@N19, At risk of being overly solicitous, check out our site: http://bit.ly/XSdnUb
You can create your own personal, proprietary strategies, test them for validity, risk & return, confidence intervals. You can select the capital to invest and the number of stocks to own. It takes the human factor out without being tremendously quantitative.
I can't comment to your strategy specifically. Do you have data on it?
As to the question: yes - self actively managed. Most professional active managers have signficant passive components. see: http://bit.ly/10yWwTV & http://bit.ly/17f1t9d
The article originally reviewed a number of Fidelity funds which SA had me edit out. So the fails to mention is true, but somewhat opposite your conclusion.
Yes, asset size will dictate what is a feasible number of stocks to a degree. However, the argument of holding more of what's good rather than just more remains constatnt.
I have managed portfolios of tens of millions up to billions. The approach between the two is not materially different, just each holding is larger. In many funds, you will see a concentrated number of large positions and a whole bunch of satellite positions.
You ability to follow all those names effectively becomes compromised, and the "goodness" of each incremental trade becomes marginal.
Under one strategy it is much easier to have 20 good ideas than to have 200 good ideas.
Fair point, but some of the confusion comes from editing to meet SA's requirements. The article originally looked at a number of Fidelity Mutual Funds' holdings, but SA wouldn't publish it b/c they don't "follow" mutual funds.
However, the concept works under most strategies. We have analyzed a great number of strategies, and in general, the concept holds true for most buy & hold strategies. That's not to say that there are certain trading strategies that widely vary on the the number of candidates.
Has Dividend Growth Gone Out Of Favor? [View article]
I was not aware of CDR before this thread. I would like to understand Chowder's system better before I write in respect to him. Sorry, I will likely delay the results.
Has Dividend Growth Gone Out Of Favor? [View article]
Robert, in all due respect - because I understand your strategy, and have no qualms with it - I would like to leave you with two examples that illustrate my point that if you disagree with then we just agree to disagree.
I invest $50,000 in equity the local manufacturer and in exchange he gives me a job paing $50,000 per year. At the end of the first year, I have earned an income of $50,000 (before tax); however, he turns out to be selling lead paint based baby toys, and closes shop. Income is wealth creation, generating a return on something - assets, labor, cash. Yes, I have generated $50,000 in income, but I added no wealth. If I only look at the income side of the equation, I miss the fact that I lost an equal amount.
Second, I would be happy to provide in exchange for any dollar investment, a 4% dividend that grows at 5% for the following 15 years. Is that a good deal for you?
Has Dividend Growth Gone Out Of Favor? [View article]
In my examples, it is effectively a return of capital. If you give me $10,000, and I give you a dividend of $1,000 a year for 10 years and am worth nothing at the end, I have paid you dividends, but effectively have only returned your capital.
As for price, a paper loss is still a loss. If your home loses value, your wealth has declined even if you don't sell it. The assets you hold have an aggregate value, and if that value goes down it is a loss. However, you are correct, it doesn't mean you are in a loss position forever, nor are you forced to lock in that loss. But it is a function whether the price rises in the future, which is measured by total return.
"is why I argued above that total return..." I claim omnipotence in nothing. I argue, and certainly have the right to argue a case - a case of measurement.
I think it contradictory to say, "my loss isn't a loss if the stock goes up later," yet not claim total return is your measurement.
I hypothesis that you (and Hilo) may be misunderstanding my total return claim. I am not suggesting that you _must_ buy stocks that go up, or that price appreciation is a required component of any strategy, or that dividend growth isn't a good enough return. I am merely saying that you must measure total return in order to understand if you are creating wealth. Your total return could be comprised of 7% dividends and 0% capital appreciation. It could be 10% dividends and -3% capital depreciation. Both those are very acceptible returns. In fact, as you appropriately point out, the later may even be better because the -3% may not be permenant.
However, if you don't measure the total return, you are not capturing a huge component of the equation.
Has Dividend Growth Gone Out Of Favor? [View article]
It's not haughtiness, it's math. Give me an investment, and I will provide you with a 4% dividend, and guarantee to give you a raise of 8% for the next 13 years. The only way to evaluate whether it's a good deal for you unless you know the total return.
Total return must be the overriding factor for any investor to determine wealth and income creation. Dividend yield as a stand-alone measure tells you nothing about wealth creation. A salary is wealth creation – labor for dollars. If I gave the local manufacturer $50,000 in exchange for working a year on his assembly line, and he paid me $50,000 in salary, I would have an income on which I may be taxed. However, if after that year, he shut the business down, I have created nothing for myself. I would have been better off doing something else with my dollars and my time.
You mentioned previously words have meaning. I agree. "Total Return, at any point in time, is a function of 1) Good investing, and 2) A merciful market." That is not accurate. Total return is a function of neither. "Happiness with your total return," may be a function of those two things, but it also may include neither of those two things. Total return is a mathematical equation, and it cares not whether you are happy with it or not. It is a mere reality.
Has Dividend Growth Gone Out Of Favor? [View article]
Thanks Devlin. I make only one point to you, and this was my point to Hilo above, a 10% income stream from a dividend paying stock that loses 10% in price isn't really income, it's a return of your orginal capital that is taxed like income - so, in fact, it's actually a loss. It may not be a "realized loss," but a loss nonetheless. That is why I argued above that total return _has_ to be the ultimate measure. Hilo didn't but it, but it's true.
Has Dividend Growth Gone Out Of Favor? [View article]
mike, that was exactly the point. If you looked, I linked to the Numbers Cruncher article that did just that. But my response was, " I wouldn't call that group [BBY, HNZ, PBI] a dividend-investor's dream. That is just a momentum strategy for companies that happen to pay a consistent dividend."
Over-Diversification? Concentrated Holdings Yield Better Results [View article]
http://bit.ly/Z4x8DJ
Over-Diversification? Concentrated Holdings Yield Better Results [View article]
You can create your own personal, proprietary strategies, test them for validity, risk & return, confidence intervals. You can select the capital to invest and the number of stocks to own. It takes the human factor out without being tremendously quantitative.
Over-Diversification? Concentrated Holdings Yield Better Results [View article]
As to the question: yes - self actively managed. Most professional active managers have signficant passive components.
see:
http://bit.ly/10yWwTV
&
http://bit.ly/17f1t9d
Over-Diversification? Concentrated Holdings Yield Better Results [View article]
Yes, asset size will dictate what is a feasible number of stocks to a degree. However, the argument of holding more of what's good rather than just more remains constatnt.
I have managed portfolios of tens of millions up to billions. The approach between the two is not materially different, just each holding is larger. In many funds, you will see a concentrated number of large positions and a whole bunch of satellite positions.
You ability to follow all those names effectively becomes compromised, and the "goodness" of each incremental trade becomes marginal.
Under one strategy it is much easier to have 20 good ideas than to have 200 good ideas.
Over-Diversification? Concentrated Holdings Yield Better Results [View article]
However, the concept works under most strategies. We have analyzed a great number of strategies, and in general, the concept holds true for most buy & hold strategies. That's not to say that there are certain trading strategies that widely vary on the the number of candidates.
Has Dividend Growth Gone Out Of Favor? [View article]
Has Dividend Growth Gone Out Of Favor? [View article]
Has Dividend Growth Gone Out Of Favor? [View article]
I invest $50,000 in equity the local manufacturer and in exchange he gives me a job paing $50,000 per year. At the end of the first year, I have earned an income of $50,000 (before tax); however, he turns out to be selling lead paint based baby toys, and closes shop. Income is wealth creation, generating a return on something - assets, labor, cash. Yes, I have generated $50,000 in income, but I added no wealth. If I only look at the income side of the equation, I miss the fact that I lost an equal amount.
Second, I would be happy to provide in exchange for any dollar investment, a 4% dividend that grows at 5% for the following 15 years. Is that a good deal for you?
Has Dividend Growth Gone Out Of Favor? [View article]
As for price, a paper loss is still a loss. If your home loses value, your wealth has declined even if you don't sell it. The assets you hold have an aggregate value, and if that value goes down it is a loss. However, you are correct, it doesn't mean you are in a loss position forever, nor are you forced to lock in that loss. But it is a function whether the price rises in the future, which is measured by total return.
"is why I argued above that total return..." I claim omnipotence in nothing. I argue, and certainly have the right to argue a case - a case of measurement.
I think it contradictory to say, "my loss isn't a loss if the stock goes up later," yet not claim total return is your measurement.
I hypothesis that you (and Hilo) may be misunderstanding my total return claim. I am not suggesting that you _must_ buy stocks that go up, or that price appreciation is a required component of any strategy, or that dividend growth isn't a good enough return. I am merely saying that you must measure total return in order to understand if you are creating wealth. Your total return could be comprised of 7% dividends and 0% capital appreciation. It could be 10% dividends and -3% capital depreciation. Both those are very acceptible returns. In fact, as you appropriately point out, the later may even be better because the -3% may not be permenant.
However, if you don't measure the total return, you are not capturing a huge component of the equation.
Has Dividend Growth Gone Out Of Favor? [View article]
Total return must be the overriding factor for any investor to determine wealth and income creation. Dividend yield as a stand-alone measure tells you nothing about wealth creation. A salary is wealth creation – labor for dollars. If I gave the local manufacturer $50,000 in exchange for working a year on his assembly line, and he paid me $50,000 in salary, I would have an income on which I may be taxed. However, if after that year, he shut the business down, I have created nothing for myself. I would have been better off doing something else with my dollars and my time.
You mentioned previously words have meaning. I agree. "Total Return, at any point in time, is a function of 1) Good investing, and 2) A merciful market." That is not accurate. Total return is a function of neither. "Happiness with your total return," may be a function of those two things, but it also may include neither of those two things. Total return is a mathematical equation, and it cares not whether you are happy with it or not. It is a mere reality.
Has Dividend Growth Gone Out Of Favor? [View article]
http://bit.ly/16uYARl
Has Dividend Growth Gone Out Of Favor? [View article]
http://bit.ly/16uYARl
Has Dividend Growth Gone Out Of Favor? [View article]
Has Dividend Growth Gone Out Of Favor? [View article]
Has Dividend Growth Gone Out Of Favor? [View article]