What to do today?

[phil13]

Hello, I have a well-stocked portfolio of mainly American dividend-growing stocks that I have purchased regularly for several years, which have shown appreciable added value due to the rise in the price of these stocks and the US dollar. I now have money to invest as well as regular income, but I am hesitant to invest in these companies (KO CL MCD WMT JNJ PEP XOM PG ABT CLX, etc.) at a price much higher than my purchase price and especially at levels that I consider to be correctly valued. I want to wait for more attractive prices, but I am afraid that they will not come and that the rise will continue with a rise in the US dollar. What would you do in my place? Continue to invest in KO at a price 35% higher than my purchase price, WMT after a capital gain of 40%, etc., or wait? Which companies would you still recommend to me today? Is staying in cash a mistake?

[Jerome]

Hello Phil

That's an excellent question. It's true that the market has recovered well: http://www.dividendes.ch/evaluation-du-marche/. In addition, the dollar has helped to further boost capital gains. I think that these two points are nevertheless independent and must be treated separately.

1) The market has certainly risen, but I believe that certain stocks like CLX, CL, MCD, etc. that are included in my Global Dividend Growers strategy are still affordable. However, and here I agree with you, I prefer to diversify rather than strengthen the positions that I already have. This is contrary to W. Buffet, but it allows me to be much more zen… which is important when investing in the long term. So if you already have these stocks indeed, and especially now, I would not strengthen them. On the other hand, why not look at my second strategy? http://www.dividendes.ch/ex-us-international-etfs-and-dividend-stocks/ ? An ETF in emerging sovereign bonds like PCY or a security like EHX? I personally plan to acquire them in the more or less near future.

2) The dollar. It is not common for the dollar to boost our positions because it is structurally weak. For the euro, the weakness is cyclical, linked to the credit crisis and government debts, but also a little structural, affecting the very functioning of the eurozone. But I think that even if it will take time, the will is there to make the euro a strong currency. Maybe not like the CHF, but at least stronger than the USD. So indeed we must be wary of the dollar in the long term. For this reason I am betting on stocks that like it when the greenback is weak. This is precisely the case for CLX, CL, MCD, etc. So from this point of view I am not too worried…

I want to wait for more interesting courses but I fear that they will not appear and that the rise will continue with a further rise in the US dollar.

Sooner or later, there are always times when extremely interesting prices arise. You just have to be patient and above all have the balls to buy when everyone is panicking and selling like crazy. As for the rise of the dollar, as I said above, it is likely to continue for some time, but here too, be careful, the dollar has been structurally a weak currency since Nixon abandoned the standard in 1971: http://fxtop.com/fr/imghisto.php?C1=USD&C2=CHF&A=1&DD1=01&MM1=01&YYYY1=1953&DD2=14&MM2=07&YYYY2=2012&LARGE=1&LANG=fr&CJ=0

Is staying in cash a mistake?

In the long term, yes, because of inflation. In the short and medium term, it is never a mistake to have cash, precisely because there will always be crises that allow you to buy cheaply.

[birdienumnum]

Phil13,

I advise you to sell WMT. 40% of capital gain on such a title is an EXCELLENT result considering that the title has nothing
been doing for ten years and has recently climbed. But mainly: the distribution sector is very complex, the margins
are not high, growth mainly comes through internationalization but the latter is very competitive, capital intensive and complicated (nothing to do with the franchise model at MCD for example). This does not mean that I have no position in the sector (I own Casino in particular through the holding company Rallye) but I have not (yet) made such a capital gain

[Lopazz]

For my part, I do not hesitate to strengthen positions that I already have. Psychologically it is not easy, but it is the rule of the game when you decide to enter a market in several times… In the long term, there is no risk, and when I see the returns of Euro funds, I tell myself that there is nothing better to do to invest your money today!

Besides, I am a fan of accumulation. 10/15 lines maximum.

I'm eagerly awaiting the wave of quarterly results that is coming. And I'm secretly hoping for a market crash so I can go shopping on the cheap...

[Jerome]

we are two Lopazz!
This is the nature of dividend investors.

[Author]

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