New opportunities

2013, a huge year for the stock market. Now the pundits are asking, what could be in store for 2014.
No one knows and many will gladly substitute for that lack of foresight with speculation. I don't waste time on that. Speculation is like playing the lottery. The odds are infinitesimally small that I'll win.

What I can do is save. I'm going to save every dollar I can squirrel away, both in my qualified plan and after taxes in life insurance cash value. Lots of people say that cash value life insurance policies are a poor investment. however, they're happy to endorse term life insurance. I have experienced the tepid returns of cash value policies. I also know that their gains are tax deferred, and I can, and have, borrowed against the cash value. In my tax bracket, putting after tax money into a cash value life policy is a no-brainer. I immediately avoid about 40% taxation on ordinary earnings, 15% on qualified dividends. That makes up for some tepid investment performance. The cost of insurance isn't much different from term life.

Maximizing income deferral is my other strategy. The government allows $52,000 maximum this year. I'll do my best to defer every bit of that much. Across my employed lifetime, The average maximum deferral will probably average about $47,000 and the average earnings duration will be about 16 years. That would suggest that each year of contribution will be worth somewhere around $120,000. That puts the qualified plan maximum (at 7% ROE) of about $3.6 million. I'll be lucky to hit $2 million given my age and prior history. Still, I'm working to defer as much as I am allowed to under the law, and then another 40% beyond that after tax.

I doubt I'll find another investment strategy that suits me better than DGI. I spent 7 years looking, after all. I don't like the logic of any other of the strategies I investigated.

I don't see the  pundits offering any clearer view of the future than in prior years, so I'm left with the same old investment theme; try to buy best in class companies at or under fair value, focus on companies that pay above average dividends and grow those dividends. The goal is a rising stream of income. A secondary goal is capital appreciation, but I'm not measuring success against a benchmark.

So, big savings, rising dividends, moderate capital appreciation, lots of diversity. I'm insured against single company  meltdowns by portfolio size. I see myself becoming more conservative. I'm not reaching for yield anymore; instead looking for relentless earnings growth, relentless dividend growth, moderate payout ratios, companies that make stuff people need come rain or shine. Not too sexy, but meant to help me SWAN.

I'm pretty happy with the monitoring function. I use FastGRAPHS premium and keep my portfolio loaded. I may start customizing the data fields to make the earnings growth and  dividend growth rates a little clearer.  I can easily follow the entire portfolio without spending a lot of time.
I'll need to get a little more disciplined about keeping issues in the portfolio that aren't performing to specifications; the sell issue is one of the more difficult disciplines in personal investing.