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Jared Gardner

 
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  • Maximize Income With A Dividend Capture Strategy [View article]
    There are so many issues with your reply that I don't even know where to start. I guess I'll just take it line by line.

    1. Your first point leaves me somewhat at a loss. If an author has scientific proof (assuming it is done correctly), then what do you have against them? Hypothetically, if I can statistically prove (p-value less than .10) that the strategy works, you would be amazingly close-minded to not even consider it. If you refuse to entertain the idea that just maybe your preconceived notions may be flawed, you are just being ignorant.

    That research defies common sense, or that it is a "dark art"? Where is your proof that it doesn't work? Let us shift the burden of proof, and see what you can come up with. No more of the silly "common sense" comments. If an investor doesn’t understand the research that others are doing in relation to the strategy, then they should probably not be playing the game.

    2. I agree. If I am not mistaken, I mentioned the two major costs in the article: taxes and trading costs.

    3. There are many people in the market. Most importantly, the institutional investors who invest in thousands or millions of shares at a time are also aware of this strategy. I'm starting to wonder if you even read my article, because I mention this point, among others that you try to use in your arguments.

    What you are trying to reference is that you believe in the strong-form of the efficient-market hypothesis (EMH). The EMH is just a hypothesis and has yet to be proven. It is discussed ad nauseum in professional and academic settings. You chalk your belief up to "common sense" as if it is fact. You, sir, are mistaken.

    I do understand where you are coming from, though. You are invested 90% in indexed ETFs. That is your deal. Why you are even bothering with this post is perplexing to me unless this is some sort of strong-form EMH crusade against all things you consider “a lot of nonsense”.

    I’m going to ignore your section about problem 1 and problem 2, since I already addressed it in the article, which you conveniently ignored.

    As for the actively managed dividend capture products, I personally don’t subscribe to any actively managed funds (that includes dividend capture funds). I am not willing to make the same blanket investment rule for everyone. I also don’t subscribe to your strategy of holding primarily indexed ETFs, so the appeal to write about that is close to zero.

    “You are just peddling an old wheeze” and the “nonsense” comments:

    Wow. As I noted in the article, this is a series. The first article is more of an introduction to the strategy more than anything. I think the main point and challenge that I have for you is that before you pass judgment, why don’t you wait until I bring some hard data to the table (unless that qualifies as a dark art…)? At that point in time, you can start trying to pick apart the strategy that I suggest as long as it is focused on facts and data, and not your “common sense”. Or better yet, let’s see some original, data-centered research of your own.
    Nov 30 11:39 AM | 5 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "Let's cut the CEO's pay in half and then maybe they could see a better profit margin without having to add another fee for overhead lighting at your seat."

    Last year, AMR's CEO made $5.2 Million.

    AMR lost $471 Million.

    Maybe there is someone else to blame. Check out this economic paper:

    http://bit.ly/plHP6d
    Oct 4 08:41 AM | 4 Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    I HIGHLY encourage thoughtful discussion on this topic from both sides of the fence. Please keep your comments professional and, in your case, drone, please give logical explanations to your conclusions (with data preferably), and remember that I am packing statistically significant data to back up my claims.

    Also, there is a rich discussion (for and against) if you look at the comments in the previous article in this series:

    seekingalpha.com/artic...
    Sep 6 12:31 PM | 3 Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    Excellent point. Beta is a significant factor that is accounted for in the model, but it is not the sole determining factor when I created the model.

    Actually, movements with the market are actually somewhat controversial in dealing with this strategy. Some believe that a long-only strategy is sufficient, given that the position is only open overnight. As can be seen from the article, I try to isolate the dividend capture returns and try to mitigate market risk through market-neutral trades because I have no clue what is going to happen overnight.
    Sep 6 03:19 PM | 1 Like Like |Link to Comment
  • Maximize Income With A Dividend Capture Strategy [View article]
    Econdoc,

    I appreciate the comment, although it seemed a little naive and condescending.

    Many people reading this article have only just started their investing journey. It may be some teenager who has his life savings in a brokerage and about ready to pull the trigger on this strategy. Beginners need to know the basics.

    You, on the other hand, have been around the block (according to your profile) many times. So this article isn't for you. Your "common sense" has been earned through the years.

    I will say that my next article is significantly more analytic and I hope to answer your "where is the edge?" question. I will agree that the terms and timing of the dividend payments are known. However, you also need to analyze the effects created by the abnormal flow of capital, and if there is an opportunity there. In some cases, I may even suggest a contra-dividend-capture strategy, where you short the stock on the cum date and go long on the ex date.

    On a different note, this comment was especially interesting:

    "I am sure the author will have all sorts of clever arguements but spend 60 seconds to think it through and then avoid these funds and products - they are designed with one purpose only - to bilk you out of fees."

    I'm not sure how clever my arguements are, but my decision processes are data driven when it comes to statistical trading strategies. As for the funds and products you speak about, I made no recommendation in this article about any investment vehicle for this strategy, so don't assume that I am rooting for a specific fund.

    In any case, I hope not to come off too aggressive. I appreciate alternative viewpoints, as it helps educate us all. Feel free to read my next article in the series and get back with me about further points of discussion.
    Nov 21 04:52 PM | 1 Like Like |Link to Comment
  • The Silver Lining of Apple's iPhone Announcement [View article]
    Thanks Greg,

    Just a couple of things:

    I totally agree with the whole iPhone 4S vs iPhone 5. If they would have called an iPhone 5, the products would be flying off the shelves.

    I really liked your question: "What were people expecting in way of features or technology? "

    I think people were expecting to be "Wowed". They anticipated something completely unexpected. Apple IS supposed to be the innovator. Instead we got Siri, which although may be more polished and advanced than any other voice recognition, is an older feature for Android. As well, the major rumor was for an iPhone 5 AND an iPhone 4S, so the lack of an additional SKU is heart wrenching.

    As for the Apple products lagging in tech specs, you have to remember that I am not talking about peformance. I am talking about specifications of hardware. Apple software is able to squeeze performance out of significantly lower-rated hardware. That is one reason margins are so high.

    I'm not quite sure what to say about your last point concerning cheap PC's vs expensive Macs. If you look online, there are a myriad of people that are creating dual- or triple-boot hardware setups that run Microsoft, Linux, and Apple OS's. Their hardware is superior to that of the Macs and considerably cheaper (the OS part is also illegal, but it makes a decent hardware comparison).

    I guess, if what you are saying is that if you are trying to mimic Mac performance on a PC, you can't get the bargain basement $400 computer from Dell, then I agree with you. However, when you can make your own PC for $1,200-$1,500 and it runs faster than a Mac (which starts at $2,500), that is a decent comparison.

    Does all that make sense?
    Oct 6 12:49 PM | 1 Like Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    Bionic,

    Good point. When viewed in isolation, the strategy is not very appealing. However, the full potential is more fully exposed when the strategy is used on a more consistent basis.

    For instance, if you had $10k of capital and invested it in each of the top picks during the first week (equal divisions of capital in the case of the same ex-date), the net Alpha (after tax and after commission) would have been 2.57%, which is greater than the raw return of SPY for the same period (-1.32%).

    The second week shows a net Alpha of 1.3%, while the SPY came in at -.43% .

    This example assumes $10 per trade in/out, and a 35% tax rate (with all taxes payable put in reserves on a weekly basis). We could bicker about trading costs, but I used a realistic number in my case. Also, I am assuming the top marginal tax rate at the present, but that completely disregards those with Roth accounts, or have optimized tax liability structures.
    Sep 10 02:11 PM | Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    I'm not sure if you read the whole article (which would make all of your comments "hopelessly useless"), or if you are familiar with the term "Alpha". The "Actual Alpha" column on the results tables is the return of the strategy minus the (beta-adjusted) market return.

    You are correct in the fact that market movements (to either side) seriously affect this strategy. To that end, I focus more on the alpha of the trade and typically neutralize market risk through shorting a market proxy.

    I do like the idea of using derivatives with the strategy, but as I stated in the article, trading costs (including bid/ask spreads) become even more of an issue (even with super-low-cost brokerages), as well as the 100 share increments (for some investors).

    As for the market events, if there is a serious market correction overnight, your risk would be mitigated by the short position in the market.
    Sep 10 09:21 AM | Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    Excellent point Kurtis.

    In its current state, the study is only looking for statistically significant returns that are mainly from an overnight standpoint. However, there are some patterns that exist early in the cum-date and later in the ex-date that I will be analyzing with intraday data.

    As for the complexity of the trades, I agree that the strategy is typically run by prop desks or equity funds due to the trading frequency and complexity. However, I will eventually be publishing detailed model results that a moderate-advanced investor/trader can easily follow.

    Thanks for your multiple comments!
    Sep 7 03:30 PM | Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    There are definitely multiple ways to look at dividend plays, and I agree that whatever you buy, you should be comfortable holding for an extended period of time (just in case stuff hits the fan, short term).

    What types of valuation methods do you typically look at?
    Sep 7 03:13 PM | Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    It is an interesting strategy, but as I stated in my last few paragraphs, this strategy should be implemented in tandem with a diversified and balanced portfolio.

    Please forgive me if I sound like I am lecturing, but If you are a first-time investor, I would start with the basics (ETFs, mutual funds, etc), get a handle on them, and then add to your strategy bucket as you gain experience.
    Sep 7 02:53 PM | Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    Great article Kurtis.

    Cocomurph, as I stated in the article, the results were pulled BEFORE the weeks in question. If I wanted to cherry pick, I could have easily found companies with better results on those specific weeks. However, the study was specifically focused on the predictive power of the model.

    If I was just trying to make the strategy look good, why would I include HSH and FNB, whose raw returns were drastically below their historical averages? Actually, the reason the article is looking back two weeks is because the first week looked so good that it looked too positively skewed to even present.

    There are definitely top picks that turn out negative, even though the statistics point to a home run. Even the best of the examples I presented only show positive returns around 80% of the time.

    Eventually, once I get my standard data sources back online, I will be publishing results before the week in play, so feel free to check back with me.

    Thanks!
    Sep 7 02:50 PM | Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    I completely agree. This would allow the investor to limit a lot of idiosyncratic risk (company risk), but it might be more costly than it is worth (options commissions are considerably higher with my broker). Also, to make it work effectively, you would need to buy the stock in lots of 100, and there would need to be enough option volume without crazy spreads.

    Once again, though, your thinking is definitely a valid route to go.
    Sep 7 02:38 PM | Likes Like |Link to Comment
  • A Successful Dividend Capture Model [View article]
    Great comment! Thanks!

    If you read my previous article in this series, I went over taxes, trading costs, and other market participant effects. As well, the last sentence of this article mentions taxes again. Of course, we are not even sure if the tax structure on qualified dividends are going to be around much longer anyways, right?

    I definitely could add taxes and trading costs to the equations, although the numbers would change drastically depending on the amount of capital invested, commission structures, and individual marginal tax rates.

    Thanks again for the comment!
    Sep 7 02:34 PM | Likes Like |Link to Comment
  • Maximize Income With A Dividend Capture Strategy [View article]
    I sincerely apologize for the delay, for all of those that have been waiting patiently. Due to the success of this article (professional industry contacts, networking, etc), I actually created a full model for analyzing dividend capture strategies and have continued this series in a slightly different way than originally anticipated.

    The next article in the series can be found here:

    seekingalpha.com/artic...
    Sep 6 12:37 PM | Likes Like |Link to Comment
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