The Next Big Crash - Are You Prepared?

[gautam]

to me, when the next crash happens is not very important to me.

I own a portfolio of stocks nearly a decade, all of them with a unblemished history of dividend paying and raising dividend record, since they were listed. when market goes up, i use the dividends to buy less shares. when market goes down, i use the dividends to buy more shares. over time, my shareholding increases and the portfolio value increase with the increased shareholding and increased share price. Thank god this simple strategy has served me well with cannot complain kind of wealth built up over time. No need frequent monitoring. No need stress. No loss of sleep. Life is short. Enjoy life to the fullest. Crisis? Nevermind. The buying and wealth building continues.

[Temperament]

And how many stocks do you own for nearly a decade?

[felixleong]

gautam

how old are u?

[gautam]

Hi guys, I own not more than 5 stocks at any one time.
I am in my thirties. Stocks as an instrument makes up not more than 20% of my overall wealth. So personally, i have elected to use the focused approach.
As aluded to in earlier posts, i am no accountant. Things like ebit, npat, fcf etc i dont know much and i am not interested in. I use raised dividends n not a single skipped div over 1-2decades as my one of my main criteria. The longer the history the better.
Thanks.

[Dividend Warrior]

I use raised dividends n not a single skipped div over 1-2decades as my one of my main criteria. The longer the history the better.

I admire your investment style.

[felixleong]

Hi guys, I own not more than 5 stocks at any one time.
I am in my thirties. Stocks as an instrument makes up not more than 20% of my overall wealth. So personally, i have elected to use the focused approach.
As aluded to in earlier posts, i am no accountant. Things like ebit, npat, fcf etc i dont know much and i am not interested in. I use raised dividends n not a single skipped div over 1-2decades as my one of my main criteria. The longer the history the better.
Thanks.

you mind sharing what are the stocks that you are currently holding?

[gautam]

Long post:

Hi Felixleong,

frankly, I am not too comfortable in disclosing my positions but from the posts I participated in, you could guess those counters share some similar characteristics. Hope you don't mind.

I chose this forum to share my knowledge because I think the moderators, esp CityFarmer is doing a good job in moderating this place. And people who post TA or gambling stuff are told off quite immediately. Kudos to the moderator in maintaining this investment website.

There are much more losers than winners in people who buy stocks. Perhaps winners constitute 5%. The real big winners <1%.

IMO, to reap the most out of investment in stock market, one needs to keep a long term view and only buy those fundamentally sound stocks.

I keep mentioning increasing dividends in my previous posts.

Why?

To me, dividends are real cash. If I were a worker, I would prefer to receive my pay regularly and would protest if my boss had skipped my pay that year! And increasing dividends over the past decades could only mean one thing, that the company is making more and more money. The other parts will fit in with the latter point. ie the company has the ability to ride through crisis and yet still pay out dividends, a testamonial of its financial strength. And increasing dividends would mean that the company is growing. Frankly, I don't think there is such a company which has these traits and subsequently went bust?

The power of compounding is great, if and only if, it pays increasing dividends over time.
Let me illustrate this. Say a stock $1, pays a dividend of 4c now, that represents a yield of 4%. If the company continues to increase dividends like what it did before, say 10years time, that dividend could increase to 10c. Now the entry price is fixed, and at that entry price of $1, that 10c dividend would represent a yield of 10%. Should the dividends be used to buy more shares, imagine the total net worth 10 years time.

Crisis or not, it doesn't really matter, for companies which have been in existence for be past 20-30years and have weathered several crises before and yet paid dividends during those crisis.

Of course past performance might not necessary repeat itself in the future. But most do. Thus a bit of diversification is good.

And what i observe is that during crisis, in general, companies which paid decent dividends, they affected to a lesser extent, since they have this dividends to sort of buffer up the prices. And one can get even more shares using dividends during crisis. When prices recover, as they always eventually will, one will join first rank.

Coupled this dividend criteria with buying an undervalued company, I think the downside is even more protected even in extreme crisis.

I hope I did not bore anyone with my dividends thingy. And I chose not to mention any specific stocks because I think investments should be flexible and each and everyone is different. But personally, i feel this is a very important consideration.

[Dividend Warrior]

I hope I did not bore anyone with my dividends thingy. And I chose not to mention any specific stocks because I think investments should be flexible and each and everyone is different. But personally, i feel this is a very important consideration.

As a fellow dividend growth investor, I enjoyed reading your post. Not boring at all.

Thanks for sharing your investment philosophy.

[specuvestor]

It is rare a relative young person has such patient temperament and long term perspective. I'm guessing you avoided being finance trained and brain washed

IMHO you are on the right track, despite much more considerations on investments than just dividends. To add to your illustration, in 13 years you would have gotten back your capital through dividends, which is more critical than most people understood. Cashflows are what the uber rich focus on.

Long post:

Hi Felixleong,

frankly, I am not too comfortable in disclosing my positions but from the posts I participated in, you could guess those counters share some similar characteristics. Hope you don't mind.

I chose this forum to share my knowledge because I think the moderators, esp CityFarmer is doing a good job in moderating this place. And people who post TA or gambling stuff are told off quite immediately. Kudos to the moderator in maintaining this investment website.

There are much more losers than winners in people who buy stocks. Perhaps winners constitute 5%. The real big winners <1%.

IMO, to reap the most out of investment in stock market, one needs to keep a long term view and only buy those fundamentally sound stocks.

I keep mentioning increasing dividends in my previous posts.

Why?

To me, dividends are real cash. If I were a worker, I would prefer to receive my pay regularly and would protest if my boss had skipped my pay that year! And increasing dividends over the past decades could only mean one thing, that the company is making more and more money. The other parts will fit in with the latter point. ie the company has the ability to ride through crisis and yet still pay out dividends, a testamonial of its financial strength. And increasing dividends would mean that the company is growing. Frankly, I don't think there is such a company which has these traits and subsequently went bust?

The power of compounding is great, if and only if, it pays increasing dividends over time.
Let me illustrate this. Say a stock $1, pays a dividend of 4c now, that represents a yield of 4%. If the company continues to increase dividends like what it did before, say 10years time, that dividend could increase to 10c. Now the entry price is fixed, and at that entry price of $1, that 10c dividend would represent a yield of 10%. Should the dividends be used to buy more shares, imagine the total net worth 10 years time.

Crisis or not, it doesn't really matter, for companies which have been in existence for be past 20-30years and have weathered several crises before and yet paid dividends during those crisis.

Of course past performance might not necessary repeat itself in the future. But most do. Thus a bit of diversification is good.

And what i observe is that during crisis, in general, companies which paid decent dividends, they affected to a lesser extent, since they have this dividends to sort of buffer up the prices. And one can get even more shares using dividends during crisis. When prices recover, as they always eventually will, one will join first rank.

Coupled this dividend criteria with buying an undervalued company, I think the downside is even more protected even in extreme crisis.

I hope I did not bore anyone with my dividends thingy. And I chose not to mention any specific stocks because I think investments should be flexible and each and everyone is different. But personally, i feel this is a very important consideration.

[gautam]

It is rare a relative young person has such patient temperament and long term perspective. I'm guessing you avoided being finance trained and brain washed

IMHO you are on the right track, despite much more considerations on investments than just dividends. To add to your illustration, in 13 years you would have gotten back your capital through dividends, which is more critical than most people understood. Cashflows are what the uber rich focus on.

Long post:

Hi Felixleong,

frankly, I am not too comfortable in disclosing my positions but from the posts I participated in, you could guess those counters share some similar characteristics. Hope you don't mind.

I chose this forum to share my knowledge because I think the moderators, esp CityFarmer is doing a good job in moderating this place. And people who post TA or gambling stuff are told off quite immediately. Kudos to the moderator in maintaining this investment website.

There are much more losers than winners in people who buy stocks. Perhaps winners constitute 5%. The real big winners <1%.

IMO, to reap the most out of investment in stock market, one needs to keep a long term view and only buy those fundamentally sound stocks.

I keep mentioning increasing dividends in my previous posts.

Why?

To me, dividends are real cash. If I were a worker, I would prefer to receive my pay regularly and would protest if my boss had skipped my pay that year! And increasing dividends over the past decades could only mean one thing, that the company is making more and more money. The other parts will fit in with the latter point. ie the company has the ability to ride through crisis and yet still pay out dividends, a testamonial of its financial strength. And increasing dividends would mean that the company is growing. Frankly, I don't think there is such a company which has these traits and subsequently went bust?

The power of compounding is great, if and only if, it pays increasing dividends over time.
Let me illustrate this. Say a stock $1, pays a dividend of 4c now, that represents a yield of 4%. If the company continues to increase dividends like what it did before, say 10years time, that dividend could increase to 10c. Now the entry price is fixed, and at that entry price of $1, that 10c dividend would represent a yield of 10%. Should the dividends be used to buy more shares, imagine the total net worth 10 years time.

Crisis or not, it doesn't really matter, for companies which have been in existence for be past 20-30years and have weathered several crises before and yet paid dividends during those crisis.

Of course past performance might not necessary repeat itself in the future. But most do. Thus a bit of diversification is good.

And what i observe is that during crisis, in general, companies which paid decent dividends, they affected to a lesser extent, since they have this dividends to sort of buffer up the prices. And one can get even more shares using dividends during crisis. When prices recover, as they always eventually will, one will join first rank.

Coupled this dividend criteria with buying an undervalued company, I think the downside is even more protected even in extreme crisis.

I hope I did not bore anyone with my dividends thingy. And I chose not to mention any specific stocks because I think investments should be flexible and each and everyone is different. But personally, i feel this is a very important consideration.

thanks specuvestor,

quite frankly, its hard to find someone who understands the impact of doing compoundation on raised dividends. even harder is to find people who does this kind of thing. I think the main reason is that most people thinks takes a long time to see results.

I shared my views on SGX(but I am not vested) thread. its yield now is 4%. but if one had invested in this counter 10years ago and faithfully reinvested every dividend back, he would have seen doubling of his sum in about 4years. by itself, 4% does not seem interesting, but this fact plus yoy raised dividends reinvested, it does make a remarkable cagr of 16-18% which few investors can achieve today.

I fully agree cash flow is impt. It is as important and vital to an investor as blood is to a person. the whole point of investment is to be able increase one's cash flow through repeated reinvestment for synergistic effect over time, and at the same time not losing focus on the perils of doing so.