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Craig Lehman

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  • Why Lower-Yielding Stocks Provide Better Long-Term Returns [View article]
    Paul, No, of course you can't calculate yield without knowing share price. But I don't see how that demonstrates that one should use the word "yield" for the *total* of dividend payout and price appreciation. Let's see: today MSFT closed at 42.09, up 0.40. Its dividend is 1.12. That means that its yield at the open was 2.866%, and at the close, after today's price appreciation, its yield was 2.661%. I don't see the problem. However, if today had happened to be the day MSFT paid its quarterly dividend, I would find it extremely weird if someone was to say "Today MSFT yielded 0.68." (0.40 + (1.12 / 4))

    In any case, I was only commenting on what I observe to be the most common usage of the words. I'd be surprised if you could produce an example of someone using the word "yield" in the combined sense of dividend + price appreciation that you favor.
    Jul 11 05:41 PM | 1 Like Like |Link to Comment
  • Why Lower-Yielding Stocks Provide Better Long-Term Returns [View article]
    "When one speaks of "yield" one is addressing both components: the amount of the dividend and the market value of the shares."

    Really? I think most people use "yield" for the dividend, and "price appreciation" for market value.
    Jul 11 12:56 PM | 1 Like Like |Link to Comment
  • Why Lower-Yielding Stocks Provide Better Long-Term Returns [View article]

    Could you provide a citation for that?
    Jul 11 12:53 PM | Likes Like |Link to Comment
  • Why Lower-Yielding Stocks Provide Better Long-Term Returns [View article]
    I appreciate the "sheer amount of data" needed to conduct a 5- or 10-year study, but I think it's essential to average in at least enough data to cover an entire market cycle. E.g., while I don't know, it's certainly conceivable that different yield profiles might have performed very differently during 2008-9. My guess would be that the higher yielders (at least, those with solid financials) perform relatively better in a bear market.

    But not to look a gift horse in the mouth, thank you for this information. Your table of results confirms my intuitions. My own view is that, for another kind of diversification, almost all portfolios ought to contain at least *some* stocks in each yield tier, with the proportions depending on factors like age, immediate need for income, and risk tolerance.
    Jul 11 12:52 PM | 1 Like Like |Link to Comment
  • When To Sell Stocks In Your Value Investing Portfolio? [View article]
    "It makes rational sense to replace a stock that currently offers 30% margin of safety with a new stock that offers 40% margin of safety."

    The spread of analyst opinions and price targets on almost any widely followed stock will typically have a very wide range. These are people who follow a small handful of stocks for a living, and some will be saying to buy while others will be recommending a sell, with a range of opinions in between. Price targets will have a standard deviation much larger than 10% of the stock price. If you are confident that you can discern the difference between a 30 and 40% margin of safety in two different stocks, you're a better man than I.
    Jul 5 07:45 PM | Likes Like |Link to Comment
  • The Numbers Are In! [View article]
    "the majority of my portfolio which is constructed of many of the usual suspects..."

    But a lot of it isn't! Few DG investors here on SA dig as deeply into the Canadian market as you have. Looking at your portfolio gives me an interesting list of stocks to study. Thanks.
    Jul 5 12:51 PM | Likes Like |Link to Comment
  • The Numbers Are In! [View article]
    Given that an average 75% per year of actively-managed mutual funds fail to outperform a simple S & P index fund, I think there is a *very good* chance INZ can outperform a mutual fund manager. Doctors performing appendectomies have a lot better track record than portfolio managers, because the steps for successfully performing this surgery are well-understood, and involve far fewer variables than stock-picking. So are the steps for managing a dividend-growth portfolio.
    Jul 5 12:46 PM | 8 Likes Like |Link to Comment
  • The 3% Yield Club: 25 Non-REIT, Non-MLP Dividend Stocks Yielding Over 3% (Part 1) [View article]
    As you build these 20- or 25-stock lists (3% Yield Club, DIY Investors Club, The All-Aristocrat Team, the All-Defensive Team, The Dividend Growth All-Stars, etc, etc) there seems to be an awful lot of overlap. It's also hard to get an overall impression of any one list, or compare it to another, because they are always dribbled out in these 5-stock articles, evidently designed to increase page views. I would appreciate something fresh.
    Jul 4 11:17 AM | 8 Likes Like |Link to Comment
  • You Are Responsible For Your Investing Decisions [View article]
    "My ignorance is willful, and I own that decision too."

    "All that is required, IMO, is an intelligent overview. If you cannot satisfy yourself that you understand an investment at that level, then don't invest in it."

    Agree. I didn't mean to suggest that you were advocating an impossible standard, just that we all inevitably make mistakes and overlook things which may seem obvious in hindsight. But I have seen articles here on SA advocating way more DD than I am willing or able to invest. Procedural details will vary, but your Easy-Rate system strikes me as being in about the right ballpark.
    Jul 3 12:29 PM | 1 Like Like |Link to Comment
  • You Are Responsible For Your Investing Decisions [View article]
    While I completely agree with the thrust of this essay (and appreciate the many fine comments people have made before I woke up, on the west coast), I do think the idea that you can be 100% sure that you know ALL relevant facts about an investment, and then invest ONLY in such opportunities, is a bit of an idealization. Even the most conscientious DD is going to miss something from time to time. And, on the other hand, when you are talking about an "analyzed to death" company like JNJ, which generates multiple articles almost every day here on SA, the likelihood of hours of your own DD turning up something new is virtually nil.

    And so, I think the best way to bridge the gap between the impossible ideal of perfect due diligence and what can be expected of an independent individual investor is to limit risk through 1) broad diversification (I would say 50 or so stocks) and 2) gradual buy-in before taking a full position. One thing I notice about myself, and I bet it is true of most people, is that I NEVER know as much about a company before I buy it as do after I start accumulating it. That being the case -- plus the fact that I know that I am sometimes a little careless and will probably never get over it -- I am not going to worry about slightly imperfect DD, or hold myself to doing more than a couple hours of research before I take an initial position.

    And of course, all this is easy to say after 40 years or so of experience in the stock market. Of course I'm a lot better at it now (and since discovering SA and DGI) than I was before. But I see no way to get from there to here without having consciously acted on the basis of imperfect DD and learned from experience.
    Jul 3 11:53 AM | 7 Likes Like |Link to Comment
  • Cheap And Profitable Canadian Value Screen With Yield [View article]
    I read right past your P/E cutoff, sorry. However, I still don't see what the cutoff point for dividend yield is (maybe I'm still skimming too fast), and no number beyond "high teens" is specified for ROE.

    The reason I nitpick is that I often like to take screens like this and then play with the numbers a little bit. So explicit specifications (ideally right with the bulleted criteria) are helpful.

    Thanks for an interesting article. As the son of a Canadian, and just back from a trip to British Columbia, I like the country at least as much as its stock market. Long TD, RY, BCE, and looking at several others both on and off your list.
    Jul 1 02:11 PM | Likes Like |Link to Comment
  • Cheap And Profitable Canadian Value Screen With Yield [View article]
    Good question, Mike. I'm mystified why the author would list the results of a screen, but not disclose the cutoff points being employed.
    Jul 1 12:14 PM | Likes Like |Link to Comment
  • Market Lessons From Iraq, Bergdahl And Cantor [View article]
    "ON Bowe Bergdahl it is a sad thing to see prisoner exchange become subject of soup [sic] opera. It is the most stupid thing to question the Commander in Chief decision to exchange POW in a war time."

    In my view it is NEVER stupid to question the decisions of any Commander in Chief about anything -- but particularly in a case where there appears to be a violation of law, in this case the 30-day notification requirement of the National Defense Authorization Act. This isn't "political football"; it's a question for the Supreme Court.
    Jun 15 01:36 PM | 1 Like Like |Link to Comment
  • Market Lessons From Iraq, Bergdahl And Cantor [View article]
    "...corporate leverage ratios have already risen in excess of pre-crisis levels across many areas of the market as borrow[er]s are capitalizing on the desire by financial institutions to satisfy what is seemingly insatiable investor demand for higher yielding investments."

    Could you provide some specifics or examples of what these "many areas of the market" are? I am under the impression that the overall trend of the last few years has been for corporations to pay down debt and reduce leverage.
    Jun 15 01:11 PM | Likes Like |Link to Comment
  • The 7 Best Electric Utilities Americans Can Own [View article]
    Not analogous. Feed-in tariffs are severely limited in the US; typically you cannot get paid for generating more electricity with your solar panels than you use. Plus, as the article explains, the German post-Fukushima panic led to a rapid shutdown of their nuclear plants (obviously not good for the companies that owned them), and the US shale gas boom perversely *hurt* gas-fired utilities there. The new EPA regulations on coal-fired plants may seem like a big deal to us, but government meddling in the US utility market is still nowhere close to producing the counterproductive results that it has in Europe.
    Jun 11 12:40 PM | 1 Like Like |Link to Comment