Search found 325 matches

by TJSI
Wed Mar 21, 2018 11:26 am
Forum: Investing - Theory, News & General
Topic: Do "dividend dollars" maintain in a market downturn?
Replies: 13
Views: 1506

Re: Do "dividend dollars" maintain in a market downturn?

Dividends are more stable than earnings and price. Dividends can and have been cut in the past. But a market downturn by itself will not reduce dividends. It takes a significant economic downturn for a dividend reduction. In fact, the generally superior performance of dividend based funds is in part...
by TJSI
Sun Mar 18, 2018 3:06 pm
Forum: Personal Consumer Issues
Topic: Quiet vehicle for two cats
Replies: 15
Views: 1028

Re: Quiet vehicle for two cats

Just tell them they are not going to the Vet. They will relax and sleep the rest of the way.
by TJSI
Sat Mar 17, 2018 11:31 am
Forum: Investing - Theory, News & General
Topic: Gordon Equation Update???
Replies: 13
Views: 1140

Re: Gordon Equation Update???

The Gordon Equation is based on a specific set of assumptions. Mr Bogle's formulation does not assume or depend on those assumptions. The Gordon Equation is of no use for short term estimates of market return. The Bogle Equation is not based on the Gordon Equation. Without trying to speak for him, I...
by TJSI
Sat Mar 17, 2018 10:48 am
Forum: Investing - Theory, News & General
Topic: Gordon Equation Update???
Replies: 13
Views: 1140

Re: Gordon Equation Update???

The Bogle formulation is not based on the Gordon Equation. It does not depend on the assumptions made in the Gordon Equation. It includes the effect of valuation change which is very important in short term market returns.
by TJSI
Sat Mar 17, 2018 10:36 am
Forum: Investing - Theory, News & General
Topic: Gordon Equation Update???
Replies: 13
Views: 1140

Re: Gordon Equation Update???

It looks like the Gordon equation is not getting much love here. If you keep in mind the assumptions behind it, it might get more respect. It assumes a discounted cash flow valuation, constant dividend growth, and an infinite holding period. It is certainly of no use in predicting or analyzing short...
by TJSI
Wed Mar 14, 2018 6:36 pm
Forum: Investing - Theory, News & General
Topic: CAPE in the Context of Real Rates & Inflation, 1880-2018
Replies: 37
Views: 3328

Re: CAPE in the Context of Real Rates & Inflation, 1880-2018

In answer to gmaynarkrebs question, I believe the best candidate for high valuations are buybacks. They are buying pressure for sure and unless they illicit a negative reaction are going to increase price. Interest rates also play an important role. If interest rates continue to rise, bonds will aga...
by TJSI
Sat Mar 03, 2018 3:11 pm
Forum: Investing - Theory, News & General
Topic: Harvard blows $1Billion picking stocks, averaged 4.4% returns over last decade
Replies: 79
Views: 10197

Re: Harvard blows $1Billion picking stocks, averaged 4.4% returns over last decade

James Stewart in a recent NYT article discussed the under performance of endowments (College Endowments Opt for Alternatives, and Less Lucrative, Route https://www.nytimes.com/2018/02/22/business/college-endowments.html ). Avg Ten-Year Returns: Endowments 4.6% 60-40 Index Portfolio 5.3% 70- 30 Index...
by TJSI
Fri Feb 16, 2018 3:17 pm
Forum: Investing - Theory, News & General
Topic: philosophicaleconomics predicts 4% real equity returns
Replies: 152
Views: 10773

Re: philosophicaleconomics predicts 4% real equity returns

HomerJ,


Div yield and EPS have been fairly flat over the last five years. I suspect that buybacks have had a major impact only on valuations. If the music ever stops we could see a collapse of valuations.

TJSI
by TJSI
Mon Feb 12, 2018 5:14 pm
Forum: Investing - Help with Personal Investments
Topic: Is it stupid of me to comprise almost all of my portfolio with high dividend funds/etfs?
Replies: 17
Views: 1309

Re: Is it stupid of me to comprise almost all of my portfolio with high dividend funds/etfs?

andrew24p, You are doing ok with your fund selection as each of them has a good record of exceeding the market total return on a long term basis. However, you need to pay attention to the effect of taxes on your return. Try to estimate the effect on your marginal tax rate by investing in another div...
by TJSI
Fri Jan 05, 2018 8:25 pm
Forum: Investing - Theory, News & General
Topic: Evaluation principle for non-dividend paying stock
Replies: 5
Views: 350

Re: Evaluation principle for non-dividend paying stock

One good method is to calculate the "owners cash flow". That being the cash flow you could extract from the company if you were the owner. You also need to discount that hypothetical cash flow. It treats the company as if it were a private company where you the owner get to enjoy the excess cash flo...
by TJSI
Wed Jan 03, 2018 5:25 pm
Forum: Investing - Theory, News & General
Topic: Nice Explanation of Volatility Drag
Replies: 4
Views: 491

Re: Nice Explanation of Volatility Drag

I think it is an obsession!
by TJSI
Sat Dec 23, 2017 7:48 pm
Forum: Investing - Theory, News & General
Topic: One answer to the Dividend stocks puzzle from behavioral finance
Replies: 184
Views: 14040

Re: One answer to the Dividend stocks puzzle from behavioral finance

Thank you Patrick! That is one of the most interesting studies of the superior performance of dividend paying stocks. For the study period ( 12/99 to 9/17) the classic div aristocrats had a return of 10.1%, the high div-low vol had a return of 11.8% while the S&P had a return of 5.1%. And their retu...
by TJSI
Fri Dec 22, 2017 12:34 am
Forum: Investing - Theory, News & General
Topic: Geometric Average vs. Arithmetic Average
Replies: 92
Views: 5566

Re: Geometric Average vs. Arithmetic Average

Random Walker,

You are absolutely right--I am not accounting for rebalancing! That is your choice and you may have a rebalancing bonus or loss. There is no automatic drag from volatility. Any loss or gain is the result of an investment decision.

TJSI
by TJSI
Thu Dec 21, 2017 11:27 pm
Forum: Investing - Theory, News & General
Topic: Geometric Average vs. Arithmetic Average
Replies: 92
Views: 5566

Re: Geometric Average vs. Arithmetic Average

Well I will try again. The movement up, down, or sideways does not cause a gain or loss. It is only the decision to buy or sell at a particular time that results in a loss or gain. Now a sharp move in price may induce an investor to sell only to realize later that it was a mistake. But it was the in...
by TJSI
Thu Dec 21, 2017 10:30 pm
Forum: Investing - Theory, News & General
Topic: Geometric Average vs. Arithmetic Average
Replies: 92
Views: 5566

Re: Geometric Average vs. Arithmetic Average

Random Walker I see why you like this article as it repeats the incorrect notion that volatility causes a drag. Although I know it is close to hopeless, let me repeat: Volatility does not cause a loss-- it your investment decisions which might cause a loss. Why if you are a clever fellow, you can vo...
by TJSI
Mon Dec 18, 2017 7:41 pm
Forum: Investing - Theory, News & General
Topic: Diversification: Is there any way to produce the same returns with less risk?
Replies: 52
Views: 5528

Re: Diversification: Is there any way to produce the same returns with less risk?

Yes, if by risk you mean variance of return. You can invest in a low volatility fund or a consumer staples fund. Just be prepared to hold on for the long run and to suffer periods of underperformance.
by TJSI
Fri Dec 15, 2017 4:44 pm
Forum: Investing - Theory, News & General
Topic: Factor-Based Investing: The Long-Term Evidence - Dimson & Marsh
Replies: 97
Views: 6322

Re: Factor-Based Investing: The Long-Term Evidence - Dimson & Marsh

lack_ey Thank you for your response to my cryptic comment. This was an attempt at early morning humor--perhaps I needed more sleep. But when all is said and done are not factors just correlations about whch a very elaborate lanuage has developed? So no one says such and such a factor is correlated w...
by TJSI
Fri Dec 15, 2017 3:14 pm
Forum: Investing - Theory, News & General
Topic: Factor-Based Investing: The Long-Term Evidence - Dimson & Marsh
Replies: 97
Views: 6322

Re: Factor-Based Investing: The Long-Term Evidence - Dimson & Marsh

Aren't factors just correlations with lipstick applied?

TJSi
by TJSI
Mon Dec 11, 2017 9:40 pm
Forum: Investing - Help with Personal Investments
Topic: Does a tilt toward consumer staples make sense?
Replies: 15
Views: 1022

Re: Does a tilt toward consumer staples make sense?

Like one of several tilts, consumer staples has out-performed the market over very long periods. It quite often underperforms--like many tilts. A 2014 paper : Defense Wins Championships: The Defensive Sector Anomaly by PensionPartners reviews the performance of sectors from 10/89 through 6/14. This ...
by TJSI
Mon Nov 27, 2017 10:41 pm
Forum: Investing - Help with Personal Investments
Topic: Divs and Cap Gains are killing me
Replies: 123
Views: 13060

Re: Divs and Cap Gains are killing me

Losses hurt worse.

Try to arrange your investments to minimize taxes as best you can. Unfortunately, taxes are a fact of life.
by TJSI
Sun Nov 26, 2017 9:19 pm
Forum: Investing - Theory, News & General
Topic: Common Sense on Mutual Funds
Replies: 20
Views: 2341

Re: Common Sense on Mutual Funds

Mr. Whoopee I don't think diversification is synonymous with reducing risk. There are risks with international investments which are probably harder to understand and evaluate than US based investments. There are great international companies and countries with a long history of stability but just a...
by TJSI
Mon Nov 20, 2017 11:18 am
Forum: Investing - Theory, News & General
Topic: Is holding bonds now dangerous?
Replies: 162
Views: 20089

Re: Is holding bonds now dangerous?

One aspect of bond risk not commented upon is the liquidity risk. There has been discussion of this in the press including by El-Erian. it seems to difficult to judge. But apparently it does exist.

TJSI
by TJSI
Sat Nov 18, 2017 11:36 am
Forum: Investing - Help with Personal Investments
Topic: Confused about cash and retirement - isn't this really about market timing?
Replies: 38
Views: 3414

Re: Confused about cash and retirement - isn't this really about market timing?

cyclist, You have raised an interesting question but I think it would be better to frame it in terms of insurance rather than market timing. Does you need for having a sufficient cash reserve change with retirement? For most individuals the answer is going to be yes. Retirement is a significant even...
by TJSI
Thu Nov 09, 2017 11:13 pm
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

avalpert, Todd said this is the yield of holding stockholders. They receive nothing directly. Anything value they receive is the result of a correct investment by management. The cash spent goes to selling shareholders. You can't use the cash outlays to compute the return (yield) of holding stockhol...
by TJSI
Thu Nov 09, 2017 11:00 pm
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

avalpert, Let me explain it this way: If a company in which I owned stock announced they were doing a buyback, I would like it to be for my benefit and give me a positive yield on the money spent. That is the correct meaning for a stockholder of a buyback yield. Just calculating the percent of money...
by TJSI
Thu Nov 09, 2017 10:08 pm
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

avalpert asked: "Do you also think we should adjust dividend yields for the people who reinvest their dividends in stock when the price is more than 'intrinsic value'?" The answer is yes. Buying a stock (or any investment) at the wrong price is the wrong decision. I don't think people who have been ...
by TJSI
Thu Nov 09, 2017 7:40 pm
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

Todd said: "What other netting is at issue?" Holding stockholders receive no cash. For holding stockholders, the buyback price must be less than the intrinsic value of the stock which some attempt should be made at netting out of the return calculation. If the company is overpaying for the stock, ho...
by TJSI
Thu Nov 09, 2017 5:55 pm
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

Todd, What I am trying to do is clarify the meaning of your equation. And the first thing to clarify is the question of what you mean by stockholders? Is it the selling stockholders, the non-selling stockholders, or perhaps all stockholders? I gather from your comments that the item in your equation...
by TJSI
Thu Nov 09, 2017 4:26 pm
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

Todd, When companies do a buyback they are taking something of value from stockholders. It is not a gift of cash. The value of a stock may be difficult to calculate but it does have some tangible value. Avalpert, I believe, thinks the number in your equation is a net number. I don't think so. I beli...
by TJSI
Thu Nov 09, 2017 4:04 pm
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

Todd,

Let me be more specific: Is there a value of the stocks purchased netted out from the purchase price?

Or is this number just the price paid for the stocks bought in the buyback?

TJSI
by TJSI
Thu Nov 09, 2017 3:31 pm
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

avalpert said: "Subtract it from what? The (net) value of stock purchased from stockholders is the numerator" If that is what the formula uses, then we have a useful metric. However, I don't believe that is what is being calculated. Perhaps the OP can explain exactly what the numerator is and whethe...
by TJSI
Thu Nov 09, 2017 11:41 am
Forum: Investing - Theory, News & General
Topic: Has “Dividend Yield” Become Globally Obsolete?
Replies: 35
Views: 2635

Re: Has “Dividend Yield” Become Globally Obsolete?

When you compute "buyback Yield", why don't you subtract the value of the stock purchased from stockholders?
by TJSI
Mon Nov 06, 2017 8:37 am
Forum: Investing - Help with Personal Investments
Topic: Should one use REITs
Replies: 48
Views: 6200

Re: Should one use REITs

One respected investor advisor, Rick Ferri, has recommended REITs in the past. He favors them because they provide some correlation protection to a portfolio. Rick's investment advice is pretty solid and he includes REITs in his "core four" portfolio. (Eight percent I believe.)
by TJSI
Thu Nov 02, 2017 11:05 pm
Forum: Investing - Help with Personal Investments
Topic: How consistent will VNQ dividend be?
Replies: 66
Views: 5227

Re: How consistent will VNQ dividend be?

nisiprius said: " whatever is paid out in dividends, for whatever reason, is not retained by the company to produce growth" The paying of dividends by REITs does not constrain growth. They are a unique investment class that is required to payout 90% of retained earnings in dividends. Their growth is...
by TJSI
Tue Oct 17, 2017 2:47 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 19290

Re: Dividends vs. Capital Gains for Spending Needs?

" In considering stock returns, then, what is most important to the truly long-term investor is corporate dividends--their yield when they are purchased and their subsequent growth." John Bogle, Bogle On Mutual Funds, 1994 edition pg 13. He did qualify the book as he said is was for the intelligent ...
by TJSI
Wed Oct 11, 2017 1:28 pm
Forum: Investing - Theory, News & General
Topic: The Stock Market Is "Fully Valued," Says Vanguard's Jack Bogle 10/7/17
Replies: 87
Views: 13385

Re: The Stock Market Is "Fully Valued," Says Vanguard's Jack Bogle 10/7/17

One thing for sure, that 90 year old man has accumulated a lot of knowledge and wisdom. And I think it is great that he is so willing to share it.

TJSI
by TJSI
Thu Oct 05, 2017 1:02 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 19290

Re: Dividends vs. Capital Gains for Spending Needs?

Taxes are very important and every investor should be aware of their effect on return.

Assumptions are also important in any analysis. So the reader of this paper should make note of the statement "assuming the total return of the two options is equal" and judge for themselves.

TJSI
by TJSI
Wed Sep 27, 2017 8:07 pm
Forum: Personal Finance (Not Investing)
Topic: Merchant Dispute/Chargeback, now sent to collection agency
Replies: 11
Views: 1502

Re: Merchant Dispute/Chargeback, now sent to collection agency

Abonder, It may not help much but it certainly won't hurt to include the statement from your card company. And if the collection company starts to make threats record as much information as possible. Acknowledge in writing the threat and copy the state attorney general. Hopefully none of this happen...
by TJSI
Wed Sep 27, 2017 4:01 pm
Forum: Personal Finance (Not Investing)
Topic: Merchant Dispute/Chargeback, now sent to collection agency
Replies: 11
Views: 1502

Re: Merchant Dispute/Chargeback, now sent to collection agency

Abonder, Your vendor is in violation of their merchant agreement. You should absolutely contact your credit card issuer and inform them that they are trying to collect from you despite having lost their case with the credit card company. Put everything in writing. If for some reason your card compan...
by TJSI
Sun Sep 24, 2017 6:35 am
Forum: Investing - Help with Personal Investments
Topic: Are all investments compound interest?
Replies: 50
Views: 3372

Re: Are all investments compound interest?

Not all investments compound. However you can always compute an equivalent compound rate. This causes a lot of confusion. It is useful to compute a compound rate to compare investments. But the fact that you can compute it does not make the underlying investment compound.

TJSI
by TJSI
Mon Jul 31, 2017 3:46 pm
Forum: Investing - Theory, News & General
Topic: Living Off Dividends
Replies: 285
Views: 25699

Re: Living Off Dividends

Generally, corporations are not valued by cash on hand. It is the ability to generate revenue, earnings, and cash that gives a corporation value. Only if the divided payment impairs this ability does it reduce value . If a corporation makes the correct capital budget decisions, dividends don't reduc...
by TJSI
Mon Jul 31, 2017 9:09 am
Forum: Investing - Theory, News & General
Topic: Living Off Dividends
Replies: 285
Views: 25699

Re: Living Off Dividends

nedsaid,

When I read that Larry had convinced you that factors were the underlying cause of returns, the movie Invasion Of The Body Snatchers came to mind.
And I thought: By God they got him.

I guess there is no hope--we are all doomed.

TJSI
by TJSI
Tue Jul 25, 2017 5:10 pm
Forum: Investing - Theory, News & General
Topic: S&P 500 Dividend + Buyback Yield
Replies: 14
Views: 1796

Re: S&P 500 Dividend + Buyback Yield

rmelvey, Thank you for your reply. You are correct with one provision. Absent any other effect, a buyback by reducing the number of shares will increase the div per share and also the earnings per share. Certainly this is a good thing. But it is more complicated than just the immediate effect of red...
by TJSI
Tue Jul 25, 2017 2:24 pm
Forum: Investing - Theory, News & General
Topic: S&P 500 Dividend + Buyback Yield
Replies: 14
Views: 1796

Re: S&P 500 Dividend + Buyback Yield

rmelvey,

A basic question:

Which stockholders are getting the 4.5% yield?

Those who sold or those who held onto their shares? Or perhaps it is the average shareholder that sells a fraction of their shares?

TJSI
by TJSI
Thu Jul 06, 2017 5:12 pm
Forum: Investing - Help with Personal Investments
Topic: Accounting for Dividends in Safe Withdrawal Rate
Replies: 42
Views: 3173

Re: Accounting for Dividends in Safe Withdrawal Rate

FractualFan wrote: "Those who use dividends for income (take dividends in cash, rather than reinvesting the dividend in shares) lose both the future dividends from the shares that would have been acquired by reinvesting and potential capital gains from those shares." You are correct! If you have the...
by TJSI
Wed Jul 05, 2017 9:15 pm
Forum: Investing - Help with Personal Investments
Topic: Accounting for Dividends in Safe Withdrawal Rate
Replies: 42
Views: 3173

Re: Accounting for Dividends in Safe Withdrawal Rate

Warning: Although it is repeated often on this blog, it is incorrect to say that using dividend for income is the same as selling shares. When you sell shares you lose both future dividends from those shares and potential capital gains from the shares. When you use dividends for income, you only los...
by TJSI
Fri Jun 16, 2017 6:39 am
Forum: Investing - Theory, News & General
Topic: Is it safer to invest in gold or bond funds?
Replies: 30
Views: 2742

Re: Is it safer to invest in gold or bond funds?

TomCat96 wrote:


"When things get bad, you want to be in bonds.
When things get really bad, you want to be in gold.
When things get really really bad, you want to be in seeds."

An award winning summation!

TJSI
by TJSI
Mon Jun 05, 2017 3:47 pm
Forum: Investing - Theory, News & General
Topic: Do you think about volatility drag on your portfolio?
Replies: 211
Views: 17593

Re: Do you think about volatility drag on your portfolio?

Random Walker, The example you give is correct but there may be a wrong implication. As you explain, when you add a volatile asset to a portfolio the expected return is just the weighted sum of the assets' returns. The volatility did not reduce the return. There was no drag on return. The volatility...
by TJSI
Wed May 31, 2017 5:22 pm
Forum: Investing - Theory, News & General
Topic: Do you think about volatility drag on your portfolio?
Replies: 211
Views: 17593

Re: Do you think about volatility drag on your portfolio?

Dave, Yes, I am familiar with the formula showing the appox relationship between arith return and geo return. All it means is that if you use a different algorithm to compute return you get a different number. It does not mean there was a loss of money. If you computed the return using continuous co...