Busy Day

Added To Some Positions

I did a little bit of shopping today.  In doing so, I have taken my cash position from 23% to 20.5%. So really at the margins.

I added to five stocks in my dividend portfolio:

CSQ at 9.86 (trading at 11.6% discount to NAV)
AOD at 4.03 (trading at 14.7% discount to NAV)
IP at 43.17 (8% below my initial purchase in September)
RIG at 44.39 (I think this Deepwater driller has gotten insanely cheap. I think it is overhang from ongoing trial.)
TC-PT at 16.60 (recall I sold near end of S pet ember at 19.25). The drop in price was difficult to resist. I bought back fifty percent of shares I sold.
HIG-WT at 22.02. I have been building positions on dips in tarp warrants for BAC and HIG. This one seemed well timed as it spiked over 6% this afternoon after I bought it.

So I inched up my yield on dividend portfolio to 6%. With my factor, the annual dividend is almost $59,000. Not too shabby.

Talk About Buy And Hold

I hear people say that buy and hold is dead.  People must then think that faster is better. Churning is better.  Because that is the opposite of buy and hold. My opinion is that buy and hold is far and away the best approach for people who want to beat the market.  You can not (in my opinion) beat the HFT on Wall Street.  They have computers looking at every last molecule of data and fancy algorithms based upon price movement.  But, so many traders are focused on price movement/momentum and on ETFs that I believe individual stock picking is becoming rarer.  That is an opportunity to "skim the cream".  Because when many many people are just trading the S&P in bulk, they are creating many many opportunities for those willing to roll up their sleeves and actually figure out which are the best and worst ones.

I was talking to a friend today.  He has taken over the finances for his father, who is in his eighties. In consolidating and cleaning up everything, he commented that his father still had stocks he had bought in the 1970s and had not traded them since.

Now that is Buy and Hold!

And you know what?  The portfolio had done very well.  One he mentioned was Merck.  His dad had put $5,000 into it in the early 70s and it was now worth between $300,000 and $400,000!  He is undoubtedly now getting more in annual dividends than the original $5,000 investment.  To me the moral is that time can be a great equalizer.  If you pick some great companies, and get them at reasonable prices and then just stand back and allow the magic of compounding to work you can get some extremely satisfactory results.

You may argue that it is different now.  But I am not so sure.  There are companies out there today that will be around in some form 40 years from now.  People will still be eating cereal.  Babies will still need diapers. The world will still need banks and insurance.  And if these companies can grow their earnings above the rate of inflation by 6 to 10% a year; you can do very well.

I know I could stand to be more patient.