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Market Timing and the Weather

Recs

5

August 21, 2013 – Comments (0)

Board: Dividend Growth Investing

Author: jackcrow

Karen,

The wind blows east, west, north and south. In the large, scale a weather front moves through, some areas will see some rain, some areas will see lots of rain, some will have only a trace.

The markets are no different. On the large scale rain or sunshine may be coming to the markets, I left my crystal ball in my other jacket so I don't know which. What I do know is that I should carry both a hat to shade my eyes and an umbrella just in case it rains.

Timing is a fools game. There are people left over from the crash in 08 that still believe this is a false rally. 5 years from now someone will still be arguing the market is about to turn up or down. This plays the greatest impact if and only if you are investing in the markets aka indexes. Tons of really good companies bounced back quickly from the last mess and paid dividends and raised dividends. Did someone who bought in 07 temporarily lose capital invested through 09-10, sure they did and the markets came back, capital was restored all the while dividends where paid out.

If you want to get serious about investing in dividend stocks you need to treat the markets weather much like a farmer treats the weather, a lot of complaining and commenting but in the end what is important is the harvest, whatever that may produce.

Dividend growth investing is a long, long term endeavor. We don't bounce in and out of the markets because every time we are out we don't get our dividend. There may some good systems out there that move in and out of the markets and cash and various asset allocations as the system dictates. Most of these do not marry up with dividend growth investing.

In dividend growth investing we buy to grow the dividend stream. There are a few times to sell but preferably we buy and add on the dips and let the management of the companies give us a raise every time they increase the dividend.

It is simple, if you don't own the company they don't pay you dividends.

If you want to start a dividend growth portfolio the time to start is now, the time to end is when someone else inherits it.

JMHO

jack 

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