02-12-2019, 02:54 PM
(02-12-2019, 12:44 PM)DividendGarden Wrote:That works out if the market happens to crash for you during these few months. If that doesn't happen it likely takes years for sectors to rotate in and out of favor. As long as you don't force yourself to go all in while the market is seemingly running away from you. We have to prepare ourselves for multiple scenarios. The same plan just isn't going to be sound if the market moves 10%+ in the wrong direction because that normally many stocks moved much more than that.(02-12-2019, 12:02 PM)Otter Wrote: That said, you might give some consideration to a valuation-based approach to your purchases, staging them over time. Whatever is not deployed into equities of fair or better value can be parked in short-term fixed income to provide a safe income stream while you wait for value to develop. Set a target P/E, Chowder Number (this incorporates both current yield and growth prospects), Credit Rating, DGI history (years of historical consecutive raises), and Dividend Payout Ratio threshold for your purchases (your baseline for fair value). Buy DGI stocks on your list when they are at or better than your value target.
Great idea, and probably how I'd tactically do this. I'd probably spread the purchases out over a few months and use valuation to guide the buying.
This thread isn't about me, but I found myself under pressure to get reinvested fairly quickly because sitting on cash went against the entire reason I had a large portfolio in the first place. I was determined to get about 25% invested quickly, and then another 50% when it made sense. Decided I needed a crash fund of about 15% and I would be willing to go a little tood deep in equities if the bad day comes. About the time I had only 10-15% in, the market starting running. I forced about 10% more in. For the next three months (OCT-DEC) the general direction was significantly down. I got to 50% and I was significantly down, and it was not a good feeling of course. I caught the bottom with a lot of my investments as well all were buying. It worked out, but it sure could have ended differently. This was the first time I was ever throwing 100 share trades down, multiple times per week. Big money to me. It's pretty easy to get scared out of your plan is my point. I consider myself seasoned, but the emotions are always there. I made a few bonehead buys during this time.
As far as the sectors that make you a little nervous, a portion of your funds in a zero commission ultra low fee ETF make sense IMO. AT least until a real bargain presents itself in a blue chip tech. AAPL dropped over $40 on me quick. I sure didn't see that one coming. Thankfully I had some ETF in the mix or I could have owned NVDIA, AMD and MU too.
I know you guys want to be all in individual stocks. I understand some, but not all of the reasons. As Otter mentioned there are many accounts that give you a LOT of free trades for a year or two with a significant new account. I chose to pay $2 per trade, because the fund and ETF fees are ultra low, and I expect that to continue because that is what Vanguard is famous for. Fidelity was in the running for sure.