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  • Bogle's Views On Retirement Income [View article]
    Yet, who has 300K ? the top 33% of the +55 age demographic
    Your public portfolio value represented represents about 60% of the value of the median household retirement asset account value at age 55 - 60. $2700 a year won't go very far, even if dividends DO grow at 6 - 8% a year and one is receiving SS ( yet many would postpone until age 70 ). At age 55, the account value should most likely should be > $1 million ( the top 20%? at this point).
    There has been a vast miscalculation about how much people have needed to save and invest over their working lives and what investment return actually needs to attained at various stages. This may be a function of employees and employers putting blind faith into 401K and pension management entities decisions' on how much was taken out of paychecks towards the 401K, and what it should have been invested in ( too conservative ) with commensurate overly steep fees being taken out. Now there is some scrambling for solutions and most financial advisors ( Robo and alike ) and Bogle types are still pushing 7 - 8% returns via passive indexing and EMH "asset class diversified" products. Run a 7% return on $120K median 55+ age household retirement balance over 10 - 15 years, and that won't get them very far either.
    In order to avoid these miscalculations in the future, my advice to younger clients is to "maximize" returns via tactically managed small cap value or Mid cap growth using low fee ETFs in personal Roth IRA accounts and shoot for "millions" of $ in terminal retirement asset value. Chowder's thinking is also along the lines of a target being in the "millions" ...
    Mar 2, 2015. 10:29 AM | Likes Like |Link to Comment
  • Lessons From A Dozen Years Of Short Selling [View article]
    A reliable "generational" method of shorting, using a market index such as the SP500, involves a multi variable approach :
    Feb 27, 2015. 04:05 PM | Likes Like |Link to Comment
  • Young Investor Dividend Growth Portfolio [View article]
    You are a minority case . The median net worth of the upper 20s group is $9,460.00. The $100K net worth number is restricted to a 15% or less? of the population sample see here:

    As a young person has the benefit of "time" ahead of them in order to achieve it, an expedient way for a majority of the 20's group of accruing and maximizing retirement wealth with a "small" initial investment can be to use a tactical asset allocation model using small cap value portfolio universe within a Roth IRA. One can use the actuarial table on Chart 6 slide 21 to see a simulated "starting" lump sum.
    Then, when they get to retirement phase, they will have utilized the stock universe that, proven academically and historically, will have provided the highest terminal asset accumulation. From there in their "spending" phase, they can look into income producing options. During their career years, their 401K plans will most likely provide diversification into other universes and asset classes.
    Feb 26, 2015. 07:31 PM | Likes Like |Link to Comment
  • Will The 'Income Bubble' End As Badly As The Tech Bubble? [View article]
    The title question of the article is something that I have been pondering for the last year or so .. Will companies change dividend policies because of demographic shifts ?

    As Philosophical Economics posits: " In all likelihood, present and future valuations will prove to be more important to returns over the next 65 years than they were to returns over the last 65 years. The reason why is that the growth of the population is set to slow, with the average age set to increase significantly. Slowing population growth and a significant upward shift in the average age, towards the elderly, implies reduced aggregate demand growth, and therefore a reduced need for expansive corporate investment. Corporations, if they want to do well for their shareholders, will therefore have to shift their capital allocation strategies away from traditional capital expenditures towards what might be perjoratively described as “capital recycling”–the payment of dividends (which get reinvested into the market) and the conduct of share buybacks (which are essentially identical to reinvested dividends in terms of their effect on total return). But the rate of return that dividends (reinvested at market prices) and share buybacks (repurchased at market prices) produce is strongly dependent on the valuations at which the reinvestments and repurchases occur. It follows that as the corporate sector shifts towards capital recycling as an allocation strategy (a shift that is already well underway), valuations–not only at the moment of purchase, but also during the entirety of the holding period–will become increasingly important to the market’s return prospects. To illustrate the point, imagine a demographically and technologically stagnant future world where dividends are punitively taxed, and where capital expenditures, in excess of depreciation, are neither needed nor profitable–a world where such expenditures do nothing but fuel competition, deflation, and profit margin shrinkage–put simply, a world that is Japan. If corporate managers in such a world are good stewards of capital, they will deploy 100% of their earnings into share repurchases. EPS growth will then be entirely determined by how much the repurchases contract the S, the share count. But the amount by which a given repurchase event contracts the S, the share count, is determined by the repurchase price–and therefore, the valuation. And so, in such a world, expensive valuations will depress EPS growth, and by extension, investor returns. The simulation above bears this out, with reinvested dividends as the proxy for share buybacks.
    Crucially, a large portion of the EPS growth that was realized over the last 65 years was the result of expansive capital formation, the net building of new things that produced new profits, and an EPS that grew by the E. In a futuristic Japanese world where that driver of EPS growth is removed, and where all EPS growth results from repurchases, a shrinking S, the returns to an always-expensive scenario will be that much weaker."

    This is why diversification and tactical asset risk mitigation strategies, for at least part of one's portfolio, are important. We can rationalize why a strategy if foolproof until the "outlier" event ( the one that causes all correlations to go to "1" for an uncomfortably extended period of time ) is upon us. Then, many times it is too late to do anything about it. ( I also wonder about the "passive indexing "craze"")
    Feb 26, 2015. 04:43 PM | Likes Like |Link to Comment
  • Anatomy Of Market Tops [View article]
    This is a 99% technical analysis article .. the editors shouldn't be allowing these through to the article section ...
    Feb 26, 2015. 04:27 PM | Likes Like |Link to Comment
  • Quarterly Tactical Strategy Backtested To 2003: CAGR Over 28% And Consistent Positive Returns [View article]
    Thanks for catching the listing mistake ...

    I believe that the picks used were from results provided by Ilya Kipnis for the 3-month SMA referenced from the comment stream between you and him on 23 Feb, 07:13 PM. (You asked Ilya Kipnis "Can you give me similar results for the 3-month SMA?"

    As for the data, I used price data from daily chart price plots provided by ProphetCharts in Think or Swim platform. It might not be 100% precise with dividend adjustment but it should be within a certain "ballpark" ... Further precision may very well be attained with a different data source.
    Feb 26, 2015. 10:11 AM | Likes Like |Link to Comment
  • Quarterly Tactical Strategy Backtested To 2003: CAGR Over 28% And Consistent Positive Returns [View article]
    One important facet of quantitive equity market analysis is the concept of defining the "long term" trend. During my quantitative equity market analysis career, I found that it was necessary to devise an overarching long term trend determinate framework for the general equities market and discovered that more reliable predictive and risk mitigated outcomes were produced, within longer time frames. This helped me migrate from a "trading" mindset to an "investing" mindset. The constraint of the "randomness" of price movements within short term time frames ( daily, weekly, monthly, even quarterly ) created too many opportunities to "overtrade" and also made it difficult to determine consistent predictiveness in signalling and alpha production.
    As the the Market Map model framework is used as a stand alone, alpha producing methodology with robust performance and historical record, it has been used as a filter for other promising investment models operating on shorter time frames. Some of these modern models provide diversification in using different equity sectors and style alternatives to those that Map model utilizes (SPY and QQQ ETFs).
    Thus, as a guide, when then testing a model working within it's framework, if the Map model deems the equities market a low "reward to risk environment", then the test model can make adjustments in terms of less or no equity exposure, and if the Map model deems the equities market environment a "favorable" reward to risk environment, then the test model can make adjustments from more conservative cash or bond positioning into equity allocation. It can then become apparent if performance has been enhanced in the test model in question.

    In the QTS case, it has been shown that the 1997 - 2002 backtest period provided some difficulty in terms of returning the alpha compared to that of the 2003 - 2014 period. I have run the QTS model within the Map model framework, and made adjustments to equity selections as per QTS and bond selections as per the Map model in periods when the Map model called for low reward to risk and high reward to risk market environments. As of 01/19/2015, the Map model is in cash.

    The spreadsheet below depicts the changes.
    Feb 25, 2015. 08:40 PM | Likes Like |Link to Comment
  • Dividend Funds With Adaptive Allocation Can Deliver Higher And Safer Returns Than The Dividend Aristocrats [View article]
    Good work ... I created a similar and reasonably simple study on the QQQ ( Nasdaq 100 ) / TLT / SHY using Mebane Faber's 10 month SMA methodolgy.
    ( page 1 here ) This is a technique that many layman could learn and apply.
    Keep in mind that, for the DG portfolio comparison, I used 1) a small portfolio of 10 of the best and popular DG stocks 2) optimized the performance by pulling GE out in 2007 before it's 2008 plunge and replaced with WMT and 3) no inclusion of financial stocks.

    Over the years , the managers of the Nasdaq 100 index have done a superb job over the years of finding some of the best quality growth stocks for inclusion into the index.
    Many of the constituents of the QQQ are showing up on div stock candidate lists.
    Feb 24, 2015. 05:21 PM | Likes Like |Link to Comment
  • The Passive DGI Portfolio: Portfolio Update #3 [View article]
    The "total" in the "total sum" column shown in your "progress of Joe's portfolio over 20 years" table from "A Case For Passive Income From Stock Dividends - Part 2" might be wrong ... it should be in the $2M range ...
    Feb 24, 2015. 09:47 AM | Likes Like |Link to Comment
  • A KISS Retirement Portfolio That Has Consistently Beaten The S&P 500 [View article]
    The academic evidence, ala Fama and French, shows that Small Cap Value and Emerging Small Cap are the top performing stock universes over long periods. I have both in my portfolio and apply the tactical asset allocation model to the portfolio. Over the 90 year CRSP data sample, the model with the addition of "Sell in May" anomalie has produced alpha above buy and hold with much less risk. Not sure why the "Sell in May" adds premia, although there is some evidence ( Stock Traders Almanac ?) that small cap has strong "seasonal" performance, usually making a low in November(s) and gaining traction into the summer. Anyway, the model tells me to sell the positions in May 2015.
    I also am going to build a position in my 19 year old daughter's Roth IRA and contribute $2000 in the 1st year, and $200 increments over the subsequent 10 years ( shown in slide 17 in presentation). If capitalism and free markets continue and the planet is still habitable over the next 40 - 45 years, then she'll have something set aside. Good thinking on the article !
    Feb 23, 2015. 11:37 PM | 1 Like Like |Link to Comment
  • Retirees Look To The Industrials Sector For Above-Market Yield And Dividend Growth: S&P 500 Industrials Sector [View article]
    And yet, an investor ( say 65 yrs old ) could have an option of taking 10% ( or a small %, 100K in this example ) of the $1 million and invest it in a risk mitigated, tactical allocation process using a top low fee growth stock ETF and Bond ETF ( in a tax deferred account ), with the 20 year rolling historical ( since 1924 ) total returns, being a median 1800% at age 85. They would "position themselves" with two alternatives (diversification); the growth stock universe that acts as a self-directed "indexed annuity" in the form of liquid assets/sale-able shares for use for "expenses" or gifts to heirs, and the dividend growth portfolio with the income generation from the 90% allocation of the non sale-able shares of dividend income portfolio.
    Many advisors / financial journalists get locked into a "one size" retirement planning methodology because of a perceived and "conditioned" fear about the market's volatility and the "conservative investors" discomfort with it. A couple of prominent and popular "fiduciary" advisors who run a weekend retirement radio talk show are absolutely convinced with and exclusively recommend buying a mix of Vanguard Total World Stock Market Index and Vang Total Bond fund. To me, this is as impractical as holding a majority stake in a single stock universe or style.
    Adding other allocations, such as life insurance with health care rider, could also be of value to some clients.

    In the end, the premise of diversification amongst many methodologies helps alleviate the "tenuousness" of investing in equities and is prudent and conservative.
    Feb 22, 2015. 12:39 PM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    By not being swayed by these "tiger in the bushes" risks ( which will always exist in some form or another), we can "defuse" and resist the hard wiring of conditional fears (and resulting fear responses) onto our limbic systems. This can be achieved by being disciplined in managing our investments using well tested and well formulated strategies, diversification, and by not using leverage. Even a process involving something as simple as a mechanical allocation into and out of the SPY and TLT as their price crossings are above and below their respective 10 mo simple moving averages, can mitigate risk and produce alpha over the long term.
    Feb 21, 2015. 11:47 AM | Likes Like |Link to Comment
  • Ready To Retire? Do It With A Dividend Growth Portfolio [View article]
    disclaimer: Just make sure that you diversify and don't put all of your assets in one methodolgy or universe
    Feb 21, 2015. 10:30 AM | Likes Like |Link to Comment
  • Where Will The Price Of Oil Settle? [View article]
    Never know what facts and figures are correct but Slate's are usually pretty good
    Feb 19, 2015. 10:29 PM | Likes Like |Link to Comment
  • Where Will The Price Of Oil Settle? [View article]
    There are lots of small inputs towards a structural change of fossil fuel use ...
    Demographics ( boomers and their elderly parents driving less, milennials using public transport, Saudi Arabia moving away from ff use by building the largest solar installation in the world, etc. ) ....
    As pickup trucks are a large segment of the fuel use, here's an improvement on that front
    Feb 19, 2015. 10:16 AM | Likes Like |Link to Comment