The stock market is in the midst of a historic downturn. Times like these often provide us opportunities as traders. We remain in a 100% cash position for our Wanderer trading portfolio because the market has yet to show any signs of a bottom. However, we've been discussing the possibilities of dividend trading in the event of a large market drop, and it appears we may have our opportunity for that.
Here at Wanderer we're constantly working to provide services that work for all of our subscribers. Our Wanderer Newsletter trades are geared towards individuals looking to trade their portfolios with aggressively managed risk parameters. In Basecamp (open to all our subscribers) we aim to teach you our methods, including more aggressive trade strategies like options. This is ideal for those with more time to monitor the markets, who would like to be more involved and increase their leverage at the same time. Now we'd like to offer a third alternative.
We realize that many of you are working towards goals similar to ours, in which you want to “pretire” with the assets you've accumulated already, make those assets work for you, and provide an income that allows you to sail the world, or spend your days unplugged with your dogs on the farm, or mountain biking in the Rockies far from the nearest cell tower. Whatever the case is, you want your money working for you, and you'd like to see a certain amount of income deposited into the bank account to cover your bills.
To that end we're beginning a Wanderer Dividend Account. Our aim is to build a portfolio of 10-20 dividend producing stocks with strong yields in what is more of a buy-and-hold strategy. We still believe in active management of risk, even with long-term buy-and-hold type portfolios. Accordingly, we employ many of the same shorter-term trading methods in order to weed out the stocks that aren't performing, and replace them with others that will. The Wanderer Dividend Portfolio will mirror, to some degree, the overall market's performance. The difference will be two-fold. One, we will look for entries into dividend stocks that are at ideal purchase levels. Whether or not we plan on holding a stock a long time, we still don't want to buy at the top of a cycle. The biggest key to outperforming the markets with a dividend account is the entry price. And two, with good entries, and an ability to cut losses and let winners run, these stocks should do quite well when combined with their dividend earning potential.
It will be up to the individual to determine how much of their overall portfolios to dedicate to active trading or dividend investment. We will be keeping a separate dividend portfolio and will be flagging these trade alerts as DIVIDEND PORTFOLIO ALERT. Again, the intent of this portfolio will be to earn a dividend income, with slightly less focus in the week-to-week gyrations of the stock itself.
The market has been hit heavily in the past two weeks providing us with some nice setups which we will begin buying now. Our Wanderer portfolio remains in cash currently, as there is still no technical indications that the bottom for this market is in. However, with dividend stock purchases we are a little less concerned with buying at the bottom, and instead are looking for significant lows and high yields.
If you have questions, please e-mail us and we will do our best to address questions in follow up blog posts.
Trade Alerts for the Dividend account will follow shortly.