In my last blog, Investing: Terms, I discussed the terms often encountered in discussions about investing. In this blog I’ll discuss how to figure out what type of investor you are and how what that will help you develop rules for how you should manage your portfolio.
Rules
1. Introduction
2. Capital Risk
3. Inflation Risk
4. Are you a risk taker?
5. Your time horizon
6. Diversification
7. Dollar cost averaging
8. Investing Rules
1. Introduction
Before going in depth into many topics, it is important for you to discover what type of investor you really are. Although I can guide you down the path to answer this question, you will certainly not know the answer by the end of this article and it may take you years or decades to really understand yourself well. From personal experience I can attest that I began seriously saving money around 22 years ago, I started to pay attention to that money from an investment perspective about 18 years ago, I started investing in stocks about 12 years ago and I started investing in options about 5 years ago.
I am *STILL* discovering what kind of investor I am and making mistakes. Despite still making mistakes, their frequency has declined significantly since I started. I’m actually hoping to help you through the learning process to save you some of the sometimes quite painful mistakes of my own past.
My first lesson is never buy a stock (or any asset) based upon a “hot stock tip”. You might spend an evening talking to someone who has been investing a lot longer than you have, someone who has made a lot of money, and someone that you trust. During this discussion you might discover that they’re investing in stock “ABC” and you might think, “Aha! I should invest in that because they certainly know what they’re doing”.
I’m telling you to NOT buy that stock – well more specifically, I’m telling you to not buy that stock until you get a chance to look it over for yourself. What have you heard in the news about the company? What does the company’s financials look like? How has the company fared in the past? These are all questions you need to discover for yourself.
At best stock ownership is making educated guesses. The more educated you are, the better your guess is going to be. Any particular educated guess can be wrong. If you are tempted to buy stock “ABC” based upon the “hot tip” remember that this stock is a small portion of your friend’s portfolio. If “ABC” doesn’t pan out, then the other stocks in his portfolio will make up for that stock.
When you buy a stock, you are putting your money on the line so ensure that you spend the time to assure yourself that the stock is a good pick.
Back to the top
2. Capital Risk
Certain types of investments such as stocks and properties possess capital risk. It is the risk that stocks both increase and decrease in value. When you read articles on investing and the writer discusses risk, this is the risk they are discussing.
If you buy a stock and the company does well, the price of that stock will go up. However, if you bought BP right before the BP oil well blew then you would have lost nearly ½ of your investment within one week after the explosion. This loss in value represents one aspect of capital risk.
Some asset types such as CDs and savings accounts do not possess this characteristic – meaning you should never lose your capital investment (unless there’s a bankruptcy). There are other assets like bonds that exhibit both properties. If you purchase a bond directly, your base investment and the interest you earn are guaranteed (unless the company files for bankruptcy or the president intercedes and breaks hundreds of years of contract law).
However, most people purchase bonds on the bond market. If you watch the bond markets, you can see that the base value of bonds fluctuate too. Bond mutual funds exhibit similar behavior.
What this means is that unless you plan to only invest in CDs, savings accounts, or a few other very low yielding investments you are going to be forced to accept some capital risk. Given that capital risk is necessary to achieve the returns you’re going to need for your retirement, we need to explore how we can minimize the downside to this risk and maximize the upside.
Back to the top
3. Inflation Risk
Inflation risk is defined as the risk that the real value (as opposed to dollar value) of your asset will decline. Only it really shouldn’t be called a risk if it’s guaranteed to happen – which it is.
Over time your assets will lose value. If you invest in CDs and savings accounts your investments are certain to lose value over time. This does not mean you must invest in highly risky assets (such as junk bonds) but it does mean you need to balance capital risk against inflation risk in your investment choices.
While capital risk can be used to increase your portfolio’s returns (through reallocation), inflation risk is ALWAYS bad.
Back to the top
4. Are you a risk taker?
How would you feel if a stock you owned drop 90% in value (ala FNM or AIG)?
What would you do if the stock market dropped 10% in value on a single day? Would you want to buy more stock or sell the stock you have?
How does the thought of gaining $10 compare to losing $10?
How long is your investment horizon?
You need to ask yourself these questions to understand what sort of investor you are. One who fears declines more than they value gains is generally called “risk averse”. These investors need to invest in assets with lower capital risk.
Investors who value gains more than they fear losses are called risk tolerant. These investors can invest in assets with higher capital risk.
The important thing about this is that you should be brutally honest with yourself. If you select an investment strategy that is contrary to your nature, you will panic when your portfolio drops suddenly in value (for the risk averse). An emotional investor is one that will make terrible mistakes with their portfolio.
I vaguely recall reading a study that 80% of private investors fare worse than the market average during sudden swings in market valuations. This is because sudden market drops trigger panic. The panicked investor then sells their stock and they typically do their selling at the BOTTOM of the drop!
Back to the top
5. Your time horizon
As you save and invest you should have a general idea about for what you wish to use your investments. In many cases you’ll be saving for retirement, your kid’s college education, a house, or some special treat for yourself. Once you determine your investment goals and their timeframes you can work backwards in time to figure out your asset allocation.
As you approach your investment goal in time, you should reduce the capital risk of your investments. You reduce capital risk by transitioning from mostly stocks with some bonds to some stock, some bonds, and some cash.
If you plan to spend all of you nest egg over a short period of time (e.g. for a college education), then you should transition over to all cash assets (e.g. CDs, savings accounts, and money markets) a few years before you need the cash.
If your investments will be used over long periods of time (e.g. for retirement), then you should ensure a large fraction of your assets remain in stocks so that your investments can continue to grow.
Back to the top
6. Diversification
One way the capital risk of your stock investments can be counter-acted is by purchasing assets whose prices fluctuate differently than your stocks. For instance, if you own stocks, bonds, cash, and real estate investment trusts (REITs), stocks might be up while REITs are down. When this happens, you can help the long-term gains in your portfolio by selling some of the higher valued asset and purchasing more from the assets whose price has fallen.
In order to get the most stable investment account value, you’d want a selection of assets that are anti-correlated with each other (e.g. stocks and bonds).
However, you can also diversify within asset classes. For example, stocks are often divided along the lines shown in this table.
<![if supportMisalignedColumns]> <![endif]>
Value stocks have low price to earnings ratios (see my blog on Investing: Terms), growth stocks possess high price to earnings ratios, and mixtures either have both growth and value or include those stocks between the others.
Meanwhile, Large cap (cap is short for capitalization) stocks include very large companies like IBM, XOM, etc. Mid cap include medium sized companies and small cap include small companies. International stocks include foreign companies like Siemens.
In order to diversify your stock assets you must select a few different combinations of these 12 choices. Note: you do NOT need them all! I have checked 3 on the chart provided for you to consider but really the diversification is the most important aspect of this chart.
I must also point out that you can also diversify your bonds assets. I have provided a notional chart for this too (provided below) but you should be aware that the bond market no longer thinks this risk assessment is accurate:
<![if supportMisalignedColumns]> <![endif]>
The bond market’s interest rates indicate that some large stalwart company’s bond risk is lower than that of the federal government. Furthermore the pricing indicates that many large corporations’ bond risks are lower than that of some states and many municipalities.
I would also like to throw out this warning: as of September of 2010, the bond market looks like a very bad deal (commodities are similarly high priced). If you do not own bonds, wait to buy them. If you do own bonds, consider selling them. In general I support the use of bonds in my portfolio but they look as over-priced right now as stocks were at the beginning of 2000.
One final note on diversification, in the investment world, increased returns often come with increased capital risk (e.g. stocks earn more than bonds but have increased capital risk), there is one exception to this that I know: on average value stocks outperform growth stocks and they also possess decreased capital risk. Their differences aren’t huge but they are significant enough to be worth suggesting that all other things being equal, you should look to acquire value stocks before growth stocks.
Back to the top
7. Dollar cost averaging
One little trick that can provide you with improved returns is to dollar cost average. This means buy small amounts of assets frequently (say bi-weekly or monthly) over a long period of time (like your working career). Since you always use the same dollar amount for purchases and that dollar amount purchases more stock when the price is low (and fewer when the price is high), your average price for the stock will be a low value.
Dollar cost averaging is really not something that most investors need to actively manage to achieve. Rather it is a side benefit of accumulating investment savings from another income source (e.g. your salary).
Back to the top
8. Investing Rules
Traditionally investment advisers suggest investing 80% of your portfolio in stock and 20% in bonds if your investment goal is still much more than 10 years away. As you get within 10 years of your goal, you should transition to a ratio closer to 60% stock, 20% bonds, and 20% cash.
If you are the type of person who is a risk taker, you might increase the portion of your investments devoted to stocks up to 90% stocks with a mixture of bonds and cash assets comprising the rest. On the other hand if you are risk averse, you might decrease the portion of your investments devoted to stocks down to 60%.
So rule 1: using your time horizon and risk tolerance select a portfolio allocation for your investments.
Once you’ve established your target portfolio allocation, you must periodically reallocate your portfolio back to your target allocation. You should select a frequency you wish to do this (once or twice a year is plenty). By reallocating your portfolio, you utilize the same mechanisms as dollar cost averaging to decrease the average of your portfolio. Essentially you sell off some of which ever asset performed best (selling it at a high price) and buy some more of the asset which performed poorly (buying it at a lower price).
Rule 2: reallocate your portfolio annually or semi-annually.
As you look for different assets for each asset type (e.g. stocks), I recommend investing in and getting experience with mutual funds or ETFs of that asset type before buying the underlying asset. Mutual funds (and ETFs) will prevent you from making beginner’s mistakes and buying stocks of companies headed for bankruptcy. On the rare occasion that your mutual fund owns the stock of such companies, the mutual funds collection of other companies stocks will reduce the impact such a bankruptcy would have on your portfolio.
Rule 3: when starting out, look to minimize your exposure to risk by beginning with mutual funds of that asset class.
Later as you begin buying individual stocks and bonds, you may be tempted to buy lots of stock in a “sure fire winner”. However, there are no “sure fire winners” on the stock market. To avoid losing a lot of money on stocks like AIG & FNM, you should set a maximum percent of your portfolio for any single stock (I chose 10%). If your stock rises in value above this amount, you should sell enough shares to cut its fraction back to the limits that you set.
Rule 4: keep the fraction of your portfolio devoted to a single stocks under the maximum you established (e.g. 10%).
Some stocks that you purchase will be losers while others will be winners. When the value of your winning stock gets significantly higher than that of other stocks in your portfolio, begin selling at least some of that stock and using the cash elsewhere. This is called “locking in your gains” and it ensures that even if your winning stock were to go bankrupt tomorrow, you will still have benefitted from the price run-up. A common point to perform this sell off is after your winning stock doubles in price – sell ½ of the shares enables you to both keep the winner and find other uses for some of that money.
Rule 5: after a nice price run-up, lock in some of your gains by selling some of winning stock.
You may hear of great stock tips at a party or an office. Some friend or colleague is going to tell you about their latest triumph in the market. Just remember this very same person has also LOST lots of money in the market. However, people don’t tend to brag about their very worst stock choices! The person giving you those great stock tips is not going to refund your money if your investment goes bankrupt.
Rule 6: tips are nice but depend upon your own due diligence (DD) when buying stocks.
The market will go up and the market will go down. Bull (market going up) and Bear (market going down/sideways) runs can last a decade or more. Sooner or later the market sentiment will change. The best time to buy into the market is when everyone has given up (this does not always work at the individual stock level), while the best time to sell is when everyone thinks that economy has fundamentally changed. Often the largest gains in the market are found shortly after a sudden drop. When there is a sudden drop, you need to remember that you bought your stocks for a reason. If there has been no fundamental change in the company you bought, hold on to your stocks during drops.
Rule 7: do not allow market drops/crashes to scare you away from your stocks.
View every investment for what it can do for you in the future. Attempting to only sell a stock after it has made some arbitrary gain (such as going back to the price you paid for it), can cause you to lose out on other far better investment opportunities. This sentiment (often found in new investors) is called the fallacy of sunken costs. Another way of stating this is, “you’ve already lost $100 on your investment, you might as well see how the remaining $100 fares.” You must look at each investment as if it were in competition with every other investment. Is that $100 likely to earn a greater return in the current stock, or could you do better by putting it in another investment.
Rule 8: view investments as competing ideas, invest in the very best ones you can find and ignore what you originally paid for that stock
There are probably a lot of other rules I should articulate but it’s getting late and I’m tired. If you can think of good rules for investing, then please write a comment and ask me to add it!
Back to the top
Proceed to my next investing blog, (not finished yet).
Return to my previous investing blog, Investing terms.
Rules
1. Introduction
2. Capital Risk
3. Inflation Risk
4. Are you a risk taker?
5. Your time horizon
6. Diversification
7. Dollar cost averaging
8. Investing Rules
1. Introduction
Before going in depth into many topics, it is important for you to discover what type of investor you really are. Although I can guide you down the path to answer this question, you will certainly not know the answer by the end of this article and it may take you years or decades to really understand yourself well. From personal experience I can attest that I began seriously saving money around 22 years ago, I started to pay attention to that money from an investment perspective about 18 years ago, I started investing in stocks about 12 years ago and I started investing in options about 5 years ago.
I am *STILL* discovering what kind of investor I am and making mistakes. Despite still making mistakes, their frequency has declined significantly since I started. I’m actually hoping to help you through the learning process to save you some of the sometimes quite painful mistakes of my own past.
My first lesson is never buy a stock (or any asset) based upon a “hot stock tip”. You might spend an evening talking to someone who has been investing a lot longer than you have, someone who has made a lot of money, and someone that you trust. During this discussion you might discover that they’re investing in stock “ABC” and you might think, “Aha! I should invest in that because they certainly know what they’re doing”.
I’m telling you to NOT buy that stock – well more specifically, I’m telling you to not buy that stock until you get a chance to look it over for yourself. What have you heard in the news about the company? What does the company’s financials look like? How has the company fared in the past? These are all questions you need to discover for yourself.
At best stock ownership is making educated guesses. The more educated you are, the better your guess is going to be. Any particular educated guess can be wrong. If you are tempted to buy stock “ABC” based upon the “hot tip” remember that this stock is a small portion of your friend’s portfolio. If “ABC” doesn’t pan out, then the other stocks in his portfolio will make up for that stock.
When you buy a stock, you are putting your money on the line so ensure that you spend the time to assure yourself that the stock is a good pick.
Back to the top
2. Capital Risk
Certain types of investments such as stocks and properties possess capital risk. It is the risk that stocks both increase and decrease in value. When you read articles on investing and the writer discusses risk, this is the risk they are discussing.
If you buy a stock and the company does well, the price of that stock will go up. However, if you bought BP right before the BP oil well blew then you would have lost nearly ½ of your investment within one week after the explosion. This loss in value represents one aspect of capital risk.
Some asset types such as CDs and savings accounts do not possess this characteristic – meaning you should never lose your capital investment (unless there’s a bankruptcy). There are other assets like bonds that exhibit both properties. If you purchase a bond directly, your base investment and the interest you earn are guaranteed (unless the company files for bankruptcy or the president intercedes and breaks hundreds of years of contract law).
However, most people purchase bonds on the bond market. If you watch the bond markets, you can see that the base value of bonds fluctuate too. Bond mutual funds exhibit similar behavior.
What this means is that unless you plan to only invest in CDs, savings accounts, or a few other very low yielding investments you are going to be forced to accept some capital risk. Given that capital risk is necessary to achieve the returns you’re going to need for your retirement, we need to explore how we can minimize the downside to this risk and maximize the upside.
Back to the top
3. Inflation Risk
Inflation risk is defined as the risk that the real value (as opposed to dollar value) of your asset will decline. Only it really shouldn’t be called a risk if it’s guaranteed to happen – which it is.
Over time your assets will lose value. If you invest in CDs and savings accounts your investments are certain to lose value over time. This does not mean you must invest in highly risky assets (such as junk bonds) but it does mean you need to balance capital risk against inflation risk in your investment choices.
While capital risk can be used to increase your portfolio’s returns (through reallocation), inflation risk is ALWAYS bad.
Back to the top
4. Are you a risk taker?
How would you feel if a stock you owned drop 90% in value (ala FNM or AIG)?
What would you do if the stock market dropped 10% in value on a single day? Would you want to buy more stock or sell the stock you have?
How does the thought of gaining $10 compare to losing $10?
How long is your investment horizon?
You need to ask yourself these questions to understand what sort of investor you are. One who fears declines more than they value gains is generally called “risk averse”. These investors need to invest in assets with lower capital risk.
Investors who value gains more than they fear losses are called risk tolerant. These investors can invest in assets with higher capital risk.
The important thing about this is that you should be brutally honest with yourself. If you select an investment strategy that is contrary to your nature, you will panic when your portfolio drops suddenly in value (for the risk averse). An emotional investor is one that will make terrible mistakes with their portfolio.
I vaguely recall reading a study that 80% of private investors fare worse than the market average during sudden swings in market valuations. This is because sudden market drops trigger panic. The panicked investor then sells their stock and they typically do their selling at the BOTTOM of the drop!
Back to the top
5. Your time horizon
As you save and invest you should have a general idea about for what you wish to use your investments. In many cases you’ll be saving for retirement, your kid’s college education, a house, or some special treat for yourself. Once you determine your investment goals and their timeframes you can work backwards in time to figure out your asset allocation.
As you approach your investment goal in time, you should reduce the capital risk of your investments. You reduce capital risk by transitioning from mostly stocks with some bonds to some stock, some bonds, and some cash.
If you plan to spend all of you nest egg over a short period of time (e.g. for a college education), then you should transition over to all cash assets (e.g. CDs, savings accounts, and money markets) a few years before you need the cash.
If your investments will be used over long periods of time (e.g. for retirement), then you should ensure a large fraction of your assets remain in stocks so that your investments can continue to grow.
Back to the top
6. Diversification
One way the capital risk of your stock investments can be counter-acted is by purchasing assets whose prices fluctuate differently than your stocks. For instance, if you own stocks, bonds, cash, and real estate investment trusts (REITs), stocks might be up while REITs are down. When this happens, you can help the long-term gains in your portfolio by selling some of the higher valued asset and purchasing more from the assets whose price has fallen.
In order to get the most stable investment account value, you’d want a selection of assets that are anti-correlated with each other (e.g. stocks and bonds).
However, you can also diversify within asset classes. For example, stocks are often divided along the lines shown in this table.
<![if supportMisalignedColumns]> <![endif]>
| Increasing risk ----------------------------------> | ||||
| Increasing risk | Value | Mix | Growth | |
| | | | V | Large Cap | X | ||
| Mid Cap | ||||
| Small Cap | X | |||
| International | X | |||
Value stocks have low price to earnings ratios (see my blog on Investing: Terms), growth stocks possess high price to earnings ratios, and mixtures either have both growth and value or include those stocks between the others.
Meanwhile, Large cap (cap is short for capitalization) stocks include very large companies like IBM, XOM, etc. Mid cap include medium sized companies and small cap include small companies. International stocks include foreign companies like Siemens.
In order to diversify your stock assets you must select a few different combinations of these 12 choices. Note: you do NOT need them all! I have checked 3 on the chart provided for you to consider but really the diversification is the most important aspect of this chart.
I must also point out that you can also diversify your bonds assets. I have provided a notional chart for this too (provided below) but you should be aware that the bond market no longer thinks this risk assessment is accurate:
<![if supportMisalignedColumns]> <![endif]>
| Increasing risk ----------------------------------> | ||||
| Increasing risk | Short | Int | Long | |
| | | | V | Federal | X | ||
| State/Muni | ||||
| Large cap | X | |||
| Small cap | X | |||
The bond market’s interest rates indicate that some large stalwart company’s bond risk is lower than that of the federal government. Furthermore the pricing indicates that many large corporations’ bond risks are lower than that of some states and many municipalities.
I would also like to throw out this warning: as of September of 2010, the bond market looks like a very bad deal (commodities are similarly high priced). If you do not own bonds, wait to buy them. If you do own bonds, consider selling them. In general I support the use of bonds in my portfolio but they look as over-priced right now as stocks were at the beginning of 2000.
One final note on diversification, in the investment world, increased returns often come with increased capital risk (e.g. stocks earn more than bonds but have increased capital risk), there is one exception to this that I know: on average value stocks outperform growth stocks and they also possess decreased capital risk. Their differences aren’t huge but they are significant enough to be worth suggesting that all other things being equal, you should look to acquire value stocks before growth stocks.
Back to the top
7. Dollar cost averaging
One little trick that can provide you with improved returns is to dollar cost average. This means buy small amounts of assets frequently (say bi-weekly or monthly) over a long period of time (like your working career). Since you always use the same dollar amount for purchases and that dollar amount purchases more stock when the price is low (and fewer when the price is high), your average price for the stock will be a low value.
Dollar cost averaging is really not something that most investors need to actively manage to achieve. Rather it is a side benefit of accumulating investment savings from another income source (e.g. your salary).
Back to the top
8. Investing Rules
Traditionally investment advisers suggest investing 80% of your portfolio in stock and 20% in bonds if your investment goal is still much more than 10 years away. As you get within 10 years of your goal, you should transition to a ratio closer to 60% stock, 20% bonds, and 20% cash.
If you are the type of person who is a risk taker, you might increase the portion of your investments devoted to stocks up to 90% stocks with a mixture of bonds and cash assets comprising the rest. On the other hand if you are risk averse, you might decrease the portion of your investments devoted to stocks down to 60%.
So rule 1: using your time horizon and risk tolerance select a portfolio allocation for your investments.
Once you’ve established your target portfolio allocation, you must periodically reallocate your portfolio back to your target allocation. You should select a frequency you wish to do this (once or twice a year is plenty). By reallocating your portfolio, you utilize the same mechanisms as dollar cost averaging to decrease the average of your portfolio. Essentially you sell off some of which ever asset performed best (selling it at a high price) and buy some more of the asset which performed poorly (buying it at a lower price).
Rule 2: reallocate your portfolio annually or semi-annually.
As you look for different assets for each asset type (e.g. stocks), I recommend investing in and getting experience with mutual funds or ETFs of that asset type before buying the underlying asset. Mutual funds (and ETFs) will prevent you from making beginner’s mistakes and buying stocks of companies headed for bankruptcy. On the rare occasion that your mutual fund owns the stock of such companies, the mutual funds collection of other companies stocks will reduce the impact such a bankruptcy would have on your portfolio.
Rule 3: when starting out, look to minimize your exposure to risk by beginning with mutual funds of that asset class.
Later as you begin buying individual stocks and bonds, you may be tempted to buy lots of stock in a “sure fire winner”. However, there are no “sure fire winners” on the stock market. To avoid losing a lot of money on stocks like AIG & FNM, you should set a maximum percent of your portfolio for any single stock (I chose 10%). If your stock rises in value above this amount, you should sell enough shares to cut its fraction back to the limits that you set.
Rule 4: keep the fraction of your portfolio devoted to a single stocks under the maximum you established (e.g. 10%).
Some stocks that you purchase will be losers while others will be winners. When the value of your winning stock gets significantly higher than that of other stocks in your portfolio, begin selling at least some of that stock and using the cash elsewhere. This is called “locking in your gains” and it ensures that even if your winning stock were to go bankrupt tomorrow, you will still have benefitted from the price run-up. A common point to perform this sell off is after your winning stock doubles in price – sell ½ of the shares enables you to both keep the winner and find other uses for some of that money.
Rule 5: after a nice price run-up, lock in some of your gains by selling some of winning stock.
You may hear of great stock tips at a party or an office. Some friend or colleague is going to tell you about their latest triumph in the market. Just remember this very same person has also LOST lots of money in the market. However, people don’t tend to brag about their very worst stock choices! The person giving you those great stock tips is not going to refund your money if your investment goes bankrupt.
Rule 6: tips are nice but depend upon your own due diligence (DD) when buying stocks.
The market will go up and the market will go down. Bull (market going up) and Bear (market going down/sideways) runs can last a decade or more. Sooner or later the market sentiment will change. The best time to buy into the market is when everyone has given up (this does not always work at the individual stock level), while the best time to sell is when everyone thinks that economy has fundamentally changed. Often the largest gains in the market are found shortly after a sudden drop. When there is a sudden drop, you need to remember that you bought your stocks for a reason. If there has been no fundamental change in the company you bought, hold on to your stocks during drops.
Rule 7: do not allow market drops/crashes to scare you away from your stocks.
View every investment for what it can do for you in the future. Attempting to only sell a stock after it has made some arbitrary gain (such as going back to the price you paid for it), can cause you to lose out on other far better investment opportunities. This sentiment (often found in new investors) is called the fallacy of sunken costs. Another way of stating this is, “you’ve already lost $100 on your investment, you might as well see how the remaining $100 fares.” You must look at each investment as if it were in competition with every other investment. Is that $100 likely to earn a greater return in the current stock, or could you do better by putting it in another investment.
Rule 8: view investments as competing ideas, invest in the very best ones you can find and ignore what you originally paid for that stock
There are probably a lot of other rules I should articulate but it’s getting late and I’m tired. If you can think of good rules for investing, then please write a comment and ask me to add it!
Back to the top
Proceed to my next investing blog, (not finished yet).
Return to my previous investing blog, Investing terms.
(DD)
ReplyDeleteand it has a 3.70% dividend yield
When I used the abbreviation "DD", I had intended it to mean "due diligence" - as in you should never buy a stock based upon someone telling you to do it. Instead, if you are given a stock tip, you should perform your own investigation to see if it fits into your portfolio.
ReplyDeleteBut yeah, DuPont has a nice dividend. Many of the DOW 30 provide nice dividends right now.