Thursday, January 1, 2015

resolutely resolving

The clock just turned into the new year. One minute to the next. What is significant about that? Why do we celebrate one minute, one day? Isn't it all a continuum?  If one needs to mark a waypoint, then why not mark it with a significant resolution? New Years Resolutions...made to be broken, right?
what makes that rare beast, the resolution one keeps? I wish I knew.
What about my retirement investing life? What could happen in the new year?  In the last year I saw a 10+% growth in value, not counting new contributions. I suppose the market could take it all back, even more. What would that do to my resolve? Am I convinced enough to stay the course? I know one thing; higher or lower valued, the portfolio will spin off 35k plus another 5-7% in dividends, so perhaps 37k.  I'll add another 55k in contributions, for 92k. That could mitigate nearly 10% against a down-draft. If the valuation stays even, the dividend plus new contributions will grow the corpus by nearly 10%. If valuations rise, the corpus could rise further than 10%.
We have a richly valued stock market, margin compressions in many industries for this reason and that, prospects for rising interest rates that tend to depress the value of multiple types of investment. I guess I shouldn't keep my hopes up for the most optimistic scenario in valuation.
So, will I stay the course? I can't see an alternative. Am I disciplined enough to critically monitor my holdings?  Funny; some of the best minds I know say buy, hold forever. That takes some of the pressure out of monitoring. That means that the most important question is, did I make prudent purchases? As I scan my portfolios, it seems like I did. I culled out the bad ones. There's a reason for every position I hold.
So, I resolve to stay the course. I resolve to only sell when something goes fundamentally wrong with a business. I resolve to only buy stocks that I will hold even if they lose 25% or more of their value in the short term. I resolve to focus on rising dividends, reinvestment, watching share counts grow, income grow, watching earnings, margins, payout ratios and trying not to look so often at the valuations. I resolve to believe that the US economy is the most resilient one in the world, the safest store of wealth, the one with the brightest long term prospects over time. I resolve to keep reading, constantly. I resolve to engage in conversation with peers. I resolve to be respectful and constructive in my comments. I resolve to keep an eye on the goal with each purchase, each balancing move. I resolve to only buy more stock if the valuation is acceptable, not just because cash is burning a hole in my pocket.
tall order, but since I have been practicing all this, there's a reasonable chance I will pull it off.
Happy New Year.

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