07-06-2015, 03:28 PM
(07-06-2015, 07:19 AM)Caversham Wrote: I'm relatively new to DGI, but I plan to employ a similar strategy. If I think a company is fairly/under valued I will reinvest the dividends back into the same company. If I think a company is *significantly* overvalued I will accumulate the dividends and reinvest them into different undervalued companies. Right now, all companies I own are DRIPing.
I'm not sure how well the unrealized gain/loss strategy will work over the long term. After 10 years, most of your positions should hopefully have unrealized gains.
Good point, maybe the metric for reinvestment should either be underperforming the market or the rest of the portfolio in the long run. I've only been doing this since October and I've seen some big swings which have led me to think about this strategy. WMT was my leader, now it's significantly trailing. AFL was trailing, now its leading. I think reinvesting in the current down stocks will pay back in the long run on recovery, but I have no proof that's sound logic.