| | | Re: Condition of the Market
For as long as I have been on SA I have talked about how I paid attention to the condition of the market in making my investment decisions. I received a lot of pushback on that with quite a bit of it being unwarranted in my opinion. I was accused by a few of misleading people due to my adjustments but Dividend Growth Investor explains in the article you linked exactly what I have been doing.
>> I’ve made some changes over the past 15 years at Dividend Growth Investor, albeit gradually. I started off with a fairly fixed screening criteria. I had been lucky, because my strict criteria helped me find a lot of great companies at attractive valuations in the beginning of my journey. They did well subsequently for the most part. But I've had to adapt over the years, due to many changes.
I have since relaxed the need for a minimum dividend yield. I have also relaxed the need to look for companies with a P/E of less than 20. Now I look at P/E and growth and quality and defensibility of the earnings stream together. This is driven by the changes in the marketplace today, the availability of quality companies at bargain valuations, and the decline in interest rates. Most importantly, it is driven by my research on historical dividend growth success stories, and not wanting to miss out on the next Wal-Mart for example. But change is a given, not just for my strategy, but the world at large. <<
When market conditions change, I adjust. Some of those adjustments are subtle, some are rather news making to some.
People love to talk about just investing in an index fund and you'll do better than most yet the reason for that is many people are not willing to adjust to the condition of the market. The Index does, the Index doesn't look the same it did 10 years ago with its holdings, why should my portfolio be any different?
Thanks for sharing that, I appreciate it. |
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