My Portfolio Business Plan

[Dividend Watcher]

(05-02-2014, 09:17 AM)TomK Wrote: I've got a written plan, but it is generally headings and numbers, not so thoughtfully written out as this. It actually looks a little daunting to me, but I may just take a crack at something like this.

Tom, thanks for the compliments.

I think everyone should have a plan that works for them. That includes knowing how you process information. For me, it's a narrative; I need to tell myself a story and, since I usually don't see anything as black & white, the narrative can get nuanced. Notice how long-winded many of my posts are? I'm also a visual learner so charts, diagrams, examples, pictures, etc. help me comprehend concepts and processes.

Yeah, it's a lot of words but a lot of it I ignore until I do a review of where the portfolio stands. For example, all the preliminary stuff about retirement age, portfolio size, income stream I don't pay attention to until it's time to stop and review my progress. That's only about once or twice a year. All the stuff about fixed income is moot right now. I have no interest in fixed income at this point, especially at these levels. Maybe when I get to retirement age.

A lot of the investment criteria have become second nature by now and I only glance at it when I'm wondering about a purchase. If I have a good conviction about a company, I buy if the cash is available. Same with the selling points.

If bullets or lists work for you, that's fine. Sticky notes on the computer screen would suffice if that's how you normally work. I just wanted to share my plan since I exhort many others to develop their own. For a long time I had no plan -- my portfolio reflected that.

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(05-02-2014, 10:40 AM)cannew Wrote:

(05-02-2014, 12:50 AM)Dividend Watcher Wrote: Sell immediately if: It suspends or eliminates the dividend.

That seems like short term thinking. Look into why they suspended or even cut the dividend. If you bought the shares after doing all the work you've outlined in your plan than don't sell without doing the same amount of work to see if the long-term outlook for the company is still good.

During the 2008 crisis the Cdn banks stopped increasing their dividends, but none cut. Many had being paying and increasing their dividends since the 1800's (pretty good record). If you had owned them for many years with that type of record, would you then sell because they stopped increasing?
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Every one should have a plan and yours is great but exhaustive. For me I've tried to stick with a simpler plan and for my core holdings doubt I would sell unless the company really got into trouble.

I think you may have misinterpreted what I wrote. "Sell immediately" is generally reserved should there be no dividend.

During the Great Recession, I owned State Street Corp. (STT), one of the founding commercial banks in the U.S. I thought more of them as a custodian bank for other financial institutions, large corporations and wealthy individuals. They also had a large M&A and IPO division. I never thought they were a repository or counter-party to much of the toxic assets the money center banks were dealing with. Duh! When they announced that they dropped their dividend to a penny (essentially zero) and the stock gapped down over half their value in the first few minutes of trading, I sold immediately and moved on. I've never looked back nor regretted it.

I agree, to me a freeze I can live with if the company seems to have a viable plan. GIS (in the past) and INTC (currently) both have frozen their dividend. I trimmed INTC lately because the reinvested income had caused the position to grow so large. Perhaps as I age I won't be as patient but I have a 17 year relationship with INTC. I know how ruthless their sales and technical teams can be.

I may live with a small cut, again, if the company can explain why and how they're going to fix it. That's why I stated "consider" and "strongly consider" selling for a freeze or cut. There's no imperative meant yet there are still several hundred other companies on the CCC list.

You have to admit, a company that has a history of regularly increasing their dividend and then cuts or eliminates it is having some serious business problems. As Ron says, you can always buy it back once things change or you have a reason to stick with them going forward.

The important point, to me, is having the plan.