Yield Hunter

Yield Hunter
Contributor since: 2013
Multiplying the reserves (48 million or so) by the price of gold ($1,200) equals approximately 57 billion. Now, clearly the market is not pricing KGC anywhere near that. As someone less familiar with gold (or any commodity corporation, I presume), why not? Taking a pointer from value investing, I can buy KGC and get a boatload of gold on sale. Clearly, I'm missing something, but can you please explain the what? Thanks.
Thanks very much for clarifying. I haven't seen this being used very often, but it certainly makes a lot of sense.
And, of course, thanks for all your writings!
I probably should've asked this 14 articles ago, but what's the difference between the cash dividend payout ratio and the payout ratio?
Thanks for your article. I'm looking to add a waste management company to my portfolio, looking a little deeper than the big guns (rsg and wmt), and I just came across this. It looks pretty solid. Two questions, please:
1. PEs are a little higher than I would like, but the whole industry seems to be up over 20. Is this normal, i.e. should I not expect to get anything cheaper?
2. (a little more open ended) aside from the insider buying, which I appreciate as being indicative if all else is equal, what's your opinion on the fundamentals of this company?
Thanks for your insights!
First of all, thanks for these (and your other) articles - I'm enjoying and learning.
Second of all, this may not be the perfectly correct forum, but I might as well ask: I have an account with a brokerage and I'm thinking about switching to another brokerage. If I transfer the account (or the positions) from one to the other, there are no taxable gains, correct (except on the liquidated partial shares)? And my cost basis will remain the same? If for some reason the new proposed brokerage will not transfer the account, and I have to sell to repurchase, if I repurchase the same amount of the same companies, is there taxable gains?
Thanks in advance!
Thanks for clarifying. That's what I was hoping you'd say.
Thanks again, Chowder!
Please clarify something for me, though. I have always thought PE is a multiple, meaning, it will be greater than 1 (for example, IBM's current PE is approximately 12, as in 12 times greater than earnings). You, along with a few of the commentors, have written it as a percentage, i.e. less than 1 (for example, IBM's current PE is approximately 1/8 of earnings). Am I missing something, or is this an alternate way of stating it?
Thanks in advance!
Is it a bad idea to buy some mREITs with the expectation and acceptance that yield will decrease. For example, I can buy NLY for the 5% yield, providing a nice buffer for that event.
Or, is this a terrible idea. Perhaps, you will say, mREITs are too risky to invest in for a measly 5% yield! Alternatively, maybe once the floor kicks out on them, there will be no stopping it until bust.
Any and all thoughts are appreciated, thanks.
Thanks very much for your time and help. On the charts I pulled up, there was no average volume info, and I couldn't figure out how to get it. But going back to your link above and comparing, I got it now. Thanks!
Thanks for sharing!
I don't see average volume on stockcharts.com. Am I missing it, or where's the best place to find that info? Do you just look at the volume bars and guestimate? Thanks again.
3 days including the first down day, or 3 days after, for a total of 4?
"Wall Street has done a wonderful job of conditioning our minds to always be cognizant of share price."
Sometimes people are in a position where they can realistically need the money in a few years, but they do not need it now. Then, price does matter now, in that such an investor ("speculator") will not want to lose on his principal. Would you recommend to just park the money in an FDIC-insured account and let inflation eat away?
"That "margin of safety" simply isn't true if you are buying companies as opposed to buying stocks."
I feel like margin of safety can apply to DG, as well. You like KO because it has a certain reputation, which builds your expectation. In addition, it has financial strength, product moat, global reach, etc etc etc. If KO with the *same exact* metrics was priced at $1,000.00 per share, you likely would not buy it, you would not reinvest the dividends into such a position, and you might even think about lightening the position. Thus, your margin of safety has been lost. I think of it as you just have a different guide for defining safe. (Perhaps 6 of 1?)
RAS- I have never come across anything. If and when I do, and I remember this comment stream, I'll post it ;)
We should give king the benefit of the doubt. He was probably referring to black sheep!
See http://bit.ly/17HQwNI (on the first page)(if for some reason the link doesn't work, google "graham chapter 39: newer methods for valuing growth stocks") and
http://bit.ly/11fpeL5 (control f "concentration," in that paragraph), Graham seems to have been heavily invested in GEICO.
Nevertheless, I was way off - I was vaguely remembering http://bit.ly/17HQwNL which is a Buffett Partnership Limited letter, pages 10-12. I have heard that this was referring to GEICO, but I don't know where I heard that, and I'm too tired to continue looking for it.
Certainly could be, thanks for pointing that out. After reviewing my notes, I saw that in Intelligent Investor, Graham recommends between 10-30 holdings. That's not to say he didn't operate his own funds differently. But I did not find anything about GEICO, so I'll now say it over in Buffett's name :)
I knew you'd have a source, but I didn't expect it so quickly. Your problem is you know too much, always reading and learning stuff!
The GEICO investment seems to have been during the 40s. But it could've been an exception. I absolutely agree in the value of having a broad-based diversification.
As you said, you don't get a full 50 overnight. It could take years to properly diversify. But until then, my portfolio suffers from un-diversification risk. I assume there's no actionable advice you can give, but how about some emotional strengthening?
thanks again for your insights. the more i read from you (and from others about these topics), the more you make sense. and this style, too!
I distinctly remembering reading (could be Intelligent Investor or Security Analysis, but could be somewhere completely different) that he kept his positions to a minimum. I want to say that he had 5 positions at an average of 20% of his portfolio at one time, with the exception of when he invested mightily in GEICO (before it was even public) at over 40% of his portfolio - in 1 position! He admitted that this was much higher than normal, but he felt the opportunity couldn't be passed up. Anyway, for value investors, it makes sense to hold less positions, because there will be a point where the quality of "margin of safety" will drop, thereby raising the risk profile. Out of sincerest curiosity, can you cite something for the Graham's 75 positions, please? I wonder if there was a certain point in time when he changed portfolio styles (obviously, within "value").
Davids- Thanks for the replies and the information.
"An IRA is not "tax-privileged"." My understanding is that the advantages are simple math equations based on the abilities to compound at tax-free rates (assuming you're not using the IRA wrong, e.g. contributing at the age of 65 to withdraw at the age of 65). Otherwise, nobody would invest in it at all, and then we wouldn't be having this discussion.
Secondly, just as it's your money, the government (your elected representatives) can tax it at any rate they choose. I'm not saying let's raise taxes to 110%; I'm saying it's a simple truth about living in an organized community. That organization costs money. If you don't want to pay taxes, go some place where there isn't this form of organization. Whether your agree or disagree with the tax rates, or what your elected officials are doing is a different question then their ability to do so. (I, for one, didn't vote for ANY of the elected officials who represent me and I disagree with how they're spending the money they take from me. I'm not happy about it, but I've also made the decision not to move to a more republican city/state/country, because it's more beneficial to me to live where I do than it is costly. There, I gave away my party affiliation.)
People will definitely continue to need those consumable goods you mentioned, but it's at least questionable from where they will purchase 10, 20 and 30 years from now.
For example, all the big store chains, be it retail, warehouse, pharmacy or grocery are all producing generic products which compete with the likes of DG champions (I'm excluding companies like wmt, because I don't really consider them a stalwart dividend payor because of Sam's Choice water). It may not be fatal to these companies, but I think it makes it a little more difficult to predict long term.
Furthermore, rising dividends is by-product of rising earnings which is a byproduct of rising revenues (and/or cost reduction). But, as AAPL (even if not a DG yet) saw in its February earnings report, growth is limited by the size of the planet (for now). Eventually, dividends might necessarily stop rising specifically because of a company's outstanding success.
Finally, this is something I've been wondering for a little while and I would appreciate information about it. A lot of people throw around historical numbers, like "if you would've bought PG or KO, etc, 30 years ago, you'd be rich!." (I have no problem with throwing around historical facts to support theories.) My point is, 30 years ago, these companies were only maintaining streaks of 20+ years. What companies historically paid out rising dividends for 70, 80, or 90 years? In 1970, what companies were paying dividends for 50 years at that point and maintained them for *another* 20 or 30 years? I briefly checked the CCC list and the largest current streak is 60 years DBD. How much higher have streaks gone, and how commonly?
Perhaps the best we can do is try to find companies likely to continue growing revenues, earnings and dividends, and pay attention for when they're about to top out?
(I feel like SA has become more hostile as of late, so allow me to clarify - I am genuinely curious, not snide and pessimistic.)
It's just a matter of perspective. I think saving is "right;" nobody can stop you from doing as you please with your money. Saving in a tax-sheltered account is not a "right" per se. You may view it as an "entitlement," in that since the government extended your ability to exercise your right, you feel that the government is now encroaching on your abilities.
If the initial legislation had a maximum cap on distributions or account value, would this have been such a big talking point?
If anyone chooses to disagree, please, explain your points or disprove my points (preferably both) as clearly as you can; I would like to understand your position.
mjs- Good story. I never heard of it, but I found it and read it this morning. Tell me please, how was it received back in the '60s? I know from the past few years that it's a little too possible (read: we're headed there!) But what about back then? Was it too progressive?
TVP- Thanks for taking the time to clarify. I think our viewpoints are pretty aligned. Unfortunately, the older generation that has seen an erosion of rights over the past 25-50 years and is rightfully warning about it is ignored by the people they're trying to protect, specifically because of their (the old folks') knowledge.
TVP- I agree with you completely. I am concerned with what this (and many other things the President has done in the last 4+ years) could lead to. My point was that, by itself, this proposed legislation is not so outrageous. Perhaps you are all upset with me because you are thinking longer term and broader than I am.
David- Should I be concerned that you're calling me a non-thinking, hating liberal? Or are those general implications of disdain with where this country is headed?
Are you redefining the term wealth? I would look at more as wealth allows you to provide goods and services. Or wealth is built by providing goods and services. (Maybe this is what you meant?) As you mentioned, if nobody lived in your buildings, you'd go bankrupt. But if you had cash, you'd still have your wealth (as it's typically defined).
Also, if the government taxes one's wealth (however defined), that money then technically goes toward providing goods and services to whomever you would've. Following your logic, then, it's also good for civilization to tax. (In reality, I don't like tax as much as the next guy; nor do I think it's providing goods and services as it should (in an attempt to avoid race and politics).) But again, this falls back into the regular tax argument and not anything specific to this new issue.
Would you be satisfied with some sort of grandfather clause? I agree that it's "unfair" to take someone's retirement savings from under them. They could've chosen a different lifestyle for 40 years and saved less had they known about this. However, if the rules are changed now, however, we would not be punishing success.
This is similar to how I feel about the SS tax increase. And yes, I feel it as an increase, not an expiration of a cut. I joined the workforce when the rate was 4.2, and this year our lovely government decided to raise my taxes. It sucks, and I'm not happy about it, and I can try to go about changing things; but until then, I still live here.
TVP- I agree, and I'm very concerned with where the more liberal folks are driving this country. And I understand that this is (likely) a step in that direction.
Justaminute- I don't agree with you. I apologize if I'm factually mistaken, but nobody is taking away people's "excess" money; my understanding is that it will just be left out of retirement shelters, to accumulate at a slower rate, all the while helping this (formerly great) country make a disappointing attempt at balancing a budget when there spending policy is whacked out, to say the least.
Tim- "Whether the gazillion dollars is in a retirement account or taxable account is not important." I think this is an important statement. As above, and please correct me if I'm wrong so I may change my opinion, you are free to have as much money as you want, and you then have to do you part of being a citizen/resident (even if half the country doesn't do theirs). If the IRA legislation was originally passed with some sort of cap on distributions or value, can people honestly say they're pissed off? I would think people's reactions would've been similar to what they probably were back then- we get to shield money from the government? AWESOME! If they're reaction was, "we get to shield $3mil from the government," I assume it would be followed the same enthusiastic "awesome."
And it's entirely understandable that now that we have something, it's rough to take it away. But I think the legislative intent has been overrun. And Bama's New Deal theoretically gets retirement savings back to its origins.
I'm not in favor of it; I just don't the possibly proposed legislation (standing alone) to be as bad as many others here do.
"This is why some people do not want to tax the most affluent." This implies that many SAers in this thread are ticked off because their wealth is being taxed at all. That's a whole other discussion, and I am only referring to tax deferred retirement savings.
Disclosure- I paid the IRS money for my 2012 return, we work hard for our money, and we do not get government handouts unlike many of our neighbors (excluding things such as roadways, police, fire, etc.).
I think the fact that retirement account contributions are limited is proof that this concept - of government limiting retirement savings - has been socially accepted.
And I don't think they're being targeted as being unreasonable. Rather, it simply means that they were able to reach the "threshold" quicker or more fully. After that, in essence, Bama's says, you can continue with your investing in an unprotected manner.
In other words, as others have commented above (and probably below at this point, too), retirement accounts were/are intended to allow for people to plan for retirement. (Anyway, I don't think the government would've ever allowed for their creation if people could contribute limitless amounts and take away their bite at the apple.)
So too, how or why would it fall within that same basic policy to allow $1,000,000,000,000,000... to sit in one (wo)man's retirement account. (Certainly, it makes sense that the government would want a stab at it.) But even without that, I think at a gazillion dollars, the policy of encouraging planning for retirement is lost.
If you don't agree with my outrageous example, that's fine, but then we're on much different pages than I thought. But if any part of you agrees that a gazillion is too much *for this policy,* then it just becomes a numbers game.
I don't think I made this clear enough before - this is assuming the government isn't going to simply take all of your money above whatever threshold (they arbitrarily set to get the most money while still maintaining the largest possible voting base. That is what it seems to be all about, after all: screwing as many as possible while remaining in favor with a majority of the populace.)
It seems like a lot of people have a problem with the plan using the term "reasonable." If Obama left this out, would it be better? I assume there will still be a lot of complaints about the amount, but at some point, the concept makes sense, as some commentors have pointed out. Isn't it essentially just another limit on what people can extract? And what happens to everything above the upper limit (whatever that may end up being)? You just have to save it in a regular, taxable account?
With that being said, I agree with those who are concerned with where a step in this direction may lead. This guy's crazy and I think he's going to try to do as much damage as he can over the next 3.5 years. I heard Canada's still a free country...
Chowder (and all opinions),
Can you please give us some pointers on where to research regulatory environment? Is it whatever you may see in the company filings? Or are you actually familiar with regulation throughout the country? Or something else?
Definitely get a hand on The Intelligent Investor. I read the one with Jason Zweig's commentary; it's a nice addition because he shows how timeless Graham's principles are. What follows is link to dealoz.com for the book, if you were so inclined to purchase it right now.
Seriously, do you know why your broker won't let? I'm not saying you haven't looked into it - I have no idea how familiar you are with options - but you have to apply for options approval.
I'm curious how chowder (and other experienced people will answer, but I'll give it a go, too.
Are these companies you want to hold for a long time, albeit it not as "core" holdings? Or are they what you envision as a quick capgain?
It probably depends a lot on what you consider a "position." If you're entering small "core" positions with $1,000, let's say, I don't think you can go much lower than that for an ancillary holding- I assume you're commissions will take a large bite out of any return. However, if you're investing $5k at a shot, you can reasonably take 1/3-1/2 that amount and put it into a more "value" oriented approach without it weighing you down too much or getting eaten by commissions.
If the latter, I suggest having a small percentage of your portfolio relegated to "speculation," since that is essentially what trading in and out for relatively quick capgains is. Once you have this percentage set, divide it by a few so that you can play this game several times at once. I personally like doing this, since it seems almost too easy. But it might be, and I might get burned real bad...
Not to get in the way of the big guns, but if *forced,* I would side with Rich on this on. Primarily because I am still accumulating, if the price return is expected to be greater than the dividend return, I would just ride out the low yield until I was satisfied, at which time I can take my larger pile of cash and move it into a more income-oriented stock. Obviously, that's assuming I can accurately project price appreciation; at the very least, it means that I should continue focusing on whatever's the best deal.
For those in the distribution phase, I hear the comfort that could be had knowing each one of your positions is providing you with $X and that you won't have to sell anything, which may not be the case with a low yield/high total return choice.