The market has been on a tear to start 2012. The S&P is up 6.81% YTD, and it’s showing little signs of slowing. This is a good thing or a bad thing, depending on your investment strategy. If you’re a value-oriented dividend growth investor like myself, a market on fire can dim the prospects of finding a good value with which to put your capital to work.
There’s a lot of talk about a forthcoming pullback in the market, due to the strong performance out of the gate. I agree that there is probably a pullback on the horizon, but when will it come and how large will it be? I lack the ability to answer these questions so I do one thing: I stick to my plan.
I have a plan. My plan involves saving a high percentage of my net income (over 60%) and using that excess capital to invest in attractive dividend growth stocks month after month after month. The market will go up and down by many percentage points during the course of this plan, which is likely going to be more than a decade long. After I’m done with the plan, I’ll have a large portfolio filled with dividend growth stocks that pay out dividends in amounts that exceed my monthly expenses, and continue to raise those dividends at rates that exceed inflation. This way, even as my expenses go up over time my income rises even faster.
I’m showing my dedication to that plan. Even though the market is strong and many are awaiting an eventual pullback I entered the fray and recently added to my positions with PEP and NSC. The market could drop like a rock tomorrow, and you know what? I’ll just buy some more. That’s me sticking to my plan.
What’s your plan? Are you sticking to it?
Thanks for reading.
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