Top 10 Dividend Growth Portfolio

Dear Mr. Market:

Dividends!

Journalists write about you daily. Investors constantly think and talk about you. Analysts and economists spend their entire careers trying to figure you out. You’re a complex yet simple character, Mr. Market! All that said, today we want to share with our readers a substantial part of you that doesn’t get enough appreciation (pun intended). Let’s talk dividends!

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Bear Market

Dear Mr. Market:

Simple title.

Simple reality.

That’s exactly where we’re at right now. We’re not going to wait for the financial media to announce it or tell us that it’s only a bear market if we officially drop -20% or more. The intent of this article is to explain not only what a real bear market is, and how this one has behaved differently, but also what to do next.

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The Stock Market Indicator that you won’t hear about…

Dear Mr. Market:

We’ll open this letter to our friend “Mr. Market” by stating one thing that will be very obvious in six to 12 months. 90% of people reading this article will have gotten it wrong. It’s not your fault though…it’s the way our minds are wired and the content we’re constantly being fed.

Regardless of your current market strategy it’s times like this that will test the most patient of long-term investors. We’ve written about this countless times but no matter what the sage counsel or stock market adage is, you should be rattled right now. We could be like most “perma-bull” financial advisors and try to data mine for all the reasons to stay calm or share positive anecdotes to convince you that now is the time to invest; it won’t matter though. Putting “lipstick on a pig” won’t help you nor the current market environment. Bad news and reasons to panic will be the headline for the weeks to come and there will seemingly be no safe place to hide.

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Letter of Final Wishes (LFW)

Dear Mr. Market:

This entire personal finance blog is about “letters” being written to you (Mr. Market), the fictitious character that exhibits all sorts of emotions due to the gyrations of the stock market. What letter, however, is the most important one YOU could ever write?

A Letter to My Family

It’s called a “Letter of Final Wishes” (LFW), or as we’ve described it to our clients at My Portfolio Guide, LLC, a “Letter to My Family: Things you should know“. On page 6 of the Spring edition newsletter of “the Guide” (click here if you have not seen it yet), we touch on this very important gesture that you can do for your family. Aside from the legalities of estate planning, this exercise is perhaps the single most loving and considerate document you can create for your family that they will forever be grateful for.

Our template (which we share below) is not a legal document and should never replace your will or living trust along with all the other ancillary documents such as a health care proxy or power of attorney.

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Sorry Ram Fans….Go Bengals?

Dear Mr. Market:

The investment world has not given us much of a break lately. Everything is down….everything…..except gold and emerging markets, but you saw that coming, right?!? Before we dive in, let’s just post some quick year to date numbers and then get to the football banter. Large Caps are down -5.4%, Mid Caps -4.2%, Small caps -5.9%, International -8.1%, and Bonds (which are supposed to shelter us from some of this near-term pain) are down -3.2%. Again, the only thing that is up YTD is Gold at +0.10% and Emerging Markets at +2.5%. Switching gears, allow us to lighten the mood and focus on something mildly entertaining (yet related to the stock market). Why should you be rooting for the Cincinnati Bengals this Sunday during Super Bowl XVI?

All kidding aside, and at the risk of upsetting any Los Angeles Rams fans, the AFC teams winning lately have been good for the bulls. What we’re talking about here is the Super Bowl Indicator. At a minimum this is a helpful article for you if you don’t have a “dog in the hunt” and your team lost weeks ago, never made the playoffs, or you could care less about football yet might be around people who do on Sunday.

In 1978, Leonard Koppett, a sportswriter for the New York Times, came up with the Super Bowl Indicator and for many years it was never wrong! Up until that point the results pointed towards NFC teams winning being the one that seemed to help the stock market the most.

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Jim Cramer and Stock Picking Performance… Booyah?

Dear Mr. Market:

It’s that time of year. Everyone has some stinkers in their portfolio and in a taxable account it’s a great time to evaluate whether one should offset that loss by taking some gains on your winners. If you followed any of Jim Cramer’s advice this past year you have some serious evaluating to do! The aim of this article is not a hit piece of Mr. Cramer but simply a word of caution and a reminder that (1) stock picking is often a futile endeavor and (2) If you are indeed going to follow someone’s picks it’s important to track them prior to blindly buying the next set of recommendations.

We begin by refreshing you on an “oldie but goodie” from the Dear Mr. Market archives. Please click here for some background on Jim Cramer and an article we wrote in 2013.

Below you will see a sample of his picks from the beginning of 2021 and how those picks have fared since. Yikes!

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Don’t be Gone Phishing

Dear Mr. Market:

This isn’t the type of letter we like to write you. Our brief note today will not center around anything of stock market or economic interest. Mr. Market dupes people with his manic, unpredictable, and volatile ways but one thing that we can guard ourselves from is the ever growing threat of phishing.

What exactly is “phishing”?

Phishing is when fraudsters send fake emails and texts appearing to be from a trustworthy source, hoping that you will click on a link or download an attachment. Their goal is to trick you into inputting and capturing your sensitive information. You may already be up to snuff on the following tips but they are worth repeating since fraudsters are becoming more and more sophisticated:

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I got in at the top of the market…Now What?!?

Dear Mr. Market:

It’s over.

The “fat lady is singing”, the alarm bells are ringing, and you are literally the last dunce in the room who decided to get into the market at the all-time high. Now Mr. Market shows you what real pain looks like and sells off like nobody has ever imagined.

Let us preface this article by stating it’s worth bookmarking and revisiting for those times when you may be rethinking your investment time horizon or just how much risk you truly are able to take on.

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All-Time Favorite Stock Chart

Dear Mr. Market:

It’s been a while since we’ve had to talk about you. The world has been focused on many changes which sometimes leaves you to quietly do your thing while we catch our breath. We’ve ushered in a new year, the United States has a new President and administration, and we’re finally seeing some light at the end of the tunnel with regards to the most surreal pandemic one could imagine.

How have you been… Mr. Market?

Up, down, sideways, and all over the place…That’s how.

Today we write you a quick note to share our all-time favorite chart as well as a reminder to all those investors who may fall prey to short-term memory lapses. The recent stock market sell-off is a great wake up call to the fact that markets obviously don’t just go up in a straight line. It’s a bit more than that though…

Below is our all-time favorite stock chart and we’re going to share why it’s important to look at this every so often.

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Revisiting the Permanent Portfolio

Dear Mr. Market:

It’s been seven years since we last reviewed the Permanent Portfolio. Please click here to view the original article.

Why do we bring up this article now? Lots has changed but lots has not! More than anything we believe that our current environment has so many unknowns embedded in it after one of the wildest rides in stock market history. We won’t dig into the weeds too much but one could easily make the case that any of the following scenarios could take place over the next year:

  1. The Stock Market could absolutely continue to defy odds and climb higher.
  2. We could see another market crash like we saw in the spring this year as there are plenty of issues that have not gone away (Covid-19, political unrest, handcuffed economy, geopolitical concerns)
  3. A deteriorating dollar, inflation on the horizon, a ticking time bomb of debt, and more fear of a prolonged recession, negates any appeal for stocks for quite some time.
  4. We trade up, down, and basically sideways as this market consolidates and digests one of the most tumultuous years in history.

Without rehashing all that has transpired in 2020, we believe that being properly allocated and prepared for just about anything that comes our way seems like a wise way to go. The market is almost always unpredictable but there are times when reading the tea leaves and figuring out clear direction is even more difficult; we believe that’s exactly where we’re at right now.

If you didn’t read our old article from 2013, the basis for the Permanent Portfolio strategy is simple at face value: You divide your portfolio into four distinct and fairly uncorrelated asset classes (Cash, Bonds, Gold, and Stocks). Ideally at any point in most economic cycles one of these asset classes will stink it up but the others could compensate and outperform. During prosperous times Stocks should win. When there is inflation a case can be made for Gold. Should the opposite occur and we get deflation you would ideally see long-term Bonds do well. Lastly, during a severe recession Cash is perhaps your best friend. When coupled together you may never hit a home run but this approach can mitigate disaster and still produce modest long-term returns.

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