Investing

Have any dividend investors here invested through the DotCom bubble?

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  • Jul 28th, 2020 3:51 am
[OP]
Jr. Member
Dec 4, 2013
194 posts
15 upvotes
Vancouver, BC

Have any dividend investors here invested through the DotCom bubble?

How did you guys manage to stay the course and stick to dividend investing strategy while seeing tech stocks soaring? I'm feeling kind of discouraged at the moment seeing hot stocks consistently moving higher while my dividend stocks fail to keep up with the market.
3 replies
Sr. Member
Oct 21, 2016
946 posts
717 upvotes
Dumped my Canadian boomer dividend stocks and ETFs for US tech stocks and tech ETFs years ago and honestly it's the best investing decision I ever made . Sticking with large cap US tech , fintech and disruptive tech long term .
Deal Addict
User avatar
Feb 1, 2012
1945 posts
3244 upvotes
Thunder Bay, ON
I was, although in those unenlightened days I was using an advisor at one of the big bank brokers. You young kids don't know how good you have it with discount brokers and $5.00 trades. :)

Lots of my coworkers and friends were bragging about how well they were doing on Nortel, RIM, JDS Uniphase, WorldCom and Netscape. They all had early retirement dreams. :facepalm: I worked for a competitive telecom company at the time. I remember going on the President's Club reward trip for outstanding employee performance in April 2000, which was just after the first tremors of the dotcom bust. Our stock dropped from over $100 to around $40. Our brash young CEO gave a speech saying how he was gonna get our stock back over $100 where it belonged. It never saw the high side of $50 after that and a lot of my stock options ended up permanently under water. Confused Face

I called my so-called advisor to tell him I wanted to boost my portfolio with some dotcom stocks. He talked me off the ledge explaining how most of those companies had a really bad business model and would never make it and he was right.

So is this time different? Will tech grow to the sky? Every bubble is different, but they all have similar traits and trends. "Tech" bubbles have been around for a long time. Railroads, car companies, airlines, electronics and mainframe computers all went through tech bubbles with lots of growth companies, very few of which made it past the nascent stage of the industry, making a lot of money for a few people and losing a lot of money for many people. This is a good article about bubbles:
Bubbles: From "tronics" to "dot com"

So what to do? What are you investing and saving for, when will you need the funds, how much of that money can you afford to lose and how would you feel if one of the big tech companies had a bad quarter and sent a ripple crashing through the entire industry? If there was a huge crash and you lost most of your savings would you have the time to start over? Maybe you do, but what if you don't.

Consider your ability, willingness and need to take risk. If you save 15% of your gross income or 20% of your net income in a low-cost balanced indexed portfolio for all your working life you will be rolling in dough when you retire. So figure out what you really need for your long-term savings goals and diversify that broadly in low cost investments, including a reasonable allocation to growth and tech stocks. Then take what you have left and can afford to lose and chuck it at whatever you want.

This is a good article about risk: Ready, Willing and Able to Take Risk
I solemnly swear, to never assume I have an inkling at which direction the market will head, and to never make any investments based on a timing strategy.
Deal Addict
Jul 23, 2007
4766 posts
3859 upvotes
I admit to getting sucked in to the technology bubble of the late 90's for about 10% of our portfolios. It was all the larger tech companies I purchased and they all paid growing dividends at the time even if the dividend yield was tiny. I just treated that eventual failure as a learning experience on the road to seeing what worked for me personally as an investor. Now I just buy and hold individual Canadian businesses on the stock market that not only increase their dividends but also make use of technology available to their industry. Any actual technology companies are contained in the global index we now also invest in. Even in retirement my wife and I keep investing and re-investing into the portfolios which usually means more dividends and distributions each successive year. That and keeping investing very simple along with trying my best to avoid performance chasing is what I stay focused on.

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