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Portfolio size
#1
Question to those who have been growing their portfolios for quite some time. Do you guys change your investment strategy (e.g., move money into index fund/Bond) or pretty much stay the same course by adding existing or new positions. 

The reason I ask is I am going to get some home equity after selling my home due to a relocation. I probably stay as a renter for a while. The new fund will push my portfolio over 0.5M. Even it may be just temporary before jumping back into real estate market, I am getting a little bit nervous to see what market movement does to my portfolio. And I still do most trades under 1k (old habit dies hard). 

Curisous to know what you guys think. Yes the thought of buying thousands shares of MO to declare victory does cross my mind. Smile
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#2
Definitely invest all of it in MO immediately, you'll be stinkin' rich!!! Just kidding, we'll kick you off the forum if you do something that boneheaded. Smile

I have a lot of stock positions, and most of them are 100 shares or more, but I will always keep a significant amount in the S&P 500 index. I don't keep as much in bonds as conventional wisdom says I am supposed to, but I always have a cash position, and I am not afraid to get a little too cashy when I think my overall stock holdings are getting over valued. I've beaten the index handily the past few years, and I sleep better at night knowing when the big one comes I can go shopping and buy thousands of shares.

I hear you on the port volatility because I look at my account balances daily. For many years I didn't do that because it's not conducive to good decision making when you still have decades to let it ride. For at least the past 10 years my port's daily valuation swings exceed what I make at work in months. Occasionally MANY months. Whenever you get financial advice from others, be mindful of where they are in life. I'm not 25 or 70yrs old, and IMO I shouldn't invest like I am.

I'm typing too much as always, but bottomline is YOU have to be comfortable with your allocation strategy Life is too short to be stressing your money on a daily basis. (That's some free old guy wisdom for you right there lol)
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#3
Fwiw, I am 8-12 yeas away from retirement. I am comfortable letting everything ride because I do not mind the fluctuations and of course it is actually helps in the long term for dividend income. (Assuming they are not cut)

That being said, if I was just “parking” the money for 5 years or less with the plan to move into real estate, I would not be in stocks. Too much market risk if you really need to pull the money IMO.
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#4
In needing the money in less than 5 years, I wouldn't have it in the stock market. Put it in CDs. Too much market risk for a short term. Better safe than sorry.

I am 100% stocks. I don't see myself moving money into index funds as my portfolio grows.
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#5
One thing I'd like to add. I think most everyone here agrees equities are where you should be long-term. We all think we can beat the index long-term and statistics say that won't happen for all of us. But the good news is you can be well below average and still crush the returns of a CD. It appears a 2% CD will soon be a dream and that may last a decade. You can buy an Aristocrat that trades totally sideways for 10 years and with dividends be no worse off in the end. The only disclaimer is you can't go all in at the top, and we never know where the top really is. You have to have some dry powder to invest for this to work at the end of a bull market, whenever the end is. It's extremely rare when 100% invested is prudent in the short to midterm.
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#6
(10-08-2019, 01:47 AM)Dividendwayfarer Wrote: Question to those who have been growing their portfolios for quite some time. Do you guys change your investment strategy (e.g., move money into index fund/Bond) or pretty much stay the same course by adding existing or new positions. 

The reason I ask is I am going to get some home equity after selling my home due to a relocation. I probably stay as a renter for a while. The new fund will push my portfolio over 0.5M. Even it may be just temporary before jumping back into real estate market, I am getting a little bit nervous to see what market movement does to my portfolio. And I still do most trades under 1k (old habit dies hard). 

Curisous to know what you guys think. Yes the thought of buying thousands shares of MO to declare victory does cross my mind. Smile

In my 401k I do move stuff around. There I'm limited to funds, which pair trash with quality. Those funds simply follow the market (or some sector of it) around, and I get charged fees for the privilege. My 401k has been mostly in a Target-Date (Retired) fund that is 90% fixed-income 10% equity since October of last year. Very small percentage in emerging market and energy ETFs with low fees. Total return in the past 12 months has been 4.72%, which is essentially identical to SPY since October, 2018 (market is only up big on YTD figures because of the December mini-crash). I'll start transitioning more of the 401k stuff to equity funds when the market is down 20% from its top (S&P 500 close to 2400). 

For all my non-401k holdings, my criteria for buy and hold doesn't change:

1. Large or Midcap (size matters if you are looking for stability);
2. P/E or P/AFFO (REITs) 15 or Less (ideal), or below 10yr Average (ok - 10yrs will typically take into account an entire business cycle without data that's too old to be reliable);
3. Chowder Number of 8+ for Utilities/Telcos, and 12+ for all other stocks (a good yardstick for total return in the DGI investing space);
4. 25+ years of dividend growth (ideal), or 10+ (ok), subject to exceptions for quality blue chips like BA (has paused dividend growth, but not cut it);
5. Investment-Grade Credit Rating (BBB+ or better is what I prefer);
6. Dividend Payout Ratio <75% (I will bend this rule for special cases like tobacco companies, which typically have stable cash flows and expenditures); and
7. No obvious outward signs of systemic risk to the company/its business model.

There's always a bear market somewhere with stuff that is on sale. T in the $20s while the rest of the market was booming is a recent example. It's just that more stuff is on sale when the entire market nosedives like in 2008/2009. 

I don't always make a purchase that satisfies all of my criteria, but I do try to stick to them. Having them as a handy yardstick is helpful. 

As for managing overall portfolio risk, I have rules of thumb for that, too. No holding should generate more than 5% of total dividend income, and holdings should be diversified across all GICS sectors. Satisfying that second rule of thumb took some time. Different sectors go on sale at different times for different reasons. Sometimes it seems like I will spend months buying the same stuff, until those sectors suddenly become favored again, leaving me with different options as other sectors/stocks fall out of favor. 

My goal was to basically build my own personal index fund, which pays dividends, and which bears no fees. Current yield is 3.6% and 5yr average dividend growth rate for the entire portfolio is currently 7.2%. Chowder number of 10.8 for the entire portfolio, which seems about fair from an anticipated total return perspective, given that ~16% of the portfolio is in Utes/Telcos. 
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#7
Excellent post Otter. I think personal investing rules are very important. Unfortunately I learned most of mine the hard way. Its best if you write them down IMO. You can also expand them over time and include your exceptions. This would be a good thread subject some time.
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#8
Thanks all for providing inputs. Learning all excellent points here.
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#9
I'm similar to Otter, except I bailed on bonds/fixed income type investments about 10 years ago. I average 80 to 100% equities/mutual funds and 0 to 20% cash, right now I'm about 85% and 15% in my kplan and 99% and 1% in the brokerage and ira accounts.

I'm anywhere from 2 1/2 to 17 years away from retiring, it depends because I just don't know what the future holds. The goal is to work till I'm approximately 62 and no later then 65.

I own mutual funds because it's the kplan choices, when I retire the monies will be moved to dividend producing stocks

I'm going to be 85% plus invested at all times till the day I die

I believe there will be a recession and that a big one can happen but I'm a firm believer that the next one is going to be mild, compared to 2008/09, jmho.

If the big one doesn't happen in another 30 or 40 years, I can believe that too. Maybe I'll be dead, maybe not.

The only thing I'm 100% sure about is if, I sold a property that gave me a pile of cash that would eventually be used for a down payment on another property I wouldn't invest in anything other then CD's concerning those dollars.
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