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David Crosetti  

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  • The Half-Million Dollar Income Project [View article]
    Good luck with this project. You are going to need it. You said:

    "The goal of this portfolio comes straight from its title - the $538,000 project. Using an inflation calculator (assuming 2% annual interest growth for the next 50 years) to receive a current income of $200,000 a year, this portfolio will need to earn $538,000 a year in 50 years."

    Have you used any calculators (financial) to see how much money you need to put away over the next 50 years and what rate of return you will need, in order to have a portfolio that will be large enough to produce the kind of income that you are hoping for?

    I might have missed it, but I don't see any mathematics in this project that would lead someone to think that your goals are achievable.

    From my calculations, if you begin with $3500 and contribute $300 a month for the next 50 years and you get an average annual return of 13.5% you should have no problem getting $538k annually from a portfolio that will yield 3.5% annualized.

    I think the only real problem here might be the 13.5% annualized gain on the money you are investing.

    I know the cliché is "some years more, some years less", but a couple of down years can really screw up this plan.

    Dave
    Apr 27, 2015. 02:29 PM | 4 Likes Like |Link to Comment
  • Comparing The DG50 To My 3-Fund Portfolio On The Road To Retirement [View article]
    Got your dare a little screwed up there.

    Hard to have performance from 6/1/2015, don't you think?
    Apr 25, 2015. 02:31 PM | 2 Likes Like |Link to Comment
  • Coca-Cola: Strong Company, Weak Earnings - Is It Time To Re-Fill Your Portfolio? [View article]
    Coke's management is no different from the management of any other company, professor.

    Just like their are rapacious people in academia, there are rapacious people in business and even in politics.

    Take Hillary and Bill Clinton, for example.
    Apr 25, 2015. 10:45 AM | 9 Likes Like |Link to Comment
  • Comparing The DG50 To My 3-Fund Portfolio On The Road To Retirement [View article]
    2.5:

    I was in the process of writing an article about my wife's Roth IRA.

    We started funding the Roth in 2005 (we made our contribution for tax year 2005 and bought stocks by the end of the year.

    Every year we decided to purchase 4-6 stocks that were "must haves" based on value to worth.

    We initially began with our standards of KO, PG, CL, KMB, and JNJ. We bought those 5 companies for years 2005, 2006, and 2007.

    In 2008 we bought MMM, INTC, MSFT, TGT and MO. Equal dollar amount for each.

    In 2009 we added WFC, LMT, LEG, ITW and GE.

    In 2010 we bought SNA, GPC, CBRL, BLL, and NOC.

    In 2011 we bought AWR, CSX, HRS, BCR, and BDX.

    In 2012 we bought BRCM, ARII, CTSH, QCOM, and OUTR.

    Every year, looking for the best values that we could find and trying to find a compelling reason to own a part of each company. We sifted through a lot of different possibilities but selected what we considered to be the best of breed.

    In 2013 and 2014 shares of new companies to our portfolio and now we have almost all 50 of our own Nifty 50 stocks in this portfolio. We now own 40 companies in this portfolio out of the 50 that were part of my group.

    This is an income and growth portfolio and it has performed very well for us since inception.

    We will be either adding new positions for our 2015 contribution or adding to our existing positions. Haven't decided yet. Decided to let the first quarter play out before making our decision to invest. The cash is there, but we have not purchased anything for 2015 yet.
    Apr 24, 2015. 01:16 PM | 2 Likes Like |Link to Comment
  • Retired Dividend Investors Are Deluded By Yield On Cost [View article]
    George:

    I'm getting a bit more cranky, it seems, every day.

    I just don't understand these articles. Who cares if an investor values YOC as a metric? I don't. It has little or no concern to me.

    What if someone says "anyone who invests in individual stocks is a fool because no one can beat an index." Is that going to make me go out and buy an index? Probably not.

    If someone says "XYZ stock can double in a year!" Should I care? I've never even heard of XYZ, much less ever considered owning it. And notice that they said "can double in a year" and not "will double in a year."

    All this angst over what someone does or doesn't do, what someone values or doesn't value, is meaningless.

    Why do we need this kind of discussion in the first place? What value does it bring to making us better investors? Is it something that I need to know or risk losing money? Is it important?

    No, it's not. It's just more discord for no reason other than page hits.
    Apr 24, 2015. 10:44 AM | 25 Likes Like |Link to Comment
  • Comparing The DG50 To My 3-Fund Portfolio On The Road To Retirement [View article]
    I think that the biggest flaw in this project centers around the flawed premise that the Nifty 50 stocks are "must buy" stocks or that they are "must own" stocks.

    Individual stock investors generally purchase stocks when they consider the stock to be priced at a value to intrinsic worth. That means that there are time when you just aren't buying KO, PG, CL etc.

    The list that Mike created was a compilation of stocks from 10 individual Seeking Alpha authors. In effect, it was a "beauty pageant" based on different motivators for each participant.

    If I am not mistake, my own list of 50 stocks that I contributed had fewer consensus picks on it than did any other author's list of stocks. The reason for that is when I selected my stocks for the list, I looked at companies that an investor could purchase at that particular point in time, as well a stocks that are cornerstones to a portfolio, but not necessarily stocks to purchase today.

    But in my own pondering about Indexes vs. individual stocks, I've found that time is the most important factor in "beating" an index. The longer one holds quality stocks, bought at a value price, the larger the spread between an index like SPY and the individual stock portfolio.
    Apr 24, 2015. 09:54 AM | 13 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    Retail:

    I am familiar with the history of the 4% Rule, which was posted in another comment.

    The intent behind the "rule" was to structure some idea of how long money would last into retirement, based on the metric of drawing 4% annually and increasing that amount every year by the rate of inflation.

    Now you can have a different notion of the 4% Rule, but as I just presented it was the intention of the man who is credited with creating it.

    In other words, not my words, but his.

    His findings were that if you followed the rule as he outlined it, that it would be a safe assumption that your money would last 30 years.

    Why is that so difficult of a concept to gasp for so many people?

    How you manage your money, in light of the current market conditions is up to you. But considering that the market environment is nothing like it was when this concept was created, I don't think that it's going to work out as well as it was intended and that perhaps a 30 year window of money should be reduced to another expectation.
    Apr 23, 2015. 05:23 PM | 6 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    G:

    I like DD and would give him a score of 9.5

    It's a combination of style, presentation, and difficulty of the particular dive. You get more style points for a backward half-gainer with a double twist followed by a suplex rotation than for just a straight swan dive off the platform.
    Apr 23, 2015. 02:21 PM | 1 Like Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    Paul:

    But, you are making the assumption that the average investor is going to behave in a "non-average" way.

    I thought that investing in an index was supposed to limit risk, as opposed to the risky nature of selecting individual stocks. But maybe I missed something.
    Apr 23, 2015. 02:16 PM | 1 Like Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    Michael:

    I think a factoid like that gives some people some solace. But over those 80 years, there were periods that investments did not return 9% in any given year.

    With an average, that means "some years more than 9% and some years less than 9%."

    As pointed out earlier, the SPY returned 2% annualized over the 12 year period of 1998-2010. With dividends reinvested, that boosted the annual returns to 3.7%.

    Whoops. The 2000-2003 years were terrible with negative returns. 2008 was a ball-buster.
    Apr 23, 2015. 02:14 PM | 2 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    Ah, yes. The "Kodak" story.

    Nice myth.

    Suggest you take a look at this:

    http://bit.ly/1yaskQ1
    Apr 23, 2015. 02:06 PM | 3 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    Paul:

    Just remember to phrase your answer in the form of a question.

    Dave
    Apr 23, 2015. 02:02 PM | 2 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    But the question you haven't answered is "what's going to happen moving forward?"

    Looking back is a lot of fun, but it can be an exercise that causes people to make faulty assumptions.

    The last three years for SPY, for example have been absolutely great. But what about the next three years? Five years? Ten years?

    People retire every day. So, they were retiring in 2000, 2001, and 2002 which were terrible years for the stock market.

    The 4% rule is a metric to determine how long your money will last based on the assumptions that you put into the calculation. What the creator of the 4% rule discovered was that based on his premise, folks would run out of money in 30 years.

    If that is the case, then you have to make adjustments to your calculations, unless you plan on dying 30 years after you retire. Which, hey is a good assumption if you retire at 66.

    The problem is not the 4% rule. It's the assumption that you are going to have a large enough portfolio, with a lower than 4% expected draw down, and that the markets are going to give you a 6% or better annualized yield every year, in order to keep the portfolio growing at a rate that is larger than your withdrawals--so that you never run out of money.

    When you consider a basket of dividend paying stocks with a dividend growth rate that is larger than a 4% drawdown and that is growing at 6% or better, I think your odds of outliving your money increase.

    But, we shall see.
    Apr 23, 2015. 02:01 PM | 10 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    G:

    There plenty of investment gurus back in the 1980's with all kinds of ideas based on "the past."

    Unfortunately, the past has a way of screwing things up in the future.

    Dave
    Apr 23, 2015. 01:52 PM | 5 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    JCC:

    Are you suggesting that there was no one retiring in the period from 12/31/1998-12/31/2010? How are my dates a "cherry pick?"

    I'm not suggesting that those dates were a lousy place to be an investor, but when you consider how many of the dividend stalwart stocks like KO, PG, CL, KMB, and JNJ did during those years, as opposed to SPY, it's an eye opener.

    I am pointing out that if an investor is going to "assume" that the market is going to provide gains in excess of 4% annually (to make up for the withdrawals in his portfolio) and that investor is going to divine some expected rate of return, he ought to be cognizant of the realities in the market.

    People keep ignoring the fact that the 4% Rule is a tool to look at how long your money will last, given a 4% withdrawal rate AND an adjustment for inflation.

    It was intended to show the investor a model of when he might run out of money so that the investor could make intelligent choices about maximizing his income and having that income last longer than 30 years.

    I think people are talking past one another here.

    Go ahead and choose to live in a world of assumptions. I prefer to live in a world where the cards in the deck are stacked in my favor and not the other guy's favor.
    Apr 23, 2015. 01:00 PM | 4 Likes Like |Link to Comment
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