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Craig Lehman

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  • 401(K) Reconstructed: 2014 Q2 Review [View article]

    I don't understand the "wait three months" thing. I don't know of a lower-cost broker who imposes any wait-time requirement between trades, and some certainly don't. If that was unavoidably the situation, I'd definitely agree with you.

    I don't use Interactive and have no motive to recommend them, but it's my understanding that their rate is $1/trade, with a fee of $10 minus the number of trades in a month if you make less than 10 trades. That ought to work out to less than you are paying, and actually would allow you to more freely make small additions to established positions at will. That fee structure certainly doesn't sound like they are imposing a delay requirement on anyone. Unless I misunderstand, of course.

    Again, no criticism of your portfolio itself is intended. I very much like it.
    Jul 15 05:48 PM | Likes Like |Link to Comment
  • 401(K) Reconstructed: 2014 Q2 Review [View article]

    Yes, your transaction costs are way lower than with a full service broker, but still, the question isn't the ratio of fees *this quarter* to *portfolio value*, it is *total fees* to *total invested capital*, and that is about 1.7%. You are kidding yourself with the statistic you have invented.

    Suppose you managed to reduce your total fees (I notice you don't total that column, but it looks to be about $600) by 1/3 to 2/3rds or more (which is possible, depending on the broker.) Now look at a compounding calculator like this, put in the value of your account, a reasonable annual rate of return (say 8%), and compound over the rest of your working lifetime, say 30 years. Now add or subtract $200 or $400 and run the calculation again. The result is as much as several thousand dollars! And that's just for your investments to date.

    I applaud your portfolio, which I think is first-rate. I won't go into the arguments here, but I agree with the approach of holding 50-60 positions, and I wouldn't try to economize on commissions by holding fewer. I am just pointing out that when you engage in the number of transactions that 50-60 positions requires, allowing an extra 1/2 - 1% to be skimmed off the top has serious consequences when you compound. If you have no use for the extra money, I'll be happy to send you my address :).
    Jul 15 03:39 PM | 1 Like Like |Link to Comment
  • 5 Undervalued Companies With A Low Beta [View article]
    "For the Defensive Investor, [HCP's] PEmg ratio is too high..."

    The authors who write about REITs here on SA generally seem to say that PE is a misleading metric for evaluating REITs, and that you should use P/FFO or P/AFFO instead. What say you?
    Jul 14 01:00 PM | 1 Like Like |Link to Comment
  • Is McDonald's Better Than Starbucks For Dividend Growth Investors? [View article]
    If you want to know where JNJ came from, check the same author's second-to-last article. Looks to me like someone is writing articles from a template to accumulate page views, forgot to plug in SBUX for JNJ, and didn't proofread.
    Jul 14 12:45 PM | Likes Like |Link to Comment
  • Chevron Lacks Growth [View article]
    Try taking a long view:;range=my;compare=;ind...

    AA rated. 9.4% CAGR over 40 years (although members of my family have owned it even longer.) 9th highest yield amongst the Dividend Aristocrats. Good long-term prospects, as pointed out by several commenters above. No, I am not terribly concerned about the first two months of the second quarter.
    Jul 14 12:39 PM | 2 Likes Like |Link to Comment
  • How Do You Buy An Irreplaceable Corner? [View article]
    For the purposes of evaluating investments, just what is the difference between "shopping center" REITs like Regency and "net-lease" REITs like National Retail Properties or Realty Income? Do NNN and O never own entire shopping centers? Does REG never do triple-net leases? Is there a difference in riskiness?
    Jul 14 11:29 AM | 1 Like Like |Link to Comment
  • Why Lower-Yielding Stocks Provide Better Long-Term Returns [View article]
    Well, I looked at what you said: "When one speaks of 'yield' one is addressing both components..." Later you say "the share price is a component of the dividend yield."

    Now that I reread, I can see what you were saying. My problem is with the the term "component." I don't think we disagree that yield is calculated by dividing the dividend per share by the share price. But it seems a little peculiar to say that share price is a "component" of the yield. Maybe when you ADD X and Y, the result has X or Y as a component, but for division the terminology sounds really strange. A divisor doesn't seem like a "component" of the result. Perhaps you can see how I got the impression that "both components" were somehow being added into the yield.

    So I think the terminology is really misleading, but I misunderstood. My apologies.
    Jul 11 07:54 PM | Likes Like |Link to Comment
  • Why Lower-Yielding Stocks Provide Better Long-Term Returns [View article]
    "In many ways, I believe that this study is too broad to answer definitively in one article – even with a longer timeframe can we be sure that the results will hold across European dividend stocks, emerging markets, etc? In addition, when examining stocks across bull and bear markets, the results would depend on which stocks are being studied."

    Well, sure. But YOU chose "which stocks are being studied" -- i.e. stocks from the Aristocrats list. The point would be that, considering THOSE stocks, you still need a larger time frame to reach a defensible conclusion. No one was complaining about you not including stocks from European or emerging markets.
    Jul 11 06:06 PM | Likes Like |Link to Comment
  • 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