Dow Jones 15,000. S&P 500 1,600. What is going on??
After the DJIA briefly crossed the 15,000 mark today I think it’s safe to say the stock market is on fire. I’m a bit surprised we find ourselves with a market this hot, but on the other hand where else do you go with your capital besides equities? Bonds? No, thanks. As interest rates rise (which they will in time) bond values will fall in kind. Gold? Not for me. Futures and derivatives? Get serious. Real estate? Sure, there are some opportunities there with extremely low interest rates, but the barriers to entry (high transaction costs, necessary down payments) are high and it’s hard to attain diversification with this asset class. Cash? Probably not a bad idea to have some allocation to this asset class right now, but historically cash has a horrible rate of return as inflation eats away at its value and purchasing power. The Federal Reserve is basically forcing investors into stocks right now through QE, much to the chagrin of us value investors. I currently view the broader stock market as moderately overvalued, but as always I still refrain from placing a large emphasis on the valuation of the entire market.
I’ve been as active as ever deploying capital over the last few months as the stock market has continued its epic and historic march upward. But value is getting harder to find every single day and high quality investments at prices that make sense are getting more and more difficult to ascertain. I’m going to remain prudent with capital and as diligent as I possibly can with broad market levels as elevated as they are. That’s not to say I’ll hold off from buying stocks (I am Dividend Mantra after all!), but remaining an intelligent steward of my own capital is extremely important and so I’ll be very watchful for value as we move forward.
But enough about the market and lack of value. It’s Friday night and I feel alright! I wanted to share some great articles I’ve been reading and I hope you enjoy them as well as your weekend!
Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.
Oneok Inc. (OKE) Valuation Estimate
Dividend Monk had an excellent write-up on OKE, its business model (as a General Partner), future prospects and the overall valuation of shares. Great stuff and OKE has actually dropped a bit since Matt published his analysis. Could be a great time to jump on shares of this General Partner.
Twenty Dividend Stocks I Recently Purchased for my IRA Rollover
DGI didn’t just publish a recent purchase, but instead published a list of 20 stocks he recently bought for his IRA rollover. Fantastic list of stocks that could actually make up an entire portfolio, and although bargains are getting extremely difficult to find right now, DGI did himself a favor by focusing on high quality businesses that will likely be significantly more profitable in the future than they are today.
I Don’t Need More Than Four Ratios To Buy A Stock
The Dividend Guy listed the four ratios he looks at before buying a stock. Analyzing companies and stocks for purchase is a very individualistic process, and I personally use a lot more than four ratios. I also think that qualitative analysis (what’s the company’s story?) is just as important as quantitative fundamental analysis using hard numbers.
Frequently Complained Questions
MMM, as only he can, listed a number of complainypants arguments and how easy it is to smack them down! This is in response to a recent interview he did for The Washington Post. Great stuff, and it’s good to see MMM spreading the good word.
Take Control of Your Financial Future Seminar – Slides and Notes
Dividend Ninja was recently a presenter at a seminar sponsored by Canadian MoneySaver. Way to go, Ninja! Awesome stuff, and if you couldn’t make it in person Ninja made it easy to get some of the beneifts by releasing his presentation slides and notes. Check it out.
Monthly Update – April
All About Interest recapped his spectacular month. He invested almost $14,00. In one month. That’s fantastic. For a couple of other great updates from April, check out Dividend Growth Machine’s update and Compounding Income’s update.
Integrator listed some recent buys and sells from his dividend growth portfolio. I like some of the buys, and I’m currently looking at CSCO in-depth.
What’s Up With Conco’s Dividend?
Tim McAleenan Jr. over at Seeking Alpha penned a great piece about Conco’s dividend and the lack of a raise over the last couple years (unless you count the PSX spin-off like I do). He points out the cyclical nature of commodities and oil companies are certainly exposed to business cycles due to the up and down nature of oil prices. He also discusses a bit about COP’s recent restructure regarding the divesting of certain assets to reinvest in higher margin assets going forward. Tim writes some great articles over at SA and I’m always eager to read his latest writings.
How to Handle Living on Another Planet Than Everyone Else
My good friend Kraig put up a great post on how those of us who are aggressively pursuing financial independence/early retirement can sometimes feel a bit lonesome in our pursuit as those closest to us (friends, family, significant others, co-workers) are often not on the same page as us in terms of financial goals or prowess. This can make it difficult at times because there isn’t much of a peer audience or support group with which to share your success or thoughts. Kraig came up with some great ideas to keep you on track when you feel like you’re on a different planet than everyone else, because I happen to think the planet we (us pursuing FI) live on is pretty sweet! *By the way, Kraig is visiting Florida from May 18-22 and we plan on meeting up at least once on the 19th. If you’re in the Sarasota area that weekend it would be great to meet up with readers or others passionate about the pursuit of financial independence and share ideas!
Thanks for reading.
Photo Credit: Benoit Mahe