- 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?
This article was written by
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.
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