Hey Russell. How recently did you start building your DG portfolio?
I think what you're experiencing makes perfect sense and is very common. Assuming that you started in the last year or two, you began accumulating when prices were lofty, and now we're into a bit of a dip, and those purchases are feeling a bit iffy now. It always feels crummy to watch prices drop below your purchase price. (It is telling about what kind of investor you are if it feels crummy: (i) because your portfolio has lost value; or (ii) because you could have gotten the same shares even cheaper!)
To address the main thrust of your post, I think it might be valuable for you to clarify your goals. I personally am NOT trying to "beat the market." Indeed, once you own 20 or 30 of largest, most diversified companies in the world, your portfolio doesn't really look all that different from a big mutual fund. In that sense, from a share price perspective, your portfolio is likely to track the broader indexes fairly closely. The reason I don't just index all of my money is that I am also not trying to match the market. My focus is on the income stream that my portfolio generates. In other words, my portfolio is not really very different from what you might find in a big mutual fund, but my shares have been lovingly pieced together at times when the companies were out of favor, or the general market had pulled back, providing me with a steady, and steadily growing income stream.
Right now, my dividend income stream is not nearly enough to live on, so I still work and reinvest the dividends. But that income stream is surely growing, in ways that I can measure and predict (to some extent). Yes, it can feel painfully slow in the beginning. But that is true of all investing. It takes a long while until the snowball takes on a life of its own. Unless you are very high income, you're looking at decades. And it really does take a long-term mindset. There will be tons of ups and downs along the way. You'll never know if prices will offer a better value in the days and weeks after you buy. But if you cultivate the right attitude, you can turn yourself into someone who loves when the market goes down -- because that is when the income streams you are buying goes on sale. And if you think getting a bargain on an airline ticket or new car feels good, it feels a hundred times better to get a great deal on an income stream that will last the rest of your life.
My favorite trick for surviving the early years: if you haven't already, make a spreadsheet to track all of your dividends as they come in (regardless of whether or how you reinvest them). Track them however you want, but make sure you include a quarterly total. And then create a graph that compares each quarterly total over time. Be patient and stick with it for a year or two. And if you have access to the data (I'm not sure why you wouldn't), go back and do this from the day you started your portfolio. Seeing the dividends grow in this manner I find very inspiring, and it keeps me on track and excited to see the growth in the next quarter.
Again, assess your goals. If you really want to beat the market (in the short to medium term), you'll probably need something more aggressive (and risky!) than DGI. If you want to simply match the market, you might be better off indexing. But if you want to track the market fairly well while focusing on a growing income stream, then be patient and stick with DGI. Look at this dip as an opportunity to improve your portfolio, by adding to your best positions and lowering your average cost per share, or by initiating new positions in excellent companies at reasonable prices.
Best of luck!
I think what you're experiencing makes perfect sense and is very common. Assuming that you started in the last year or two, you began accumulating when prices were lofty, and now we're into a bit of a dip, and those purchases are feeling a bit iffy now. It always feels crummy to watch prices drop below your purchase price. (It is telling about what kind of investor you are if it feels crummy: (i) because your portfolio has lost value; or (ii) because you could have gotten the same shares even cheaper!)
To address the main thrust of your post, I think it might be valuable for you to clarify your goals. I personally am NOT trying to "beat the market." Indeed, once you own 20 or 30 of largest, most diversified companies in the world, your portfolio doesn't really look all that different from a big mutual fund. In that sense, from a share price perspective, your portfolio is likely to track the broader indexes fairly closely. The reason I don't just index all of my money is that I am also not trying to match the market. My focus is on the income stream that my portfolio generates. In other words, my portfolio is not really very different from what you might find in a big mutual fund, but my shares have been lovingly pieced together at times when the companies were out of favor, or the general market had pulled back, providing me with a steady, and steadily growing income stream.
Right now, my dividend income stream is not nearly enough to live on, so I still work and reinvest the dividends. But that income stream is surely growing, in ways that I can measure and predict (to some extent). Yes, it can feel painfully slow in the beginning. But that is true of all investing. It takes a long while until the snowball takes on a life of its own. Unless you are very high income, you're looking at decades. And it really does take a long-term mindset. There will be tons of ups and downs along the way. You'll never know if prices will offer a better value in the days and weeks after you buy. But if you cultivate the right attitude, you can turn yourself into someone who loves when the market goes down -- because that is when the income streams you are buying goes on sale. And if you think getting a bargain on an airline ticket or new car feels good, it feels a hundred times better to get a great deal on an income stream that will last the rest of your life.
My favorite trick for surviving the early years: if you haven't already, make a spreadsheet to track all of your dividends as they come in (regardless of whether or how you reinvest them). Track them however you want, but make sure you include a quarterly total. And then create a graph that compares each quarterly total over time. Be patient and stick with it for a year or two. And if you have access to the data (I'm not sure why you wouldn't), go back and do this from the day you started your portfolio. Seeing the dividends grow in this manner I find very inspiring, and it keeps me on track and excited to see the growth in the next quarter.
Again, assess your goals. If you really want to beat the market (in the short to medium term), you'll probably need something more aggressive (and risky!) than DGI. If you want to simply match the market, you might be better off indexing. But if you want to track the market fairly well while focusing on a growing income stream, then be patient and stick with DGI. Look at this dip as an opportunity to improve your portfolio, by adding to your best positions and lowering your average cost per share, or by initiating new positions in excellent companies at reasonable prices.
Best of luck!