Would selling right now be such a poor decision?

[copyright1997reloaded]

I noticed that the SP500 is just above the 50 day moving average right now and just about half way between the high water mark and the recent low.

Not that I'm a technician but just thought that was interesting. Will it continue up or will it go down below that low? Only retirees watch this stuff.

Yes, are we in that V uptrend off the low too fast? Did we really have a successful retest of the low? Do we need to? What happens if we stall out near the high? And so on. Happy days are here again?

 

[redduck]

Yes, the price increase of stock is higher than the increase of dividend. People are willing to pay more to get less, and I guess that bothers you.

Do you feel that the stocks you own now are overvalued, and want to sell them, and get other stocks with a higher dividend yield?

Yes, if people are willing to pay more to get less, it gets in the way of my finding "bargains." The only decent bargains that I see are in power utilities and I use XLU (an ETF that holds utilities) for that group.

Yes, again. I feel the stocks that I own are all over-valued--or at least much less a good value from when I bought them. (With two exceptions, I only own dividend stocks, but I do own several mutual funds). Recently, I've only been adding to my Wellington.

No, I don't want to sell my over-valued stocks. I've done that in the past and the only thing that happened was that they become even more over-valued. So, I'm still getting my dividends and my dividend raises and that is working out pretty well so far. Additionally, I have an asset allocation that I will stay with because I don't want audreyh1 yelling at me again.

 

[NW-Bound]

... There are plenty of folks out there (and on the ER forum) who think they don't have to worry about stock market drops because they just rely on the dividend flow. But dividends are a mechanism for returning capital based on expected profits...and if the future for those diminishes, the dividend flow will also (but usually with a delay as companies are at first too reluctant to cut the dividend to match their new reality.) [Hm, I wonder if GE is an example of that.]

If the storm gets too bad, there is no safe harbor and very few places to hide.

+1

The Great Recession of 2008-2009 was sufficiently short that dividends held up quite well. Past bad periods lasted much longer, and the economy was in the doldrum for a long time. It was not always possible to avoid selling principal, and eating our seed corn. Looking back in history teaches us a lot.

 

[redduck]

The Great Recession of 2008-2009 was sufficiently short that dividends held up quite well. Past bad periods lasted much longer, and the economy was in the doldrum for a long time. It was not always possible to avoid selling principal, and eating our seed corn. Looking back in history teaches us a lot.

But, at least the dividend stocks might continue to pay for the first two years into a deep and lengthy downturn, thereby delaying dipping into the principal.

 

[Lsbcal]

+1

The Great Recession of 2008-2009 was sufficiently short that dividends held up quite well. Past bad periods lasted much longer, and the economy was in the doldrum for a long time. It was not always possible to avoid selling principal, and eating our seed corn. Looking back in history teaches us a lot.

History teaches us that there are times when eating a bit of seed corn (think popcorn) is necessary as biology teaches us that we will surely die. So I try to get used to the idea that our net worth chart might go down and to the left.

VPW data says we will be alright with our current AA and spending. Generally we should be OK even in a period like the late 1960's through 1970's or even the 1930's.

Regarding dividends, I'm more into total return wherever I can get it.

 

[NW-Bound]

But, at least the dividend stocks might continue to pay for the first two years into a deep and lengthy downturn, thereby delaying dipping into the principal.

Yes. So is having cash, of which I have probably way too much.

In the past, the bad years could just drag on and on, with lousy return for both stocks and bonds. Those were periods when FIRECalc said with 4%WR you went broke in 30 years. The only way to avoid spending principal is to have a superlow WR. For dividend stocks, one had to contend with living on 1/2 the dollar amount he used to get, per the chart shared by copyright.

As frugal as I am, if I had only 1/2 as much to spend, I would have a major lifestyle change. Hello RV boondocking. No, to stay in my home I would spend principal, as I cannot take it with me. My children will understand if I do not have much to leave them when I croak.

 

[SecondCor521]

I noticed that the SP500 is just above the 50 day moving average right now and just about half way between the high water mark and the recent low.

Not that I'm a technician but just thought that was interesting. Will it continue up or will it go down below that low? Only retirees watch this stuff.

Yes, are we in that V uptrend off the low too fast? Did we really have a successful retest of the low? Do we need to? What happens if we stall out near the high? And so on. Happy days are here again?

The two of you just summarized about 8 hours worth of CNBC's coverage of the markets today.

 

[NW-Bound]

Yes, if people are willing to pay more to get less, it gets in the way of my finding "bargains." The only decent bargains that I see are in power utilities and I use XLU (an ETF that holds utilities) for that group...

Reminded me to look at my XLU holding. I do have it, in addition to VOX (Telecom) which also pays high dividends. For the last few years, the total return of these does not look too well compared to that of the total market, but I have a few percent of portfolio in them for diversification.

One thing about these dividend stocks/ETFs is that I do not have to pay much attention to them, while I have to watch my biotechs and semiconductor stocks like a hawk. I would do better keeping less cash and having more in these dividend stocks. It's illogical. Habits die hard.

 

[NW-Bound]

Thanks for reminding me of XLU. It has been said that utilities are a safer bet than bonds in a rising rate environment. That, plus utilities have been in the dumps for the last few months means that it's not a bad time to add to my position.

Now, you know who's going to buy more of XLU tomorrow.

 

[dallas27]

But, at least the dividend stocks might continue to pay for the first two years into a deep and lengthy downturn, thereby delaying dipping into the principal.

So, the day before dividends are issued they are “principal”. So, you are dipping.

 

[copyright1997reloaded]

The two of you just summarized about 8 hours worth of CNBC's coverage of the markets today.

Hey, pretty good for not watching CNBC!

 

[NW-Bound]

Thanks for reminding me of XLU. It has been said that utilities are a safer bet than bonds in a rising rate environment. That, plus utilities have been in the dumps for the last few months means that it's not a bad time to add to my position.

Now, you know who's going to buy more of XLU tomorrow.

Well, maybe, maybe not.

Many articles advise against buying utilities in a rising rate environment, citing many plausible factors. And utilities have dropped in the last 3 months because investors were repricing them. XLU dropped 12% because of that. Is the correction overdone? Who knows?

On the other hand, it is said that material stocks will do better. And indeed, I have some basic material stocks that rose 20% in the last 3 months.

For Buffett's view on how scary inflation is, see: https://www.cnbc.com/2018/02/12/war...to-invest-in-stocks-when-inflation-rises.html.

 

[ERD50]

But, at least the dividend stocks might continue to pay for the first two years into a deep and lengthy downturn, thereby delaying dipping into the principal.

So, the day before dividends are issued they are “principal”. So, you are dipping.

We can talk until we are blue in the face (and we have!)...

http://www.early-retirement.org/forums/f28/dividend-paying-stocks-90316-2.html#post1996761

and yet, some people will just choose to not recognize that dividends are just another form of a company selling off some of its principal (versus you deciding to sell some of it at your discretion).

-ERD50

 

[redduck]

We can talk until we are blue in the face (and we have!)...
-ERD50

Yes, yes, I got it. Honest!!!
But, I slipped. Got to start attending my meetings more often and on a more regular basis.
Guess I just can't be a moderate dividend investor. Maybe some people can, but for me it's a road to failure.
I want you to know that I appreciate your always being there for me.
And you should also know, blue is my color.

 

[OldShooter]

... some people will just choose to not recognize that dividends are just another form of a company selling off some of its principal (versus you deciding to sell some of it at your discretion). -ERD50

+1 Strictly what Richard Thaler calls mental accounting. https://en.wikipedia.org/wiki/Mental_accounting

 

[aja8888]

Well, well......now that the market is heading north for this week, all the panic threads have stopped.

 

[NW-Bound]

You mean that I can go back to my soldering iron instead of hanging out here discussing what to buy and what to sell?

Aw, as they say, "good" times like the last two weeks do not last.

 

[mamadogmamacat]

Indeed they have
And my inability to accurately predict the financial future continues unabated

However those to my mind silly volatility instruments are back to getting more volume albeit at a slow pace, after bleeding it at a rapid pace for about 3 or 4 days, so...........

 

[Lsbcal]

Well, well......now that the market is heading north for this week, all the panic threads have stopped.

In the old days we didn't have any real way to wail and gnash our teeth publicly. Now with social media we can get really silly.

It felt somewhat lonely back in Oct 1987.

 

[SecondCor521]

Hi, I'm secondcor521 and I've been a buy and hold indexer since about 1987, retiring in February 2016 at the age of 46.

The market recently pulled back.

I continue to be a buy and hold indexer and have done no buying or selling except to rebalance to my 90/10 AA, which has remained the same since June 2016. (From 1987 through June 2016 my AA was 100/0.)

Recently that has meant selling some stocks to buy some bonds. Soon that might mean selling some bonds to buy stocks.

I'm not sure that is enough non-silence for you, but I hope it helps.

Not that anyone particularly cares, but I checked my AA last night and put in a transaction to trade 23 basis points of VBTLX for VTSAX to get me back to 90/10.

I expect to continue to do similar trades for a while. Eventually I believe Mr. Depressed Market will become Mr. Happy Market again. At that point I have planned to move towards 100/0 again. This has more to do with optimizing my portfolio towards my goals. It would not be any fundamental shift in my economic outlook, my opinion on the Phillips curve, the Fed, China, technical analysis, or anything like that.

I have not made banana bread lately but have some in the fridge.

 

[NW-Bound]

Well, well......now that the market is heading north for this week, all the panic threads have stopped.

It's been a month since the above post. It's time to panic again.

 

[Lsbcal]

Looks like the market hit around the 200 day moving average today. Chart for 6 months:



.

 

[Dash man]

I’m just glad I took $400k of stocks out a month ago to harvest a tax loss. Thirty days has now passed and I can reinvest it next week at these even lower prices.

 

[aja8888]

It's been a month since the above post. It's time to panic again.

Exactly!

 

[NW-Bound]

Well, I bought during that panic time. And I sold out barely in time last week. Lucky me.

Should I be buying again? Well, I have been selling put, but can still do some more.

Should I give back to the market what it gave me? Blow that dough?