08-19-2013, 10:43 PM
I've made the decision to transition to a DGI portfolio. I've dabbled in asset allocation via index funds for over a decade, but it just seems kind of pointless at present. For instance, the asset allocation models for my age would have 50% or more of my portfolio in bond index funds, and with the taper in sight that is akin to playing Russian Roulette with six bullets - the question isn't whether you're gonna win or lose, it's how big the mess is gonna be. So, I'm going to make the transition to DGI and not have to stress as much about macro issues.
The goal? I'm 54 and my retirement window is 6-12 years from now. No, I don't really plan on retiring, but rather redirecting my energy. I may work part time in my current industry, or I may work full time at something new. The goal is to make my 'retirement' as comfortable as possible. I have a lot of flexibility in how long I work - my uncle is 83 and is still managing a couple of projects a year for EDF, so if it comes to it I'll just keep on working.
Advantages? Well, I have a Rollover IRA from my old 401K. I get a small military pension at 60. I get a pension from my former employer (large Utility company) at 65. I get full SS at 67. I have excellent cash flow from which I can create an after tax portfolio to help me muddle through between 60 and 65 if I so desire.
Disadvantages? I'm old. Yes, the good judgement that comes from age is nice, but it certainly limits my time horizon. Plus my forehead is a lot bigger than it used to be.
How am I gonna get there? Well, I'm currently developing screens that will allow me to identify stocks that I can purchase for the long haul. I am leaning towards higher dividend growth and lower yield for my initial purchases (foundation) and then branching into higher yield holdings (if necessary) as I get closer to screwing off (errr, retirement). I think that 15 to 20 core holdings would be adequate. Once the screens are satisfactory, I will start averaging in on the identified securities. A large portion of my portfolio currently in cash because weird sh*t is going on (QE, taper, bank stability, Europe, Japan, China, new Fed Chair, Royal Baby, etc) and that money is ready to deploy (slowly). I currently hold individual issue bonds, holding to maturity to eliminate interest rate fluctuations, and will continue to do so. I also anticipate that my international and emerging market exposure will continue to be thru dividend centric index funds/etfs (mostly wisdom tree).
What I'd be interested from the forum in is input on my screens. I'm using Portfolio 123 (on the 30 day trial). Most of these screening criteria are pure rectal extraction, or rather lightly educated rectal extraction. I regard feedback as a gift
.
No ADRs
No OTC
Yield > 2%
Dividend Growth over 5 years > 10%
Payout < 80%
Debt to Equity < 50%
PEG < 1.5
Earnings Growth over 5 years > 8%
I then apply that screen (playing with the numbers but not the criteria) across a specified group of stocks - all stocks, all stocks excluding micro caps, Russell 3000 and S&P 500.
As you might guess, I come up with a pretty limited list when I apply the screen to the S&P 500 - only 10 stocks. Some are well known, some not so much. Kinda Semiconductor/Electronics/Software heavy. I'm envisioning a set of core holdings based on the S&P 500, but prefer to have a slightly bigger universe to pick from. Media dividend growth is 20% (excluding Coach, don't know what they did). Even when applied against all except micro caps, I get 13 stocks.
So, my questions for the folks on the forum is this: What adjustments would you make to my criteria, both in terms of actual criteria, and the value of the given criteria?
Thanks in advance!
The goal? I'm 54 and my retirement window is 6-12 years from now. No, I don't really plan on retiring, but rather redirecting my energy. I may work part time in my current industry, or I may work full time at something new. The goal is to make my 'retirement' as comfortable as possible. I have a lot of flexibility in how long I work - my uncle is 83 and is still managing a couple of projects a year for EDF, so if it comes to it I'll just keep on working.
Advantages? Well, I have a Rollover IRA from my old 401K. I get a small military pension at 60. I get a pension from my former employer (large Utility company) at 65. I get full SS at 67. I have excellent cash flow from which I can create an after tax portfolio to help me muddle through between 60 and 65 if I so desire.
Disadvantages? I'm old. Yes, the good judgement that comes from age is nice, but it certainly limits my time horizon. Plus my forehead is a lot bigger than it used to be.
How am I gonna get there? Well, I'm currently developing screens that will allow me to identify stocks that I can purchase for the long haul. I am leaning towards higher dividend growth and lower yield for my initial purchases (foundation) and then branching into higher yield holdings (if necessary) as I get closer to screwing off (errr, retirement). I think that 15 to 20 core holdings would be adequate. Once the screens are satisfactory, I will start averaging in on the identified securities. A large portion of my portfolio currently in cash because weird sh*t is going on (QE, taper, bank stability, Europe, Japan, China, new Fed Chair, Royal Baby, etc) and that money is ready to deploy (slowly). I currently hold individual issue bonds, holding to maturity to eliminate interest rate fluctuations, and will continue to do so. I also anticipate that my international and emerging market exposure will continue to be thru dividend centric index funds/etfs (mostly wisdom tree).
What I'd be interested from the forum in is input on my screens. I'm using Portfolio 123 (on the 30 day trial). Most of these screening criteria are pure rectal extraction, or rather lightly educated rectal extraction. I regard feedback as a gift
.No ADRs
No OTC
Yield > 2%
Dividend Growth over 5 years > 10%
Payout < 80%
Debt to Equity < 50%
PEG < 1.5
Earnings Growth over 5 years > 8%
I then apply that screen (playing with the numbers but not the criteria) across a specified group of stocks - all stocks, all stocks excluding micro caps, Russell 3000 and S&P 500.
As you might guess, I come up with a pretty limited list when I apply the screen to the S&P 500 - only 10 stocks. Some are well known, some not so much. Kinda Semiconductor/Electronics/Software heavy. I'm envisioning a set of core holdings based on the S&P 500, but prefer to have a slightly bigger universe to pick from. Media dividend growth is 20% (excluding Coach, don't know what they did). Even when applied against all except micro caps, I get 13 stocks.
So, my questions for the folks on the forum is this: What adjustments would you make to my criteria, both in terms of actual criteria, and the value of the given criteria?
Thanks in advance!