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Well, the correction that I've been waiting for appears to be upon us. I've got lots of cash to deploy, but the question is when to deploy it.
The dividend yields on some of my current holdings are getting quite attractive.... but the termination of the two previous QEs resulted in 20% market drops, so I'd prefer to wait a bit. However, there are some really awesome companies on sale right now, but the question is when to pull the trigger?
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Howdy OK.
You know that there will NEVER be a good answer to this question. If you happen to fall asleep for a few months and wake up one day with the market down 25 percent, you might know it is time to buy, but even then, could just keep going down. If you watch the dip from the start, it is all the worse. Could be just a temporary blip, or the start of a downtrend.
My instinct would be to buy in chunks. Buy a bit of your hottest prospects at these prices. You can keep buying more if prices continue to fall or stay around here. And if they head back up from here, at least you picked up a few shares at (relative) bargain prices.
Which companies are you eyeing?
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I think it's best to buy every month, or whenever you can afford too. When the market is down your money buys more shares, and when it's up your money buys less shares.
This has a huge psychological benefit. The last thing anyone wants to do is spend a ton of money only to watch their stocks drop 3-5% within the next few days. If you buy small and often this lets you average down(or average up). If you have $5000 to deploy then you could actually spend it slowly. As an extreme example over 50 weeks, buy $100 a week. That's just an example but you get the idea.
There are several blue chips that you can buy with with zero commissions or very low commissions. This lets you buy very small amounts and often, but you are restricted since not all stocks can be bought like this.
Sharebuilder has a program where you get 12 trades for $12 a month. I don't use it but it might be appealing if your focus is solely on stocks since this way you can buy anything for only $1 a trade.
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02-04-2014, 12:41 AM
(This post was last modified: 02-04-2014, 12:43 AM by Dividend Watcher.)
Red, how about selling some cash-secured OTM puts on your favorites here? I've noticed that the premiums are starting to inch up on a few issues I was ogling (not that I have a ton of cash on the sidelines here).
TDA has a $2.70 premium on CVX for the March monthly $110. That would put you in at about $107.60 after commissions giving you around a 3.7% yield and P/E of about 9.7. Of course, CVX's earnings have been slowing a little bit but they're not going away.
Or you could start with 1/4 positions here and then wait and see.
Surprisingly, I'm actually just fine with the recent drop and wasn't sure if it would bug me or not. I'm more anxious about dividend pay dates getting here. Too bad March is my biggest month for divs. This may be the correction we've been waiting for. We'll have to see what weaker hands shake out this week.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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I take it as a good sign of my investing temperament that I am disappointed that today is not another down day. I am hoping that prices would continue to drop giving us even better entry points. I know that one day is just one day, but given how the last year has gone, we could be headed back up from here. I know that earnings have not been all that stellar, generally, but I'm not sure they've been so bad as to justify this sell off, and I'm not sure what does account for it, other than "jitters."
That said, there are more great companies at good prices right now than recently. I'm keeping an eye on:
JNJ, KO, PM, O, MCD, and DE.
What are on your short lists for this dip?
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Thanks for the input!
My equity positions are so small that I'm keeping an eye on ALL my positions. Of special interest - GE, CVX, PM, SJM and TGT. I just initiated a postion in STAG, so I don't have a good feel for the price dynamics yet, but would also include it on the short list. All of my current positions are about 10-12% of my intended final positions, so buying in smaller quantities makes the most sense.
Dexter, funny that you mention Sharebuilder - I've had an account with them since they started up in the early 90s. However, I'm at the point in my career where I can purchase in much larger amounts, so I am actually getting ready to close that account.
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(02-04-2014, 01:03 PM)Ok Red Wrote: Thanks for the input!
My equity positions are so small that I'm keeping an eye on ALL my positions. Of special interest - GE, CVX, PM, SJM and TGT. I just initiated a postion in STAG, so I don't have a good feel for the price dynamics yet, but would also include it on the short list. All of my current positions are about 10-12% of my intended final positions, so buying in smaller quantities makes the most sense.
Dexter, funny that you mention Sharebuilder - I've had an account with them since they started up in the early 90s. However, I'm at the point in my career where I can purchase in much larger amounts, so I am actually getting ready to close that account.
Wow the 90s. That's really great and it's awesome that you are at that place. Maybe someday I can purchase in bigger amounts 
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Here is an interesting article on how to read the bottom the old fashioned way....
http://www.zerohedge.com/news/2014-02-04...indicators
Enjoy 
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02-04-2014, 10:52 PM
(This post was last modified: 02-04-2014, 10:54 PM by Dividend Watcher.)
Red, that was an interesting article. I'm actually looking forward to an end of the whiney-pants commentators blaming the FED for everything.
I'll just put my seatbelt on and count my dividends. I'm not going to sell now and lock in losses on some of recent purchases. I have a wee bit of cash and will nibble on dirt cheap companies. Keeping my eye on the income stream.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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I'm almost fully invested, but remain very defensive with covered calls dominating my IRA account. Significant cash will be freed as current call plays conclude now through April. Will be very sparing in the redeployment of that cash until during or after the usual weak period of October/November. All dividends will mostly be allowed to accumulate until the fall period.
Alex
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