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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (5590)	8/29/2010 10:53:56 PM
From: Steve Felix	1 Recommendation Respond to of 34328

Hi EKS. I always enjoy your insight. I don't attempt dividend capture. As for someone making money on the trade, if I bought BP before the dividend cut, not only could I be out, but the same shares could have been sold numerous times on the way down. Not only didn't I get my dividend, there could be numerous losers. How many dividends would I have to capture to cover one "aw sh$t? Selling naked puts makes sense to me with stocks you want to own. I don't keep the cash to do it. I've thought of selling calls in my taxable account but just haven't done it. "This strategy has worked well for BMY but there are other stocks where I would have been better off to just let the stock pay its dividends and not bother with writing covered calls." I'd love to see someone who says they can consistently make money this way post the trades. I think individual investors have advantages over the "professionals", but I would have to see this done to believe it. I think your cash parking vehicles are fine. I don't have anything against VFIIX except in the context of the original question which I took as long term holding: "On the surface, it seems that buying a stock, reit, etc. for it's dividends is a risking business...... ....Why not just by a GNMA fund?" As someone who buys most of my stocks with the thought that if all goes well, I will never sell, I have to admit to not understanding why turning over 33% of a portfolio yearly would be a goal. I can see taking losses against gains, but just don't see where percentage comes in. ____________________________________________________________ I've really become "dyed in the wool" with dividend investing as the way for the average Joe to go. My sister and her husband had over 700k with Ameriprise two years ago. Today they have less than 550k. The fact that she has a 72T and withdraws 2k a month hasn't helped any. She doesn't want to be "bothered" taking care of it. I'm trying to get her to transfer it to a discount broker and do it herself with my help. When I told her she could have been spending the 24k+ a year and still owned the same amount of stock, I finally got her interest. Here is a piece of an e-mail I sent to her this week. The context was funds she owns which have underperformed the averages, but propose to be a value fund, and a growth fund, holding 400+ stocks each. The point was where they each find 400+ undervalued stocks. __________________________________________________________ Funny thing is that both Mr. Growth and Mr. Value buy undervalued stocks. Hmmm...... who buys overvalued stocks anyway? Every stock trading is undervalued? I like this from Lowell Miller: "The quest for so-called undervaluation is a tricky one. What would lead an average individual investor to believe - for that matter, what would lead a professional investor with a team of assistants to believe - that the investor can recognize an undervalued stock, whereas all the rest of the world, all the trillions of dollars of brain and computing power, all the armies of researchers and global profit-seekers cannot? When you think about it, the view that a particular stock is undervalued can only be seen as sheer arrogance..... .... Undervaluation, is really, consciously or unconsciously, a code word. What is really meant is the belief: 1. That the company will do better in the future and investors will recognize this through a willingness to pay higher prices in the future for those still-to-come improvements, or 2. That investors are being overly emotional about a company's problems or changes, and over time investors will come to see the error of their ways, come to see that the company has more power as a business then they had given it credit for and are currently willing to pay for it." In any given year, 80% of funds trail the averages. Over time dividend stocks beat the averages. Let me know what is holding you back.