Economics-Based Investor

Value, growth, growth at reasonable price, long-term horizon
Economics-Based Investor
Value, growth, growth at reasonable price, long-term horizon
Contributor since: 2015
It is somewhere in the middle - some feel they can now spend a bit more, but I would assess it is more in the food/booze industry that you would see increases, mainly because as in your example, it is $78/month...or a couple meals out/couple bottles of a tasty elixir. A trip to Costco for me is already 2-3 times that, so it won't be something on my mind there...unless it is for an extra bottle/case of something to take home.
Nice article - please keep writing, you just got a new follower. Your style and BLUF/BLATE (Bottom line up-front / Bottom line at the end) use is very reader friendly, and the idea is something fresh and non-recycled to at least make me think.
The one thing, and this is something that could help further the argument, is how healthcare costs have risen at the same time; so it is not likely a clear-cut into savings, but there are also other expenditures taking in the excess wealth.
You took the words out of my mouth...I love the acquisition comments that lack a reason to do so.
Wild - I concur on all; the article made me at least do some chart comparisons to 2007-2009 and 2015-now; there does appear to be a pattern with XLP/XLU and SPY as investors flee to safer grounds that does bring some concern.
But it is, to a large degree, stating the obvious that those who lived 2009 likely remember well.
The fact that several people are missing the point and that it took me two, almost three reads to figure out his BL is likely what is causing some emotional reactions. Once you understand the point, it is a solid article and something to ponder. I just think the BL/thesis could have been a bit more up-front with probably a couple less charts...and the tweet.
The only list I remotely liked was: Good Dividend Payers To Buy On Dips
Your comment on the dividend is interesting as well - it would have been worth looking at DRIP / non DRIP and the performance. The other question that I have is how many of those cut or stopped their Divs? Not too many outside the banks/finance companies.
On a serious note, similar to my comment above, you are correct - everything in XLP / PBJ is very high right now as are utilities. A real look is needed to see if this mirrors 2007-2008.
The point was to discuss the myth that dividend stocks are oblivious to market drops. It has validity in that all the consumer staples stocks and utilities have recently seen abnormal gains as investors run to "safety."
However, this could have likely been explained in a more simplified manner...and by likely showing the recent market actions that may coincide with 2007-2008 as the crash stage was set.
Could not have said this better. I think "safer" might be the word - it is like running to the hills to defend a town against attackers. It gives you an advantage, but even hills can be over-run by attackers. And right now investors are running for the hills in consumer staples.
Additionally, DRIPs are concerning if you stop them as the market sinks instead of increasing the interval amounts...you can bet if O fell to under 20 (with no changes in fundamentals that put the company's future in health), or KO back to the teens, or MMM well under 100, that I and many other dividend investors would be buying hand over fist.
That is exactly how I set up the portfolio with 4 flagship stocks that have next-to-nothing that I dislike. Passive investing has been my most profitable over the past 20 years...and yes, dips provide a lot of opportunity.
based on filling what need that those companies need to accomodate?
Generally acquisitions occur because a company has void it needs to fill. So what need would TWTR meet for any of the big boys - FB, GOOG, AMZN? How would it enhance the current models that are growing quite well? Before someone spouts off with "it's the user base, silly" remember that that vast majority of TWTR users are already intertwined with the previously mentioned companies; and even if they are not, they have heard of them and are staying away for a strong reason that will be difficult to erode.
I could agree in that the new common move is to trade on a regular basis or buy high growth and leave the old consumer staples stocks to grams and gramps...or to leave drips to old fogies.
I am actually ahead of SPY by a fair amount since December on my twins fund which is set as a weekly/biweekly purchase in a drip-style (sharebuilder and WFC's shareowner) - around 6-8% ahead right now - mainly due to O and MMM as the stablizers to counter SBUX and V. But I am now at the point of considering adding more to SBUX and V while they are beat down. I will publish something in-depth on it next month as it crosses its first Q of investing.
And now it is looking even better!
I feel you have described a cross between a company's point of maturation versus saturation. One could argue AAPL had to pay out its dividend at the point of maturation, where its ecosystem was complete and its flagship products (Pod, Phone, Pad) were out in mass. The cash was building up and investors wanted more - and you could argue this with any stock in any sector. Then those products hit a level of saturation unless new flagships are found - there are only so many people in the world, and within that, only so many who can afford AAPL products.
So BL, does the dividend payout represent a lack of innovation and future growth stagnation? Generally, yes in regards to investors expecting 10-20%+ YoY growth; but it more illustrates that a company, especially in tech, has found great success and sees a stable future. Intel, MSFT, CSCO all are great examples of these...ho-hum growth, but also saturated and stable. Even when funding R&D, these companies generally are finding innovation to be add-on gimmicks, not brand new game-changing products unless by acquisition. And while acquisitions sound great, the bigger a company grows, the harder it is to manage and continue growing.
HOG is worth a nibble, but likely still a few more Qs of pain before pleasure. The big concern for me remains in that motorcycle sales worldwide are increasing while HOG has seen only gains in international sales offset by a decline in domestic revenues. However, with its current yield and steady cash flow, nibbling right now is not a bad option.
Nice red herring argument... CRM may be the same, but that is for another article/post. The market decided yesterday that 200 is not a justifiable price based on guidance.
Just because LNKD serves a truly functional purpose does not mean it makes money...it is all about total eyeballs through advertising and paid subscriptions. Those subs are clearly not the majority, and advertising is a very specific niche on LNKD as opposed to the generalist model on FB.
O trades similar to a consumer staple due to its dividend, low vacancy rate, and manageable debt at fixed rates - thus people see it as safety. Compare it to PG and other staples, even food. SJM is about to break 130 in a "down market," and K is back up near highs as well.
The less sensitive are becoming harder and harder to find with globalization. Your food stocks are not bad choices, as well as some of the REITs and consumer staples (PG is a bit pricey right now, like CL better).
Actually I am about to do that in the near term. Have O, GIS, K, and KHC/MDLZ there already so what's one more!
Agree - TMI does matter in investing, and it is why I never defended my UA long position during the dip into the 60s - we really had no new accurate information, so all I would be doing is restating what I have already stated.
Gut Feelings was a requirement in grad school for me and it was great for helping my Communication decision making paper on investing based on less information - name recognition and even ticker recognition (CAR vs KMX, GOOD vs O, for example). Sometimes the best decisions are made with just gut assumptions.
For AAPL, is that Paulo? I know there are a few who do write a lot of the same thesis, and AAPL is very profitable to write about, especially if you are a bear.
LOL, I was thinking the same. While I am long O and buy through the drip regularly, I do think it has gotten a bit ahead of itself. However, rather than sell, I would just consider going to cash for a better entry point or lowering my bi-monthly buys.
The retail stores, outside the outlets, were a terrible choice. Outlets did well for the tourists, but the retail shops inside high-end malls just did not make sense when the product was already carried in the dept stores within the malls. Cannibalism at its best!
But I do feel the author is valid in assessing O is overpriced; it is just not something I would like to sell and take the tax hit, but I am considering slowing my purchases a bit in my DRIP.
Yes, and there was actually another article on O describing how each time mgmt does that, value is actually enriched for shareholders as mgmt does not squander the additional funds - they place them into new properties, thus increasing revenues and profits and in turn dividends. This is how O has significantly increased its hold and business over the past 10 years, as well as become heavily diversified.
Concur here; while it has gotten a bit ahead of itself, it is more reason to simply move funds to cash/slow buys on O and await a better entry point. I don't see where the fundamentals have changed.
It is a good point overall, and goes with the Hastie-Dawes argument regarding rational choice. Too much information, even 100% accurate and regardless of the source, does not usually lead to better outcomes. It makes decisions more difficult for the most part.
And the contrarian is Gigerenzer's Gut Feelings, where you should trust your gut. But with SA, I find ideas from reading other articles as most contributors do, but agree that there is often too much noice...usually involving AAPL and its value/iPhone sales.
The piece about her in NYT speaks volumes. If you can't say "thank you" and "good job" more than once in a blue moon then you will have a team that performs like Yahoo has performed. Leadership by fear is a type of leadership that normally does not end well; leadership by inspiration builds teams that work cohesively. She appears to lack the "it" factor in building the necessary trust and loyalty that makes a cohesive team, not to mention the lack of a Yahoo vision for the future outside survival.
Alex, I think you need to define fad - an intense and widely shared enthusiasm for something, especially one that is short-lived and without basis in the object's qualities.
If this is a "fad," then by all intents and purposes we should see cider sales completely slump, not slow in growth as they fall out of favor, similar to bell bottom jeans, pogs, chia pets, and so on; but instead, we see growth drastically slow, but still growth. This likely means that those who chose to drink cider are still drinking cider, with a few new companions.
Rather than fad, a better thesis might be that the market for cider is "saturated and/or matured." Those who have switched to cider have done so; growth (not the fad) is halting. Now if we see a -20 - 25% drop next Q, then yes, it was a fad.
T- agree. Look at domestic beer growth over the past 10 years compared to craft; one is losing market share, the other moving higher. BUD's real point of growth has only been in acquisition of craft beer brands.
Alex,
See my comment to T-Time - it ends up being less keg sales, more bottle sales during hard times, and more switching to cheaper hard liquor vs changing beer brands. DEO tends to do well during recession times.
Craft is growing slower because the market has matured and is saturated; those lovely things called "barriers to entry" have been put up to slow more brewers from joining the club and you have a market now flooded with choices - I mean man can only drink so much!
T-Time: Good comment; in addition, If a recession hits, you will see the 2009 movement that took consumers from drinking $4-7 drafts at the bars to drinking $9-12 six packs at home with friends - it actually helped beer sales more than hindered. And by that logic, sports bars like BWLD become a good short; But even if it is a recession, those establishments see a spike from cable-cutters coming out for a game or two. The time to short SAM, IMO, passed when it sank well under $300 a year ago and again in the last Q.