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Kiisu Buraun  

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  • Bogle's Views On Retirement Income [View article]

    I tend agree in principle ...

    With the caveat that government (read particularly bureaucratic agencies) always expands its reach, power and budget ... even at the expense of the nominal beneficiaries. IMO the process is not "inherently evil" ... it is more a matter of motivations ... and like crabgrass the system needs pruning on a regular basis to limit the damage done by the "Iron Law of Bureaucracy"[1].

    Along those lines, IMO term limits for elected officials ... without corresponding term limits for (unelected) bureaucrats would simply exacerbate the problem as it would effectively shift even more power from elected officials to unelected employees who essentially can not be fired.

    While the civil service reform of a little more than 130 years ago curbed the abuses of the spoils system[2], a large, permanent, effectively untouchable bureaucratic elite is a power of its own and generates its own set of abuses.

    Limiting a federal bureaucrat to perhaps a total of no more than 10 years of government service ...with no possible exceptions... would be, I believe, a good first step in the right direction.

    Best wishes,

    1. any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work for the organization itself. Examples in education would be teachers who work and sacrifice to teach children, vs. union representatives who work to protect any teacher including the most incompetent. The Iron Law states that in all cases, the second type of person will always gain control of the organization, and will always write the rules under which the organization functions.

    Mar 12, 2015. 02:46 PM | 6 Likes Like |Link to Comment
  • The Importance Of Total Return With Dividend Growth Investing [View article]

    While agreeing with much of your comment, I find the statement "DGI is much more palatable under two circumstances" incomplete.

    It might be reword as: "DGI is much palatable under the following circumstances".

    The following might then be added to the supporting rationales:

    3. you have sufficient external income, (a pension, or other sources) so the DGI capital is not tapped for living expenses. The dividends either periodically supplement retirement or accumulate and add to capital for potential future income.

    Specifically ... I'm retired. My pension currently covers my living expenses. However to cover the eventuality of my pension being frozen or cut (or for whatever other reason my living expenses eventually exceed my pension income), I manage and try to grow my DG portfolio.

    Best wishes,

    Mar 12, 2015. 11:13 AM | 3 Likes Like |Link to Comment
  • The Importance Of Total Return With Dividend Growth Investing [View article]

    Thank you. Interesting article.

    Best wishes,

    Mar 11, 2015. 04:37 PM | Likes Like |Link to Comment
  • The Dividend Aristocrats: Should They Be A Part Of Your Investing Decision? (Part 1) [View article]
    My $0.02 worth ...

    Another way to look at the question is to flip it upside down and see what shakes out.

    Typically my smallest position is the one with the largest transaction cost ... which is based on the most I'm generally willing to pay (as a percentage) for the privilege of making a purchase.

    I generally keep that cost at 1% or less of the total.

    Because my cost is $7 per trade, the smallest purchase transaction I'm generally willing to make is $700 ...

    ... which I normally round up to $1000.

    That bounds my lower end.

    A full position for me depends on the account balance and the number of companies I want to purchase.

    For one portfolio it is ~$10K (purchase cost), other portfolios it is about 1/3 that amount.

    Best wishes,

    Mar 11, 2015. 02:05 PM | 3 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    Alan, Robert,

    Of course, you both could be right ...

    Robert might associate with the only other libertarian in the state, and that person might not be an anarchist libertarian.

    Given he lives in what people outside the state often call Taxachusetts, (and given his previous comments) I suspect MA is not a hotbed of libertarian activity ... of any persuasion.

    If Alan lives in Tempe AZ, he may know a great many libertarians across a variety of persuasions.

    Best wishes to you both...

    Mar 11, 2015. 12:21 AM | 2 Likes Like |Link to Comment
  • The Dividend Aristocrats: Should They Be A Part Of Your Investing Decision? (Part 1) [View article]
    My $0.02 worth regarding ETFs...

    While still fully employed, I bought a handful of foreign ETFs including: EWA (Australia), EWH (Hong Kong), EWM (Malaysia), EWS (Singapore), EWT (Taiwan) and KF (Korea). Each was bought for about $4,500. Most were bought in February of 2006.

    The rationale ... I wanted foreign investments (and all those together made for a rather small % of my total holdings) but I could not find enough info to be comfortable buying foreign companies directly.

    Took about a 30% loss on KF (counting dividends); and broke even on EWT (if I count dividends and ignore the time value of money);and did the best on EWM (which more than doubled, not counting dividends).

    After I retired I sold them all (EWA in Jan '11, KF in Jun '12, the rest in Oct '14). Those funds are now part of DGI portfolios and invested in US companies.

    However, I would not now buy a foreign ETF without a lot of study.

    Best wishes,

    Mar 10, 2015. 11:53 PM | 2 Likes Like |Link to Comment
  • 5 Common Errors Of A Dividend Growth Forecast [View article]

    Please keep up the good work. Enjoyed it.

    The section on survivorship aroused my immediate curiosity, so I did a buy/sell count on one of my portfolios (DGP-1) for the four years since inception (March, 2011).

    During that time, I acquired 49 different stock-tickers and disposed of 21* for a survivor rate of (49-21)/49 or about 57% ...

    ... but 57% is not really an "honest" number as it took 12 months to fully invest the one time deposit (a TSP rollover to IRA), and by the first anniversary I had already sold two (MCY & NPK).

    Of the 13 companies purchased during the first year (AZN, CHL, CVX, DCM, JCS, JNJ, MCY, NKSH, NOC, NPK, NVS, RTN, STRA), I now hold only 2 (JNJ & CVX).

    All were CCC companies at the time of purchase.

    Based on experience ... and the insight you've provided, I suspect by time March 2026 rolls around, my survivor rate will be truly dismal.

    C'est la vie ...

    On the other hand, the current value of DGP-1 has grown nicely with an end of Feb '15 CAGR of 9.73%, an effective portfolio yield of 3.90%[1] and a dividend growth rate of 5.49%[2]. Total transaction costs since inception are 0.40%[3].

    That's better than my former performance in TSP-land[4].

    Best wishes,

    * includes one spin-off and one merger. Sold both the spin-off & the merger.
    1. projected 2015 annual dividends divided by end of Feb portfolio value
    2. 2015 projected dividends vs 2014 actual dividends
    3. computed as a fraction of original portfolio value.
    Mar 10, 2015. 03:32 AM | 1 Like Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]

    AgAuMoney: That is theft. A rose by any other name... but this is not a rose.

    rnsmith: No, it is not. If it is, refer it to your prosecuting attorney.

    Law is what is "legal", not what is moral, fair, correct, right or decent.

    Legal theft -enshrined in precedent, mandated by government, and enforced by power- remains theft.

    For example, "Sums of money resulting from deposits of less than $10,000 may be seized after a warrant is issued based on a suspicious activity report. Legal proceedings, which may cost in the vicinity of $20,000 or more, may be required for an innocent party to retrieve his or her money. Reports in October 2014 by _The New York Times_ of arbitrary seizures resulted in modification of Internal Revenue Service (IRS) practice to focus on investigations that "closely align" with IRS "mission and key priorities.” Banks are not permitted to warn or advise customers unless the customer asks, but sometimes bank tellers will informally warn customers"

    Or is it "theft" if your bank deposits are involuntarily, converted to bank stock because the bank is insolvent ... and needs your assets to remain in business? If a law permits such, it is legal ... by definition. The fact that you made a deposit to cover planned and anticipated expenses remains _your_ problem. The fact that you now have bank stock you don't want and can't sell for an amount close to what you deposited is neither the bank's nor the government's problem. The law said it could be done, the bank needed it ... and it was legal.

    Mr. Bumble (Oliver Twist: phrased it eloquently:
    "'If the law supposes that,' said Mr. Bumble, squeezing his hat emphatically in both hands, 'the law is a ass--a idiot. If that's the eye of the law, the law is a bachelor; and the worst I wish the law is, that his eye may be opened by experience--by experience.'"

    From Thomas Jefferson's (3rd US president) letter to Isaac H. Tiffany (4 April 1819):
    "Liberty then I would say that, in the whole plenitude of it’s extent, it is unobstructed action according to our will: but rightful liberty is unobstructed action according to our will, within the limits drawn around us by the equal rights of others. I do not add ‘within the limits of the law’; because law is often but the tyrant’s will, and always so when it violates the right of an individual."

    Ahh ... life is so full of wonders ... I'm surprised anew each and every day ...

    Best wishes,

    Mar 9, 2015. 12:24 PM | 3 Likes Like |Link to Comment
  • The Chowder Rule [View instapost]


    Best wishes,

    Mar 9, 2015. 10:37 AM | Likes Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    Thank you!

    Greatly appreciate the education.

    Best wishes,

    Mar 8, 2015. 11:26 PM | 1 Like Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    Is the author warning of a potential "black swan"?


    Unfortunately, I don't usually see a "black swan" until it kicks me in the face.

    In my personal life, I've repeatedly found braggadocio, hubris and over-confidence antithetical to long-term positive outcomes. On the other hand, extreme timidity does not work all that well either.

    I drive defensively, spread my bets, periodically update various contingency plans, and exercise what I believe is reasonable caution ... without being paralyzed into inaction.

    What is a "black swan"? From wikipedia:

    The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.

    The theory was developed by Nassim Nicholas Taleb to explain:

    1. The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.

    2. The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).

    3. The psychological biases that make people individually and collectively blind to uncertainty and unaware of the massive role of the rare event in historical affairs.

    Unlike the earlier philosophical "black swan problem", the "black swan theory" refers only to unexpected events of large magnitude and consequence and their dominant role in history. Such events, considered extreme outliers, collectively play vastly larger roles than regular occurrences. More technically, in the scientific monograph Silent Risk , Taleb mathematically defines the black swan problem as "stemming from the use of degenerate metaprobability".

    Here's hoping I avoid getting kicked again, but survive if I do...

    Best wishes,

    Mar 8, 2015. 11:20 PM | 2 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]

    "Puleeeeese don't use that paragraph to say it proves SS is charity."

    Of course SS is not charity. Charity is voluntary. SS is coerced.

    Best wishes,

    Mar 8, 2015. 10:42 PM | 2 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]

    "you can get away with stuff that individuals and businesses and local governments cannot."

    Exactly ... and that concept is incompatible with the rights of a free people. You can have a government "that can get away with stuff" or individual freedom, but in the end you cannot have both.

    Honest money limits the power, scope and extent of government. And because governments and people compete in the same space, where the power of one expands, the power of the other diminishes.

    Experience with fiat currencies was one of the reasons Article 1, Section 10 states "No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts ...".

    However, for more than a hundred years "we" have been systematically unchaining government.

    For example, FDR's Executive Order 6102[1] 1933 (and subsequent EOs followed eventually by the Gold Reserve Act of 1934) made the personal possession of gold illegal and defrauded citizens of 40% of their accumulated wealth by paying $20.67 per troy ounce ... and then repricing that same gold at $35 per ounce. EO 6814[2] implemented the seizure of all silver.

    Nixon's EO 11615[3] of 15 August 1971 closed the "gold" window thereby prohibiting the exchange of "foreign" dollars to gold.

    FDR and Nixon's EOs expanded the power of the Executive, decreased the power of the people and continued us on our current trend.

    When a government program creates problems ... many claim the remedy is more government programs to fix the earlier problems, and when those programs cause additional problems, the claim is for even more government ... wash, rinse, repeat ... and the US is "fundamentally changed".

    "The more we learn about the Federal deficit ramifications, the more we see it is not as bad of problem as we once thought."

    I assume you meant, "it is not as bad of a problem as -I- once thought".

    As we are still as yet in (what I believe are) the middle stages of the problem your comment is reminiscent of a BASE jumper with a bad chute ... commenting how the problem is not as bad as he thought. ;-)

    Like all unsustainable trends, this one will continue until it doesn't.

    The eventual collapse of the US dollar as a fiat currency will not be pleasant ... historically, fiat currency collapses never are.

    And a claim "this time is different" requires substantial proof.

    "We have a very good understanding of personal deficit problems, and very poor understanding of Federal deficit problems."

    I agree the problem is complicated with many moving parts. But that is typical.

    But all that does not change the instability of the underlying problem.

    Unstable physical systems remain "stable" by applying force. The same holds with unstable political and economic systems.

    As Barry Eichengreen stated: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one"[4].

    No one voluntarily impoverishes himself and his children to benefit others without a perceived return. If that return no longer adequately compensates, it takes increasing force by those that benefit to continue the exchange.

    Best wishes,

    4. Barry Eichengreen
    page 3-4.
    "A more controversial benefit of the dollar's international-currency status is the real resources that other countries provide the United States in order to obtain our dollars. It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries have to pony up $100 of actual goods and services in order to obtain one. (That difference between what it costs the government to print the note and a foreigner to procure it is known as "seignorage" after the right of the medieval lord, or seigneur, to coin money and keep for himself alone some of the precious metal from which it was made.) About $500 billion of U.S. currency circulates outside the United States, for which foreigners have had to provide the United States with $500 billion of actual goods and services.

    Even more important is that foreign firms and banks hold not just U.S. currency but bills and bonds that are convenient for international transactions and at the same time have the attraction of bearing interest. Foreign central banks hold close to $5 trillion of the bonds of the U.S. treasury and quasi-governmental agencies like Fannie Mae and Freddie Mac. They add to them year after year.

    And insofar as foreign banks and firms value the convenience of dollar securities, they are willing to pay more to obtain them. Equivalently, the interest rate they require to hold them is less. This effect is substantial: the interest that the United States must pay on its foreign liabilities is two to three percentage points less than the rate of return on its foreign investments. The U.S. can run an external deficit in the amount of this difference, importing more than it exports and consuming more than it produces year after year without becoming more indebted to the rest of the world. Or it can scoop up foreign companies in that amount as the result of the dollar's singular status as the world's currency."
    Mar 8, 2015. 10:37 PM | 2 Likes Like |Link to Comment
  • The Chowder Rule [View instapost]

    Thank you.

    I find your Chowder Rule very useful.

    Currently I use it to compute a target price (for limit order buys) for a company I want to purchase by:

    o computing the "Chowder Yield" (the yield required for the stock to match its Chowder Rule of either 8 or 12).

    o adding a 1/4% bias to the current yield

    o selecting a minimum acceptable yield (currently 3% for my main DGI portfolio)

    The "target yield" is the maximum of the three above yields.

    The target price is the current annual dividend divided by the "target yield".

    I also compute an associated price discount (the percent the current price would have to drop to enable a buy at the target price). If the discount is less than 10% I'll submit a limit order to buy stock at the target price.
    Quick example:

    Assume I'm interested in company A (which meets my quality requirements) and I want an acceptable purchase price.

    Also assume my minimum acceptable yield is 3%, the current price for company A is $100.00, its current dividend is $3.25 and its 5-yr DGR is 8.25%.

    If A is not a MLP, REIT, or utiltity the Chowder rule requires a value of 12% [5yr DGR + yield].

    The current yield is $3.25 / $100 or 3.25%; the biased yield is 3.25% + 0.25% or 3.50%; and the "chowder yield" is (12% - 8.25%) or 3.75%.

    The maximum of the minimum acceptable yield, biased yield and chowder yield (3.00%, 3.50%, 3.75%) is of course 3.75%

    The target price would then be the dividend divided by the target yield which is $3.50 / 3.75% or $93.33.

    The associated price discount is 1-(93.33/100) or 6.67% ... which is less than 10%, so I'd submit a limit order buy N shares at $93.33.

    "10%" is an arbitrary value, but one I believe normal price variation is likely to trigger during the limit order period.
    All of the above can be automated with Excel.

    I've used the process for several months now and find it definitely helps ... thank you once again.

    Best wishes,

    Mar 8, 2015. 09:17 AM | 1 Like Like |Link to Comment
  • Dividend Growth Checkup [View article]
    Thank you.

    Learned something new.

    Updated my spreadsheet to incorporate the new calculation.

    Best wishes,

    Mar 8, 2015. 07:55 AM | 1 Like Like |Link to Comment