Ignoring The Lions, Tigers, And Brexits And Focusing On Alpha - 5%+ Dividend Yield Portfolio (A June 2016 Review)

Review and Outlook
U.S. investors primarily exposed to domestic indexes received an important lesson is separating signal from noise in the past week courtesy of our friends across the pond. The day before the Brexit, the S&P 500 closed at ~2100. 2 days later after Brexit, the S&P 500 dropped below 2000. But 3 days after that, the index closed right back at ~2100. In other words, a nothing sandwich. After all, roller coasters are more likely to deposit you where you started than to fall off the tracks.

Nonetheless, investors that paid attention to the noise in the markets (and from TV pundits) probably panic sold solid positions (at prices lower than today) and now have no way to get those valuations back. However, well-diversified investors that focused on signal (a still resilient U.S. economy with relatively small exposure to the British market) were either bargain buyers or of the opinion that the entire thing was a non-event (at least in its intermediate term impact on U.S. stock markets).
It is easy to talk about this with the benefit of hindsight (and the trading tape already created), but how does an investor know in real time what to do? Well I am no expert but in my personal opinion, the stronger your adherence to an investment philosophy (not just DGI, but any fundamentals focused strategy), the more likely you were to play it cool and not do something rash. If I can impart one lesson that I have learned as a "home gamer" (a small time,... Read more