10-27-2013, 02:36 PM
I think you hit on an important point, KenBob.
I think a lot of people who are not very familiar with dividend growth investing assume that all we do is buy stocks off the champions list willy-nilly. In fact, I get the impression that dividend growth investors are more careful than many other types of investors to understand the valuations of the companies that they are considering and to work hard to select entry points that represent good value and that provide as much of the fabled "margin of safety" as possible. That involves a lot of trading skill, I think.
That said, I do not personally use limit orders when making buys for my dividend growth portfolio. I watch the market carefully and only place orders when the stock I want has reached a price that I am comfortable with. When I actually pull the trigger, it is with a market order, but I only do so when the market is open, so I know within a few pennies what my price will be. My intended holding period is years if not decades, so I do not feel that I need to worry about nickels and dimes on the actual purchase price. If I really really wanted to buy a stock that I thought might hit my price on a day I couldn't be near a computer, I might consider a limit order, but since I only buy once or twice a month, on average, this is not really an issue.
With respect to price momentum, what I generally do is wait until the stock I want is trading at or near the price range I want, then I wait for a nice down day to pull the trigger.
Good topic!
I think a lot of people who are not very familiar with dividend growth investing assume that all we do is buy stocks off the champions list willy-nilly. In fact, I get the impression that dividend growth investors are more careful than many other types of investors to understand the valuations of the companies that they are considering and to work hard to select entry points that represent good value and that provide as much of the fabled "margin of safety" as possible. That involves a lot of trading skill, I think.
That said, I do not personally use limit orders when making buys for my dividend growth portfolio. I watch the market carefully and only place orders when the stock I want has reached a price that I am comfortable with. When I actually pull the trigger, it is with a market order, but I only do so when the market is open, so I know within a few pennies what my price will be. My intended holding period is years if not decades, so I do not feel that I need to worry about nickels and dimes on the actual purchase price. If I really really wanted to buy a stock that I thought might hit my price on a day I couldn't be near a computer, I might consider a limit order, but since I only buy once or twice a month, on average, this is not really an issue.
With respect to price momentum, what I generally do is wait until the stock I want is trading at or near the price range I want, then I wait for a nice down day to pull the trigger.
Good topic!