Skip to main content

Survival, Appreciation and Dividends

My basic guiding principle of recent picks (and personal investments) have been:
  • Survival - is company going to survive this economic hurricane ?
  • Appreciation - if it survives, how much appreciation would company stock have (that means, has it come down enough to trade like option on survival)
  • Dividends - would company resume paying dividends after threat of survival is gone
Examples of these strategy are DDR, PLD, ACAS, XL, PDS, BCS and many more. Fortunately the strategy has been playing out very well during this market upswing. Would it continue to play out as good as it did in future ?

I still remember dot.com bust of 2001 and 2002. There are many companies in technology sector which appreciated multi-fold once they were past "survival" test. Examples: Sonus networks, Redback, Redhat, Rediff India (was trading at below 10 cents at one point), Yahoo, Ebay and so on. Learning from that experience, I decided to apply this strategy on financial, insurarance and real estate companies and it seems to be paying off.

Market has become little frothy. With stress test results out on May 7 and Apr employment report due on May 8, next Friday would be very exciting for market. Even though some folks are becoming un-easy with market rise so fast so quick, there is still lot more upside remaining to the market. There is more money on sidelines than in the stock market and folks who are out of market have started feeling that they are missing on this upside. These people would jump into market when there are 200 points drop on DOW and should give enough support for DOW to remain above 7500.

Of course all depends on how economy shapes up. If the trickle of positive news keeps on coming, there is good chance that people would feel more secure about their future and that itself would help economy. 

Added following book in my reading list:


Continuing on my real estate theme, this week's pick is:

Symbol: RLF
Stock/ETF: Cohen & Steers Advantage Incm Rlt Fd Inc
Buy price: $3
Recommended price in 12 months: $4.50
Summary: Cohen & Steers Advantage Income Realty Fund, Inc. (the Fund) is a non-diversified, closed-end management investment company. The Fund's investment objective is to provide high current income. Capital appreciation is its secondary investment objective. The Fund seeks to invest at least 90% of the total assets in common stocks, preferred stocks and other equity securities issued by real estate companies, primarily real estate investment trusts (REITs).

Selection criteria:
  • NAV down by 77%
  • Distribution yield of 28%
  • Investments in one of the best REITs (covered in Barron's article)
  • Fund manager is well known in this sector
Good luck and have a good weekend !

/Shyam

Comments

Post a Comment

Popular posts from this blog

2025 = Is it going to be 1997 or 2000?

Happy Holidays... After 5 months of hibernation with no real reason than writing block, I decided to use quiet morning of Christmas day to start writing again. Lot has happened in last 5 months - in particular release of Animal Spirits with Fed starting interest rate reduction cycle and historic victory of President Trump for 2nd term. As the year turns into 2025 and stock markets at all time high, one would wonder, what's next?  To answer this, one needs to look back at 1920s and 1990s to give us some context on where markets may be headed. 1920s saw invention of televisions, radio, wider adoption of cars, vacuums, penicillin and many other which we consider household items now. These inventions created roaring 20s with markets going up by 500% eventually leading to crash of 1929. However during mid-20s, markets keep going up due to excitement of these inventions and end of World War-1 and Spanish Flu Pandemic. 1990s also saw many inventions - the key being launch of Netscape in 1...
Post a Comment
Read more

Elections and Rotations!

2024 will be known as an important year in terms of elections (97 nations covering half the population) across the major countries in the world. We are only halfway thru the year and already some key nations have gone thru elections and voters have indicated their preference for change (in a way). Let's take a look at few. India - Modi's BJP started with lots of enthusiasm with slogans of "Modi ki Guarantee" and "400 paar" (more than 400) seats (out of 543). Indian voters (which I considered one of the most smartest) gave reality check to Modi and BJP by reducing BJP count to 240 (from 303 in previous parliament) forcing it to form coalition government. I have lot more detailed hypothesis on these results (but not here). Almost everyone (including me) got their predictions wrong and lost some friendly bets. Indians want balance between "Strong, Prosperous, Proud" India with "Inclusive, Employment and Harmony". Modi and BJP are quick learn...
Post a Comment
Read more

The "i" factors are back again!

Happy Earth Day! In following Stotra, we remember Mother Earth every morning before touching feet to the ground. समुद्रवसने   देवि   पर्वतस्तनमण्डले   । विष्णुपत्नि   नमस्तुभ्यं   पादस्पर्शं   क्षमस्वमे   ॥ Samudra-Vasane Devi Parvata-Stana-Mannddale | Vissnnu-Patni Namas-Tubhyam Paada-Sparsham Kssamasva-Me || Meaning : 1:  (Oh Mother Earth) O  Devi , You Who have the  Ocean  as Your  Garments , and  Mountains  as Your  Bosom , 2:  O  Consort  of  Lord Vishnu ,  Salutations  to  You ; Please  Forgive my Touch  of the  Feet  (on Earth, which is Your Holy Body). (source: Green Message site) So let's make sure that we honor Earth every day and preserve her for millions of years..After all we have only ONE! It has been six weeks since I wrote about markets. During that time, markets reached all time highs (almost touching 5300) and down by 5% from those levels. W...
Post a Comment
Read more