Search found 792 matches
- Sat Mar 16, 2024 3:14 pm
- Forum: Investing - Theory, News & General
- Topic: What is the appeal of Robinhood
- Replies: 85
- Views: 5929
Re: What is the appeal of Robinhood
I equate Robinhood to a used car lot with lots of balloons, shiny streamers, and the ever so ubiquitous floppy inflatable tube men. It attracts a certain demographic.
- Tue Mar 05, 2024 11:23 am
- Forum: Investing - Theory, News & General
- Topic: Vanguard Announces CEO Retirement and Appointment of President
- Replies: 371
- Views: 34767
Re: Vanguard Announces CEO Retirement and Appointment of President
So where does Vanguard's Private Equity offering fit in? Seems to be larded up with layers of fees.
Wonder how pitching that idea to Jack Bogle would have gone over?
- Sun Mar 03, 2024 3:11 pm
- Forum: Investing - Theory, News & General
- Topic: Vanguard Announces CEO Retirement and Appointment of President
- Replies: 371
- Views: 34767
Re: Vanguard Announces CEO Retirement and Appointment of President
You think the directors are reading these comments? Afterall, the WSJ is quoting members from this forum.billaster wrote: ↑Sun Mar 03, 2024 1:10 pm You can see the list of trustees for each fund in the fund's annual report. The trustees are independent of the fund managers. The trustees have a fiduciary duty to the fund investors. The trustees hire the managers.
You can see the board of directors of the Vanguard here:
https://corporate.vanguard.com/content/ ... 32b2b9-tab
The trustees for each fund vote on the members of the board of directors. The board of directors is responsible for hiring the CEO and other managers.
- Sun Mar 03, 2024 9:12 am
- Forum: Investing - Theory, News & General
- Topic: Vanguard Announces CEO Retirement and Appointment of President
- Replies: 371
- Views: 34767
Re: Vanguard Announces CEO Retirement and Appointment of President
The ability to direct dividends and capital gains from separate accounts doesn't exist to the same degree as the mutual fund platform which is important in my situation. Even my Vanguard rep has encouraged me to remain with the legacy mutual fund platform. It's a step backwards in service.
What message is Vanguard sending when the rank and file employees aren't fully onboard with the switchover?
I suppose the position of upper management is that a certain amount of angst with customers is acceptable. Can't please everyone all the time.
- Fri Mar 01, 2024 8:21 am
- Forum: Investing - Theory, News & General
- Topic: Vanguard Announces CEO Retirement and Appointment of President
- Replies: 371
- Views: 34767
Re: Vanguard Announces CEO Retirement and Appointment of President
The WSJ article was co-authored by Jason Zweig and on front page of business section, so tapping into frustrations of BHs isn't surprising. It would be nice if he devoted a column to how Vanguard has strayed and what kind of improvements the masses want.
I too hope the nautical theme is resurrected.
I too hope the nautical theme is resurrected.
- Thu Feb 15, 2024 8:52 am
- Forum: Investing - Theory, News & General
- Topic: Any studies to refute dividend yield & chill?
- Replies: 161
- Views: 12104
- Sun Feb 11, 2024 8:17 am
- Forum: Investing - Theory, News & General
- Topic: Meta becomes a dividend payer.
- Replies: 43
- Views: 5034
Re: Meta becomes a dividend payer.
vs
Sums up the debate on BHs nicely.gtrplayer wrote: ↑Sat Feb 10, 2024 10:26 pmIf markets are efficient, companies never have to pay a dividend. They could hold the excess money and shareholders could sell stock if they need income. The funds in their bank account are accounted for in the stock price - this is proven by the stock price dropping when the dividend is paid. Dividends force the company to give away the money and force shareholders to pay taxes on it. Companies no longer have the money if an investment opportunity comes up, and shareholders have less money because they were taxed on it.
- Sat Feb 10, 2024 2:38 pm
- Forum: Investing - Theory, News & General
- Topic: Ashwath Damodaran on the S&P 500
- Replies: 15
- Views: 3520
Re: Ashwath Damodaran on the S&P 500
I enjoy the video too. Thanks for posting.
Also fun (and instructive) to sift through intrinsic value spreadsheets he link to in the video. Warren Buffet always talks about intrinsic value. I wonder if the framework Professor Damodaran uses is similar to Buffet's method?
Also fun (and instructive) to sift through intrinsic value spreadsheets he link to in the video. Warren Buffet always talks about intrinsic value. I wonder if the framework Professor Damodaran uses is similar to Buffet's method?
- Fri Feb 09, 2024 4:22 pm
- Forum: Investing - Theory, News & General
- Topic: Meta becomes a dividend payer.
- Replies: 43
- Views: 5034
- Fri Feb 09, 2024 1:21 pm
- Forum: Investing - Theory, News & General
- Topic: Meta becomes a dividend payer.
- Replies: 43
- Views: 5034
Re: Meta becomes a dividend payer.
Care to elaborate with real world examples?TimeIsYourFriend wrote: ↑Fri Feb 09, 2024 8:31 amI don't think it is a good idea to concentrate your entire portfolio only in dividend payers as that introduces potential risk during certain economic regimes as the high dividend payers tend to be in certain industries by a lopsided amount compared to the market.
Economic regimes? Gus Sauter (you know who he is, right?) said, "There is no correlation between a country's gross domestic product (GDP) growth and the real returns of its stock market"
- Thu Feb 08, 2024 4:46 pm
- Forum: Personal Investments
- Topic: Farmland LP
- Replies: 12
- Views: 1883
Re: Farmland LP
No kidding.Lookingforanswers wrote: ↑Thu Feb 08, 2024 4:40 pm 4. When you published your expected IRR as 13%, did you forget to put a decimal point between the "1" and the "3"?
- Thu Feb 08, 2024 3:06 pm
- Forum: Investing - Theory, News & General
- Topic: Meta becomes a dividend payer.
- Replies: 43
- Views: 5034
Re: Meta becomes a dividend payer.
Tsk tsk, it's not wise to cast any doubt on the Modigliani–Miller theory of dividend irrelevance. The theory's suppositions are too rooted in the real world to ignore. Https://www.investopedia.com/terms/m/modigliani-millertheorem.asp Before too long numerous BH posters will sweep down and "correct" you on the irrelevance of dividends. After all, because businesses are wonderful, frugal stewards of all capital at their disposal, dividends can hinder a company’s ability to be competitive in the long term since the money would be far better off reinvested in the company to generate future earnings. Really, because these corporations are all teeming with fiscal geniuses, they ought to adopt the Berkshire Hathaway approach and eschew ...
- Thu Feb 08, 2024 9:31 am
- Forum: Investing - Theory, News & General
- Topic: Meta becomes a dividend payer.
- Replies: 43
- Views: 5034
Meta becomes a dividend payer.
Dividends cause heated debates with BHs. It seems either you embrace them or loathe them. Meta has announced it will begin to pay a dividend. I see this as a welcome development since it signals that management believes it's better to return capital to it's owners rather than embark on new ventures or repurchase shares at record prices. I haven't done a deep dive into Meta's financials, but I can't help but wonder if Meta shareholders would have been better of if the investment in the "Metaverse" had been returned to shareholders in the form of dividends? I'm sure many BHs will be upset to see dividends increase in their taxable accounts as some are very passionate about firms repurchasing shares even if at value destroying levels...
- Tue Feb 06, 2024 4:10 pm
- Forum: Personal Investments
- Topic: What's your allocation for International Stocks?
- Replies: 101
- Views: 6956
- Sun Feb 04, 2024 9:45 am
- Forum: Personal Finance (Not Investing)
- Topic: Rob Berger interviews Mike Piper
- Replies: 46
- Views: 5905
Re: Rob Berger interviews Mike Piper
Well worth watching if you haven't yet begun taking social security. Mike's website provided an insight into claiming social security that I had thought about but never attempted to quantify by answering the question; what generates the highest expected lifetime amount of payments?
But Mike also says it's ok to think in terms of delaying in order to qualify for the largest monthly payment as longevity insurance even if delaying doesn't yield the highest expected total lifetime payments.
Social security is insurance in my mind, not an investment. Therefore delaying makes more sense to me.
But Mike also says it's ok to think in terms of delaying in order to qualify for the largest monthly payment as longevity insurance even if delaying doesn't yield the highest expected total lifetime payments.
Social security is insurance in my mind, not an investment. Therefore delaying makes more sense to me.
- Sun Feb 04, 2024 9:26 am
- Forum: Personal Investments
- Topic: Income vs Return in Retirement
- Replies: 57
- Views: 7173
Re: Income vs Return in Retirement
I think in terms of income but understand the logic and mathematics of total returns. My investment assets are mostly taxable and mostly equities having sold off the business assets that generated the taxable income for my livelihood. I'm going to guess that many BHs will think that I'm making a mental mistake of viewing the proceeds from the sales of my business assets as still business assets generating income, albeit passively. I doubt Warren Buffet would think I'm making a mistake though. Since a good deal of the dividends are qualified and bond interest is tax exempt, the income my assets produce is way more tax efficient now. I still think of my investment portfolio as a business producing income and the market value as an instant app...
- Thu Jan 25, 2024 8:53 pm
- Forum: Personal Investments
- Topic: 60/40 vs. 67/33 plus bond allocation question
- Replies: 46
- Views: 5010
Re: 60/40 vs. 67/33 plus bond allocation question
Given: required withdrawal rate of 2.67% ($400k / $15,00k)
Vanguard High Yield Tax Exempt Distribution yield = 3.73%
Vanguard Value Index yield = 2.4%
X = percent allocation to bond fund
X(3.73) + 1-X(2.4) = 2.67
Solving for X
X = 20% bond fund
She can put 20% into muni high yield fund and the rest in value index and live off interest and dividends. A higher allocation to bonds would allow unused cash to be directed as she wishes and margin for cash flow variations. Tax efficient.
Keep it a simple two fund portfolio and forget about it.
Vanguard High Yield Tax Exempt Distribution yield = 3.73%
Vanguard Value Index yield = 2.4%
X = percent allocation to bond fund
X(3.73) + 1-X(2.4) = 2.67
Solving for X
X = 20% bond fund
She can put 20% into muni high yield fund and the rest in value index and live off interest and dividends. A higher allocation to bonds would allow unused cash to be directed as she wishes and margin for cash flow variations. Tax efficient.
Keep it a simple two fund portfolio and forget about it.
- Sat Jan 20, 2024 7:36 am
- Forum: Investing - Theory, News & General
- Topic: Vanguard Cash Plus Account
- Replies: 458
- Views: 61925
Re: Vanguard Cash Plus Account
- Fri Jan 19, 2024 8:38 pm
- Forum: Investing - Theory, News & General
- Topic: Vanguard Cash Plus Account
- Replies: 458
- Views: 61925
Re: Vanguard Cash Plus Account
No trust, no mutual fund account, no bueno.
- Fri Jan 19, 2024 7:12 pm
- Forum: Investing - Theory, News & General
- Topic: Vanguard Cash Plus Account
- Replies: 458
- Views: 61925
Re: Vanguard Cash Plus Account
Is the Cash Plus Account functional with legacy mutual fund accounts or do you have to have a brokerage account?
- Sat Oct 28, 2023 7:38 pm
- Forum: Investing - Theory, News & General
- Topic: Is SCV always a long term winner
- Replies: 40
- Views: 4418
Re: Is SCV always a long term winner
I sure hope so
- Wed Oct 25, 2023 10:43 am
- Forum: Investing - Theory, News & General
- Topic: WSJ: Your 'Set It and Forget It' 401(k) Made You Rich. No More.
- Replies: 121
- Views: 23201
Re: WSJ: Your 'Set It and Forget It' 401(k) Made You Rich. No More.
What happened Jason Zweig? I haven't seen a column in the WSJ from him since early summer.
- Thu Oct 12, 2023 3:47 pm
- Forum: Investing - Theory, News & General
- Topic: Who holds individual TIPS in taxable accounts?
- Replies: 30
- Views: 4570
Re: Who holds individual TIPS in taxable accounts?
Not me either. Munis only in taxable.
- Fri Oct 06, 2023 7:51 pm
- Forum: Investing - Theory, News & General
- Topic: In appreciation of dividends
- Replies: 119
- Views: 13275
Re: In appreciation of dividends
Without revisiting the dividend irrelevance argument, which one group of posters always tries to steer every single one of these threads to, I find this kind of statement that is frequently made hard to follow. M&M's Dividend Irrelevance is abstract as you need to know some accounting. It is also foundational. And I am going to have to burry the lead on this point, but really scenario #4 is the key scenario. And now onto some accounting. To make it less abstract let us imagine a apartment building. Let us assume the balance sheet shows: Building is worth $2,000k Mortgage of $-1,000k Cash 100k And the Income Sheet shows: 100k earnings. How much is the equity Scenario #1: No action taken. Answer: $1,100k. $2,000k assets + $100k cash - $1...
- Tue Oct 03, 2023 3:11 pm
- Forum: Investing - Theory, News & General
- Topic: Stocks are sinking, bonds are sinking.. where is the benefit of diversification ?
- Replies: 102
- Views: 13465
Re: Stocks are sinking, bonds are sinking.. where is the benefit of diversification ?
I'm pretty sure Jack Bogle would approve.invest2bfree wrote: ↑Tue Oct 03, 2023 2:31 pm Because I have designed my portfolio based on income and not asset values.
- Mon Oct 02, 2023 7:43 pm
- Forum: Investing - Theory, News & General
- Topic: Does a Bond Fund Yield Equal Its Perpetual Withdrawal Rate?
- Replies: 34
- Views: 2928
- Mon Oct 02, 2023 7:35 pm
- Forum: Investing - Theory, News & General
- Topic: Does a Bond Fund Yield Equal Its Perpetual Withdrawal Rate?
- Replies: 34
- Views: 2928
Re: Does a Bond Fund Yield Equal Its Perpetual Withdrawal Rate?
Except a bond has a finite life if you will. Perpetual means never ending.
The OP is asking about a rate which is a percentage of something. This seems like a probability problem, except I don't know how to frame it other than trial and error as shown in Portfolio Charts, Otar's work, or something similar.
- Mon Oct 02, 2023 6:35 pm
- Forum: Investing - Theory, News & General
- Topic: Does a Bond Fund Yield Equal Its Perpetual Withdrawal Rate?
- Replies: 34
- Views: 2928
Re: Does a Bond Fund Yield Equal Its Perpetual Withdrawal Rate?
Maybe I'm wrong, but to me a perpetual rate is constant. To have a perpetual rate that is variable is an oxymoron.Random Poster wrote: ↑Mon Oct 02, 2023 6:25 pm Okay, so if a bond’s distribution yield is not equal to its perpetual withdrawal rate, how would you determine what a particular bond fund’s perpetual withdrawal rate is?
Does a bond fund even offer a perpetual withdrawal rate, however variable it may be?
Play with the chart here:
https://portfoliocharts.com/portfolio/w ... tes/#chart
Insert 100% for bonds, see what you get.
- Sun Oct 01, 2023 8:00 pm
- Forum: Investing - Theory, News & General
- Topic: Does a Bond Fund Yield Equal Its Perpetual Withdrawal Rate?
- Replies: 34
- Views: 2928
Re: Does a Bond Fund Yield Equal Its Perpetual Withdrawal Rate?
Specifically, if a bond fund makes money from interest payments and not from price appreciation, does that mean that a perpetual withdrawal rate for a bond fund is equal to whatever the distribution yield is of that particular bond fund, even if that yield fluctuates over time? Thus, if the bond fund has a distribution yield of 2% in January, 3% in February, 1.5% in March, 2.35% in April, and so on, as long as you only spend the interest received, you will never exhaust or deplete the underlying principal in the bond fund? I've wondered the same thing myself and asked about what happens to capital losses as a fund rolls shorter maturity bonds to longer maturity to maintain the fund's stated maturity objective in the other thread. I would s...
- Sun Oct 01, 2023 2:27 pm
- Forum: Investing - Theory, News & General
- Topic: What’s So Bad About Cash (v. Buying a Bond Fund)?
- Replies: 122
- Views: 9811
Re: What’s So Bad About Cash (v. Buying a Bond Fund)?
I understand that. In a rising rate environment, what happens to all the capital losses incurred from selling low, buying high?gavinsiu wrote: ↑Sun Oct 01, 2023 2:25 pm Bond funds can be thought of as equivalent to a rolling bond ladder. You can create a bond ladder with a rung for each year. The rungs averaged out to a duration. When the bottom rung matures and get cashed out it gets reinvested at the top. This isn’t how bond funds are run but they are conceptually equivalent to a rolling bond ladder of the same duration.
- Sun Oct 01, 2023 2:12 pm
- Forum: Investing - Theory, News & General
- Topic: What’s So Bad About Cash (v. Buying a Bond Fund)?
- Replies: 122
- Views: 9811
Re: What’s So Bad About Cash (v. Buying a Bond Fund)?
But in 3 years when the bond matures, it’s going to return $10,000 to the fund. So the bond will pay 3%, but it’s also going to appreciate over the next 3 years, so the actual yield of that bond from this point forward is higher than 3%. It’s 3% plus the $1,000 it will appreciate between now and 3 years from now. That is the calculation that the SEC yield adjusts for and why the dividend yield is currently lower than the SEC yield. I've always wondered how a fun manages to meet it's investment objective, let's say intermediate bonds, and also hold a bond until maturity. To balance holding a bond that will mature in the short term, the fund has to balance it with a bond in the long term, or so it would seem. Otherwise the fund would need to...
- Sun Oct 01, 2023 1:21 pm
- Forum: Investing - Theory, News & General
- Topic: What’s So Bad About Cash (v. Buying a Bond Fund)?
- Replies: 122
- Views: 9811
Re: What’s So Bad About Cash (v. Buying a Bond Fund)?
But in 3 years when the bond matures, it’s going to return $10,000 to the fund. So the bond will pay 3%, but it’s also going to appreciate over the next 3 years, so the actual yield of that bond from this point forward is higher than 3%. It’s 3% plus the $1,000 it will appreciate between now and 3 years from now. That is the calculation that the SEC yield adjusts for and why the dividend yield is currently lower than the SEC yield. I've always wondered how a fun manages to meet it's investment objective, let's say intermediate bonds, and also hold a bond until maturity. To balance holding a bond that will mature in the short term, the fund has to balance it with a bond in the long term, or so it would seem. Otherwise the fund would need to...
- Sat Sep 30, 2023 8:33 am
- Forum: Investing - Theory, News & General
- Topic: In appreciation of dividends
- Replies: 119
- Views: 13275
Re: In appreciation of dividends
I fully understand the concept of total return. Creating one's own dividend. Adverse taxation in some cases. Buybacks (which I loathe).
But...I love dividends.
Burn me at the BH stake of heresy.
But...I love dividends.
Burn me at the BH stake of heresy.
- Fri Sep 22, 2023 5:23 pm
- Forum: Personal Investments
- Topic: Relationship Between Federal Tax Rate & Qualified Dividend Rate
- Replies: 14
- Views: 2069
Re: Relationship Between Federal Tax Rate & Qualified Dividend Rate
In the comments section someone mentioned the absense of the NIIT which will likely be significant for the OP. Kind of a stealth tax that is forgotten sometimes.
- Thu Sep 21, 2023 7:34 am
- Forum: Personal Investments
- Topic: Relationship Between Federal Tax Rate & Qualified Dividend Rate
- Replies: 14
- Views: 2069
Re: Relationship Between Federal Tax Rate & Qualified Dividend Rate
Use Turbotax Taxcaster, which is free, to test the tax consequences of investment decisions.
My accountant actually encourages it as he prefers having knowledgeable clients. You seem like a perfect candidate to do it yourself.
My accountant actually encourages it as he prefers having knowledgeable clients. You seem like a perfect candidate to do it yourself.
- Mon Sep 18, 2023 12:05 pm
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
One issue that tends to muddy the waters is whether or not the investor is proposing to invest in "dividend" funds or is proposing to select individual stocks. BHs should embrace good corporate governance. If the board at the individual stock level thinks it's in the best interest of shareholders to pay a dividend, then that's probably what should be done. The Investment Act of 1940 pretty much ties the hands of fund managers; they have to pass along dividends. What muddies the waters are fund investors who refuse to look at the bigger picture and somehow believe the fund level and individual stock level are somehow unrelated. I have mentioned before, retail stock investors are pretty much along for ride, they should accept that....
- Mon Sep 18, 2023 9:37 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
The market value is what it is. That's why shareholder value is destroyed when the board uses $1.00 of retained earnings to buy $1.00 the market values at $1.20 as frequently happens in buybacks. That's worse than just paying the tax on a cash dividend.barnaby444 wrote: ↑Mon Sep 18, 2023 8:50 am But right before a dividend is issued (say, ex-dividend date - 1), the book value of the cash is the same as the market value, because the dividend has already been announced, so the market knows there are no other possible alternative uses for the cash.
- Mon Sep 18, 2023 8:46 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
Book valuebarnaby444 wrote: ↑Mon Sep 18, 2023 8:39 am At the moment a dividend of $1M is issued, the cash component of the company's market value is exactly $1M less than it was before.
The market value is what ever silliness or rational behavior happens to be going on at the time.
- Sun Sep 17, 2023 10:32 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
- Sun Sep 17, 2023 10:13 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
It's a total fallacy that buybacks always result in a higher share price, especially when management turns around and re-issues the shares they purchased to themselves and favored employees. You have fallen prey to an ideology that allows corporate management to enrich themselves at your (and every other owner's) expense. I understand that people love to feel clever and superior to others (especially those they view as simpleminded, benighted or hopelessly out of date in their thinking) , but the reality is that dividends are the only legitimate means of receiving return through security ownership, and have always been recognized as such. Indeed, without dividends there is no actual ability to truthfully calculate share price to begin with...
- Sat Sep 16, 2023 1:11 pm
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
As for item 2), you realize when one receives a dividend payment one is losing/diluting ownership with respect to other investors who re-invest the dividend, right? I do realize that, relative to other players. But if no new stock is issued, their share stays fixed, does it not? I'm talking about the players at the Warren Buffet level who actually control (or influence) the capital allocation. You think Berkshire reinvests it's Coca Cola dividends into buying more Coke so ownership isn't diluted or do you think they use it for their own purposes? Retail investor ownership is so miniscule that it doesn't matter what happens to their ownership share. Mostly retail investors own through an investment vehicle anyway. Again, this anti dividend ...
- Sat Sep 16, 2023 12:51 pm
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
While I'm firmly in the camp of "dividends are irrelevant for stock selection," I will never understand this more extreme position that " dividends are a forced sale, therefore they are bad ." In the determination of whether it is preferable for a company to pay a dividend, tax efficiency for the recipient should be a tiny factor compared to whether the company believes it has market-beating return opportunities for that cash. +1 It's baffling to me how people refuse to accept this. In financial accounting it's the only way for a shareholder to receive a share of earnings in the form of cash. 1) stock buybacks aren't cash; though there are certain benefits for sure under the right circumstances 2) sale of stock generate...
- Thu Sep 14, 2023 11:52 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
Have you run a business before? Or even your own household. Assumptions must be made or nothing would get done.Hyperchicken wrote: ↑Thu Sep 14, 2023 11:39 am You cannot assume future dividend payments any more than you can assume future share price.
One of the most common assumptions is that a dollar today is worth more than a dollar tomorrow. Decisons regarding capital improvement projects always involve assumptions.
Do you make any assumptions before you purchase common stock? How do you decide how to allocate your investment fund?
(I don't think I'm providing useful input anymore, I think I will bow out. I thought Dr. Bernstein's writings were pretty good and felt like sharing)
- Thu Sep 14, 2023 11:26 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
It's a NPV (net present value) calculation which includes assumptions.Hyperchicken wrote: ↑Thu Sep 14, 2023 10:44 am You need to compare dividends today vs. selling today. Or, dividends in the future vs. selling in the future.
Dividends are a string of payments, so making a point in time comparison is not useful because it doesn't factor in the value of the string of prior cash flows from dividends.
Dividends in the future vs selling in the future is a valid comparison provided the time value of money from accumulated dividends is properly accounted for.
- Thu Sep 14, 2023 10:52 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
I don't. Bird in the hand...
It is relevant, it's the essence of investing. If you're not receiving cash along the way, how else can one expect to profit? What would be your exit strategy then?ThereAreNoGurus wrote: ↑Thu Sep 14, 2023 10:38 amWhether one can or can't sell at a higher price in the future is irrelevant
- Thu Sep 14, 2023 10:29 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
What if:ThereAreNoGurus wrote: ↑Thu Sep 14, 2023 10:26 am It's exactly the same. The distribution is a fixed amount. Stock prices move up and down up to the ex-dividend date (when the dividend is paid). So whether you self-dividend and pick a date or rely on a fixed dividend date determined by the company you are still vulnerable to stock price fluctuations.
1) you can't sell for a higher price in the future?
2) you can't sell at any price?
In other words, what if you're wrong?
- Thu Sep 14, 2023 10:16 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
It's not the same. Cash now is much different than the possibility of selling for a higher price in the future.ThereAreNoGurus wrote: ↑Thu Sep 14, 2023 10:13 amSo whether one takes a dividend or sells stock it's virtually the same. I'm not claiming one method is better than the other. For many investors, of course, receiving the dividend is going to be better or more convenient
- Thu Sep 14, 2023 10:01 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
Simplistic at best? Hardly. It seems pretty rational.
What's a better way? If you place a value based on earnings and the earnings are never distrubuted, how do you know the retained earnings will be there in the future for your benefit?
- Thu Sep 14, 2023 9:44 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
Interesting metaphor and I undersrtand the point, but the child exists because of the parent.
In finance, the company exists because of the investor so sort of the reverse of your metaphor. A corporation isn't a benevolent entity, it exists to enrich shareholders.
- Thu Sep 14, 2023 8:25 am
- Forum: Investing - Theory, News & General
- Topic: Tell me again, why dividends are not useful ?
- Replies: 1156
- Views: 90636
Re: Tell me again, why dividends are not useful ?
On area that has not been talked about a lot in context of the first quote is “what is done with the dividend payment?” Yes, let's talk context. Mostly the context here on Bogleheads is that of a retail investor who owns shares in ETFs or mutual funds. To many, it is quite clear that dividends seem to be a nuisance to them, especially those who have taxable accounts and have tax consequences to receiving dividends. But those investors are essentially along for the ride without much say or control. They're riding the coattails of the real investors; founders of the company and venture capitalists. But what about large investors at the company level, those who have significant stakes in the business? They want a return on their investment an...