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OverTheHill

OverTheHill
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  • Why It Can Be Self-Destructive To Compare Yourself To The S&P 500 [View article]
    Investing requires a plan. Gambling can be done on an ad hoc basis. An investment plan should identify short-term, intermediate-term and long-term goals, buy/sell guidelines and performance metrics to meet the goals. Periodically, the portfolio should be assessed to evaluate how well the plan is working. In other words, "take no more risk than is necessary" to stay on your personal investment plan. With such an approach, comparisons to the S&P 500, or any other index becomes unnecessary.
    Jul 30 03:02 PM | 2 Likes Like |Link to Comment
  • Forget About SWANs, Fish And Chowder: Chase Yield In Retirement [View article]
    $0.05 in 1904 and $2.25 in 2014 ... that's an inflation rate of ~3.5%, just about equal to the "official" change in the CPI during that period. Just as the point above about the ratio of a programmer's salary to a the price of a subway token, the historical value of a subway token just about equals the historical change in CPI. Extrapolating forward 30 years forecasts the subway token will cost $6.35 and the programmer's starting salary will be $198k. I wonder how many 2014 college graduates are saving to live in that world?
    Jul 7 12:47 PM | 2 Likes Like |Link to Comment
  • My 'Buy-The-Dip' High-Yield Portfolio: Security Selection [View article]
    Another two cents ... work towards a portfolio that is sufficiently diverse and with enough (say 30-40) investments that no single failure de-rails the Plan. Classical theory (as well as common sense) says that high yielding investments are prone to provide a bumpier ride that more moderate yielding investments. Hedge you bets just a bit by limiting the consequence of disappointments.
    Jun 28 12:11 PM | 2 Likes Like |Link to Comment
  • Why Do People Have Such Different Ideas About Retirement? [View article]
    "Why do people have such different ideas about retirement?" .... because some folks have thought more seriously about retirement than other folks. I for one thought I had spent plenty of time thinking about, planning and saving for retirement. Little did I realize how far off I was going to be during the first four years. NOTHING I planned for came to pass in the early days. However, I was fortunate and could go down a different path than was planned. That could well be the greatest benefit of planning for, and saving for retirement ... having the ability to pursue other options if Plan A doesn't pan out. Without a retirement nest egg, alternatives are very limited.
    Jun 28 11:47 AM | 2 Likes Like |Link to Comment
  • Why Do People Have Such Different Ideas About Retirement? [View article]
    The financial planning industry should not be painted the same color due to the experience with one jerk / crook / a$$hole representative of that industry. If you follow that logic, the entire economy will spiral to a stop because the same story can be told about plumbers, carpenters, painters, doctors, teachers, waiters or any other service provider. Rather, perhaps the learnings should be applied to selecting another service provider. After all, the day may come when you're hit by a bus and your family is left to sort through your financial plan, or you become old and senile and can not longer tend to your affairs. Just something to think about. (P.S. I am NOT in any way connected with the financial planning community, but neither do I want my wife to have to pick up the pieces after I've been hit by a bus.)
    Jun 28 11:33 AM | 5 Likes Like |Link to Comment
  • Retirement Strategy: What I Will Do When The Market Corrects [View article]
    Your article serves as a good reminder of the benefits of owning dividend paying stocks; however, I think you may have inadvertently forgotten an additional benefit of your portfolio. Your portfolio is comprised of numerous low beta stocks, creating a portfolio with a Beta of approx 0.65. With a general market correction of 30%, BTDP should decline in the neighborhood of 18-20%; thereby, creating only a slightly less desirable buying opportunity.
    Jun 25 10:25 AM | 6 Likes Like |Link to Comment
  • The Richest Man In History Reveals His Simple Wealth Generating Secret [View article]
    To better understand your suggestion, I would appreciate some guidelines on your definition of a "market crash" in the "Hybrid DofD + Value" strategy. Are you suggesting a wait for another 2007-08-09 "crash", or something a bit tamer?
    Mar 28 11:05 AM | Likes Like |Link to Comment
  • How Much Dividend Income Growth Do You Need? [View article]
    I very much enjoyed your article. It provided a perspective that I had not considered. However, I was not able to follow some of the math. For instance: in the Summary Table of Average Family Expenditures - all items, you show:
    1934_____$1512 1950_____$3808
    This looks like a 151.9% increase in 16 years, rather than 60.29% shown in the table.
    1996____$34,312 2002___$40,748
    This looks like an 18.75% increase in 6 years, versus the 15.79% in 4 years shown in the table.
    I would appreciate seeing a bit more detail in your calculations?
    Feb 17 02:32 PM | 3 Likes Like |Link to Comment
  • How Obama's 'MyRA' Plan Will Impact The U.S. Economy [View article]
    MyRA va ACA ... who can forget the mis-statements, partial truths and outright lies repeatedly said about ACA (not to mention the statements made about Benghazi, the IRS and NSA)? Why would a person risk his retirement savings over the next 25 to 30 years on the word of a such a chameleon? But then "what difference does it make"... what could possibly go wrong with MyRA? Oh, let's remember how well this administration developed and rolled out http://1.usa.gov/1btBOyr.
    Jan 31 09:13 AM | 3 Likes Like |Link to Comment
  • Retirement: The Forgotten Pieces Of The Puzzle [View article]
    The theme of the article is spot on. Few articles stress the importance of developing a retirement budget (identifying discretionary vs non-descretionary expenses) while forecasting a retirement savings / investment plan. The initial budget and savings plan should be prepared several years (possibly as much as 10 years) prior to retirement and then be updated annually. Having time to make adjustments and the knowledge that comes from early planning helps to ensure success. Unfortunately, the example budget in the article grossly understates reality for most locations in the U.S. and excludes numerous line items that many retirees experience. These understatements and exclusions result in significantly underestimating monthly expenses for many retirees.
    Jan 21 09:17 AM | 4 Likes Like |Link to Comment
  • The ABCs Of Dividend Investing: Divi-Do Or Divi-Don't? [View article]
    For years I benchmarked my portfolio against the movement of the S&P 500. I felt successful if I did better, and felt unsuccessful if I came up short. Most of the time I felt unsuccessful. Later in my investment life, I re-calibrated my benchmark and adopted the mantra: "Take no more risk than is needed to meet your goal". I moved away from YOY comparisons and began to think in 3-yr and 5-yr comparisons against my benchmarks. I am definitely a divi-do. Dividends and dividend growth are important criteria of my benchmark.
    Jan 18 09:21 AM | 1 Like Like |Link to Comment
  • Is The End Of Dividend Investing Coming? [View article]
    Successful investing requires a Plan so there is a basis to compare long-term actual performance. Part of the Plan should be: "Never take more risk than is necessary to meet you plan." If the Plan targets capital appreciation of 5% and a 3% yield, with a dividend growth rate of 6%, it makes little difference that a segment of the market is producing capital appreciation of 15%, of is Yielding 12%. Bragging rights should come from accomplishing the Plan and not from coming up short while chasing those segments of the Market that are shining.
    Jan 3 08:59 AM | 2 Likes Like |Link to Comment
  • Building A Portfolio Part 1: Not Just Buying Stocks [View article]
    I walk a similar path as ScottU. As a retired DGI, my portfolio's job is to produce a steady, sustainable and increasing annual income without external contributions. I assess my portfolio's allocation using the investment's annual dividend stream as a percent of Annual Income (rather than the investment's value as a percent of portfolio). Allocations based on annual dividend streams are less volatile and more predictable than if based on Market Value. This slow moving metric de-emphasizes short-term headlines that introduces wide price swings that have nothing to do with an investments real value. I am less influenced by news stories and more interested in annual statements. An investment's annual dividend stream is capped at 5% of Annual Income. This 5% cap (1) limits the negative impact that a single investment can have on my annual income and (2) shows underweighting / overweighting of income contributors.
    Dec 27 12:12 PM | Likes Like |Link to Comment
  • Building A Winning High Yield Portfolio [View article]
    Running the screen every 4 weeks opens the door to a fairly high annual turnover. It would seem a high portfolio turnover would likely cut into the very attractive yield. What impact to yield was shown from your backtesting? For a dividend growth investor, this would be very interesting data.
    Sep 25 12:45 PM | Likes Like |Link to Comment
  • How To Plan For Your Retirement Income [View article]
    PTI,
    No one knows what inflation will do in the future, but 100 years of history tells us inflation should not be ignored in long range planning. Forecasts and estimates are seldom "busted" because pieces of the forecast were "mis-estimated," but because pieces of the forecast were omitted. The inflation rate for the past 40 years has averaged 4.1%; for the past 99 years: 3.2%; for the past 25 years: 2.8%. Suggestion: add a column to your table (above) labelled "2013 Purchasing Power" and discount the Dividend Income column by an annual inflation rate ranging from 2.8% to 4.1%. If the results warrant no change in your plan; you're golden.
    Aug 31 09:59 AM | 1 Like Like |Link to Comment
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