Strategy change? Possibly...

This past election has proven to me that people do not uniformly and consistently act in their self-interest.  This leads me to question how rationale the market is.  It certainly isn't the first time I have questioned the basic tenets of economics :-)

The market cannot climb forever.  At least not if history has any say.  I continue to believe that we are on the cusp of a downturn.  The question is just how soon it will appear.  

Right now I believe there are a lot of speculators out there drunk on the idea that Trump is going to shred ALL THE REGULATION (and thereby *free* us all...where is the vomiting emoji?!). There are also some non-speculators (especially at the institutional level) that are probably hedging their bets.  

Now Twump is going to reduce some of the regulations.  That much is clear.  But that doesn't necessarily mean that it will translate into a wonderful thing.  There is also the issue of possible trade wars which would not be a good thing.  There is also the possibility that some of the regulations that are clawed back were some of the really good ones put in place to protect us (us being the average citizen) following the last downturn.  SAD!

All of the above, means that I'm just not sure what exactly to do.  Right now I am transferring a certain level of funds to my brokerage account each month.  I believe in a good market and a bad market, it is important to keep investing.  Consistency is everything.  

I am not investing all the money.  I am investing about half and keeping the remaining half in cash.  It's not a lot.  But I am not willing to put everything into the market right now.  The funds remain in my money market account and can be transferred back to my checking account if need be.  They can also be invested if I see something that I want to purchase.

I will continue to reevaluate this throughout the next year.

Pru

Bruised

This has been a shitty week and I am still extremely numb because of the election results.  

While I knew that there was an intolerance in this country, I didn't fathom the depths of the hatred and misogyny.  Yes I saw it through Trump's rallies but that silent (and let's just call it what it is - white) "majority" that voted for him is quite possibly the worst of all of it.

For all of them who say that they aren't x, y, or z - yes you are.  Because if you voted for Trump despite the campaign that he ran and despite his misogyny and despite the statements he made against anyone who wasn't white and male, then yes you are.  You don't get a pass for standing by silently and saying you voted because you want better financial results.  You don't get a pass on all the hatred because you are now part of that movement, like it or not.

How any woman could have voted for him is unfathomable to me.  And yet I know that women consistently date and marry misogynistic men and let men get away with assault and excuse their behaviors and their comments even though essentially all women (and sadly some young girls) alive today throughout the entire world have had to deal with a man's unwanted attention, words, touch or assault.  To vote for a man who has verbalized his own sexual predatory actions is unconscionable.  Women need to support women and stop directly OR indirectly endorsing words, threats and actions against women.

I work with many white males and many Trump supporters (many who have only now just come out of the closet).  If you have to stay silent on your support for a candidate that speaks volumes.  VOLUMES.

I am sickened.  I am numb.  And I feel that I need to do something.  I, in a completely uncharacteristic manner, went money-crazy on Friday when I was off work.  I spent money on things I would never buy at a big box store.  Then I came home and spent the money I had transferred to my brokerage account buying a few shares of ETFs.

Then I completely lost it, transferred $2,000 from my savings account to my brokerage account and bought 50 shares of Unilever (UL) stock.  $2,000!!!  WTF!  I technically bought these shares on margin since I didn't have the actual funds in my brokerage account when I bought them.  Ultimately, I'm happy to have the stock but if it turns out that I don't get them (banks were closed on Friday so the cash transfer won't go through until Monday...), I will live with that.  I believe I have until Wednesday to have the cash in my account so I should be good.  

But seriously Pru?!

Also made the decision that I need to donate money to causes that will fight against everything that Trump said OR implied he was for during his horrible campaign.  I am going to aim to do this on a monthly basis and to be consistent with it.  This likely means that monies directed towards savings/investments will decrease since my income isn't increasing.  But it's the right thing to do.

And for those who say or think that Trump may become more "presidential" or that it was just "campaign talk", what does that say about the candidate you voted for?  That he said things that were horrible to get people's vote?  If it wasn't true or if he didn't intend to follow through then he had about the same respect for the people he was courting as he has for everyone else.  Zero.

Diverting some money to charities to fight for people's rights is the right thing to do.

Not interested in having any Trump supporter read this blog or comment in this space (although clearly I won't know unless you specifically say so).  IRL the same goes - I may have no choice in working with you but in my personal life I don't want to be within 10 feet of you.

I refuse to be tolerant of intolerance.  It is not up to women to teach men not to be misogynistic or to show men that yes we are just as equal as they are.  Similarly, it is not up to nonwhites to prove to whites that they have the same right to exist on this planet and to have the same good life as they do. 

Now, to hopefully discourage any Trump supporters from reading this blog, I need to add some language to the blog.

Pru

Strategy for the second half of 2016

I meant to discuss one of the reasons why I decided to buy the Global REIT ETF a couple of weeks ago.  The main reason was that I wanted more non-U.S. exposure.  This was also the reason why I had previously purchased the international dividend ETF.

But more to the point, I recently read a Wall Street Journal article which talked about how people believe that investing in large U.S. companies that have operations abroad give them international exposure and diversification.  Well I sat right up because yes that is what I thought.  But part of the reason for looking for international exposure is the benefits of the exchange rate and not just other non-U.S. markets.

However, a U.S. company (or any other large company in another country), is going to enter into hedges to protect themselves against currency movements.  When I read this I was like (Pru slaps hand against forehead), "Of course!"

And so a desire to have more direct international exposure has started to grow.  Also, while I still expect the U.S. to be a strong economy in 20-30 years, other countries will also be doing well so I need to have some of them in my portfolio (via index funds and ETFs).  I am, however, not looking to add specific international stocks to my portfolio.  Well at least not right now.  I do have Unilever but that is more because it is cheaper than Proctor & Gamble :-)

Okay, now let's look ahead.  I want to continue making purchases of my ETFs (VYM, VYMI, VENQ) and I want to invest funds into my Energy mutual fund since I do believe that over the long term Energy will do well and it will be important to my building stable returns.

As for stocks, I plan to increase my Walmart (WMT) stock to 10 or 15 shares in total.  I'd like to have all my stocks at a rational (to me) number - like 25, 50, 75 etc.  And I'd like to add Ford (F) to my portfolio.  

I am trying to spend at least $700 when I purchase a stock so that the fee of $7 is equal to 1% or less of the purchase.  Because of this, I will be starting to transfer excess funds to my settlement account and will be holding them there until I have saved enough to make a stock purchase.  It's better for me than keeping in my checking account or saving account where it isn't earning much.  

So expect ETF and mutual fund purchases monthly and then a couple of times between now and December I will make WMT or F purchases.

Pru

Updates, Some changes, And new pages

Well the mortgage got paid (and overpaid!) this week.  But I still have some transfers left to do.  Those will be done next week to allow enough time to clear the bank accounts.

All of the Pages have been updated to reflect balances as of yesterday.  Sadly, all the investments have been taking a bit of a battering lately.  Think long-term Pru!

I have also added 2 new Pages:  Dividends & Capital Gains and Actual Savings & Investments.

I'd like to focus a bit on getting dividends - more for the idea of what they could represent in the future - actual income to pay my expenses.  (I don't want to get too crazy because as I've been reading in the paper, in bad times dividends get cut or eliminated.)  I have a money market settlement fund (need this for a brokerage account), and the cash in there generally is used up quickly by stock purchases.  While I do not expect to earn much on this account, I'm still counting it!  I earned $0.05 (5 whole cents!) in January.

Yesterday I also received $4 from Starbucks (I have 20 shares).  Honestly I didn't realize they paid in February.  (Most of the dividends received are in the calendar quarters so next month there will be lots of activity.)  I have all the stock/ETF/mutual fund dividends set to reinvest automatically since I don't need the income now.  But tracking it is fun (and important).  

That $4.05 would definitely buy me a large cup of plain coffee or tea.  Not a fancy cup of coffee but possibly a small cappuccino.  Or it would get me a bag of rice that would last for easily 10-15 meals.

What would it buy you?

Now a bit about my investing strategy.  Since on a monthly basis I'm investing small sums (well compared to some folks), I want to make sure that I feel somewhat "accomplished" with this investing.  And I want to be smart about the $7 fee I'm charged each time I make a stock trade.  

Decision has been made to buy in larger chunks to build up my current portfolio of stocks.  In 2016, I'd like to focus on building up my shares of Intel (INTC), Unilever (UL) and my dividend ETF (VYM).  Goal is to have 100 shares of INTC, 75 shares of UL and 50 shares of VYM by the end of the year.

This of course means that my portfolio will be heavily weighted towards those three but I'm OK with that since it should be a short-term issue.  In 2017, I'll build up the other stocks and that will help with the diversification.

Also, I am planning on making a speculative trade within the next month (probably).  I saw something that was trading very low ($3-5/share range).  I expect that it will remain low for some time because it's energy focused but it could significantly increase over the next 5-10 years.  I'd like to buy 100 shares for fun.  Yup fun - I know this money could be lost.  Stay tuned...

Pru

Investing Strategy

Okay here is my game plan!

As of today, in my brokerage account I have 3 mutual funds, 1 ETF (exchange traded fund), and 5 individual stocks.  At least as regards this account, I do not intend to purchase any more mutual funds.  

Side note:  There is a lot in the press about ETFs and mutual funds and frankly I can't say whether one is better than the other.  At Vanguard you generally need to have a minimum investment of $3,000 to open a mutual fund whereas you can purchase a share in an ETF just like you do with individual stocks.  Right now I don't have $3,000 laying around that I want to use for a new mutual fund (nor do I want to go into savings for it) so ETFs are going to be a main vehicle for me to invest my money.  I will say that ETFs do tend to have lower expenses.  However, Vanguard offers certain mutual funds, called Admiral funds, where the expenses are the same as the ones in the corresponding ETF.  But you need to have an investment of $10,000 to go into the Admiral fund.    

My REIT mutual fund is an Admiral fund so those expenses are low.  (The STAR mutual fund doesn't have an option for an Admiral fund so that's moot.)  However, my Energy mutual fund doesn't have a big enough balance for it to be converted to an Admiral fund.  While I won't be adding any new mutual funds to this account, I do intend to increase my holdings in the Energy mutual fund so as to go above the $10,000 balance and have it convert to an Admiral fund with lower expenses.  (Lower expenses means I keep more of my money!)

I am particularly keen on the energy sector.  Yes it is being beaten up right now with the oil price so low but it is a sector that is extremely important to the world economy (and to just having a nice life!  Heat!  Electricity!  Plastics!).  Since I have a long-term horizon for investing, I will be making investments into the Energy mutual fund (and possibly some stocks) while prices are low.  

[Oil (and gas or let's just call it energy) are commodities. Commodities have cycles.  Well more like roller coasters.  It's down now but it will go back up.  Tomorrow, no.  Next year - possibly.  In 10-15 years - yes probably at some point during that time frame it will go a lot higher.  I don't need the money right now so it is best for me to focus on the far, far away future.]

Moving on....let's talk about what a perfect day looks like!  I've decided to focus a bit (or a lot) on dividends.  I mentioned before that it would be great to get the portfolio to the point where it generates a few hundred a month in dividends.  That's real cash - or income - that could be used for basic living expenses or for something fun.  I've decided to focus on fun :-)

For a lot of the purchase I make, I am going to translate them into how that would impact a future perfect day.  For example if I will receive $20 in dividends from one stock in a month (or $60 in a quarter), well that $20 can buy me...insert something.  This way the investing becomes more tangible.  And the best thing about dividends is that you don't sell the underlying stocks/shares.  So as long as the company doesn't cut the dividend, you'll get the same amount (or more) the next month or quarter.

And the more dividends I receive, the more perfect days I'll have in the future.  Win-win!

With this in mind, I will be investing in Vanguard's High Yield Dividend ETF (VYM) as well as in individual stocks.  VYM's most recent quarterly distribution was $0.60/share or $0.20/share on a monthly basis.  Sticking with the same example above, if I had 100 shares of this ETF I would receive $60 each quarter. Take that and give myself $20 each month and well that dividend would pay for a nice simple lunch.  Not bad although it does take time and a lot of money to get to 100 shares.

I am still looking into additional individual stocks that I want to buy.  I do not want to have too large a portfolio at this point.  I have 5 stocks so I could see myself increasing it to 15.  Not all in the same year since I do not have a lot of cash and I also want to invest more with the current 5 stocks.  

I will also invest in some index-type ETFs namely to have exposure to the total stock and bond markets (U.S. and the rest of the world).  That ends up being 4 additional ETFs.  The money that will go into these ETFs are more "set it and forget it."  They track so many companies/sectors that there is significant diversification.  Of course I won't completely forget it but it will be fairly mindless on my end.

On a final note, I wanted to just mention spending vs. investing.  For a variety of reasons, I am really trying to get myself out of a spending mentality.  (Not that I spend that much....)  There is very little I need and I should be at the point where I am comfortable with what I have.  So instead of seeing a pair of shoes and thinking "oh they're nice!" and whipping out my credit card (paid off in full each month but still...), I want to be transferring little bits of money here and there into the brokerage account.  I believe that if I can do this, I will quickly grow this account.

Not bad, not bad - at least I know have a plan!

Pru