For the past few years, I’ve been in dividend stocks, but now I have to wonder with the rally in the stock market if I shouldn’t shift into non-dividend paying growth stock instead, at least for the time being… Or am I too late now?
A lot of stock already had decent run up in the stock market, and I’m late to the game with this strategy. I wonder out loud, “is there still some stocks that haven’t appreciated that I can still get in?” I’m hoping so. Stocks that have my interest are financial and insurance stocks in particular.
The reasons that I’m interested in financial stocks are the following:
- Some financial stocks that fell deep and hard are still valued cheaply, especially considering that a lot of these companies acquired other troubled financial firms. For instance, Bank of America still owns Merill Lynch, and Merill is doing quite well from what I late heard.
- Some are still down 90% or more from their highs back in 2007, these banks aren’t going away without the collapse of america, so they should be a good buy, or so it would seem.
- Alternatively, the mechanism that provided the primary growth for the banks and made them a great investment was the mortgages, and the market for that stream has become much more restricted, especially the sub-prime market (I hope).
As for insurance companies, I’m mostly interested in the bad boy of the housing collapse, AIG. You see AIG, although an insurance company got involved in mortgages too and obviously did so very poorly. Apparently they don’t believe in risk management when it comes to business. But the beauty of AIG is that their stock is still less than 95% of their former value.
At one time the government practically owned all of their shares of stock, but that is no longer the case, and hopefully they should reinstate their dividend policy again sometime in 2013 and probably at the latest 2014.
Both financial institutions and the AIG insurance company seem like a risky investment, but they also have a lot of potential with little downside left.
So now you know my strategy. Please remember that this is all for fun and I’m not making any investment recommendations of any sort. This is just what I’m going to try…