A.I.M. Users Bulletin Board

[BowlerBob]

Adam,

Hi Bob, One reason to hold the "core position" that does not trade is for dividends. For example two of my stocks Qcom and Intc generate about 3% dividend compared to almost zero in cash.

When I look at a graph of QCOM, I see that it fell about -45% from the Spring of 2014 to February 2016. My thinking is that the 3% dividend is a "plus" to holding a stock, but not a reason to "ride out" serious pullbacks. On the other hand, QCOM has been increasing their dividend every year since 2003, and that is a good reason to stay with the stock. The drop in 2014 to 2016 was only "fractionally" less than the 2008 crash, and of course they were insignificant compared to the 2000 crash. Just using that Monthly MACD that Ocroft talks about would have had you "avoid" the deep dive each time and have gotten you back in at a good, low price, in order to reap those dividends. But then, that is a "All in, All out" strategy, which is contrary to AIM.

I don't see AIM as a Dividend Investment Strategy, but as a Capital Gains Strategy, lots of "churning" over the years of ownership (trading, buy low, sell high). And the churning generates profits over time without you having to add funds to the position. Though I can see it being useful for Dividend investing if you "never sell" because it will identify great buying opportunities and you can accumulate many, many shares at low prices to take advantage of those increasing dividends, especially if you use it to delay purchases like Ocroft originally described.

I believe your point was that it is better to receive the dividend than to get 0% for holding cash, and you are right, so the dividend is a "Plus". The problem from my perspective is that that Core Position is doing nothing, except getting that dividend, it really serves no other function, which is why Steve the Grabber "virtualizes" it and Ocroft simply "pretends" it is there. This is where each person has to find their "comfort zone" in investing. If getting a dividend on the Core helps you maintain your strategy discipline, then all is good!

Respectfully,

Bob