(12-13-2018, 12:04 AM)Phidius Wrote: I liked your input. I didn't mention I sold my first dividend producer: $GE.
Aren't dividend investors okay with a bear market? As long as dividend stays healthy I just want to worry about increasing positions. I think the risk you warned about was new IPO investing, so that makes sense. Let's get some Blue Chips on the menu!
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A bear market is part of the reality of long-term investing for sure. History says you will endure 3 or more during your equity investing career. We generally invest through the turmoil and average our positions down in the stocks of our choosing. If you happen to have some cash on hand it can be a wonderful opportunity. All dividend investors do not have to same risk tolerance. It's rough watching your port get devastated. It's one thing to say you are OK with huge losses, another to experience it and react correctly.
Some cash out and run away from stocks forever. I know I can't time the market, but there is little doubt we are late cycle and the bear is coming some year soon. I am not going to head into it 90% in equities, and I won't have a port loaded with speculative stocks. That 35% port drawdown could turn into 75%. You have considerable control over the likelihood. Have you ever had a stock go to zero? I have only a couple times in 35 years and it's painful. Thousands of dollars gone forever. Buy and hold only works if your stocks survive the recession. Preferably all of them, and definitely most of them.
2001 was my worst beating. Waited a decade for INTC, MSFT and PFE to recover. A few tech stocks went out of business (JDS Uniphase and Nortel) They were must own stocks a few years earlier. My truly safe stocks helped me keep the faith. (JNJ, XEL, etc.) The speculative stocks were mostly vaporized and I was 100% invested in equities. Easily avoidable mistakes and I never repeated them, but it was avoidable in the first place. It's cliche, but "don't lose money" should be high on your list of investing rules. I enjoy speculative stocks but they are a very small part of my overall port. 2007 was really bad but my core holding were now blue chips and I had some cash this time. 2007 cancelled, or at least delayed a lot of people's retirement plans. Now I am approaching retirement so I need to dial back the risk even more. I'll never abandon equity investing no matter how old I become, but the bear will return. You can't be afraid of the bear but you have to respect him.
Consider adding a few dividend aristocrats, and keep your speculative positions small is how I would begin de-risking your port. If you get lucky and a few risky stocks quickly go to the moon, don't confuse that with investing brilliance and double down. That is exactly how I got in trouble in 2001.