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Eli Inkrot

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  • Why This Dividend Aristocrat ETF Isn't So Noble [View article]
    Hi carr, thanks for your comment. Although there are at least two previous comments that address rebalancing specifically. My fielded answer is the same as it was above:

    "I didn’t so much omit the quarterly rebalancing as much as I considered it to be a secondary notion. Sure, if you wanted to precisely replicate the fund you would also have to rebalance each quarter. Yet that might not be as tedious as one would believe. In the fund’s fact sheet it lists an average monthly turnover of 1.4%. With the previously described $54k invested, you could make up to 26 trades a year at $7 and still come out ahead by owning the companies. Heck, if you utilized Scottrade’s FRIP program you could likely get quite close to rebalanced positions without any fees.

    More importantly, do you really want to sell a portion of your wonderful business partnership simply because someone happens to supply a bid that’s a percent or two higher than your other holdings? The idea of rebalancing could just as easily be a hindrance instead of useful automation."
    Apr 4 08:55 AM | Likes Like |Link to Comment
  • Why This Dividend Aristocrat ETF Isn't So Noble [View article]
    Hi old galoot, thanks for your comment. Ask and you shall receive:

    http://seekingalpha.co...

    This is an article I did on VIG back in 2012. Granted it's a year and a half later and it certainly would be more difficult to emulate than NOBL, but I would contend that my points in that article still stand.
    Apr 4 08:52 AM | Likes Like |Link to Comment
  • Why This Dividend Aristocrat ETF Isn't So Noble [View article]
    *an ETF is its holdings less fees
    Apr 3 03:10 PM | 2 Likes Like |Link to Comment
  • Why This Dividend Aristocrat ETF Isn't So Noble [View article]
    Hi BoomBoom (any relation to Fred Couples?), thanks for your comment. I certainly agree with the second bit. Yet one should be conscious of the relative fee scale when imitating an ETF. For instance, in this article I demonstrated how you could essentially replicate the NOBL and be effectively even in fees after 2 years with $54k (54x$7 = $54,000 x .0035 x 2). This was mainly due to the low number of holdings. But when you consider something like the SPY it becomes much more difficult to emulate as it has both many more holdings and a far lower expense ratio.

    With 500 holdings and a .09% expense ratio, this ETF would require 36 times as many years to replicate in the fee game. Said differently, with $108k in capital it would take you one year to match the NOBL on fees while it would take you 36 years to match the SPY. Or alternatively, to match the NOBL in fees in one year it would take $108k vs. almost $3.9 million for the SPY. So it is true that not paying fees will always win out, but it’s important to keep this in context.
    Apr 3 01:23 PM | Likes Like |Link to Comment
  • Why This Dividend Aristocrat ETF Isn't So Noble [View article]
    Hi Bob, thanks for your comment. Agreed. With relatively small sums or forced aggregation vehicles, the NOBL appears to be a reasonable proxy.
    Apr 3 12:59 PM | Likes Like |Link to Comment
  • Why This Dividend Aristocrat ETF Isn't So Noble [View article]
    Hi Dale, thanks for your comment and kind words. However, it should be underscored that while the fund’s performance might seem impressive, it is purely a function of the underlying holdings. That is, the ETF can do no better than what it is invested in and in fact will always underperform the aggregate due to fees. There is nothing inherently remarkable about the fund, as it is the companies that do the heavy lifting.
    Apr 3 12:57 PM | Likes Like |Link to Comment
  • Why This Dividend Aristocrat ETF Isn't So Noble [View article]
    Hi chiero, thanks for your comment. I didn’t so much omit the quarterly rebalancing as much as I considered it to be a secondary notion. Sure, if you wanted to precisely replicate the fund you would also have to rebalance each quarter. Yet that might not be as tedious as one would believe. In the fund’s fact sheet it lists an average monthly turnover of 1.4%. With the previously described $54k invested, you could make up to 26 trades a year at $7 and still come out ahead by owning the companies. Heck, if you utilized Scottrade’s FRIP program you could likely get quite close to rebalanced positions without any fees.

    More importantly, do you really want to sell a portion of your wonderful business partnership simply because someone happens to supply a bid that’s a percent or two higher than your other holdings? The idea of rebalancing could just as easily be a hindrance instead of useful automation.
    Apr 3 12:43 PM | 3 Likes Like |Link to Comment
  • Why This Dividend Aristocrat ETF Isn't So Noble [View article]
    Hi varan, thanks for your comment. I agree with you. Yet people will continuously pay for conveniences. I simply wanted to highlight that this particular convenience wasn’t all that difficult to imitate.

    Incidentally, your glass house / stone throwing blurb reminded me of a joke: “My policy is: No stone throwing regardless of housing situation.”

    http://on.cc.com/1mE6VJg
    Apr 3 12:23 PM | 2 Likes Like |Link to Comment
  • You Don't Need $2.5 Million To Retire [View article]
    Jeremy, this is a fantastic post! Thanks for sharing! I went ahead and sent the link to Rockstar Finance to hopefully get a bit more exposure. Your story is a great one and certainly the zero tax scenario is motivating for those pursuing financial independence.
    Mar 24 09:26 AM | Likes Like |Link to Comment
  • Target Is The Only 'Above Average' Dividend Champion [View article]
    Hi maybe, thanks for your comment and kind words. You got it. It's all about the partnership decision.
    Feb 20 04:31 PM | Likes Like |Link to Comment
  • Target Is The Only 'Above Average' Dividend Champion [View article]
    Hi Buffalo, thanks for your comment. However, it's paramount to underscore the notion that this article wasn't truly about TGT. Rather, I was simply indicating that an investor must realize that stock screens are short-cut filters with limitations.
    Feb 20 04:31 PM | Likes Like |Link to Comment
  • Target Is The Only 'Above Average' Dividend Champion [View article]
    Hi David, thanks for your comment. As I mentioned in the article, you provide an outstanding service for income investors and certainly deserve any praise that is sent your way. Moreover, your point about using the "All CCC" tab is a good one in that it would expand your selection universe.

    Yet even with the 488 companies on the present list, you could still run into some of the same follies that I described above. Basically I was indicating that even though such screens are usually reasonable in theory, it's important to underscore the fact that these short-cut filters have limits. After-all, I think we could all agree that TGT isn't truly the only 'above average' dividend champion.
    Feb 20 04:28 PM | 1 Like Like |Link to Comment
  • Coca-Cola Yields 3% And Everyone Should Know It [View article]
    Hi ajaydesai, thanks for your comment. Dating back to 1984, KO has always announced the dividend increase on the third Thursday of February:

    http://bit.ly/TDlalI
    Feb 18 03:32 PM | 1 Like Like |Link to Comment
  • PepsiCo Yields 3.24%, But That's Not The Important Part [View article]
    Hi gfmn2000, thanks for your comment. I agree with 88% of what you said. Thanks for reading!
    Feb 16 09:47 AM | Likes Like |Link to Comment
  • PepsiCo Yields 3.24%, But That's Not The Important Part [View article]
    Hi Bob, thanks for your comment. The important part of the article was focusing on a multi-year stream of income in reference to your applicable alternatives, to which we agree. However, your follow up notions effectively muddle our ideologic common ground.

    Quickly to your points:

    Your use of "fallacious" or "mistaken belief" is a bit worrisome. "Yield" can have a variety of meanings and as I described my interpretation - the amount of income one would receive in the coming 12 months - neither my math nor my logic is misguided. The most likely outcome (and even announced outcome) is that PEP will pay out $2.5325 per share within a year's time and thus a partnership decision at today's price would mean that one receives 3.24% of their capital "back" in that period.

    The use of an unknown and imperfect analysts' consensus estimate is the very definition of what I would deem misguided. The frame of reference is today's purchase, not something that may or may not happen in the future and could be dramatically incorrect.

    Your "evidence" is also a bit troublesome. You don't need "evidence": the math is standing right in front of you. Referring to a quoted yield instead of doing a 1st grade calculation is - in my opinion - a sloppy short-cut and quite like running into traffic at an intersection with a green light. "Well, the light was green so I didn't think to see whether or not any cars were still passing." Incidentally, even your quoted "definition of yield" is incorrect. PEP did not pay out $2.27 in the last 12 months - it paid less. The sites you are referencing are simply annualizing the last quarterly payout - that's it - nothing more, nothing less. The data is only useful in that you know its limitations.

    Finally, it's paramount to underscore the idea that my method does in fact make an "apples to apples" comparison. On the other hand, simply annualizing the trailing payout works against this ability. For instance, look at MMM vs. GPC - two companies that have increased their dividend for over half a century. If you take the short-cut approach, you might see MMM with a 2.6% "yield" and GPC with a 2.5% "yield" and conclude that MMM will pay you more in the coming year. Yet this type of thinking fails to take into account the idea that MMM recently increased its dividend, while GPC will likely do so shortly. In turn, GPC could easily pay more than MMM within the next year. In effect, your quoted metric is not only backward looking it could also lead one to the exact opposite conclusion it supposedly indicates.

    Overall I believe our big picture is on the same page, but relying on a quoted backward yield to make comparisons can be, in a word, dangerous. It's in the same frame as telling me that gasoline used to cost $0.25 a gallon or milk went for a buck. Sure those stats can be interesting, but they tell you little about the current value proposition. Thanks for reading.
    Feb 16 09:42 AM | 7 Likes Like |Link to Comment
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