Strategy

Bull market just keeps on going and it’s very difficult to see a major shift happening very soon. It seems that the most likely outcome of the QE operations is a significant bubble which will continue to grow for couple of years. Volatility might increase in near term but it’s very difficult to imagine all the loose money not going to stocks especially in Europe. All this makes it a bit difficult to come up with a solid shopping list for the next 6 months or so. In general I’d need to consider or address the following issues:

• Portfolio balancing would require adding on existing positions in companies such as Baxter International, General Electric, AT&T, Aflac Inc and perhaps Deere. Baxter is special item here since I’d like to increase my position before the upcoming Baxalta spin-off.
• I’m not a huge fan of the idea of converting euros to dollars with the current exchange rate (existing USD income will help a bit)
• It’s much more difficult to find high quality companies from euro zone (especially ones that pay a quarterly dividend)
• In general I would like to increase my position in currencies other than euro and US dollar

Having said that, the expected shopping list and order to  go as follows:

1. Baxter International
2. Unilever/Diageo/something european
3. Telia-Sonera/Nordea/Gjensidige if there’s a temporary and significant enough drop during spring (otherwise these will be considered during Q4/2015 and Q1/2016)
4. Canadian bank (looking at Royal Bank of Canada and Bank of Nova Scotia at the moment even though I have some concerns about the housing bubble)
5. General Electric/AT&T/Aflac/Deere (it remains to be seen how the dollar valuation moves or is moved, I might consider converting dollars to euros as well)

Investement strategy as follows:

• passive income through dividend growth investing
• limited number of high quality companies (eventually in the range of 20-30)
• reinvest all passive income
• inject new capital every month
• target single purchase per month
• be prepared to increase the rate of investments when blood is in the streets
• utilize changes in currencies when possible
• buy & hold, selling something might sometimes be the best thing to do but to try to avoid ending up in that situation

Stock selection strategy:

• diversify, diversify and then diversify a little bit more (focus on global companies or companies operating in large enough market areas)
• home market bias is evil
• target company must be able to benefit from the following: growing population, aging population, people’s fear of death, people’s tendency to kill each other, people’s tendency to exchange long term benefit for short term pleasure
• mix dividend growth stocks and high yielding stocks, target portfolio yield growth close to average inflation rate