Monday, February 15, 2016

Some Advice I picked up over the weekend


Seriously this is a funny picture. in 2008 market crashed 504 and people are freaking out. In 2016 market crashes 300-400 points for a week and nobody bats an eye.

The market is going insane again. I’m not buying anything this month since I have to pay for medicare and income taxes. I am here to ask you a simple question.

Just how bad was 2008?

I might be an old man but I have only started investing since 2014 (the height of the bull market). I have never invested in a bear’s market or recession. Over the weekend I received some good advice from an old stockbroker who survived the 2008 market.

“Fortify your stomach, punch yourself in the heart, and distrust your brain. Get some Tums and invest like it’s 2008.”

He said I had been buying for dividends and capital appreciation whereas I should have been buying like 2008 is going to repeat tomorrow. Over the long run I’ll win with capital appreciation and dividend investment but humans aren’t long term animals. We love short term gains and even the longest of longs can sell if pressured hard enough. Basically go to yahoo finance and look at the highest prices in 2008 and the low bounce back price in 2009-2010. Now take repeat that idea for stocks in 2016.

So I took his advice and made this chart of stocks I would consider holding or am holding in my portfolio.


High LowDifference% LossToday's Prices2008 RepeatNew Price
JNJ$70.43$50.00-$20.43-29.01%$101.82-$29.54$72.28
PG$69.69$47.09-$22.60-32.43%$80.99-$26.26$54.73
KO$30.43$20.42-$10.01-32.90%$43.11-$14.18$28.93
PEP$71.27$48.14-$23.13-32.45%$98.49-$31.96$66.53
CL$38.96$29.50-$9.46-24.28%$65.70-$15.95$49.75
WMT$59.89$47.12-$12.77-21.32%$66.18-$14.11$52.07
T$39.90$23.77-$16.13-40.43%$36.47-$14.74$21.73
CLX$62.69$48.60-$14.09-22.48%$127.54-$28.67$98.87
EMR$58.18$26.75-$31.43-54.02%$46.02-$24.86$21.16
CAT$82.64$24.61-$58.03-70.22%$63.15-$44.34$18.81
SO$37.69$28.41-$9.28-24.62%$47.91-$11.80$36.11
ED$43.57$35.46-$8.11-18.61%$70.72-$13.16$57.56
GE$37.01$8.51-$28.50-77.01%$28.26-$21.76$6.50
CVX$99.13$60.71-$38.42-38.76%$85.43-$33.11$52.32
XOM$93.07$57.07-$36.00-38.68%$81.03-$31.34$49.69
O$26.31$17.53-$8.78-33.37%$60.48-$20.18$40.30
VTR$49.42$21.57-$27.85-56.35%$48.23-$27.18$21.05
ADM$45.10$20.73-$24.37-54.04%$32.45-$17.53$14.92
BBL$77.48$31.37-$46.11-59.51%$20.27-$12.06$8.21
SPY$140.35$73.93-$66.42-47.32%$186.63-$88.32$98.31
QQQ$50.01$27.53-$22.48-44.95%$98.02-$44.06$53.96

The idea is a test to know your limits. Just how much pain can you take. After concluding this test and looking at my portfolio I realize that I can’t take much pain. What I really need to do is drastically reduce my reits (30+% of my portfolio) and buy more consumer staples, healthcare, and utilities (which is at 59% of my portfolio).

*Someone emailed me asking for a subscription? After looking around on blogger I added the Follow by email App. I have no idea why anyone wants to follow me as this is just reminders to my future self what I did right and wrong in life. Probably more of the latter than the former.

4 comments:

  1. I started my long term dividend investing in 2007. Not the best timing either considering what followed in 2008/9. In any case, I held on to every single position in my portfolio making my monthly buys as I always have and simply averaged down. I still believed in all the companies in my portfolio and almost all continued to pay dividends and even raise. Only 3 out of about 40 stocks cut their dividends, GE, WFC and IR which shows that even the bluest of blue chips can falter. I did not sell any of those names, rather continued to build my positions in each. Consumer staples are my largest sector holdings for a reason... I like my sleep. I see too many portfolios online that are yield heavy in MLPs, REITs and the like. I like the low growth stocks that have attractive growing dividends and sustainable yield first. Thanks for sharing this blast from the past.

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    1. Hi DH, wow only 3 out of 40? I agree with you. I went too heavy on the reits and now it's time to build around it. I'm actually looking at other people's portfolio (your's included) to see how to build mine. Keep up the good work

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  2. Haha, what a great reminder BDI! I backed the truck up in late 2008, which turned out to be 6 months too early, and was thrilled with the financial results. That time was exciting! I hope we see some of those prices soon....... the ones you show in the right hand column of your table. Johnson and Johnson and Pepsico would be great long term holdings for me, and ADM at $14 or BBL at $8 would be fantastic swing trades. Unfortunately I doubt we'll see such a massive price drop in the next few years, but here's hoping!

    I hope you have a great week.
    -Bryan

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    1. his bryan. I know the pain is going to come eventually. Just need to follow the advice of my elders and keep at it. thanks for visiting

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