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Kurtis Hemmerling

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  • Dividend Champions For March 2013 [View article]
    Hello David. Just wanted to let you know that I created a strategic portfolio model based on your CCC list. I realize most DGI'ers wont want to be this active as they largely prefer 'buy and monitor' but I didn't want to exlclude the more active investor either.

    I don't charge anything for it... but the Ready-2-Go model lineup is only available for Portfolio123 members at this time so you can't see the holdings unfortunately. But I can post them at any time if you like(upon request).

    Current list is as follows:AUBN
    Mar 5 06:21 PM | Likes Like |Link to Comment
  • Netflix: A Good Company, But A Terribly Overpriced Stock [View article]
    I would hope they learned something from the last debacle. But is the CEO a super-shrewd business man that has seen the future and taken proactive steps to hide from calamity as the previous commenter suggested? I doubt it.
    Mar 2 10:55 AM | 1 Like Like |Link to Comment
  • Netflix: A Good Company, But A Terribly Overpriced Stock [View article]
    Netflix has made some bad decisions....its why CEO Reed Hastings had his pay cut in 2012.

    In memory yet green Netflix repurchased shares as it climbed up to $300 (spending $200 million with avg share price of $222) and then decided they needed more money so they diluted shares at $70 per share and sold convertable bonds ($400 million worth). Pure and simple cash destruction and shareholder loss!

    Remember Qwikster - the debacle over trying to split the DVD service from the streaming?

    “I slid into arrogance based on past success,” Hastings wrote at the time.

    “Consumers value the simplicity Netflix has always offered and we respect that,” co-founder and Chief Executive Officer Reed Hastings said today in an e-mailed statement. “There is a difference between moving quickly -- which Netflix has done very well for years -- and moving too fast, which is what we did in this case.”
    Mar 2 10:23 AM | Likes Like |Link to Comment
  • Netflix: A Good Company, But A Terribly Overpriced Stock [View article]
    I find all the Netflix valuations ridiculous, especially when compared to Apple. I suggest a pairs trade of long Apple and short Netflix. It may take a few months to a year for sentiment to sway and valuations normalize - but when it does.....
    Mar 1 07:15 PM | 1 Like Like |Link to Comment
  • New Investment Vehicle For Do-It-Yourself Investors Wanting Performance [View instapost]
    Now you can get Portfolio123 at $495 per year or $49 per month. Remember to use this link for a 30 day free trial instead of 15 days.
    Feb 23 11:58 PM | Likes Like |Link to Comment
  • A Powerful Nasdaq Portfolio Built On Academic Research [View article]
    For those wanting to folow a higher liquidity version of this - see this link
    Feb 22 02:11 PM | Likes Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    I think we are misunderstanding each other Dave. The process is simple and automated by a sophisticated engine and is no different than a total return equal-weighted index.

    Then quant engine at P123 has a set of instructions to look across all North American exchanges and OTC for any stock that has reported 10 years of annual increasing dividends. All stocks are equal-weighted in this instance (and equal-weighting usually improves performance than cap-weighting). Dividends are accounted for and re-invested. On the rebalance date (I did it form one week to one year with only a small variance), the market is re-examined and any stock that now has a 10 year history is included and any stock that failed to pay an increasing dividend is cut. On the rebalance date, the equal weighting is ensured.

    The data is from Compustat and is real point-in-time. The 10 year dividend rule is computed each and every re-balance point.

    This is as close as you can get to actually being there. What I meant by factoring in stocks no longer being listed is that you need a reliable dataset that includes all stocks that existed during the period of your test...which this does. This wasn't some 'by hand' guesstimation I did. There is one inclusion criteria only and it was run by a sophisticated quant engine that has refined its process over the past decade to provide answers such as this.

    But to your point, perhaps a longer test or using different start and stop points would give different answers. Even value and growth go back and forth as to who carries a higher premium. And dividend growth investing can be profitable. But blind investing - whether it be with a hedge fund, mutual fund, dividend growth stock or value stock - will not result in excess gain or less risk of loss over time.

    This research is academic and I like to follow the empiracal evidence but I find that this article has brought out many emotionally charged individuals with their identity wrapped up in dividend growth. But we are merely talking about total return of stocks with certain characteristics over periods of time.
    Feb 22 10:24 AM | 2 Likes Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    I too have found that such things as high yield and low payout ratio trounce the market as it speaks the low valuation of a company. There are many combinations that work well with dividends.

    But a key point to take away (and this will become increasingly important as many companieshave been figuring out how much investors like dividend growth) is that just because the board of directors vote to maintain growing dividends come what may - you should make no assumptions what-so-ever about the company itself. The div growth is a method to convert capital into income. A great great great process if the company is increasing earnings and revenue over time. But don't make that assumption without checking.
    Feb 22 09:57 AM | Likes Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    If you have a strategy, it needs to include stocks that are no longer listed (or in this case it also includes stocks that offered 10 year annual increase dividend payments but then froze them or offered smaller dividends).

    Higher risk investing should pick up a higher amount of delisted stocks. Certain strategies will pick up more buyouts. This dividend strategy needs to include stocks that at one time offered div growth but then quit. You cannot look at the group of survivors to determine how many people died if you didn't have a head count to begin with.
    Feb 22 01:36 AM | Likes Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    Portfolio123 has the friction cost factor.

    I am using a list because there isn't long-term data and these are the common sources new dividend growth investors are using. Because there isn't any performance numbers - new div growth investors assume that past performance of stocks on the list represents real performance.

    But the real point of the article was the difference between dividend growth stocks and the market or the S&P 500. Div growth stocks are no better on average.

    If you have a decade old div growth list and it was updated every week, then you would get the identical results as to what the survivorship-bias free were. But I am not aware of this awesome database and neither would a new investor take the 300 hours to do by hand for what Portfolio123 does in seconds. I don't get the point of what you are saying.
    Feb 22 01:32 AM | Likes Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    Thanks for your reply David.

    The benchmark was not meant to be some kind of active stock-picking investment fund, and neither was it meant to be a reflection how investors would construct a portfolio. I simply wanted the total return of the universe of stocks which had 10 years of annual dividend increases or more.

    It is similar to portfolio sorts done by academics to determine if value, growth, share repurchase, dividend, or momentum stock carry any sort of market premium with it. I understand that investors choose all different sorts of stocks for all sorts of objectives and I am not attacking them for it. But what I am saying is that if an investor thinks he can increase his wealth (total return) by simply buying dividend growth stocks as opposed to all the other stocks - he is mistaken. If he simply wants to convert the cash in his bank account into taxable income - I am not here to question. If he wants to employ strategy with dividend growth stocks (and the point of this article), he has an advantage.
    Feb 21 07:29 PM | 1 Like Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    It was equal-weight where any stock in any North American market that had annual dividend increases for 10 years in a row was included. Stocks that did not increase dividends were cut and new stocks were included (based on annual data). Dividends profit is reflected directly in price for a total return (so it doesn't represent paying taxes on income before re-investment). I rebalanced a range from weekly to yearly and it made very little difference. The range of DGI stocks (with over 10 years of increases) ranged from 170 - 290. The current number is north of 200. I realize that there are other methods to calculate what a dividend growth stock is (some use calendar years instead of annual reports, etc. etc.)

    No fundamental or any other checks were made. I wanted a pure equal-weighted benchmark where stocks are added and removed as they meet the 10 year dividend growth criteria. The idea was to get examine dividend growth investing as a policy but not necessarily as individuals use these to invest in. This was not meant to be an attach on dividend growth investors anymore than a Fama French paper attacks growth or value stocks. It is making a broad statement about stocks with that attribute and then discusses how to strategize to seek alpha.
    Feb 21 05:32 PM | Likes Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    Strategy-testing is only limited by the user. If you simply data-mine or start programming based on past events or what you already 'know' the market has done, its futile. But it allows you to create an unbiased strategy and test logical concepts in a real-world environment. For this it is priceless. If you start writing rules and you have no idea why it will lead to performance - you should not be developing a strategy.

    If all you want to do is screen and backtest you can use Stockscreen123 for much cheaper (and more powerful than Zacks Research Wizard). But if you are looking for ongoing portfolio management using the latest methods - Portfolio123 is better choice.

    In the beginning of this 'how to build a strategy' tutorial I have a few of my favorite papers linked (PDF format). But nothing much in the last quarter or year... last couple of years maybe.
    Feb 21 12:35 PM | 1 Like Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    Portfolio123 costs $995/ year for an individual level membership or $83/month (assuming you pay for the whole year at once. $99/month if going monthly). It carries a bit of a learning curve but once you get the hang of it you have a system similar to what institutions pay $2,000 per month for - so the value is good if you can swing it. Even just the one filter, max correlation, is worth it. Share prices become highly correlated in bear markets (many times more than bull markets) and you can set a diversification filter based on price correlation(e.g. new stocks must have price correlation less that 0.80 when compared to the portfolio price performance and holdings are sold when price performance correlation exceeds 0.90) . What it actually does is that you sell your holdings progressively as the market drops and buy back in near the bottom of the bull market. Its my new favorite cash management rule.

    One new feature they offer is Ready-2-Go models where portfolio developers make their models available for free (and some will charge a small subscription fee down the road). Its a new feature but I have a Piotroski - All Exchange Smallcaps model up there that has some strong 10 year returns. I offer it for free on the site.

    I recently created a guide on how to build your own strategy - its a free download on the main page (use above link). This will give you a feel for how to use the basic tools. Its 30+ pages but that includes graphics.
    Feb 21 09:49 AM | Likes Like |Link to Comment
  • The Hard Truth Of Dividend-Growth Investing [View article]
    I agree with what you say chowder. It is why I dedicate so many articles to dividend growth and trying to determine what a high quality stock is (in my opinion) and how to find separate high quality from low.

    I guess my point is that out of 200 dividend growth stocks that have at least 10 years of annual increases - which 15 or 20 do you want to own and why? I see articles that say 'I like these 20 stocks because they are good' but why are they better than the other 180 dividend growth stocks? What is the reasoning behind it? I'm a quantitative guy and I like hard numbers and rationale. All I ask is that if someone is going to critique my strategy - which I encourage as it pushes me to improve and work harder - please offer me something concrete as a filter improvement or an alternate strategy.
    Feb 21 12:26 AM | 3 Likes Like |Link to Comment