2008 Was An Awesome Year for Dividend Investors???
Wow! No one I know thinks so. I guess maybe that’s because we’re all a lot closer to the end of the trail than to the beginning. In fact, The Dividend Guy says pretty much the reverse about his own position. “I will be honest, I hope that 2009 is a better year from a returns perspective. However, at my wealth accumulation stage 2008 was a good year from a learning perspective.” (See his full post here.)
Before that, though he made one point that shouldn’t be missed by ANYONE. Number 1 in my mind? The importance of asset allocation. Asset allocation probably isn’t important to you if you know which moves the market will make or you’ll never need your money. Of course I don’t know anyone like that. Do you?
He continues with “I strongly believe that 2008 really showed investors their true colours when it came to their risk profile.” I sort of agree with this one.
I’m not sure how much a once-in-four generations event has to do with risk tolerance, at least as I think of it. I can tell you this for sure though. As I approach retirement I’ll be building cash and near-cash equivalents to a point where I shouldn’t ever be forced to liquidate stock investments.
Finally, he states that “The companies that made it out of 2008 alive are the strongest of the companies in my opinion.” I hope he’s absolutely right on this. I’ve read alot of his stuff, and I respect his opinion, but I’m just not sure about this. How many companies are just alive due to bailouts received? Worse still, how many are only alive due to the prospect of bailouts for themselves and unknown counterparties to various derivatives contracts?