Investments Trade Log

Ask your investment, budget, and other money related questions here
Michael_00005
Posts: 90
Joined: Thu May 04, 2017 12:26 pm
Location: East coast USA

Re: Investments Trade Log

Post by Michael_00005 » Wed Jan 31, 2018 8:06 pm

If anyone is waiting for a correction before putting more money into the market, how much of a correction will it take to get you back in?
. There are plenty of stocks out there that pay around 10% in dividends, why not go that way? Even if the price drops for a few years you can hold and collect the dividends. I'm guessing the div. stocks will not drop like the rest of the market.

I've been out of the US markets since Dec. 2016, except for a small percent of play money, but then moved the bulk of it into international and emerging markets where it's matching US returns. My guess is that the US will be one of the first to see a correction, when that happens it might be time to put more into cash.

If you have extra funds and looking for security, it's possible donating to a worthy cause is the best investment you can ever make.

George the original one
Posts: 4810
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Investments Trade Log

Post by George the original one » Wed Jan 31, 2018 8:39 pm

Michael_00005 wrote:
Wed Jan 31, 2018 8:06 pm
I'm guessing the div. stocks will not drop like the rest of the market.
The real question when holding through a downturn is whether the dividends will be cut. And right now most dividend stocks are priced too high, so it's likely they will drop when the market drops... dividends, in general, are not that special when it comes to market price.

arcyallen
Posts: 86
Joined: Sat Jan 20, 2018 11:20 am

Re: Investments Trade Log

Post by arcyallen » Thu Feb 01, 2018 8:58 am

I would never consider a 10% dividend as safe or stable. Especially during a market drop. That's just too much cash flowing out for the company. As soon as markets drop and the economy goes south, those companies will likely be under extraordinary pressure and cut the dividends. Even large strong companies had to do that back in the late 2000's.

Michael_00005
Posts: 90
Joined: Thu May 04, 2017 12:26 pm
Location: East coast USA

Re: Investments Trade Log

Post by Michael_00005 » Thu Feb 01, 2018 8:24 pm

What companies are you guys talking about? Currently I've got some money in GOV and AGNC. GOV rents property to the government, and recently diversified the portfolio to go outside govt. rentals. The GOV PE is off due to a purchase in 2017 which should correct this year. These companies don't go price ballistic like all the other growth companies do, like from the past year... the price is stable within a range. I see GOV was down to 19.50 in 2009, now it's at 16.92; i can't see what happened to the dividend. AGNC PE is under 10.

We are talking about less risk George, not no risk. I would say there is a lot more risk in holding cash than putting money in several diversified dividend stocks.

I'm certainly not saying these stocks can't go down, cut dividends, or lose money, stocks are a risky.

Were you just looking to find faults or do you actually have a better idea? With a little effort I bet we could add something constructive to the conversation.

Chris
Posts: 650
Joined: Thu Jul 22, 2010 2:44 pm

Re: Investments Trade Log

Post by Chris » Thu Feb 01, 2018 8:49 pm

Michael_00005 wrote:
Thu Feb 01, 2018 8:24 pm
Currently I've got some money in GOV and AGNC.
I notice that GOV's 2017 dividends were almost 50% return of capital. Prior years were also significant (42%, 37%, 36%). Any idea what that's about?

Michael_00005
Posts: 90
Joined: Thu May 04, 2017 12:26 pm
Location: East coast USA

Re: Investments Trade Log

Post by Michael_00005 » Thu Feb 01, 2018 9:05 pm

I notice that GOV's 2017 dividends were almost 50% return of capital. Prior years were also significant (42%, 37%, 36%). Any idea what that's about?
I'm still working FT and don't have much time to research, but this guy seems to have a good grasp of the numbers at GOV: https://seekingalpha.com/article/413711 ... lding-reit

George the original one
Posts: 4810
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Investments Trade Log

Post by George the original one » Fri Feb 02, 2018 12:07 pm

Michael_00005 wrote:
Thu Feb 01, 2018 8:24 pm
We are talking about less risk George, not no risk. I would say there is a lot more risk in holding cash than putting money in several diversified dividend stocks.
You're new here, so you might want to have a look at my open history regarding risk-taking before making assumptions about my knowledge: viewtopic.php?f=3&t=975&hilit=leverage+experiment

AGNC dividend was $1.40 per quarter in 2011 ($0.46/month). They cut dividend a couple times before going to monthly payments in 2016 at $0.20/month. Today, in 2018, it is only $0.18/month. If you're looking for a reliable long term income, a -70% drop in income is a crappy track record. Short term, it might be worth the risk, but I'm retired, so dividend growth is what I'm looking for. Realize, also, that AGNC is a lending company known as a mortgage REIT, not a traditional REIT that holds properties. mREITS are highly leveraged and very subject to interest rate risk; a small interest rate movement has a significant impact on their ability to pay dividends as well as what happens with their portfolio's mortgage default rate.

GOV has been around longer than the record you can see on Yahoo finance or other locations. I considered and rejected them in 2012. They merged with First Potomac in 2017, which apparently allowed them to start a fresh exchange record... you might ask yourself why they felt that was a good idea.

Edit: Some safer, higher yield alternatives to cash are leveraged bond funds. I like VKQ (municipal bonds, so tax free) and PGX (short term corporate preferred stock).

cmonkey
Posts: 1777
Joined: Mon Apr 21, 2014 11:56 am

Re: Investments Trade Log

Post by cmonkey » Mon Feb 05, 2018 3:03 pm

Finally a nice little correction. This is the first time I've lost any substantial amount of capital value since starting this journey (currently down 1 year of expenses from 1 week ago) and it's not really that scary.

Edit - Make that a very nice correction!

jacob
Site Admin
Posts: 11413
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: Investments Trade Log

Post by jacob » Mon Feb 05, 2018 3:17 pm

For those whose portfolios are a bit more.. uhh.. nuanced, now is a good time to see what's dropping faster and what's dropping slower and perhaps what's holding and even rising. If the overall equity market keeps dropping, this is a good indication of where you'll end up. Note that since the marginal prices on the market tend to be traded with borrowed money "on the margin", margin calls are often met by selling those stocks with the most recent "bestest" performance. If they drop, it doesn't mean they're bad investments; just that desperate people desperately need the money.

One thing I did today was to calculate my portfolio betas. This can easily be done in googlesheets using =googlefinance(TICKER,"beta")*...

They come down to 0.73 for my "risk portfolio" (which is also my everyday dividend cash for a living portfolio) and 0.24 for my tax-deferred portfolio (which is the age 59.5 boost portfolio). They're about equally large, so my overall beta is about half of the market.

For indexers (and concentrated FAANG speculators), AMZN is helping to hold up the rest of the market today. There was some significant selling pressure on AMZN a few moments ago, where amazon dropped 5%+ over a few minutes because of lack of liquidity on the buyer side ... taking the rest of the market down with it for another 1.5%. AMZN has since recovered.

George the original one
Posts: 4810
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Investments Trade Log

Post by George the original one » Mon Feb 05, 2018 3:24 pm

The correction has been in motion for a couple days now. My rule of thumb typical pattern is 3 down days before a pattern change, but I can never estimate how long the pattern change will last and whether it will be bounce or flat.

cmonkey
Posts: 1777
Joined: Mon Apr 21, 2014 11:56 am

Re: Investments Trade Log

Post by cmonkey » Mon Feb 05, 2018 4:08 pm

jacob wrote:
Mon Feb 05, 2018 3:17 pm
One thing I did today was to calculate my portfolio betas. This can easily be done in googlesheets using =googlefinance(TICKER,"beta")*...
Do you mean beta for the day? I don't go that far but I do make a mental note each day on whether I beat the indexes or not. I probably should get some better metrics going.

jacob
Site Admin
Posts: 11413
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: Investments Trade Log

Post by jacob » Mon Feb 05, 2018 4:43 pm

What?! No. Beta is usually calculated as the (3-5 year) moving average of closing prices of the security vs the s&p500. If you plotted the two datasets, beta would be the slope. alpha would be the intercept. Googlefinance gives the 5yr slope.

Watching the individual positions daily gives a better sense of how the portfolio is reacting, but the actual calculation gives a number. The problem with relying on betas is that correlations change when market conditions change. For example, for my two portfolios, today's samplesize=1 beta was 0.92 and 0.33, respectively, thus suggesting that correlations for the day were up relative to the unusually smooth rise over the past ~9 years. Correlations will tend to increase when people need cash to cover---as explained above.

User avatar
jennypenny
Posts: 6274
Joined: Sun Jul 03, 2011 2:20 pm
Location: Stepford USA

Re: Investments Trade Log

Post by jennypenny » Mon Feb 05, 2018 6:32 pm

As GTOO said, two or three days don't make a trend. Gold isn't breaking out and small cap is holding up pretty well, so I'm not so sure 'this is it'. We'll see.

PML dropped more than other muni funds. If I can't find a reason for it, I might add to that position.

Michael_00005
Posts: 90
Joined: Thu May 04, 2017 12:26 pm
Location: East coast USA

Re: Investments Trade Log

Post by Michael_00005 » Mon Feb 05, 2018 7:22 pm

No worries, i was not making assumptions on your knowledge. The post was in reference to cash vs high dividend stocks. We're at very different places in regards to FI at the moment, nothing wrong with that, at some point I may be happy with a 6% return (PGX).

And by the way thanks for the info on AGNC. AGNC looks like it might be a better play, when rates are predicted to go down, rather than up... so i'll keep that in mind. Mostly my money is in international and emerging market index funds this year, I'm content riding those out for 2018.
Last edited by Michael_00005 on Sun Apr 01, 2018 7:26 am, edited 2 times in total.

User avatar
jennypenny
Posts: 6274
Joined: Sun Jul 03, 2011 2:20 pm
Location: Stepford USA

Re: Investments Trade Log

Post by jennypenny » Mon Feb 05, 2018 7:30 pm

Instruments like SVXY and UVXY are used by traders. They can be a lot more volatile than the market and can move more in line with traders than the market overall. Just FYI before anyone puts their money into them. Most traders fear getting caught in those overnight.

For example, here is SVXY after hours (currently down another $50+) https://www.nasdaq.com/symbol/svxy/after-hours

George the original one
Posts: 4810
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Investments Trade Log

Post by George the original one » Mon Feb 05, 2018 8:33 pm

Michael_00005 wrote:
Mon Feb 05, 2018 7:22 pm
You're new here, so you might want to have a look at my open history regarding risk-taking before making assumptions about my knowledge:
Maybe your making assumptions, about someone making assumptions on your knowledge... boy this is getting ridiculous. My post was a simple clarification. The post was in reference to cash vs high dividend stocks. We're at very different places in regards to FI at the moment, nothing wrong with that, at some point I may be happy with a 6% return (PGX).
You brought cash into the discussion and I haven't said a thing about cash. My original note was in post 4374 if you care to check:
George the original one wrote:
Wed Jan 31, 2018 8:39 pm
Michael_00005 wrote:
Wed Jan 31, 2018 8:06 pm
I'm guessing the div. stocks will not drop like the rest of the market.
The real question when holding through a downturn is whether the dividends will be cut. And right now most dividend stocks are priced too high, so it's likely they will drop when the market drops... dividends, in general, are not that special when it comes to market price.
Basically what I'm saying is that holding dividend stocks through a market drop is not going to protect you from a market drop. And if there are wide-spread business reasons for the drop, then the dividends are at higher risk of being cut.

Therefore, if you're holding through a market drop, then it doesn't matter whether the stock pays dividends or not. As Jacob says, what's more important is what went up quickest and how badly people need cash. People selling do not hold the stocks merely because they're getting a dividend from them.

If you're operating solely on feeling without data to back up your moves, then good luck, because luck is the only factor you can point to.

George the original one
Posts: 4810
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Investments Trade Log

Post by George the original one » Tue Feb 06, 2018 11:56 am

"The US Auto Industry is about to implode" - 12 minutes
Buildup of used car inventory due to cars coming off lease and its getting harder to qualify for loans
Baby boomers moving into phase of life where they buy less
Millenials don't shop like the Boomers
https://www.youtube.com/watch?v=b-9hX3H_9qI

jacob
Site Admin
Posts: 11413
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: Investments Trade Log

Post by jacob » Thu Feb 08, 2018 4:09 pm

Today was another good test for how how individual portfolios might hold up against the generic "market" in a generic downturn. It looked quite familiar cf. 2008/09.

https://finviz.com/map.ashx (note that interest rate sensitive sectors like utilities and REITs did better)

Everybody, please stare at this until you go blind 8-) But please use your out of focus hockey-vision and take it all in at once!!

Keep in mind that this is earnings seasons, so if you see something particularly green, double check to see if they came out with a positive surprise today.

Note that more than half of all reporting companies this season have still beat expectations. The main worry here is whether wage increases will translate into inflation causing inflation to translate into Fed hikes causing people to flee stocks and go into bonds (or utilities and reits). These are the first signs of inflation (CPI, not real world) seen in years! That's a pretty long chain of reasoning ... but people are rather trigger happy currently.

PS: Also, if we're not officially there yet... then it's pretty damn close to the -10% drop that is a correction. (I think the official verdict uses closing prices from the max closing... but all I have at hand is intraday, so...)

cmonkey
Posts: 1777
Joined: Mon Apr 21, 2014 11:56 am

Re: Investments Trade Log

Post by cmonkey » Thu Feb 08, 2018 4:44 pm

Both Dow and S&P just crossed 10% today, so yep.

Seppia
Posts: 1099
Joined: Tue Aug 30, 2016 9:34 am
Location: Italy

Re: Investments Trade Log

Post by Seppia » Fri Feb 09, 2018 3:31 am

let's hope things get interesting.
For all the noise we are back to prices of just a few months ago (november for the usa and august for europe iirc), so not exactly bargain bin prices.
I like the trend btw.
According to my rules, it is business as usual unless we see another 15-20% drop, in which case I'll go in with half my cash cushion.

Post Reply