The original Sharpe Income post can be found here.
The Sharpe Income category be be found by clicking on that red ‘Sharpe Income’ tag next to this post title, or by clicking here.
Remember that $25.00 has been added to the Sharpe Income, Fixed Income account this Monday, per the rules of this account as mentioned in the original post. You will also be able to note this on the PDF at the bottom of this post.
We continue the discussion from the last entry.
It is unfortunate that at times, one’s will hear the idea that it is pointless to try to buy income producing assets at low prices. There are even a few popular blogs that espouse this concept.
Never try to ‘time’ your entrances … they will proclaim … it is pointless to try! No one can do it! If the dividend ‘looks good’ then just buy it at any price!
Wrong … wrong … wrong.
Not only is this idea wrong … it’s wildly wrong. Perhaps such ones suffer from the problem of having cash in their account, and they cannot control their impulse to buy something. They simply buy something to scratch that ‘itch’, and then stack up the dividends with little thought as to future flexibility to their positions. I don’t know. I do know that there is so much conclusive proof that one can infer cost basis bias into their fixed income investing, it’s silly.
In fact, the ‘Dogs of the DOW’ strategy provides decades of data of proof, that one can buy companies and assets that pay a dividend, can infer a cost basis, and do very well over time, with very few down years.
And what is the basic concept of ‘Dogs of the DOW’? Why does it work?
Always look to be buying on weakness.
This follows what we have already discussed, in that Mr. Market behaves with wild ‘mood swings’, and we can take advantage of those mood swings. What is cheap today, and out of favor, will be expensive tomorrow. What it does require? Is patience. It requires that a trader be able to not go in and buy something, simply because the cash in his account is tempting him to purchase something so he or she can have a ‘feel good’ moment.
This is why 9 times out of 10, when you see me make a purchase, I am usually buying something that has been beat up in price. A financially sound company, that has been beat up in price.
The link to the Google Drive Spreadsheet that you can view, that we will edit, build upon and refer to over time can be found at this link.
We continue the Sharpe Income discussion with our next entry here …
Actionable View of Markets for Sharpe Income
There are no purchases planned at the moment. So for this week, we have more cash. At the moment, American Express (AXP) is falling in price. Stocks look weak.
So I wait.