Wednesday, August 22, 2012

Sleepy Markets

This is how exciting the stock market has been lately. 

I don't really trade stocks that much. I like watching big swings happen and kind of treat it as entertainment, but this market, at least the S&P 500, is putting me to sleep! Up 10 here, down 5 there, up 20 today, down 15 tomorrow.

Monday, August 13, 2012

Future of America, Path to Prosperity

What a nice weekend! I went to my friend's engagement party. The Olympics finally ended. North American farmers finally got some rain, albeit perhaps too late. And Mitt Romney chose Paul Ryan as his VP running mate for the 2012 US elections.

The light at the end of the tunnel just got a little bit brighter.

Wednesday, August 8, 2012

Going Against the Crowd

My experience in the 5 years that I've been investing money for myself and others is that going against the crowd is the hardest. It can be very easy to get caught up in the hype of a rally, or the pessimism of a sell off. The worst part is, you don't even realize you got caught up in it, until AFTER.

Often, the hardest action to take, is the one that you don't want to take. When the investment you made has gone up 30% in a few months, the overwhelming reflex is to keep riding it higher. Sometimes this is okay, yet other times, it is a big mistake.

The key is to keep a level head, and think about the most difficult action for you to stomach. Sometimes, the most difficult decision is the correct one. It was the right move to buy in February - April 2009 when folks caught holding equities was having nightmares and panic selling, just like it was the right move to sell stocks when the financial crisis began to spread, even while optimists about containing the contagion were everywhere.

A second piece of advice to try to follow is, to consider your decision in the face of macro scenarios. We all know the answers to what if you are right about the specific stock. Well, if you are right, the stock keeps going higher, and you make more profit. If you are wrong, the stock falls and you lose some profit. But as a long only value investor, who is always looking to get in at an attractive level, and believes the world will be a better place tomorrow versus today, it is important to remember that even if I do not make an investment, I am still long many other names in the market via my overall portfolio. The question then becomes, do I want to go from 90% bullish to 95% bullish? I already will have upside exposure if the macro conditions improve, but if they get worse, do I want to be caught adding to my exposure at these overall valuation levels.

I believe the best investor is one that understands multiple aspects of the market, and economics. We don't necessarily need to act, or trade, on the information, but we must know how traders respond to the information, because opportunities don't just arise from your own actions, but the actions of others as well.

Wednesday, August 1, 2012

Dividend Growth Portfolio, July 2012 Update

July brought some activity in my DGP. New funds entering the portfolio allowed me to add to an existing position, as well as initiate a new position

The annualized dividend is slightly over the top end of my 2012 goal now, an increase of $136.20 over the June 2012 values

New Purchases
JP Morgan - $78.00
Becton Dickinson - $45.00

There were no equities divestitures this month.

Intrinsic Dividend Changes
Cummins - $13.20 (quarterly dividend increase of 25% from 40 cents to 50 cents)