The Blue-Chip Dividends On Sale, Once A Decade

A friend of 30+ years gave me a ring last Friday afternoon to check in on the family. Unfortunately for him, I popped back with a little more “real life” than he was ready for!

Other than catching up, he shared that his 401(k) plan was now liquid, thanks to his company being acquired. Having a cash portfolio at times like these is a fantasy that few investors actually experience.

“I’ll share what I wrote to my CIR subscribers today. For long-term positions, don’t be afraid to have up to half of your portfolio in cash right now. I think we’re going to see nice buying opportunities in the months ahead.”

“That said, don’t forget to get back into the market,” I warned. “In March 2008, I left my last ‘day job’ and rolled my 401(k) into an IRA. All cash. It was sweet timing, as (by pure accident) my retirement funds were protected from the bulk of the big crash.”

“But I forgot to get back in! Me of all people. I missed the initial bounce and then kept it parked in cash, year after year, into the next big stock boom.”

“So, don’t do that. Set a reminder to call me every month if you need to. Eventually, we will have brighter things to talk about, and investing returns to match!”

Dividends on Sale, Once a Decade

My recent research into pullbacks and bear markets has highlighted an obvious finding that many of us (including myself) overlook:

Once every decade or so, something really bad happens to stocks.

In recent memory, we had the crash of 1987, the tech bubble bursting in 2000, 2008 (which needs no intro), and, currently, the global pandemic of 2020. With this knowledge in mind and, of course, a ton of patience, an income investor could simply stockpile cash for 8 to 13 years or so and grab the “deal of the decade” when it presents itself.

Now I realize that nobody actually does this. And to be fair, the relentless upward climb of the stock market does place these crashes in perspective. Let’s look at Black Monday, which looks like a retirement-killer in real-time:

The Crash of 1987, “Live”

Black Monday S&P 500 Chart

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