09-02-2013, 09:47 AM
Interesting discussion....
Horace is right - cash * 3% / 12 is how much I'm losing a month in income.
And Kerim is right - when you buy a DGI equity you are really buying the income stream. The price of the equity doesn't really matter as long as the dividend growth rate remains acceptable.
And yet I'm comfortable with almost 60% cash in my primary retirement portfolio... soon to be more like 68% as I have a bond coming to maturity this month.
Why? I'm not sure the US or world economic growth is sufficient to support equity current prices. What will happen when the QE spigot is turned off? I believe it's already priced into bond yields. Is it priced into equity valuations? I'm not so sure. So I'm content to spend the extra commissions to dollar cost into the positions over the next year or two. And if there is a black swan event - like our president getting ready to start another freaking war like last week, or another financial crisis - then I have the cash on the sidelines to put to work. I always prefer to buy on sale if I can
.
In the meantime I can watch my portfolio and get to understand how it behaves in certain market conditions, and to prune poor performers, and add other new equities, before I have built large positions.
My after tax brokerage account is easier; I remain almost 100% invested as I fund new purchases each month. It's much simpler that way!
Horace is right - cash * 3% / 12 is how much I'm losing a month in income.
And Kerim is right - when you buy a DGI equity you are really buying the income stream. The price of the equity doesn't really matter as long as the dividend growth rate remains acceptable.
And yet I'm comfortable with almost 60% cash in my primary retirement portfolio... soon to be more like 68% as I have a bond coming to maturity this month.
Why? I'm not sure the US or world economic growth is sufficient to support equity current prices. What will happen when the QE spigot is turned off? I believe it's already priced into bond yields. Is it priced into equity valuations? I'm not so sure. So I'm content to spend the extra commissions to dollar cost into the positions over the next year or two. And if there is a black swan event - like our president getting ready to start another freaking war like last week, or another financial crisis - then I have the cash on the sidelines to put to work. I always prefer to buy on sale if I can
.In the meantime I can watch my portfolio and get to understand how it behaves in certain market conditions, and to prune poor performers, and add other new equities, before I have built large positions.
My after tax brokerage account is easier; I remain almost 100% invested as I fund new purchases each month. It's much simpler that way!