12-21-2013, 02:02 PM
I've already proven many times over I'm a lousy market timer. My latest was EMR. My cash secured put was filled with an effective cost in the low 40s. When it went up to the low 50s and the P/E was high teens, I sold a covered call thinking I'd just harvest the premium never thinking that, after a brief rest and an optimistic (at the time) earnings report, that it would charge higher. It was called away a few weeks before the expiration date in what I'm guessing was a dividend play.
I now usually only trim something that is an exceedingly large holding and only if I see something better valued that helps diversify the portfolio or the revenue stream. I did swap out BDX for BAX on the recent dip with BAX in my wife's portfolio only to capture a higher dividend stream. Using my estimates (guesses, really), it would take 15 years for BDX's higher dividend growth rate to exceed the income from BAX. A lot can happen in 15 years so I have time to watch and evaluate.
If valuations do get crazy, such as the late 90s, I think I'll reduce a lot of the holdings to build some capital. Hopefully I'll recognize it before it's too late.
I now usually only trim something that is an exceedingly large holding and only if I see something better valued that helps diversify the portfolio or the revenue stream. I did swap out BDX for BAX on the recent dip with BAX in my wife's portfolio only to capture a higher dividend stream. Using my estimates (guesses, really), it would take 15 years for BDX's higher dividend growth rate to exceed the income from BAX. A lot can happen in 15 years so I have time to watch and evaluate.
If valuations do get crazy, such as the late 90s, I think I'll reduce a lot of the holdings to build some capital. Hopefully I'll recognize it before it's too late.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan