Blind Spots and Continuous Improvement
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As an investor, I am aware that I have a lot of blind spots. Someone with a
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Including 30 Weekly Goals, You Can Try Setting and achieving weekly goals
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I Owe $6000 In Taxes
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Well, it’s official. I’ve completed my taxes and I owe the Government
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JPMorgan Chase Dividend Increase
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JPMorgan Chase (JPM) increased its quarterly dividend by 9.52%, from $1.05
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"Since I own 74.704 shares of Cisco in my FI ...
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"Since I own 74.704 shares of Cisco in my FI Portfolio, this raise
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Monthly Income Update – December 2023
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Dear Readers, I wanted to wish y’all a Very Happy New Year! I hope you had
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2022 Week 46 investing and trading report
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I feel like the markets are easing their bearish stance. They are still
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2020 Q1 Dividends - $430.58
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The markets have been in turmoil and I have seen my investments drop by
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Portfolio Update – March 2021 – $1,000 per month!
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Passive Income for July 2020
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Once a month, I like to talk about my total passive income for the previous
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Portfolio Update May 2020
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Cardiovascular Systems
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Cardiovascular Systems, Inc., a medical technology company, develops,
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States. Th...
Buy: ABBV
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Today I added a new position: ABBV. They didn't show up on my screener
because some spin-off activity made it look like their div history is much
shorter t...
This is one question that almost all long term investors ask themselves. Most of the well known value investors that we read about in public domain, usually, are concentrated in teens. If that’s the case, then what about diversification? The concept of risk is very subjective because every person will have a different risk profile. These well known value investors have proficiency to balance risk vs. returns. They have resources to be able to manage that risk of concentration. As individual investors, we do not have such resources at our disposal, and hence risk level changes for us. In addition, we cannot generalize that a fixed “number of stocks” provides diversification.
Being a dividend investors, I am looking for companies that have potential to grow their dividends over time. I have observed that companies that grow their dividends, with good quality of earnings, the market value (or share price) also grows. This not only provides dividend cash flow, but also the capital appreciation over time.
Now, in case of concentrating the portfolio to small number of stocks will increase my risk. Assuming equal allocation in 10 companies, when any one company suspends dividends, it will reduce my dividend cash flow by 10%. That is a very large drop. Therefore, I am targeting to build my portfolio with 30 to 35 companies.
The reason for using 30 to 35 companies is that I want to limit the risk if dividend cash flow to any single company to maximum of 5%. In one my earlier post, I have discussed the process of risk management.
It would be a folly to expect that all companies in the portfolio would continue to pay growing dividends. 100% success rate is purely an illusion. However, I would expect that at a minimum there would always be 20 to 25 companies performing as per my initial expectation. These will continue to provide growing dividends over time. I also expect that they will continue to increase their value.
The remaining ones may or may not perform. I will have to continue to make changes such as adding to existing ones, removing, and adding newer ones.
In addition, I also understand my limitation of not being able to keep track of more companies.
At present, I continue to hold approximately 27 companies. One of the benefit of long term buy and hold investing is that you do not need to keep following the market daily or monthly; all of the companies that I select are not going to vanish or crash in such short period of time. Sure, some small number will have problems like 2008/2009, but I do not expect to have all of them in a same crashing bucket. If it does happen, then it was likely due to improper portfolio management process.
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As an investor, I am aware that I have a lot of blind spots. Someone with a
glass half full outlook on life might say that I have a lot of room for
impro...
1 day ago
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Linked here is a detailed quantitative analysis of Microsoft Corporation
(MSFT). Below are some highlights from the above linked analysis: Company
Descript...
1 year ago
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