05-23-2015, 10:12 AM
(This post was last modified: 05-23-2015, 10:17 AM by Dividend Watcher.)
notexactly, first I want to say welcome to the forum! Somehow I missed your introduction thread. You are in an enviable position.
I agree, we are in a bull market. Furthermore, I believe we are in the first stages of a secular bull market meaning an extended period of increasing stock prices but punctuated with corrections or cyclical bear markets. That being said, I don't believe we're at the end of the first stage yet -- the Great Recession did too much damage and created too many dislocations.
Why do I say this? I don't see corporate growth peaking. In fact, I don't think corporate growth ever really got revved up to unsustainable levels. As much of the growth we did experience was done by financial engineering -- dividend cuts, share buybacks, reorganizations, mergers & acquisitions -- as by actual consumer & business spending. Employment didn't get so tight that "job hopping" became a challenge for businesses. Credit hasn't tightened for those that have decent credit records. Inventories couldn't keep up with demand -- in fact, inventories are still relatively lean because the demand is just not there. Despite all that, I believe we could have a correction at any time.
I believe the economy is in the middle of another transformation much as the industrial revolution changed the 20th century. Looking back from afar, I believe the tech boom of the late 90s set the stage for the transformation we're undergoing. As a result, you're going to see changes in how the whole world operates. Of course, you may not see the forest because of the trees. We're living it and it's hard to recognize such things in real time and only with the benefit of broad-based hindsight do such things become apparent. Companies will evolve, new industries will emerge and our lifestyles will change; it's actually quite exciting if you think about it.
Enough of my hocus pocus, voodoo talk because not much of it is actionable. I'm wondering why that all flowed through my feeble mind and I guess I just wanted to counter your fairly definitive assertion that we're near the end of this bull run and it's not a good time to invest. Broaden your outlook a little maybe? This not a slam against your opinion so don't take it the wrong way. I could be totally wrong and have been accused of being too optimistic at times also. (Probably doesn't help that it's Saturday morning and I have no set timetable on a long weekend so I have the luxury of letting my addled mind wander.)
I'll really start by asking whether you have a plan developed for where you want to go investing-wise and how you're going to get there. For that, I'll point you to the thread on my business plan. hendi_alex started another thread with some interesting thoughts and viewpoints here. You can also search on Seeking Alpha for Bob Wells' and David Van Knapp's articles on portfolio business plans. Realize that this plan will change over time as you learn more things and your goals and wants change. And change they will.
After all that, I'd suggest looking at fairly valued (or close to it) companies and start a slow, methodical investment regimen. Perhaps you buy only a quarter or a fifth of what you feel is a full position right now and start reinvesting those dividends. If you're unsure what that means, buy $1000 at a time. If they take a significant drop in the near term, take another bite. Piece by piece, you'll be building a portfolio that in 10 or 20 years time will amaze you. By the time you retire, worrying about where you want to invest will be a fool's game. Unless you're a die-hard value player -- and I posit that since you are just beginning to learn about investing you may not be completely aware on what that entails -- buying at reasonable, or even slightly elevated, prices now and letting time work its wonders will ameliorate any damage from a silly market downturn.
If I were you I'd look at things like JNJ/ABBV, COP/CVX/XOM, PH/EMR, AMGN/GILD (it's now officially a dividend payer), ROST/TJX, LMT/RTN, KO/PEP, AAPL/MSFT HCP/WCP/OHI or even DE/CAT right now. I don't think any of them are outrageously priced -- especially for the time frame you're looking at.
Remember, it's time in the market and not timing the market that gives the individual investor the edge.
I agree, we are in a bull market. Furthermore, I believe we are in the first stages of a secular bull market meaning an extended period of increasing stock prices but punctuated with corrections or cyclical bear markets. That being said, I don't believe we're at the end of the first stage yet -- the Great Recession did too much damage and created too many dislocations.
Why do I say this? I don't see corporate growth peaking. In fact, I don't think corporate growth ever really got revved up to unsustainable levels. As much of the growth we did experience was done by financial engineering -- dividend cuts, share buybacks, reorganizations, mergers & acquisitions -- as by actual consumer & business spending. Employment didn't get so tight that "job hopping" became a challenge for businesses. Credit hasn't tightened for those that have decent credit records. Inventories couldn't keep up with demand -- in fact, inventories are still relatively lean because the demand is just not there. Despite all that, I believe we could have a correction at any time.
I believe the economy is in the middle of another transformation much as the industrial revolution changed the 20th century. Looking back from afar, I believe the tech boom of the late 90s set the stage for the transformation we're undergoing. As a result, you're going to see changes in how the whole world operates. Of course, you may not see the forest because of the trees. We're living it and it's hard to recognize such things in real time and only with the benefit of broad-based hindsight do such things become apparent. Companies will evolve, new industries will emerge and our lifestyles will change; it's actually quite exciting if you think about it.
Enough of my hocus pocus, voodoo talk because not much of it is actionable. I'm wondering why that all flowed through my feeble mind and I guess I just wanted to counter your fairly definitive assertion that we're near the end of this bull run and it's not a good time to invest. Broaden your outlook a little maybe? This not a slam against your opinion so don't take it the wrong way. I could be totally wrong and have been accused of being too optimistic at times also. (Probably doesn't help that it's Saturday morning and I have no set timetable on a long weekend so I have the luxury of letting my addled mind wander.)
I'll really start by asking whether you have a plan developed for where you want to go investing-wise and how you're going to get there. For that, I'll point you to the thread on my business plan. hendi_alex started another thread with some interesting thoughts and viewpoints here. You can also search on Seeking Alpha for Bob Wells' and David Van Knapp's articles on portfolio business plans. Realize that this plan will change over time as you learn more things and your goals and wants change. And change they will.
After all that, I'd suggest looking at fairly valued (or close to it) companies and start a slow, methodical investment regimen. Perhaps you buy only a quarter or a fifth of what you feel is a full position right now and start reinvesting those dividends. If you're unsure what that means, buy $1000 at a time. If they take a significant drop in the near term, take another bite. Piece by piece, you'll be building a portfolio that in 10 or 20 years time will amaze you. By the time you retire, worrying about where you want to invest will be a fool's game. Unless you're a die-hard value player -- and I posit that since you are just beginning to learn about investing you may not be completely aware on what that entails -- buying at reasonable, or even slightly elevated, prices now and letting time work its wonders will ameliorate any damage from a silly market downturn.
If I were you I'd look at things like JNJ/ABBV, COP/CVX/XOM, PH/EMR, AMGN/GILD (it's now officially a dividend payer), ROST/TJX, LMT/RTN, KO/PEP, AAPL/MSFT HCP/WCP/OHI or even DE/CAT right now. I don't think any of them are outrageously priced -- especially for the time frame you're looking at.
Remember, it's time in the market and not timing the market that gives the individual investor the edge.
=====
“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
“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