David Van Knapp

S&P 500: Locking On a Future Target

If anybody understands the first sentence of this article, or the whole article, please spell it out. I have no idea what it is talking about.

The New Normal: A Secular Bear Market

I'm not managing anybody's money but my own, but I'll answer your question anyway. My results from August 7 until now closely mirror the S&P 500's, which is to say they're damn good. Actually, my results have been that way since April, when I recognized that a mid-recession rally was under way.

Often when "timing" is mentioned, a straw man is set up to contrast with it: buy-and-hold. The fact of the matter is, the Sensible Stock Investor need not be strictly a market timer nor a buy-and holder. There are gradations along the scale, subtleties and nuances. It's not a binary choice.

So in the market since 2000 (which has had both strong up and down periods), it was possible for a stock investor to be invested at some times, partially invested at other times, and completely out of the market at still other times. It was possible to follow two completely different strategies: One for capital gains (which usually leads to more trading) and another based on the receipt of ever-increasing dividends (which usually means little trading). There have been an infinite number of ways to invest and make money, and an infinite number of ways to lose money.

Furthermore, just because one's long-term view may that we are in a secular bear market does not mean that one cannot be flexible and take advantage of periodic opportunities when the stock market is going up, as it has been since March. If that's "timing," so be it, I don't care about semantic arguments. The point is not to get wedded to one point of view--don't get emotional, get practical. I think that was the point of the article.


On Nov 11 10:32 AM Conventional Wisdumb wrote:

> I have a very simple question for all pundits: What were your clients
> results from Aug 07 till now?
>
> The annualized, geometric return, not the average return. No gimmicks.
> Beginning and ending money.
>
> The only way you could win in this market is to be a market timer
> - a long term buy and holder is still buying and crying.

Falling Bank Dividends: It Could Be Worse

Stock prices have nothing to do with corporate decisions to issue, not issue, freeze, increase, or decrease a dividend.

Assuming that management is basically competent (admittedly sometimes debatable), all decisions about dividends are based on the corporate dividend culture and strategy, the company's cash situation, and most important the company's businesss outlook for the next couple years, as best as the company can determine that.

At some point, presumably, most banks will return to being dividend payers. That does not mean they will just leap back to the amount of dividend they formerly paid. More likely most bank managements will decide to scale back into dividend mode. Anyway, all this is speculative. The fact of the matter is, we do not know when or at what payout rate banks are going to return to being dividend payers. The "old days" may be over or may not return for many years.

Usually, you don't have to speculate about dividends...that's the whole point about buying dividend stocks under a dividend investing strategy. Most banks now are unsuitable for such a strategy, because of the questions surrounding their dividends.

Louise Yamada on the Market's Direction

Bruce, You make good points. But if you simply look at past recessions, rallies like the current one are not unusual. This one has been steeper and longer than average, but all of the criticism of the rally for all these months (and it has been derided from the beginning) has ignored or refused to accept the fact that it's a garden-variety recession rally.

Look at the article I wrote in May about it (seekingalpha.com/artic...). It contains charts of the previous 9 recessions, and in 8 of them, there were rallies similar to this one. So it's wrong to say this rally has been unpredictable or illogical. Its historical precedents are right there on the charts...not charts from the depression, but charts of the last 9 recessions.

Louise Yamada on the Market's Direction

Pretty wishy-washy. And that's more likely to make her right than she has been through most of this rally, throughout which she's been dead wrong. Or as it's put in the interview, "confusing." That's analyst-speak for "wrong."

Six Striking Trends Emerge from Third Quarter Earnings

Assuming the facts are basically correct as stated (I have not checked them), the article is spot-on. I have been stating for months that this rally has been and is based on "net news flow." That is a pretty subjective standard, but it is what is driving the market. The most important news items, IMO, are earnings news, revenue news, and general economic news.

On any given day, a single headline news item can seem to drive the market (up or down), while on other days it seems like it's a blend of smaller news items from the past couple of days. Occasionally, the market seems to move counter to the balance of that day's news, but on most days, it reacts about as you would expect.

This article mostly covers earnings news. The "news" in earnings is almost always results vs. consensus estimates, NOT results vs. year-ago or last quarter. It's been that way as long as I can remember, this current rally is not unusual in that regard. That's why companies work so hard to manage expectations...it's a routine function at most of the largest and best companies. It's all part of capitalism.

The Consequences of the U.S. Monetary Base Bubble

user396040:

Good observation at the end of your post about so many participants being more interested in ranting. The fencesitter's remorse that you also detect is often much more than that, it is the sound of people who have gotten massacred because they shorted the market, continue to short the market, and/or are itching to short the market the first chance they get. They've been wrong for months, but they have become married to a doom-and-gloom outlook; a belief that the entire rally has materialized out of thin air; and that it has all been engineered by a government-financier-m... conspiracy.

Don't worry, though. Look around the site and soon enough you'll find articles and comments about riding the rally safely; dividend investing; and others who are working on what you are seeking, namely a way to make money today and tomorrow.

Q3 GDP: Obviously Fictional

You prefer comments with hard facts, not fluff? How's this?
-----
"Sorry, but this "rally" is 50% propaganda, and 50% Plunge Protection Team. It sounds like you could use a large dose of REALITY.

"I recommend John Williams' site: shadowstats.com. Take a look at REAL numbers - and that should be all it takes to bring you back to Earth.

"The U.S. housing collapse isn't half-over, and forget about ridiculously fabricated employment "statistics", the U.S. is actually on course to lose 20 MILLION jobs, this year alone.

"Finally, the U.S. government cannot AFFORD for this "rally" to continue - as it would result in the Treasuries "bubble" deflating - as people move out of bonds into equities.

"The U.S. government CANNOT prop up the USD, the bond market, AND equities all at once."
-----
Do you see a fact in there? I don't. In case you don't recognize the comment, it's one that you wrote back in May. As to the market rally itself, down here on Earth where I've been all along, the market is up about 23% since you wrote the above. Guess your "reality" has flaws.

United Technologies: Attractive Dividend and Peer Outperformance

I agree. Nowhere in the article is the current dividend stated. My minimum threshold is 3%. The historical dividend chart (including the yield on cost column) is interesting, but that is irrelevant for a new buyer. A new buyer would be, in effect, starting at the op of that chrt with a yield below 2.4%

Dividend Progress Report: October 2009

Thanks. The reason I asked is that you may not be giving yourself enough credit for the yield on cost of the overall strategy. You are correct that new purchases made mostly with new money will usually "start you over" with a lower yield on cost than has been achieved by purchases made in the past. That obscures your (presumed) increasing YOC results on prior purchases that result from their increasing dividends. It's probably not amenable to a simple presentation (since you're adding new money so often), but it would be cool to have a way to show your yield on cost growing for past purchases . Perhaps yearly...YOC on holdings as of end of 2007, end of 2008, etc.?

The Reluctant Bull: My Portfolio

Old Trader,

First off, you're not "old" by any definition I use. Second, thanks for sharing your well-thought portfolio. It seems well selected to achieve the objectives mentioned in your profile. Third, appreciate your individual responses to comments...more good info came out of the comments and responses. This is the way SA works at its best, for the benefit of the whole community: Thoughtful article, thoughtful comments, thoughtful responses to the comments.

Thanks.

Q3 GDP: Obviously Fictional

"Let's start with the big picture. At the end of 2008, official GDP was -6.4%. This was also likely an understatement, but for the sake of argument let's treat it as “fact”. Move ahead to the Q3 2009 reading of +3.5% and we see a swing of 10% in U.S. GDP – in merely the span of nine months. The only factor in the U.S. economy pushing against this massive contraction (and debt implosion) is the “Obama stimulus package”. However, using the Obama regime's own numbers, less than $300 billion of true “stimulus” would reach the U.S. economy over the course of this entire year."
-----
You seem to like facts and logic, so let's parse those statements you made.

(1) "At the end of 2008, official GDP was -6.4%." Wrong. The RATE OF GROWTH of the GDP was -6.4%, not the GDP itself. The GDP was contracting at a 6.4% annual rate. That's what happens in a recession, overall economic activity contracts. There is a difference between size and rate of change, just as there is a difference between, say, a car's location and its velocity of movement away from that location.

(2) "This means that as of the end of Q3, only about $200 billion of true stimulus has entered the U.S. economy. If anyone actually believes that this $200 billion could create a 10% shift in U.S. GDP, the following points will quickly dispel that fantasy." Wrong again, repeating the same mistake. The $200 B did not create, and is not claimed to have created, a 10% shift in GDP. It is one of many factors that led to a CHANGE IN THE RATE OF GROWTH in GDP from -6.4% annualized to +3.5% annualized. There have been many such shifts in history. Just look at any long-term chart of quarter-to-quarter changes in the rate of growth of GDP over the years. There is nothing remarkable about this. It is what typically happens towards the end of recessions.

(3) "The only factor in the U.S. economy pushing against this massive contraction (and debt implosion) is the 'Obama stimulus package'." Wrong again. There are lots of factors. Since we are talking about a rate of change, not absolute size, any economic measurement or activity that contracted at a slowing rate of speed, or flattened out instead of contracting, or turned upward from a downward trajectory, ALL contributed to the change in the rate of growth in GDP. There are literally thousands of such factors. Many of them are reported in a continuing stream of data and information almost daily.

Surely you must understand the difference between the size of something and the rate at which it is changing? If you do, I'm wondering why you write such misleading sentences as the ones quoted here? Perhaps the reason the MSM didn't look into things like the ones stated here is because they are false, illogical, and misleading, not because the journalists are part of a massive conspiracy or lazy. If you are going to present analysis to help the users of SA, you could use facts and sound logic. Efforts to dig behind government (or any kind) of information are welcomed, but such obviously flawed statements diminish any writer's credibility.

Dividend Progress Report: October 2009

Thanks for sharing. Question: Do you add new money (from the outside, not from dividends) to this account? Given your age, I'm assuming you are adding new money (each month?), so the account size change is a blended result of new money added, dividends coming in, and price changes in the stocks owned. A corollary to that would be that new purchases are made with a combination of new money + accumulated dividends + proceeds from sales of existing shares.

Thanks, Dave

Telus Fails to Raise Dividend

No surprise here. I am currently culling through dividend stocks for the upcoming edition of "The Top 40 Dividend Stocks for 2010," and Telus did not make it through the first round of qualifying tests. 169 other stocks did.

Wall Street: Dumb as It Ever Was

You dump all over prognosticators, yet you are one yourself. Just looking at your last article (from late July), you had this to say: "Now that the market has run up some 46% since the last Running (away) of the Sheep, the wooly stampede has reversed direction. Will the carnage be just as bad this time? History says yes..."

How did that work out for you? The market made it up to 60%+, is still at +58% and may go higher. (By the way, I have a statistical and scientific background too.) Maybe you should lighten up on the prognosticators--if you want peace from CNBC, turn off the damn TV.