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emac99

emac99
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  • The Great Beta Hoax: Not An Accurate Measure Of Risk, After All [View article]
    Bob Burnett,

    The SA article you authored in 2013 (referenced in your comment above) is actually very enlightening.

    From my MBA program in the early 1980's I've always understood beta to be a "directionally correct" backward looking measure, vs. a specific, accurate, predictive one.

    Your examples with UTX and CL added another dimension - that of the distribution (or "scatter") of price volatility when using beta with individual stocks. And how that scatter relates to company-specific vs. market factors.

    Thanks for providing that link. It's a nice adjunct to Chuck's article.

    emac
    May 22, 2015. 08:41 PM | Likes Like |Link to Comment
  • Lessons Learned From The Grand Canyon [View article]
    Dave,
    Loved the road trip story and your Grand Canyon analogy. It really IS all about Time.

    Even as a recent retiree I find value in your approach. Being in my mid 50's still, it's entirely conceivable my retirement portfolio needs to perform for 30 years - as long as my accumulation phase.

    So even now, as an SDI, I recognize the power in buying and holding Quality, reinvesting excess dividends to accelerate compounding, and letting Time work its magic.

    Nicely done.

    emac
    May 22, 2015. 08:15 PM | Likes Like |Link to Comment
  • These 32 Dividend Champions Are Fairly Valued [View article]
    DVK,

    Agree that David Fish's (free) CCC and Chuck Carnevale's (modestly priced) FastGraphs tools are an SDI's best friend.

    What makes them pure gold are articles like yours - and Chuck's weekly ones - that demonstrate and demystify how to use them.

    Simple, straightforward, powerful.

    Thanks and keep 'em coming!

    emac
    May 21, 2015. 09:25 PM | 4 Likes Like |Link to Comment
  • Retired Investors: When Dividend Growth Slows What Should You Do? [View article]
    Bob,

    You know I have the utmost respect for your ability to always keep your Portfolio Business Plan top of mind, and your recognition that "buy and monitor" is preferable to blind "buy and hold."

    That being said, I concur with other commenters who question whether your 3.5% threshold isn't maybe micromanaging, and whether looking at total portfolio performance might yield you a better (long term) outcome vs. your goals.

    PG and KMB are among the closest to "hold forever" in our own DG retirement portfolio. Yes, I monitor the DGRs, and of course I look at what's behind them (KMB's spinoff of HYH, for example, or PG's divesting of lower performing brands, plus both facing currency headwinds). But I tend to agree with BuyandHold2012 on this one - I'd think hard before benching an Aristocrat based on one or two years of lower DGR.

    As Chowder says, it can take a while to right these ships. But they have proven to be adaptable to change and have weathered far worse than the economy of the past couple of years. So not only would I not bench PG or KMB based on one year's (prudently cautious) DGR, I wouldn't hesitate to continue to add to either anytime they fall into my buy zone.

    I also owned WM, but rather than bench it I just sold it last year. It was "utility like" but never core or high quality relative to other utility holdings. Reinvested my WM proceeds into WEC and NEE, utilities with better earnings growth prospects.

    Anyway, my two cents' worth... Thanks as always for a thought provoking article and the interesting comments so far!

    emac
    May 20, 2015. 11:54 PM | 1 Like Like |Link to Comment
  • Retired Investors: When Dividend Growth Slows What Should You Do? [View article]
    heglimp,

    <<If the stock being evaluated is a 40 year+ Champion versus a 11 year Contender is of significance in my opinion.>>

    Nicely stated. Exactly my thinking.

    I not only don't "bench" superstars like PG, but I would have no hesitation adding to my position, if it wasn't already one of my largest. One 3% increase (after years of strong raises) does not a trend make. It's a prudent management move given restructuring, forex headwinds, and keeping the payout ratio in line.

    On the other hand, I have no hesitation selling something non core (or lesser quality) that fails to keep pace with inflation, and replacing it with something better.

    emac
    May 20, 2015. 11:29 PM | 1 Like Like |Link to Comment
  • Why Cash Is King [View article]
    Eric,

    Interesting article.

    Pretty clear from the comments that no one is agnostic when it comes to cash. As long as it suits your own investing style and goals, there's clearly no one "right" answer.

    As a retired income investor, in this aging bull market I stay invested to the point of generating sufficient dividend cash flow to cover our expenses. The rest I'm holding as investable cash (above and beyond emergency fund). Currently about 10% in a mix of money market and easily liquidated short term bond funds.

    Not earning a return? To me, it is - flexibility and peace of mind. Not planning to buy the market so not waiting for the next "big one" either. Just for the stocks I want to own (or add to) to land in my buy zone.

    I didn't time the top in 1999 or the bottom in 2009 so I harbor no expectations I'm going to time either the top or the bottom next round either. Fortunately my plan doesn't require that I do so.

    emac
    May 18, 2015. 01:19 PM | 1 Like Like |Link to Comment
  • Should I Have Followed My Advisor's Advice ? A Look At 4 Year Performance [View article]
    Bob (aka "Mr Portfolio Business Plan"),

    I started reading your articles in 2012 while transitioning our own retirement portfolio to a DG income stream. Your recommendation to treat investing like a business, and your generous sharing of your own (evolving) Wells Family Portfolio plan influenced my own SDI journey tremendously. A million - growing with inflation - thanks!! :)

    We met with a fee-based CFP from a major national firm on and off for about 6 or 7 years prior to my "forced" retirement. Her early advice was spot-on in terms of having a budget, when to take Social Security, estate planning, long term care insurance, etc. She helped us assess our risk tolerance and ran Monte Carlo scenarios with her own and our modified variables. She reviewed our asset allocations. All of which were greatly helpful in determining when we would finally be able to say we had achieved "financial independence."

    I feel we got our money's worth. We paid only for the advice and plan adjustments every 2-3 years. We never paid her to manage our accounts, which were mostly in stock and bond mutual funds due to severe time limits from work and family commitments.

    Fast-forward to retirement and I received (with much disappointment) the same, canned response that most people do: put 25% of assets in an annuity and the rest in a 60/40 mix of managed (mostly proprietary) stock and bond mutual funds, treasuries, and commodity funds. Take out 3-4% of principal each year. 90%+ chance of not running out of money in 30 years. Etc. Etc. Etc.

    No discussion of how dismal interest rates in 2012 made both the locked-in annuity and 40% bond funds a bad deal. No suggestion that Social Security might be considered Fixed Income in our asset allocation. And of course a 1% annual fee for her oversight.

    I can look back now with healthy skepticism...but that's only because around that same time I found SA - and more importantly you, Bob, and a community of like minded self-directed investors (DVK, Chowder, Chuck Carnevale, David Fish and many others) who asked very different questions than our CFP.

    How much heavy lifting after SS and pensions does your portfolio need to do? Why not create a (growing) income stream from your investment assets? And then use that instead of (or in addition to) principal drawdowns to live on? And then demonstrated with real life examples; stress-tests; recession tests; back tests. Tools and resources like FastGraphs, the CCC, Value Line, StarMine, Morningstar. Dozens of stimulating articles and hundreds of informative comments. Truly, an education for those like myself seeking a different path.

    I haven't yet back tested the specific fund mix recommended for us in late 2011, or what the current portfolio value would be, or how much we would have paid in fees. But I'm pretty convinced the DGI path we're on is the right one for us.

    In our 4th year, our portfolio generates more dividends (and dividend growth) than we need. We haven't sold a thing. We haven't added a dime. The balance is substantially higher than when we started. So it's accomplishing everything it is designed to do.

    I'm still a fan of CFP's for many things, especially instilling basic financial literacy and planning discipline. Just not managing our retirement assets. As my SDI father says, "no one cares more about your money than you do."

    emac
    May 14, 2015. 10:34 PM | 11 Likes Like |Link to Comment
  • Dividend Growth Investing Requires Perseverance [View article]
    Chowder,

    Another great article, and another reminder that it's about the "long game." Kudos.

    As someone who transitioned only in the past four years to DGI, I suspect I haven't really been battle-tested on perseverance as an SDI yet. But I realize I do have experience to draw on, nonetheless.

    During my working years, I had no choice but to stay the course, as my retirement was tied up in a company sponsored 401(k) with limited mutual fund options. I was too focused on career and family to do much more than rebalance the fund mix annually. I did, however, invest like clockwork (auto pilot payroll deductions, mostly equity funds, reinvesting all dividends and capital gains) every two weeks for 20 years beginning in the early '90's. And although I didn't invest a dime until my mid 30's (due to student loans, mortgage, etc.) the compounding effect over twenty years was still staggering.

    So, even without actively managing the portfolio as I do now (for retirement income), the sheer act of investing regularly, month in and month out, through any and all market conditions is a form of perseverance, as well. My diversified portfolio survived two major downturns, and rebounded. Sure, I had a lot of alka seltzer moments during the tech/dot-com crash and especially 2008-2009 when the portfolio lost 35% of its value (which I now realize was much less than the S&P). But I did my patient best to ignore the noise, didn't liquidate at the lows, and just kept adding new money every month.

    I was unexpectedly laid off in 2012. No pension, too young to collect social security. But I had that 401(k) fully funded right up to the end, plus a brokerage account where I invested any excess money whenever I could. And with that combination I found I was actually able to retire - earlier than I ever imagined.

    Nothing magical here. Perseverance, patience, investing regularly, and staying focused on the long game, was my ticket to financial freedom.

    I'm a believer.

    emac
    May 13, 2015. 01:45 PM | 9 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    As a unit holder since 2009 I was also less than thrilled with the "forced" KMP conversion. However, there was plenty of opportunity after the announcement and prior to the end of 2014 to realize some paper investment losses, so that's exactly what I did. It lowered my Fed and CA taxes on the event significantly.

    Sometimes when you're dealt lemons you have to just make lemonade and move on.

    emac
    May 12, 2015. 04:57 PM | 2 Likes Like |Link to Comment
  • Project $3 Million - Portfolio Management, New Purchase [View article]
    Chowder (and everyone who commented on BDX),

    It's hard to believe a lot of the Carefusion impact isn't already baked into BDX's current share price. I also like BDX, and own a half position purchased about 2 years ago,but have been reluctant to add at these prices. Part of my reluctance is the yield. At 1.7% it's below my minimum threshold of 2% (meaning a price of $120 - pipe dream, I know). But given its 5 year historical average yield is 2.1%, that suggests to me, at least, the price has gotten a bit ahead of itself.

    I'm not averse to averaging up. But BDX is for me a satellite vs core holding. So I'd need to see the valuation quite a bit lower before I'd consider adding.

    IMHO.

    emac
    May 7, 2015. 11:29 PM | 1 Like Like |Link to Comment
  • Learning From The Masters: Q&A Session With Chowder [View article]
    Nicholas,

    You and Chowder have performed a valuable public service here. Chowder (literally) changed my investing mindset 180 degrees, and you have succinctly captured here the essence of his straightforward, common sense, effective DIY approach. Bravo.

    I actually PM'd Chowder a couple of months ago to thank him following the publication of his "Mindset" article (can't easily provide the link from my iPad now). To paraphrase that PM:

    I retired early 3 years ago (not by choice), around the same time I discovered SA. David Van Knapp was my first intro to DGI, then Bob Wells and Chuck Carnevale. In reading their articles, I first discovered Chowder's comments, then his Instablogs and later his articles.

    It was like a 1000 watt light bulb going off, so strongly did Chowder's approach resonate with my way of thinking. Finally, I knew exactly how I intended to manage our post-accumulation nest egg - which is just what I've done the past 3 years.

    I don't mean mirroring his portfolio, although there are quite a few holdings in common. I mean marrying his approach with my goals and my investment plan. Could not be more pleased with the results: we are indeed now comfortably living off our (growing) dividends and one Social Security in retirement.

    A couple of years ago I took an investing course through Stanford University School of Business. 10% of what I learned there made sense to me. (By that I mean "useful." It all made sense; after all, I have an Ivy League MBA and three decades of corporate finance experience.) 99% of what Chowder says makes sense. The last 1% I simply haven't figured out yet... HA! (to coin a phrase).

    Thanks to you both! I know there are many others just like me who have already benefited from Chowder's generous sharing of wisdom and experience, and your interview expands that audience even more.

    emac
    May 7, 2015. 10:57 PM | 28 Likes Like |Link to Comment
  • Should I Sell? A Selling Approach For Stock Purchase Mistakes [View article]
    DH,

    I applaud you for bothering to even *have* sell criteria tied to your goals and investing style. Whether one agrees with them or or not, what matters is if they work for you. And given your 60+ stock portfolio, it might actually benefit from a little pruning.

    I know that was the case for me. As a new DGI a few years ago, I cast too wide a net and became actually too diversified. A "toppy" market (as evidenced by low yields, weak earnings, low interest rates, currency headwinds, etc.) seems like the perfect time to consolidate and raise some cash. Especially since our retirement portfolio has no new funds going in (aside from dividends).

    I had no difficulty parting with AFL recently, as it just wasn't pulling its weight, for reasons you cite in your article. I also don't like its dependence on Japan's stagnant economy and aging demographics. The few financial stocks I hold are not core for me and probably never will be. So not only did I make a tidy profit on AFL (tax free in IRA), I used some of the proceeds to add to core stocks with better yield and DGR. Win-win.

    Happy investing!
    emac
    Apr 29, 2015. 12:47 PM | 3 Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    "There is no correlation or causation between interest rates and dividend payments. Your view of T is misguided. A stock is never a bond. T will increase or decrease in value depending on it's earnings, independent of interest rate increases or decreases."

    And how are earnings not affected by rising interest rates when heavy borrowers like telecoms (T) and utilities incur higher costs to service debt, hence depressing their bottom line?

    Seems like a pretty strong connection to me.

    emac
    Apr 23, 2015. 01:24 PM | 2 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    DVK,

    Good point. About half our retirement investments are at Schwab. So ThomasPartners might be another "Plan B" alternative for someone looking to maintain a DG strategy.

    Probably means consolidating everything else into Schwab to take advantage of the reduced fees for larger portfolios. But certainly worth looking into.

    emac
    Apr 22, 2015. 11:08 AM | 1 Like Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    six,

    I also appreciate your thoughtful comment here.

    Correct me if I'm wrong, but wouldn't a 1% fee on a 4% yielding DG portfolio essentially cut the income by 25% in nominal terms?

    Not a criticism, just trying to understand the math here. Like many DGI's here, I live off the dividend income and don't sell the underlying stocks, so cap appreciation, while good, is not a driver. Also - wouldn't capital appreciation in turn increase the fee (again, in nominal terms)? Why would that be a goal at all?

    Maybe it's a pipe dream, but for my "Plan B" when I can no longer manage our retirement portfolio as an SDI, I sincerely hope there's an adviser out there somewhere who will base his or her fee on "income growth" and not AUM.

    Again, not a criticism of you or your fee model. It's the reason I abandoned my previous fee based adviser to go it on my own.

    emac
    Apr 21, 2015. 11:05 PM | 3 Likes Like |Link to Comment
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