Venturing into Opportunistic Ideas and Portfolio
On rare occasions, I have mentioned about my opportunity portfolio. I have never discussed about so far on this blog. Over the years, I have not had any tangible traction on this aspect. My wife tells me that I have failed on this subject. She tells me, I am too slow or logical or methodical to understand what opportunity means. For opportunistic, I have to be like a “hawk” to pounce on it when it comes. Well, I accept her opinion. Why? Because have you ever won an argument with your wife?
When I say, not much traction, what I really mean is, I haven’t focused on it. I haven’t spent sufficient time on it. Opportunity is too wide a definition which could probably include deep value, market timing, downturns, de-listing, arbitrages, buyback offers, etc. In my early investing years, I played with market timing with not much success. Again, I could succeed in few trades here and there, but sustainability is an issue. In my investing philosophy, sustainability and consistency over long term is not negotiable.
So far, my opportunity portfolio has been clueless; do not know what is going on and no direction. It has been starved for any capital allocation. I have been holding two positions as a reminder of my failed market timing adventures. Since last few months, I have been thinking about it and have started dabbling in it.
In my progress update, I mentioned about “reaching critical mass” of dividends. What it means is, the total dividends I receive, have enough mass that I can buy shares of one or two companies every year. Similarly, the income generated from the blog is also at a point, where I can buy one or two companies. That is, I can buy up to four companies with this critical mass.
I have been buying only three or four times in any given year. The portfolio and blog generates enough capital to be re-invested for this objective. Essentially, what this means is, I do not need to allocate new capital from my full time job. I consider this as a milestone. I haven’t discussed about my milestones, but those of who are reading my post or interacted with me, would have gotten flavor of it.
- First milestone was about completing real estate payments.
- Second milestone was completing bond investments which are now on auto pilot. These are no brainer, so nothing much to discuss, right? And there is no glamor associated with them.
- Third milestone was dividend portfolio on which I have working for a while, probably many of them got bored about it. Last few years, I have been focusing on creating a good foundation for sustainable long term growth. Therefore, I have remained fixated on a specific type of objective, i.e. sustainable dividends. I consider reaching a “critical mass of dividend cash flow” as a milestone for me. Like bond portfolio, this portfolio is also on auto pilot. I do not need to allocate new capital to it.
It is time to adapt. If you do not adapt, you rot or get corroded.
I will continue to look for companies with sustainable dividends. I will continue to build and grow my portfolio of dividends companies. But the pace and percentage allocation is likely to slow down.
This year, I am working on slowly widening my focus to include opportunistic companies that I can buy. This would be little different than dividends based companies, or buy and hold philosophy. I can’t put my finger on it, but it would be somewhat based on earnings power based value investing. Here, sustainability of dividends would not be a pre-requisite.
No, this is not going to happen next day or next month. I am sure there are many opportunities out there. But I am not on a buying or selling binge. My core investing philosophy of good business will still remain as is. That is not going to change.
I still need to work out my methodology or the process I am going to use. I need to determine what methods I will follow, what parameters I would be looking for, etc. It is likely to be slow learning process. And when you are venturing into unknowns, it is essential to take baby steps and keep learning from your mistakes.
earnings power, opportunity, value investing
hi ,
i am holding few stocks with historic price i.e is very low price.when i brought them..with horizon of 5-6 years…..i am sitting with handsome profit…but these stocks lost say 25-30% from there high because of market fall…so sometime i feel it is good idea to book time to time profit….or should stick to our investment goal when that we have when we start investment?what you say…
Hello Chetan,
Nothing wrong in booking time-to-time profit. In my case, it is depends upon my objective, my expectations, etc. Did you miss reading my discussion on selling? Check the exit strategy on my process page.
Best Wishes,
TIP Guy,
It’s a coincedence that your & Rohit Chauhan’s thought process is going together. same thinking, same milestones, same experiments. don’t know but do you have relation with him?
regards
MIP
Hello MIP,
No relations. My guess would be we both are in same phase of our investing lives, same thought process rooted in value investing, etc, etc. I think Rohit is much more adventurous and experimental than me.
Best Wishes,
@ My Income Portfolio, I think Rohit has been experimenting for more than a year into derivatives, arbitrage ideas… etc etc…
it will be good to see TIP GUY ideas also… we need to make more money
Hello Raju,
We will see if we end up making money or lose money. probabilities are equal
Best Wishes,
congrats on milestones!
Hello Marshal, Thanks.
Glad that you have started thinking about it.
Was waiting for a long time for your opinion on this topic.
will wait for your next post on this.
Thank you.
it is going to be a while. I still need to lay out my process. there is no short cut my friend.
this would be good addition. can you share your plans, or can you share any analysis. what type of company are you look at … egarly looking forward to this work.
again, here also i expect you doing to be doing a thorough job from top to bottom
good luck
DS,
patience my friend. When I have something to share, I will write about it. I could certainly share the fluffy stuff but it does not make sense. So stay tuned