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by TJSI
Fri May 22, 2015 12:46 pm
Forum: Investing - Theory, News & General
Topic: Silver lining for bond fund NAV declines?
Replies: 33
Views: 2839

Re: Silver lining for bond fund NAV declines?

Ogd, You don't see the error in your statement that "Its only defaults that bring down the NAV without higher yields" because you use an incomplete concept of NAV computation. A more accurate computation of NAV is that NAV = market value of assets + revenue - expenses. If there is a liquid...
by TJSI
Thu May 21, 2015 10:05 pm
Forum: Investing - Theory, News & General
Topic: Silver lining for bond fund NAV declines?
Replies: 33
Views: 2839

Re: Silver lining for bond fund NAV declines?

ogd, Your statement is not true because you ignore the real world operation of funds. Funds like most things in life work on cash not yield. Funds have real expenses that must be paid. A panic induced run on a fund can cause a loss in liquidity. In matters not if the yield on remaining bonds goes up...
by TJSI
Thu May 21, 2015 2:38 pm
Forum: Investing - Theory, News & General
Topic: Silver lining for bond fund NAV declines?
Replies: 33
Views: 2839

Re: Silver lining for bond fund NAV declines?

Ogd said: "It's only defaults that bring down the NAV without higher yields". I don't believe this is correct. If there is a run on a fund during a panic, they may be forced to sale assets at the depressed NAV rate. Once sold there is no yield rate increase benefit.

TJSI
by TJSI
Mon Mar 30, 2015 9:17 am
Forum: Investing - Help with Personal Investments
Topic: Increasing REIT holding in a ROTH
Replies: 10
Views: 1049

Re: Increasing REIT holding in a ROTH

Scotthew asked about a study of REIT correlations and other sectors.

Google REITs: Making Property Accessible and see Exhibit 7 which presents a correlation matrix for the period Dec 31, 1992 to Aug 29, 2014.

(correlation with S&P 500 = .54 )

TJSI
by TJSI
Wed Mar 25, 2015 1:30 pm
Forum: Investing - Theory, News & General
Topic: U.S. cash pouring into international
Replies: 23
Views: 2583

Re: U.S. cash pouring into international

Or, for a slightly different view on the matter see "Torrent of Cash Exits the Eurozone" WSJ 3/22(I think). Seems more cash is leaving the Eurozone for safe investments at the same time cash is flowing into Europe's higher yielding investments. Smart money chasing yield on a large scale.
by TJSI
Mon Mar 23, 2015 11:05 pm
Forum: Investing - Theory, News & General
Topic: How important is an international allocation?
Replies: 66
Views: 5367

Re: How important is an international allocation?

Some interesting stats and comments relative to international investing in today's WSJ (3/23) Pg C1. Title of story: "Strong Dollar Slams Profits They provide a breakdown of foreign sales as a % of total sales by S&P Sector: IT 57% Energy 55% Materials 54% Health Care 51% S&P 500 46% In...
by TJSI
Sun Mar 01, 2015 10:45 pm
Forum: Investing - Theory, News & General
Topic: Dividends and Market Slides
Replies: 55
Views: 3827

Re: Dividends and Market Slides

Nisiprius, The Arnott & Asness paper shows that higher dividend payout in general means higher earnings growth (see Fig 2 of their paper). They were not talking about total return. And higher earnings in general should mean higher price appreciation. William Bernstein discusses why this is so. T...
by TJSI
Sun Mar 01, 2015 7:37 pm
Forum: Investing - Theory, News & General
Topic: Dividends and Market Slides
Replies: 55
Views: 3827

Re: Dividends and Market Slides

Nisiprius said: "The company that retains dividends grows faster. The company that pays dividends grows slower." Although this may have some intuitive appeal, the facts are otherwise. Suggest those interested read: Surprise! Higher Dividends = Higher Earnings Growth by Arnott & Asness ...
by TJSI
Thu Feb 26, 2015 8:00 pm
Forum: Investing - Theory, News & General
Topic: Capital gains and dividends real income ?
Replies: 12
Views: 826

Re: Capital gains and dividends real income ?

It is tax time. What income do you report to the IRS. That is your income.
by TJSI
Wed Feb 25, 2015 3:46 pm
Forum: Personal Consumer Issues
Topic: Should I shut off water in a vacant home in winter?
Replies: 15
Views: 1549

Re: Should I shut off water in a vacant home in winter?

Unfortunately, there is no free lunch in turning off the heat. As you have surmised there is a downside to leaving a home unheated. If you have a prolonged cold spell anything that uses glue may fail. Furniture may become loose and wallpaper may start to peal. In addition if there is heavy snowfall,...
by TJSI
Fri Jan 30, 2015 4:02 pm
Forum: Investing - Theory, News & General
Topic: Forecasting REIT dividends
Replies: 13
Views: 1415

Re: Forecasting REIT dividends

I question the correctness of backing out capital distributions from the dividend yield part of the Bogle Return Estimate formula. This term represents the rate at which shares are compounded. Since capital distributions would be used for the same purpose, there would be no reason to back them out o...
by TJSI
Tue Jan 27, 2015 9:00 pm
Forum: Investing - Theory, News & General
Topic: Chaos, complexity and entropy [for non-physicists]
Replies: 113
Views: 7781

Re: Chaos, complexity and entropy simplified

protagonist,

Thanks for the great article!

TJSI
by TJSI
Wed Jan 21, 2015 3:16 pm
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1484

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 11:17 am
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1484

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 12:38 am
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1484

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
Tue Jan 20, 2015 11:40 pm
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1484

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 10:42 pm
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1484

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
Sun Jan 11, 2015 10:56 pm
Forum: Investing - Theory, News & General
Topic: We miss Larry Swedroe
Replies: 28
Views: 7611

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
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: 12696

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
Mon Dec 08, 2014 1:30 am
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5501

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
Wed Nov 26, 2014 11:44 pm
Forum: Investing - Help with Personal Investments
Topic: Determining profit from a bond fund
Replies: 4
Views: 764

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 Oct 29, 2014 9:45 pm
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 5149

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 9:13 pm
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 5149

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 8:06 pm
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 5149

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 6:34 pm
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 5149

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 12:02 pm
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 5149

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 22, 2014 10:11 pm
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5501

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 2:51 pm
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5501

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 2:06 am
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5501

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
Tue Oct 21, 2014 10:44 pm
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5501

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 8:55 pm
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5501

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 8:17 pm
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 66
Views: 5501

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
Wed Oct 01, 2014 10:55 am
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 76
Views: 6439

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
Mon Jul 28, 2014 9:53 pm
Forum: Investing - Theory, News & General
Topic: DDM model predictions vs real returns
Replies: 6
Views: 639

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 21, 2014 8:57 pm
Forum: Investing - Theory, News & General
Topic: Value Overvalued
Replies: 23
Views: 2424

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
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: 2547

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 2:25 pm
Forum: Personal Consumer Issues
Topic: Credit card "payment networks"--how many are there, e.g Amex
Replies: 18
Views: 2547

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
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: 839

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
Mon Apr 14, 2014 4:32 pm
Forum: Personal Consumer Issues
Topic: Woodpeckers...I'm desperate!
Replies: 52
Views: 5473

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
Sun Apr 06, 2014 8:03 pm
Forum: Personal Finance (Not Investing)
Topic: How do I value my business?
Replies: 6
Views: 742

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
Sat Apr 05, 2014 10:32 am
Forum: Investing - Theory, News & General
Topic: Gordon equation-stock buybacks
Replies: 11
Views: 980

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
Fri Apr 04, 2014 10:22 pm
Forum: Investing - Theory, News & General
Topic: Gordon equation-stock buybacks
Replies: 11
Views: 980

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 10:38 am
Forum: Investing - Theory, News & General
Topic: Gordon equation-stock buybacks
Replies: 11
Views: 980

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 Mar 14, 2014 9:49 pm
Forum: Investing - Help with Personal Investments
Topic: Dividend stocks for current income in early retirement?
Replies: 38
Views: 4497

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 3:30 pm
Forum: Personal Consumer Issues
Topic: I don't want to upgrade XP just yet, is that ok?
Replies: 86
Views: 7512

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
Thu Mar 13, 2014 12:53 pm
Forum: Investing - Theory, News & General
Topic: How exactly do index funds compound?
Replies: 12
Views: 2269

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
Mon Mar 10, 2014 11:45 am
Forum: Investing - Theory, News & General
Topic: where did the dividend money go?
Replies: 8
Views: 1316

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
Sun Mar 09, 2014 4:35 pm
Forum: Investing - Theory, News & General
Topic: where did the dividend money go?
Replies: 8
Views: 1316

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
Sat Mar 08, 2014 11:55 am
Forum: Investing - Theory, News & General
Topic: Schwarzman Loves Dividends!
Replies: 34
Views: 2587

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...

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