Sunday 7 June 2015

Dividend Simpleton, a trader or investor?

Yes, I get the question posed to me by some of my fellow friends when I shared some of my strategies in buying stocks. So is Dividend Simpleton an investor or a trader? Well, it depends on what is your definition of a trader or investor. I would like to perceive myself as a hybrid of both, one who is willing to embrace the different sides as an when the situation calls for it. Oh my, Dividend Simpleton has a spilt personality! Well, it isn't so bad, it simply allows me more flexibility on my part, which really helps in being nimble in volatile markets.

As the name suggests, Dividend Simpleton looks for stocks which pays out a reasonable dividend yield and purchases them when their valuations are perceived to be of fair value. I would like to take this opportunity to point out that what is perceived to be fair by one would be completely different by others, and we assume the risks of our own actions.

My intentions to purchase some shares initially may have changed over a period of time, and depending on the current circumstances, I may or may not take action. For example, take the recent action of Sembcorp Industries (SCI). I had initially purchased SCI because of the potential growth of its utilities business, as well as its decent dividend yield. However, it has come to my attention that the utilities business may take a couple of years to bear fruit. This I cannot afford to keep my limited fund tied up with the stock, so I took action and liquidated it. The reasons for buying the stock had failed to materialise. Yes, indeed it could do so in the next few years, but time is the essence for me, and I cannot afford to keep funds tied down until I have accumulated enough to really invest for keeps.

The current bull run is likely to continue, and I cannot predict when it will end. Rather, I would continue to be as nimble as possible, navigating the volatile market while keeping as little of continued exposure in the market as possible. My accumulation target is probably 150-200k within the next 4-5 years, and until then, I will continue to monitor the market for potential opportunities of speculation or dividends.

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