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.
Thursday, January 1, 2015
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