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Re: Chaos, complexity and entropy simplified

protagonist,

Thanks for the great article!

TJSI
by TJSI
Tue Jan 27, 2015 9:00 pm
 
Forum: Investing - Theory, News & General
Topic: Chaos, complexity and entropy [for non-physicists]
Replies: 16
Views: 957

Re: Adjusted Closing Price

PapaGeek,

Thanks for your remark. However, my comment was directed at Tanelorn who believes I am "dense". I was once accused of having the "mind of a lizard" so maybe this is a step in the right direction.

TJSI
by TJSI
Wed Jan 21, 2015 3:16 pm
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Adjusted Closing Price

Tanelorn, You are being insulting, perhaps deliberately so. If one is computing total return, they should of course include dividends. If they sell/buy at closing, they will get the closing price. If they buy/sell at opening they will get the opening market price. Total return will be a function of ...
by TJSI
Wed Jan 21, 2015 11:17 am
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Adjusted Closing Price

I will repeat my strongly held belief: The closing price is the closing price as it happened in the real word and the opening price is the opening price as it happens. Mr Market knows about dividends and includes it in its pricing. Unless someone is willing to make a market at an "adjusted clos...
by TJSI
Wed Jan 21, 2015 12:38 am
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Adjusted Closing Price

dbr, Just goes to prove you should not take financial advice from something called Yahoo. The closing price is the closing price. Mr Market although a manic depressive knows enough to include the fact that a stock is trading ex-dividend. The effect no matter what its size is baked into the closing p...
by TJSI
Tue Jan 20, 2015 11:40 pm
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Adjusted Closing Price

PapaGeek, If you are talking about common stocks, there is no such thing as an adjusted closing price. The closing price is exactly that--the price at market close. If you are taking about funds with NAVs, the NAV will include the effect of dividends paid out when they are paid out. The funds report...
by TJSI
Tue Jan 20, 2015 10:42 pm
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: We miss Larry Swedroe

And here I thought he was at an undisclosed location counting his dividends.

He certainly deserves a good vacation.
by TJSI
Sun Jan 11, 2015 10:56 pm
 
Forum: Investing - Theory, News & General
Topic: We miss Larry Swedroe
Replies: 28
Views: 7424

Re: Is the collapse of oil price a "black swan"?

As a consumer who pays for gasoline and home heating oil, I consider it a Goose That Lays A Golden Egg.
by TJSI
Wed Dec 10, 2014 11:28 pm
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 106
Views: 12041

Re: IBM: Stock Buybacks Gone Wrong?

Comments from IBM CFO on why they are doing buybacks: http://www.cnbc.com/id/102241195

I guess he wouldn't say they were making a mistake.
by TJSI
Mon Dec 08, 2014 1:30 am
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5306

Re: Determining profit from a bond fund

Yes, you made $79.67 on your total investment. This assumes there is no selling fee/cost.
by TJSI
Wed Nov 26, 2014 11:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Determining profit from a bond fund
Replies: 4
Views: 746

Re: A Backtest of the Dividend Growth Model, 1871-2010

MindBogler,

Do you read what I write? I have said twice that there is no problem using earnings growth instead of dividend growth.

What is wrong is losing sight of how the Gordon Equation is derived. It is from cash flow.

It must be getting late.
by TJSI
Wed Oct 29, 2014 9:45 pm
 
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 4934

Re: A Backtest of the Dividend Growth Model, 1871-2010

rmelvey, Earnings growth rate is often substituted in place of dividend growth and they are close. However, there is a hidden assumption --that the payout ratio is constant. The payout ratio is not quite constant and earnings are more volatile than dividends. Over the long term, the earnings growth ...
by TJSI
Wed Oct 29, 2014 9:13 pm
 
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 4934

Re: A Backtest of the Dividend Growth Model, 1871-2010

Larry, Go back and review your notes from NYU! The Gordon Model is cash flow. No variation in shares. And it is not earnings it is dividends--cash. Now many substitute earnings growth for dividend growth and they are close. So no major error. But the Gordon model is a cash flow analysis with zero ch...
by TJSI
Wed Oct 29, 2014 8:06 pm
 
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 4934

Re: A Backtest of the Dividend Growth Model, 1871-2010

Simplegift, By the Dividend Growth Model, I assume you are referring to the Gordon Model. That model is a discounted cash flow analysis. It is the price of one share of stock assuming an initial yield and constant dividend growth rate. There is no variation in share quantity. If the share quantity v...
by TJSI
Wed Oct 29, 2014 6:34 pm
 
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 4934

Re: A Backtest of the Dividend Growth Model, 1871-2010

We have been down this path before but I will try again. Adding a buyback yield to the Gordon formula produces a nonsense number. Buybacks are investments. If buybacks are good in general, their effect will show up in an increased earnings or dividend growth rate. Their effect is already included in...
by TJSI
Wed Oct 29, 2014 12:02 pm
 
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 4934

Re: IBM: Stock Buybacks Gone Wrong?

inbox788, You asked if I had any ideas for IBM. At the time I had none. However, in a burst of creativity I now have two: 1) IBM wants to own the cloud. They should look into owning the pipes between the clouds. Buy/build some backbone networks. 2) Google wants to provide cloud services. Use Watson ...
by TJSI
Wed Oct 22, 2014 10:11 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5306

Re: IBM: Stock Buybacks Gone Wrong?

inbox788, Sorry, I don't have any recommendations for IBM. I hope they recover and continue as a mainstay of the IT industry. Maybe the cat has a few more lives in it. I find their strategy of shedding lines of business and doing massive buybacks interesting and peculiar. Maybe it will work--time wi...
by TJSI
Wed Oct 22, 2014 2:51 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5306

Re: IBM: Stock Buybacks Gone Wrong?

inbox788, Since they have been consistently doing buybacks, they must have concluded that their stock was consistently undervalued for more than a decade and was always a good investment. They were probably right some of the time but I suspect that there were other motives at work. That is some list...
by TJSI
Wed Oct 22, 2014 2:06 am
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5306

Re: IBM: Stock Buybacks Gone Wrong?

Langhhawi, I suggest you read the latest comments from the good professor on buybacks v dividends. See: Musings on Markets, Sept 22, 2014 Stock Buybacks: They are big, they are back & they scare some people. He refers to them as a type of "return" not a dividend. Buybacks are investmen...
by TJSI
Tue Oct 21, 2014 10:44 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5306

Re: IBM: Stock Buybacks Gone Wrong?

Stlutz, Well I don't believe a buyback is a dividend, or a form of dividends , or like a dividend. It is an investment. IBM has a great history as a technology company. They have weathered several technology changes and their stockholders have benefitted greatly. It looks like somewhere along the wa...
by TJSI
Tue Oct 21, 2014 8:55 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5306

IBM: Stock Buybacks Gone Wrong?

There is an interesting article in today's NYT (The Truth Hidden BY IBM's Buybacks) about a much discussed and debated topic---Buybacks. The article points out that since 2000 IBM has spent $108 billion on buybacks while investing $59 billion on capital expenditures and $39 billion on acquisitions. ...
by TJSI
Tue Oct 21, 2014 8:17 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5306

Re: Stock Dividend Yields & Share Buybacks — A Surprise

If you add dividend yield to the percent net buyback your result is a nonsense number. Stockholder yield (return) results from capital gains or dividends. A 5% buyback does not result in an automatic 5% increase in share price. A buyback is an investment by a corporation. It can be a good, bad, or i...
by TJSI
Wed Oct 01, 2014 10:55 am
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 5287

Re: DDM model predictions vs real returns

siamond,

Suggest you take a look at the speech given by John Bogle on June 13, 2012--Thinking About What Lies Ahead For Investors. I think you will find it interesting. And it is in the Wiki under John Bogle speeches.

TJSI
by TJSI
Mon Jul 28, 2014 9:53 pm
 
Forum: Investing - Theory, News & General
Topic: DDM model predictions vs real returns
Replies: 6
Views: 619

Re: Value Overvalued

Overvalued or not, I would like to thank James99 for the link. It contains a lot of relevant statistics and data.
Thanks.
by TJSI
Mon Jul 21, 2014 8:57 pm
 
Forum: Investing - Theory, News & General
Topic: Value Overvalued
Replies: 23
Views: 2381

Re: Credit card "payment networks"--how many are there, e.g

tidalwave10, AdamFist & Imbros have used the best term to describe the top of a pyramid of functions--a brand. Below the top it becomes complex and irregular quickly. Each brand provides a set of functions. These functions can be broadly divided into three categories: issuing functions, merchant...
by TJSI
Thu May 29, 2014 5:17 pm
 
Forum: Personal Consumer Issues
Topic: Credit card "payment networks"--how many are there, e.g Amex
Replies: 18
Views: 1796

Re: Credit card "payment networks"--how many are there, e.g

Unfortunately, there can be no easy answer to the question: How many payment networks are there? The term "payment network" has multiple meanings and is used freely an loosely by many article writers. The payment process is large and complex and over the years much of it has been outsource...
by TJSI
Thu May 29, 2014 2:25 pm
 
Forum: Personal Consumer Issues
Topic: Credit card "payment networks"--how many are there, e.g Amex
Replies: 18
Views: 1796

Re: Can we rely on stock and bond yields during bear markets

A nice, concise summary of dividends, earnings, and yields can be found here: http://www.stern.nyu.edu/~adamodar/pc/datasets/spearn.xls If an economic downturn is severe enough dividends can be cut. It is for that very reason that many advise a greater allocation to bonds with age. Note: If you clic...
by TJSI
Wed May 28, 2014 2:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Can we rely on stock and bond yields during bear markets?
Replies: 5
Views: 831

Re: Woodpeckers...I'm desperate!

I had this problem for a couple of years as a woodpecker would arrive each Fall and do some damage. It use to wake me up in the morning and at first I thought some crazy person was knocking on my door at 6AM. Eventually, I saw the damage it was doing. My little friend would arrive faithfully each Fa...
by TJSI
Mon Apr 14, 2014 4:32 pm
 
Forum: Personal Consumer Issues
Topic: Woodpeckers...I'm desperate!
Replies: 52
Views: 5304

Re: How do I value my business?

Valuation of your business would most likely be done on an after-tax cash flow analysis. Your income tax statements would be the starting point of a valuation analysis. You can determine the value of the company to you by your after-tax cash flow and a discount rate. So if you and your partner gener...
by TJSI
Sun Apr 06, 2014 8:03 pm
 
Forum: Personal Finance (Not Investing)
Topic: How do I value my business?
Replies: 6
Views: 736

Re: Gordon equation-stock buybacks

After a little thought, I will modify the statement about the valuation assigned to manufactured ( non-operating) earnings per share. The P/E should be near 1. If the stocks purchased are undervalued, than the P/E assigned to those earnings would be greater than 1. So if a stock is purchased at 70% ...
by TJSI
Sat Apr 05, 2014 10:32 am
 
Forum: Investing - Theory, News & General
Topic: Gordon equation-stock buybacks
Replies: 11
Views: 937

Re: Gordon equation-stock buybacks

camontgo, Thanks for the interesting links! I found the article "A Supply Model of the Equity Premium" most interesting as they attempt to provide an analytic model of the effect of buybacks. However, I believe their analysis and model is flawed. First they conflate price changes with cash...
by TJSI
Fri Apr 04, 2014 10:22 pm
 
Forum: Investing - Theory, News & General
Topic: Gordon equation-stock buybacks
Replies: 11
Views: 937

Re: Gordon equation-stock buybacks

Andyman, I don't think buybacks are easily incorporated into the Gordon Equation. They are not dividends although they might effect future dividend flows--positively or negatively. The Gordon equation is based upon discounted cash flows and buybacks most directly effect capital gains. I don't think ...
by TJSI
Fri Apr 04, 2014 10:38 am
 
Forum: Investing - Theory, News & General
Topic: Gordon equation-stock buybacks
Replies: 11
Views: 937

Re: Dividend stocks for current income in early retirement?

SteveKL,

I don't know to break the news to you but----long term capital gains have been taxed for a decade at the same rate as qualified dividends.
by TJSI
Fri Mar 14, 2014 9:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Dividend stocks for current income in early retirement?
Replies: 38
Views: 4381

Re: I don't want to upgrade XP just yet, is that ok?

Nisiprius. Now that is the "Telltale Pie Chart". It shows why Microsoft as a company may have seen its best days. They need to change their marketing strategy from constantly adding ever more features and complexity to how to insure their base is satisfied. Otherwise, I think they will jus...
by TJSI
Fri Mar 14, 2014 3:30 pm
 
Forum: Personal Consumer Issues
Topic: I don't want to upgrade XP just yet, is that ok?
Replies: 86
Views: 7410

Re: How exactly do index funds compound?

rdlaner, I feel your pain. The term compounding is used loosely by many so reading the various posts on the matter will only add to your confusion. The value of your investment in a fund or stock will increase as you gain more shares you own by reinvesting the dividends and through the increase (hop...
by TJSI
Thu Mar 13, 2014 12:53 pm
 
Forum: Investing - Theory, News & General
Topic: How exactly do index funds compound?
Replies: 12
Views: 2255

Re: where did the dividend money go?

Another place money is missing is overseas. Since a significant fraction of large companies revenues are now overseas, the resulting income and cash are held there due to the tax burden of moving them to the US. The money is not so much missing but rather it is sequestered. The earnings component of...
by TJSI
Mon Mar 10, 2014 11:45 am
 
Forum: Investing - Theory, News & General
Topic: where did the dividend money go?
Replies: 8
Views: 1302

Re: where did the dividend money go?

Well a lot of money is now being used for stock buybacks. It is at least as big as dividend payouts and maybe even more. Even though this is massive, I don't believe the effect on corporate profitability and stock holder returns is fully understood. Some of it appears to be money thrown out the wind...
by TJSI
Sun Mar 09, 2014 4:35 pm
 
Forum: Investing - Theory, News & General
Topic: where did the dividend money go?
Replies: 8
Views: 1302

Re: Schwarzman Loves Dividends!

abuss368, you ask who has enough information to invest in firms like Blackstone? I think the answer is the "smart people"--endowments, trusts, pension plans, and the very wealthy with really great investment advisers. It is not for the common folk. Or, for the "little people" who...
by TJSI
Sat Mar 08, 2014 11:55 am
 
Forum: Investing - Theory, News & General
Topic: Schwarzman Loves Dividends!
Replies: 34
Views: 2547

Re: Schwarzman Loves Dividends!

Valuethinker, Thanks for pointing that out. I am guilty of what I accuse others off--using terms in a sloppy and inconsistent manner. They are definitely not a company. They did an IPO and file a 10K. Ordinary shareholders are second class citizens. Now if I can only figure out what they are "w...
by TJSI
Thu Mar 06, 2014 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: Schwarzman Loves Dividends!
Replies: 34
Views: 2547

Re: Schwarzman Loves Dividends!

An interesting company which I suppose would describe themselves as a private equity company which does friendly buyouts and turnarounds. Last year was a very good year as they did an IPO on the Hilton Properties. Seems they had taken it over a few years back and turned it around. I guess Paris was ...
by TJSI
Thu Mar 06, 2014 1:40 pm
 
Forum: Investing - Theory, News & General
Topic: Schwarzman Loves Dividends!
Replies: 34
Views: 2547

Re: Schwarzman Loves Dividends!

Valuethinker, Thanks for the references. I read Barbarians at the Gate many years ago and it was truly entertaining. A recent quote from the WSJ ( 3/4/14) from Mr. Schwarzman on his payout philosophy: " Mr Schwarzman told investors they could look forward to the firm continuing to pay out most ...
by TJSI
Wed Mar 05, 2014 2:19 pm
 
Forum: Investing - Theory, News & General
Topic: Schwarzman Loves Dividends!
Replies: 34
Views: 2547

Re: Schwarzman Loves Dividends!

Thanks Grt2bOutdoors for your comments. I know next to nothing about the private equity business. But those type of numbers are impressive and it will be worthwhile to learn a bit about how such incomes are earned.
by TJSI
Wed Mar 05, 2014 12:43 pm
 
Forum: Investing - Theory, News & General
Topic: Schwarzman Loves Dividends!
Replies: 34
Views: 2547

Schwarzman Loves Dividends!

Stephen Schwarzman CEO of Blackstone Group last year received $352.5 million in dividend income. His total comp was $465.4 million. Apparently, he has not been keeping up with the latest financial theory that dividends don't matter. I don't know what Mr. Schwartzman does to earn that kind of money b...
by TJSI
Wed Mar 05, 2014 12:09 pm
 
Forum: Investing - Theory, News & General
Topic: Schwarzman Loves Dividends!
Replies: 34
Views: 2547

Re: Why do investors prefer cash dividends?

Larry, I believe Mr. Buffett said that he did not pay dividends because he was running a holding company and not an operating company. He said that because his investment horizon was the world, he believed that he could always find good investments ( I believe he said his target was 12% ROI) and thu...
by TJSI
Tue Mar 04, 2014 11:44 pm
 
Forum: Investing - Theory, News & General
Topic: Why do investors prefer cash dividends?
Replies: 126
Views: 5959

Re: Why do investors prefer cash dividends?

Ogd, You are one of "those people" who are constantly mixing the terms value, price, and worth. So your arguments are full of heat but not easy to interpret. You say that a company that pays a 1% dividend is "worth" 1% less the next day. Is "worth" price or book value? ...
by TJSI
Tue Mar 04, 2014 10:58 pm
 
Forum: Investing - Theory, News & General
Topic: Why do investors prefer cash dividends?
Replies: 126
Views: 5959

Re: Why do investors prefer cash dividends?

Leeraar, I did not say there was an arbitrage opportunity. I said that most studies show that prices do not change by the dividend amount. Deal with it; don't change the topic. There may or may not be an arbitrage opportunity. I don't know. Larry said: " So you are one of those people (Those pe...
by TJSI
Tue Mar 04, 2014 7:43 pm
 
Forum: Investing - Theory, News & General
Topic: Why do investors prefer cash dividends?
Replies: 126
Views: 5959

Re: Why do investors prefer cash dividends?

Leeraar, Free money? Where? I want some. I have said only two things: 1) Most research has shown that prices do not drop by the dividend amount. It has been widely studied. 2) The value of an investment is due to the discounted return via dividends and capital gains. The value does not change by the...
by TJSI
Tue Mar 04, 2014 5:21 pm
 
Forum: Investing - Theory, News & General
Topic: Why do investors prefer cash dividends?
Replies: 126
Views: 5959

Re: Why do investors prefer cash dividends?

Ogd, Well I just did a small amount of research and take a look at this paper: Marginal Stockholder Tax Effects & Ex-Dividend-Day Price Behavior Evidence from Taxable versus Non-Taxable Closed -End Funds (Elton, Gruber, Blake-- NYU Stern). Here is the first sentence from the abstract: "Almo...
by TJSI
Tue Mar 04, 2014 4:22 pm
 
Forum: Investing - Theory, News & General
Topic: Why do investors prefer cash dividends?
Replies: 126
Views: 5959

Re: Why do investors prefer cash dividends?

Ogd, Before you fling insults, I suggest you learn to use Google and do a little research. There is much to learn for inquiring minds. The topic of dividend capture has also been studied and some say that the is a tiny return available. However, market noise makes the capture of the small change in ...
by TJSI
Tue Mar 04, 2014 3:51 pm
 
Forum: Investing - Theory, News & General
Topic: Why do investors prefer cash dividends?
Replies: 126
Views: 5959

Re: Why do investors prefer cash dividends?

Sorry Larry but you are mistaken in the claim that stock prices drop after the paying of a dividend. This thing has been studied to death in multiple stock exchanges around the world and the results vary. The best that could be said is that most likely there will be a slight increase in price before...
by TJSI
Tue Mar 04, 2014 2:54 pm
 
Forum: Investing - Theory, News & General
Topic: Why do investors prefer cash dividends?
Replies: 126
Views: 5959
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