This post will cover a quick dividend update and a few stocks on a much longer term horizon than usual but maybe it will help give a different perspective to the short-term churn and media hyperbole we are all used to experiencing.
Things keep churning away, i honestly probably look at them too much but it’s fun and interesting so what the hell. It looks at this stage this month is setting up for another $700-$800 which is kinda nice, a few of the new purchases will kick in their income around July and August so the base income should keep building nicely.
I’m quite happy with the fact that i’ll have exceeded my 2013 annual dividends by the end of this month. I still find it hard to believe it was only 18 months ago when i made the change in my investment strategy but i came into a bit of cash, opportunities popped up and i took advantage of that rather than buying a new car or whatever. I had some interesting discussions with work colleagues last week who were contemplating doing the same thing, some had never done any investing before and as such were using financial advisors and so on, some had just started in their late-20s and are doing exactly the thing i wish i had done 15 years ago. With time on their side, they should be very happy when they reach their 40’s.
I have put quite a bit of equity into stocks that are not currently paying dividends right now but if you have followed my journey so far, you know i tend to go for the contrarian and riskier plays. The ones i have picked appear to be on the cusp of issuing dividends within 12-18 months. Given where the market is, it may or may not of been a good idea, we’ll see 🙂
I’m also maintaing a reasonably frugal lifestyle and by frugal i mean i am still piling about 60-65% of my income away while the going is good. I am still succumbing to the daily temptations of a coffee here or there and so on, i tend to fallback to old habits pretty bad when work gets intense but it is by no means affecting my end goal. As for the saved cash, it is pretty much all going into my registered accounts while i still have contribution room and when they are topped up, the spillover goes straight into the margin accounts. I maintain 3 brokerage accounts and spread the risk accordingly.
The DRIPS are starting to work nicely with the $0 commission buys really kicking in – i’ve decided to minimize my swing trading to major opportunities rather than chasing every lead i see, mainly due to time commitments and partly due to the current market situation. I’ve done pretty well from those and piled the profits right back into dividend stocks.
Right now, things area bit overstretched so at the very least, i’m not anticipating much more upside in the short-term. Probably more sideways into the fall and then i’ll reassess. The geopolitical wildcard came back with a vengeance last week with Iraq and as a result the VIX popped ( from multi-year lows ) and Crude popped. Will this cause a deeper sell-off? No idea but let’s look at the charts and see where we are..
S&P 500 Futures Long term
This is a chart of 15 years of futures prices for the S&P ( /ES ) as aggregated by ThinkorSwim. Amazing chart right? You can see the failure in 2008, the generational bottom in March ’09 and then the incredible ride up to where we are now. I wish there was a chart about media sentiment i could plot against this, pretty much following the inverse of that would of made you very, very wealthy.
The white line on the chart rising up rapidly is the ‘mean’ of the current price range. I am fully expecting the market to retest that at some point. Now bear in mind, this is a MONTHLY chart. Things will get very interesting if the market suddenly hits a pocket of weakness and sinks into the 1700-1800 level, it could be a great buying opportunity or something more grim. That is a way off for now. In my eyes, i’m am expecting churn now between this 1850-1960 ish level. We could of course float up still and tag the 2000, we’re close to one of those big round numbers so usually the market will have a go at some point but i wouldn’t be going in guns blazing big long new positions here. I think we’re in a process of digesting this incredible move for a while which would be healthy.
Crude Futures ( /CL ) 15 year Weekly
I don’t tend to trade commodities that much but here is a long term picture of the crude futures. Remember 2007 when everyone was screaming about oil hitting $100, then $120, then $140, the green revolution was about to take off then kaboom. Demand destruction on top of the housing crisis, double whammy on the market and look what happened. Pretty crazy times. Things aren’t doing much here with all the media gassing about Iraq but i’d keep an eye on the $113-$115 level. I honestly think that when this media stuff dies down, we’re going to be right back to $100 again, the chart isn’t telling me much here.
Gold futures ( /GC ) 15 year Weekly
On the flip side, let’s look at Gold, people are still calling for crazy high prices in this commodity but the chart says otherwise, i’d stay off this for now till we get in a proper identifiable bottom. The miners will probably undergo more consolidation and cost-cutting as this price drops down, probably get some great deals eventually. $1000 is entirely feasible and somewhere down there is where i’ll be buying. On the upside, if gold does retake $1400 it is game on. In the meantime, i wouldn’t be a chaser.
Vodafone ( VOD ) 15 year Weekly
Vodafone has been having a hard time of late, people are really laying into it because the big source of income ( Verizon Wireless ) is now gone. That said, the dividend is still awesome, the cash is still great and i still believe in this company for the long term. It is a solid company. I would not be surprised to see this thing pop up as a takeover target again in due course. In the meantime, i’m accumulating in the low 30’s here and in the 20’s if it gets there. Long term hold for me.
Apple Post-split 3 year Weekly
I love this stock for momentum trading, once it starts to move, it really moves. Right now it looks like Apple is finally? in a process of consolidation before a likely attempt at taking out the old post-split highs of $100. From my perspective, it is a bit tricky to trade this current price, i’d prefer a deeper sell-off first. I may take a bite if we get into the 80’s. Remember August/September is likely the launch window for the iPhone 6 and other hardware so think about the funds buying into that ahead of the announcement. I also think if Apple does get into the mobile payments in a big way then this thing is just going to take off again. The company WWDC keynote was exciting and interesting, the potential is there so it is just a matter of waiting for that opportunity to popup again. I sold my last batch of calls too early ( around $620 ), i was surprised at the strength through the resistance but that is where sentiment overcomes technicals and sometimes fundamentals which is what keeps the market interesting 🙂
Petrobras ( PBR ) 10 year Monthly
I’ve been buying PBR since $11. I really love the technical setup here, i don’t care what people think of the fundamentals but i love the fact the stock is absolutely hated, there is a lot of crap priced into this stock. There are some fantastic catalysts coming up and the chart is telling me this thing is likely to have a good run. Is this 100% guaranteed? Of course not so play accordingly. 6 years of a major downtrend is looking likely to be broken, we currently have FIFA going on, olympics soon and then the elections. If you have been reading about Brazilian politics you will see that the current president ( Rousseff ) election rating is dropping and every time this happens, the Brazilian stocks go up. The election is currently dated for 5th October 2014 so watch what happens. Anyway, i’m not big into politics,i just thought it was an interesting cause-effect situation. So current price target, i have about $30 pencilled in. When? No idea, but to me, the risk-reward is worth it and there is risk, don’t ignore it.
Finally, i thought this recent presentation from Mark Carney ( Bank of England governor ) was pretty interesting.
Reading between the lines, it looks like the UK interest rates are likely to go up sooner than people think? Well that is my take…