Search found 2051 matches

by fortyofforty
Tue May 05, 2020 5:40 am
Forum: Investing - Theory, News & General
Topic: Why doesn’t Jim Cramer start a fund?
Replies: 26
Views: 3914

Re: Why doesn’t Jim Cramer start a fund?

There is not one stockpicker you can see on television whose advice is worth following. Watch them for entertainment. Watch them for details on specific companies (if it interests you) but don't try to invest based on what they say. (Except at least Cramer does say investors should put their first $10,000 in an S&P 500 index fund. Their first, their last, and every $10,000 in between would be better, I'd say. :D )
by fortyofforty
Sun May 03, 2020 7:26 am
Forum: Investing - Theory, News & General
Topic: What explains the continued rise in equities?
Replies: 167
Views: 16052

Re: What explains the continued rise in equities?

The supply chain for food and every day goods was much more localized. People worked in more commodities-based positions (producing "things") instead of services that can be replaced so easily at the start of any downturn. Sure, that explains the difference in economy crashing today vs then. But he was talking about how society will never be the same. How we won't congregate in groups ever again, scared of infection. But baseball games resumed after 1918, and crowds still gathered. How long did it take for society to completely lose their fear of crowds again? The etiology of the Covid-19 virus has, so far been very different from the 1918 19 Spanish Flu. Or the 1957 flu. Or the 1968 one. It may be that exposure to Covid-19 does ...
by fortyofforty
Fri May 01, 2020 1:38 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

The first year with complete annual data on VBTLX was 2002, so it's unlikely to give you the data you're looking for. These are all projections based solely on past performance, anyway. They're of limited value, at best, in predicting the future, which is why I never asked for "data". I just posed a question. It looks to me as though one could live off of VWETX dividends/distributions if, as I mentioned upthread, that one's starting portfolio was sizable enough. If you started with a portfolio that is 35x to 40x your annual expenses, I'm sure it would be great. But then so would a lot of other strategies. Just answering fortyofforty's original question. Thanks. If you live off dividends, you live off dividends, even if they're pa...
by fortyofforty
Fri May 01, 2020 6:26 am
Forum: Investing - Theory, News & General
Topic: Jack Bogle - Two Fund Portfolio
Replies: 2645
Views: 319970

Re: Jack Bogle - Two Fund Portfolio

abuss368 wrote: Thu Apr 30, 2020 6:45 pm I am amazed that Total Stock and the S&P 500 have bounced back this fast!

Not sure what the future holds but we will continue to tune out noise.
And profit in many ways because of it.
by fortyofforty
Fri May 01, 2020 5:42 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Since 2002, the difference in returns between the two funds was only 11 basis points. The dollar amount is irrelevant. Vineviz was looking at spending all the dividends, not a fixed dollar amount. Were there every any capital gains generated by the Total Bond Index fund? Oh, it was just the Long Term Investment Grade that was used for the charts. I'm sure that there were, but Vanguard's TBM fund VBMFX has returned 2% less in total annualized returns since 1987 than VWESX, so it would have performed even worse. Unless capital gains, and lower price fluctuations, played a role. You might be right, but I'd still like to see VBTLX (Admiral Shares, much better representation of true returns than VBMFX Investor Shares), that has paid monthly div...
by fortyofforty
Thu Apr 30, 2020 8:36 pm
Forum: Investing - Theory, News & General
Topic: What explains the continued rise in equities?
Replies: 167
Views: 16052

Re: What explains the continued rise in equities?

le_sacre wrote: Thu Apr 30, 2020 8:34 pm Krugman said today it's that
  • bond yields are so poor that investors are driven to stocks
  • long term economic forecast is good enough that investors are willing to take at least some risk
Consider the source. No thanks, for me.
by fortyofforty
Thu Apr 30, 2020 8:35 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

I can't see anyway this could work. Corporate bonds are typically callable, which puts an effective cap on the upside due to falling yields (so not much roll yield). Also, most bonds are issued at par so your principal is basically guaranteed to to have a negative real return in an inflationary world. I did a quick test with Vanguard Long-Term Investment-Grade Inv (VWESX) instead of total bond, since it has a long history. Here is portfolio growth if you spent all the distributions. https://i.imgur.com/5tTTXDb.png Here's nominal income of the two funds. https://i.imgur.com/uJpe9QV.png In real terms, that's a 95% loss in purchasing power for the bond fund investor spending all their dividend distributions. Just curious...what if the startin...
by fortyofforty
Thu Apr 30, 2020 5:21 pm
Forum: Investing - Theory, News & General
Topic: What explains the continued rise in equities?
Replies: 167
Views: 16052

Re: What explains the continued rise in equities?

I have no idea if the recent lows will be retested. I'm pretty sure I'll be a buyer if we break into new lows - but, I wouldn't bank on it (the US markets hitting new lows in the near future). :happy "Retested?!?" Oh my word, I'm convinced the recent lows will be absolutely obliterated. Sure, nobody knows nothin', as they say. But that's not literally true. We all generally agree that the market will occasionally crash. We don't know when. We don't know how fast. We don't know how far. And we don't know for how long. But we all know crashes will happen, right? The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the ass...
by fortyofforty
Thu Apr 30, 2020 5:19 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

What if you invest in a total bond fund? Could you live off bond dividends, and simply not worry about the prices of the underlying bonds? Anyone? I can't see anyway this could work. Corporate bonds are typically callable, which puts an effective cap on the upside due to falling yields (so not much roll yield). Also, most bonds are issued at par so your principal is basically guaranteed to to have a negative real return in an inflationary world. I did a quick test with Vanguard Long-Term Investment-Grade Inv (VWESX) instead of total bond, since it has a long history. Here is portfolio growth if you spent all the distributions. https://i.imgur.com/5tTTXDb.png Here's nominal income of the two funds. https://i.imgur.com/uJpe9QV.png In real te...
by fortyofforty
Thu Apr 30, 2020 3:59 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

fortyofforty wrote: Wed Apr 29, 2020 6:54 pm What if you invest in a total bond fund? Could you live off bond dividends, and simply not worry about the prices of the underlying bonds?
Anyone?
by fortyofforty
Thu Apr 30, 2020 2:20 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

abuss368 wrote: Thu Apr 30, 2020 10:16 am
vineviz wrote: Thu Apr 30, 2020 10:15 am
Instead, they are opposing what is mathematically inevitable: all else equal, a stock which pays a $1 dividend is worth $1 less in the moment AFTER the dividend is paid than it was in the moment BEFORE the dividend was paid.
Correct. Simple math that makes sense.
Absolutely. Of course, what the value of the cash in the hands of corporate management should be is another question, as I've pointed out repeatedly. It would certainly be nice to be at a point to be able to live off dividends, or even a reflection of what the dividend payout would be, whether you receive actual dividends or reinvest the dividends and sell an equivalent amount in shares. That ought to be a VSWR.
by fortyofforty
Thu Apr 30, 2020 5:58 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: tn

hi But I'm asking you, what, as a dividend-focused investor, can I expect to get in terms of a SWR? Compared to a total return method, where we have lots of good research. if you draw no more than the dividends you're ok, no research needed you can probably even occasionally dip into the share base if needed, then replace those shares with cap gains And the actionable reason I asked is simple: I'm saving for retirement as an income investor. How much should I save? Until the dividends in year X equal my expected expenses upon retirement? Will the dividends grow to match inflation, etc. only you know how much you need to save, and many dividends grow with inflation over time Can I just buy SCHD and spend all of those dividends? With that fu...
by fortyofforty
Wed Apr 29, 2020 6:56 pm
Forum: Investing - Theory, News & General
Topic: What explains the continued rise in equities?
Replies: 167
Views: 16052

Re: What explains the continued rise in equities?

The stock market is soaring to prevent those who jumped out near the bottom from feeling too smug. They're still holding cash and waiting for the lower lows at which time they'll pour back in.
by fortyofforty
Wed Apr 29, 2020 6:54 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

What if you invest in a total bond fund? Could you live off bond dividends, and simply not worry about the prices of the underlying bonds? I'd say it's pretty much the same concept.
by fortyofforty
Wed Apr 29, 2020 4:06 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: tn

hi But I'm asking you, what, as a dividend-focused investor, can I expect to get in terms of a SWR? Compared to a total return method, where we have lots of good research. if you draw no more than the dividends you're ok, no research needed you can probably even occasionally dip into the share base if needed, then replace those shares with cap gains And the actionable reason I asked is simple: I'm saving for retirement as an income investor. How much should I save? Until the dividends in year X equal my expected expenses upon retirement? Will the dividends grow to match inflation, etc. only you know how much you need to save, and many dividends grow with inflation over time Can I just buy SCHD and spend all of those dividends? With that fu...
by fortyofforty
Tue Apr 28, 2020 7:12 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Let's go back up a level. I want to touch on a point here in your post. When it comes to "what I can spend in retirement" we usually refer back to the various SWR studies. Using historical data, or sometimes Monte Carlo return simulations, researchers take a portfolio (say the S&P 500 and bonds), withdraw the rate being tested (4%, 3%, what have you, adjusted for inflation every year), rebalance annually, and then note how well the portfolio did. Various stock/bond ratios are tested. And from those studies researchers argue we can draw as much as 4% a year, annually adjusted for inflation. Some studies come up with different, lower numbers. But I believe I am accurate saying the vast majority of these studies will argue that ...
by fortyofforty
Tue Apr 28, 2020 5:57 pm
Forum: Investing - Theory, News & General
Topic: Are we better off now than Dec 2018?
Replies: 301
Views: 30466

Re: Are we better off now than Dec 2018?

ukbogler wrote: Tue Apr 28, 2020 6:00 am
SandysDad wrote: Mon Apr 27, 2020 5:28 pm Still not trying to call the bottom, just have a firm belief that the Market will have another leg down (minimum) before we are past this. Discussion back and forth thru short term gyrations is probably not as useful. My thesis and my point is still why someone would pay more than they would in Dec 2018 for the market (and t
OMG, a rational person, here on Boggleheeds! Burn him!
If you consider market timing to be rational, then, yes, there is a rational person here on Boggleheeds [sic]. No fires need be lit. :sharebeer
by fortyofforty
Tue Apr 28, 2020 5:54 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Like this: How does "effectively have an infinite life" equate to being "infinitely valuable"? I'm not seeing the correlation. The claim is that the company is worth $10/share today, pays out a dividend of $10 tomorrow, and is still worth $10/share on Thursday. Oh, I didn't see anyone make that claim. I must have missed it. Of course that would be ridiculous. Just like if someone accepts dividends paid by a diversified fund--like one that tracks the S&P 500--and doesn't sell any shares, that would not last forever (or at least as long as the fund exists). Yes, that should certainly last forever. We can all agree on that. The question then becomes whether spending only dividends is in any way the optimal approach to ...
by fortyofforty
Tue Apr 28, 2020 5:49 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

You are completely misrepresenting this. No investor wants their share price to devalue. An investor that accumulates "x" amount of shares to provide a desired dividend income from the total of those shares is also most certainly always concerned about about the future value of the share prices...is that not obvious? Who wants to lose money on an investment? We all want our investments to gain in value. Total Return is defined in many ways. The 'anti-dividend' crowd wants everyone to hate dividends as much as they do. They don't realize or want to admit that, in a portfolio of individual stocks, selling a few shares is not a simple proposition. Many decisions must be made in that process, with the accordant chance of making what ...
by fortyofforty
Tue Apr 28, 2020 5:34 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

I haven't read anyone claim that dividend-paying companies are "infinitely valuable", but maybe you can find an example of someone making this claim on this forum. Like this: Because a company would be assumed to effectively have an infinite life, the payment of a single dividend should not effect the valuation of the company's shares . How does "effectively have an infinite life" equate to being "infinitely valuable"? I'm not seeing the correlation. The claim is that the company is worth $10/share today, pays out a dividend of $10 tomorrow, and is still worth $10/share on Thursday. Oh, I didn't see anyone make that claim. I must have missed it. Of course that would be ridiculous. Just like if someone accepts ...
by fortyofforty
Tue Apr 28, 2020 12:39 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Unfortunately, many who are very 'pro-dividend' view their wealth strictly in terms of shares owned without regard to the market price of those shares. You are completely misrepresenting this. No investor wants their share price to devalue. An investor that accumulates "x" amount of shares to provide a desired dividend income from the total of those shares is also most certainly always concerned about about the future value of the share prices...is that not obvious? Who wants to lose money on an investment? We all want our investments to gain in value. Total Return is defined in many ways. The 'anti-dividend' crowd wants everyone to hate dividends as much as they do. They don't realize or want to admit that, in a portfolio of ind...
by fortyofforty
Tue Apr 28, 2020 12:36 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

vineviz wrote: Tue Apr 28, 2020 8:12 am
fortyofforty wrote: Tue Apr 28, 2020 8:05 am I haven't read anyone claim that dividend-paying companies are "infinitely valuable", but maybe you can find an example of someone making this claim on this forum.
Like this:
restingonmylaurels wrote: Wed Apr 22, 2020 5:28 am
Because a company would be assumed to effectively have an infinite life, the payment of a single dividend should not effect the valuation of the company's shares.
How does "effectively have an infinite life" equate to being "infinitely valuable"? I'm not seeing the correlation.
by fortyofforty
Tue Apr 28, 2020 8:05 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

The 'anti-dividend' crowd wants everyone to hate dividends as much as they do. There is no "anti-dividend" crowd, just an "anti-misinformation-about-dividends" crowd. I don't hate dividends. In a tax-advantaged account, I don't care whether companies pay a large dividend or not. In a taxable account, I have a mild preference for low dividend because of differential tax rates but that preference is mild. Some people have a preference for dividends because spending dividend payments is easier/more comforting than reinvesting them and selling shares when they need them. More power to them. If that ease/comfort is worth the small tax disadvantage then who am I to judge? I think that MOST dividend-preferring investors unders...
by fortyofforty
Tue Apr 28, 2020 5:52 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Unfortunately, many who are very 'pro-dividend' view their wealth strictly in terms of shares owned without regard to the market price of those shares. You are completely misrepresenting this. No investor wants their share price to devalue. An investor that accumulates "x" amount of shares to provide a desired dividend income from the total of those shares is also most certainly always concerned about about the future value of the share prices...is that not obvious? Who wants to lose money on an investment? We all want our investments to gain in value. Total Return is defined in many ways. The 'anti-dividend' crowd wants everyone to hate dividends as much as they do. They don't realize or want to admit that, in a portfolio of ind...
by fortyofforty
Mon Apr 27, 2020 6:14 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

MathIsMyWayr wrote: Mon Apr 27, 2020 5:24 pm
willthrill81 wrote: Mon Apr 27, 2020 5:02 pm Yes, dividends are part of the return of stocks. The other part is capital appreciation.
return of stocks: actually basis, my money, all after tax. Why do I have to pay tax on my money? Isn't it a double taxation? What happens if the company dissolves and distributes what remains after meeting external obligations, do I still pay tax on the payout?
That's an issue to take up with those who write the tax code.
by fortyofforty
Mon Apr 27, 2020 5:45 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

hoops777 wrote: Sun Apr 26, 2020 9:23 pm I HEREBY DECREE BY THE POWER INVESTED IN ME BY MY OWN DELUSIONS TO MAKE THIS THE LAST DIVIDEND THREAD EVER RECORDED ON THIS SITE.
THANK YOU.
I have seen both viewpoints over and over and over and over and there will NEVER be a meeting in the middle.IT is very similar to what goes on in a famous place named after our first prez.

The only inescapable facts are that total return people who invest wisely do well and dividend investors who invest wisely also do well.
Total return people who make poor judgements suffer the consequences. Dividend investors who chase yield and poor quality also suffer the consequences.
Well said.
by fortyofforty
Sun Apr 26, 2020 7:50 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

The haters always claim the method doesn't work, yet no doubt hundreds or thousands of investors live comfortably off dividends and don't look at the stock market. I don't know why you're invoking the term 'haters' here. Many, including me, have no problem at all with dividends. Where we take issue is when people claim that dividends are 'special' in some way when they are, in fact, not. Now if an investor is inclined to build their saving to 50x in order to make a 2% dividend ratio on a very broad index fund work and can take on a reduction in those dividends, such as the one that occurred a little over a decade ago, that's fine. A friend of mine who is a financial advisor reports that most of his clients don't come close to spending thei...
by fortyofforty
Sun Apr 26, 2020 6:46 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

You are presenting a list of companies that were delisted or went out of business. It was your list, etc., etc. So, the question as you posed it is are you better off having owned a company that went out of business having received at least some earnings back as dividend payments, or nothing? You can't have it both ways. Either you own shares worth zero, or you own shares worth zero plus whatever dividends you received over months, years, or even decades. No strawmen in my post, only cogent points. The claim in the OP's title is that "if you live off dividends, a crash in stocks prices doesn't matter." The demise of countless companies that once paid dividends shows that to be patently false. If the claim was "if you can aff...
by fortyofforty
Sun Apr 26, 2020 3:02 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Enron, Sears, Washington Mutual, etc., etc. Dividends were cut back in the financial crisis. If they were cut again from current levels and retirees were only spending dividends, their withdrawal rate could fall to below 2%. :? Of course, those who received dividend payments from stocks of companies that went belly-up (Enron) were left with the value of those dividend payments. Those who received no dividend payments (Pets.com) were left with zero (or maybe pennies on the dollar). I know which option I'd choose. :beer That's a complete strawman, and I suspect that you know it. Nobody has received any dividends from Enron in many years. So the idea that dividends last in perpetuity with no rest is demonstrably false. You are presenting a li...
by fortyofforty
Sun Apr 26, 2020 1:57 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Without reviewing the entire thread, I assume it was pointed out earlier that at some point if a stock price sinks enough and reflects a financially impaired company, the dividend will eventually be cut. This will happen to an individual stock in either bull or bear markets, but is more likely in bear markets. Enron, Sears, Washington Mutual, etc., etc. Dividends were cut back in the financial crisis. If they were cut again from current levels and retirees were only spending dividends, their withdrawal rate could fall to below 2%. :? Of course, those who received dividend payments from stocks of companies that went belly-up (Enron) were left with the value of those dividend payments. Those who received no dividend payments (Pets.com) were ...
by fortyofforty
Sun Apr 26, 2020 12:54 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Without reviewing the entire thread, I assume it was pointed out earlier that at some point if a stock price sinks enough and reflects a financially impaired company, the dividend will eventually be cut. This will happen to an individual stock in either bull or bear markets, but is more likely in bear markets. Enron, Sears, Washington Mutual, etc., etc. Dividends were cut back in the financial crisis. If they were cut again from current levels and retirees were only spending dividends, their withdrawal rate could fall to below 2%. :? Of course, those who received dividend payments from stocks of companies that went belly-up (Enron) were left with the value of those dividend payments. Those who received no dividend payments (Pets.com) were ...
by fortyofforty
Sat Apr 25, 2020 6:16 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Interesting article in the South China Morning Post about HSBC's dividend. Dividend Halt Puts HSBC at Risk of Losing Core Investors HSBC Holdings Plc’s dividend suspension threatens to cost the lender some of its core investor appeal in Hong Kong. Payouts have been an important reason to own HSBC shares in the city. Its stock price has lagged the Hang Seng Index by more than 600 percentage points since 1986, the earliest available Bloomberg-compiled data from when a unified Hong Kong exchange commenced. But including dividends, HSBC’s total return is more than double the Hong Kong benchmark’s in the period. Shareholders have started mobilizing. A group on Facebook Inc., called the HSBC Shareholders Alliance was recently established to call...
by fortyofforty
Fri Apr 24, 2020 4:45 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

One thing about dividends is that you can't fake 'em for very long. Cooked books and accounting tricks are soon exposed to the light of day, with the resultant market (or regulatory) reaction.
by fortyofforty
Fri Apr 24, 2020 5:56 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

What if a bunch of companies cut dividends? Your investment plan, which was built on a foundation of sand, collapses. Since you'd already have planned on this eventuality, you'd be able to modify your lifestyle and cut back on frivolous purchases. Or dip into that emergency fund you'd been accumulating with the excess cash you'd been squirreling away over the years, until things turned back around. Same as with a stock market crash dropping your equities by 50% or 60% virtually overnight, planning would be key. If you'd been pulling what you had assumed was at a safe withdrawal rate from a traditional portfolio, suddenly you might see it isn't truly safe. Ironically, dividends allow you to choose not to sell shares when they've dropped dra...
by fortyofforty
Thu Apr 23, 2020 7:20 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Spending only dividends allows investors to do several things. First, they never have to worry that they will choose the wrong stocks to sell, or the wrong moment at which to do so. The decision is made for them. Second, the dividend amounts are chosen for them. Investors do not have to decide themselves how much they want to withdraw. The decision is made for them. It can for discipline, if spending is limited to dividends only. Finally, a dollar in the hands of Warren Buffett is certainly worth more than it is in my hands; it works in both directions. Each company is free to decide how much of a dividend it wishes to pay out. Anyone with a portfolio of individual stocks, whether purchased themselves or left over as a legacy from an inheri...
by fortyofforty
Thu Apr 23, 2020 5:23 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

So consider my response in light of what I think is your/vineviz's/others' point (among many), that after the payment of a cash dividend, the value of the shares in a company must fall. I do not believe that is accurate, for the reasons I stated above. If you believe that the shares of a company do not fall in price, all else being equal (a very important point lost by many considering this issue), after payment of a dividend, then you believe that dividends are somehow 'free money'. And if you believe that, then all companies should pay high dividends because doing so won't hurt their share price. Rather than general statements, I am more interested in the math that would prove that. The firm's market value should decline by the amount of...
by fortyofforty
Thu Apr 23, 2020 5:12 am
Forum: Investing - Theory, News & General
Topic: Are we better off now than Dec 2018?
Replies: 301
Views: 30466

Re: Are we better off now than Dec 2018?

Though nigel-ht posted here regularly through all of February, the first post on the pandemic that I can find is this one: https://www.bogleheads.org/forum/viewtopic.php?p=5046068#p5046068 Note that this post is a month after the news articles being referenced should have made it blindingly obvious to any of us that a crash was coming. The S&P was about 12% above where it is now on that date. But the advice from nigel_ht was "If I were already in the market I'd just stay the course". As you said, the path is always clear in the rear view mirror. Thanks for digging this up. "It is difficult to make predictions, especially about the future," as Karl Steincke wrote in the 1940s. It's equally true today. No prediction w...
by fortyofforty
Wed Apr 22, 2020 6:33 pm
Forum: Investing - Theory, News & General
Topic: Are we better off now than Dec 2018?
Replies: 301
Views: 30466

Re: Are we better off now than Dec 2018?

His implication is that you never have any advantage over the market and yet many folks looked at the obvious information being written on the NYT and made decisions that saved them money. Whether the market knew and ignored it or didn't know is the same outcome. You don't have to act on information but when people do, it's not luck. And when its this obvious it's not rocket science either. Bogle did the same thing during the dot bomb crash. He looked at it and said these valuations are just not right and shifted to a more conservative AA. Yes he had other reasons to do so but they had never seemed sufficient to bother until that evaluation. The path is always clear in the rear view mirror. And you'll always find people who successfully pr...
by fortyofforty
Wed Apr 22, 2020 5:49 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 536
Views: 44473

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Here's the best way that I can think of to describe why dividends are not 'free money'. Imagine that you are the sole owner of a business that has $10,000 in its checking account. You transfer that $10,000 into your personal checking account. Has your net worth increased at all? No, because you owned the $10,000 the entire time. The same is true of a company paying dividends. Before they pay dividends, you own your share of the entire company, including the cash they use to pay the dividends. When they proceed to pay you your share of that cash, your net worth does not change because you owned your share of that cash the entire time. It is morning so my brain might not be wired right but this feels a bit incorrect. Doing this from long-ter...
by fortyofforty
Wed Apr 22, 2020 5:41 am
Forum: Investing - Theory, News & General
Topic: Are we better off now than Dec 2018?
Replies: 301
Views: 30466

Re: Are we better off now than Dec 2018?

His implication is that you never have any advantage over the market and yet many folks looked at the obvious information being written on the NYT and made decisions that saved them money. Whether the market knew and ignored it or didn't know is the same outcome. You don't have to act on information but when people do, it's not luck. And when its this obvious it's not rocket science either. Bogle did the same thing during the dot bomb crash. He looked at it and said these valuations are just not right and shifted to a more conservative AA. Yes he had other reasons to do so but they had never seemed sufficient to bother until that evaluation. The path is always clear in the rear view mirror. And you'll always find people who successfully pr...
by fortyofforty
Tue Apr 21, 2020 6:14 pm
Forum: Investing - Theory, News & General
Topic: Are we better off now than Dec 2018?
Replies: 301
Views: 30466

Re: Are we better off now than Dec 2018?

You literally wrote "You are still not facing the fact that the market is forward-looking and knows everything about the economy that you do ." Just wanted to point out that there is a huge difference between "knows everything about the economy" and "knows everything about the economy that you do " . One of them is always false and the other is likely very true. I believe the person you quoted was very purposeful in putting it there. His implication is that you never have any advantage over the market and yet many folks looked at the obvious information being written on the NYT and made decisions that saved them money. Whether the market knew and ignored it or didn't know is the same outcome. You don't have to...
by fortyofforty
Tue Apr 21, 2020 8:10 am
Forum: Investing - Theory, News & General
Topic: Are we better off now than Dec 2018?
Replies: 301
Views: 30466

Re: Are we better off now than Dec 2018?

Also, trying to time the market is a loser's game. If you believe, emotionally, that this is just the beginning of an ever greater downturn, then react accordingly. I don't know. I know I don't know. So I follow the course I set, and don't try to change course in the middle of a hurricane. Staying the course, with steady dollar-cost-averaging, worked in 1987, 2000, and 2008. Only fear and emotion can derail a sound investment plan. Buffet market times and is not a loser. Berkshire has $128 B of liquidity of which $25B is cash (the rest largely treasuries if I remember right). “But you’re not Warren Buffet!” I don’t have to be to ask why does the guy who says to be greedy when others are fearful hasn’t bought into the market yet. It means i...
by fortyofforty
Tue Apr 21, 2020 6:11 am
Forum: Investing - Theory, News & General
Topic: Are we better off now than Dec 2018?
Replies: 301
Views: 30466

Re: Are we better off now than Dec 2018?

No need to flame you. I will simply point out the obvious: if you have a set asset allocation, it should be the same allocation in December 2018, December 2019 and December 2020. Rebalance. Just rebalance. No need to overreact, or react with emotion to what should be a logical plan. Also, trying to time the market is a loser's game. If you believe, emotionally, that this is just the beginning of an ever greater downturn, then react accordingly. I don't know. I know I don't know. So I follow the course I set, and don't try to change course in the middle of a hurricane. Staying the course, with steady dollar-cost-averaging, worked in 1987, 2000, and 2008. Only fear and emotion can derail a sound investment plan. Good luck moving forward. He ...
by fortyofforty
Tue Apr 21, 2020 5:54 am
Forum: Investing - Theory, News & General
Topic: Are we better off now than Dec 2018?
Replies: 301
Views: 30466

Re: Are we better off now than Dec 2018?

To the market timers, I have one request: please post here on this forum when you decide it's time to get back in, that way your timing can be independently evaluated. Best of luck!
by fortyofforty
Mon Apr 20, 2020 10:38 am
Forum: Investing - Theory, News & General
Topic: The Three-Fund Portfolio
Replies: 3895
Views: 2424179

Re: The Three-Fund Portfolio

The ultimate in simplicity and diversification. VT + BNDW is a good one too. More diverse. Hard to get more diverse than that combination, for sure. S&P 500 plus short term treasuries or total bond is good enough. Sure it is. Just not the most "diverse". Diversity is overrated, by some posters here, in my opinion. While I don't know that much, I agree. To me, I can't put the US stock market and the Chinese stock market in the same haystack. Or the US stock market and emerging markets. People here often accuse others of "tilting" because they don't put the whole world in the same haystack. But the regulations, laws and governments are not the same globally. There is not one global stock market. There is not one globa...
by fortyofforty
Sun Apr 19, 2020 8:05 pm
Forum: Investing - Theory, News & General
Topic: The Three-Fund Portfolio
Replies: 3895
Views: 2424179

Re: The Three-Fund Portfolio

bck63 wrote: Sun Apr 19, 2020 6:20 pm
fortyofforty wrote: Sat Apr 18, 2020 10:59 am
lostdog wrote: Sat Apr 04, 2020 9:51 pm
watchnerd wrote: Sat Apr 04, 2020 9:38 pm
abuss368 wrote: Sat Apr 04, 2020 9:02 pm

The Three Fund Portfolio is an excellent choice. Tune out the noise and stay the course.
I'm unclear why it's better than making a 2 fund with VT + BND.
The ultimate in simplicity and diversification.

VT + BNDW is a good one too. More diverse.
Hard to get more diverse than that combination, for sure.
S&P 500 plus short term treasuries or total bond is good enough.
Sure it is. Just not the most "diverse". Diversity is overrated, by some posters here, in my opinion.
by fortyofforty
Sun Apr 19, 2020 5:55 am
Forum: Investing - Theory, News & General
Topic: Mr.Random Walk
Replies: 25
Views: 3073

Re: Mr.Random Walk

If you're not happy to invest in a broad market index, don't... but you should be aware there is significant disagreement about what is concerning with regards to companies that some regard to be a public safety or environmental issue. Absolutely agree. I can guarantee that I would disagree with whatever judgmental choices Vanguard's board made about which companies are "good" and which are "evil". I say let the free market float, and keep fingers off the scales. For example, remember when single use plastic bags were evil and reusable shopping bags were good? Then, CoViD-19 hit the country and... For investors seeking so-called "ESG" options, they are easily found. In effect, it's a proxy for tilting towards ...
by fortyofforty
Sat Apr 18, 2020 4:53 pm
Forum: Investing - Theory, News & General
Topic: Jack Bogle - Two Fund Portfolio
Replies: 2645
Views: 319970

Re: Jack Bogle - Two Fund Portfolio

Thank you abuss368, thank you Taylor, and thank you Jack Bogle, for pointing us to that plateau that lies slightly above halfway up the mountain. Two Fund. Three Fund. Four Fund. It's a three-horse race, and you'll finish in the money betting on any one of them.
by fortyofforty
Sat Apr 18, 2020 10:59 am
Forum: Investing - Theory, News & General
Topic: The Three-Fund Portfolio
Replies: 3895
Views: 2424179

Re: The Three-Fund Portfolio

lostdog wrote: Sat Apr 04, 2020 9:51 pm
watchnerd wrote: Sat Apr 04, 2020 9:38 pm
abuss368 wrote: Sat Apr 04, 2020 9:02 pm

The Three Fund Portfolio is an excellent choice. Tune out the noise and stay the course.
I'm unclear why it's better than making a 2 fund with VT + BND.
The ultimate in simplicity and diversification.

VT + BNDW is a good one too. More diverse.
Hard to get more diverse than that combination, for sure.
by fortyofforty
Sat Apr 18, 2020 5:38 am
Forum: Investing - Theory, News & General
Topic: Jack Bogle - Two Fund Portfolio
Replies: 2645
Views: 319970

Re: Jack Bogle - Two Fund Portfolio

I still haven't found anyone in the Two Fund crowd using the term "dangerous" but that was just a quick search. One side is clearly tolerant of all opinions on the matter, while the other claims only one way is "right" and anything else is "dangerous". Sadly. I would agree that the term "dangerous" is not beneficial, and in some respects losses impact, in making a case in favor of including international funds or any funds. In my opinion any person who spends less than they earn, saves and invests, keep costs and taxes low, stays the course, focuses on career growth and income potential, selects an index funds or a few, and pays down / off debt is doing all the important things. Focusing on including...