Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing

The Third Principle: Know When to Buy!

I always strongly advocate that you 1.) Always know what kind of market you are in. It’s a Bull, a Bear, or perhaps transitioning between the two. I always tell folks to 2.) Know precisely what kind of corporate stock it is that you want to buy. And, I’ve made it clear that I am not a trader, but a real investor, and that I look for, and only want to acquire safe-dividend growers for my portfolio. Only a small portion of all of the listed issues on the exchanges begin to meet the criteria of a truly investment-grade, safe-dividend grower. But, I know what I am looking for, and I know how to find mine.

The Third Essential Principle of Successful Stock Market Investing is… to Know When to Buy! Now, granted, if your time horizon is years, decades, a lifetime, or even multi-generational, as mine is; the idea of market timing becomes less important. But, since I am living in the now, and constructing and maintaining this portfolio; and, since I also have a means of measuring market risk, as to whether it would seem to be high or low… I am going to make use of those market-risk measuring tools, and I am going to employ them for the purpose of taking advantage of what look like to me to be the most advantageous opportunities to step-up and acquire shares of those companies that I want in my possession. Make sense?

That being said, I employ some “baker’s dozen” of what are called technical indicators that measure market risk for me. And, as I examine them at this time, they tell me that market risk is presently only moderate, and declining toward that place where, hopefully, soon I will perceive what I will believe to be a good place and time to become a buyer once again. I refer to these as “low-risk market entry opportunities.”

Low-risk market entry opportunities happen, seemingly, at least once each year, and often more than once. It is not at all unusual for there to be two, three, and I have even seen four such opportunities in a years’ time. I believe that patience is an investor’s greatest ally. I believe that patience pays. I possess patience in great abundance. I am sitting and I am waiting.

As I write this, our portfolio is presently almost 13% in cash. With that cash, I know that I can cause our portfolio dividend income to increase by a goodly amount, just as soon as I deploy it for the purpose of accumulating more shares in our favored safe-dividend growers. This simple strategy, worked with this simple discipline, simply works.

Whenever I measure market risk, and I think that it has been all wrung out, I will state my opinion right here, and I will say whether I have become a buyer, or not, rightly or wrongly. With a multi-generational perspective… can I ever truly be wrong?

Here’s to your successful investing?
Harold F Crowell

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2 thoughts on “The Third Principle: Know When to Buy!

  1. Kris L. says:

    Thanks for all the great posts, Harold! I’ve followed your methods for some time know, so might be able to guess at the answer to this, but what about the use of some closed end funds as part of the strategy? There are some that when charted have great history of dividend payments, even a few with very regular increases in those payments over time, and the yields tend to be higher. I know you’re at the whims of fund companies and managers, but couldn’t you consider them as you do management of any company and look for the very best, that treat their shareholders well and have managed the fund during up and down times? Look forward to your comments.

    Thanks,

    Kris

    • Kris, It’s a great question, but I had not able to find any CEFs or ETFs that satisfied me concerning consistent income growth… that, and I have yet to learn of a way to determine the safety of the dividend that any pay. Between those two concerns, I have overlooked them altogether. If you could point me to any good resource on this subject, I’d only be too happy to look into it. Harold

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