Friday, October 10, 2014

How Many Watch Lists Do You Have?

Those are not 3D glasses, but they sure are awesome!
Entertained Gremlin here to talk about Watch Lists (WLs).  No, not the kind where there are movies involved.  Besides, everyone knows there are probably 10 movies worth watching every year in the USA - of which only 1 or 2 are worth paying the $30 to take yourself and your significant other(s) to.  Otherwise Netflix and or Redbox rule that roost, but I probably will see Gone Girl (its like getting a year's worth of Law and Order SVU) and the Hobbit Part III (cause I am a sucker for that).  I probably will get dragged to Hunger Games Part III, but that one is NOT on me.

I digress, WLs are an important part of dividend investing.  For me they are used to organize and track potential future investments.  Those investments might take place this year, in the near future, in 10 years or never.  They do a lot of the work for me in tracking the basics of several companies.  They go back in time and allow me to look up trends and historical norms.  They also allow me to quickly look up stocks in an industry that I might like to add to my account, especially to build in diversity as I go.

My key to using WLs effectively is to categorize stocks in a way that makes sense.  The brokerage I use (Sharebuilder), instantly creates a general WLs for stocks.  If you so desire you can add types of lists.  Currently, I have ten (10) different WLs created.  Is that a lot or too many, maybe, but it works for me.  I use it primarily for stocks I do not own, but I have included stocks from Loyal3 not yet merged into my main account.  What do my WLs have on them?  Glad you asked so here they are in alphabetical order:

Banks - A list of banks, pretty self-explanatory. Examples include: BK, BMO, BNS, OZRK, and MTB.

Bio and Technology - Biological and pharmilogical research companies and hi-tech players make up this list.  Neither one is full of enough players to merit its own list, and despite their differences as a science person I find they have more in common with each other than anyone else.  The list does also contain numerous healthcare players.  Examples include: A, ABT, BAX, CA, GSK, IBM, and MRK.

Energy - Petroleum, coal, and natural gas can all be found here.  Example include: CVX, PSX, RDS.B, RIG, and XOM.

Food - You are what you eat, and what you own.  Examples include: CAG, CPB, GIS, SJM, and YUM.

General - What do you call everything else?  It also takes into account companies that span several industries.  Examples include: ADP, COH, MAR, OMC, and PM.

Industrials - The most unsexy stocks ever.  It includes basic materials, heavy manufacturing, and processing.  Nothing cool here, but excellent staying power.  Examples include: APD, CLX, DCI, DOW, MMM, and PX.

Insurance - Formerly with banks and part of the financial sector, but not quite the same as is the same with REITs.  All types of insurance are considered here from personal needs to large shipping, everything can be insured.  Examples include: AFL, AHL, CB, KCLI, LNC, and TRV.

REITs - Fomerly part of my bank list, REITs are part of the financial sector, yet they are their own animal.  Examples include: ARCP, DLR, HCP, and OHI.

Transportation and Equipment -Once a member of Industrials, it had to be split off because it is a very unique niche.  All types are considered here - Planes, Trains, and Automobiles.  Examples include: BA, CAT, DE, CSX, KSU, NSC, R, and UNP.

Utilities -Typically I do not like electric utilities, but those are included here along with my more favorable water, gas, and other utilities such as trash collection.  Electricity has a big hurdle ahead of it the next few decades, but the others are always in demand.  Telecom has some challenges, but looks like it will adjust nicely to the future - minus landlines.  Especially water in the arid Southwest and in the congested Northeast.  Examples include: AWR, MSEX, NJR, RSG, SO, VE, and VZ.