SPY Missed

I missed my entry point of 188 on SPY and it hit around 193 shot back up before I could get in.  I still think it has more room to go but I think I'll wait for another pullback.  Historically the chart shows that between November and December it makes a run due to the holidays.  I'll probably start scaling in around mid September.

In Defense of ARR

A recent article in Motley Fool questioned whether ARR is a good investment.

“Though ARMOUR Residential presently exhibits a dividend yield of nearly 14%, investors should be carefully watching ARMOUR Residential's book value in the coming quarters. This should yield a clue as to whether further dividend cuts are looming down the road."

There are two points I would make about this article: first ARR has declared their dividend through the end of 2014 so the dividend won't change either way until then, second the real estate market is at its lowest point so the price is not going to get any lower.

Some would say that ARR went down 43% last year but I would contend that that's the time to buy.  “Buy low, sell high” is the basic law of investing.  If you buy high then you won't make any money.

Here's the thing about ARR:  it's a numbers game.  In my humble opinion it's the best stock out there to make the most monthly income off dividend payments.  Because of its low price and consistent high yield you can buy more of it and make more each month.  Most dividend stocks cost too much to buy in bulk and make a decent monthly income.  I did a lot of research to find this stock and that's the reason why I've been in it so long.

If you were to put $100,000 in ARR since the dividend is declared till the end of the year, you would make $7000 by the end of the year just off dividends. That's 7 percent for 6 months not including the possible equity gain. If there is an equity loss it most likely won't be any larger than 7 percent.

For the general investor I would agree that a more conservative strategy is better.  It also depends on how old you are and how long you have to invest.  Investing in ARR is definitely an aggressive strategy and if you are risk averse, it would be prudent to balance things out with other stocks and maybe some ETFs.

Indeed, not one of us knows what's going to happen tomorrow.  If an investor says they do they're lying. We're all just making the best educated guesses we can.

We all have our strategies so you got to trust your gut. I could come up with a ton of articles to support buying ARR and just as many not to support buying ARR.  At the end of the day you got to call a play and hope your team wins.

Profit Taking On A Stock You Still Want

When taking profits it is important to consider if you still want to hold the stock because of its overall growth potential or if you want to collect a dividend.  If this is the case then to not miss out on any potential surges after you have taken profits be sure to scale back in by buying small amounts even at the higher price.  Also if the ex-dividend date is approaching and you want to catch the dividend you will want to scale back in as well.  Use a dollar cost averaging strategy to get back in so you don’t miss any potential big upswings.

Note: I took another position into TSLA as it climbed back up today.  It may pull back after earnings this week but I want to be in a position to ride it higher if it doesn't.

Alternative Strategy With The VIX

Alternative strategy time... if you buy the VIX (volatility index) on dips some jittery news event always makes it jump up at least 2 points. If you look at the yearly chart and check the days where it spiked you will see some big news event happened on that day (try it just type in the day on google). Also Fridays and Mondays are big days for the VIX. Sell on volume and you have a consistent cash generator.

Dollar Cost Averaging Plan

I had another conversation with a friend of mine about dollar cost averaging.  He uses it as an overall strategy to build his investments.  He combines it with Fibonacci retracements and moving averages to refine his trades.  I think this is a great plan and would add that if you want a solid overall plan, only buy stocks that pay a dividend and you will be paid to own the stocks as well.

Here is a great video from Investopedia on dollar cost averaging:

http://www.investopedia.com/video/play/dollar-cost-averaging/