Search found 201 matches

by kmok
Mon Nov 14, 2016 2:38 pm
Forum: Investing - Theory, News & General
Topic: Real Total Return (Larry Swedroe Question)
Replies: 56
Views: 4967

Re: Real Total Return (Larry Swedroe Question)

Question about inflation in earnings. So how can corporations keep up with inflation? Don't most corporations have long contracts and other legal stuff where they can't just raise prices and pass the cost on to the consumer? How do they beat inflation? If you are going to sign a long term contract ...
by kmok
Sat Nov 05, 2016 2:06 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

Yea but a stock dividend does the same exact thing. There is an increased amount of shares outstanding and value of shares drops proportionally. So what I'm asking is how does a company decide on stock split vs stock dividend? Whats the difference? From an economic viewpoint, a stock split is nothi...
by kmok
Fri Nov 04, 2016 12:44 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

So imagine that earnings remain the same as last time and the market doesn't anticipate any increase in earnings, everything else being equal, the stock stays at $9. No it doesn't, as the earnings accumulate they replace the cash that was given out in a dividend increasing the value of the shares t...
by kmok
Thu Nov 03, 2016 10:39 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

GuitarXM, I will disagree with the others and I believe you are basically correct. Here is why: Consider a stock that is worth $10 per share. It pays out a $1 dividend and is now worth $9. If everything stays the same, it would be worth $9 three months later and when it paid out $1, it would now be...
by kmok
Thu Nov 03, 2016 9:23 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

Yes, the cash comes from Retained Earnings and technically the stock isn't worth less because the value of the stock is determined by future cash flow. Since a quarter later another dividend is expected the value of the company doesn't change. All of the price changes prior to ex-dividend date depe...
by kmok
Thu Nov 03, 2016 9:16 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

GuitarXM wrote:How do you explain the fact that the price increases before the ex-dividend date?

This is not true as several of us have been explaining.
by kmok
Thu Nov 03, 2016 9:15 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

All of the sources I'm reading must be wrong then. Why would a company distribute dividends then? It creates a tax liability, so why would I want a dividend if not only I don't gain any money from it but I have to pay taxes on it? It doesn't make any sense. A value company may have excessive cash a...
by kmok
Thu Nov 03, 2016 7:16 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

Because the stock is trading at a premium to account for the dividend that's about to be paid out. It's technically not before Declaration but I understand what you are asking. That's what I said earlier. If the stock is trading at say $10 and its about to pay $1 dividend its worth a total of $11. ...
by kmok
Thu Nov 03, 2016 4:52 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

I agree that stock splits and stock dividends don't increase your net worth but according to some of the sources cash dividends do. What happens, is that before the ex-dividend date, the stock price increases roughly by the dividend amount. So even though, the stock price is reduced by the dividend...
by kmok
Thu Nov 03, 2016 12:22 pm
Forum: Investing - Theory, News & General
Topic: Cash Dividend Vs Stock Dividend Vs Stock Split
Replies: 153
Views: 6507

Re: Cash Dividend Vs Stock Dividend Vs Stock Split

I have been doing some research online on this issue it can get confusing. So it appears that Cash Dividends increase your net worth through stock price appreciation while stock dividends and stock splits do not. Am I missing something? None of those increase your net worth. Cash dividends distribu...
by kmok
Wed Nov 02, 2016 12:32 am
Forum: Investing - Theory, News & General
Topic: Stocks and Inflation
Replies: 27
Views: 1886

Re: Stocks and Inflation

So does it make sense to say that if the average P/E ratio is 15 aka Earning Yield=6.67% REAL average stock return. Yes. Earnings yield is the inverse of P/E ratio Earning Yield consists of average REAL 4.5% dividend + 2% average REAL earnings growth? No. EarnIngs yield is just a ratio. It does not...
by kmok
Tue Nov 01, 2016 6:30 pm
Forum: Investing - Theory, News & General
Topic: Stocks and Inflation
Replies: 27
Views: 1886

Re: Stocks and Inflation

GuitarXM wrote:Bogle shows average nominal earnings growth at 5% for the last hundred years.
So this would mean that inflation does in fact take 3% out of earnings?

That sounds about right.
by kmok
Tue Nov 01, 2016 5:40 pm
Forum: Investing - Theory, News & General
Topic: Stocks and Inflation
Replies: 27
Views: 1886

Re: Stocks and Inflation

The only issue is that the Gordon equation account for dividends. What if the stock doesn't have a dividend, then you would have to look at earnings growth to see what inflation does. Still, if you look at S&P from 1871 to 2016, real earnings annual growth is just slightly less than 1.8%. So if...
by kmok
Tue Nov 01, 2016 5:04 pm
Forum: Investing - Theory, News & General
Topic: Stocks and Inflation
Replies: 27
Views: 1886

Re: Stocks and Inflation

Don't the companies raise their prices to keep up with inflation, because if they do that would mean that earnings growth doesn't get hit by inflation? If you want to get the real investment return from the Gordon equation you need to plug g with the real growth. If you want to get the nominal inve...
by kmok
Tue Nov 01, 2016 2:27 pm
Forum: Investing - Theory, News & General
Topic: Stocks and Inflation
Replies: 27
Views: 1886

Re: Stocks and Inflation

Real returns over the long-term have been 6.67% as implied by the average P/E ratio of 15. The NOMINAL total return has been 9.6% (5% earnings growth + 4.5% dividends). My question is what figure of the Nominal Return is affected by inflation? I have been reading that stocks are not affected long t...
by kmok
Sat Oct 29, 2016 11:11 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Total Stock Return Chart
Replies: 23
Views: 3376

Re: Bogle's Total Stock Return Chart

Why would the earnings shrink? The company didn't distribute more than it earned? Everything being equal if the Company need the 2.17% retained earnings to keep earnings from shrinking, why would earning not go down if the Company does not have the 2.17%? Theoretically speaking the 2.17% invested s...
by kmok
Sat Oct 29, 2016 9:44 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Total Stock Return Chart
Replies: 23
Views: 3376

Re: Bogle's Total Stock Return Chart

Why would the earnings shrink? The company didn't distribute more than it earned? Everything being equal if the Company need the 2.17% retained earnings to keep earnings from shrinking, why would earning not go down if the Company does not have the 2.17%? Theoretically speaking the 2.17% invested s...
by kmok
Sat Oct 29, 2016 9:19 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Total Stock Return Chart
Replies: 23
Views: 3376

Re: Bogle's Total Stock Return Chart

So if the average P/E ratio is 15. I am trying to understand what the earnings yield of 6.67% means and how it relates to bogle total stock return chart that I listed above. There is no 6.67% in the chart. It only shows 5% growth and 4.5% dividend yield for a total of 9.6 which I don't understand h...
by kmok
Fri Oct 28, 2016 8:13 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Total Stock Return Chart
Replies: 23
Views: 3376

Re: Bogle's Total Stock Return Chart

The 5% is the growth in earnings. That is the total return correct? I understand that dividends and earnings can grow together to eventually reach 9.5% So say in one year the earnings grew 5%. Some of that earning is distributed as a dividend which Bogle shows is 4.5%. That means the remaining 0.5%...
by kmok
Fri Oct 28, 2016 7:48 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Total Stock Return Chart
Replies: 23
Views: 3376

Re: Bogle's Total Stock Return Chart

Here is a link to total stock returns chart: https://hurricanecapital.files.wordpress.com/2016/04/bogle_4.png So if the total average return is 5%, wouldn't the price increase at the rate of 5% vs 9.6% as the way its shown? I don't understand why he adds the dividend + earnings. Isn't this double c...
by kmok
Fri Oct 28, 2016 3:23 pm
Forum: Investing - Theory, News & General
Topic: Future technology and future inflation
Replies: 9
Views: 900

Re: Future technology and future inflation

The problem with the ever increasing pace of technological advances is that: 1) It creates a few very high paying jobs for highly skilled workers, those with high levels of education and/or technical training who design, manufacture and market these labor saving devices. 2) It destroys many jobs fo...
by kmok
Fri Oct 28, 2016 1:01 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Total Stock Return Chart
Replies: 23
Views: 3376

Re: Bogle's Total Stock Return Chart

Here is a link to total stock returns chart: https://hurricanecapital.files.wordpress.com/2016/04/bogle_4.png So if the total average return is 5%, wouldn't the price increase at the rate of 5% vs 9.6% as the way its shown? I don't understand why he adds the dividend + earnings. Isn't this double c...
by kmok
Fri Oct 28, 2016 12:28 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Total Stock Return Chart
Replies: 23
Views: 3376

Re: Bogle's Total Stock Return Chart

Dividends are subtracted from corporate income as a business cost before earnings are calculated. Therefore dividends paid out to shareholders have an accounting effect of reducing GAAP earningsGarland Whizzer Incorrect. Dividends have no impact on current year GAAP earnings, period. Dividends does...
by kmok
Thu Oct 13, 2016 8:58 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Speculation Component
Replies: 20
Views: 1608

Re: Bogle's Speculation Component

So looking at the past 100 years, the average P/E ratio of stocks as a whole is around 15. Obviously some sectors are higher and some are lower, but on average its 15. So if price follows earnings then it would grow with earnings in the long term. But then there is a speculative component which rep...
by kmok
Wed Oct 12, 2016 7:47 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Speculation Component
Replies: 20
Views: 1608

Re: Bogle's Speculation Component

I just want to understand the reason that speculative profits and losses are almost equal in the size of their long-term movements? Like, why is one 10 year period around +10%/annual and the next decade is -10%/annual. Why isn't it say +20% one decade and -10% the next decade due to the fact that i...
by kmok
Wed Oct 12, 2016 5:30 pm
Forum: Investing - Theory, News & General
Topic: Sustainable payout ratio
Replies: 4
Views: 682

Re: Sustainable payout ratio

Hi, A few weeks ago I posted a question regarding the dividend yield in a thought steady-state where corporate earnings are assumed to compose a fixed portion of GDP here . My question now is similar, but this time relates to the payout ratio.... More precisely, is it possible to say anything about...
by kmok
Wed Oct 12, 2016 4:12 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Speculation Component
Replies: 20
Views: 1608

Re: Bogle's Speculation Component

It increase at 0.1% annual rate for the period studied above. I'm not sure I understand the question. It moves up and down but at the end almost cancels out to just 0.1%/year Beginning value * (1 + return % ) ^ years - 1= return % =1*(1+0.001)^100-1=~0.11 So 0.1% speculative return means P/E increa...
by kmok
Wed Oct 12, 2016 3:30 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Speculation Component
Replies: 20
Views: 1608

Re: Bogle's Speculation Component

Its very volatile. As you can see on the chart above, some years have speculative annual return of almost 10% a year for a decade but some have almost -10% so it cancels out. What I'm trying to understand is, why it cancels out almost perfectly? lol I am not sure whether that is arithmetic average ...
by kmok
Wed Oct 12, 2016 3:20 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Speculation Component
Replies: 20
Views: 1608

Re: Bogle's Speculation Component

You might be referring to Chapter 2 of Common Sense on Mutual Funds. It was based on a specific 2 decades, which P/E flucuate from 15.9% to 15.5%, thus reducing return by just 0.1% annually. The 0.1% can be much higher when P/E change much more drastically. However, the longer you look, the less an...
by kmok
Wed Oct 12, 2016 3:06 pm
Forum: Investing - Theory, News & General
Topic: Bogle's Speculation Component
Replies: 20
Views: 1608

Re: Bogle's Speculation Component

You might be referring to Chapter 2 of Common Sense on Mutual Funds. It was based on a specific 2 decades, which P/E flucuate from 15.9% to 15.5%, thus reducing return by just 0.1% annually. The 0.1% can be much higher when P/E change much more drastically. However, the longer you look, the less and...
by kmok
Thu Oct 06, 2016 4:06 pm
Forum: Investing - Theory, News & General
Topic: taxable account tax drag
Replies: 9
Views: 1026

Re: taxable account tax drag

Can someone help me understand tax drag on a taxable account? From what I have read, because you have to pay taxes when using a taxable account, the growth of your money is slower than that in a tax-sheltered accounts. I'm trying to determine how that works out though. Let's say you have $10,000 in...
by kmok
Tue Sep 20, 2016 11:24 am
Forum: Investing - Help with Personal Investments
Topic: Asset Spread When Only Utilizing Tax-Advantaged Space
Replies: 2
Views: 224

Re: Asset Spread When Only Utilizing Tax-Advantaged Space

The question depends on whether you tax adjust, if yes how do you tax adjust. If you don't, then Lou354 is correct. Low return investments in traditional. The caveat is that although you will get higher overall expected return if you put low return investment in traditional, you are actually fooling...
by kmok
Thu Aug 18, 2016 6:24 pm
Forum: Investing - Theory, News & General
Topic: Inflating Income Statement through Surplus Account
Replies: 7
Views: 710

Re: Inflating Income Statement through Surplus Account

The terminology of accounting has evolved as well. Capital surplus is equivalent to additional paid in capital. Surplus at times can mean net income or retained earnings. When surplus is excluded from the income statement, it would be equivalent to other comprehensive income.
by kmok
Thu Aug 18, 2016 4:10 pm
Forum: Investing - Theory, News & General
Topic: Inflating Income Statement through Surplus Account
Replies: 7
Views: 710

Re: Inflating Income Statement through Surplus Account

The contra account would be inventory reserve, which is part of inventory in the balance sheet. The point is each financial transaction has equal and opposite effects in at least two different accounts. So the question is what is the other account that it hits. In this case, it would be an income st...
by kmok
Thu Aug 18, 2016 12:59 pm
Forum: Investing - Theory, News & General
Topic: Inflating Income Statement through Surplus Account
Replies: 7
Views: 710

Re: Inflating Income Statement through Surplus Account

Accounting has evolved. Not sure the accounting rule back then. Currently under US GAAP, you cannot write down inventory and charge directly to other comprehensive income without hitting the income statement. In IFRS, there are certain type of revaluation that you can hit other comprehensive income ...
by kmok
Thu Aug 18, 2016 1:20 am
Forum: Investing - Theory, News & General
Topic: Inflating Income Statement through Surplus Account
Replies: 7
Views: 710

Re: Inflating Income Statement through Surplus Account

Writing down inventory does hit the income statement. However it hit the current period income statement, or the period that the inventory are being written down. It can potentially inflate future period income statement (if the inventory write down is not justified). In accounting, every financial ...
by kmok
Tue Aug 09, 2016 5:38 pm
Forum: Investing - Theory, News & General
Topic: Return On Investment using XIRR formula in Excel
Replies: 5
Views: 533

Re: Return On Investment using XIRR formula in Excel

Let's put it this way, if you can get 24.97% return annually and you put in $10,000 and don't withdraw until 32 years later, you should be able to pull out $12.5M by the time you withdraw. How much additional return % would be added if you get an add $200K and can withdraw $12.7M instead of $12.5M? ...
by kmok
Wed Aug 03, 2016 2:36 pm
Forum: Investing - Help with Personal Investments
Topic: Help: Calculating overall % gains
Replies: 10
Views: 547

Re: Help: Calculating overall % gains

% gain is not meaningful unless it consist of a time period, such as an annualized return %. For example, 5% monthly return is totally different from 5% annual return. You can used an excel function XIRR to calculate the annualized return %, but you will need to include the time and amount for each ...
by kmok
Wed Jun 29, 2016 6:11 pm
Forum: Personal Finance (Not Investing)
Topic: Rent Vs. Buy Example
Replies: 37
Views: 3210

Re: Rent Vs. Buy Example

Look at the dilemma from another viewpoint. Those here who are Landlords are not in the charity business! What you are implying here. Yes, landlords are not in the charity business. The stocks that people invested in are also not non-profit business. There is a basic concept in economics call oppor...
by kmok
Mon Jun 20, 2016 6:53 pm
Forum: Investing - Help with Personal Investments
Topic: Contributing After-Tax Income to Rollover IRA
Replies: 2
Views: 382

Re: Contributing After-Tax Income to Rollover IRA

I won't say I am an expert, but unless you know what you are doing, otherwise it is usually or even almost always a bad idea to make after-tax contribution to a traditional IRA account. Now my question is are you covered by a retirment plan at work (most commonly 401K)? Also, how do you know you mad...
by kmok
Thu Jun 02, 2016 1:23 pm
Forum: Investing - Theory, News & General
Topic: Dividends Useless?
Replies: 154
Views: 8454

Re: Dividends Useless?

What you said is basically true. Your true potential gains will be based on the company's true earnings (not dividends, though the amount distributed through dividends will definitely be influenced by the earnings) which would lead to higher stock price. Obviously, there is a lot more that can influ...
by kmok
Thu May 26, 2016 2:00 pm
Forum: Investing - Theory, News & General
Topic: S&P 500 Growth Rate?
Replies: 5
Views: 774

Re: S&P 500 Growth Rate?

You should look at it net of inflation. Long term real earning growth should be somewhere between 1.5% to 2.5%, depends on the the time period you looked at.
by kmok
Tue Nov 17, 2015 4:01 pm
Forum: Investing - Theory, News & General
Topic: [How much does "Book Value" count in company valuation?]
Replies: 31
Views: 2904

Re: BOOK VALUE

In general (there are exceptions), most of the asset and liability line items are somewhat accurate except fixed assets and intangible assets, and goodwill. What about companies whose reserves in the ground (commodities) were valued using point in time market prices, following publication of balanc...
by kmok
Tue Nov 17, 2015 1:29 pm
Forum: Investing - Theory, News & General
Topic: [How much does "Book Value" count in company valuation?]
Replies: 31
Views: 2904

Re: BOOK VALUE

In general (there are exceptions), most of the asset and liability line items are somewhat accurate except fixed assets and intangible assets, and goodwill.
by kmok
Tue Jun 02, 2015 11:31 am
Forum: Investing - Theory, News & General
Topic: Global Market is the optimal portfolio. Do you follow that rule?
Replies: 43
Views: 4067

Re: Global Market is the optimal portfolio. Do you follow that rule?

It is reasonable to be a bit biased toward your own market. For example, if you live in US, you would want more US market relatively to the global market. Here are a few reasons: 1. You live in the US. You spend USD. The S&P 500 might be your benchmark, thus domestic equity might offer lower tra...
by kmok
Thu Feb 19, 2015 12:06 am
Forum: Investing - Theory, News & General
Topic: Easy Money
Replies: 18
Views: 2315

Re: Easy Money

Devil's Advocate wrote:So since inflation is essentially non existent why do we all complain about the low interest rate environment?


Correct me if I am wrong, when looking at the long term history, we are currently in a very low real interest rate environment.
by kmok
Sun Feb 15, 2015 3:37 pm
Forum: Personal Finance (Not Investing)
Topic: Savings Rate Methodology
Replies: 22
Views: 2506

Re: Savings Rate Methodology

Gross is much more common. So if you are comparing others or recommendation from books or blogs, then use gross. However, for your personal purposes, you can choose to use net. If you have already done your best to minimize taxes, then you can use net to see how you are doing over time, especially i...
by kmok
Sat Jan 31, 2015 3:16 pm
Forum: Personal Finance (Not Investing)
Topic: Effects of early retirement on Social Security benefits?
Replies: 8
Views: 1190

Re: Effects of early retirement on Social Security benefits?

Social Security benefit is calculating based on the 35 years of earnings. For example, if you only work for 20 years, Social Security will put $0 income on the remaining 15 years, which would significantly lower the Average Indexed Monthly Earnings (AIME). AIME is used to calculate your benefit. How...
by kmok
Thu Jan 29, 2015 9:36 pm
Forum: Personal Finance (Not Investing)
Topic: Stop 401K To Save More Cash
Replies: 5
Views: 872

Re: Stop 401K To Save More Cash

Without providing more details it is hard to provide recommendation. For example, your annual spending, amount of emergency fund, portfolio, income, tax rate, and etc.
by kmok
Thu Jan 29, 2015 9:29 pm
Forum: Investing - Theory, News & General
Topic: Wiki comments requested: The importance of asset allocation
Replies: 208
Views: 14318

Re: Wiki comments requested: The importance of asset allocat

Maybe these quotes should be considered: "in the late nineteen eighties, Gary Brinson, a noted money manager and financial analyst and his colleagues published two sophisticated statistical studies of eighty two large pension funds, but concluded that asset allocation accounted for over ninety ...

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