My Mad Method: What Next To Buy And Why - February, 2013 [View article]
Thanks for the comments, folks.
If you've read any of chowder's comments or Instablogs, you'll understand why I have so many positions. And, yes, the goal is to get to about 50 positions, equally allocated, so that no one position represents more than about a 2% impact to the portfolio's value.
@Vikingsfan: If you get to the point where you only have 5 positions, what happens if one of them takes a big hit? 20% of your portfolio takes that hit. In my case, only 3.57% (presently) would be at risk, and at 50 positions, only 2%.
The reason for holding the #1 and #2 stocks in a given sector/industry is not a matter of indecision, but of getting the best exposure to that industry via the top 2 performers. I own KO, and I've got PEP on my watchlist and would like to hold it someday. MO and PM are another good example (although right now I have LO in my portfolio, but am keeping an eye on PM). Where there are 2 top players, everyone else in that industry is fighting over table scraps...
@rnsmth: Not sure if you saw it on the list, but I do own WEC. It's one of David Van Knapp's Top Dividen Picks for 2013, which is one of the reasons why I went with it over SO when I first picked it up (last month?).
As Viperman states in the comments further down, I don't like just owning a mutual fund because of the fees, the knee-jerking to try to get the "next best thing" after the horse is already out the barn door, and all the other stuff they hold that I'm not interested in. I'm happy being a Do-It-Yourselfer...
Intel (INTC -1%) spikes lower on a Bloomberg report that Apple (AAPL +1.3%) is thinking of abandoning the use of Intel's CPUs within Macs in favor of internally-developed, ARM-based processors such as the ones that power its iOS hardware. Similar reports have been around for a while. [View news story]
When I want to get ANY work done, I go to my laptop. The only thing I use my iPad for is browsing the web at night (but woe betide me if I want to reply to or make a comment on that damn touch-screen keyboard) and reading books. There are things I use my iPad for outside the home (and work) that it's nice to have, but all the content is created on my laptop, saved as PDFs and mailed to myself, so I can open it on my iPad and save the PDF... There is no content creation taking place on my iPad; it's all content consumption... :-/
The Best Thing Warren Buffett Has Said All Year [View article]
Thanks, Siverback, I appreciate that. Yeah, I wasn't attacking Tim, I was just shocked at the revelation that he didn't have an active portfolio, when he writes such wonderful articles and has such great advice on investing, especially Dividend Growth Investing. I understand and respect his explaination; getting through undergraduate work AND law school and coming out the other side with zero debt = an amazing feat, and a lot of great forethought about how you want to manage your future. I'm sure once Tim lands a real job after law school that his portfolio will be one to envy. I just wish someone had told me the things that Tim knows at his age when I was his age. Took me too long to figure out what to do, and now I'm playing a frantic game of catch-up...
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
Trolledo, what part of "I trade in my IRA, so Uncle Sam does NOT get 15% of my dividends" don't you understand?...
$5 in dividends DOES NOT equal $5 in unrealized capital gains, because I haven't realize those capital gains, but next month I get another $5 in dividends, regardless of what the price of that stock is at that time...
Sheesh, you really don't get it. YOU do the math. If you never sell, you're never realizing the capital gains (or losses), but you continue to collect the INCOME from your positions...
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
@RLJ: As DVK alluded to, I, as a DG Investor, don't (can't) rely on the "growth component in my portfolio". I'm striving to build income (from dividends & distributions); the wealth that accumulates as a by-product of currently re-investing that income back into my portfolio while I'm still in the accumulation phase of my investing lifetime is a plus, but it's purpose is to allow me to accumulate more shares of DGI+ stocks, thereby increasing my income stream. Wash, rinse, repeat... I appreciate the growth in value of many of the stocks that I have owned and do own, but its a means to an ends, and that ends is to build a portfolio that will throw off enough income that I can replace my paycheck with it and retire, AND that that income continues to grow at an overall pace that beats inflation until my wife and I have departed our earthly coils; then whatever is left can be divided up amongst my heirs to continue doing the same thing. Wash, rinse, repeat over multiple generations...
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
Great article, Dave! Thanks for getting it published. And congratulations on it being an Editor's Pick, as well; that is well deserved. I'm glad I saw it so soon after it was published and got the chance to post an comment before there were 60 or 100 comments ahead of me that I'd have to read through! LOL!
When Should I Transition From Capital Gain Investing To Dividend Growth Investing? [View article]
"The "cause" of dividend growth investing is helped greatly each time someone says, "I've done that; it works". "
Oh, it's working alright, at least for me, and at least so far. I'll keep chronicling my adventures and reporting DGI progress on my portfolio. Got an end-of-quarter report coming out early next week for Q3'12. Numbers look great!... :-)
10 Rules For Your Own 'Perfect Investment Portfolio' [View article]
DD:
Actually, if you think about it, 4 base hits in a row would probably yield more than just 1 run. This is what I'm always trying to stress to people at work: Don't swing for the fences, get on base consistently and you'll end up winning the game...
The Best Thing Warren Buffett Has Said All Year [View article]
Whether Tim's made a buck in the market yet or not, I still think he gives great advice and puts out well-written articles. I think his theories are sound, and suspect (but don't know for sure) that he's been "paper trading" to check out his ideas.
Keep writing, Tim. I will continue to Follow you here on Seeking Alpha...
The Joy Of Falling Stock Prices For Income Investors [View article]
That's one of the great things about JNJ; they don't have to solely rely on their pharma leg, they've got consumer products and medical devices, too. Also, they have a history of keeping their pharma pipeline well stocked. All the pharmas have the same problem, but they know it and the big ones keep chugging along. I think JNJ is about as "safe" as you can get in a stock; just don't expect huge equity growth, but collect those growing dividends and re-invest, re-invest, re-invest!
Intel Will Soar Above ARM Holdings With New Microarchitecture [View article]
Actually, I think Stock Croc hit the nail on the head. Tablets are just the latest incarnation of computing devices, but they are primarily content consumption devices (by a wide mark) as compared to PCs, which are content creation devices. Dropping a tablet into a dock so that it can have a real keyboard and (possibly?) mouse does not overcome the fact that the tablet cannot process nearly the same amount of data and perform the same volume, quantity and quality of tasks that even a Core i3 PC can (or an Atom-based netbook, for that matter). This is not going to change, and in the meantime Ultrabooks running Windows 8 will start to blur the lines between a traditional notebook computer and a tablet, including touch screens. No, PE, the point is that ARMH is substantially overpriced compared to INTC, and that Intel spends far more in R&D every year than ARM's current market cap. It's also absurd to compare the two companies, since ARM does absolutely no manufacturing, whereas Intel does what ARM does in terms of designing new chips plus they own their own fabs plus they do the assembly and testing of all of their own products; in other words, Intel is a manufacturing powerhouse, while ARM Holdings is just a design house that licenses their IP. It's really not a fair comparison (not fair to ARMH, that is). As an investment, INTC is clearly superior given the simple math that both stocks are currently trading for about the same dollars, but INTC's P/E is well below the market average while ARMH's is significantly above it.
By the way, recent headline from MarketWatch today: "PC Shipments Beat Analysts' Estimates". Don't be so quick to parrot Steve Jobs and declare the PC as being dead. It certainly isn't, and it certainly is continuing to evolve...
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
As usual, Trolledo, you side-stepped the question I posed. I wasn't questioning the mania over the new iPhone 5, but you can not do on an iPhone what you can do on a computer. All of the materials consumed by iPhones are created on... PCs and, in some cases, Macs.
Also, you present "projections" for 2017, which is 5 years in the future. I was refering to now. If you check Intel's sales for the last several years, you will see that the majority of growth is coming from emerging markets: Brazil, India, Indonesia, Russia and China. 5 years from now, it's not surprising to imagine those folks then using whatever disposable income they've accumulated in the interim to spend on a tablet, which as I said, is an add-on device. So I'm not surprised by those projections, although I take all analyst projections with a very large lick of salt, especially when they are trying to predict what will be happening 5 years from now. Point being, your remarks did not dismiss mine; they are complimentary.
You failed the homework assignment. Instead of researching semiconductor manufacturing and Intel's obvious and recognized superiority in that field, you resorted to analyst predictions about tablet consumption 5 years from now, and comments about iPhone sales currently. You get an "F" on this assignment. If you come back with comments about the semiconductor space, Intel's place in it and their prospects in the future in providing the best silicon to any OEM or ODM, we can continue the discussion. (And, oh, by the way, in 5 years it's a very real probability that all those tablets being developed for the emerging markets you referred to will also have Intel Inside. Not a given, but a very real probability...)
Michael (et al): I don't understand your comment about 85 year olds wanting to spend at a faster rate than they did when they were 65 year olds so that they can live a better life than they had been. Let me clarify: I don't understand how you can make that statement and assume that it applies to everyone who might live to be 85 or beyond.
Personally, and this is just a personal bias, I WANT to leave money to my heirs, which is exactly what my parents did NOT do (or will not do, as my mother is still alive but has very few assets left) in my case. I, personally, think it's selfish for an 85 year old to want to "burn through" the rest of their assets so that they die just before they run out of money. Sure, "you can't take it with you", but you can sure as hell leave whatever you were able to accumulate behind for future generations, and still live a comfortable life in retirement.
If my children repeat the mistakes I've made by not investing enough and not starting soon enough to save for retirement, then I will be very happy to leave them something when I'm gone to help them boost their own retirement funds. If they don't repeat my mistakes and start investing earlier than I did and more consistently than I did, then I will be very happy to leave them that much more so that they can enjoy a better life than I've had (or will have had up to that point).
I don't intend to "set the thermostat to 60 in the winter" or live on cat food under a bridge in the end, but I also, knowing my own mother's situation, can't imagine how I'd be spending MORE at 85 than I was capable of spending at 65. If anything, aside from extreme health-related costs, my observations are that past the point where it's comfortable to travel, your expenses tend to go down the older you get (again, aside from nursing care, etc., costs).
But even in that case, we just managed to get my mother-in-law into a very nice facility where she is still very close to most of her children, and while we know when her money will run out, we also know that she will be able to stay in that facility based on what Medicaid (Medicare?) will provide for her. My wife and siblings are sleeping better at night now than when my mother-in-law was still living in her own condo and we weren't sure how we were going to prise her out of it...
I have no idea how long I'm going to live, and therefore don't want to take ANY risks about outliving whatever money I'm able to save up to and beyond retirement. I WANT to leave money for my grandkids to attend the best schools that they can get into, I WANT to leave a legacy of a DGI portfolio that will continue to generate dividends that grow at a rate that's faster than inflation* (* = "on average", so you don't get pithy with me...). To me, that's the beauty of DGI, is that by monitoring my investments now and making prudent choices, I should have a portfolio of stocks that, along with SS and my "pension" from my employer, will replace my paycheck, and give me a raise every year at a rate that will be higher than the raises I've been getting from my employer.
Sure there are certain situations that could threaten that, but it seems to me to be inherently, intuitively obvious that living off of the income generated by dividends is a much saner approach to funding retirement than selling off my assets, in whatever increments you want to specify, over the time that I've got left after I retire, regardless of what Bengen's damn study says.
I also don't understand your obsession with reiterating that when Bengen originally published his study he was considered "too LOW", while what you're interpreting folks on this thread to mean that 4% is "too HIGH". It's not that 4% is too high, it's that the steady, errosive liquidation of my assets throughout whatever amount of time I've got left makes far less sense than setting myself up between now and when I stop getting a regular paycheck to have a portfolio that will generate the income that I will need to support myself in retirement. 4.15%, 3.5%, 4%, none of that matters; what matters is, barring an economic necessity, I'd rather NOT liquidate any of my hard-earned assets to support a lifestyle that I know will cost less (adjusted for inflation) than what I'm currently enjoying.
Why will it cost less? Because part of my plan is to pay off my mortgage. Boom, there's a big chunk of change that I don't have to pony up every month. In less than 7 years I won't have any more children left in of college. Boom, there's another chunk. Sure, my health insurance premiums might go up from what I'm paying now, but I've got that factored in already. Sure, I'd like to travel and see my kids and grandkids in my retirement time, and there's some "seeing the world" that I'd like to do, too, but I don't plan on buying a bunch of toys such as a boat, wave riders, ATVs, or any of that other crap. I've also been able to see a good deal of the world already through business travel, and I know from personal experience with my mother and my in-laws that I'm going to hit a point (if I live that long) that ANY form of travel beyond going to the grocery store is going to be uncomfortable and not worth it; let the kids come to us at that point!
Anyway, you've made your point, you can stop making the same arguments over and over again. We get it. You believe in Bengen's study. I believe that I don't want to liquidate any of my investment assets in order to live comfortably in retirement, but rather live off the income that they will be throwing off when that time comes, and that I'd like to start retirement earlier than I currently think I'll be able to, if at all possible, and have as much left over as possible to pass along to my kids and grandkids...
My Mad Method: What Next To Buy And Why - February, 2013 [View article]
If you've read any of chowder's comments or Instablogs, you'll understand why I have so many positions. And, yes, the goal is to get to about 50 positions, equally allocated, so that no one position represents more than about a 2% impact to the portfolio's value.
@Vikingsfan: If you get to the point where you only have 5 positions, what happens if one of them takes a big hit? 20% of your portfolio takes that hit. In my case, only 3.57% (presently) would be at risk, and at 50 positions, only 2%.
The reason for holding the #1 and #2 stocks in a given sector/industry is not a matter of indecision, but of getting the best exposure to that industry via the top 2 performers. I own KO, and I've got PEP on my watchlist and would like to hold it someday. MO and PM are another good example (although right now I have LO in my portfolio, but am keeping an eye on PM). Where there are 2 top players, everyone else in that industry is fighting over table scraps...
@rnsmth: Not sure if you saw it on the list, but I do own WEC. It's one of David Van Knapp's Top Dividen Picks for 2013, which is one of the reasons why I went with it over SO when I first picked it up (last month?).
As Viperman states in the comments further down, I don't like just owning a mutual fund because of the fees, the knee-jerking to try to get the "next best thing" after the horse is already out the barn door, and all the other stuff they hold that I'm not interested in. I'm happy being a Do-It-Yourselfer...
Thanks again!
How Ex-Dividend Dates Work [View article]
Intel (INTC -1%) spikes lower on a Bloomberg report that Apple (AAPL +1.3%) is thinking of abandoning the use of Intel's CPUs within Macs in favor of internally-developed, ARM-based processors such as the ones that power its iOS hardware. Similar reports have been around for a while. [View news story]
The Best Thing Warren Buffett Has Said All Year [View article]
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
$5 in dividends DOES NOT equal $5 in unrealized capital gains, because I haven't realize those capital gains, but next month I get another $5 in dividends, regardless of what the price of that stock is at that time...
Sheesh, you really don't get it. YOU do the math. If you never sell, you're never realizing the capital gains (or losses), but you continue to collect the INCOME from your positions...
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
Thanks for being the DGIers' Advocate!
When Should I Transition From Capital Gain Investing To Dividend Growth Investing? [View article]
Oh, it's working alright, at least for me, and at least so far. I'll keep chronicling my adventures and reporting DGI progress on my portfolio. Got an end-of-quarter report coming out early next week for Q3'12. Numbers look great!... :-)
10 Rules For Your Own 'Perfect Investment Portfolio' [View article]
Actually, if you think about it, 4 base hits in a row would probably yield more than just 1 run. This is what I'm always trying to stress to people at work: Don't swing for the fences, get on base consistently and you'll end up winning the game...
Dividend Growth Portfolio: 2012 Mid-Year Update [View article]
The Best Thing Warren Buffett Has Said All Year [View article]
Keep writing, Tim. I will continue to Follow you here on Seeking Alpha...
The Joy Of Falling Stock Prices For Income Investors [View article]
Intel Will Soar Above ARM Holdings With New Microarchitecture [View article]
By the way, recent headline from MarketWatch today: "PC Shipments Beat Analysts' Estimates". Don't be so quick to parrot Steve Jobs and declare the PC as being dead. It certainly isn't, and it certainly is continuing to evolve...
:-)
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
Also, you present "projections" for 2017, which is 5 years in the future. I was refering to now. If you check Intel's sales for the last several years, you will see that the majority of growth is coming from emerging markets: Brazil, India, Indonesia, Russia and China. 5 years from now, it's not surprising to imagine those folks then using whatever disposable income they've accumulated in the interim to spend on a tablet, which as I said, is an add-on device. So I'm not surprised by those projections, although I take all analyst projections with a very large lick of salt, especially when they are trying to predict what will be happening 5 years from now. Point being, your remarks did not dismiss mine; they are complimentary.
You failed the homework assignment. Instead of researching semiconductor manufacturing and Intel's obvious and recognized superiority in that field, you resorted to analyst predictions about tablet consumption 5 years from now, and comments about iPhone sales currently. You get an "F" on this assignment. If you come back with comments about the semiconductor space, Intel's place in it and their prospects in the future in providing the best silicon to any OEM or ODM, we can continue the discussion. (And, oh, by the way, in 5 years it's a very real probability that all those tablets being developed for the emerging markets you referred to will also have Intel Inside. Not a given, but a very real probability...)
A New Take On The 4% Rule [View article]
Personally, and this is just a personal bias, I WANT to leave money to my heirs, which is exactly what my parents did NOT do (or will not do, as my mother is still alive but has very few assets left) in my case. I, personally, think it's selfish for an 85 year old to want to "burn through" the rest of their assets so that they die just before they run out of money. Sure, "you can't take it with you", but you can sure as hell leave whatever you were able to accumulate behind for future generations, and still live a comfortable life in retirement.
If my children repeat the mistakes I've made by not investing enough and not starting soon enough to save for retirement, then I will be very happy to leave them something when I'm gone to help them boost their own retirement funds. If they don't repeat my mistakes and start investing earlier than I did and more consistently than I did, then I will be very happy to leave them that much more so that they can enjoy a better life than I've had (or will have had up to that point).
I don't intend to "set the thermostat to 60 in the winter" or live on cat food under a bridge in the end, but I also, knowing my own mother's situation, can't imagine how I'd be spending MORE at 85 than I was capable of spending at 65. If anything, aside from extreme health-related costs, my observations are that past the point where it's comfortable to travel, your expenses tend to go down the older you get (again, aside from nursing care, etc., costs).
But even in that case, we just managed to get my mother-in-law into a very nice facility where she is still very close to most of her children, and while we know when her money will run out, we also know that she will be able to stay in that facility based on what Medicaid (Medicare?) will provide for her. My wife and siblings are sleeping better at night now than when my mother-in-law was still living in her own condo and we weren't sure how we were going to prise her out of it...
I have no idea how long I'm going to live, and therefore don't want to take ANY risks about outliving whatever money I'm able to save up to and beyond retirement. I WANT to leave money for my grandkids to attend the best schools that they can get into, I WANT to leave a legacy of a DGI portfolio that will continue to generate dividends that grow at a rate that's faster than inflation* (* = "on average", so you don't get pithy with me...). To me, that's the beauty of DGI, is that by monitoring my investments now and making prudent choices, I should have a portfolio of stocks that, along with SS and my "pension" from my employer, will replace my paycheck, and give me a raise every year at a rate that will be higher than the raises I've been getting from my employer.
Sure there are certain situations that could threaten that, but it seems to me to be inherently, intuitively obvious that living off of the income generated by dividends is a much saner approach to funding retirement than selling off my assets, in whatever increments you want to specify, over the time that I've got left after I retire, regardless of what Bengen's damn study says.
I also don't understand your obsession with reiterating that when Bengen originally published his study he was considered "too LOW", while what you're interpreting folks on this thread to mean that 4% is "too HIGH". It's not that 4% is too high, it's that the steady, errosive liquidation of my assets throughout whatever amount of time I've got left makes far less sense than setting myself up between now and when I stop getting a regular paycheck to have a portfolio that will generate the income that I will need to support myself in retirement. 4.15%, 3.5%, 4%, none of that matters; what matters is, barring an economic necessity, I'd rather NOT liquidate any of my hard-earned assets to support a lifestyle that I know will cost less (adjusted for inflation) than what I'm currently enjoying.
Why will it cost less? Because part of my plan is to pay off my mortgage. Boom, there's a big chunk of change that I don't have to pony up every month. In less than 7 years I won't have any more children left in of college. Boom, there's another chunk. Sure, my health insurance premiums might go up from what I'm paying now, but I've got that factored in already. Sure, I'd like to travel and see my kids and grandkids in my retirement time, and there's some "seeing the world" that I'd like to do, too, but I don't plan on buying a bunch of toys such as a boat, wave riders, ATVs, or any of that other crap. I've also been able to see a good deal of the world already through business travel, and I know from personal experience with my mother and my in-laws that I'm going to hit a point (if I live that long) that ANY form of travel beyond going to the grocery store is going to be uncomfortable and not worth it; let the kids come to us at that point!
Anyway, you've made your point, you can stop making the same arguments over and over again. We get it. You believe in Bengen's study. I believe that I don't want to liquidate any of my investment assets in order to live comfortably in retirement, but rather live off the income that they will be throwing off when that time comes, and that I'd like to start retirement earlier than I currently think I'll be able to, if at all possible, and have as much left over as possible to pass along to my kids and grandkids...
'Nuff said...