Thursday, October 09, 2014

Dealing With My Retirement Rollover

I've paid a price for consolidating my retirement accounts. I had a traditional IRA to which I sporadically contributed since age 20. It wasn't a lot of money, but it was something. In addition, having worked for the State of Texas, I had 401k and 401a accounts which were out of my control as a non-state employee. I decided to roll them together into one account at a local Edward Jones office.

So, I've slowly been turning my rolled over money into stock positions. The funny thing is that we have been expecting a market correction. So, I decided to slowly put my money into positions rather than all at once. Of course, as soon as most of my money is alloted, the market takes a crap.

I have positions in BBL, BP, DEM, GLD, HCN, HSBC, KO, RIG, and T in the IRA. I bought most of that in the past couple months as the market was reaching its peaks. Sensing that a market correction is imminent, I added GLD to my portfolio so that I don't freak out so much. It has indeed gone up on days that the market takes a dive. However, GLD has overall gone down slowly as the market gently descends.

In other words, I find that GLD is great for market freakouts; but, it's not doing so hot when the market slowly declines. In any case, GLD is in the green today, but in the red overall. Still, it brings me peace in these troubled times.

Today, I allocated the last of my retirement money into RIG, which has had their ass handed to them. As it kept dipping, I kept getting more and more excited. Sure, oil prices are low and production is still working hard. But, it's not like an oil company is going to stop exploring all of the sudden. They may not start new wells. But, they definitely won't stop midway and come back to it later. So, I figure, RIG is a great buy, long-term. I'm down over 10 percent since my first purchase. So, I bought more.

I wish I had more money to put into BBL, another stock that having its day of reckoning. They are down more than 12 percent since my purchase. Ouch. BBL is one of the better mining companies around. If I could afford more, I'd buy it now for the fat dividends in the long-run.

I bought BP because they are a good company that is having government issues. Despite the leeches, they have been making a profit and paying dividends. I think once they are done with the legal stuff, they will be more profitable. So, for me, they have been a depressed stock that will pay off long-term.

DEM invests in dividend paying companies in emerging markets. I know that the fund is somewhat risky; but, only developing markets have the growth potential to ...yes, I'll say it again, pay fat dividends. Imagine the dividend growth rate for 20+ years from now when I am forced to cash out.

HCN was a tough call. I like REITS. I know that healthcare will be a giant industry as baby boomers start to become decrepit. My Edward Jones advisor suggested HCN, and I checked them out, liked the dividends. They actually hold their value well when the market takes a crap. I think investors sell the growth stocks and pile into value, which helps HCN go up while the rest are going down. I think HCN will also help me avoid future freakouts. In the future, however, as my contributions allow, I will probably add O to my portfolio. O is a REIT that pays monthly. I certainly support a stock with that degree of confidence.

I bought HSBC purely for exposure to the financial sector. HSBC has been crawling out of their troubles and may finally be able to put their bad history behind them. More importantly, HSBC is an international concern, which means that they have better access to capital where it is most available. I guess what I'm saying is that they have a diversified client base.

Coca-Cola, KO, has been the one rock star in my portfolio. It is the only stock in my portfolio that has ALMOST absorbed my broker's commission and shrugged off the market dips. I added KO because, well, it's KO. They sell sugar water for a big markup. What's to dislike? I certainly don't dislike their future dividend growth.

And, finally, AT&T, aka T. I am not an AT&T customer. Other than landlines, I never have been an AT&T customer. However, they pay good dividends and, in my estimation, have the best prospects for the long term. For example, they will provide broadband to GM cars and trucks. They have hotspots across the country. They provide Internet to Amazon devices. They bundle their offerings for great savings. So, despite their higher cost and meh offerings, they operate a great business. This is probably the only business that I don't like as a consumer; but, love as an owner.

So, that's where my money went.

In the future, I'm looking at a combination of blue chip stocks and those that pay monthly dividends. You may have figured out that capital gains aren't my main concern. I'm looking to play with house money rather than my own money. For this reason, stocks that pay dividends are my preference, with GLD being the only exception.
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