The Progeny of Fate

I don’t usually get up this early, primarily because I don’t have to and secondarily…they don’t serve breakfast around here until 7:30 AM. I can raid the kitchen and demand coffee - which the warden of my culinary world would gladly provide…well… except that coffee would make me even more awake than I would like to be this early in the day. Disrupt the routine as it were that I have of late fallen into of late. (Of late being in the last 6 months or so.) And this is exactly where fate has intervened. Reared its ugly head and all that. Sigh!

Back tracking several months ago - at some inopportune moment during our recent travel, the All-Too-Lovely informed me that she was bored managing our income portfolio and thus and hence forth she would really be pleased should I accept that responsibility. BAM - my peaceful existence gouged by the progeny of fate. All of which is to explain me being up this morning at about 5:00 AM studying stuff I need to get up to speed on.

Were I to judge myself as an investor I would give myself a rather mundane and biased grade…well in the range of - and from time to time, perhaps…fudging a little…a range from C+ to B-. I mean…I have been at this for well over 20 years now and one couldn’t…just couldn’t…would actually be nigh impossible (Even if he or she wanted to) to fail to learn a bit about this Growth investing stuff after following so very many investing sharpies, gurus and assorted other talented folk here abouts for all that time. And therein lies the rub…the problem and perhaps even the dilemma.

I now have to learn, or at least figure out, the general plan, the schematic, the mechanics of the income generating, dividend paying - you know driving in the slow lane…ie shifting from the rabbit to the tortoise mode of investing all the while still managing the up and down the court Globe Trotters account - as it were.

So - first things first, going over, reviewing, researching and analyzing the copious amount of companies (Think college football full roster + walk-ons etc) in the income producing account: the various REITs, CEFs, ETFs and Preferred Shares - and the other ones that I have no clue what they might actually be or what categorical pigeon hole they might/or should, be stuffed in. My goodness…I’ve had to cut back on the wine consumption!

Now…I could just say to heck with it: sell it all and roll the entire fund into the Growth world: Would be simple and easy to do - take a couple of months for the transition. And history says that we would make higher returns - after all, surely being a C+ player in the Growth world is much, much better (and certainly more comfortable) than being a three legged tortoise in the income investing world. But!

Doing so would violate the family financial plan that I myself established so many years ago. Guarantee the income and the growth is all gravy - or something like that. So here is a matter of note - something to ask myself or perhaps reconcile myself to: When is profit…well, actual profit? Under the same general theory that a loss isn’t a loss until you sell and make it so - then doesn’t actual gains and profit become profit and gains only when it is realized by selling? Here is the thing: When we growth investors talk about our portfolios we talk in terms of percentages: Heck fire Gomer (Income Investor) my Growth portfolio increased this month alone by almost 8%. Over 44% last year while you scrap by on a few points of growth and…what…4-5% in annual dividends?

But wait a moment here: If Gomer is taking his dividends out to pay his bills that is realized gain - real money in the bank while us swufty growth guys roll things over…and over…and over piling up the gains…until…until along comes Mr Bear in cahoots with Mr Sell-Off and sometimes even Mr Recession. And all those unrealized gains can go poof. Ahaaaaaaa! And this is exactly why I decided in the first place to put into place the income port so that despite the occasional sell off the family has cash rolling in.

So - even though I would like to foist the family income portfolio responsibility off on someone else I am left to determine who that might actually be? And as I ponder that exact question repeatedly ad infinitum - I keep coming back to the same dang answer: me.

The Growth Portfolio sits snuggly at a +14% or so gain YTD while the Income portfolio produces annual income of about 11.84%. And since we don’t use or need it at the moment - the income portfolio income we just roll it over/drip it into new shares - or alternatively, fresh income companies.

So here is today’s Income Port of the day plan:

Add slightly to BRSP, JPC and DX then swap CHMI -A (paying 8.7%) for CIM-D paying 11.55%. Once completed I can turn my attention to re-building the Growth portfolio. The things we do for the All-Too-Lovelies in our lives: The wine will have to wait.

All the Best,
BDH Investing


Enjoyed your thoughts. As we’ve spoken about this before, I, too, have most of our funds allocated to the Income Port (heck, I’m even more conservative there than you are!), but still have fun and get kicks from growth. Sleep in! 5
PS I sold CIM-A, CIM-D and NYMTL today, moving into more conservative preferreds just in case…buy RITM-A snd DX-C


Hi 5:

The gist of it is - you try to balance these things by concentrations and allocations by industry. I can see already that the income port has drifted a bit and - just like the tires on my truck - needs balancing or perhaps re-balancing, whichever comes first. Having said that, I am still thinking like a growth guy while trying to sort things out. And that is what made Mickey Mantle so valuable: he was a switch hitter and I am pretty sure his stats were slanted only slightly, and for that exact reason I somehow feel a little better about it all. Having said that:

Most of us gravitate to the side of investing that we feel comfortable with. We put in the time, research and try to listen to the guys that are really good at this stuff…but in the end I think it’s fair to say that the majority of investors are good at one or the other: Growth vs Value/Income And once knee deep in either they tend to stick to what they do best. And once stuck/committed to what we are good at - we tend to disparage, look down upon, and otherwise denigrate those with the opposite viewpoint.

In the investing world I am much more the Ron Swoboda than the Mickey Mantle but the concept is the same I suppose.

All the Best,