Rubbing Elbows said:
I'd be interested to know your strategy? please tell if your open to share with the rest of us.
Basically, I try to maintain my holdings as below:
39% cash (high interest accounts)
1% cupronickel coins (20cent coins mainly)
10% dividend paying stocks (only those with a dividend yield of 10% [or close to it])
15% gold
35% silver
As primary income arrives, it is distributed in the above fashion.
Since I'm on "hold mode" while I wait for GFC2, the cash based holdings have been increasing rather than the other holdings.
I see that as temporary though, since I'll be using that cash on PMs and targeted stocks when GFC2 hits.
I'm a low-risk, long-term buy/hold kinda guy - who wears a tin foil hat.
I'm anti-debt and pro-productivity.
I don't use leverage and have never been in debt.
All funding is through my own productivity rather than "recycling" positions.
Since I abide by those beliefs personally, I look for companies that follow a similar approach.
Of course, it's very rare or impossible to find a company with no debts, but there are some with small debts which are likely to be paid off based on their specs.
I stick to dividend paying stocks because most companies paying good, stable dividends tend to have a solid business model (translates to productivity) which will continue to provide supplemental income.
In fact, I'm solely into stocks for the dividends.
While the capital gains may be a bonus, I don't base my buying decisions on capital gains.
Partly, this is because I like to hold long-term and am not looking to day trade on the movements.
I believe low-volatility is a consequence of a stable business, and that's exactly what I look for.
Besides, PMs can serve the purpose of capital gains.
Also, I prefer low volume stocks where possible.
An example of one of my holdings is Lemarne Corporation (LMC).
Previous div yields are:
2008 - 8.72%
2009 - 15.33%
2010 - 21.21%
(Based on SP at the time of Div payment)
Commsec currently report them as having a 17.4% div yield.
I should mention that this period's dividend was cut, which was unexpected, but the reason given is decent.
They have a strong position and want to scope out some opportunities.
I think if they don't find anything worthwhile they'll pay out a tidy div next period.
So yea, that's the sort of company I aim for.
I stay away from consumer discretionary, mining, marketing, finance and real estate companies.
They either don't pay high enough dividends, have too much debt or are in an industry heading for a collapse.
The gold is "hold forever". I would only sell gold if the capital gains provide for a primary need.
I am prepared to sell silver for capital gains towards cash holdings, but not while the economy is going through dangerous times.
It will be useful in a SHTF scenario.
In light of that I see most of it long-term, but there is a short-medium term portion I consider my trading portion.
Some might say the trading portion would be best in paper silver.
I prefer to keep even the trading portion in physical because if something goes wrong, I get to keep a consolation prize
The trading portion will be sold on the run-up to GFC2 unless I find a reason to hold it.
20cent coins are a long-shot play on cupronickel in the very distant future, but its primary purpose is actually to have cash on hand in a time of chaos.
I could keep notes so as not to take up much space, but I'd prefer to keep my physical cash in metal
At least it has more physical value than the notes due to metal content.
I'm prepared for the next time NAB or other banks pull another bank error (not in our favour).
Another part of my strategy is how I use interest and dividend payments.
When I was in "buy mode", I would buy PMs with the supplemental income.
Now that I'm on "hold mode", I let bank interest compound and direct dividend payments to high interest accounts.
When I exit "hold mode" and get back into "buy mode" when GFC2 hits, my targets for my stock quotas are:
-Bega Cheese
-Woolworths
I am prepared to go with lower div yields in the case of these 2 stocks (esp. woolies) for one important reason:
They deal in a primary need - food.
They will have higher chances of survival in a SHTF scenario.
Marketing companies selling ring tones will be toast.
I think that about wraps up my strategy.
It's definitely not a get-rich-quick scheme, but at least for me it works and I have not made any losses yet, only steady profits.
Of course, outside of investing, tin foil hat wearing means stacking non-perishables etc.., but that's another story
, hang on its going to be a wild ride!
