Getting nervous

 I feel things are getting fairly strained in this market.  I just read where the PE ratio of the S&P just hit 30.  That can't be a good sign.  Looking at charts for the wider market, it seems that classic top signals keep getting overcome.  I'm waiting for the 'this market is invincible' type quotes to come up.  That will be the last straw.  I am becoming more and more conservative in my naked put trades.  The prices keep getting higher, which takes trading capital out of my account, and I am waiting longer and longer before making those trades, just to reduce risk.

The thing is, thanks to AIM rules, if something does tank, I am ready to take advantage of a bear market, even if is sudden and quick, which is all we've had since 2009.  I've broken my cash into different income-producing vehicles, so half of my account isn't just sitting there doing nothing.  I have periodically gone through my mind about how I would go about refilling my actual trading capital, if it were to be used up.  Not really much need to worry about it at this point, though - the market is still making new highs.  I just don't know how much longer this can last - we've got to be approaching historic numbers here, as far as how much time it's been since the last sustained bear market.  I keep seeing more and more hints that, historically, have been signs that the bull market is about to end.  I just seems very stubborn about giving it up.  That tells me that when it does go, it won't be pretty.

As far as individual stocks in my account go, I did make one change since last entry.  I got rid of the NKE and replaced it with SWK (Stanley-Black & Decker).  Better dividends and I feel SWK has more upside possibility.  Neither one have been actual dogs, but SWK is closer to being one.

Current stocks in my account - INTC, VZ, SWK, DINO, DOW

AIM for Not Necessarily Dogs

 The Dogs of the Dow have, of late, become, on average, very high in price.  In other words, the per-share price of the stocks in this group has become higher, generally, than I am comfortable paying for a stock for my accounts (which are not really huge, by the way).  If someone has a large account, then it wouldn't really matter if the stocks in that account are above $100 a share. But in a smaller account, to maintain it by the AIM rules, it makes it difficult to manage it, because of the rules involved. I like to have all the stocks around the same total value.  Since the average number of stocks in the ideal AIM account should be 5 or so, it makes it easier to manage a smaller account if the per-share price of each stock is a little lower.  Now, I will always check the Dogs of the Dow group for stocks to use in my AIM account, since they meet the criteria that works well, generally.  But lately, since the per-share prices of the Dogs are so high, for my accounts, I have been backing away from using those stocks.

Right now, there are only 3 stocks in the Dogs that are under $100, and the lowest price one is Verizon. The other two are Coke and Merck, neither of which appear, in my opinion, to be bargains right now. When I look for candidates for my accounts, I look at volatility, quality of company, and where they are in their general trading range.  Right now, only VZ fits those descriptions, so except for VZ, all of the stocks in my account are either former Dogs or non-Dogs.  

One of the nice things about using DOTD stocks is that they inherently have nice dividends, so they are always adding to my cash.  So when I have to go outside the Dogs to look for stocks, I still make sure the company pays at least a reasonable dividend.  I stay away from companies that pay too high of dividend, because I understand that those companies may have a higher risk than I am willing to take.

Lichello, in his book, doesn't talk about Dogs of the Dow.  That was my idea.  His description of a good stock candidate, to my recollection (I honestly haven't read the book in a while) says that if you recognize the name just from general day-to-day dealings, it's probably worth looking at. As he puts it, if you are drowning in the ocean, and somebody throws you 2 lifesavers, and you recognize the brand of one and not the other, grab the one you recognize. Now, I'm not sure I would take the time, if I was drowning, to read the brand names of lifesavers, but he was just trying to make a stock-picking point.

I really didn't talk about the way the market is right now, because it hasn't changed too much from last post.  I'm a little surprised that it's coming back the way it is after it's major double-top (I'm a bit of a technically guy - I pay attention to charts) but the S&P just made a new high yesterday.  The Dow has a little work to do to get to it's next high.

Current stocks in my account - INTC, VZ, NKE, DINO, DOW

The Market Took It All Back - Now Another Push?

 Before the last couple trading days, everyone was talking about how Trump's tariffs made the market give up everything it gained between the election and his inauguration.  Of course, he lightened up and the market responds back in a pretty big way.  Though, not all the way.  This market is way overdue for a major correction, at least.  It is feeling very sensitive to negative as well as positive news, which spells volatility, which could be a warning for something to go haywire.  It still seems fairly resistant to any long term down turn...I still don't see the attitude that the market can't go down.  When that kind of thinking happens, then it's time to buckle the seat belts and get ready for a ride.  We aren't there yet, though.

I've been a little more cautious about the cash-producing methods I've been trying in the last couple years.  One part of my thinking is, "Don't just go right back out and sell an option the first thing after the last one expired."  I know I need to give it a little time between those trades.  I may give up some income, but that's better than getting stuck with something careening out of control.  I've been staying with the lower priced options anyway, so there's not as much risk.  Less reward too, should this market decide to have another session of climbing that wall of worry.  Putting time between trades just lowers the risk further without giving up all the profits.

This latest downturn seems like has created a new sense of unsuredness -  now it appears there are as many thinking disastrous thoughts as there are still thinking with a positive outlook.  The bottom line is, though, that it's really just in a funk right now.  No particular direction (especially as far as any major movement goes) either way.  This is evident from my accounts.  Usually, there is at least one that is either have a buy or a sell signal, but they are all in between.  That's actually more of a rarity than the alternative.  It's unusual for there to be more than two of them with activity, but even more unusual for there to be none.

I know this will not stay this way forever, as there is always something new on the horizon.  It's just hard to see if that something is a good something or a bad something.  We'll just wait and see, and in the meantime, we'll just keep playing by the rules...