I guess it's not a bad dream after all

I woke up the other morning in a cold sweat. The Chief Narcissist is about to become our president. Either America has lost it's marbles, or there are nearly 50% of the public who have no sense of outrage when their chosen leader tramples all over the concept of simple decency. Today at the Sunday service, our Rector emphasized that it is our task to be in the world acting as the body of Christ, actively promoting the values of love, charity, patience, advocacy, long-sufferage in a time when even our leaders threaten the welfare of many amongst us.

It blows my mind that the markets have responded with about 8% rise over the last 10 weeks as a result of the election. What do these people think this man is going to do? Maybe there will be some elements of tax relief, or rollback in regulations, but I doubt our currency is going to become less valuable and our exports to explode any time soon. The world is too unstable a place for people of means to bet on Russia, China or any other large economy to safeguard their personal investments.
Even if the money is in offshore banks, they are still bidding up American institutions, real-estate, American based multi-nationals. European governments  are requiring private depositors to PAY to keep their money safe with negative interest rates.

In spite of all the craziness and the bitter aftermath of the election, it hasn't hurt my investment performance. I'm thrilled to see the portfolio do what it was designed to do; outperform in flat and declining markets like most of last year, and spin off increasing dividend payments that can be reinvested. I like the capital gains as well, although they blunt the effect of the DRIP on number of shares and overall dividend payments.

After the KMI debacle, there have been no gross melt-downs in the portfolio. The smallpcap weighted 401k has experienced more volatility than my IRAs that are pumped full of blue-chip dividend paying  large-cap stocks. However, it finished nicely in the positive and had a much greater leap in dividend payments, even accounting for the added investment contributions. I sold Johnson Controls after several years of holding it. It was the last of the battery storage companies I bought out of personal interest, but not on the DGI plan. I have redeployed that cash to better prospects. The 401k is sitting on several sizeable unrealized capital losses, but the dividend performance remains strong, and my holding period is infinite unless something drastic happens with my portfolio, apart from some failure in a company's fortunes.

I'm going to have to liquidate some holdings, as I will be in need of bridge financing to move to a new home. I'll probably use this time to clear out some of the laggards and leave the portfolio with its strongest performers. I'll take a loan from the 401k and a short term loan from my IRA to complete the down-payment, then repay them out of the proceeds of the sale of the current home

So what did I learn in the last 4 months? Mostly how to sit on my hands. I deployed some new cash in the 401k and switched some equities into the 401k by selling in the IRA and purchasing in the 401k to allow me to redeploy assets in the 401k. I improved the quality of that portfolio in the process.

Having built out the equities in my portfolio to the degree of diversity I want, now my task is to progressively improve the quality of the holdings, finding companies with higher credit ratings, lower volatility, slanted towards defensive sectors and low- to mid-cap values if I can find them with an adequate pedigree. This results rather low trading frequencies, mostly limited to deploying new money in the 401k.

Using DRIPs halves the amount of purchasing I would otherwise be doing, as all dividends are automatically reinvested. There are no brokerage fees on those reinvested dividends, so my account maintenance fees are truly tiny. Were I invested in funds, between the fund managers and the retirement account manager, I'd be shelling out between 5-10k in management fees every year. My new contributions to the 401k result in about 4-5 purchases per year, so the total cost of investing runs roughly around $100 per year.

I have an associate who pays $6000 per year for an advisor to tell him which funds to buy in his retirement plan. He buys funds individually, so he doesn't get a large institutional class of funds. I'm guessing those funds cost him another 5-10k per year.

At this point in time, I probably spend 2-4 hours/ week reading about investing and checking in on my holdings. That makes 100-200 hours/year. I'm paying myself somewhere between $50-100/hour by self-directing an individual equity portfolio.

Since dividends tend to be more predictable than stock price, I continue to focus on building share count, understanding that the dividend per share is paid whether or not the shares are at a yearly high or yearly low.  The primary effect of price is on how many additional shares I can buy at each dividend payout.

This year I'll expect to collect 3+% more shares on the positions I own, and another 3-4% in new contributions. That secures 6-7% growth in the portfolio. Additional growth will come from capital appreciation and dividend growth. I will be thrilled if the portfolio grows by 10% in value of which 7%  will come from deploying dividend dollars to reinvestment. Any capital gains will be welcome.