Chowder

Estrategia Referentes
374

Desde hace un par de meses, Chowder cerró dos de los tres blogs que llevaba,
Ahora el único que queda es “Young Folk and New to Equity Investing Posrtfolio”.

"The cash has shown up in my son’s account and I just added to HD. A full position in this portfolio is $6K and HD is now at at $4.8K. I have two more companies that need to be added to in order to bring them in proximity of HD, those companies are GPC and SWK, so those are the considerations for next man up.

Once I bring these two companies up in value I will then switch gears where the rest of this year I will only add to companies showing 100% gains or better.

I am ignoring valuations, I am ignoring market conditions, I am staying focused on building shares in companies that are doing well for us. It’s a simple as that. It doesn’t take a genius to succeed in building an equity portfolio regardless of what others want to tell you. I think too many people are trying to be too smart and it isn’t necessary. I believe in keeping things simple

A word about valuations and HD. My son’s portfolio, due to investing small amounts on a regular basis and the fact that everything in his taxable account is in the green, anytime I add to a position like HD I’m averaging up on his cost basis.

As to valuation, the share price would have had to drop about $35 just to pick up one more share. I don’t see that happening soon and if I waited for a $10 drop in price, I would still only be able to purchase the same number of shares, so I ignore valuations.

Morningstar says fair value is $170, Valuentum says $175, but in either case they both consider HD overvalued at its current price of $206. In my case, the cost basis rose to $157 after yesterday’s purchase, so as you can see, I am still showing an undervalued position in spite of ignoring the current valuations. I can simply focus on building the position."
[…]
"If waiting works it feels great, but when it doesn’t there is a company I wanted to build up in size that didn’t get built unless I ended up having to pay even higher prices for less shares for the cost of waiting and not getting it. I won’t allow that to happen.

I will often invest in $4K and $5K lots for middle aged investors, but if share prices keep rising, and the company is still performing well, then I will invest in smaller amounts of $1K or $2K at a time. I will not miss out on building dividend cash flows now. My attitude is … what can I do today to build cash flows, money that will be used for further investment. The more dividend cash flows I have, the more cash I have to invest in the event prices do eventually fall, but for me, it’s all about building positions of size. … I will never get caught having one of my best performers being one of my smallest positions and me ending up saying, I wish I owned more."

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"What is the primary objective?

In my case the primary objective is to build an income stream that is reliable, predictable and increasing. In doing this there is a dollar objective. How much do you need and when do you need it?

I have one older folk portfolio where the income objective was $120K per year in dividends. Until that objective was achieved the portfolio was always 100% invested.

I now have the income flow in that portfolio at over $160K per year and that is the only portfolio that now holds cash for investing in the event of a pullback.

I have another older folk portfolio with an income objective of $60K per year in dividends, we are not there yet but I anticipate it being met soon. Therefore, this portfolio stays 100% invested. The owner of the portfolio asked me the same question you did. Shouldn’t we hold some cash for something opportunistic? I said Ale no, not until the income objective is met. When I ask you what the primary objective is, everything is geared to achieve it as quickly as possible. I won’t allow you to wander off the reservation.

So it always boils down to what the primary objective is and it needs to be crystal clear, something too many people don’t understand and/or utilize, they are easily influenced by outside sources.

If you read Eric’s latest article that was a tribute to the late Joni, you will see in the comment section where a number of people credit me for giving them a purpose, a direction to go in, and it always starts with a clearly defined objective.

Now, if your objective is to show whether a position has a nice per-cent of increase, then perhaps your suggestion is the way to go, but for me it’s all about dollars and cents not per-cent, and the dollars and cents is based on how much do you need and when do you need it. Are you on schedule or not. If you can’t answer this question, you do not have clearly defined goals."

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"People seem to ignore that companies are mis-valued all the time. Analysts are always having to raise their numbers when a company is performing well and it’s always after the fact and always behind the eight ball.

You say COST is way overvalued today. How do you know that? The true value of a company is in the future, and I suspect most people value companies based on past numbers. This would indicate they simply don’t take current market conditions into consideration as part of their due diligence, so typical.

This concept of adding on double digit announcements applies to any company we own."
[…]
"The primary objective for many dividend growth investors is to build an income stream that is reliable, predictable and increasing, hopefully above the rate of inflation. Thus the initial yield isn’t as important for some, but the growth of the income stream is. Therefore, when a company we own raises the dividend by 8% or more, I am adding more shares automatically to insure income growth.

Since MDT raised the dividend by 8%, those who own it and had cash to invest had me adding to MDT yesterday.

Now, if someone wishes to establish a minimum yield then that’s up to them and is the reason why I stated if the yield is too low for you, then don’t buy it. I do manage some portfolios where a 3% yield is the minimum we’ll except. It all comes down to where you are in your investing cycle and what your needs and wants are."

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“Today I helped a new person set up a brand new account. Here is some of what I told that person after he informed me he read the Introductory and first four chapters of the Single Best Investment. It’s one of my requirements.
There are three basic categories of companies. Defensive, Cyclical, and those Sensitive to the economy.
I always suggest people go at least 50% Defensive, 25% Cyclical and 25% Sensitive.
Those in the Defensive category are Consumer Staples, Utilities, and Healthcare.
Those considered Cyclical are Discretionary Staples, Financial and REIT’s.
Those considered Sensitive are Industrial’s, Energy and Technology.
I suggest you purchase 12 companies in the Defensive category.
In staples pick 7 companies from the following list:
CL … CLX … COST … DEO … KMB … KO … MKC … PEP … PG … SYY
In the utility sector I am going to recommend 3 companies for you and I consider telecom like a utility.
D … NEE … VZ
In healthcare, pick 2 companies, making sure JNJ is one of them. Pick 1 other from:
ABT … BDX … MDT … SYK
In the cyclical sector I want you to pick 4 companies. They can all be in one industry or you can spread them out over 2 or 3 industries. I’ll leave that up to you.
Choices in Discretionary:
DIS … GPC … HD … LOW … MCD … NKE … SBUX … VFC
Choices in Financial’s:
BMO … MA … TD … V
In the REIT industry I highly recommend O. In fact O would be one of my top 5 picks if I were only buying 5 companies. I am recommending 20 to start so be sure O is one of them.
In the Sensitive category, I want you to select 4 companies.
In the Industrial’s, choose from:
ADP … CAT … DE … LMT … MMM … NSC … UNP
In energy choose between CVX and XOM.
In technology, the choices are:
AAPL … CSCO … MSFT
I want you to take all available cash, all of it, and divide it equally among the 20 choices. Then set it up on dividend reinvestment. The sooner you get all of the cash to work, the sooner you start drawing dividend cash flows which will also be invested.
Here are his selections.
PEP… KO … DEO … SYY … CL … KMB … COST
D … NEE … VZ
JNJ … MDT
O … MCD … HD … V
CSCO … XOM … LMT … CAT
I like it! Mission accomplished.”

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“Dividend growth for my son’s portfolio, year over year, does not exist. He is actually down 2.8% year over year in dividend cash flows. I did not expect very much dividend growth this year and that was my intention. Last year, and earlier this year, I liquidated the following positions.
MO … 6.71% yield
PM … 5.72% yield
KHC … 5.25% yield
IBM … 4.62% yield
I resolved in my mind there was no way to make those yields up unless I went the CEF route, which I did with older folks, but I was not going to do that in the young folk portfolios. With the amount of time they have until retirement age, especially in my son’s case, I thought it best to take a step back in order to move several steps forward in the future.
Here are the companies I replaced the above positions with.
FAST … 2.68% yield
WM … 1.77% yield
AWK … 1.71% yield
ACN … 1.55% yield
BF.B … 1.17% yield
SYK … 1.01% yield
CTAS … 0.86% yield
So, as you can see, I sacrificed yield in hopes of getting some growth, and in moving forward I will be working on picking up some yield in hopes of getting some dividend growth for the year.
I expect to have very good dividend growth numbers next year as I will be focusing on them more as opposed to focusing on the growth aspect with low yielding companies that I did this year.”
[…]
“I thought the timing was right as the objective is 10% compounded annually and last year the dividend growth was 19.1% and the year prior was 9.6%. I figured if I showed a small amount of growth this year I would still be on target over the 3 year period.
I don’t make a move without a plan. There is always an objective, always a mission.
I have one more low yielding position to add to (SWK) and then I am going to be adding to his highest yielding positions the rest of this year in hopes of getting the dividend growth up a little to keep him on track.
The low yielding replacement companies, I expect, should do well long term so I agree with you on that.
A side note:
Anyone out there still holding KHC, just thought I’d mention that Simply Safe Dividends has them with a 29 Unsafe dividend rating. Brian suggests nothing lower than a 60 rating for what it’s worth.”

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Mira que casualidad, justo cuando hace nada escribí en mi hilo acerca de algo similar…

“A word to you young folks about research.
Most of you are only investing $1,000 at a time in a company, some folks even less than that. I recall Eric setting up his portfolio initially at only $500 per company. How much research do you think is necessary for a $1,000 investment? A $500 Investment? A $200 investment?
There are some people here who use Robinhood as a brokerage firm where you may only be investing $200 per month and it’s spread between 4 companies. Do I really care what a company is selling at times earnings on such a small investment? Do I really care what the PEG ratio is, the PE ratio, or the valuation itself? … It’s all unnecessary in my opinion. You are going to be adding to these positions many times over the decades to come so today’s decision to buy, even if the company is overvalued, is irrelevant.
When I started out with dividend growth investing, the only research I did was to look at Value Line. I wanted to see where the company was rated 1 or 2 for safety, paid a dividend, had a financial strength rating of B+ or better, and was a company that I liked what they did for a living. … That was it!
Everything else is noise because all the financial criteria that the geniuses look to is constantly changing from month to month, year to year. It don’t mean nuthin”.
The most simplest and efficient way to manage a portfolio that you are going to build for the next 2 or 3 decades is to simply buy small and then only add to companies in the green as you go forward. If you have a $1,000 or $500 investment that is showing red, don’t add to it until it turns green. This way if the company shows it can’t move forward, you minimize losses. Don’t average down on companies in the red when most of your other companies are showing green. Build on strength.
Stop trying to be too smart. Be like me! Be dumb enough, to be smart enough, to simply continue building share count on companies in the green. Your portfolio will thank you for it years from now."

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“Sometimes, okay most of the time, I think too many people don’t stop and think. They hear all these cliches everywhere they go with the concept of simply owning the S&P 500 is the way to invest. … It is for those who are ignorant or don’t have clearly defined goals.
I used to sell mutual funds, I was trained in them, had my Series 6 license and learned that the fund is only as good as the underlying assets of the fund.
People seem to think that funds give them safety through diversity and that couldn’t be further from the truth for those who consider themselves dividend growth investors.
Have you folks ever looked at how the S&P 500 Index is broken down into sectors? Using the ETF (SPY) to represent the S&P 500 Index here is the breakdown.
Companies sensitive to the economy … 41.51%
Cyclical companies … 33.31%
Defensive companies 25.18% and utilities have just 3% exposure. … ARE YOU KIDDING ME???
And you wonder why the index fund takes such a hit in recessions?
What is the blue print I have been discussing for the past 10 years?
Defensive companies 50%, and the older you are the more exposure to defense you should consider.
Cyclical companies 25%
Sensitive companies 25%
C’mon people, this should be common sense. Most of your dividend cuts come from companies outside the defensive sector. Stop and think for a change as opposed to chasing results. Let the results come to you. They will as long as you stick with my definition of quality.
Companies who are a leader in their field, or one of the leaders. Companies who are investment grade in quality. Companies who have been paying a dividend for decades. Companies who have shown the ability to overcome adversity. … Stick with that and you should do just fine as long as you add to strength as opposed to averaging down on losers.”

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Pues yo no estoy de acuerdo con esto. ¿Es mejor comprar Apple ahora o hace unos meses cuando cotizaba 30 o 40 dólares por debajo? ¿Y 3M? ¿No es mejor ahora que cuando estaba por encima de 210$?

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Esto si que me parece una verdad irrefutable.

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Esa es una de las cosas que más me cuesta entender.
Estoy de acuerdo que cuando una buena compañía cae, aprovechamos para comprar a buenos precios.
Lo que Chowder dice son instrucciones para seguir tendencia y cuando ya tienes las acciones que deseas. En mercado alcista (todavía estamos ahí), compras en verde. Las empresas que en mercado alcista no van bien (en general), cuando caiga todo tampoco irán bien.

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En realidad Chowder recomienda que una vez iniciada la posición en una compañía se haga el “average down” solo una vez. Es una forma de evitar que la cartera termine desequilibrada. Imagina por ejemplo un inversor que lleve 5 años haciendo average down con Telefónica…

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Y que al final se trata de tener participaciones de grandes empresas. Yo el otro día compré 100 ENG que no las tenía. El comprar cuando compré a 22,46€ no me importa tanto como que tengo 100 acciones que me pagarán 160€ el año que viene. En 20 años supongo, espero, es lo normal, que coticen a más de esos 22€. Pues eso con las JNJ, PG, PEP, MMM, etc.
Unidades compradas de grandes empresas. Cuantas más unidades (acciones), mejor.

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El tema es que Chowder piensa a muchos años vista en las carteras para jóvenes. No hay mas que ver los cambios que ha hecho ahora:

Last year, and earlier this year, I liquidated the following positions.
MO … 6.71% yield
PM … 5.72% yield
KHC … 5.25% yield
IBM … 4.62% yield
I resolved in my mind there was no way to make those yields up unless I went the CEF route, which I did with older folks, but I was not going to do that in the young folk portfolios. With the amount of time they have until retirement age, especially in my son’s case, I thought it best to take a step back in order to move several steps forward in the future.
Here are the companies I replaced the above positions with.
FAST … 2.68% yield
WM … 1.77% yield
AWK … 1.71% yield
ACN … 1.55% yield
BF.B … 1.17% yield
SYK … 1.01% yield
CTAS … 0.86% yield

Mientras que los que estamos en esa franja de jóvenes no pensamos en cuando tengamos 60 años, sino que queremos cosas tangibles cuanto antes mejor. Y por eso invertimos también en tabaco, utilities o High Yields en general sacrificando growth, porque mientras el piensa a 30 años vista, nosotros pensamos en generar un flujo de dinero antes de eso.

Al final depende de las expectativas y objetivos de cada uno. Pero también se puede ser joven, construir un flujo de dinero sustancial y sólido primero, cimentar bien la casa, y entonces ponerte a reforzarla con más lujo y más crecimiento.

De todas formas, a mi es que las carteras que proponen Chowder, Ted Quality o lo que tiene Jason Fieber con tanta empresa en el 1% o incluso menos, acaba siendo contraproducente para los que comienzan. No ven los frutos del trabajo hasta después de muchos años y eso puede llevar al desánimo y la falta de constancia, que al final es lo mas importante para seguir la estrategia.

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“High Yields do not equal High Returns”. Qué gran verdad!

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De aquí sonsaco que Chowdah no tiene el criterio tan asentado como parece dar a entender (y no es malo, ojo; redefinir estrategias es positivo).

Si carece de sentido tener high yielders en portfolios para jóvenes, ¿por qué tenía en ellos MO, PM, KHC e IBM hace cuatro días?

Para una cartera dividendera B&H, evidentemente sale más a cuenta tirar en su mayoría de low yielders con un alto crecimiento del dividendo, ya que a largo plazo el potencial de revalorización es mucho mayor, pero un aporte extra desde alguna cash cow tampoco viene mal del todo.

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"I don’t use the beat and raise concept with the young folks per say. It’s a strategy I use with the older folks who already have full positions. With the older folks, the only way I wish to overweight their positions is when a company is doing better than expected.

With the young folk portfolios I basically use the next man up concept. Whose turn is it to be added to? The goal here is to build share count in all positions so I look to see who needs to be brought up in size to be in proximity with other companies."
"

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"PE ratios are nearly irrelevant and in my opinion shouldn’t even be a part of the valuation process. It was designed for dummies as in Investing For Dummies 101.

What is important is a company’s earnings, revenue and cash flows. What is important is if those things reflect potential success looking forward.

What is important is the condition of the market in the here and now and looking forward. If market conditions are signalling a potential recession, then we change our tactics, but not our criteria.

Look at how the narrative has changed over the last 5 or 6 years. It used to be the only companies considered undervalued were those that showed the black line below the orange line on FAST Graphs. Now people want to use the blue line which is well above the orange line.

I have no problem with changing tactics based on market conditions, but when you have to change criteria, it indicates we didn’t know a damn thing about valuations to begin with, yet that’s what we go with, faulty criteria.

When people succeed in spite of themselves, it’s due to luck mostly, and it’s hard to convince them they focus on the wrong things."

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Pocas cosas me cuestan tanto como el hecho de no comprar las empresas que ahora tengo en rojo y me dan una buena RPD (sin perspectivas evidentes de recorte): MO, CAH, IMB, BATS, PM, CVS…

“Young people, a word if I may!
There are several older folks sharing ideas here and they mean well, but their strategy and tactics should not be applied to a lot of you. I know because you have shared your portfolios, goal and objectives with me behind the scenes.
You need to ignore taking profits, you need to ignore valuations and you need to follow the blue print I try to share with folks here.
Keep in mind, that by following the blue print I lay out, you still may have a few investments that don’t work out but you still will have a portfolio 3 times the size of what some older folks here have when you reach their current age, maybe more.
Over the last 5 years my son has had some poor investments where significant losses (percentage-wise) were realized, IBM … KHC … KMI … CVS … GILD … FTR and yet he sits here today at an all-time high in portfolio value and is two years ahead of his long term objective of a portfolio value of $3M.
In order to achieve a multi-million dollar portfolio, you need to keep building positions every year. You can’t expect to play the overvaluation game and keep switching from company to company with the same dollars and be successful. Today’s valuation isn’t going to mean anything 20 to 30 years from now, and the people talking to you about valuations haven’t held most of the companies they own that long, you will be. They are trying to keep what they have, you need to be building what you have, not trimming!
Keep building, invest small, and invest often. Add only to the companies in green, and by doing so it will insure that any company you own in the red will be a small position because you weren’t stupid enough to keep doubling down on a loser.
I now have my son’s taxable account with 29 or 30 companies showing just 1 company in the red … MMM down 6%. He has quite a few positions at a 100% gain or better. You are going to see me adding to those companies starting next month and for the remainder of the year.
ADP is up 288% and I should be worried about waiting for a good entry point due to valuations? … HA! HA! HA! … And if the company is this successful now, what’s it going to look like 20 years from now? I want to be sure it’s not a small position. I will be adding to it in the next couple of months.
Ignore most of what you read elsewhere, ignore some of what you see here. It’s not important what others have done with their portfolio, all that matters is that you continue to build your portfolio, based on your goals and objectives, using the blue print I have shared here.
Think about it!”

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Si tiene MMM en rojo seguramente es culpa de cuando seguía añadiendo a 260$. Curioso que añadía alegremente MMM a 260$ y ahora que esta a 170$ dice que no hay que comprarla.

Si con ADP lleva una ganancia de 288% es que de media la tiene a unos 42$. Ese precio es de 2010. ¿En 9 años no ha añadido ninguna vez a ADP y lo va a hacer ahora a 165$?

Cuanto mas leo a Chowder mas farsante me parece.

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A mí no me desagrada la estrategia, viene a ser un híbrido entra la indexación y el DGI. Quiero una cartera que me genere dividendos crecientes pero al mismo tiempo no quiero estar pendiente del mercado. No me extrañaría que en el largo plazo consiguiese un rendimiento muy superior al de la mayoría que rondamos por aquí.

Al final lo realmente importante, y en lo que tantas veces hemos incidido en el foro, es que esas 30, 40 ó 50 empresas que componen la cartera tengan un denominador común: la calidad.

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