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Parson  

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  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    Robert,
    Funny! Glad you and your dad have a sense of humor.
    Oct 3, 2012. 10:29 AM | 1 Like Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    David,

    Call me a ditto head. I agree with everything you said.
    Oct 2, 2012. 03:14 PM | 1 Like Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    SDS
    Thank you for the link to your instablog.

    It seems that you bought one share of each of the stocks on the 12/31/07 CCC list, expending $6,401.27 in commissions, and called it DFDC. You compared the performance of DFDC to a basket of mutual funds with the word "dividend" in the name, and called the basket FUN-D. FUN-D outperformed.

    May I suggest you sort the CCC list by share price, then establish three tiered allocation levels, each level containing about 1/3 of the stocks. Buy 3.14159 shares of each of the stocks in the highest price tier, buy more shares of the lower price levels according to fibonacci ratios. Call it MACARONI. Compare its performance to Vince Lombardi's career win-loss record.

    Seriously though, do whatever validates you. And may the Schwartz be with you.
    Oct 2, 2012. 01:14 PM | 3 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    "Hate to bring it up and spoil the celebratory tone in the DGI community as an intruder,.... "

    That was varan's first phrase of his first sentence of his first comment on this article. Since that was so obviously false, I'm questioning why I bothered to respond to begin with. I'll know better next time.

    As far as posting my portfolio, I'm in.
    Oct 2, 2012. 08:55 AM | 2 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    Thank you for the update on ABT, David. I'm busy updating my old Paypal account so I can buy your book.
    Oct 2, 2012. 08:34 AM | 1 Like Like |Link to Comment
  • DGI And Total Return - A Few Scenarios [View article]
    Congratulations on your first article. I checked out your blog, very impressive core holdings.
    Keep writing, I'll keep reading.
    Oct 2, 2012. 03:59 AM | 3 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    David,

    I've written 2 articles and 1 instablog that involved backtesting on the CCC, but none of them are serious scholarly works.

    My third article "The Amateur Hour" was just what the title said it was.

    This article makes naive assumptions about stock selection and allocation with no real due diligence or valuation judgments, then treats the portfolio like a Ronco kitchen appliance (set it and forget it.)

    The instablog is the sad story of "Lucky", who gets burned in the tech wreck, invests what he can salvage in a "sure thing", CCC housing-related stocks in 2002 (VAL, SWK, SHW, LEG, & LOW). He then gives the portfolio the Ronco treatment for almost 10 years, but withdraws the dividends for living expenses. His total return is 278% over about 10 years, including the dividends he has received and spent. The editors thought it was too long and too basic. They were right about the too long part. It reads like an O. Henry short story.

    I took the time to read your 2012 midyear update on your Dividend Growth Portfolio. http://bit.ly/LwPZAB. I see you have a problem with Abbot Labs, similar to my own. I have made the decision to do nothing for the time being. Are you still tightening the screws on the stop loss order?

    Best Regards,
    Parson
    Oct 1, 2012. 06:24 PM | 2 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    Varan,

    Always happy to hear from you, whoever you are.

    I took a look at your article. It's a little difficult to follow the money, because the Allocation % data is presented in graph form with no grid lines. It appears that “Year” on the x axis is year end. So it seems that for the time period Jan. 15, 2008 to Sept. 28, 2012 the allocation was about 20% in DIA for two years at the start, 60-70% in VUSTX throughout the period, with the balance in QQQ.

    Looking up adjusted prices for the start date and adjusted closing prices for the relevant end date gives:

    VUSTX, start 8.76, end 13.50, thus 54.1% total gain for the whole period.
    QQQ, start 45.05, end 68.57, thus 52.2% total gain for the whole period.
    DIA, start 110.64, end 97.49 on December 31, 2009, so a loss of 11.9%.

    Absent leverage, I see no way to allocate the three funds, reallocating yearly, to obtain 85% total return for the approximate 4 year 9 month period. Leverage is never mentioned in your article. If I'm missing something, please let me know.

    If I am reading the Allocation chart correctly, the portfolio was reallocated at the end of 2011 to 65% VUSTX and 35% QQQ. Being a curious sort, I looked up adjusted prices for 12-30-11 and closing prices for 9-28-12. VUSTX has had a 4.41% gain this year to date. QQQ has had a 23.7% gain this year to date. Taking a weighted average based on the 65/35 allocation gives a blended total return to date of 11.16%. SPY has had a total return of 16.43% in the same period.

    Your disclosure statement in the article says “I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.” This is, by definition, true, because no literal stocks are mentioned in the article. May I assume you have no position in the funds mentioned?

    Summarizing, my observations are these:

    The data is presented in an inexact manner, making it difficult to replicate the investments and results.

    The performance of the method seems to be exaggerated during the past 4 years, 9 months or so.

    The method is under-performing the broader market year to date.

    There is no actual money invested.

    Bernie?

    Is that you Bernie?
    Oct 1, 2012. 10:44 AM | 3 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    Mr. Fish,
    I'm almost sure MO would have improved the results, and FPU probably would have. But after writing five articles, I have learned the editors prefer short, concise, and focused. So now I emulate Hemingway rather than James Michener. If explaining a situation like MO and FPU would take more than a short paragraph, wave the magic wand, let the reader know, and move on. Elaboration of an idea can wait for the comment section.
    Sep 30, 2012. 07:41 PM | 2 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    Richjoy403,

    Actually, I used the SPY as a benchmark for the DGI portfolio because the SPY is adjusted for splits and dividends, whereas the S&P 500 Index does not account for dividends. Perhaps the VIG would be a better choice of benchmark for a DGI portfolio.

    Had there been a portfolio of "pure" growth stocks in the article, I would have used SPY as a benchmark for that portfolio also. There wasn't. I am not aware of any mutual fund, ETF, or index that contains only common stocks and excludes all dividend payers. But there are a lot of things I'm not aware of, maybe there is one that is suitable.

    VUG is not suitable to represent non-dividend growth stocks. Among it's top 10 holdings are KO, PM, and WMT. QQQ is all about tech stocks, a sector fund.

    If you are referring to Chuck Carnevale's "The Fourth Scenario" article, that is a list of the best 20 year performances by 20 stocks with the benefit of 20/20 hindsight; a fact that he explicitly stated in the article and still had to explain a half dozen times in the comments. Using near-perfection as a benchmark doesn't seem fair.

    I have heard the phrase "risk-adjusted returns", and know in general terms what it means. I haven't a clue how to calculate it.
    Sep 30, 2012. 05:48 PM | 3 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    Jeff,
    If stock prices would go where I want them to, when I want them to, investing would be a lot easier and much more profitable. It's not going to happen, as we both know. So I adopted a "Trade Around a Core system" to try and boost total return and keep things interesting. It has worked for over a year, but past performance ..... yada, yada.

    The bulk of the total return in the example did come from capital appreciation, the same is true for my core portfolio for the last 3 years. Historically 40% of stock market gains have been from dividends while 60% has been from capital appreciation. If I am able to keep my portfolio intact for a decade or more, I fully expect that capital appreciation will be a much larger number than dividends received.

    Larger is not the same as more important, however.

    I said in the article that the company has nothing directly to do with a capital gains transaction. True, but it is likely that increasing revenue and increasing cash flow make the stock attractive to the buyer. Increasing revenue and cash flow are also necessary to support increasing dividends. The increasing dividends are an expression of the management's commitment to operating the company for the benefit of the shareholder owners, and their belief that the company will continue to grow and prosper. In that sense, dividends speak volumes.
    Sep 30, 2012. 04:47 PM | 2 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    Robert,
    Thanks for dropping by. The article wouldn't have happened without your archive, and you getting the ball rolling. We've heard from Analytical Chemist, I put in 2 cents worth, and Chuck Carnevale has contributed his viewpoint. Chuck is a patient saint, I think he's answered the same question about about half a dozen times. Will reply in greater length later, need to get the oldest daughter to the airport for her trip to Spain.
    Sep 30, 2012. 11:32 AM | 2 Likes Like |Link to Comment
  • Dividend Growth Investing Is Capital Gain Investing With An Edge [View article]
    Hello again Bob, and thanks for the compliment.

    I don't think it would be difficult to track the income stream over the time frame, but I don't think the exercise would provide much benefit. To me, the more interesting question would be how to “weed out” the stocks that would be removed from the Champion list within a five year period.

    I made a crude attempt at it by requiring a dividend yield between 3% and 4 %, thinking that the 3% lower bound would remove the companies that didn't have the “true religion”, and the 4% upper limit would remove the companies that might not be able to sustain the dividend increases. Then applied the criteria, and then calculated the result, having no idea how it would turn out. The total returns were better than I had hoped for, so I used it as the example.

    As you point out, the crude attempt at avoiding dropouts failed miserably, with 9 out of 29 (31%) of the stocks “failing.” The symbols that failed (for other readers) are AVY, BOH, LLY, GE, HSY, MTB, OTTR, & PEBO. In fairness, 4 of the 9 are banks or insurance companies, and GE is a borderline financial company in some regards.

    If you have any thoughts on that subject, I'd love to hear them. Any other readers have any thoughts on the topic?
    Sep 30, 2012. 10:27 AM | 2 Likes Like |Link to Comment
  • How Lucky Survived The Housing Market Crash With Housing Related Stocks [View instapost]
    Thanks for the comment Robert.
    Sep 27, 2012. 10:30 AM | 1 Like Like |Link to Comment
  • Toddling Toward The Goal: These Are A Few Of My Favorite Things [View article]
    Thank you Rudester,
    I tend to think that sound strategy and disciplined tactics are my strong points, and what I enjoy. Rigorous analysis of individual stocks is my weak point. Studying financial statements is a chore. Thank heavens and David Fish for the CCC list. There are some clinkers on the list, but even someone with limited skills can spot them with enough effort.
    Sep 23, 2012. 08:44 AM | 1 Like Like |Link to Comment
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