I was wondering if you have an update from the 37 year old (he must be 38 now!) millionaire. Has he bought more stuff since Oct. 2008? I would be interesting to get an update.

Brian

But, as I build an iron stomach, I still think this is a great time to be alive. A market such as this (a bear-with-rabies!) can really heighten your investing skills. For me it is too late to sell, and I don’t really want to either, but I am most definitely keeping my eyes on buying opportunities — although I’m sure there will be quite a few more “plummet” days to come before I actually do put more money into the market.

FT: I read an article somewhere that agreed with Acorn’s “middle-of-the-bear” comment, being on Fib’s 3rd wave of the 3rd wave — the worst wave!

Here’s a question: would it be wise to put any amount of emergency cash fund into high-yield GIC’s (eg. RBC RateAdvantage) during this market, assuming the turmoil and losses will continue?

Fair comment.

Most people with 100K are not generally living off that investment and have (hopefully) long term plans to keep going. A smaller portfolio like that would (again I hope) be at the growth stage and if the invester is purchasing regularly then the past couple months of turmoil are probably presenting some buying opportunities.

Q

If you go from 100K to 70K, that’s a much bigger deal in my opinion. If that person isn’t losing sleep, that says a lot more to me that someone who is 37 with 1.6M.

It looks like I didn’t explain it clearly… It is not the 50% technical rule. The believe is that (and I have to admit that for me it was and is the most repeatable / reliable chart formation, which I’m always looking for) if the second Elliot Wave has been recognized and a small gap up (during a uptrend) or down (during a downtrend) occurred “inside” this wave, this gap represents the “middle point” of the second wave as well as the middle point of the overall trend REGARDLESS how far a security went up or down (more than 50% or less) compared to the previous major reversal point.

The main issue that I have with SDY the US high yield dividend aristocrats is that the companies are weighted based off yield which led to an overweight of financials before their dividend cuts. In addition to that, not all of them are attractively priced. That being said, if you want to buy it and forget it I would consider purchasing equal weights in the dividend aristocrats index and rebalance once per year.

FT,

I think that Acorn is refering to the 50% technical rule which refers to securities having to retrace more than 50% of the prior move up or down before a new trend start. For example the S&P 500 fell from 1313 to 839 in its latest down leg move. Untill S&P 500 moves decisevly above 1076 points then we would keep being in a bear market..

I’m using both, the Elliot Wave Theory and Fibonacci trend lines as well as a number of other technical indicators /chart patterns. One of the indicators, which usually works with a deadly precision is a small gap up / down in the middle of the second Elliot wave. This gap represents not only middle of the second wave, but the middle point of the overall trend. Currently, the NASDAQ Composite Index chart demonstrates a book example of the Elliot Wave Theory. A small gap occurred at 1,900 points level (Oct.6th). Considering the fact that the downtrend has started @2,800 points level, the “bottom target” is… 1,000! However, by looking at 10 years chart and taking in account all these billions injected in the market, I’d say that the bottom will be around 1,200 – 1,400 points level (today we are at 1,800). Thus, some pain is still ahead of us…

Brian, I would never recommend a stock or dissuade someone from purchasing a security. I will tell you that I have bought EIT.UN recently, I purchased BMO and I also like the XDV. But I hold these in the context of my entire portfolio, which will be the subject of a later post wherein I will disclose all my holdings in all my accounts so you can better judge my overall position.

I would say given today’s surge, the prime minister was right that last week was a good time to buy :-)

Sampson – Absolutely, we have time to recover and again, not relying on selling assets to finance our lifestyle, we can afford to be patient.
I don’t disagree with your picks for Brian either.

Q

I’ve got the iShares products, and a SPDR, YMMV, but look these up and compare with offerings from other companies.

XDV (Canadian dividend etf)
SDY (US dividend etf)

Hopefully those folks close to retirement weren’t liquidating and missing on the giant rebounds we’ve been getting this week.

A timely post I very much enjoyed it. As an investor I think I’m following the right path. Out of the 7 points you’ve mentioned, I’ve been following all but 1 of them, which is dividend investment.

Is there a broad based fund or etf that I could buy? I don’t think I would be knowledgable enough to pick individual stocks.

I’m planning to do more reading on divident investing, is there any book (from a canadian perspective) that you would recommend?

Thanks! I voted in the advanced polls.

Al – the threshold will be income based, not networth based. I had originally planned to do this early retirement thing when I had $2M. After reading Derek Foster and a few others on income investing, I realized that I would be able to generate after-tax income similar to what I was earning. I would have to go back to work if we were no longer able to sustain our lifestyle. But I do save some of my income now, so I could last longer if need be.

DGI – Thanks. I think today’s rebound shows that the sky is not, in fact, falling. Banks in the US will have to stop lending to people who can’t afford it and growth will have to be real and sustainable, rather than consumer driven.

We will emerge stronger than before.

Q

PS To you Canadians reading this, don’t forget to vote.

I like your long-term approach of thinking. For most people this is the first bear market they have experienced so they are listening to so called gurus which proclaim that the world is coming to an end.

Good Luck in your investments!

Dividend Growth Investor

Have you figured out your threshold point for going back to work? Is it based on a certain income level from your investments or a certain net worth? Or will you just go with your gut?