This is default featured slide 1 title
This is default featured slide 2 title
This is default featured slide 3 title
This is default featured slide 4 title
This is default featured slide 5 title
 

Investment Strategy

We are becoming a culture of speculators, where hindsight is replacing the reality-based foresight that once was flowing in our now real-time veins. Still, the markets have always been dynamic places where investors can consistently make reasonable returns on their capital. If one complies with the basic principles of the endeavor and doesn’t measure progress too frequently with irrelevant measuring devices, growth in working capital, market value, and spendable income are quite likely to happen… without undue risk taking.

The classic investment strategy is so simple and so trite that most investors dismiss it routinely and move on in their search for the holy investment grail(s): a stock market that only rises and a bond market capable of paying higher interest rates at stable or higher prices. This is mythology, not investing.

Investors who grasp the realities of these wonderful (speculation driven) marketplaces recognize the opportunities and relish them with an understanding that goes beyond the media hype and side show “performance enhancement” barkers. They have no problem with the “uncertainty”; they embrace it.

Simply put, in rising markets:

  • When investment grade equity securities approach the “reasonable” target prices you have set for them, realize your profits, because that’s the “growth” purpose of investing in the stock market.
  • When your income purpose securities rise in market value the equivalent of one-year’s-interest-in-advance, take your profits and reinvest it in similar securities; because compound interest is the safest and most powerful weapon we investors have in our arsenals.

On the flip side, and there has always been a flip side (more commonly dreaded as a “correction”), replenish your equity portfolio with now lower priced investment grade securities. Yes, even some that you may have just sold weeks or even months ago.

And, if the correction is occurring in the income purpose allocation of your portfolio, take advantage of the opportunity by adding to positions, increasing yield and reducing cost basis in one magical transaction.

  • Some of you may not know how to add to those somewhat illiquid bond, mortgage, loan, and preferred stock portfolios quite so easily. It’s time you learned about closed end funds (CEFs), the great “liquidators” of the bond market. Many high quality CEFs have 20 year dividend histories for you to salivate over.