Search found 792 matches

by Riprap
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.
by Riprap
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

nisiprius wrote: Tue Mar 05, 2024 11:09 amThe point was that they don't jump in to offer products in every hot new category, even when their competitors are.
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?
by Riprap
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

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.
You think the directors are reading these comments? Afterall, the WSJ is quoting members from this forum.
by Riprap
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

Tubes wrote: Sat Mar 02, 2024 9:29 amI never had a problem with the switchover to brokerage accounts. I did it probably 7 years ago when they first announced it. I actually like it.
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.
by Riprap
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.
by Riprap
Thu Feb 15, 2024 8:52 am
Forum: Investing - Theory, News & General
Topic: Any studies to refute dividend yield & chill?
Replies: 161
Views: 12104

Re: Any studies to refute dividend yield & chill?

nisiprius wrote: Thu Feb 15, 2024 8:16 am There are various ideas which get hopelessly mixed up. In discussions it's important to decide what we're discussing and stick to it.
Idea #5: Management can't effectively employ cash, so it's returned to shareholders who can.
by Riprap
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.

nisiprius wrote: Sat Feb 10, 2024 6:27 amTo put it another way, a stock that is truly guaranteed never to pay money to the shareholders (in some way) is a greater fool investment.
vs
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.
Sums up the debate on BHs nicely.
by Riprap
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?
by Riprap
Fri Feb 09, 2024 4:22 pm
Forum: Investing - Theory, News & General
Topic: Meta becomes a dividend payer.
Replies: 43
Views: 5034

Re: Meta becomes a dividend payer.

gtrplayer wrote: Fri Feb 09, 2024 2:48 pmto literally give your income away to shareholders
gtrplayer wrote: Fri Feb 09, 2024 2:48 pmBut giving away that much money
I'm not sure I would characterize paying a dividend as "giving away" money, after all who are the owner's of the company?
by Riprap
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.

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.
Care to elaborate with real world examples?

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"
by Riprap
Thu Feb 08, 2024 4:46 pm
Forum: Personal Investments
Topic: Farmland LP
Replies: 12
Views: 1883

Re: Farmland LP

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"?
No kidding. :mrgreen:
by Riprap
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 ...
by Riprap
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...
by Riprap
Tue Feb 06, 2024 4:10 pm
Forum: Personal Investments
Topic: What's your allocation for International Stocks?
Replies: 101
Views: 6956

Re: What's your allocation for International Stocks?

Curly wrote: Tue Feb 06, 2024 2:46 pm We are now: 64/11/24 US/xUS/bond funds. The recent information from Professor Cederburg and others has gotten me to think again about the xUS percentage.
Mind sharing a link to the recent information?
by Riprap
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.
by Riprap
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...
by Riprap
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.
by Riprap
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

watchnerd wrote: Fri Jan 19, 2024 10:55 pm
Riprap wrote: Fri Jan 19, 2024 8:38 pm
jameskay wrote: Fri Jan 19, 2024 8:29 pmI got confirmation from Vanguard that you cannot currently open a Cash Plus Account that is owned by a trust
sycamore wrote: Fri Jan 19, 2024 8:30 pmThe Vanguard Cash Plus Account is a brokerage account offered by Vanguard Brokerage Services.
No trust, no mutual fund account, no bueno. :(
Maybe it's time to migrate to brokerage, like Vanguard wants you to?
I'm wondering how migrating helps with a trust account?
by Riprap
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

jameskay wrote: Fri Jan 19, 2024 8:29 pmI got confirmation from Vanguard that you cannot currently open a Cash Plus Account that is owned by a trust
sycamore wrote: Fri Jan 19, 2024 8:30 pmThe Vanguard Cash Plus Account is a brokerage account offered by Vanguard Brokerage Services.
No trust, no mutual fund account, no bueno. :(
by Riprap
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?
by Riprap
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
by Riprap
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.
by Riprap
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.
by Riprap
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...
by Riprap
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 ?

invest2bfree wrote: Tue Oct 03, 2023 2:31 pm Because I have designed my portfolio based on income and not asset values.
I'm pretty sure Jack Bogle would approve.
by Riprap
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

Re: Does a Bond Fund Yield Equal Its Perpetual Withdrawal Rate?

watchnerd wrote: Mon Oct 02, 2023 7:39 pm Perpetual is a goofy framing to use for bonds.

Bonds have reinvestment risk, so even the yield will not be the same after maturity.
Agreed 100%
by Riprap
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?

watchnerd wrote: Mon Oct 02, 2023 7:26 pm Pretend it's not a bond fund, but just a bond.

It pays you a coupon every 4 or 6 months.

If all you spend is the coupon, the principal remains untouched.
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.
by Riprap
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?

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?
Maybe I'm wrong, but to me a perpetual rate is constant. To have a perpetual rate that is variable is an oxymoron.

Play with the chart here:

https://portfoliocharts.com/portfolio/w ... tes/#chart

Insert 100% for bonds, see what you get.
by Riprap
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...
by Riprap
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)?

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.
I understand that. In a rising rate environment, what happens to all the capital losses incurred from selling low, buying high?
by Riprap
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...
by Riprap
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...
by Riprap
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).

:D But...I love dividends. :D

Burn me at the BH stake of heresy. :twisted:
by Riprap
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.
by Riprap
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.
by Riprap
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....
by Riprap
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 ?

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.
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.
by Riprap
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 ?

barnaby444 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.
Book value

The market value is what ever silliness or rational behavior happens to be going on at the time.
by Riprap
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

Re: Tell me again, why dividends are not useful ?

rkhusky wrote: Sun Sep 17, 2023 8:34 amSometimes dividends are just a means to prop up share price before the inevitable bankruptcy.
At least you would have something to show for your investment instead of zero.
by Riprap
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...
by Riprap
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 ...
by Riprap
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...
by Riprap
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 ?

Hyperchicken wrote: Thu Sep 14, 2023 11:39 am You cannot assume future dividend payments any more than you can assume future share price.
Have you run a business before? Or even your own household. Assumptions must be made or nothing would get done.

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)
by Riprap
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 ?

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.
It's a NPV (net present value) calculation which includes assumptions.

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.
by Riprap
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 ?

randomguy wrote: Thu Sep 14, 2023 10:33 amHow do you know the dividend will be there in the future for your benefit
I don't. Bird in the hand...
ThereAreNoGurus wrote: Thu Sep 14, 2023 10:38 amWhether one can or can't sell at a higher price in the future is irrelevant
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?
by Riprap
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 ?

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.
What if:

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?
by Riprap
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 ?

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
It's not the same. Cash now is much different than the possibility of selling for a higher price in the future.
by Riprap
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 ?

randomguy wrote: Thu Sep 14, 2023 9:50 amThe statement that the only proper way to value a stock is to look at dividends is simplistic at best.
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?
by Riprap
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 ?

loukycpa wrote: Thu Sep 14, 2023 9:26 amImagine a parent with a net worth of X they eventually want to pass along to a child.
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.
by Riprap
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...