Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Buy high,sell low
Old 03-26-2004, 04:44 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Buy high,sell low

I have codified my investment philosophy of the last 15 yrs of hobby stock investing into two rules:

1. Buy high, sell low

2. Trade actively.

Under 1. you buy DRIP stock with free/low expense reinvestment of dividends. Sell if they fail to raise their dividend rate every 1-2 yrs. Under 2. if you haven't doubled your(not div.) money in 7.2 years(rule of 72) then sell.

Am I rich, does it work? Nope but it does provide 32% of my taxable income stream not counting cap gains/losses. This was originally planned for the fourth leg of the table (pension, IRA, SS, div.) When IRA and SS cuts in, the 32% drops to 10 - 15 % depending on SWR selected. Thoughts are to start shifting toward more div growth oriented stocks as an inflation fighter. ? Are there any true blue old fashioned types that actually live off dividends anymore? I thinking of Frank Armstrong's old online book on mutual funds which contained the one line zinger - 'the rich live off dividens'.
__________________

__________________
unclemick is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Buy high,sell low
Old 03-26-2004, 05:23 AM   #2
 
Posts: n/a
Re: Buy high,sell low

Hello unclemick!

I have no stocks, no SS, and no pension. Plus have not touched my IRA
as yet. Must be a goldang "ER Houdini". Maybe my personal dryer sheet flag should show a stool with one leg

John Galt
__________________
  Reply With Quote
Re: Buy high,sell low
Old 03-26-2004, 09:46 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Buy high,sell low

One true blue dividend liver offer here.

John, if any of my stools grow a leg, I'd be off to the doctor.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Buy high,sell low
Old 03-26-2004, 12:30 PM   #4
Recycles dryer sheets
 
Join Date: Jun 2002
Posts: 367
Re: Buy high,sell low

John, I still have no idea what keeps your ship afloat, but I wish you many years of calm seas. Though I have to admit, I'm beginning to think you are in the witness protection program or something, I mean, the money has to come from somewhere ?? Right ?? Don't tell me, you were a mafia boss who turned states evidence, right ? Or, you have a very, very, good printing machine ?!

Heh Heh, just jealous man, hope to join you in a couple years !
__________________
When you walk in the shadow of insanity, the presence of another mind that thinks and acts as yours does is something close to a blessed event. -Robert Pirsig, Zen and the Art of Motorcycle Maintenance
panhead is offline   Reply With Quote
Re: Buy high,sell low
Old 03-26-2004, 12:47 PM   #5
Thinks s/he gets paid by the post
BigMoneyJim's Avatar
 
Join Date: Feb 2003
Location: DFW
Posts: 2,627
Re: Buy high,sell low

Quote:
John, if any of my stools grow a leg, I'd be off to the doctor.
Okay, which wine were you drinking before that post?
__________________
BigMoneyJim is offline   Reply With Quote
Re: Buy high,sell low
Old 03-26-2004, 12:53 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Buy high,sell low

The coffee wine. Starbucks Columbian. Extra strong. Time for another cup.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Buy high,sell low
Old 03-26-2004, 04:12 PM   #7
 
Posts: n/a
Re: Buy high,sell low

Hey Panhead! Well, of course there is more to my
story than I've revealed. But what I have posted is 100% true. I'm a stickler for honesty.

Here again I repeat, but it is a huge advantage to
believe you can accomplish about anything with just willpower and brainpower. The downside (of being a
borderline egomaniac) is a small price to pay for being able to sail through life and roll over all obstacles.


John Galt
__________________
  Reply With Quote
Re: Buy high,sell low
Old 03-27-2004, 08:25 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Buy high,sell low

Quote:
Hey Panhead! *Well, of course there is more to my
story than I've revealed. *But what I have posted is 100% true. *I'm a stickler for honesty.
John,

If you truely want to have a reputation for honesty, then you need to start telling the whole truth. When you say you are invested 100% in bonds, you are ignoring your real estate investments. This is very misleading -- especially to newcomers on the board. And that kind of advice could lead one of them to disaster. In other posts you often mention your significant real estate investments and holdings, but a reader has to read a lot of posts to understand that you really have a diverse portfolio of bonds and real estate.

__________________
sgeeeee is offline   Reply With Quote
Re: Buy high,sell low
Old 03-27-2004, 09:38 PM   #9
 
Posts: n/a
Re: Buy high,sell low

Salaryguru, you are correct. I am guilty of at least
oversimplification. That portion of my net worth
not in real estate is 100% in bonds or bond-like
securities. About 50% is currently in real estate
and a small amount left over in personal property.

How's that? I hope I won't be smothered in wet
dryer sheets for my errors of omission

John Galt
__________________
  Reply With Quote
Re: Buy high,sell low
Old 03-28-2004, 12:04 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Buy high,sell low

Slap yourself silly with a wet noodle.

Going by that damned historical data, portfolios consisting of more than 60% bonds give weaker returns with no lessening of risk.

I dont think anyone has done a 50% reit, 50% bond portfolio yet. I'd be interested to see what the past 100 years told us about such a mix. Its probably quite a ride.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Buy high,sell low
Old 03-28-2004, 10:46 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: Buy high,sell low

1972-2002 efficient frontier curve and eyeballing:

50/50 REITS/stocks: return 12.9%
: SD 14.5%

100% REITS: return 13.4%
SD 17%

100% Stocks(?S&P): return 12.4%
SD 17.2%

At first blush, REITS and stocks have similar SD's and reutrns - BUT no idea of correlation or what happens when you start adding bonds. And REITS haven't been around 100 yrs. The curve looks like a parabola flopped on it's left side. With no correlation data I can't throw REITS into a calculator as a stock substitute and run with bonds. I think I can say (non math here) the REITS 'might' tend to damp SD as an asset class in stock/bond portfolio and 'maybe' slighly enhance 'long' term return by a few tenths of a percent.
__________________
unclemick is offline   Reply With Quote
Re: Buy high,sell low
Old 03-28-2004, 10:59 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Buy high,sell low

I was thinking about doing some modelling on a high REIT portfolio. At first glance they did appear to have similar total returns to stocks with a much higher yield.

Presuming you had a nut that was big enough to live off of the dividends thrown off, and given that inflation should 'inflate' the value of the real estate and hence the REIT, and you never had to sell any shares, wouldnt that work?

Then again, maybe this is just crappy low interest rates making me think about reaching for yields. I already have seen enough to know not to go to long bonds or at this time to high yield corporates, and REITs are expensive right now...but...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Buy high,sell low
Old 03-28-2004, 11:53 AM   #13
 
Posts: n/a
Re: Buy high,sell low

Hello TH and all. I have very long term bonds and
High Yield bond funds as a major part of my "forever" money. If I am satisfied with the return and can hold until maturity (assuming no defaults), I don't see a problem.
Say the NAV falls due to higher interest rates or whatever.
It's only a loss if you sell.

John Galt
__________________
  Reply With Quote
Re: Buy high,sell low
Old 03-28-2004, 12:43 PM   #14
Full time employment: Posting here.
 
Join Date: Sep 2003
Posts: 902
Re: Buy high,sell low

John, if inflation doesn't swamp your bonds' income, you should be OK if you hold to maturity. That's a pretty big "if", though.
__________________
Bob_Smith is offline   Reply With Quote
Re: Buy high,sell low
Old 03-28-2004, 01:56 PM   #15
 
Posts: n/a
Re: Buy high,sell low

Not a "big if" really. I considered whether I might
need to cash in prior to maturity. Very little chance of that.
If the bonds all disappear, I can still make it. If the real
estate goes to -0- I can still make it. I have back-ups to my back-ups to my back-ups. Nice position to be in.

John Galt
__________________
  Reply With Quote
Re: Buy high,sell low
Old 03-28-2004, 03:10 PM   #16
Full time employment: Posting here.
 
Join Date: Sep 2003
Posts: 902
Re: Buy high,sell low

I envy you! My position is not that secure. Reasonably secure, but far from bullet-proof.
__________________
Bob_Smith is offline   Reply With Quote
Re: Buy high,sell low
Old 03-28-2004, 05:03 PM   #17
 
Posts: n/a
Re: Buy high,sell low

Guess my position is enviable in some ways. I mostly
ignore the historical probabilities, because I don't care
what my weird asset mix did over the last 50 years, or 40 years, or 30 years, etc etc. I have no long term
expectations for my life (very short horizon). On the other hand, if I am still here in 30 years, I have it set in my head
how I would handle that. So, when someone points out
how 50/50 bonds- real estate would have done since 1940, except for interesting conversation it does not pertain much to my life. Kind of like who will be elected
president in the fall. I don't much care. My life will
change little no matter who wins. In some ways I
wish that I attached more importance to voting
and that it would make some difference in my life.
Sorry, I don't see it. "Bullet-proof" is mostly
a state of mind anyway. Success in life is primarily based on
whether you believe you can do it. Willpower and
brainpower; an unbeatable combination.............................


John Galt
__________________
  Reply With Quote
Re: Buy high,sell low
Old 04-12-2004, 08:29 AM   #18
Thinks s/he gets paid by the post
BunsGettingFirm's Avatar
 
Join Date: Jan 2004
Posts: 1,502
Re: Buy high,sell low

He lives in the boonies. He can grow certain cash crops that you'd have a difficult time growing in your basement.

Quote:
John, I still have no idea what keeps your ship afloat, but I wish you many years of calm seas. *Though I have to admit, I'm beginning to think you are in the witness protection program or something, I mean, the money has to come from somewhere ?? *Right ?? *Don't tell me, you were a mafia boss who turned states evidence, right ? *Or, you have a very, very, good printing machine ?! *

Heh Heh, just jealous man, hope to join you in a couple years !
__________________
Got retiree health care through your company? What if the company goes bankrupt? Retire and go RVing full time? RVs are not structurally sound. You'll die in a fiery crash. Retire and live overseas? What if you die? Aren't you worried about your body? No, I don't think I will be able to seeing how I am dead.
BunsGettingFirm is offline   Reply With Quote
Re: Buy high,sell low
Old 04-12-2004, 09:01 AM   #19
Recycles dryer sheets
 
Join Date: Jun 2002
Posts: 367
Re: Buy high,sell low

Yeah, lives in the boonies and grows a cash crop, good idea ! So I guess the back up plan would be a "state funded" retirement in case of incarceration (sp) ? Not a bad plan ! Maybe I'll buy myself a hemi orange 70 Dodge Charger, weld the doors shut, put an '01' on the doors and a rebel flag on the roof and start runnin' shine (or something more profitable) ! Hah !

I don't know what keeps that bro (sorry, biker talk) afloat, but I know he will be ok, he's got the right attitude. My view is simple, I've read all the safe withdrawal rate stuff, asset allocation, efficient frontier, real estate, gold bullion, mason jar allocation stuff, etc, but in the end, I'm going to create my own early retirement mix, and if something screws up along the way, I'll fix it. I think it's a combination of using you're head, heart, and b*lls that makes all this work anyway (sorry ladies, I ain't counting you out, substitute your own appropriate word there) ! We all (well, most of us) understand where the SWR came from and why or why not it will hold true in the future. Like has been said before, you can always go back to work (ARRRGGGHH)!

Disclaimer: I do still work, but hey, I'm young ! Then again, can you ever be too young to retire ?!
__________________
When you walk in the shadow of insanity, the presence of another mind that thinks and acts as yours does is something close to a blessed event. -Robert Pirsig, Zen and the Art of Motorcycle Maintenance
panhead is offline   Reply With Quote
Re: Buy high,sell low
Old 04-12-2004, 12:54 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Buy high,sell low

Quote:
So I guess the back up plan would be a "state funded" retirement in case of incarceration
My backup plan is a stale baguette and a one way ticket to switzerland. I practice my "menacing brandish of the baguette" once a week.
__________________

__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
buy and build or just buy land and wait ? lonedog Life after FIRE 11 02-13-2006 10:55 AM
HELP! Willpower weakening! Yearning to buy barely-affordable luxury house! SLC Tortfeasor Young Dreamers 64 02-02-2006 02:21 PM
Best time to buy into a fund PJ03 Young Dreamers 7 12-12-2005 09:30 AM
Choosing cash/short term bond/bank/cd for low risk money lazyday FIRE and Money 3 10-23-2005 01:49 PM
Why Did I Buy That Dry Bubble Gum? JPatrick FIRE and Money 25 08-17-2005 07:38 PM

 

 
All times are GMT -6. The time now is 11:21 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.