Where to Put Your Money in 2019
12/31/2018
We can wax-poetic on the recent market volatility or debate whether a recession is coming or not. The fact of the matter is volatility is likely here to stay. I’ve long grown tired of hypotheticals and have little desire timing bear-raids or attempting to short cult-frenzied tech stocks.
A well-defined strategy makes it easy to find investment candidates. Nothings set-in-stone and of course positive returns are never guaranteed but falling back on fundamental analysis and dividend income makes it easy to sleep at night with minimal regard to political nonsense and interest-rate hyperventilation.
The easiest way to search for actionable investments is to set minimal investment criteria.
Investment Criteria
Dividend Yield
> 5%
* The Core of my Investment Strategy which relies more on Income than Capital Gains. Care must be taken in assessing the sustainability of the Dividend Yield.
Operating Margin
> 0%
*An Investable Company should be profitable. Many REITS do not show Net Profitability but should at the very least show a Positive Operating Margin.
This search will return a list of profitable companies that pay a respectable dividend.
There is a myriad of additional metrics you can apply to the screener perhaps the most useful being ROE & ROA. However, it is truly mind boggling how many companies do not meet these basic criteria.
The key to this strategy is diversification. I want my portfolio to pay me consistently and often. I do not expect all of these companies to hold up. I go into this strategy knowing that some will fail and others will go on to produce nice returns. However, I don’t concentrate any one position in my portfolio. Currently, my portfolio is holding around a hundred or so different securities. These securities encompass all types of investments of different industries, nationalities and market-caps. Almost every day I have dividend income coming in, even if it may seem negligible in isolation, in aggregate it all adds up. Once this income is received, it is immediately reinvested in more dividend paying securities. This is where the fun and challenge of this investment style comes in. Gone is the trend-following, market-timing game. In is the fundamental analysis and long-term investment game.
That being said, the speculator in me knows that low-priced stocks have the greatest probability of delivering strong capital-gains. Therefore I tend to focus on stocks trading below $15/share. It’s important to note that theoretically share price is irrelevant to the value of the company. In fact there are many companies with huge market caps that have low share prices. Conventional wisdom generally goes, the larger the market cap, the less risk. This makes sense when you consider that larger companies simply have more resources at their disposal to help protect and sustain themselves through downturn and recession.
...to be continued with specific suggestions...
12/31/2018
We can wax-poetic on the recent market volatility or debate whether a recession is coming or not. The fact of the matter is volatility is likely here to stay. I’ve long grown tired of hypotheticals and have little desire timing bear-raids or attempting to short cult-frenzied tech stocks.
A well-defined strategy makes it easy to find investment candidates. Nothings set-in-stone and of course positive returns are never guaranteed but falling back on fundamental analysis and dividend income makes it easy to sleep at night with minimal regard to political nonsense and interest-rate hyperventilation.
The easiest way to search for actionable investments is to set minimal investment criteria.
Investment Criteria
Dividend Yield
> 5%
* The Core of my Investment Strategy which relies more on Income than Capital Gains. Care must be taken in assessing the sustainability of the Dividend Yield.
Operating Margin
> 0%
*An Investable Company should be profitable. Many REITS do not show Net Profitability but should at the very least show a Positive Operating Margin.
This search will return a list of profitable companies that pay a respectable dividend.
There is a myriad of additional metrics you can apply to the screener perhaps the most useful being ROE & ROA. However, it is truly mind boggling how many companies do not meet these basic criteria.
The key to this strategy is diversification. I want my portfolio to pay me consistently and often. I do not expect all of these companies to hold up. I go into this strategy knowing that some will fail and others will go on to produce nice returns. However, I don’t concentrate any one position in my portfolio. Currently, my portfolio is holding around a hundred or so different securities. These securities encompass all types of investments of different industries, nationalities and market-caps. Almost every day I have dividend income coming in, even if it may seem negligible in isolation, in aggregate it all adds up. Once this income is received, it is immediately reinvested in more dividend paying securities. This is where the fun and challenge of this investment style comes in. Gone is the trend-following, market-timing game. In is the fundamental analysis and long-term investment game.
That being said, the speculator in me knows that low-priced stocks have the greatest probability of delivering strong capital-gains. Therefore I tend to focus on stocks trading below $15/share. It’s important to note that theoretically share price is irrelevant to the value of the company. In fact there are many companies with huge market caps that have low share prices. Conventional wisdom generally goes, the larger the market cap, the less risk. This makes sense when you consider that larger companies simply have more resources at their disposal to help protect and sustain themselves through downturn and recession.
...to be continued with specific suggestions...
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