Lilguy

Dividend Paying Stocks: You Only Have to Be Lucky Once

Interesting article, but a little too anecdotal for my comfort. I'd like to see a more systematic historical analysis of dividend vs. non-dividend paying stocks in this strategy (vs. Red or Black at the roulette wheel).

Moreover, they certainly is a situational element to the strategy: Right now, in our recession, it makes a lot of sense to be in dividend-paying stocks (if one is in any stocks), but it probably makes sense to move to growth (non-dividend paying) stocks during a period of strong economic growth.

Without a little more comprehensive analysis, this is just an interesting tidbit of speculation.

False Data Clobbers the Markets

O_M_G! With this kind of thinking, is it any wonder that the economy is in trouble, banks are leveraged to the hilt, consumers are in debt up to their ears, etc.???

....but let's take them one-by-one.....

First, I didn't like the latest GDP numbers anymore than anyone else. It was one of those "this does not compute" moments. But waiting for "better" data is not the answer. While I'll be about the last person to cheer on BEA, it makes clear that the latest estimate is "preliminary" after its "advanced" estimate a month ago--and it will continue to revise this number as time goes on. Are markets going to wait until the GDP number is 100% accurate before it moves? I don't think so.

And to the extent that the writer believes "inaccurate" NFP estimates cost the DJ some 1500 points, I would say that points to a huge flaw in his modeling approach to the market. The data is what it is; whether you can properly interpret it is your problem.

Second, Steve Jobs' health--or lack thereof--has been the subject of rumors for years. Look how skinny he is, he must be dying of cancer......blah, blah, blah. This isn't data; it's barely information, and it's not new. It is rumor, innuendo, etc., and the likelihood of its being true--no matter how many times it has been repeated--is small. To make investment decisions on that kind of information is stupid, even misfeasance.

Third, explanations for why oil prices go up or down are no better or worse than the explanations given for other market phenomena. Indeed, pundits feel compelled to explain market, stock, or other investment-related events in terms of some kind news event. Once in awhile they get it right, but more often than not, there is no apparent cause and effect relationship. And sometimes they are just plain wrong. Acting on such information without vetting it thoroughly is irresponsible. Until it is vetted, it is not data.

As for the apparent contradiction between slowing population increases in China and India and the growth of the middle class, the writer is confusing a demographic trend and an economic trend. It is quite easy to have a smaller population and larger middle class over time in both real and relative terms. This is not bad data, this is really bad analysis.