Oh shit! I missed the stock market rally!
So here is the thing this run up since the end of December have been up and up for 1 month. Many have wanted to add during the correction, but there just wasn’t one.
Reminds me of the bull run from 2009. It teaches you that
- in a bull run, the pull backs are small and infrequent
- the largest part of the bull run may occur over 10 to 20 days
- you underperformed when you couldn’t get leg in fast enough
- if you see companies that are valued and with a margin of safety you should systematically own it
My portfolio currently underperforms due to being yield heavy. I am comfortable in this 48% invested position. If the market continues to go up, picking up value stocks that yields should still do well. 50% of my returns will come from dividends.
Having a few “strikers” will lets you keep up with the broad market index. But a rising tide lifts all the boats as well, even the dividend cows.
How about you guys? Do you think the end is here? More run to come?
For those interested in tracking my most current holdings, you can review my portfolio over here. Learn to use our Free Stock Portfolio Tracking Google Spreadsheet to track stock transactions.
Dr Doom Nouriel Roubini is bullish!
This could be the ultimate contrarian indicator but when one of the most depressing market watch says this bull has a few months of legs to run, do you listen?
From CNBC.com:
“We’re a believer; we’re celebrating. We think the rally has legs,” explains Gina Sanchez, Roubini’s director of equity and allocation strategy. (She is also a CNBC contributor.)
She tells us that Roubini’s firm currently recommends being overweight equities, playing cyclical areas of the market such as technology. “Also we’d take some tilts into staples and telecom to collect yield. And we’d also be overweight ag and livestock. Generally we’d take advantage of the risk rally.”
She topped off the forecast by adding that investors have months to make money.
Roubini reportedly believes the recent action by the Fed and ECB will continue to make equities an attractive investment over the next few months.
On the flip side, Roubini doesn’t expect the rally to last long, according to the report. He thinks more pain will accompany the equity markets in the second half of 2012. He sees the S&P 500 ending the year at 1300, which would represent a 3.6% decline from current levels.
Investment Moats Weekly Reads 8 Feb
Here are this week’s reads
Money Management, Portfolio Management
- Learning from your own mistakes, framing solutions to combat them in the future [TBP]
- Can you sum up your investment philosophy in 10 words? [WSJ]
- Health Tips for Traders [Stock Sage]
Technical Analysis, Cycles and Sentiments
- How do you know you are in a forgiving market? Be vigilant [Stock Sage]
- The 3 stages of a bull market, sentiment wise [Ivan Hoff]
- How bullish are Golden Crosses [TBP]
- S&P 500 to 1517 according to Peter Brandt [Peter Brandt]
Dividend Investing
- A good article on 12% yielding stock in Lee Metal [Next Insight]
- The 40 best dividend stocks in the world [Business Insider]
- Should large cash holdings be paid out or bought backed? [Aleph]
Personal Finance, Budgeting
- The sad plight of Singapore’s fav football son Fandi Ahmad [Singapore Mind]
General Trends, Individual Stocks and Miscellaneous
- For folks who does negotiating in their job, a list of Dos and Don’t [Inc.]
- For telecom investors – a future model:leasing phones[GIGAOM]
- SOPA is wrong – Piracy indirectly helped Angry Bird [Android and Me]
- How to be happy at work! [Inc.]
- Apple’s pricing paradox [Asymco]
- An in depth look into why clean energy is not working [Wired]
- The 3 technologies that is going to change the world [WSJ]
Don’t miss the best articles of Investment Moats (iMoat) sponsored by TradeStation
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Should you invest your bonus in the stock market?
December to March is usually the period where working people get their yearly bonuses. How do you use your bonus?
Smaller Bonus this Year
This year, most foresee that their year end bonus will shrink.
The two-day poll of 100 people, conducted in both the Central Business District and heartlands, found that the majority of Singaporeans foresee smaller bonuses this year compared to last year.
Almost 75 per cent polled said they believe their bonuses will shrink, which is a prediction seconded by human resource managers.
- SPH
Like wise, I do not expect to receive much special bonus this year. Its likely to remain lower than norm consider the firm is hit with some bad results during the quarters.
Part of the overall compensation
I do see that your annual bonus be part of your overall compensation package. And as such it should be manage as a total annual package instead of treating it as something of a windfall.
The fact is that folks that work in Keppel will get their 7 month bonus while some companies will struggle to gain any. Yet the workers in Keppel may each be paid much much less than the standard monthly pay of bankers who will not get much bonus.
Reward yourself but save up for the rainy day
I used to be in the frame of mind that you should always save as much as possible. But life goals change and for some people they really work hard for it.
Rewarding oneself by going for a good holiday, buy some gifts for parents and loved ones are good ways to recharge your batteries and share the joy around.
Sometimes share and you will received more. However, do it in moderation. For some people, they may feel that their bonus is small, but when they add up in 10 years, it may be quite a substantial sum.
Pay off debts
Some folks might be incline to put these substantial amount to the stock market, however, I would suggest assessing the debts that you currently hold to see whether you are able to reduce them.
You can take up debt clearing methodology like Debt Snowball to substantially reduce the amount of interest paid.
Your returns from the markets may not be certain, but by paying down debts, you are certain that you will be reducing your outflow, which is indirectly a gain.
Get an education before investing
Some of my friends would rather put their money into the stock market and learn from it directly. There are pros and cons to it but I do see it as more cons.
The end state is they normally do more harm themselves to their portfolio rather than good.
Why not pick up $100 worth of books or education session? treat that as a commission. The difference is that you arm yourself with something that you can use over and over again ad possibility prevent you from making bigger mistakes.
An annual dollar cost averaging
Should you make it this far and still think it’s a good idea to invest your bonus then all the best to you. My take is that you do not have to split the amount out. If your bonus is rather consistent, what happens when you dump a whole lump sum is that if you buy at the market peak your next bonus may be bought at a discount.
Why I would not invest all my bonus
I made a conscious decision not to save as much of my bonus as possible. I made a 10 year goal that I may talk about in a later article.
The truth is that your life goals change and when your income progress to a certain state, you need to set aside money for other goals and that you need to share the wealth around more.
Its not easy to adjust but 30% of it will go to my family, other objectives and higher education.
How do you guys intend to use your bonus?
I run a free Singapore Dividend Stock Tracker . It contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly here.
Summing up my Investing Philosophy in 10 words
Can you summarize how you invest in 10 words?
Here’s mine:
Determine price paid versus future cash flows. Optimize portfolio risks.
What’s yours?
