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Non-Tech : Kirk's Market Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: kimberley who wrote (7976)	12/18/2019 12:07:57 PM
From: robert b furman	1 Recommendation Recommended By kimberley Respond to of 26788

Hi Kim, Thanks. I would definitely say cash is a "great" thing. The first 50 years I has huge margin balances and huge worries on major declines. Every time I got to a great value purchase time (market bottoming out) I swore next time I'd have fresh cash. When I quit running the dealership (9 years ago) I committed to not ever being in margin again. Now if my dividends accumulate and a stock I want has a dip, I'll take on some margin till the next dividend pays out. Margin did me very well in 1997 to 2000, but not without margin calls in 1998. After that event I took the stack of margin calls and framed them for display in my study (as a reminder of the stress margin brings with it). It was not until 2008 to 2009 that I swore off margin. During that time I had to take out a HELOC (home equity line of credit) and paid off my margin account. At that time, I sold off all stocks that did not pay a dividend. I was hard headed about it - I hate to admit this, but I even sold off enough AMAT at $13.50ish to be margin free! Today it trades at $61.00. UGGGH So a conservative plan that ensures no more dumazz moves are ever again necessitated is my mantra. The fact that I missed out of a 5 bagger on some of my Amat is really a good thing that happened - it reinforces that I stay on the plan from here out. Now everytime one of my stocks pays out a dividend, I can pay cash for the next stock and add to my portfolio. Everytime I add to my portfolio, I give myself a pay raise for the next year (assuming the dividend payout stays equal). Then everytime one of my stocks increases the dividend - I get another pay raise for the next year. Now we've been in a bull market for a long time - but it's been a slow run up. I remember that markets can be bad for a long time. If I have no margin and I have stocks with a history of continuing the dividend - even in tough times, I'll have the ability to buy more shares with my existing dividend revenue stream and get an even bigger pay raise for the next year. It feels a little bit like playing Monopoly when you have hotels on Park Place and Boardwalk. My portfolio is 50 % dividend Aristocrats and 50 % low yield dividend small cap high growth semi companies (Cohu and Brooks Automation). My anticipated challenge will be to swap Cohu and Brooks before the top of this market into Dividend Aristocrat stocks that will have the ability to continue paying their dividend in a declining market/ recession (while reserving the taxes due for the capital gains made on those two stocks). Then a big bad market will allow me to accelerate the accumulation of the Aristocrats. As long as they continue the dividend, that big bad market can take as long as it wants to. Redeploying dividends into Aristocrats in a down market is actually the fastest way to grow a portfolio (assuming there is a reversion to the mean out into the future). One just has to know they'll never be forced to sell a share. Do that for a lifetime, and Elizabeth Warren will tell you you're too rich and need to let them steal (tax) your assets. She's a power hungry spewer of class envy and a fool about what the U.S.A. should stand for IMHO. Bob