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buy and hold?
Posted on 6/20/13 at 4:15 pm
Posted on 6/20/13 at 4:15 pm
So what are the board's opinions. If the correction is coming, do you hold what you have and buy more? What are your thoughts on this if you're not close to retirement. Obviously, you move to less risky investments closer to retirement but I'm mid-30s and thinking of just riding it out and buying more at cheap prices.
I don't have many individual stocks. Mostly index funds or ETFs, zero bond funds. Thoughts?
I don't have many individual stocks. Mostly index funds or ETFs, zero bond funds. Thoughts?
2
Posted on 6/20/13 at 4:23 pm to ulsaint
Did things fundamentally change for coca cola,mcdonalds,phillip morris,3M,pepsi from last week?
Those companies were just victims of a huge sell off. Frankly most are trading at cheap forwards earnings valuations, this sell of is borderline comical and criminal at the same time. Yes the economy is in some deep doo doo, but really even all these people struggling, they're going to be affected when it comes to purchasing mcdonalds and it's $1 menu products? Or even a 75 cent can of coke? These companies aren't affected by commodity pricing like say oil prices like exxon or chevron would be, those companies sell cheap products that continue to be bought in good times and bad.....oil prices go up and down, coca cola prices don't.
I don't see why you would sell, I hold,enjoy growing dividends and I bought alot more of my favorite 4 or 5 companies today.
In the long run, this 300 pt drop will be comical in say 2030 if you hold and reinvest the dividends till retirement
The real problem is everyone thinks they're fricking george soros and wanna time the market and buy and sell the news etc leading to days like today, read the following piece, if you bought 1, yes 1 share of exxon like 40 years ago and added just $100/month youd be a millionaire today
LINK
become an accumulator, buy solid companies and add add add....no eastman kodak wasn't a solid company, we dont need film today, I cant envision a world in which we dont need coca cola, mcdonalds, cigarettes, etc
Those companies were just victims of a huge sell off. Frankly most are trading at cheap forwards earnings valuations, this sell of is borderline comical and criminal at the same time. Yes the economy is in some deep doo doo, but really even all these people struggling, they're going to be affected when it comes to purchasing mcdonalds and it's $1 menu products? Or even a 75 cent can of coke? These companies aren't affected by commodity pricing like say oil prices like exxon or chevron would be, those companies sell cheap products that continue to be bought in good times and bad.....oil prices go up and down, coca cola prices don't.
I don't see why you would sell, I hold,enjoy growing dividends and I bought alot more of my favorite 4 or 5 companies today.
In the long run, this 300 pt drop will be comical in say 2030 if you hold and reinvest the dividends till retirement
The real problem is everyone thinks they're fricking george soros and wanna time the market and buy and sell the news etc leading to days like today, read the following piece, if you bought 1, yes 1 share of exxon like 40 years ago and added just $100/month youd be a millionaire today
LINK
become an accumulator, buy solid companies and add add add....no eastman kodak wasn't a solid company, we dont need film today, I cant envision a world in which we dont need coca cola, mcdonalds, cigarettes, etc
This post was edited on 6/20/13 at 4:26 pm
Posted on 6/20/13 at 4:39 pm to ThaBigFella
Oh I agree. I am diversified as far as my indexes go:
Roth IRA
40% total stock market etf (including maybe 5% in some ind. stocks of DJ dividend paying stocks)
20% in mid cap etf
20% in small cap etf
20% in international etf
401K
45% S&P etf
30% mid-small cap
20% intl
5% large DJ dividend paying ind. stocks
Just curious what others were thinking. I bought more today for my Roth since the price was good. Usually buy monthly around this time to hit the max contribution limit. Timing was perfect this month price wise.
Roth IRA
40% total stock market etf (including maybe 5% in some ind. stocks of DJ dividend paying stocks)
20% in mid cap etf
20% in small cap etf
20% in international etf
401K
45% S&P etf
30% mid-small cap
20% intl
5% large DJ dividend paying ind. stocks
Just curious what others were thinking. I bought more today for my Roth since the price was good. Usually buy monthly around this time to hit the max contribution limit. Timing was perfect this month price wise.
This post was edited on 6/20/13 at 4:54 pm
Posted on 6/20/13 at 4:52 pm to ulsaint
I buy and hold a diversified portfolio of index funds. And I hope the markets crash really big one more time in the next decade so I can load up some more.
If you're a regular working person a major crash or two when you are 35-45 can be a very good thing. By that point your income is starting to get substantial, so you want a big crash so you can pile in with real effect.
If you're a regular working person a major crash or two when you are 35-45 can be a very good thing. By that point your income is starting to get substantial, so you want a big crash so you can pile in with real effect.
Posted on 6/20/13 at 4:52 pm to ThaBigFella
quote:
Did things fundamentally change for coca cola,mcdonalds,phillip morris,3M,pepsi from last week?
Big Fella - what do you think about CVX?
Posted on 6/20/13 at 5:00 pm to Ace Midnight
It's a great deal, its graham number puts it at $140 or so. I own a little big oil(sinopec,exxon,shell,cvx,conoco) but its probably a total of 10% of my portfolio, I figure I'm heavily invested enough into oil with 4 convenience stores.
I don't know how i feel about oil long term, I myself have a tesla on order for september delivery and I'm somewhat intrigued on if they can really mass produce some type of electric car for cheap one day, whether it be tesla,GM,ford whoever. It could change a global demand for oil.....it probably won't happen, but there's a much higher chance it could today vs 10 years ago.
CVX,XOM are great great companies don't get me wrong, I just don't see the growth like I do with other companies and the dividend increases are typically smaller than those of other companies. At 9x earnings you can't go wrong, but then again the price of oil could fall significantly, I'd rather stick with products inelastic to global conditions ie coca cola,pepsi,toilet paper,cigarettes.
I personally cannot fathom how coca cola ever will have a drop in income, they increase the price of cans to dealers like myself by a penny annually but thats a significant increase % wise ie from 2009-today a can of coke has gone from .17 cents to .24 cents thats a near 50% increase....wow....then the amount of money they make on bags of syrup they sell to fountain drink machine owners ie every restaurant,nightclub,gas station around is insane...not to mention they own so many big big brands, its not just coke
I don't know how i feel about oil long term, I myself have a tesla on order for september delivery and I'm somewhat intrigued on if they can really mass produce some type of electric car for cheap one day, whether it be tesla,GM,ford whoever. It could change a global demand for oil.....it probably won't happen, but there's a much higher chance it could today vs 10 years ago.
CVX,XOM are great great companies don't get me wrong, I just don't see the growth like I do with other companies and the dividend increases are typically smaller than those of other companies. At 9x earnings you can't go wrong, but then again the price of oil could fall significantly, I'd rather stick with products inelastic to global conditions ie coca cola,pepsi,toilet paper,cigarettes.
I personally cannot fathom how coca cola ever will have a drop in income, they increase the price of cans to dealers like myself by a penny annually but thats a significant increase % wise ie from 2009-today a can of coke has gone from .17 cents to .24 cents thats a near 50% increase....wow....then the amount of money they make on bags of syrup they sell to fountain drink machine owners ie every restaurant,nightclub,gas station around is insane...not to mention they own so many big big brands, its not just coke
This post was edited on 6/20/13 at 5:13 pm
Posted on 6/20/13 at 5:10 pm to foshizzle
quote:Unfortunately that's when regular working people tend to run away from markets.
If you're a regular working person a major crash or two when you are 35-45 can be a very good thing. By that point your income is starting to get substantial, so you want a big crash so you can pile in with real effect.
Posted on 6/20/13 at 5:13 pm to ThaBigFella
quote:
I'd rather stick with products inelastic to global conditions ie coca cola,pepsi,toilet paper,cigarettes.
You're the person who got me looking really hard at PM. I've had a recent windfall and I'm looking to diversify by buying long-term hold stocks. I'm fairly well set up with index funds through my employment.
My initial analysis for the windfall money has me CVX, MMM, JNJ, PM and F, projecting to reinvest the dividends in each. The other gasoline stock I considered was XOM.
Posted on 6/20/13 at 5:18 pm to Ace Midnight
PM to me is a steal at todays closing of $86+...its down 10% off its highs a few months back....has anything changed? nothing except "the flight to treasuries" where supposedly according to the media people are dumping dividend stocks and going to the safety of 2.3% US treasuries....not me, Im holding my dividend stocks.Really do you wanna collect 2.3% annually in US treasuries or buy dividend growth stocks who have 4% annual payouts that will probably be 10% by the end of the decade?
The PM dividend is 3.9% today and should be 4.3% after september increase. So I ask you do you want a bank account yielding .015% or wait the rates went up to .03% or whatever bs rate the bank gives you or would you rather own a cigarette company that owns 7 of the 15 biggest global brands and pays you 4%+ annually and that rate will grow by 10% for the forseeable future bc they're buying back shares like crazy and thus will increase the dividend more and more......and dont forget the payout ratio is 65% while most cigarette companies payout close to 90% so by the time they get there, watch out, massive dividend in 10-15 years.
I know many think cigarettes are declining, but that's here, they don't sell cigarettes in america. Countries like vietnam,indonesia,russia, etc are smoking at higher rates than ever, actually china alone is 40% of all cigarettes sold globally and their population is growing at 80 million new human being a year...think about that. PM also signed a licensing deal recently to get marlboro into that same china....no other company is in china except china tobacco and PM, so if PM can do what they did all over the world in china one day...watch out. Also they take income in every currency not named the USD, so if the USD ever falls off a cliff like many think it will....big big boon to PM
So don't think you can go wrong, but again, thats my take....everyone has their own opinion, could the price drop more? sure it could, but it wont be bc fundamentals changed. Look if i had to buy, id buy tomorrow sure, the dividend cutoff is monday, so i'd definitely buy tomorrow and get that juicy .85/share
The PM dividend is 3.9% today and should be 4.3% after september increase. So I ask you do you want a bank account yielding .015% or wait the rates went up to .03% or whatever bs rate the bank gives you or would you rather own a cigarette company that owns 7 of the 15 biggest global brands and pays you 4%+ annually and that rate will grow by 10% for the forseeable future bc they're buying back shares like crazy and thus will increase the dividend more and more......and dont forget the payout ratio is 65% while most cigarette companies payout close to 90% so by the time they get there, watch out, massive dividend in 10-15 years.
I know many think cigarettes are declining, but that's here, they don't sell cigarettes in america. Countries like vietnam,indonesia,russia, etc are smoking at higher rates than ever, actually china alone is 40% of all cigarettes sold globally and their population is growing at 80 million new human being a year...think about that. PM also signed a licensing deal recently to get marlboro into that same china....no other company is in china except china tobacco and PM, so if PM can do what they did all over the world in china one day...watch out. Also they take income in every currency not named the USD, so if the USD ever falls off a cliff like many think it will....big big boon to PM
So don't think you can go wrong, but again, thats my take....everyone has their own opinion, could the price drop more? sure it could, but it wont be bc fundamentals changed. Look if i had to buy, id buy tomorrow sure, the dividend cutoff is monday, so i'd definitely buy tomorrow and get that juicy .85/share
This post was edited on 6/20/13 at 5:31 pm
Posted on 6/20/13 at 5:30 pm to ThaBigFella
quote:
Look if i had to buy, id buy tomorrow sure, the dividend cutoff is monday, so i'd definitely buy tomorrow and get that juicy .85/share
I'm tracking the ex-dividend. I think I'm buying tomorrow, at market opening - I think anything under $88 or $89 is a steal.
Posted on 6/20/13 at 5:31 pm to Ace Midnight
I think anything under $92 is a great buy bc it will yield 4% come the increase to $3.75 dividend in september
Posted on 6/20/13 at 5:37 pm to ThaBigFella
Love reading your posts. How much of your portfolio is in individual stocks and how much in mutual/index funds?
Posted on 6/20/13 at 5:42 pm to jimbeam
I have 0 index funds, its all individual blue chips. I just don't see the point of owning SPY which has a 2% yield after the big price drop today when I can build my own mutual fund of companies that all yield 3-5%.
I mean I know it's "riskier" but look if you've got a $3M portfolio the difference between 2% and 4% is $60,000/year in dividends....thats a pretty damn big difference so I stick to the high yielders with great dividend histories. Frankly I don't have 1 stock with a sub $100B market cap so I don't really see it as being risky.
Like I said I've owned individual stocks for nearly 20 years, and for the average investor who doesn't take the time to study balance sheets, dividend payout ratios, and other important indicators, indexing is an awesome option.
I don't hate it....but it's just not for me and my particular goals of a SIGNIFICANT dividend stream that grows annually in excess of inflation.
Really would a 5 stock portfolio of say coke,chevron,phillip morris,altria, and mcdonalds be considered risky? That would give you average yield of almost 4% with incredible blue chips....even if its only 5 companies, if those companies have great products and solid balance sheet, who cares if you're diversified into 100+ companies or whatever the media tells you to diversify into?
I mean I know it's "riskier" but look if you've got a $3M portfolio the difference between 2% and 4% is $60,000/year in dividends....thats a pretty damn big difference so I stick to the high yielders with great dividend histories. Frankly I don't have 1 stock with a sub $100B market cap so I don't really see it as being risky.
Like I said I've owned individual stocks for nearly 20 years, and for the average investor who doesn't take the time to study balance sheets, dividend payout ratios, and other important indicators, indexing is an awesome option.
I don't hate it....but it's just not for me and my particular goals of a SIGNIFICANT dividend stream that grows annually in excess of inflation.
Really would a 5 stock portfolio of say coke,chevron,phillip morris,altria, and mcdonalds be considered risky? That would give you average yield of almost 4% with incredible blue chips....even if its only 5 companies, if those companies have great products and solid balance sheet, who cares if you're diversified into 100+ companies or whatever the media tells you to diversify into?
This post was edited on 6/20/13 at 5:46 pm
Posted on 6/20/13 at 5:44 pm to ThaBigFella
Gotcha. I don't know enough at this point about the ins and outs. Would really like to learn though.
Posted on 6/20/13 at 5:53 pm to jimbeam
google read about dividend growth investing jimbeam, its a very powerful concept of companies that have grown dividend year over year for a very long time.Take your job for instance, do you get a 10% annual raise? Well as an owner of coke,exxon,pm,chevron, etc you would get an annual increase in your income(dividend) in that range for the most part year over year.
Mcdonalds for instance grew its dividend on average 20%+ annually for the last decade....think about that if you made a 20% increase in your income on average each year over the last decade. This would keep you well ahead of inflation income wise.
Great site to see companies dividend history
LINK
Great site to backtest stocks and potential worth today with div's reinvested...really look at coke $1000 in 1990 and adding $100/month would give you $93k today....thats how powerful dividends are
LINK
Google a list of dividend titans, dividend champions and you will see these companies that boost their dividends every year, in good times and bad. Of course there will occasionally be that eastman kodak blue chip that collapses, but thats why holding a basket of these is safe enough if one somehow collapses. I personally made my pick of of phillip morris and im swinging for the fences, if you can even call it that for a company with a 100+ year history.
This is a link of a dividend growth investor I saw on good morning america, the guy makes like $30k/year or less and has been saving, reinvesting dividends and plans on retiring by 40 with a $400k or so portfolio which with dividends would probably allow him to earn the same income he makes now well minus the savings part bc thats taken care of with his balance and enjoy his life....great story.
LINK
Mcdonalds for instance grew its dividend on average 20%+ annually for the last decade....think about that if you made a 20% increase in your income on average each year over the last decade. This would keep you well ahead of inflation income wise.
Great site to see companies dividend history
LINK
Great site to backtest stocks and potential worth today with div's reinvested...really look at coke $1000 in 1990 and adding $100/month would give you $93k today....thats how powerful dividends are
LINK
Google a list of dividend titans, dividend champions and you will see these companies that boost their dividends every year, in good times and bad. Of course there will occasionally be that eastman kodak blue chip that collapses, but thats why holding a basket of these is safe enough if one somehow collapses. I personally made my pick of of phillip morris and im swinging for the fences, if you can even call it that for a company with a 100+ year history.
This is a link of a dividend growth investor I saw on good morning america, the guy makes like $30k/year or less and has been saving, reinvesting dividends and plans on retiring by 40 with a $400k or so portfolio which with dividends would probably allow him to earn the same income he makes now well minus the savings part bc thats taken care of with his balance and enjoy his life....great story.
LINK
This post was edited on 6/20/13 at 6:07 pm
Posted on 6/20/13 at 5:59 pm to ThaBigFella
thanks a lot manPosted on 6/20/13 at 6:05 pm to ThaBigFella
quote:Except, to be fair, the OP question related to "buy and hold."
I just don't see the point of owning SPY which has a 2% yield
quote:Many folks talking "buy and hold" actually mean "buy and forget about it" (for extended periods). In those circumstances high quality MFs are a reasonable option. In fact, I'd argue diversified MFs are a dissociated investor's best option. Individual equities . . . not so much. Not sure we ferreted out what the OP "buy-and-hold" thesis was, after-tax performance vs attentiveness vs other.
I can build my own mutual fund of companies that all yield 3-5%
IMO post-tax returns/profits in the post-March'09 market have better been attained via trading range strategies, than with buy-and-hold. But like you, we stay on top of this stuff daily.
Posted on 6/20/13 at 6:10 pm to NC_Tigah
agree NC tigah, All I can say is I had been saving and investing heavily since my first real job at 21 until last year when I had this windfall and inherited a big business from an uncle.
In 13 years I was up to close to $32k/year in annual dividends, and my goal was to reach $75k and quit working all together bc I figured $75k in income and not having to save anymore would be plenty for me. If I had been all in on say SPY that $30k/year in income would have been closer to $15k so for me and my particular goals of an early retirement, I went straight for the big dividend payers and some of those I locked in 2008/9 like altria was paying 9% then?!?!?!
Man I could only pray for a correction like that today bc I have alot more cash on the sidelines waiting.
In 13 years I was up to close to $32k/year in annual dividends, and my goal was to reach $75k and quit working all together bc I figured $75k in income and not having to save anymore would be plenty for me. If I had been all in on say SPY that $30k/year in income would have been closer to $15k so for me and my particular goals of an early retirement, I went straight for the big dividend payers and some of those I locked in 2008/9 like altria was paying 9% then?!?!?!
Man I could only pray for a correction like that today bc I have alot more cash on the sidelines waiting.
This post was edited on 6/20/13 at 6:12 pm
Posted on 6/20/13 at 6:12 pm to ThaBigFella
quote:
$30k/year in annual dividends
Maybe i'm just young but that doesn't seem shabby at all!
Posted on 6/20/13 at 6:20 pm to jimbeam
It's fantastic and a testament to something that started out as a $5K gift when I was 16 that paid me $250/year give or take......I caught an obsession with dividends and 18 years later, its where its at, and now that I have a much higher income ive been adding monthly and my dividend stream is much higher and will hopefully allow me to retire by 45 with a 6 figure income and then allow me to rent out my convenience stores and have 2 big income streams
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