Working Orders

I got something now to think about
I'll work all day but not to pay it out
--Pete Townshend

Pension buyout funds were deposited into my rollover IRA yesterday. I look forward to allocating these resources primarily toward dividend paying stocks and precious metals/miners. However, with stock markets at all time highs and the metals complex in rally mode, it is difficult to do a lot right here as prices are stretched to the upside.

Instead, I plan to spread out my buys over time. By 'working' my buy orders, I accumulate shares at various prices which, given the extended nature of the tape, increases the likelihood that my cost basis will be lower than if I purchased an entire position all at once right around here.

In the 'olden days,' working orders in small increments was uncommon. When brokers served as investment agents for most investors, those agents rarely had the time or patience to piece out trades for clients. Moreover, the transaction fees associated with trading in small quantities made trading in small size cost prohibitive.

Now, however, individual investors have the operational resources trade on their own behalf. And with brokerage commissions largely a thing of the past, it makes little sense to make big trades in risky situations--such as our present overbought condition.

So I'll work my orders by buying small and scaling in.