First off, welcome to the the Long Term Dividend Fund blog. This is my first post about the fund and believe me when I say that it is just the start. I wanted to outline for you all my reasoning behind the fund, my rules for the fund, and my goals for year one.
So Why go long term?
Trust me when I say that I love the market. I wake up every morning and read a couple of articles over coffee, listen to CNBC on my way to work (sorry to those that listen to FOX Business), and typically will get through 4-5 10K's each week in my down time. That being said this is definitely a different way of fulfilling my market obsession than in the past.
What did I look like in the past? Here's an example:
Wake up, check StockTwits. Find out what was going to be the pre-market hype. Watch pre-market like a hawk and look for an opportunity. Buy on open or wait for a drop and stop. Sell around 11am. Buy again as volume pours in towards the end of the day. Pray for no terrible news or really good news in after hours. Sell early in the morning and repeat.
If you got exhausted reading that paragraph then you came to the right blog. Day trading isn't my gig, especially because I have a real job that pays my bills as well as takes up a lot of my time while the market is open. How could I still quench my insatiable thirst for the market? Value investing, that's how.
If you want to make the market work for you then you need to get paid to do nothing different than you would in a normal day. To accomplish that you need passive income. How can you do that? Dividends.....
My 5 Rules:
- Positions must be held for at least 1 year.
This gives me four quarters of information to sift through to make sure the company is going in the same direction that I was originally anticipating. Not only that but it means that I better have a good reason to buy it and not just jump on a bandwagon or just because an article from a certain court jester site said so.
- Max Position size of 15%.
This is simply a way to make sure I hold a diversified portfolio. If a position gains enough to break out of the ten percent mark then I need to look to sell a portion and re-invest in something else that is more undervalued at the moment.
- Minimum Stock Price of $3 for Purchase.
Just to keep me out of the gutter and penny stock land on this one. No reason to get into a long term under $3. There is a reason it is down there in the bottom of the barrel. Safety first.
- Invest on a Schedule.
This is a strategy called dollar cost averaging (DCA). I use this strategy to make sure that I not only am consistent with my investing but also to ensure that I don't buy huge lumps of a stock at one price. Regular DCA invests in a certain position each month. My DCA strategy is a bit more custom. I choose an amount to invest every two weeks and either add to a position that is still undervalued or add a new undervalued position to my portfolio. It's DCA on steroids!
- Invest any Extra Cash.
I pay my bills first, save a set percentage of my salary second, then invest a pre-set amount third. When I come along extra cash (bonuses, fantasy football wins, March Madness victories, etc.) then it is time to make this money working for me. Any small investments can pay big time in the future. A $1000 investment in Microsoft in 1987 would now be worth over 500k and return you over 13k in dividends each year. Now I don't expect to hit a home run like that but who knows!
MY Goals for 2017:
- Total Portfolio Value of at least $12,000
- Total Portfolio Gain of at least 10%
- Total Dividend Income of at least $450
Pretty simple goals I guess but you have to start somewhere. Obviously the gain of 10% will be the most difficult, but I believe that it is obtainable with sufficient research and timely buying. Trust me when I say that I don't think I am better that a Wall Street professional but I have some things going for me they do not; I answer only to myself and don't have to worry about any money being pulled from the fund!
My current portfolio was started on 11/30/2016 and has just finished the first quarter of 2017. Stay tuned as I breakdown all of my future buys, my current holdings, and fund's performance for each quarter.
I am excited to be running the 2k Hedge Fund Long Term Dividend Fund and I can't wait for all of your comments and feedback!