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Nelson Smith

 
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  • Petroamerica Oil: Welcome To The Cheapest Oil Producer Worldwide (Part 2) [View article]
    I wish I was as sure of anything as much as the author is sure of Petroamerica.
    Oct 14, 2014. 11:22 PM | 11 Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    If by "refuting" Mr. Swerdoe you mean "a bunch of DGIers got upset about what he said and disagreed," then you'd be right.

    "But how dare they attack, with no basis in fact, our means of income."

    If your method is so right and sound, why care so much? Won't everyone eventually see the light and come over to the holy ground of DGI?
    Jul 17, 2014. 01:41 PM | 11 Likes Like |Link to Comment
  • PIMCO High Income Fund Offers 12% Yield, Lots Of Risk [View article]
    To clarify for Seth and everyone else, my concern is when you look at the distribution compared to the NAV. A 12% yield looks reasonable until you compare it to NAV, which pushes it up to an 18% yield on the invested assets.

    There is no way they can invest their capital in junk bonds and get 18%, even with the leverage. So the managers of the fund have to play risky derivatives. Those have worked out for the fund in the past, but I'd rather get 8-9% on a fund that doesn't use derivatives to enhance returns on a junk bond fund. Junk bonds are already risky enough.
    Nov 4, 2013. 04:45 PM | 11 Likes Like |Link to Comment
  • Target: Sometimes The Market Consensus Is Right [View article]
    I live in Canada, and visit a Target store a month, approximately.

    The company had two major problems in Canada - shelves were empty, and customers just weren't showing up. They've started to fix the shelves empty problem, but there's still a ways to go. If the shelves were a 4/10 before, they're maybe up to 6/10 or 7/10 now. Better, but still not even close to their competitors.

    The problem with slow foot traffic is a long way from getting fixed. I visited a location last week that was located next to a Loblaw's Superstore (Loblaw is Canada's largest grocer), and the Superstore was at least ten times busier. I'm not exaggerating. Target had two registers open. Superstore had the majority of its 20 registers open, and there were lineups at each one.

    American investors continually downplay the situation in Canada because they're not here. It's a disaster, and is years away from getting fixed in any sort of meaningful way.

    Oh, and my girlfriend bought two items and both were priced wrong. She cursed the place and probably won't be back soon. All over $1.20. These details matter, especially in the ultra competitive Canadian retail market.
    Jun 8, 2014. 11:05 PM | 8 Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    Dave:

    I find your comments on the subject quite reasonable, actually.

    That's what it all comes down to. I've had success buying turnaround stories and unloved small-cap value stocks. You've done well buying KO and others.

    I think it's much easier to convert someone to DGI than it is to my style. DGI involves buying (mostly) household names, which are considered secure, and give someone a "worse case" return scenario of a 3-5% dividend. Especially people who are relatively new to investing.

    I just like weighing in on these debates when I see the author is getting shelled. I was once there, and I know what it's like.
    Jul 18, 2014. 01:29 AM | 7 Likes Like |Link to Comment
  • Do Dividends Lower Total Return? [View article]
    "How come dividend paying stocks outperformed all other asset classes over the past 100 years?"

    It's a case of confirmation bias. Successful companies tend to have mature businesses that have predictable cash flows. Therefore, successful companies tend to pay dividends. Successful companies are not successful because they pay dividends. They just happen to have those things in common.

    Essentially, saying dividend stocks outperform is saying that successful companies outperform unsuccessful ones. They are not successful because they pay dividends, they (mostly) happen to have those two things in common.

    I hate this argument so much. Would Coke or Apple or any other giant company be any less successful if it stopped paying a dividend tomorrow? Or even if it stopped 20 years ago? Of course not. There are all sorts of successful investments that don't pay a dividend, including Buffett's baby.
    May 2, 2014. 12:15 AM | 6 Likes Like |Link to Comment
  • Coca-Cola Has Growth, Margin And Capital Deployment Problems [View article]
    I think Tom brings up a lot of valid points with Coke. The fact is growth has slowed to practically nothing, management is paying themselves *really* well, and the stock is bid up thanks to retail investors' delusion that the next 50 years will somehow be as profitable as the last 50.

    Like I've said before, $KO would have to fall 50% before I'd look at it. There's just too many headwinds to pay 23x earnings for it.
    Nov 11, 2014. 05:54 AM | 5 Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    Bonds protect during market downturns and give steady income. Bondholders are also higher up the ladder when it comes to getting paid, compared to shareholders. They have a place in a portfolio.
    Jul 17, 2014. 02:00 PM | 5 Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    "Dividends are convenient, leaving me free to sell shares if/when I choose, or not sell shares under pressure."

    This is an absolute valid point, but what about the other side of this argument? Sometimes shares are really depressed, and other times they're overvalued. Sure, market tops and bottoms are much easier to identify using hindsight, but I see 1,000 comments about the dangers of having to sell during market troughs to one of the benefits of selling at market peaks.

    I can get 3% on solid short term corporate debt or a longer term GIC up here in Canada. There's something to be said for moving assets out of equities during times when markets are high, even during periods of low interest rates. Sure, you might give up some upside, but when the correction happens and you can buy back in for 10-30% lower? There's value in that.
    Jul 17, 2014. 01:51 PM | 5 Likes Like |Link to Comment
  • Do Dividends Lower Total Return? [View article]
    @ butterfly, smurf, etc.

    One of my last posts for SA was on some of the weaknesses of DGI. I also pointed out that a DGI investor could just buy an ETF and replicate the returns of their DGI portfolio pretty easily.

    And the insults that flew from pissed off DGIers were amazing. While it never went as far as Nazi comparisons, my intelligence was also insulted, and one overly aggressive commenter publicly pondered legal action against my opinion piece.

    Many investors come to SA to expand their horizons and to get investment ideas. A certain group of DGIers show up to talk among themselves about how awesome their investment philosophy is. It's confirmation bias at its finest. Heck, it's almost cultish. These people are only interested in the next DGI idea, all other investment ideas should be sent to the trash where they seemingly belong.

    I almost feel compelled to chime in during these comment threads, just in case an investor clicked on this article to hear a reasoned analysis, instead of a rah rah DGI is the best with no downsides piece masquerading as something that looks at both sides equally.

    I read a lot of what Larry writes. It's interesting and makes me think. The 2,791st article on why JNJ or KO is a good dividend growth stock are neither interesting nor thought provoking, and further cementing your belief that the 100 or so (out of what, 6,000 publicly traded North American stocks) companies that have been around long enough to raise dividends 'x' number of years in a row are the best investments NO MATTER WHAT is a pretty poor way to grow as an investor. We need people who are willing to look at things outside of the box.

    I'm not anti-dividend. Many of my holdings pay dividends. I hold preferred shares, a junk bond ETF, and shares of Rogers Sugar strictly because I think each are going to consistently spin out 7-8% a year which I can then reinvest (or spend, if I was a retiree). Most DGIers aren't willing to expand their investment philosophy to even consider those stocks, even though it takes decades for a faster growing 3% yield to catch up to a slower growing 7% yield.

    I was just struck by an overwhelming thought about how big of a waste of time this is. I think I'm going to go and do some actual research now.
    May 3, 2014. 01:49 PM | 5 Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    I wondered why my ears were burning this morning.
    Dec 17, 2013. 10:09 AM | 5 Likes Like |Link to Comment
  • There's No Reason To Own Johnson & Johnson - Sell It, And Buy VHT Instead [View article]
    Hey Buyandhold, we get it.
    Nov 10, 2014. 09:55 AM | 4 Likes Like |Link to Comment
  • Retirement Strategy: Every Dividend Growth Investor Should Own AT&T Right Now [View article]
    AT&T did $128 billion in revenue last year and had a net profit of more than $18 billion. Getting excited about $500 million and $100 million, respectively, is like altering your financial plan based on change you found in the sofa.
    Aug 27, 2014. 02:22 AM | 4 Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    "Maybe in a couple of decades when you have some time under your belt, you will have a better appreciation for not having to worry about market prices....."

    Ah, the "I'm older than you and therefore wiser" argument. You'll forgive me if I don't take it very seriously.

    You say the same thing every time you comment. They're the same arguments made by every DGIer since the beginning of time. But I'm the dumb one? Alrighty then.
    Jul 18, 2014. 01:55 AM | 4 Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    You're right, but some DGIers get the equation backwards.

    It's not because of dividends that the usual suspect DGI stocks outperform. They outperform because the have competitive advantages, terrific management, good brands, good ROE, etc. The dividends stem from the strength of the business, not the other way around.

    These advantages would exist whether the company paid no dividends or all the dividends.
    Jul 17, 2014. 02:09 PM | 4 Likes Like |Link to Comment
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