Shift in focus of personal portfolio
Why is it that I always think of things to write about when I don't have any time to do so? While I was getting ready for work this morning I was thinking about all of the companies that I have purchased over the past year or so. I have seen a noticeable shift in my investment strategy over that time period. Here are some of the areas that I have been focused on:
- Companies that pay high dividends and I believe can be sustained and will grow in the future, Such as BDCs, MPLs, and CANROYs.
- Foreign companies based in areas that I believe will grow more quickly than the U.S., like Latin America and Asia.
- U.S. companies that are heavily involved in exporting goods or that have significant overseas operations.
- A focus on value more than growth, without shunning extremely attractive growth opportunities.
- Special situations, especially spin-offs that fit in one or more of the above categories like Telmex's spin-off of its Latin American operations or Altria's spin-off of Philip Morris International.
Here are my quick thoughts on why I have made this shift.
- I disagree with the sentiment that the dollar has reached a bottom and believe that it will continue to weaken over time. This will cause many foreign economies to grow more quickly than the U.S. and provide additional juice to earnings results for companies that earn money in foreign currencies. It will also make the goods of U.S. companies that export less expensive and more attractive to foreigners.
- While I love the United States, I am very disenchanted with the current administration and I am not in love with any of the current candidates.
- Investing in companies that pay solid dividends provides a semi-floor to their share price. If they continue to fall, the dividends that I reinvest earn an even higher return. Also, I can choose to not reinvest these dividends and apply them to other opportunities.
- While I do not know whether we have reached the point of "peak oil" I do strongly believe that the demand for oil will continue to increase and that there is a finite supply of it. According econ 101, high demand, low supply = high price. Again adding additional juice to this is the fact that oil is priced in dollars which I believe will continue to fall. There is not currently any viable alternative energy source to oil. Given the current technology, ethanol is an absolute joke.
Well these are my quick thoughts. I've really got to head off to work.
Long MO & TMX