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Just some things I've been thinking about with the market once again hitting new all-time highs.
1. Many commodities are trading near recent year lows, especially the grain markets but also things like cotton, silver, lumber and copper. I remember back in 2008 before the last recession, nearly all commodities were at or near all-time highs. While oil is solidly above $100, its not out of norms considering the turmoil in the M.E.
2. With the exception of some of the high-flying stocks (NFLX, TSLA, UA, etc.), the market really isn't trading at crazy levels. Many large cap tech, oil, and materials stocks are trading near or below historical valuations.
3. Interest rates continue to stay low, meaning the flight to higher yielding treasuries and bonds doesn't appear to be happening anytime soon.
4. Employment and housing continues to slowly improve, which, along with the booming energy and industrial sectors, should continue to provide a tailwind to corporate profits. The low commodity prices I mentioned above should also help many companies profits in the second half of the year.
All in all, I still don't see any near-term reasons why the market won't continue to march higher. Other than a few tech and fad stocks, prices really aren't irrationally high and there seems to be plenty of seeds around for more growth. Of course, there is always the potential for a black swan, most likely coming from the Middle East, but, other than that possibility I think we continue to slowly move higher in the second half of the year.
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I am in basic agreement when it comes to share prices. I also see no reason why the companies I hold will not continue to increase their dividends, and if they do skip an increase, I'll sell the suckers 
Along with dividend reinvestment, my income will keep increasing regardless of fluctuations in share price.
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Good thoughts, Eric. I also generally agree.
I do find it harder to deploy new money these days. But I think I am succumbing to the dreading "anchoring." It is just hard to buy at $100 when you picked up shares in the same company at $60.
There is something to be said for patience, which in the market is measured in years, not weeks or months. I am much more devoted to dividend growth investing than I am to value investing, but the real pleasure (and long-term wealth creation) is when they intersect. Through that lens, I think it makes sense to buy more aggressively when there are bargains to be had, and to be a bit more picky during up stretches like these.
But as I've said in other posts, I would not just sit idle in times like these -- there are countless times in the last century that the market made new highs only to continue higher in ensuing decades. So you've got to stick to your plan in up markets and down markets. In the past seven years we've had opportunity to live through great examples of both.
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I am in agreement here. Generally we're not seeing exponential increases in dividend stocks (I really don't pay attention to the others) that either are not justified by company events or taken back down by Mr. Market within a short period of time.
I think this is an important time to re-evaluate and follow your investment plan. This should minimize mistakes due to greed or fear.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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Well, end of month update. Maybe we're seeing the beginning of the correction this week. Even good earnings reports aren't cutting it if it doesn't exceed the whisper numbers. It's been a while since I've seen some names trading off like this.
I hope it lasts for a couple months so I can get some bargain reinvestment done. Not much free cash available yet.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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(07-31-2014, 02:41 PM)Dividend Watcher Wrote: Well, end of month update. Maybe we're seeing the beginning of the correction this week. Even good earnings reports aren't cutting it if it doesn't exceed the whisper numbers. It's been a while since I've seen some names trading off like this.
I hope it lasts for a couple months so I can get some bargain reinvestment done. Not much free cash available yet.
I think the correction last week was a pre-cursor to what the market is going to do when the interest rates finally rise. As is to be expected from the market, the knee-jerk reaction to the employment-cost index report on Thursday started the speculation that the Fed will probably consider raising rates sooner rather than later. But the jobs report on Fri made people second-guess it since it was bad (bad news is good news).
My take is that next year will bring plenty of great investment opportunities - so, I'll be working on building up my cash reserves.
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(08-02-2014, 08:53 PM)Roadmap2Retire Wrote: ... so, I'll be working on building up my cash reserves.
Seeing as I'm down to less than 1% cash in my wife's portfolio and 1.6% in mine, I'm going to start slowly building the cash.
Surprisingly, for all the hoopla, I didn't give a wit what was going on with the market other than hoping some that were paying dividends in the near future were hit so I can get a better price on my reinvestment. Never seems to work out that way. I'm sure that time will come.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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There seem to be plenty of reasonable-sounding arguments on both the bull and bear side these days. My gut is pretty quiet on the issue, so all I can do is stick to my plan. I've been buying a bit more sparingly in recent months, as there are so few obvious bargains. But I'd sure welcome a more significant pullback.
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