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Strategies for Building a DGI Portfolio
#11
(12-13-2018, 10:35 AM)fenders53 Wrote: That is quite a list Otter.  I personally believe all my stocks should be re-evaluated from time to time, or I am just stock collecting and an index would serve me better in the end.  Certain sectors may trend towards irrelevancy unless the companies diversify.  (fossil energy for example).  I use sector ETFs for part of my investment in sectors I feel less informed.  It just seems safer and the income is still there.  That said, your port is well diversified and your inclination towards dividend paying stocks should keep you out of trouble.   It may even outperform the broad indexes during certain market climates.  That is part of the core DGI strategy in the first place.

What can I say. Buyandhold2012 on Seeking Alpha is my spirit animal. Big Grin

I am a poor student, though. I have in fact sold shares, including this year. Trimmed XOM, CVX, and LLY as they were generating more than 5% of portfolio income at one point. Also sold UNIT for a roughly $50 long term capital gain, as it was just a speculative play in which I invested a small amount. The 12.5% yield was fun for a year, but meh.
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#12
(12-13-2018, 10:44 AM)Otter Wrote:
(12-13-2018, 10:35 AM)fenders53 Wrote: That is quite a list Otter.  I personally believe all my stocks should be re-evaluated from time to time, or I am just stock collecting and an index would serve me better in the end.  Certain sectors may trend towards irrelevancy unless the companies diversify.  (fossil energy for example).  I use sector ETFs for part of my investment in sectors I feel less informed.  It just seems safer and the income is still there.  That said, your port is well diversified and your inclination towards dividend paying stocks should keep you out of trouble.   It may even outperform the broad indexes during certain market climates.  That is part of the core DGI strategy in the first place.

What can I say. Buyandhold2012 on Seeking Alpha is my spirit animal. Big Grin

I am a poor student, though. I have in fact sold shares, including this year. Trimmed XOM, CVX, and LLY as they were generating more than 5% of portfolio income at one point. Also sold UNIT for a roughly $50 long term capital gain, as it was just a speculative play in which I invested a small amount. The 12.5% yield was fun for a year, but meh.
Buy and Hold is quite a character.  I love it when an SA noob first reads him saying "my mother told me to do this so I did"  Then claims he is better at mowing lawns than investing. The reactions are epic sometimes.  Smile  

I enjoy investing in oil but I don't know why as I always time my entry wrong lol.  I see no harm in you trimming them if they were violating your diversity of income stream rules.  Well thought out rules are important.  We don't have to get this perfect to succeed as long as we have appropriate investing discipline.
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#13
I'm in the Otter boat. I currently have 58 different companies. It wouldn't surprise when I retire, I'm at close to 100 companies. I'm a part of the buy and forget set. Would I be better off buying an index? I don't think so. An index would buy stocks that are over priced or that don't fit my investment goals. Also, after the initial purchase fee, I have no costs associated with my portfolio where I would have yearly fees with an index.

Also, I don't want to kill the golden goose. With having all of these stocks, I can just collect the dividends and keep the portfolio intact so if I happen to retire at the start of a bear market, I'm OK with it. And I've learned during my investing career that I do more damage to my portfolio when I start tinkering with it by trimming my winners and selling when I think something is over valued. Will some of my investments go to $0? Most likely, but with numerous different companies, I'm not worried about it. Now if 15% of my companies go under in quick succession, I've got bigger problems to worry about than my portfolio.
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#14
Seems like most of the participants on this thread are very worried about our goose. Smile I do think Crimson offers some wisdom, even if he is a young whippersnapper investor. If the market turns against me, I should probably not go in full stock miser mode while I worry and eat cheese and crackers for dinner. Or are crackers properly called biscuits Crimson? You English folks have really screwed up our language lol.

Anyway, my daughter knows I am willing my estate to the "Cat Foundation". That's been a family joke for a long time. If she doesn't put me in a nursing home too soon, I'll consider hooking her up with nice paid for house and a stock port to sell off and waste if she pleases.
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#15
(12-13-2018, 10:29 AM)Otter Wrote: It's a mental thing for me. The thought of selling the principal gives me extreme anxiety. I get the statistics and understand the 4% rule, but it's just not for me. If I needed to, I could live off of the dividends generated by my DGI portfolio today. It would be a bare subsistence sort of Lean-FIRE existence, and not really pleasant or what I'm aiming for long-term. So, I have every expectation that in 20-30 years' time, when I am contemplating a proper "retirement," the income stream will be sufficient to meet my goal of living off the eggs and leaving the golden goose alone.

Well, we all have our own little quirks and we definitely need to adjust to those. I do know how you feel like, I've always been a bit skeptical about butchering that golden goose. But I've run all sorts of calculations (monte carlo simulation is a good one to play around with) and quite frankly it just makes sense to withdraw a little when you need it. Or constantly, it's up to you. Personally I wouldn't go as far as the 4% but rather stick to 2% or 3% and adjust as necessary.

The s&p 500 div yield is currently around 2%. We mostly tend to leave out the non-divi payers so how about we say that our portfolios are expected to generate around 3% div yield? If you add withdraws of 2%, you basically add 67% more income. And with 2% withdrawal, unless something terrible happens, your portfolio will still, on average, keep growing faster than inflation.

It's a win-win. But again, if it makes you uncomfortable then there is no point doing it. But at least consider it as an option, a lot of things (including you) might change in the next 20-30 years. Wink
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#16
Also, I've stated this in other threads, but the resources that help me the most in identifying potential purchases that fit my buy criteria are the CCC List (RIP David Fish), and FAST Graphs. Once I have a candidate list, I can do further diligence on SA and in the 10-Q/Ks. I tend to do less diligence if I am just adding to an existing, well-established holding that looks attractively valued on FAST Graphs (like when I picked up some additional JNJ shares in May for $120.88/share). The reasoning behind those purchases is pretty much "hey, this stock I already have and like is fairly valued again, might as well buy more."
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#17
(12-13-2018, 01:33 PM)crimsonghost747 Wrote:
(12-13-2018, 10:29 AM)Otter Wrote: It's a mental thing for me. The thought of selling the principal gives me extreme anxiety. I get the statistics and understand the 4% rule, but it's just not for me. If I needed to, I could live off of the dividends generated by my DGI portfolio today. It would be a bare subsistence sort of Lean-FIRE existence, and not really pleasant or what I'm aiming for long-term. So, I have every expectation that in 20-30 years' time, when I am contemplating a proper "retirement," the income stream will be sufficient to meet my goal of living off the eggs and leaving the golden goose alone.

Well, we all have our own little quirks and we definitely need to adjust to those. I do know how you feel like, I've always been a bit skeptical about butchering that golden goose. But I've run all sorts of calculations (monte carlo simulation is a good one to play around with) and quite frankly it just makes sense to withdraw a little when you need it. Or constantly, it's up to you. Personally I wouldn't go as far as the 4% but rather stick to 2% or 3% and adjust as necessary.

The s&p 500 div yield is currently around 2%. We mostly tend to leave out the non-divi payers so how about we say that our portfolios are expected to generate around 3% div yield? If you add withdraws of 2%, you basically add 67% more income. And with 2% withdrawal, unless something terrible happens, your portfolio will still, on average, keep growing faster than inflation.

It's a win-win. But again, if it makes you uncomfortable then there is no point doing it. But at least consider it as an option, a lot of things (including you) might change in the next 20-30 years. Wink

I think I will definitely be open to options/alternatives if things don't shake out according to plan once those 20-30 years roll by. All options are on the table if it means avoiding the cat food diet. Big Grin
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#18
(12-13-2018, 01:19 PM)fenders53 Wrote:  Or are crackers properly called biscuits Crimson?  You English folks have really screwed up our language lol.  

Actually I'd go with cracker. I know what proper food is like, I do not enjoy spending 95% of my life standing in the rain and I've also figured out things such as insulation and a tap (or is it a faucet?) which combines the hot and cold water for me. Thus, I'm not English! :p

However one thing that I'm sure of: when you order biscuits in the USA you will most definitely get bread, not biscuits.
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#19
That absolutely applies to me Crimson. I don't look at this the same as I did when I was your age and I am monetarily better off for it. My opinion evolves over time and your's will too if your mind is open, which I believe it truly is.

Otter, you gotta have some faith and patience in core positions longterm , but I find flaw in the attitude that I researched in once and my work is done forever. I don't think you really believe that. Feel free to dissent. That's we are here trading experiences and thoughts.
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#20
(12-13-2018, 01:33 PM)crimsonghost747 Wrote:
(12-13-2018, 10:29 AM)Otter Wrote: It's a mental thing for me. The thought of selling the principal gives me extreme anxiety. I get the statistics and understand the 4% rule, but it's just not for me. If I needed to, I could live off of the dividends generated by my DGI portfolio today. It would be a bare subsistence sort of Lean-FIRE existence, and not really pleasant or what I'm aiming for long-term. So, I have every expectation that in 20-30 years' time, when I am contemplating a proper "retirement," the income stream will be sufficient to meet my goal of living off the eggs and leaving the golden goose alone.

Well, we all have our own little quirks and we definitely need to adjust to those. I do know how you feel like, I've always been a bit skeptical about butchering that golden goose. But I've run all sorts of calculations (monte carlo simulation is a good one to play around with) and quite frankly it just makes sense to withdraw a little when you need it. Or constantly, it's up to you. Personally I wouldn't go as far as the 4% but rather stick to 2% or 3% and adjust as necessary.

The s&p 500 div yield is currently around 2%. We mostly tend to leave out the non-divi payers so how about we say that our portfolios are expected to generate around 3% div yield? If you add withdraws of 2%, you basically add 67% more income. And with 2% withdrawal, unless something terrible happens, your portfolio will still, on average, keep growing faster than inflation.

It's a win-win. But again, if it makes you uncomfortable then there is no point doing it. But at least consider it as an option, a lot of things (including you) might change in the next 20-30 years. Wink

(12-13-2018, 02:15 PM)crimsonghost747 Wrote:
(12-13-2018, 01:19 PM)fenders53 Wrote:  Or are crackers properly called biscuits Crimson?  You English folks have really screwed up our language lol.  

Actually I'd go with cracker. I know what proper food is like, I do not enjoy spending 95% of my life standing in the rain and I've also figured out things such as insulation and a tap (or is it a faucet?) which combines the hot and cold water for me. Thus, I'm not English! :p

However one thing that I'm sure of: when you order biscuits in the USA you will most definitely get bread, not biscuits.

Yes we use faucets in "new" England, but we understand what tap water is  Smile And an order of biscuits here will likely be drowned in gravy. The southern half of our citizens demand they die early and happy lol.
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