Stocks Are Twitchy

Oct 23, 2014 by

New York Stock Exchange

If you’ve got money in stocks, you probably can’t resist being aware of the market’s daily movements.
And lately, even if you’re determined to ignore the stock market’s short-term moves, you’ve likely found the breathless reporting of the latest round of wild price swings tough to avoid.

Here’s a chart of the daily S&P 500 Index over the past three months.

S&P 500 chart

The height of those colored bars illustrates how widely prices fluctuated each day. It’s clear the stock market has gotten twitchy since early September, with big down and big up days often occurring in close succession. Every day the pundits have explanations, and it’s entertaining to listen to them yap because a second grader would quickly conclude that this gang is full of crap, though they’re well paid to pontificate endlessly.

Have You Reacted to Stock Volatility?

Have you been inspired to buy or sell any stocks since September 1st because of the market’s craziness? Do you see the current market situation as 1) a potential or developing opportunity, or 2) a warning to head for the exit?

Stocks are riskier than you probably think, but when the market’s looking shaky, do you get scared or excited?

We’ve Done Nothing

We’ve made no changes to our stock investments. I am looking for opportunities to increase our holdings of dividend paying stocks (my favorite category) we already own, or to add to our portfolio other stocks that pay a good dividend. I’m not contemplating selling anything because of the jittery market. I like our current dividend income too much to sell out based on speculation about the near term future of stock values.

Here’s a list of the highest valued individual stocks we own, the current value of our investment in each, and the dividend yield we’re earning based on what we paid for the stock:

 

TransCanada (TRP) — $55,914 — 6.9%
Bristol-Myers Squibb (BMY) — $47,250 — 6.2%
Bank of Nova Scotia (BNS) — $33,840 — 6.4%
General Electric (GE) — $17,808 — 3.5%
Valener (VNR) — $9,624 — 6.7%

We’ve owned all of these for quite some time (many years), and the primary rationale behind each investment was 1) high dividends combined with 2) a relatively stable business. (I learned the hard way that GE’s business was less stable than I’d judged when the company slashed its dividend in the aftermath of 2008’s financial meltdown. But I held on to the stock, and the dividend has been partly restored.)

Just eyeballing the numbers above, I’d guess the weighted average dividend yield on my mini portfolio to be about 6.5%. That’s why I’m not interested in selling any of these!

How have these stocks performed since September 1st? I have no idea! One I do have concern about though is Bank of Nova Scotia. The Canadian housing market may well be in bubble territory—it’s definitely bubbly in certain markets like Toronto and Vancouver—and BNS may not fare well when the bubble pops.

One stock I’m interested in adding to our portfolio is BCE Inc. with its 5.3% current dividend yield and relatively stable business. But I keep thinking the price will sink when interest rates normalize, which I’ve been waiting for now for about five years and so have missed out on a lot of dividend! C’est la vie.

My Big Fat Disclaimer

None of the above comprises a suggestion for your investments. Our circumstances, goals, and risk tolerance differs from yours, so our investment choices likely aren’t suitable for you.

How Are You Holding Up?

How do you view the current market? Do you have the stomach and cash to jump in if markets crash? Is your finger poised itchily over the sell or buy trigger, or are have you resolved to stand pat come heck or high water?

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