So this is a "risky" post --- because some of you are investing in non taxable accounts -- and others are investing in IRA's -- and still others are doing both.
These strategies are all DIFFERENT yet investing is the same regardless of what type of account. They're different because of tax implications - and they're different because the non taxable accounts might be for a different purpose (investing for a house down payment etc).
Remember that I personally LIVE off my dividends and other investments... that's a completely DIFFERENT strategy from investing for retirement. I also pay attention to the markets (you have no idea how much time is spent doing this!)... etc. So what I'm doing and why you're doing something have completely different reasons etc.
I use three or four "stocks" for parking cash... JNK - HYG - NLY are the three main ones - and these are the names that have been mentioned in this thread repeatedly. I have also said that these names are used to PARK -- and in TEMPORARILY - cash. JNK and HYG pay a very nice dividend MONTHLY... so if a guy has some cash - he can buy these ETF's and you don't have to wait until the next quarter (3 months) to get some cash flow off them. NLY is a quarterly dividend payer and pays super high dividend percentage.... ALL THREE OF THESE NAMES ARE EXTREMELY INTEREST RATE SENSITIVE! They're the first names (this type) that get killed in a rising rate environment. So if you're not on top of what's going on -- you're going to check your account and you're going to have gotten creamed in this stuff. Leave these to the "active traders" accounts.
So that's all the "disclaimer" ---- it's IMPORTANT.... because this thread isn't about what to do or when or which name to buy and sell... but I can't write a post of Investing 102 without using something for examples.
I sold all three of these names this morning. I had gains in all three. I've picked up dividends off all three as well.... and I wanted to get some cash ready to pick on some more long term dividend payers IF ---- hello here! --- IF --- we get a "correction" (down 10% or so). I don't want to wait until that happens --- or some other event -- and loose money in my "cash parking names" --- so I'll just have to take a small gain while I have it -- and then SIT with employees on vacation -- until and maybe and IF -- we do have a small sell off..... and I'll put all those employees back to work. I had over 3MM in these three names... you guys might have 300 -- 3000 -- or 30,000 whatever it is doesn't matter... what matters is putting yourself in a position to go shopping if we go on sale. Think of it no differently than "Christmas is coming and I need to be ready". Christmas might get canceled.... and we never get the opportunity.. we won't / don't know that.... but if there's a sale --- I'm going shopping!! LOL
I'm not talking about down one day -- boom! I'm talking about a market that just "re-sets" --- a market that re-sets does so over weeks.... and it does it in a matter sometimes that you really don't notice it much. A couple bigger down days --- then some up --- then a week of just down here and there.
So how do I do this?? I have some names I want to add to and some I want to add. I will wait until these names are down 5 - 6 - 7 or so percent... and then I'll just buy a third or a quarter of them at a time. AVERAGING IN. Until I get the position I want. Remember that I can do this because I'm buying a few thousand shares. If you're buying 50 shares you can't do that -- so then you'd want to maybe wait until they're down 7 or 8%. There's no reason to try to wait until you think they're at the very "bottom"! That's nonsense and you'll never hit it. WE ARE LONG TERM.... so if you can just get some shares on sale a little BE HAPPY with that! They will recover... The shares you got on sale might help you average down a position you already have... or sometimes you might average your cost up - even though you bought shares this time on sale. The whole point is --- when stuff goes on sale - take advantage of it if you can and if you can. Don't be afraid of something (the market) just because it's on sale! We don't know how long it's going to be on sale... or when it's going on sale. But if it does... you should be happy.
Think about it like the guy that has been trying to sell his Camaro -- you'd like to own it -- but he's hold his price high and the market might even be going up... and he's thinking about raising his price... all of a sudden the market goes soft and he freaks out and drops his price 10K.... Like Charley did on his Mustang when I bought it! BAM! I'm happy as a clam to have swooped in a grabbed it! Think about stocks the same way. They are no different!!! Get your heads around that and you'll make some real money.
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