Recent Buy

buyDo you have your seat belt on? The market is falling faster than a plunging roller coaster at your local theme park. This could be a fun time to be an investor, or your worst nightmare…depending on your mindset. It’s a great time for me. Some of my favorite companies are trading at 15-20% discounts from just a month ago.

This market correction could be viewed in a number of different ways. Some investors and economic analysts do not think the market should have been as high as it was just a month ago. It was likely artificially inflated by the Fed dumping money into the system by buying up bonds and forcing investors into equities. In that case, this market is still likely inflated. I’m a simple man at the end of the day. I think in any market there are companies trading at favorable and unfavorable valuations. That was true a month ago, and it’s still true now. You could also view this market correction as an absolute bonanza buffet in which you come in with a full wallet and empty stomach. I’m pretty hungry.

In case anyone isn’t clear, I am gainfully employed in a workplace that pays me 100% commission. I earn no hourly wage or salary. I usually get paid one large check at the beginning of every month. I just happened to get lucky this month, and I got my large check on August 4. That day just happened to see one of the biggest 1-day drops the DOW has seen since the crisis in 2008 (since eclipsed by today’s drop). Great timing on the part of my job. I, however, did not have the greatest timing with the deployment of that capital.

I purchased 15 shares of Chevron (CVX) at $99.94 a share on 8/4/11. I made this purchase mid-morning when the DOW was down almost 200 points. Chevron was already down considerably over the last month, and I had my eye on increasing my holdings below $100 per share. When it dipped below, I figured I would take that opportunity and increase my holdings. As we all know, the afternoon absolutely murdered the market and it has been down ever since. Chevron is now trading for $90.25 a share. Again, great timing on the part of my job by paying me my large check on 8/4, but bad timing on my part by purchasing in the morning.

Foresight is a superpower and hindsight is 20/20.

I love energy at these levels. I have my eye on so many equities my head is spinning. Energy has really fallen recently making COP and CVX tremendous buys right now. I hope this bear market continues for many months to come.

My purchase came with an entry yield of 3.12%. It will provide me with a yearly dividend total of $46.80 based on the current payout. Overall, I’m happy with my purchase. Obviously, I would have LOVED to have made my purchase today instead of last week. I simply can’t predict the future and I always look for value on my price. I initially purchased Chevron as it made its run to over $100 a share and always wanted to increase my holdings, but wouldn’t when it was trading at those levels. It dropped to what I consider a good value on my money and I pulled the trigger. That’s what I do.

This market should continue to be very interesting for the near, and possibly, far future. I’m excited!

What are you buying?

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

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30 Comments

  1. Mantra,

    Sorry to hear about the purchase price, but don’t worry about it. As long as you hold for the long term, I think you’ll be fine. Plus, that’s the great thing about dividend stocks…we’re getting paid dividends regardless of the stock price! (for the most part).

    Anyway, I made several purchases last week myself, so I am definitely in the red right now too!

    Take care,

    DP

  2. I think the entry point for CVX was good. You got in at a nice yield, and if the stock drops more there’s always dollar cost averaging. I have my eye on PM at the moment. Hopefully it’ll decline to $64 so the yield will be 4%. Plus there’s the dividend increase coming up.

  3. I like Chevron, but I feel your pain – check out the article by <a href=”www.dividendninja.com>Dividend Ninja</a> about remaining patient. Who knows where the market will go from here – try dollar cost averaging in the next time, it may help…though it also may hurt. Remember, you can’t win if you don’t play, so at least you’re the market.

    Better than these idiots I read about who are 23 and all in cash because they are worried about stocks – come on! You’ve got 40 years to ride it out. Why hold cash to earn about 0.7% interest?

  4. Partisan,

    Yeah, we’re both in it for the long term. It’s amazing that you and I both made purchases on the morning of 8/4. I don’t think we saw that large of a drop coming! I’m ok with it though. 🙂

    Keep in touch.

  5. Henry,

    I agree. With or without the subsequent drop, I feel I got a great value on my price. I think it’s actually one of the more undervalued stocks out there.

    I also have my eye on PM. I think it’s a great long-term holding. It has been pretty resilient through the drop and PM actually hasn’t moved that much. There have been a lot of equities that have swung much lower.

    Good luck and happy hunting!

  6. Pig,

    Believe me, I’m patient. I plan on holding everything I have for a long, long time. The only holding I’m watching is TOT. I regret that, and wish I would have initially gone in with COP last summer.

    I agree with you on the young people holding cash. There is a Buffett quote out there about cash being the worst investment of all time, and how people feeling comfortable holding large amounts of it must be oblivous.

    I do DCA, but I try not to make purchases less than $1k, so as to lessen the blow that commission fees naturally inflict.

    Keep in touch! 🙂

  7. I think energy is done for a while, go foe consumer goods like PG, WMT, KFT, and KO. Long PG, KFT

  8. Hey DM,

    Even though my purchase of 1000 TEF last week was a bit early, I feel fine about it. Today I bought 1000 of O. I have been waiting for the yield to hit 6% on that, and today I picked up 1000 shares at 28.56.

    I look at this market dip as a buying opportunity, although I know there is real chance the market could drop a lot more.

    Good to hear others that have their eye on their goals and long-term plans, and not giving into panic and fear.

  9. Great post Mantra! I feel the same, its so much value out there so money is the only problem. I didnt buy something because Im short of cash but next month I gonna buy, perhaps energy. I like COP, Chevron, BP, TOT, Statoil maybe also the Italian Company Eni spa ADR is good. The yield are about 7-8%.

    Keep up the good work!

    Best regards ägamintid

    “Own my time” in Swedish)

  10. I took the chance and averaged down my position in DTEGF.PK. Yield is over 7% now.
    Also added some more INTC to my portfolio.

    Good luck to all!

  11. Anon1,

    Why do you think energy is dead for a while? I happen to disagree and think our global thirst for energy is only going to increase. I’m obviously a fan of the consumer stocks too, but think they should be part of a balanced portfolio.

    Anon2,

    Great job on the pickups! TEF is a great value right now. Partisan just picked up some O as well. I don’t know enough about REIT’s to get into them, but it must have been good news to see the Fed commit to low rates!

    Keep in touch!

  12. ägamintid,

    I’m in the same position as you. I have a small pool of capital I could draw from, but I’m a little leery going 0% cash right now. I always like to have a little in there. You are bullish on energy too? I agree that a lot of those names are screaming buys right now. I’m surprised TOT dipped as far as it has, as I thought it’s been one of the cheaper oil plays for some time now.

    Good luck on your purchases and keep me informed!

  13. Moneycone,

    Great to see you join me on the energy buys. COP has become a wonderful buy right now. I wish I would have waited a week, but I still feel good about my long-term purchase!

    Keep in touch.

  14. Well I’m the odd man out, the decline caused a stop loss to issue a sell, so I’m 100% cash at the end of today, but I got out on a up tick.I would be very carefull about trying to catch a falling dagger, the selling pressure will most likely bottom out in oct.Just remember about value investing, what looks cheap, can become a lot more cheaper. Markets go down much much faster than they go up.Anyway good luck, our investing style are 100% different, but I will still follow your progress.

  15. Anonymous,

    100% cash? I don’t have any stop losses on any of my positions. A large flash crash could cause me to lose a lot of money.

    I agree with you that the markets can be turbulent. What’s cheaper today could become a lot cheaper. Of course, it could also become much more expensive. Because I lack intuition I continue to DCA monthly.

    Where are you going from here? Are you going to wait for a larger drop on the horizon? I’m hoping, as you probably are being 100% cash, for a large drop ahead. I’m actually crossing my fingers for a drop below 10K for the DOW.

    Keep in touch!

  16. I increased my position on ETE and an emerging market index. They both got hit harder than the average US domestic equity, so to remain balanced I focused capital on those areas.

  17. Monk,

    Great job Monk. I see a lot of international equities have been getting hammered, as I see TOT and TEF both down quite a bit in my own portfolio.

    Awesome job deploying capital in the down market!

  18. so you have XOM,COP and CVX? those 3 are from similar industries.

    To go back to your post;dont worry just continue with your principal and discipline.

  19. Inq,

    Yes, I am bullish on energy, but I’m a little heavy in terms of position numbers in the sector. I actually love holding those three…it’s my holdings with TOT that I’m not sure about. I’ll probably end up owning 3-4 positions in each sector when I’m done.

    Thanks for the encouragement! I hope you are doing well in these turbulent markets as well. Thanks for stopping by!

  20. I’m in 100% money market earning nothing, but I look on it as a form of insurance. I use trend following. It will be a while before I buy, as it will take a strong uptrend to issue a buy. On my next buy I will a 2nd trend following system & split them 50% each, if I had used the other system I would have gotten out of the market in May. I’m the guy who told you about the book ” Handbook of Formula Plans in the stock market ” In case your wondering I only use mutual funds & Index funds as I’m not a stock picker, with an index fund I track the market, anyway best of luck, I will check in from time to time .

  21. Hey Mantra,

    I feel your pain and also your enjoyment, man. I’ve been deploying capital liberally over the past few weeks. I picked up 60 shares of WM, added another 30 shares COP and 25 shares of DOV. Even after the great run today, I’m still down on all my buys, but I really don’t think much of it at all. The longer the price stays deflated, the more shares my dividends will pick up when reinvested. They can stay down for the next 30 years as far as I’m concerned so long as the revenue and earnings per share remains strong.

    I had an ironic situation today which made me laugh a bit. I own AFL and I really wanted to add to my holdings at $36.00 a share (what I consider to be a super bargain). So, on the one hand, I was rooting for a stock I own to tank in order to buy more shares but on the other hand, I was actually quite relieved that it rallied, picking up another 5% today. That’s the beauty of value investing, is it not? I can root for my holdings to go both down and up so it’s a win-win no matter what the market hands out.

    Keep up the good work and I commend you on remaining so calm during these volatile times.

  22. Pey,

    I completely concur with you. The markets could stay flat for the next 30 years for all I care. As long as revenue and earnings increase along with the dividends, I’d be just fine. Only in our dreams.

    AFL is a phenomenal buy right now. I thought it was very attractive in the mid-$40’s. It’s screaming now. I do agree with you on the win-win. If the market value goes up, the portfolio’s value rises. If the market value goes down, it just makes a great entry point. I love being a value investor!

    I wish I had about $10K or so to go wild with. I’d have it spent pretty quickly on quality names like WMT, AFL, ABT, PEP…but that’s ok! Unfortunately, I usually stay pretty close to fully invested. I had dry powder ready for a drop but deployed it too early with my CVX and COP purchases. I’m excited for an extended correction!

    Keep in touch!

  23. “I had dry powder ready for a drop but deployed it too early with my CVX and COP purchases.”

    Don’t sweat it. After a few years of dividend reinvestment, you’ll look back and realize it wasn’t such a bad idea to buy. We can’t predict the market, so the most powerful tool we have is to continue buying shares on a routine basis and to reinvest those dividends for more shares.

    Onward!

  24. “What are you buying?”

    Today (8/11/2011) I added to my position in Becton Dickinson (BDX) at $76.95

    BDX has a relatively low dividend yield (2%) but a high annual dividend growth rate: 15% on average over the past 5 years.

    Good luck everybody!

  25. Scott,

    Becton Dickinson is a fantastic business and I’ve looked at it many times. It is on my watch list. The only think keeping me away is the low yield, but it is on my list. I like it and TEVA in the low-yield health care space.

    I think you made a fantastic purchase.

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