I think that you have it backwards.
"The beauty of high quality, high yielding investments, is that you are taking the market timing out of investing. Since stocks run in cycles, an investment could have a poor performing year or two and then explode to the upside. If you traded out of an investment that had been doing well, but had slowed down some, for something you think will do better, and then the cycle turns around, you've lost holding the old investment unless you market time back into that one correctly as well."
It is not market timing to move from one asset to another. If I own a stock (or find a stock) that is "poor performing" (which in your use of the word, I think means that the price has dropped, or is now undervalued) I do not sell that stock, I buy more. I do not trade out of it.
However, if your "poor performing" means that they operationally are in worse shape than expected when I bought the stock (i.e. sales, profits, etc., are below expectations), then I sell, and I hope that I sold before everyone else realized the same thing. That is not market timing either.
If you hold a stock that pays $2 a year, because you bought it at $10 and are earning 20% (your yield based on cost), when you could sell it at $30 and buy something else paying just 10% ($3 a year), well that is a step up in my book. Yield based on cost is a distraction. You may have tax consequences in switching investments, but cost of purchase should not be considered otherwise.
In the above example, I moved out of a ($2/$30) 7% yield, and moved into a ($3/$30) 10% yield. Yield should be looked at based on present price.
But you should also consider PE and undervaluedness. The fact that many in this thread do not consider value metrics, make many of the investment suggestions here a bit simplistic and incorrect to me (or at least incomplete). I will take a 5% yield on an undervalued stock, before I'd take an 8% yield on a reasonably valued stock. |
