After the Crash: Portfolio Income Planning


E

Elle

My portfolio is of course paying much less than two years ago as far
as stock dividends and Certificate of Deposit interest are concerned.
Naturally I have cut expenses as much as I can without sacrificing
lifestyle quality (too much :) ). Also I have some job opportunities,
the sort of jobs that can supplement my income and bring joy in
retirement. The question on my mind for several months now is how and
whether to balance the following:

(1) drawing down principal. I have a large cash reserve for the
proverbial rainy day of seven or so years, a la what IIRC jIM has
proposed several times here.

(2) waiting for a few bank stocks to 'bounce back.' They may not
anytime soon. If they do bounce back, then I suppose their formerly
relatively high dividend yield will precede the stock price returning.
Which means there is no point to selling them, except to reduce my
exposure to the higher risk bank sector.

(3) waiting for a few finance-based stocks, which slashed their
dividends, to 'bounce back' in price, then selling them. E.g. HOG and
some REITs. Their stock prices are making a better comeback than some
banks. Their company earnings often justify the rise in stock prices,
too. Will their dividend yield return as well? I am thinking maybe not
as fast as their stock price. IR is a case in point. Its price has
bounced back. If it were not in my IRA, I would be considering selling
it, because its dividend has been slashed so much.

I am studying my beloved Robert Shiller S&P 500 data and see dividends
after the 1929 yada collapse took on the order of 20 years to return
to their 1930 level. If financial bubble theory and how economies
crash and rebuild are logical phenomena (as opposed to numerology), I
can see a couple of decades being necessary for my portfolio income to
return to its 2007 or so level. This is so far away that I almost
think it is not worth planning for too exactingly. After all, I will
be receiving Social Security in 13 years, assuming SS does not go
under. And it might.

My inclination is to shift my CDs coming due in the next year to non-
financials with good fundamentals. Granted this is exactly what the
Fed wants me to do. My income from my portfolio will be flat for some
years as a result. This is because the CDs are currently paying
upwards of 4.5%, whereas the stocks I am contemplating pay mostly
south of this in dividend yield. It is not too troubling, because a
lot of my costs seem under control, like grocery bills and gasoline.
Milk has been under $2 a gallon for some weeks now, and ditto for many
other food products. Of course, one really bad medical ailment and I
could be in bankruptcy.

I would welcome others' ruminations on this, especially those living
largely off a portfolio. It is a very strange time, with for example
income rates so low for so long, and proving that financial history
does not repeat per se.
 
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D

dpb

For the best free and legitimate investment advice on the web, go to:

http://www.bogleheads.org/forum/

Be prepared for a financial awakening. You will not find much advice
recommending dividend stocks to replace CDs.

My portfolio is of course paying much less than two years ago as far
as stock dividends and Certificate of Deposit interest are concerned.
Naturally I have cut expenses as much as I can without sacrificing
lifestyle quality (too much :) ). Also I have some job opportunities,
the sort of jobs that can supplement my income and bring joy in
retirement. The question on my mind for several months now is how and
whether to balance the following:

(1) drawing down principal. I have a large cash reserve for the
proverbial rainy day of seven or so years, a la what IIRC jIM has
proposed several times here.

(2) waiting for a few bank stocks to 'bounce back.' They may not
anytime soon. If they do bounce back, then I suppose their formerly
relatively high dividend yield will precede the stock price returning.
Which means there is no point to selling them, except to reduce my
exposure to the higher risk bank sector.

(3) waiting for a few finance-based stocks, which slashed their
dividends, to 'bounce back' in price, then selling them. E.g. HOG and
some REITs. Their stock prices are making a better comeback than some
banks. Their company earnings often justify the rise in stock prices,
too. Will their dividend yield return as well? I am thinking maybe not
as fast as their stock price. IR is a case in point. Its price has
bounced back. If it were not in my IRA, I would be considering selling
it, because its dividend has been slashed so much.

I am studying my beloved Robert Shiller S&P 500 data and see dividends
after the 1929 yada collapse took on the order of 20 years to return
to their 1930 level. If financial bubble theory and how economies
crash and rebuild are logical phenomena (as opposed to numerology), I
can see a couple of decades being necessary for my portfolio income to
return to its 2007 or so level. This is so far away that I almost
think it is not worth planning for too exactingly. After all, I will
be receiving Social Security in 13 years, assuming SS does not go
under. And it might.

My inclination is to shift my CDs coming due in the next year to non-
financials with good fundamentals. Granted this is exactly what the
Fed wants me to do. My income from my portfolio will be flat for some
years as a result. This is because the CDs are currently paying
upwards of 4.5%, whereas the stocks I am contemplating pay mostly
south of this in dividend yield. It is not too troubling, because a
lot of my costs seem under control, like grocery bills and gasoline.
Milk has been under $2 a gallon for some weeks now, and ditto for many
other food products. Of course, one really bad medical ailment and I
could be in bankruptcy.

I would welcome others' ruminations on this, especially those living
largely off a portfolio. It is a very strange time, with for example
income rates so low for so long, and proving that financial history
does not repeat per se.

======================================= MODERATOR'S COMMENT:
Please trim the post to which you respond. "Trim" means that except for some brief material to provide context for your remarks, the previous post is deleted. Thank you.
 
T

The Henchman

Milk is $4 a gallon where I live (4L). You are damn lucky to only be
paying 2 a gallon. Gasoline pricing has been stable for some time but I
would never plan on it being at a stable price long term. Never discount
the opportunity that governments will tax gasoline even more, never mind the
futures exchanges.

For what it's worth inflation in Canada is above where the central bank
forecasted it wants it to be. Bank of Canada targets under 3% like most of
the industrilizalised world. They predicted 1.5% for 2009 and it approached
2% and it worries the bank somewhat. For 1 quarter this year Canada
actually experienced deflation for the first time since the 1950s, so that
2% overall annual rate could have been higher. Cost of living keeps finding
ways to go up even in steep recessions awash in low credit and government
loans.

Now I assume you live I the US cause you use the gallon system. Is
inflation not a concern down there? The USA could be facing lower ratings
on it's debt. Could this force retailers to charge more and borrow less and
stock less? I wouldn't count on stable food prices for very long. China
and India will be/are importing vast amounts of food for their growing
middle classes and they are the first to limit exports of food in times of
crises. Australia and Argentina are in the throes of drought. Same with
California.

I'd be reexamining how under control your day to day living expenses for
basics such as food and energy are and what sorts of spikes you are able to
absorb. Food prices have been anything but stable these last 3 or 4 years.

One thing you did not mention is your housing. Is it paid for? Are you
mortgage free? What a big sigh of relief that would be before an interest
rate jump next year.
 
E

Elle

One thing you did not mention is your housing.  Is it paid for?  Are you
mortgage free?  
Yes and yes. I own outright my small, relatively inexpensive house
with the huge garage and pleasing view.

I am in the United States.

I can take the spikes due to a huge cash reserve supplemented by
sizable CDs coming due for another two years.

I agree food and gasoline could oscillate quite a bit. But for the
most part, if they go up I expect company earnings to go up, which I
think will tend to drive up my dividend income.

The COLA for U.S. Social Security recipients in 2010 is nil, for your
reference, meaning inflation was negligible to none by the usual
standard here in the U.S. for about the last year. Of course the usual
standard can be useless to many of us.

I continue to monitor how my net worth has changed since 2003, since
full retirement. I am down about 1% from 2003. I am not sure this will
hold, since after a nice run-up, my house's appreciation has been
declining this past year. Of course my greatest assets are stunning
good health, maybe a few brains, and lots of buds with whom to enjoy
adventures.

Sorry about Canadian milk. I would pay $4 a gallon if I could get
Canadian health care, though. ;-)
 
D

dapperdobbs

My portfolio is of course paying much less than two years ago as far
as stock dividends and Certificate of Deposit interest are concerned.
Yes ... and last year municipal floaters were redeemed because none of
the fabulously bright institutional buys wanted any of them. Indiana
bought back their issue when it hit 8% or so. Today, the very same
very bright boys want all the municipal issues they can get - even at
fraction of a percent yield. Not that I have a handle on what I call
the "water sloshing around in a bucket" (worldwide financial flows),
but this yo-yo insantiy (lack of analysis) bears observating with
caution. I mean, when even a ski resort in a hotel in a desert gets
into trouble, what can one trust, eh?:)

[snip]
(3) ... [snip] Their company earnings often justify the rise in stock prices,
too. Will their dividend yield return as well? I am thinking maybe not
as fast as their stock price. IR is a case in point. Its price has
bounced back. If it were not in my IRA, I would be considering selling
it, because its dividend has been slashed so much.
Your research on historical trends and events is probably better than
mine, but what you extrapolate makes sense to me, and clearly
dividends depend on earnings not deployed in new reinvestment into the
business. IR is still under the recession, and digesting its
acquisition of Trane. Those elements out of the picture, I would not
be surprised to see rapid re-increases in their dividend. IMO banks
and financial companies may never see a return of their speculation-
based profit growth.

[snip, I think - I forgot:-]
I am studying my beloved Robert Shiller S&P 500 data and see dividends
after the 1929 yada collapse took on the order of 20 years to return
to their 1930 level.  
[snip]

Yah, oh ... (gasp) ... yah! (Swedish :) ... but ... wasn't there
something called The Great Depression, and The Second World War
inbetween 1930 and 1950? (Gentle joking :)

[snip]
It is a very strange time, with for example
income rates so low for so long, and proving that financial history
does not repeat per se.
Through thick and thin, over thousands of years, times have come and
gone, yet mankind has found ways to continue to rise to new levels.
That doesn't say much about what will happen tomorrow, but the
fundamentals of investment are structured around it. Stick to
analysis. Something thrown into the air will fall. Ducks will float on
water, even when wet. Do not chase the hot money or the short-term
trend (unless you're a trader). Somewhere, somehow, even if it drags
on, the strangeness should return to more recognizable realities. The
stock market is at recovery highs, and portfolios have appreciated. I
think many misjudged interest rates (by how many years, I don't know).
I'm watching for some pullback in stocks (cautiously) but my theory,
even if shaken by near-term conditions, remains the same. I'm watching
GIS (I'm underweighted).

I hope my ruminations are helpful - I'm not feeling very sure of what
to do, myself. Optimistically, I can't see rates at 0.03% for more
than another year, and it may well be that earnings recover smartly,
even if dividends do lag.
 
E

Elle

dapperdobbs said:
IR is still under the recession, and digesting its
acquisition of Trane. Those elements out of the picture, I would not
be surprised to see rapid re-increases in their dividend. IMO banks
and financial companies may never see a return of their speculation-
based profit growth.
Despite what I wrote earlier, I approve so heartily of the nuts and
bolts business of IR that it would be hard to let go. It will be
interesting to see how dividends, IR's and others', return, if they
return in my lifetime.
[snip, I think - I forgot:-]> I am studying my beloved Robert Shiller S&P 500 data and see dividends
after the 1929 yada collapse took on the order of 20 years to return
to their 1930 level.  
[snip]

Yah, oh ... (gasp) ... yah!  (Swedish :) ... but ... wasn't there
something called The Great Depression, and The Second World War
inbetween 1930 and 1950? (Gentle joking :)
I know, that WWII thing bothers me too. It was a great jobs program.
Industry had to feed the war machine. The GI bill helped educate more
than usual.

We need something like a war on our crumbling infrastructure and our
dependence on foreign oil (hence create 'green jobs'). ISTM that these
would represent a heckuva lot of bang for the buck.
[snip]
It is a very strange time, with for example
income rates so low for so long, and proving that financial history
does not repeat per se.
Through thick and thin, over thousands of years, times have come and
gone, yet mankind has found ways to continue to rise to new levels.
That doesn't say much about what will happen tomorrow, but the
fundamentals of investment are structured around it. Stick to
analysis. Something thrown into the air will fall. Ducks will float on
water, even when wet.
I hear you. It is why I believe in investing in companies in the first
place.
Do not chase the hot money or the short-term
trend (unless you're a trader).
Trader, ha, very funny. ;-)
Somewhere, somehow, even if it drags
on, the strangeness should return to more recognizable realities. The
stock market is at recovery highs, and portfolios have appreciated. I
think many misjudged interest rates (by how many years, I don't know).
I'm watching for some pullback in stocks (cautiously) but my theory,
even if shaken by near-term conditions, remains the same. I'm watching
GIS (I'm underweighted).
GIS seems like watching to me. I have it now in a category of a whole
bunch of companies that produce sort of staple, well known products,
like PG, ABT, MMM, JNJ, PEP. Also UTX and GD. (I did quite well on GD
this past year, buying at 36.5. Its fundamentals argue for picking up
a bit more, maybe.) I just sold some KO but only because I am top-
heavy in it. I am considering a couple more electric-power type
utilities, probably along with darn near everyone wanting more sanity
in stocks (plus a seemingly more reliable dividend) these days. Of
course it bothers me that just a few years ago electric utilities were
often dismissed by the big guns but not so today. Following fashions
shows a lack of pride.
I hope my ruminations are helpful - I'm not feeling very sure of what
to do, myself. Optimistically, I can't see rates at 0.03% for more
than another year, and it may well be that earnings recover smartly,
even if dividends do lag.
Your measured words are always helpful.
 
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H

HW \Skip\ Weldon

My portfolio is of course paying much less than two years ago as far
as stock dividends and Certificate of Deposit interest are concerned.
The question on my mind for several months now is how and
whether to balance the following:
snip

I would prefer you get a job in a field that interests you and which
provides employee benefits and use that income to supplement your
meager investment income rather than making changes to your portfolio.
Here's why.

1. Every recession and bear market in history has eventually ended.

2. Making changes in long-term investments using current trends has
proved notoriously costly.

There's a fancy term that describes projecting current events into the
future that escapes me, but the idea that the future will look like
the present has always been wrong. For example, interest rates did
not stay at double digits, the "new economy" was bull and hedge funds
crumbled despite being managed by "geniuses". In fact, the fallacy
that somebody has discovered the secret to investing money is what's
behind the old joke question, "Where are all the OLD gurus?"

So I vote for doing nothing with your investments. The path to
financial security comes from saving regularly and living within one's
means. My suggestion is to get back to that, and if the income isn't
enough, get a job you bum. <grin> You're just a kid anyway.
 
R

rick++

Having your "base living expenses" in an immediate annuity
may work. This would a "check for life" to be combined with
social security to pay housing and food.
Your other savings would generate more discretionary expenses
which you'd tighten in slow economic times.

I've heard suggestions of 1/4 to 1/3 savings buying an annuity.
There are variants such as charitable annuities where you can
chose fixed rate for life or a lower percentage of underlying
growing endowment. The later used to sound attractive when
college endowments grew at a double digit rates.

You should also watch the health of the insurance company
during a recession. You hope the company survives the
decades you need. I surpised at how few insurance companies died
in the current deep recession.
 
R

Ron Peterson

Having your "base living expenses" in an immediate annuity
may work. This would a "check for life" to be combined with
social security to pay housing and food.
Your other savings would generate more discretionary expenses
which you'd tighten in slow economic times.
Immediate annuities don't have much of a payout until one gets to
retirement age, and maximum tax credit occurs at age 70+. I would
suggest waiting until interest rates go up because annuity yields are
partly dependent on interest rates. If a person anticipates having a
short remaining life span than annuities should be avoided.
I've heard suggestions of 1/4 to 1/3 savings buying an annuity.
There are variants such as charitable annuities where you can
chose fixed rate for life or a lower percentage of underlying
growing endowment. The later used to sound attractive when
college endowments grew at a double digit rates.
Buy only enough annuity to meet current expenses so that the remaining
assets can grow.
You should also watch the health of the insurance company
during a recession. You hope the company survives the
decades you need. I surpised at how few insurance companies died
in the current deep recession.
Annuities are insured by the state in which they are issued, but there
are dollar limits.
 
D

dapperdobbs

Your management, as evidenced in the paragraph below, is really sound,
IM[studied]O. I've looked at some 'privately managed' portfolios as
well as mutual funds, and your examples below are better than what
I've seen. Investing in areas one understands is a 'competitive
advantage.' I don't really understand defense (e.g. GD) I couldn't
figure out TXT, 20 years ago, the Osprey and VTOL. Also, TXT seems to
have left their knitting with ventures into photo-masking (?).
GIS seems like watching to me. I have it now in a category of a whole
bunch of companies that produce sort of staple, well known products,
like PG, ABT, MMM, JNJ, PEP. Also UTX and GD. (I did quite well on GD
this past year, buying at 36.5. Its fundamentals argue for picking up
a bit more, maybe.) I just sold some KO but only because I am top-
heavy in it. I am considering a couple more electric-power type
utilities, probably along with darn near everyone wanting more sanity
in stocks (plus a seemingly more reliable dividend) these days. Of
course it bothers me that just a few years ago electric utilities were
often dismissed by the big guns but not so today. Following fashions
shows a lack of pride.
Good rational weighting is important (e.g. KO). Electric utilities got
swept up into the Enron energy futures "game" a decade or so ago. DUK
got itself into real trouble trying to market in CA etc. (NC to CA??)
Now I don't believe their mgmt statements. Gov't control into
utilitites would be horrible.
I know, that WWII thing bothers me too. [LOL - good one!]
It was a great jobs program.
Industry had to feed the war machine. The GI bill helped educate more
than usual.

We need something like a war on our crumbling infrastructure and our
dependence on foreign oil (hence create 'green jobs'). ISTM that these
would represent a heckuva lot of bang for the buck.
I see what you're saying. And I have stories to tell about my fond new
involvement with orange trees and grape vines. Want some oranges? I
have plenty!:) I'm studying up on soil. I tried finding an
infrastructure or water management company, and failed. I bought TTEK,
but the mgmt got into cell-phones without warning, bombed out badly,
and I sold on the recovery for break-even. Mgmt one can trust is
important! DD is into soil and agriculture. Buffett's Burlington
Northern overall reasoning is interesting. I like CHRW for the growth
potential and product / services.

The reason for going into all that is that it does relate to
retirement portfolios. Earnings growth enables higher stock prices,
and higher dividends. A sound company establishes a sound dividend
policy, and untradiionally low yields attract questions. The great
innovaion of the high-tech era made fast-growth companies easy to find
(MCHP). Today it looks like polticial stability and capitalism is the
driver (e.g. BRIC countries), and US multi-nationals have exposure
there - not fast growth overall, but growth, if they play it right.
PG, KMB, for example - low-ticket items, but with substantial barriers
to entry (R&D, product goodwill). I'm not sure where to get reliable
data on foreign companies. The thing about investing is that it is the
turtle winning over the hare. Steady as she goes! ("Steady" is a 10mm
word!:)
 
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R

Ron Peterson

(1) drawing down principal. I have a large cash reserve for the
proverbial rainy day of seven or so years, a la what IIRC jIM has
proposed several times here.
Think in terms of cash flow instead of reserves.
(2) waiting for a few bank stocks to 'bounce back.' They may not
anytime soon. If they do bounce back, then I suppose their formerly
relatively high dividend yield will precede the stock price returning.
Which means there is no point to selling them, except to reduce my
exposure to the higher risk bank sector.
Examine the financials of your bank stocks and sell those that are in
bad shape.
(3) waiting for a few finance-based stocks, which slashed their
dividends, to 'bounce back' in price, then selling them. E.g. HOG and
some REITs. Their stock prices are making a better comeback than some
banks. Their company earnings often justify the rise in stock prices,
too. Will their dividend yield return as well? I am thinking maybe not
as fast as their stock price. IR is a case in point. Its price has
bounced back. If it were not in my IRA, I would be considering selling
it, because its dividend has been slashed so much.
Sell IR, it shouldn't matter if it is in your IRA or not.

CLMT is high dividend stock for you to consider.
After all, I will
be receiving Social Security in 13 years, assuming SS does not go
under. And it might.
If you can, and are still in good health, postpone SS until you are 70
even if you have to live off savings.
My inclination is to shift my CDs coming due in the next year to non-
financials with good fundamentals. Granted this is exactly what the
Fed wants me to do. My income from my portfolio will be flat for some
years as a result. This is because the CDs are currently paying
upwards of 4.5%, whereas the stocks I am contemplating pay mostly
south of this in dividend yield. I
Stock investing functions best by harvesting capital gains to take
advantage of lower taxes.
 
D

dapperdobbs

Sell IR, it shouldn't matter if it is in your IRA or not.
CLMT is high dividend stock for you to consider.
Hi Ron,

Good advisement principles :) If I may pick your mind a bit:

1) why are you pessimistic about IR's business?

2) do you own Calumet? I glossed over their 10k, but had some
difficulty reconciling their hedging losses to their derivatives
losses. I know these are a problem for commodity based industries.

3) Calumet seems it reorganized from partnership to corporation (the
payout policy confuses me a little). Do you know how old the company
is, and if it has always had the same basic businesses? It looks like
they are doing well, and it's hard to complain about the price entry
point. Refineries (I've heard) are very expensive, so age of plant as
well as legal liabilities require analysis
 
E

Elle

CLMT is high dividend stock for you to consider.
For small caps, I only buy funds.
Stock investing functions best by harvesting capital gains to take
advantage of lower taxes.
Versus buy and hold? With all due respect, I think there is much
disagreement on your point.
 
E

Elle

dapperdobbs said:
I don't really understand defense (e.g. GD)
My positions in GD and UTX are small. I bought them in the last couple
of years because of some confidence that governments (ours and
overseas) will not cease to keep their war machines strong and will
also tend to continue to support contracts to defense companies
because members of Congress want their constituencies employed. I also
think many in government see the U.S. military as a jobs and education
program. So military cuts are not entirely on the horizon. Both
companies seem to have large international exposure.

I do not expect everyone to buy this reasoning. This is why my
positions in the two companies are small. Also I am recalling the 70s
when there were major cuts in the defense industry, with accompanying
layoffs.
Electric utilities got
swept up into the Enron energy futures "game" a decade or so ago.
With all due respect, I cannot generalize like this. I have always
thought Enron was not a utility like those that actually produce power
(from coal, gas turbines, nuclear, whatever).
I see what you're saying. And I have stories to tell about my fond new
involvement with orange trees and grape vines. Want some oranges? I
have plenty!:)
Seriously, I think getting a green thumb is a good thing to do in
these difficult times. Oranges? I think they have increased in price
dramatically in the last decade. Applause to you!
I'm not sure where to get reliable
data on foreign companies.
I hear you. For my international exposure, I buy only funds or large,
old companies based in the U. S.

All other commentary noted. I am looking at some of the companies you
named.
 
R

Ron Peterson

Good advisement principles :) If I may pick your mind a bit:
1) why are you pessimistic about IR's business?
I am not pessimistic about IR's business. I don't like their balance
sheet.
2) do you own Calumet? I glossed over their 10k, but had some
difficulty reconciling their hedging losses to their derivatives
losses. I know these are a problem for commodity based industries.
Yes, I own Calumet stock in my my IRA making high dividends more
tolerable than in a taxable account. Hedging helps keep long term
contracts profitable.
3) Calumet seems it reorganized from partnership to corporation (the
payout policy confuses me a little). Do you know how old the company
is, and if it has always had the same basic businesses? It looks like
they are doing well, and it's hard to complain about the price entry
point. Refineries (I've heard) are very expensive, so age of plant as
well as legal liabilities require analysis
The company was formed in 1916. I am not familiar with their history.

CLMT is more of a chemical company than a refiner, so it has a higher
gross profit margin making it more immune to price fluctuations.
 
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R

Ron Peterson

For small caps, I only buy funds.
I have problems finding decent funds. Funds give you diversity, but
that can also be done buying an assortment of stocks.
Versus buy and hold? With all due respect, I think there is much
disagreement on your point.
Holding a stock that is very over priced seems like a losing
proposition.

I am a value investor where I assume there is a intrinsic value
associated with each stock which may be different than the market
price. Management of the company issuing the stock can goof up an
destroy that value or there may other factors that do that. I am not
good at knowing what the exact value of a stock is.
 
E

Elle

I have problems finding decent funds. Funds give you diversity, but
that can also be done buying an assortment of stocks.
I agree but feel I do not have quite enough money to diversify well
among small caps. After studying several small cap (value) funds a
couple years ago, I chose VBR. I can't defend the choice really well,
but I did draw up a spreadsheet and compared VBR with several other
small cap funds.
Holding a stock that is very over priced seems like a losing
proposition.
I meant the buy and hold part kind of generally. Otherwise, you sort
of caught me. It is true I have sold some stocks when they seemed
overpriced, the portfolio was getting a bit top heavy with the
position, and I wanted to take the gain and diversify a bit more.
I am not
good at knowing what the exact value of a stock is.
Your admission of this makes you a superior advisor in my book. I run
from anyone saying they have a good handle on the exact value of a
stock.



Aside: Farewell Professor Paul Samuelson
 
T

The Henchman

Your admission of this makes you a superior advisor in my book. I run
from anyone saying they have a good handle on the exact value of a
stock.
What is there to look for in a small cap index fund? This is something I
don't have in my small portfolio. What benefit can they bring to a young
person's portfolio with aggressive growth in mind.

I have a TSX Venture exchange fund but most of it's constituents are mining
and energy speculation stocks and I rarely contribute to the fund as it's
not a diversified exchange IMHO.
 
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R

Ron Peterson

What is there to look for in a small cap index fund?  This is something I
don't have in my small portfolio.  What benefit can they bring to a young
person's portfolio with aggressive growth in mind.
I look for sectors that seem to have a future, but am not sure of
which companies are going to be the winners. For example, I own TAN
which is an ETF holding solar stocks. Sector ETFs may contain large
and mid-caps in addition to small caps, but I don't see small caps
having a big advantage unless they fill some niche in the market
place.
I have a TSX Venture exchange fund but most of it's constituents are mining
and energy speculation stocks and I rarely contribute to the fund as it's
not a diversified exchange IMHO.
That covers basically two sectors, just get some other sector funds or
stocks to balance your portfolio.
 

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