1.2 Million Americans Quit Seeking Work Since November 2010 [View article]
The unemployment rate is pretty much meaningless since it is not an absolute measure of anything but a ratio of two numbers that can constantly fluctuate. The author raises all the valid points. Ultimately over time what matters is the increase in payroll at a high level, but then also as KTS noted that not all jobs are equal and it is better to have more higher paying jobs than lower paying jobs.
Dividend Reinvestment: What Some Winners and Losers Look Like Over Time [View article]
David, Thanks for the comments. You're absolutely correct about differentiating between dividends from the initial investment and dividend earned from subsequent reinvestments. These latter dividends grow in size and importance as the time horizon stretches or the dividend yield increases. I think you noticed that I addressed this in the text. For KO, about 8% of the dividends were from reinvested dividends, while for NLY about 30% of the total dividends were from reinvested dividends. I have subsequently rebuilt my model and can now show the graphs differentiating between the two.
You also raise a second point that is pretty important around collecting the dividends and then reinvesting them in the best available investment opportunity for your situation. This is very true and still captures the benefits of compounding. My one push back is that this does create behavioral aspects that the investor needs to have the discipline to overcome - i.e., actually doing that investment. The automatic reinvestment/dripping takes the behavior out of the equation and for many people this is probably a good thing when it comes to retirement saving. (The caveat is always you need to have a reasonable stock as illustrated by the issues of dripping FTR)
You're also absolutely right that this article was written to illustrate the mechanics of reinvestment and show the power of compounding - in three cases at least - rather than advocating for one approach over another.
Who's Benefiting Most From The Recent Stock Sell-Off? [View article]
I would agree. I had the exact same thought reading the first section. The author is implying that the equity sell off is driving down commodity prices. The reality is that poor economic prospects are driving both events.
Furthermore, the notion that the 47%, presumably at the bottom, don't care is pretty questionable. I would argue that they are more interested in a robust economy than folks at the top who are probably better insulated. I think the second oversight is that for the majority their house is their main investment and so that trumps what happens both to equities as well as fluctuations in commodity prices.
Frontier Communications: Why This High-Dividend Stock Is A Buy [View article]
This article looks like a lot of random facts and a flimsy case to go long. Far more points were made that should lead investors to be wary than to go long. Reading the article, the long case basically sounds like: Some Wall Street analysts think it is worth more than its current price, the book value is higher than the stock price, and insiders are purchasing stock.
I'm not sure I would put any value in the first point. The second one is not much better when FTR has a negative net tangible value. The third one is usually viewed as a bullish sign, but the first question is exactly how much stock is being purchased. CEO purchased $50k of stock and makes $2.2 million and also disposed of about $200k of stock in February. (per Yahoo Finance). I think I would disregard this third one as a bullish sign.
The article does provide some interesting statements: "It is making substantial dividend cuts and reorganizing its long term debt to keep a lid on revenue declines." I was never aware that cutting dividends might help with top line growth.
"Some good news on the horizon is the prospect for better revenue as the rate of subscriber loss has been curtailed, the cost savings from system conversions and better than expected margins." First point is simply false - Quarter on Quarter lost business access lines were at a peak - 1.5% decline. Lost residential access lines were 2.2%, a little better than previous quarters. Actual customer numbers are also down. The rest of the sentence does not really make sense.
Frontier Communications: Dividend Reinvesting Gone Bad [View article]
Given the track records of the two companies and your reference to smart phones, I'm going to wager AAPL, although without Jobs there could be challenges further down the road.
I also find it interesting that you cite keeping your wireline while migrating to mobile, but from the FTR 2010 10-K - "We have lost access lines primarily as a result of competition and business downsizing, and because of changing consumer behavior (including wireless substitution and disconnections of second lines upon an HSI addition), economic conditions and changing technology"
Seadrill: High Valuation Relative To Its Competitors [View article]
7 Drillships (of which 3 under construction) 1 harsh env. 6 ultra deep-water 12 Semisubmersibles (of which 2 under construction) 6 harsh env. 8 ultra deep-water 21 Jack ups (of which 6 under construction) 2 harsh env. 19 Tender and semi tender rigs (of which 3 under construction) Total is 59 units including ones under construction.
EU Leaders Remain Deadlocked On Eurobonds: Hedge Yourself Against A Meltdown In Europe [View article]
Overall it was an interesting summary of the situation which is useful , but the title is not really accurate - it should be like profiting from or betting on a eurozone meltdown. Should things go in the opposite direction the positions would most likely lose. It is also not clear what types of positions would suffer (beyond generally everything except certain treasuries).
The $27,000 Millionaire: Dividend Growth Unleashed [View article]
Thanks for the comment. I do note that I wouldn't expect JNJ to show the same performance over the next 40 years. The goal of the article was to illustrate the power of dividend reinvesting using real data. In order to accomplish that I need to find stocks with significant price and dividend histories, which often by definition means they have probably been quite successful. This is in essence survivorship bias.
Dividend Reinvestment: What Some Winners and Losers Look Like Over Time [View article]
I agree. One cannot overlook behavioral aspects. When I wrote the article I simply wanted to illustrate the benefits of reinvesting. In theory one should always choose the best available investment accounting for everything if you have some investable cash. In practice, shortcuts are very useful. Don't forget the opportunity cost of your time.
Seadrill: High Valuation Relative To Its Competitors [View article]
When making fundamental assessments, current price analysis is independent of historical performance so there is nothing wrong with comparing SDRL performance to the S&P and then discussing its current valuation relative to competitors. They are two separate items.
In terms of performance, RIG was down 13%, NE was down 10% and ESV was down 15% over the same time frame that SDRL was down 13%. This is pretty comparable to the others.
Seadrill: Large Dividend Yield, Slowing Growth [View article]
You should recognize that seeking alpha (I'm assuming that is the you being referred to) is not a monolithic organization with a single view point on any particular stock, rather it is a collection of individual contributors with their own perspectives and hence divergent viewpoints. The notion of whims and wishes - are you disputing something in the article or just trying to be colorful?
Communication Services Stocks: Plenty of Dividends, Limited Price Appreciation Potential [View article]
A hurdle rate can also be called a discount rate, the required rate or several other names. It is a rate (like interest) used to discount future cash flows or dividends. If some one is looking to invest they have a targetted or desired rate that they decided is what they would need to compensate them for the risks they are taking.
Think about a bank that makes mortgages and charges you interest. The bank has a hurdle rate they need to meet based on your credit score. People with poorer credit pay more interest while people with sterling credit pay less interest. The bank views people with worse credit as a larger risk - they might not get all of their principal back. People with better credit, i.e., a better track record of paying off their debt, have a lower interest rate since the bank has a stronger belief they are more likely to get their principal back.
In the same way, stocks that are deemed to be riskier or have a greater chance of declining in value, or operate in more challenging industries typically make investors more skeptical about the their prospects and the investors require higher returns to justify investing. This article looks at risk from the perspective of beta which is noted to be a historical measure.
1.2 Million Americans Quit Seeking Work Since November 2010 [View article]
Dividend Reinvestment: What Some Winners and Losers Look Like Over Time [View article]
Thanks for the comments. You're absolutely correct about differentiating between dividends from the initial investment and dividend earned from subsequent reinvestments. These latter dividends grow in size and importance as the time horizon stretches or the dividend yield increases. I think you noticed that I addressed this in the text. For KO, about 8% of the dividends were from reinvested dividends, while for NLY about 30% of the total dividends were from reinvested dividends. I have subsequently rebuilt my model and can now show the graphs differentiating between the two.
You also raise a second point that is pretty important around collecting the dividends and then reinvesting them in the best available investment opportunity for your situation. This is very true and still captures the benefits of compounding. My one push back is that this does create behavioral aspects that the investor needs to have the discipline to overcome - i.e., actually doing that investment. The automatic reinvestment/dripping takes the behavior out of the equation and for many people this is probably a good thing when it comes to retirement saving. (The caveat is always you need to have a reasonable stock as illustrated by the issues of dripping FTR)
You're also absolutely right that this article was written to illustrate the mechanics of reinvestment and show the power of compounding - in three cases at least - rather than advocating for one approach over another.
Who's Benefiting Most From The Recent Stock Sell-Off? [View article]
Furthermore, the notion that the 47%, presumably at the bottom, don't care is pretty questionable. I would argue that they are more interested in a robust economy than folks at the top who are probably better insulated. I think the second oversight is that for the majority their house is their main investment and so that trumps what happens both to equities as well as fluctuations in commodity prices.
Frontier Communications: Why This High-Dividend Stock Is A Buy [View article]
I'm not sure I would put any value in the first point. The second one is not much better when FTR has a negative net tangible value. The third one is usually viewed as a bullish sign, but the first question is exactly how much stock is being purchased. CEO purchased $50k of stock and makes $2.2 million and also disposed of about $200k of stock in February. (per Yahoo Finance). I think I would disregard this third one as a bullish sign.
The article does provide some interesting statements: "It is making substantial dividend cuts and reorganizing its long term debt to keep a lid on revenue declines." I was never aware that cutting dividends might help with top line growth.
"Some good news on the horizon is the prospect for better revenue as the rate of subscriber loss has been curtailed, the cost savings from system conversions and better than expected margins." First point is simply false - Quarter on Quarter lost business access lines were at a peak - 1.5% decline. Lost residential access lines were 2.2%, a little better than previous quarters. Actual customer numbers are also down. The rest of the sentence does not really make sense.
Frontier Communications: Dividend Reinvesting Gone Bad [View article]
I also find it interesting that you cite keeping your wireline while migrating to mobile, but from the FTR 2010 10-K - "We have lost access lines primarily as a result of competition and business downsizing, and because of changing consumer behavior (including wireless substitution and disconnections of second lines upon an HSI addition), economic conditions and changing technology"
Dividend Reinvestment: What Some Winners and Losers Look Like Over Time [View article]
Dividend Reinvestment: What Some Winners and Losers Look Like Over Time [View article]
Seadrill: High Valuation Relative To Its Competitors [View article]
12 Semisubmersibles (of which 2 under construction) 6 harsh env. 8 ultra deep-water
21 Jack ups (of which 6 under construction) 2 harsh env.
19 Tender and semi tender rigs (of which 3 under construction)
Total is 59 units including ones under construction.
ConocoPhillips: Hoping For Growth, Fearing A Cut [View article]
EU Leaders Remain Deadlocked On Eurobonds: Hedge Yourself Against A Meltdown In Europe [View article]
The $27,000 Millionaire: Dividend Growth Unleashed [View article]
Dividend Reinvestment: What Some Winners and Losers Look Like Over Time [View article]
Seadrill: High Valuation Relative To Its Competitors [View article]
In terms of performance, RIG was down 13%, NE was down 10% and ESV was down 15% over the same time frame that SDRL was down 13%. This is pretty comparable to the others.
Seadrill: Large Dividend Yield, Slowing Growth [View article]
Communication Services Stocks: Plenty of Dividends, Limited Price Appreciation Potential [View article]
Think about a bank that makes mortgages and charges you interest. The bank has a hurdle rate they need to meet based on your credit score. People with poorer credit pay more interest while people with sterling credit pay less interest. The bank views people with worse credit as a larger risk - they might not get all of their principal back. People with better credit, i.e., a better track record of paying off their debt, have a lower interest rate since the bank has a stronger belief they are more likely to get their principal back.
In the same way, stocks that are deemed to be riskier or have a greater chance of declining in value, or operate in more challenging industries typically make investors more skeptical about the their prospects and the investors require higher returns to justify investing. This article looks at risk from the perspective of beta which is noted to be a historical measure.