1st Quarter 2016 Investing Results
The first quarter of 2016 is now over and the results are that if the investor didn't panic and sell when the market was crashing during January and February, then the investor should have recovered all of his/her losses and be breaking even for 2016 YTD by having remained invested during March, which delivered fantastic market returns. The attached article below provides a chart that speaks a thousand words about the virtue of not panicking and selling during a market crash.
On a personal note, my investment portfolio rebounded from being down as much as (3%) by mid-February (before the market rebound) to now being up by 4.1% YTD as of April 1. The reason for being up 4.1% YTD versus merely breaking even is that I used my cash reserves to buy beaten down stock index funds that track the S&P500 companies (large cap companies) and non-S&P500 companies (small/mid cap companies) at the January lows while maintaining enough cash reserves in guess the market declined further. By the time I was done shopping, I had increased the stock allocation of my portfolio from 40% (as of early January when the market crash began to accelerate) to 60% by the end of January just in time for the market rebound that began in February.
My only regret is selling off my gold ETF (GLD) too early. I liquidated my gold ETF around February 9 after it gained 10% for the year for the purpose of 1) locking in that gain and 2) raising more cash to buy beaten down stock index funds in case the market dropped another 10%. Unfortunately, gold gained nearly another 10% in late February, which I missed out on. However, as a colleague keeps reminding me, it is better to lock in a gain then to lose it by holding on to it for too long. I will be buying GLD for up to 10% of portfolio when it declines below its February 9 closing price.
Last week, I sold large portions of my stock index funds to lock in my gains. The stock market rebound in March was too much too fast for my comfort. I expect a market pullback sometime in the near future. I could be wrong, which is why I didn't completely sell all of my stock index funds. Heading into the 2nd Quarter, the stock allocation of my portfolio is down from 60% (as of mid-February) to 40%. (This 40% is sub-divided between 3 stock index funds that track the S&P500 companies (17.5%), non-S&P500 companies (17.%), and international companies (5%)). If the market continues to rally despite being overbought, then I still have enough of my portfolio allocated to stock index funds to participate in such a rally without losing sleep over a sudden market reversal. I hold another 20% in a long-term US treasury index fund. Finally, I am holding another 40% in cash reserves waiting to buy back GLD (up to 10% of my portfolio) at the right price and also beaten down stock index funds after the next market decline, which will come when investors least expect such a decline.
http://money.cnn.com/2016/03/31/inve...d=hp-stack-dom
Re: 1st Quarter 2016 Investing Results
again, you are a 'active' investor ... who did your own research, who made trading decisions based on that research, and as a result managed to eek out a positive return for the first quarter. But, referring back to a thread from the 4th quarter, unlike yourself and some regular Dollar Den posters, the majority of dancers and camgirls are 'passive' buy and hold investors. And depending on which particular index funds they own, as well as the particular expenses and fees involved with those funds, those 'passive' investors more or less broke even during the first quarter. This is the same rate of return offered by a short term CD ... which unlike their index funds would have been guaranteed against loss of principal value.
Without exception, my Wall St. related VIP customers tell me that the only truly important development during the first quarter was a reversal of FED policy in regard to US dollar strength = interest rate increases. In the middle of February, in response to large US based multinational corporations crying to their lobbyists about the strong US dollar destroying their foreign sales revenues ( when converted back to US dollars ), the FED went on record as delaying additional interest rate increases. Arguably, off the record, the FED acted in conjunction with other central banks to tank the US dollar's exchange rate versus other major world currencies. Thus the US dollar denominated US stock market gains achieved over the past 6 weeks or so can be attributed to a declining US dollar ... which allowed those US based multinational corporations to book significantly higher foreign sales revenues at the end of the quarter. As my Wall St. related VIP customers always tell me, 'don't fight the FED'.
However, this gives rise to a question - or more accurately a fallacy - that most Americans view the US dollar, and thus the US dollar denominated stock markets, as an absolute measure of value. In fact, this is not the case. While US$1000 invested in US stock indices might have resulted in US$1001 in price level at the end of the first quarter, is that $1 an actual gain if other aspects of a declining US dollar are taken into account ? For example, a declining US dollar affected the US dollar denominated price levels of global commodities, from gold to oil to wheat to copper. As such, an indirect effect of a declining US dollar might show up as higher prices at US gas pumps, higher prices at US grocery stores, etc. in addition to higher prices at US big box retailers whose product line is mostly imported from other countries thus costed in currencies other than the US dollar.
In the way of disclosure, I executed two trades during the first quarter ( or close ). The first was to buy some QID shares during Christmas week, based on the FED's December policy announcement. The second was to sell those QID shares and use the proceeds to buy QLD shares after the FED's about face in mid February. Now that the end of quarter results have been booked, I'm ready to sell those QLD shares in anticipation that the US stock markets are due for another downturn. Admitted these are not 'investments', but speculations based on market volatility and likely response to FED policy.
Re: 1st Quarter 2016 Investing Results
Well, I personally manage my portfolio of stocks. I currently hold only three issues and have held them the whole quarter. One issue is up 27% for the quarter plus a dividend yield of 3.67%. The second is up 8% for the quarter plus a dividend yield of 2.25%. The third is up 15% for the quarter plus a dividend yield of 2%. I won't re-balance until January of 2017. If any of the two issues I am watching hit my buy price, I've got some money in a federal intermediate term bond fund that is waiting to be used on an equity. That said, my federal bond fund is yielding 3.4% YTD. Of course my broader market fund has done well too. It's been a very good quarter, after a losing 2015. To be fair to my three companies, they all maintained their dividends through 2015, so it's not like I lost anything by holding them. :-)
Re: 1st Quarter 2016 Investing Results
Darn, CassandraVIP, you got me.
Nice job, Zofia! I could never personally invest in individual stocks. Too much risk for me although the greater the risk, the greater the potential reward -- if one makes the right investment call as investors in SunEdison found out this past week.
http://www.marketwatch.com/story/sun...sks-2016-04-15
Nevertheless, I'll still to a diversified portfolio comprised of index funds where I essentially own thousands of companies instead of a handful. That said, this should be an interesting week for the markets given the bad news over the weekend out of Doha, Saudi Arabia's threat to launch financial Armageddon if Congress votes to hold them accountable for their role in the 9-11 attacks, or if the "Big One" that seismologists have been warning about since the Great San Francisco Quake of 1906 finally strikes the nations of the Pacific Rim.
http://www.cnbc.com/2016/04/17/doha-...agreement.html
http://www.nytimes.com/2016/04/16/wo...bill.html?_r=0
http://www.dailymail.co.uk/news/arti...scientist.html
Re: 1st Quarter 2016 Investing Results
Thanks Danny. One of my finance professors in college said that a part-time individual investor could not follow more than five companies at any one time. I think he was right. That's why I limit myself to five. My targets all have a steady dividend history. That helps make down years, like 2015, a lot less painful than they might otherwise be. I also am a buy and hold investor.
XOXO
Z
Re: 1st Quarter 2016 Investing Results
I read that overall, dividend stocks outperform stocks that don't provide dividends.
Zofia,
Are you in any DRIPs?
Re: 1st Quarter 2016 Investing Results
Quote:
Originally Posted by
eagle2
I read that overall, dividend stocks outperform stocks that don't provide dividends.
Zofia,
Are you in any DRIPs?
Yeppers. All three of my companies have DRIPS and I participate in them.
With the right research, it is possible to identify companies that don't pay dividends that will perform very well. There are good reasons not to pay a dividend. For example, the company is reinvesting it's profits into the business. That's just one more research task. I don't do it because my focus is on dividend paying stocks in industries I do understand.
Z
Re: 1st Quarter 2016 Investing Results
since nobody has commented, for the sake of less experienced dancers and camgirls some of the basics of dividend stocks should probably be covered.
When you invest $1000 in a 1 year bank CD, you are guaranteed to receive $10 in interest earnings at the end of the year. You are also guaranteed to have your original $1000 returned to you. When you invest $1000 in a dividend paying stock, you are gambling that the present dividend payouts will still exist a year from now so that you receive $30 in dividend earnings. You are also gambling that the resale value of the stock shares a year from now will at least be equal to the amount which you paid to buy them.
Dividend payouts, and to some extent stock share valuations, are a result of policy decisions made by the company's board of directors. The board can vote to terminate, reduce, or increase dividend payouts at any time - which affects future dividend percentages. The board can also vote to increase, decrease, or even terminate, open market purchases of the company's stock shares by the company treasurer - which affects future stock share resale value.