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Kurtis Hemmerling  

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  • New Investment Vehicle For Do-It-Yourself Investors Wanting Performance [View instapost]
    The Ready-2-Go portfolios are an add-on service for model developers at the moment. This is phase 1 and still in the beta-testing stage. I don't think anyone at this point is going to sign up for Portfolio123 just to follow the models. Its going to be added to Stockscreen123 as well in short-order. It may very well be the quantitative engine that drives this new type of personal fund. I happen to know that Portfolio123 has adapted their platform so other 3rd party sites can use their engine and portfolio-following platform for their own proprietary fund.

    I really wouldn't focus too heavily that this is being beta-testing amongst the model-developers first. Its more of a nice perk that we can exchange amongst ourselves first.
    Feb 11, 2013. 10:56 PM | Likes Like |Link to Comment
  • A Powerful Nasdaq Portfolio Built On Academic Research [View article]
    Thanks for the comment Roger. I will have to look at the output settings on Portfolio123 to see if I can modify them to log...if I can't, I'll put through a feature request to the programmer. It's used as a strategy development and backtesting engine but not as much for presentations like what I am doing. I'll look into it... thanks.

    The CAGR or compound annual growth rate is a good number to focus on as it doesn't take the total return and divide by the amount of years which would suggest s 500% return...and is wrong of course... the real number is over 50%.
    Feb 7, 2013. 10:35 AM | Likes Like |Link to Comment
  • When To Buy And Sell Dividend Growth Stocks [View article]
    Thanks Craig for your view. The reason for the price change is due to a potentially undervalued condition. That is the motivation the first two rules that look at higher yield as well as yield pulling away from historic norms (reversion to the mean).

    I guess I could sum it up this way... one investor looks at 50 stocks that have growing dividends and buys them all. The next investor initially buys the best looking 25 and holds them as long as possible before replacing it. The last investor wants to constantly hold the best 10 (as determined by his undervalued system yet he still looks for fundamental strength). When one of his best 10 falls to position 15, he sells it and replaces it with a top 10 pick even though it still might be a decent holding and something that investor 2 keeps.

    The idea is to have a more tightly focused portfolio that keeps your best 10 since these have the highest upside potential (contrarian and being undervalued). You might still like all 50 stocks and at some point trade every single one of them... but you don't hold them all at the same time.

    Some are uncomfortable with this notion and prefer to hold all 50 or the best 25 with infrequent stock replacement. Its the difference between single stock trading versus a portfolio valuation theory. The first limits your growth to the average performance of the combined stocks. The second allows you to create a strategy that can outperform the market with less drawdown and even progressively go to cash when no good trades exist.

    To each his own and each investor should only invest with what he is comfortable with. I am not trying to change the world....just trying to offer another perspective for those wanting something new.
    Feb 4, 2013. 06:35 PM | Likes Like |Link to Comment
  • When To Buy And Sell Dividend Growth Stocks [View article]
    There is an interesting paper... I will have to dig it out... it basically says that rebalancing deep value portfolios is what drives the 'value premium' found by Fama and French.

    As a seeming contradiction, if you perpetually hold an average growth stock it will outperform a value stock. But if you create growth and value portfolios and rebalance every year... essentially you have unwitting created a valuation-timing strategy (or a simplistic version of the above) where you buy value stocks and sell them when there is a run-up in price (away from their fundamentals) and the following year they are categorized as glamour stocks. Which means you buy value and sell once they become over-valued and your new year once again holds only deep value... it actually explains the market-wide value premium that is found in most periods. Interesting piece, I will have to dig it up again.
    Feb 4, 2013. 12:09 AM | Likes Like |Link to Comment
  • When To Buy And Sell Dividend Growth Stocks [View article]
    The question was whether the valuation-timing strategy of dividend growth investing outperforms dividend growth stocks in general vs. the S&P 500 and needs to be taken in context. My reply, therefore, referred to total return and was not meant to be a slight toward the dividend growth strategy or concept of increasing dividends for a sustainable retirement payout.
    Feb 3, 2013. 07:50 PM | 1 Like Like |Link to Comment
  • When To Buy And Sell Dividend Growth Stocks [View article]
    In the context of this article an extra 3.5% return for the average dividend growth stock compared to an extra 13.5% return is marginal.

    You should try out Portfolio123... you can add whatever your contstraints and costs for how this strategy would perform for you. Portfolio123 does not have look-ahead bias nor survivorship bias. And no, the cost of trading is minimal on these stocks unless you are using market orders with tens of millions of dollars... and even then you are not going to move these stocks too far.
    Feb 3, 2013. 07:30 PM | Likes Like |Link to Comment
  • When To Buy And Sell Dividend Growth Stocks [View article]
    Dividend growth investing only marginally outperforms the market. For example, I ran a screen (no survivorship bias such as you would have simply backtesting a list like David Fish CCC's) an it included all stocks with 10 years or greater of dividend increases. The test was run over the trailing 10 years. The dividend growth stock universe produced a an average annual return of 9.17% vs the S&P 500 CAGR of 5.81%. All dividends were re-invested.

    I don't include taxes because that is different for everyone. Depending on your don't pay taxes. As well, these are highly liquid stocks so slippage is minimal. As for transaction costs, many brokers offer $4 to $5 per trade or brokers like Foliofn will allow unlimited trading (portfolio window trades) for a flat $29 per month.

    The parameters I can control for are minimal on this strategy... other strategies such as small caps I add 0.5% slippage per order which should cover trading costs. But you are on your own with tax... I don't you'll find many mainstream articles covering every possible tax bracket.
    Feb 3, 2013. 03:27 PM | 1 Like Like |Link to Comment
  • When To Buy And Sell Dividend Growth Stocks [View article]
    True, but then you are not utilizing your capital appreciation. It is like dead money. But I extract the capital gains and re-invest them into a higher yielding product... thus growing my dividend stream faster. The bonus is that the new holding also has deeper value thus giving me more potential upside than a fairly valued, or even over-valued stock.
    Feb 3, 2013. 12:07 PM | 1 Like Like |Link to Comment
  • A Simple But Powerful Greenblatt Smallcaps System [View article]
    No, I don't choose dividend yields greater than 4%. That has a hypothetical example of how to use absolute rules.

    This article is about relative ranking rules (just 2 of them on the smallcaps index) under the heading of Greenblatt Ranking System.
    Feb 3, 2013. 12:05 PM | 2 Likes Like |Link to Comment
  • When To Buy And Sell Dividend Growth Stocks [View article]
    You are correct David. The whole point of this system is to grow your income stream as fast as possible. The focus is on a sustainable dividend stream that is 'hyper-compounded' as to the portfolio.

    The idea is that at some point you will live off dividends only, hence the focus on building that up for this strategy only. I have found this to be true with many dividend growth investors.
    Feb 3, 2013. 12:02 PM | 2 Likes Like |Link to Comment
  • 4 February 'Feel Good' Factors For Apple Fanatics [View article]
    Frankly, I'm shocked. Even if Apple just held to this earnings yield and failed to acheive any earnings growth going forward I would consider this a decent low-risk stock to add to something like the Utilities portfolio (due to low valuation, dividends and easy ability to pay future dividends). But we are not talking about electricity or water delivery...this is a stock trading a deep deep value that still has game. I was not a fan of Apple when it was trading around $700 and got slammed for saying so. Now at $450 I think its a great bargain and this is suddenly the unpopular opinion. Apple is a great stock to play provided you are a contrarian investor.
    Feb 2, 2013. 11:35 AM | 22 Likes Like |Link to Comment
  • A Do-It-Yourself System For Dividend Investors [View article]
    One more point: Dogs of Dow. Use top 50% yield and top 50% yield reversion to mean rules. Of these take top 10 based on ranking. Last decade plus of CAGR is 17.5% (1999 - present) and last year was 25% gain. This is with 3 month rebalancing. Worst drawdown in 08/09 is -36.5%.

    Stocks making this list right now (and for the next 3 months) are:
    Jan 7, 2013. 12:12 PM | Likes Like |Link to Comment
  • A Do-It-Yourself System For Dividend Investors [View article]
    Correction. It performed 3.59% better than the market this year if only using the two valuation rules and with a range of of 2% underperform to 7% outperform depending on the additional ranking system used (choosing best 10)

    Point of interest, this same system on the Dow Jones Industrial Average would have resulted in a 20.4% total return.
    Jan 7, 2013. 11:56 AM | Likes Like |Link to Comment
  • A Do-It-Yourself System For Dividend Investors [View article]
    If you only used the 2 valuation rules you would have 19.63% return for 2012 (div included) which represents 7% alpha. The added optional value ranking system would have the portfolio trading roughly inline with the broad market.
    Jan 7, 2013. 11:48 AM | Likes Like |Link to Comment
  • Why Dividend Stocks Are A Shield Against Mr. Market [View article]
    I beg to differ. Not everything that happens in the market is because of Mr. Market. The idea is that Mr. Market comes knocking on your door offering a variety of prices and it is up to you to decide if it is good or bad. In the case of offering a dividend, the price must go down by the rough equivlent (I say rough because there are tax considerations et. al) but anything less would be an arbitrage play that could be taken advantage of by any trader. Mr. Market did not decide to lower the price by $2.64 per share, the company did when they offered that amount in a dividend. There is no big force of supply and demand here... the $2.64 is representative of a transfer of wealth...any more or any less on ex-div date is Mr. Market but not the $2.64.
    Jan 5, 2013. 07:15 PM | Likes Like |Link to Comment