When to Initiate a New Position ?

If you are like any other do-it-yourself individual investor, you would have been through this dilemma. When should I initiate a position? As per our individual investing style, criteria and risk profile, we have done our due diligence and come up with price that we are ready to pay. Now if we are in bull market, we do not hesitate and take a plunge. However, if we are in the bear market (like these days), then we hesitate to initiate our position. We start contemplating, should we wait a little bit more? This dilemma is more in case of dividend investors because YOC is sensitive to initial yield.

I have been through this dilemma quite often. Let is think this through with some rational reasoning.

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Risk Analysis of Portfolio – 2009 1Q

Last week, I presented an update on the quarterly performance of my overall portfolio (this includes my index funds, opportunity portfolio, and dividend portfolio). Here I am discussing the quarterly risk analysis. My objective here to make sure I am continuing to following my risk management process.

  1. Maintain pre-determined asset class allocation;
  2. Maintain pre-determined diversification (any sector should not exceed 10%); and
  3. Dividends from a single stock should not exceed 5% of total dividends.

My dividend portfolio holdings can be referenced in “My Holding” menu at top of this page. continue reading rest of the article….

Year 2009 – First Quarter Update

My dividend portfolio consists of stocks, exchange traded funds, and closed-end funds. Since all of them are dividend focused and provide cash flow, I look at this together (and not standalone).

In general, companies are showing reduced earning, paring down growth plans and expenditure, and slashing and suspending dividends. Not only that many companies are not able to look forward and predict their own earning expectations. To me, not able to put an expectation is a sign that management is either not able to plan (clueless?) or not sharing the true state of their business. This recession wind is clearly separating chaff from wheat. Against all the sky is falling scenarios, I am continuing to invest in some really good companies at bargain prices.

Year 2009 Quartely Update

Year 2009 Quartely Update

The status or update is as follows:

  1. Dividend cash flow was $1380 per year.
  2. Yield on my original investments (YOC) is 5.07%.
  3. Year-to-Date the portfolio lost 1.6% of the value (relative to loss of -4.90% in SPY); and
  4. At present, I hold 22 stocks. continue reading rest of the article….

Portfolio Management Process – Goldratt’s Way

Have you ever noticed that many times and perhaps on many occasions, we do things, or we respond certain situations, or the way we manage certain things, it may be reflecting how we really think. Even if we are not able to express it precisely we naturally tend to do things in a specific way. Conversely, it could also be due to our educational or experiential background.

The foundation of my educational background is in industrial/manufacturing engineering. Any industrial engineer in United States will know about a little book titled “The Goal”. It is written by Eliyahu Goldratt. It is written in a novel based story format. During the course of this story, Goldratt introduces the concept of “Theory of Constraints”. He intertwines the concepts with daily life events. When Goldratt introduced this book (and hence theory of constraints) in early 90s, management consultants recognized its significance and applied at hundreds of manufacturing organization across of board. continue reading rest of the article….

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