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Smarty_Pants

Smarty_Pants
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  • No Fees Please! Create Your Own 'Mini-ETF' [View article]
    "never thought you'd see those words in an SA comment, did ya?" - giorgiolb

    I prefer my déclassé in a bowl with chocolate syrup on top and gauche on the side.
    Jul 24 07:02 AM | 3 Likes Like |Link to Comment
  • Second Quarter Portfolio Review: Building Dividend Growth And Quality [View article]
    "You cannot make dimensional inconsistencies disappear by hand-waving." - ij_fritz

    It's a Rule of Thumb used to estimate TR. Notice that migdu uses the phrase "conservatively estimate". Ignoring the compounding effect is 'being conservative'.

    The 'horse sense' thought process goes like this:

    Market participants currently value Stock ABC at a yield of Y%. If the dividend payment grows at DG percent CAGR, then the price of ABC will also need to grow at DG percent to maintain a yield of Y% over time.

    Given that, it is a conservative estimate over long time intervals to equate price growth with dividend growth. Therefore, TR can be estimated as the sum of Yield and Dividend Growth (which is a conservative estimate for Price Growth).

    Now the yield on most stocks varies within a range over time, so the estimate won't be exact and it will change constantly, but for a long term DG investor the estimate can be used in a reasonable fashion to construct a portfolio of stocks that should attain a threshold TR over time, barring significant changes in the business operations.

    Examine Chowder's Project 3 Million:

    http://bit.ly/rBJkXG

    His approach is summarized as follows:

    "To contribute $500 per month to the portfolio, plus 5% of income (no match) to the Thrift Savings Plan (NYSE:TSP), look to earn 8.25% annually, compounded over 40 years"

    Chowder has stated elsewhere that he uses a Chowder Rule (Yield + Dividend Growth Rate) of 12% to pick stocks which have a TR margin of safety to achieve his goal of 8.25% TR CAGR.

    Yes, we know the units don't match, but it works as a general tool for planning purposes and it's easy to do.
    Jul 20 02:25 PM | 6 Likes Like |Link to Comment
  • Second Quarter Portfolio Review: Building Dividend Growth And Quality [View article]
    I'll add my thanks to those of everyone else. Looks like you have exceeded your initial goals handily.

    Your performance is reinforcing DVK's demonstration portfolio to show that an involved individual investor CAN outperform an index benchmark over time using DGI principles. Your risk adjusted return exceeds the SP500 by roughly 1/3 and you are yielding near 5% vs. 2% for the SP500.

    There seems to be something to this DGI 'Stock Picking' method. My guess is that the facts will continue to support that conclusion going forward.

    I'll wish you continued good luck with your portfolio, but it appears that you've figured out how to manufacture your own luck in that regard. Keep on keepin' on.
    Jul 19 01:01 PM | 2 Likes Like |Link to Comment
  • Second Quarter Portfolio Review: Building Dividend Growth And Quality [View article]
    "I replaced LO with HCP, a healthcare REIT with a better yield and much better valuation." - DVK

    I copied DVK because what he did made a lot of sense to me. I was fortunate enough to sell LO just below peak prices and pick up HCP on a momentary dip. Since then LO is down and HCP is up, and my future dividends will be a bit higher than they were. So far, so good.
    Jul 19 10:46 AM | 3 Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    "Bondholders are also higher up the ladder when it comes to getting paid, compared to shareholders." - Nelson Smith

    Tell that to the former, pre-2008, secured GM bondholders. They got squat while the unsecured Union got the money. The days of following the law when markets are under financial duress are long gone. The fact that you receive your $0 share a few minutes before the former shareholders received their $0 share won't really matter in any fashion except an academic one.

    If the company whose bonds you hold were a counter-party to many derivative contracts prior to going bankrupt you will discover the derivative counter-parties are now first in line to get whatever money remains after the courts, lawyers, and government get theirs. At best your bonds will be converted to equity in the newly reorganized company.

    Then NEW bonds will be issued that have precedence over your converted and watered down shares, until such time as the reorganized company enters into more derivative contracts during the course of business. Then you'll be all set to watch the entire process repeat from the lowest rung on the receivership ladder.
    Jul 17 07:08 PM | 3 Likes Like |Link to Comment
  • Are There Any Blue Chip REIT Bargains? [View article]
    "On Friday, when LO's price spiked on merger mania (with RAI), I sold it and used the proceeds to buy HCP." - DVK

    After seeing Dave's comment and doing a little thinking over the weekend, I pulled out my copy-cat manual and made the same trade at the open on Monday. Sold all my LO with a nice gain and used the proceeds to buy HCP.

    Since then, LO has dropped by at least 8% while HCP has gone up about 1%, My dividends are higher and I kept nearly all of the LO capital gain attributable to the buyout rumors too.

    I'll be the first to admit my action wasn't the culmination of a brilliant plan. It's much more likely I am now high on the qualifying list for "Dumb Luck Trade of the Month".

    But ..... I'll take it. :-) 'Better lucky than good' I always say. Thanks a bunch DVK!!
    Jul 15 07:21 PM | 6 Likes Like |Link to Comment
  • Fallen Dividend Champions: I Still Have No Fear Of A Market Crash: Part 2 [View article]
    "Look at this way. Walmart is negotiating a lower price for you. You don't have to to anything but show up at the store and buy items at a lower price. They do all the heavy lifting for you. What's wrong with that? Unless you like paying 15-25% more at other retailers" - snoopy44

    While this is true, it is also true that there are factors other than price that matter to discriminating shoppers.

    A businessman who charges $200 per hour for his time would be better off economically buying a loaf of bread at a 7-11 for $7.00 than the same loaf of bread at Wal-Mart at $4.00, if it saved him 20 minutes of standing in line at the checkout counter.

    He could earn an extra $66.66 during that 20 minutes if he could allocate the time to work instead of standing in line getting paid nothing. That far outweighs the extra $3.00 cost of the bread.

    As for the whole minimum wage issue, my personal opinion is that Wal-Mart should leave wage scales where they are and implement a pro-rata bonus program based on the profitability of the store / department / percentage of hours worked for each hourly employee. That way everyone working "on the clock" shares in the success of the business.

    Why should bonuses be restricted to management only?

    If you look into the data, the percentage of hourly Wal-Mart workers paid minimum wage in 2010 was 0.6%. In fact, 78.9% of hourly workers were paid over $9.00 / hour.

    Even so, Wal-Mart could raise prices 0.5% and reduce profits by an equal dollar amount and afford to pay every hourly employee $12.00 / hour. A sliding scale profit sharing plan amounting to 1% to 3% of profits for hourly employees would hardly be noticed.

    http://bit.ly/1n04ILL

    But that's just me talking out loud.
    Jul 13 09:18 PM | 3 Likes Like |Link to Comment
  • Where Are The Digital Shorts Now? [View article]
    "Why do you say that? Because I'm poking holes in your theory?" - donkengen

    No, because it appears you are missing the point, IMHO.

    Data centers provided by specialized businesses will provide a more cost efficient capability than most other businesses can provide for themselves, whether you believe it or not.

    Humans have realized that the Division of Labor would lead to higher economic output and better standards of living since Plato wrote about the topic around 2,400 years ago.

    Fortunately those better standards of living are enjoyed by the entire population in some degree, even those people who don't grasp the concept.

    As another simple example, despite my Master's Degree in electrical engineering, and 30+ years of technical experience it would take me many months to figure out how to build a wireless router that worked properly. Fortunately there are a handful of specialized companies that will sell me one much better than I could build for under $100, any time I care to buy it. Division of Labor provides me that benefit for a cost much lower than I would have paid by doing it myself.

    Likewise, if I were a small startup ISP owner, I'd probably be willing to pay a lease of a few thousand dollars a month to have DLR provide Data Center services, rather than spend hundreds-of-thousands of dollars of my own money to build the same capability from scratch. The cost of those "wires in a warehouse" is much lower for me when DLR can build them in volume and spread the overhead cost over many clients. Additionally, I can upgrade my service at any time for a cost much lower than I could ever achieve myself.

    If you don't believe it, try living life as a fully self sufficient individual who makes all his own tools and doesn't contract anything out to another party. You'll soon discover why the majority of today's society have a better standard of living than European royalty from the middle ages could have dreamed of.
    Jul 13 08:56 PM | 2 Likes Like |Link to Comment
  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    "DGIZ" - Miz

    Methinks that would be DGI Zealot Zombies (DGIZZ).
    Jul 13 08:25 PM | 2 Likes Like |Link to Comment
  • Where Are The Digital Shorts Now? [View article]
    "What's so great about having extra costs to contend with?" - donkengen

    Perhaps the fact that it is more cost efficient to lease such 'wired office space' from a specialized provider like DLR than to create and maintain it yourself.

    If we extend the logic of your argument to the extreme there would be no reason for payroll companies, tax preparation companies, internet service providers, wireless phone service providers, or pretty much any other sort of commercial infrastructure.

    I guess things would work so much better if every business built their own private internet, right? NOT.
    Jul 13 11:32 AM | 2 Likes Like |Link to Comment
  • Where Are The Digital Shorts Now? [View article]
    I have to add my thanks to those already expressed. After reading Brad's articles I picked up a position in DLR at $49.50-ish for a yield of 6.3%. I'm up nearly 20% on the position now (ignoring dividends) and any dividend increases are icing on the cake. So long as DLR continues to execute I have no reason to sell.
    Jul 10 10:09 AM | Likes Like |Link to Comment
  • The Numbers Are In! [View article]
    With all due respect Charles Ponzi, there's no justification to post for the sole reason of belittling another member's comments.

    There are people of all levels of experience interacting here on SA. Most are trying to learn how to improve their investing results by sharing their past experiences. Some are very knowledgeable, some aren't, but that doesn't justify cracking a joke at another's expense.

    In many of your posts you've demonstrated a good understanding of investing but nobody is going to take you seriously if you keep going with the wiseacre routine.
    Jul 9 08:13 AM | 2 Likes Like |Link to Comment
  • The Numbers Are In! [View article]
    "A 57% return over 8 years, congratulations." - Charlie Ponzi

    Actually, for someone who is already retired he's doing pretty well with INTC. His dividend has grown at 10.6% CAGR over those 8 years (that's without dripping).

    The earliest day he could have bought in March 2006 was the 17th (first day the low was below $19.47). According to longrundata, his CAGR, with dripping, from 3/17/2006 through the present is 8.97%.

    TR for SPY, with dripping, was 7.28% CAGR by comparison.

    So he beat the S&P 500 TR by 1.69% CAGR over those 8+ years. From what I've read, that's better than a majority of professional money managers can do.
    Jul 8 07:59 PM | Likes Like |Link to Comment
  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    Awesome Sauce!
    Jul 8 07:05 PM | Likes Like |Link to Comment
  • How Warren Buffett Earns $900 In Dividends Per Minute [View article]
    "And the enemy of the people who pay over a buck for flavored sugar water." - Khyber Pass

    Voluntarily. Nobody is forcing them to make those purchases. There are store brands available that cost a lot less nearby on the same shelves, yet customers keep buying billions of dollars of Coca Cola for some reason.

    Must be they think the price is reasonable enough for the product they get, or they would buy the store brands instead.
    Jul 7 07:09 PM | 1 Like Like |Link to Comment
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