As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Sunday, 29 April 2018

My Thought On Leveraging To Power Up Dividend Income










How we view our investment portfolio's dividend income will shape our approach to fill up or refill this glass to full state?


When we view the current state of our investment glass as half empty; and that could mean we had previously held a full glass and now we see it as half  emptyi.e. we had went from empty glass to full glass and now at half empty glass.

We knew that previously we have the resources and means to fill up this glass to full state; we may still have those resources and means on hand to refill the half empty glass to full glass. 

Do we still need to consider additional resources and mean e.g. leveraging to refill this glass to full state since we have previously done it before with those resources and means?

It may not be the same view as someone is seeing the glass as half full as he or she may have come from empty glass to half-full glass and want to fill up this glass quickly. They have to consider additional resources and mean to help them to power up. One way is to leveraging!


From Jan 2000 to 2007; Uncle8888 has been viewing his investment glass as half empty even though it was nearly full and kept chasing to fill it up.

Read? My War Room (7) - The Last Mile


But; now he is viewing his glass as half empty and cautiously looking to refill it to full glass! 

When we see our investment glass as half empty; we will be happy if the glass doesn't go empty! Right?


This is Mind part of 3M's - Method, Mind and Money Management!








7 comments:

  1. CW,

    I like your analogy :)

    This is why same school, same class, same teachers - the students' grade may vary...

    But in real world, we see others got MBA and promoted, we also must get! (Better blame our lack of papers than admit we not as good as others)

    Yesterday others follow value investing, I follow also.

    Today passive investing is the style everyone put on their lips, I switch!


    Some seek answers within.

    Some like my weekend customers, like to ask, "Which brands are the most popular?" (Make a wild guess would I include the brand I promoting?)



    ReplyDelete
    Replies
    1. Quote "But in real world, we see others got MBA and promoted, we also must get! (Better blame our lack of papers than admit we not as good as others)"

      Ya. I have been there before. LOL~

      Read? Work or Further My Studies?

      Delete
  2. Half glass to fill to full glass or full glass now left half glass to fill to full glass again?

    It's like investing going up hill is definitely different from investing going down hill.

    U see a different scenery.

    Going downhill has a more beautiful scenery.

    U want to linger longer going downhill.

    U are no more "Kan Cheong Spider".

    ReplyDelete
  3. Buffett also saying the same thing!

    https://www.cnbc.com/2018/02/26/buffett-says-out-of-the-three-ways-to-go-broke-liquor-ladies-and-leverage-leverage-is-the-worst.html

    ReplyDelete
  4. Even for those who consider themselves experts, it's dangerous to leverage up too much of their available portfolio. Those who trade products like futures, options, forex, CFDs etc are also using leverage, but usually only a small part of their portfolio, and they will have strict pre-determined plan in-place to handle losses. Those that don't are gamblers & don't have much to lose anyway.

    Buffett himself is no stranger to leverage & he often uses millions of dollars worth of leveraged derivatives, while telling people that derivatives are WMDs. However he uses them mainly as hedges or as distressed plays, especially during GFC.

    The problem with leverage is if over-leveraged and also under-estimating volatility of underlying assets. During a credit crunch / credit crisis induced bear market, even the largest REITs can drop 60% to 75%.

    In addition, there will be Billions of dollars worth of rights issues being frantically rolled out to service debts & shore up balance sheets. These recession rights issues not only will dilute DPU, but will also hammer share price, making margin calls more likely. Hence you'll need plenty of spare cash to (1) handle margin calls & (2) handle rights issues to prevent DPU dilution.

    To me, leveraged dividend portfolio using underlying assets that are already leveraged is an eventual plan for failure. Unless just to reap rewards during good times, and have a plan to cut when portfolio drops by a certain amount.

    ReplyDelete
  5. Yes but plan may not be able to execute in time because market turns too brutal, and too abrupt all of a sudden.
    In fact it often catches most of us off-guard by surprise no matter what we plan.

    Trading without leverage is already quite difficult; what's some more to compete with the Pros?

    During my working years, got many opportunities to leverage in properties but wify disagreed because of fear of retrenchment or ask to leave because Boss says so.

    May have made some money actually in properties.

    It's O. K. no regret.

    ReplyDelete
  6. Actually still made some money in properties but very little because did not use double edge sword.

    ReplyDelete

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