave the market to the young and healthy. For me, on a personal level, I had grown pessimistic, nervous, and fearful. That is not a great situation for anything, and it's especially detrimental to confident investing. I am living off of my lifetime of dividends and cash and I barely look at the markets anymore. I am one of the lucky ones who have been able to do this and support my lifestyle.

The way I looked at it, it was if I had already basically "won" this game - so why should I stress myself out by continuing to play? On top of that it became harder for me to stay focused and I began making mistakes. Not only in investing but in my poker playing as well (my other vice).

I could not think correctly and began making bad moves and even misreading my hands. It became too stressful to even play the game I loved, and I have recently decided to greatly reduce my playing time.

On top of that my health has continued to decline (just had some more issues and hospitalizations), and being in my 70s I simply cannot keep up. My family and friends come first now, and it is the quality of the time I have left, not the size of my portfolio, that defines me.

However, that is me, not everyone else!

My Bottom Line

Personally I wouldn't know what to do, but if I was an investor with these gains, I probably would take a few chips off the table and lower my exposure. I truly do not believe that this can continue, but who knows, right?

What are you doing right now?

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

Disclaimer: The opinions and the strategies of the author are not intended to ever be a recommendation to buy or sell a security. The strategy the author used in his past, worked for him, and it is for you to decide if it could benefit your financial future. Please remember to do your own research and know your risk tolerance.

Comments

[Donggle]

I arranged my retirement portfolio to only have the min to meet my income goal 20% yield 7% allocation to the market. I had a SA portfolio picks but swapped near the bottom for high yield blue chips + 10%. I will cull the rest of the SA at BE since I'm 30% now and need to cut back to 20%. The sirens song is loud though!

[Some Lazy Bum]

How is that ("cull the rest of the SA") working out for you?

[borrowed time]

RS The last I heard from you was when you had to stop writing due to health problems. You tend not to miss someone until they pop up again. I am very very pleased to come across you again Is it only me or has SA the format so much that we now miss a lot. Although I follow you and others I get no real notification that you have posted. I found this article attached to another.
Great to hear from you again.

Regards Bob

Ps you will see from my name that I thought I would be long gone, joining the dog in the picture

[MidWorld]

Hi RS (Alan),
Glad you are still writing! !
Looking at who is following you, you know that you have a lot of friends out there.
They may agree, they may argue. Priceless!
Stay well!

[xbureaurat]

I've probably read most of your articles through the years and I think this is one of the best articles you have ever written.

When I retired 10 years ago I switched completely to dividend growth investing and put all of my liquid assets into stocks such as JNJ.PG,MCD,KO,MO,etc with the expectation I would hold them forever and live off the dividends. I felt if I got sick or started losing it mentally the ever increasing dividends would support me for the rest of my life. Reading this article makes me feel I probably made the correct decision.

[mbpgui]

Dry powder fully deployed by first few days of April.
So quite happy with unexpectedly fast turn around. Clearly over-hype and sensationalism by the media and excessive posturing and political positioning during this election year drove greater fear and panic than the reality would suggest (~3% positive of those tested, ~15% of those hospitalized and ~10-15% of those in ICU and vast majority fighting preexisting conditions).
...sitting tight now....fighting the temptation to take some off the table. But that is not investing (for the long term). Trying hard to maintain a 3-5 years perspective.

[pjdubin]

Thank you for your response. I have been a subscriber for 5 years. I just turned 71 & 6 months ago lost the love of my life after 49 years. A little history if you’re interested: lost my dad at 11, 1st gen. college grad., worked 33 years selling in the healthcare industry & retiring @ 55
living the life. I thankfully learned
early that family & friends were the most rewarding part of life, not money. Money just provides comfort & a stress reducer. F &F create memories that live into old age. I have 2 wonderful grandsons 12& 16. I am finishing my legacy document I call “financial literacy & life thoughts”. Your advice has always been wise & thoughtful. I like you have tried to give back the last 16 years. Volunteering, generosity when needed & advice of 7 decades of life. I have no advice to improve on you honesty & thoughtfulness. You have reached & helped many people. I can only thank you & salute you! Lastly I urge you to fight for your life because you are required reading. Good luck & you will be in my prayers.

[User 10831611]

@RS: Alan, you are a treasure. When I first discovered you a few years ago, it was like a breath of fresh air. Your honesty, integrity, and genuine concern for your readers opened me to think

about investing in a totally new way. When I saw you were back, I was delighted until I read that your health was declining once again. Each time in the past, you bounced back, writing excellent advice full of practical wisdom. I hope you will continue writing, whatever strikes your fancy. You haven’t lost your edge. Your clear thinking and straightforward writing cut to the core of what matters.

Now 88, in this wildly volatile time of change and uncertainty I’m a deer in the headlights. I don’t want to think about investing in this crazy market. This is not my area of expertise. I was lucky in the past when I used my intuition. Financial managers have lost a lot of my life savings. Who to trust? Am 70% in cash and just want to keep it simple. I don’t need to get rich, would like to keep what I have, not lose capital. If I sell the 30% in stock, will forfeit dividends and pay taxes. Where to put cash for safety plus some earnings?

Your deep life values, wisdom and witty remarks are a rare combination in a financial writer. You are blessed, loved by many. Thank you for sharing your inspiring journey. You are in my thoughts and heartfelt prayers for continued strength, resilience, joy and ongoing good health. May good news pursue you!

[Paul of Arabia]

Your one of my fav writers - and you are doing it while ill to help others less experienced. You have no axe to grind just lots of experience to offer. Great selection of stocks for long term. I am a UK investor living in Saudi with nearly 3 years investing experience - my stocks sank 35% in March but are now above water again. Thanks again for your sage advice. Regards, Paul

[Rusty65]

RS, I am in my 70s as well and have had my own heath issues to deal with. It saddens me to hear about your declining health, but becoming pessimistic, nervous and fearful, happens to us all. I think it might have more to do with age than illness, but I do know that those negative feelings aids your illness (particularly cancer) right along so you have to fight that. So please try to keep your spirits up. We all slow down as we age, some much sooner than others, and whether we have illness or not, but there is no telling where we are going to end up even one day to the next. There have been many unexplained "cures" that have been recorded by the medical profession, even to the profound disbelieve of doctors who told people they had less than 3 or 6 months to live. Nothing is certain except that your journey here at its end will take you off of this planet, but no one can predict exactly when that end will come just like no one can predict the future returns of the stock market.

I have read nearly all of your postings since becoming an SA reader and I think I can say for many others as well as myself that you are by far my favorite writer on this site. And you are one of the very few who didn't do it to make money, but to help others. I commend you for that! I miss not seeing your name and postings as often as I did in the past

Make no mistake, I love the market climb we've had in the last couple of weeks, but I have to say I am much more concerned about the political climate in the USA than the market climate. In my 70+ years on this planet and in this country, I have never witnessed more hatred, bigotry, deceit, non-existent leadership and instability than in the last 2 years. There is no compassion and no humanity at the federal level and at the state level in many of our states. We are once again dealing with racial strife that I thought was at least somewhat behind us as a country. Our civility and civilization in the USA has had drastic setbacks that does not portend well for our future if we do not change our direction and soon. Quite frankly, that makes me more pessimistic, nervous and fearful than my health issues. Mostly, I cannot understand the dramatic lose of civility and humanity-- there is no excuse for that among common citizens or politicians or leaders. What made America great was kinder, gentler, more compassionate, more considerate, more accepting and more understanding people -- not an ever climbing stock market and certainly not the acceptance of public displays of meanness and dishonesty. I hope this all changes soon.

Stay well, RS, and think positive thoughts. Please don't stop giving us your comments on the stock market. You are still right 99% of the time even if you aren't invested in the market any more!

[gregory.mcmahan]

Spot on, Sir!

[User 286]

Powerful statement. Thank you for speaking up!

[moneymaid]

So sorry that you are feeling unwell. However you’ve invested wisely which alleviates so much worry...👸

[carnegie]

Forget “O” !! Loser category of retail real estate. For real estate go with only industrial/ distribution and multi-family properties.

[Watcher of the Fray]

"The markets are soaring with no signs of slowing down."

My current net worth is actually higher than it was back in 1/1/2020. That is because one of my mutual funds bought a lot of Amazon and other hot stocks. I am getting very, very worried.

[Donggle]

@Watcher of the Fray I always found it is better to be lucky then smart. The blue chips rocketing back, SA portfolio just cannot get out of its own way. Deep pockets will be king for some time.

[Horcrux]

@Donggle tech stocks will be king also for me. At the moment, I think that the train passed. From my point of view, as a medium risk investor, I prefer to let them go down a bit and then enjoy the rally. Just an example. I would never buy AAPL at 331. I will wait to come below 250ish. Then AAPL can catch my interest. Now is way overpriced according to me. Or better, there are a lot of better alternatives.

[Donggle]

@Horcrux Nov 2019 it was 250 did you buy then? April 20 did you buy then? To get those prices you had to take unlimited risk at the time and it is really all the same unlimited risk any time you enter. The is no medium risk!

[Horcrux]

Hi RS. I read this article, very interesting. I'm 26. I invested in some of your PRIP company and some other (Like Delta Airlines... I bought when it was at 26.).
Take a look at my situation.
I'm Italian. So another issue, that I have is the currency risk. As for now, I'm doing so.
Buy stocks under the medium price, only if they have a good Free Cash Flow, a good dividend, and Healthy Payout ratio. I'm not converting all the euros in dollar, right now. I convert them everytime the EUR USD dollar is more than 1.1. Hoping for the next year, It will be 1,04 increasing my profits.
I believe in a second wave of coronavirus, and if this is the case, I'm pretty much covered for another V Shaped market move. In this scenario I expect a drawdown of -50%, and I will start buying the dip every day the market goes down of a -2%. When the turmoil will pass, I would be at +60% without any doubt, and start taking off some chips from the table.

[David Freilich]

You are extremely bright for being only 26!

[mrenviro]

Hang in there RS, wishing you the best. Thx for the article, always interesting reading your perspective. Market rally action is truly shocking, but I think deep down, all investors are aware that we could be shocked just as easily in a down move (as we were in Feb/Mar). One way or another either corporate earnings will justify the valuations or they won’t... we’ll just have to wait and see. I wouldn’t mind seeing Jay Powell and the fed governors actually directly address the potential consequences of all this money printing and debt monetization. For months now we’ve been hearing them say that now is not the time to worry about that...tells me they have no clue.

[Watcher of the Fray]

@mrenviro
Actually, a small downward movement, or some side way actions will not shock to me. This rally is shocking to me.

The weakest statement you can make is that the world has changed because of the pandemic. Yet, the stock market level suggests that it is all a temporary anomaly.

[Duncan20903]

From 10/30/1929 through 04/30/1930 the DJI gained 49%. October 30, 1929 was the highest percentage increase in 1929 with the DJI gaining a little over 10%.

[Watcher of the Fray]

@Duncan20903
Difficult to compare 1029 with today. Today we have the unlimited Fed interventions.

[Wilddave86]

I am somewhat long winded but I will try not to write a book.

First off I would like to add my best wishes to Alan. I hope your report Monday is good news.

Now as for this guy we call RS. One of the things that has always stood out about RS is his honesty. This is a rare thing. I have been somewhat saddened by some of the posts in a few of his latest articles. The man is not a pessimist nor a doom and gloom author. You have not not heard doom and gloom until you have heard me go on a rant. Yet I am not a pessimist. I am a realist.

RS is said to have started writing on SA in 2011. That does not mean he was born in 2011. He came to the table a grown man with skills and experience. He wrote to an audience who mostly looked at long term dividend growth investments. I am NOT a DGI. I am NOT a buy and hold. I sell. Yet that being said I have held blocks of dividend paying stocks since 1946. I now help young men ages 13 to 19 learn how to make and manage money. Ok, there are different ways to do that but for the long term dividend method RS has real good things to offer! So a good man, an ethical man and a man looking to help will by their very nature warn you if they sense danger. The Market is not like it was in 2011. If RS had just started out writing a month or so back his first article , based on his years of experience , may have been something like “ So what the hell is this BS!” There are some authors who “write the end is near” when things are just getting started. RS is not one of them. Yet “ No good deed ever goes unpunished”. Man I can sure relate to that!

Hey, you said your piece Brother. You spoke it from the heart. May God bless and Keep you.

Oh I could go on and on. Now folks may feel good that one of the most financially irresponsible institutions the world has ever seen ( the FED) is now the only thing holding up the economy but that gives me reason for concern. If you are not able to look at the totality of all this stuff and not be concerned then you could be a turkey on the way to one hell of a plucking and stuffing. When? I do not know the hour or the day but I will say this: Many a turkey has been plucked and stuffed around two to three weeks after a presidential election. I am a Libertairian. I do not like the “trickle down” theory of economics. This nation was not founded on a concept of trickle down power. Yet I would NOT be looking forward to the “Robin Hood” theory of economics. I would be looking for something more in the middle and not dominated by political agendas. Like say a FREE MARKET.

Good Luck to all

[Watcher of the Fray]

@Wilddave86
The market is up because people and machine are courting TINA FOMO to hope to benefit from the largess of the Fed.

[Wilddave86]

@Watcher of the Fray

I have to laugh. I write BS stories to help teach and inspire the boys I teach. Tina Fomo is a character in my latest story. I will leave it at that.

I have way too much time on my hands these days.

[Minnie da Mulcher]

@Regarded Solutions I don't know how I missed out on following you before now, but here I am, and I echo your other correspondents in wishing you all the best for your health. Try to have a relaxing weekend. I have also enjoyed reading the positive comments from those other correspondents.

[daustin97222]

What am I doing now?

For the intangible portfolio I bought about $400k in different issues and immediately sold calls ("buy-write") and half of those got called away already! What an updraft!!!

So half remains in broad indexes and half remains (or goes BACK to) dry powder. I personally don't think that both shoes have dropped in this market but I am not clairvoyant.

For the tangible portfolio: ALL of the rents are in for June already. So Jan/Feb/Mar/Apr/May/June == no lost rents. No surprise there, since it has been at least 20 years since I had lost rent. The rents are twice what we need to live on.

@Regarded Solutions has quickly become my favorite SA author. Thanks Alan for the post.

[craya]

Alan, I've told you before, you are a treasure. your values are in the right place. keep up the fight. and thank you for taking good care of your followers. i believe you care about us and want the best for us. your words are taken seriously and your wisdom does not fall on deaf ears. we hear you and we understand . may you keep surprising yourself with a long, precious and fruitful life with your family and friends and all of us to keep cheering you on along the way.

[nls174]

I always like reading your articles, RS. I can understand them. I started a couple of small positions during the big dip in March on some tech stocks that I thought were too expensive previously and added to some I already had. I thought it was a good opportunity.