Just so you are not surprised, the portfolio numbers will not look right on Monday (and maybe Tuesday as well) due to two spin-offs, Altria (MO) spinning off Kraft (KFT), and Automatic Data Processing (ADP) spinning off Broadridge Financial (BR).
This is an interesting piece on how dividend growers outpace the rest of the market.
I made quite a few changes on Friday - bought were Allstate (ALL), Nuveen (JNC), Jabil Circuit (JBL), and Pacer Tech (PACR). I eased up a little on SDS (Double Short S&P), but remain defensive and expecting more pain.
Hope this finds you without pain. Till next time...
Saturday, March 31, 2007
Tuesday, March 20, 2007
Altria's Kraft Spin-off finalized
It's finally set: Altria will spin off Kraft on Mar 30th
Meanwhile, I have been raising more cash (by selling a bit of TTH, MCHP, and JNJ) and sticking to a hedged position. I know this doesn't look very smart with the last two day's rallying going on, but the technicals rarely lie, and they are saying that drop awhile back 'ain't no blip.'
I do think oils are due for better action, so I picked up Total SA, which, contrary to Yahoo Finance, actually pays around a 4% yield, before foreign taxes.
Eaton Vance Tax Advantaged Global Dividend Opportunities Fund (ETO) got away from me before I could get it, and I am not chasing it now. If it pulls back I would reconsider another try. Also, I found a couple more ETFs that take a 'dividend growth' approach. The expense ratios are much lower than ETO, although the expected dividend isn't as rich (because these aren't leveraged). They are Wisdom Tree Mid Cap Dividend and Small Cap Dividend. I was troubled by the prospectus initially because it was not clear on the frequency of dividend distributions, so I asked. They replied that domestic funds are quarterly, foreign is annual. The funds have a short history, but they claim to match their dividend growth index in yield and performance. The index yields are in the 3.75-4.0% range.
Meanwhile, I have been raising more cash (by selling a bit of TTH, MCHP, and JNJ) and sticking to a hedged position. I know this doesn't look very smart with the last two day's rallying going on, but the technicals rarely lie, and they are saying that drop awhile back 'ain't no blip.'
I do think oils are due for better action, so I picked up Total SA, which, contrary to Yahoo Finance, actually pays around a 4% yield, before foreign taxes.
Eaton Vance Tax Advantaged Global Dividend Opportunities Fund (ETO) got away from me before I could get it, and I am not chasing it now. If it pulls back I would reconsider another try. Also, I found a couple more ETFs that take a 'dividend growth' approach. The expense ratios are much lower than ETO, although the expected dividend isn't as rich (because these aren't leveraged). They are Wisdom Tree Mid Cap Dividend and Small Cap Dividend. I was troubled by the prospectus initially because it was not clear on the frequency of dividend distributions, so I asked. They replied that domestic funds are quarterly, foreign is annual. The funds have a short history, but they claim to match their dividend growth index in yield and performance. The index yields are in the 3.75-4.0% range.
Tuesday, March 13, 2007
See I Told You So
As mentioned last Friday, the correction was not likely over. Today was rather devastating, but looking at the big picture, not so bad considering SDS was there to bear hedge the portfolio. The result was that on a day when the Wilshire 5000 lost 2%, our portfolio lost "only" 0.95%. Painful, to be sure, but much less so than for those who did not prepare for a storm that you could see coming.
The financial press is getting almost hysterical about its claims that the subprime meltdown does not affect the overall economy much. Fair enough, but tell that to the financial sector, which comprises a very large percentage of the S&P 500 (and of this portfolio as well) and is getting unmercilessly hammered by the fallout.
Anyway, I'll reiterate that when things start settling down, it'll be time for snatching up shares at bargain prices, and the beauty of hedging a portfolio is that it provides you cash to help build it back up without excessive pain.
Until then, we will continue to grin and 'bear' it...
The financial press is getting almost hysterical about its claims that the subprime meltdown does not affect the overall economy much. Fair enough, but tell that to the financial sector, which comprises a very large percentage of the S&P 500 (and of this portfolio as well) and is getting unmercilessly hammered by the fallout.
Anyway, I'll reiterate that when things start settling down, it'll be time for snatching up shares at bargain prices, and the beauty of hedging a portfolio is that it provides you cash to help build it back up without excessive pain.
Until then, we will continue to grin and 'bear' it...
Friday, March 9, 2007
Continuation of Volatility?
Sorry, but I am not buying that the rally we got this week marks a resumption of the bull - at least not yet. I won't go so far as to say the bull is dead, but this ain't no "pause" either.
It doesn't take a chart expert to see that the ferocity of last week's decline - specifically the 'velocity' of the decline and associated volume - looks to me like the sudden drop was not based on a 'fluke' or happenstance.
Besides the China explanation - why did it happen, and what happens next?
First theory - Alan Greenspan implied a recession is just around the corner. If you go by the 'six month rule' which is that the stock market discounts a recession six months in adavance, then a recession should hit around the first of September.
Second theory - A normal correction is overdue, since we've been getting a more or less non-stop run since around Aug 2006. Markets never go up in a straight line. The bull is intact, but a 10% correction now is normal and maybe even expected at this point. Load up after the next wave down.
Third Theory - The bull is officially dead. Although it is an election year, the bull market has been going since March of 2003. We just hit the four year mark. It's not unusual to get a bear market after this long. The 1990s were a fluke.
Fourth Theory - The drop is over and it will be remembered as just a blip in the continuing bull market.
Which theory will bear out is anyone's guess. If I knew I would already be retired.
In dividend news...Colgate Palmolive just increased their dividend 13% - I like it!
It doesn't take a chart expert to see that the ferocity of last week's decline - specifically the 'velocity' of the decline and associated volume - looks to me like the sudden drop was not based on a 'fluke' or happenstance.
Besides the China explanation - why did it happen, and what happens next?
First theory - Alan Greenspan implied a recession is just around the corner. If you go by the 'six month rule' which is that the stock market discounts a recession six months in adavance, then a recession should hit around the first of September.
Second theory - A normal correction is overdue, since we've been getting a more or less non-stop run since around Aug 2006. Markets never go up in a straight line. The bull is intact, but a 10% correction now is normal and maybe even expected at this point. Load up after the next wave down.
Third Theory - The bull is officially dead. Although it is an election year, the bull market has been going since March of 2003. We just hit the four year mark. It's not unusual to get a bear market after this long. The 1990s were a fluke.
Fourth Theory - The drop is over and it will be remembered as just a blip in the continuing bull market.
Which theory will bear out is anyone's guess. If I knew I would already be retired.
In dividend news...Colgate Palmolive just increased their dividend 13% - I like it!
Saturday, March 3, 2007
What to do?
I bet that Wednesday's rally was simply a reflexive bounce, and that we could have more pain to come, and judging by Friday's action it looks like that is the case.
That is not to say it is my philosophy to bail out of the market whenever it catches a cold, but some smart adjustments are in order. First, you may have noticed my caution a couple weeks ago. Wednesday I used the lukewarm rally to take a short position in SDS which is an ETF that is 2X short the S&P 500.
It certainly won't eliminate portfolio losses in the event of a major correction, but it will certainly make sleeping at night easier while I am waiting it out. Ideally this will provide a nice pile of cash to buy cheaper stocks when the dust clears.
See my last few posts for the companies on the radar as buy candidates. Also, I like Eaton Vance Tax Advantaged Global Dividend Opportunities Fund (ETO). Although ETFs are not better than proper stock selection, this fund has a low turnover rate, and its selection of holdings are complimentary rather than redundant to my individual stock holdings. It currently yields around 6.2% and has growing dividends.
Oh, also Bank of Montreal just increased their dividend by over 22%.
That is not to say it is my philosophy to bail out of the market whenever it catches a cold, but some smart adjustments are in order. First, you may have noticed my caution a couple weeks ago. Wednesday I used the lukewarm rally to take a short position in SDS which is an ETF that is 2X short the S&P 500.
It certainly won't eliminate portfolio losses in the event of a major correction, but it will certainly make sleeping at night easier while I am waiting it out. Ideally this will provide a nice pile of cash to buy cheaper stocks when the dust clears.
See my last few posts for the companies on the radar as buy candidates. Also, I like Eaton Vance Tax Advantaged Global Dividend Opportunities Fund (ETO). Although ETFs are not better than proper stock selection, this fund has a low turnover rate, and its selection of holdings are complimentary rather than redundant to my individual stock holdings. It currently yields around 6.2% and has growing dividends.
Oh, also Bank of Montreal just increased their dividend by over 22%.
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