It’s been a bit crazy in the market lately. There was fear over a government shutdown due to funding issues, which eventually came to pass. Investors didn’t really get a chance to catch their breath as talks soon broke down over raising the debt limit. Largely due to disagreements over the Affordable Care Act, Democrats and Republicans appeared to be far apart on how to move the economy forward. However, as it seems to always happen the government eventually forged a last-minute compromise and passed a deal to raise the debt limit through February 7, 2014.
What does that tell us? Well we’ll likely be looking at more D.C. drama in just a few months. I’m quite excited, because I’ll do the same then as I did over the last few weeks: nothing. My life changed nil as the drama from the Capital unfolded. I scanned the market for a few opportunities, but only used the recent broader market weakness to initiate a position in Exxon Mobil Corporation (XOM). While other people get a little crazy when drama really heats up in our government, I continue to exude patience while I execute my long-term plan.
But enough about all that! The weekend is here, so let’s enjoy it.
Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.
Why do I own so many individual dividend paying stocks?
Dividend Growth Investor explained some of the rationale behind his decision to hold over 60 stocks in his personal portfolio. I personally plan on my portfolio holding somewhere around 50 individual positions when it’s completed. I’ll feel, at that point, my income is diversified enough to sustain a dividend cut or two while also not being in a position where I can’t functionally manage the portfolio.
The End of Work as We Know It
Jet Set Citizen wrote a great article that explores the ideology of work, and why we still work so much when productivity has increased and the cost of goods has decreased. He discussed scarcity and how technology will change access to resources, commodities and energy. A really great piece. I find it quite crazy that there are so many people around the world working so hard to afford many things that they never seem to have the appropriate amount of time to enjoy. Why have a giant house if you have to work 60 hours per week to afford it, thereby never being home to really enjoy it? I guess you could say that financial independence is a fantastic insurance plan if chronic high unemployment due to technology is truly on the horizon.
PepsiCo (PEP) Dividend Stock Analysis
Passive Income Pursuit analyzed PepsiCo, Inc. (PEP), one of my favorite companies and a personal investment of mine. While I don’t think PEP shares are particularly cheap right now, I am very happy with holding my stock in the company and collecting those dividends!
Why I’m avoiding large cap telco’s for dividends
Financially Integrated reveals to us why he’s going to avoid large cap telecommunication companies for investments for the time being. While I can’t wholly disagree with his thesis, I do have a little exposure to telecoms via AT&T Inc. (T) and Vodafone Group plc (VOD). While I’m not a huge fan of the telecom industry, I do like to have a little exposure for the higher yields they provide my portfolio. T and VOD have actually worked out quite well for me. I look at telecoms like utilities – higher yield, slower growing investments that juice the income of a portfolio. I like to have a mixture of lower yielding/higher growing, middle yield/middle growth (sweet spot) and higher yielding/lower growth investments. They all have their benefits and drawbacks, but it does seem the stocks that offer a 3-4% entry yield backed by high single digit or low double digit growth offer the best prospects.
Living on $5,000 a year, on purpose: Meet America’s ‘intentional poor’
A really interesting article here. This piece examines a few people who have chosen to live well below the poverty line here in the U.S. (an invisible line created through income alone). While I consider myself fairly frugal against the backdrop of the general U.S. population, I’ve got nothing on some of these people. I know in my heart of hearts that I could live on $5k/year if I absolutely had to, but it’s surely not a situation I would choose to be in. However, I really admire the ingenuity and courage it takes to live a life completely different than everyone else and it appears that some of these people (especially Dan) are happy. I think while this lifestyle is a bit extreme – even for me – there are some lessons that can be gleaned here.
‘OMG, I’m SO Busy!’
Pretired Nick talks about how tasks and plans can stack up on one another, quickly putting you in the hole. But the key is to remember that you have control over your free time. Don’t get caught up in being busy just for the sake of being busy. Accomplish things that bring great value to your life and prioritize them accordingly. Most importantly, live in the now. Long-term goals are extremely important, but you should also enjoy today!
You Need Five Dividend That Will Be Untouchable Your Entire Life
Tim reminds us of the importance of finding a few really high quality investments and sticking with them for the long haul. Wealth can be built in a number of different ways, but it’s not too difficult to let a few great companies go out there and make a ton of money and share some if it with you. Let them profit and stay out of the way – and you’ll profit too.
Scott Adams’ Secret of Success: Failure
Scott Adams – the man behind the Dilbert comic strips – reveals this his greatest success was found at the bottom of his biggest failures. While you could make a case to disagree with his thoughts on the worthlessness of goals (he prefers systems), I also view perseverance as an extremely important character trait if you want to have success over the long haul. I know personally that it wasn’t easy to get to where I’m at. I’ve dealt with losing my birth parents early in life, blowing an inheritance at 21 years old, moving across the United States away from my family in order to maximize my human capital, ate ramen noodles for a year and lived without a car in order to save money…but I’m here now stronger and wealthier than ever.
With IBM Down, Buy And Sleep Sound Like Buffett
I like this article at Seeking Alpha which shows why International Business Machines Corp. (IBM) investors, like Warren Buffett, should be particularly excited about the recent dip in IBM share prices: the lower prices means IBM’s massive buyback program is more effective when shares are cheaper, meaning existing owners (like me) are seeing increased ownership positions by doing nothing. While I’m concerned like many others about the lack of top-line growth, I try to keep a long-term perspective and have faith in management. I’m considering adding to my IBM position as it’s now trading slightly below my cost basis – which I thought was already cheap – but I don’t want IBM to be much more than 2% or so of my portfolio, as I’m not a huge fan of the technology sector in general.
Should you use IRS rule 72(t) to access your retirement fund?
Joe put together a great resource on the benefits and drawbacks to use of the 72(t) rule to access certain tax advantaged monies early, avoiding the 10% early withdrawal penalty that usually comes with such actions. I’ve discussed my thoughts on this before, and find the idea of using a SEPP to access funds in a IRA early unattractive, and instead invest 100% of my available capital in taxable accounts.
Full Disclosure: Long XOM, PEP, T, VOD, IBM
Thanks for reading.
Photo Credit: Benoit Mahe