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Smarty_Pants

Smarty_Pants
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  • Lessons Learned From The Grand Canyon [View article]
    +1,000,000

    One of my All-Time Favorite Pink Floyd tracks!

    Far too many are indeed frittering and wasting the moments that make up a dull day. 'Tis sad that those who have the largest balances of Time remaining on this ball of dirt are overly challenged in understanding the true value of that quickly diminishing asset. Spend it wisely!

    Oops. I've fallen even further behind the Sun. Gotta run.
    Jun 9, 2015. 09:02 PM | Likes Like |Link to Comment
  • Retired Or Soon To Be? Here's A Back Test You Need To Review [View article]
    "How would you handle partial years?" - BoomBoom99

    I whipped up a simple, but tedious, spreadsheet you can use to estimate the CAGR of a portfolio of many positions, each entered on a different day.

    The link to the Google Drive spreadsheet is:

    http://bit.ly/1Gq6AWE

    I put some basic instructions on the sheet. If you find them confusing please let me know.

    The sheet is limited to 50 positions total as written. Anyone with basic excel skills could easily expand that to more positions.

    Hope that is of some value. :-)
    Jun 9, 2015. 08:38 PM | 4 Likes Like |Link to Comment
  • HCP, Inc.: The Problem Just Got Smaller [View article]
    "Medicare eventually audits months and months of charts and if they determines that either no orders, incomplete orders exist, or orders with inadequate documentation exist. They charge the skilled nursing facility provider with fraudulent billing." - Author

    This will be the typical end result of government provided health care. Some faceless bureaucrat from Washington, DC will decide whether you get 'free' health care (ie. covered under your "insurance"), or whether, ex-post-facto, you are responsible for paying the bill yourself (which is where the billing for grandma's "uncovered" care will eventually land - in the family's lap).

    Government run anything will always cost more than it would if done by the private sector. Case in point, I have first hand knowledge of a government office buying new office chairs, between 40 and 50 of them.

    From the time the first expression of "buy them" way made it took nearly 3 years to complete the purchase. Each chair cost slightly over $350 and required several days of government employee labor to assemble them all. The sad part of the entire fiasco is that you could have bought similar, or better, chairs at Office Max for half the price and had them in less than a month. As an aside, the new chairs were less comfortable than the old chairs they replaced.

    It's only a matter of time before ALL health care is in the same boat as the chairs. Everything will take far longer and cost multiples of what it requires for care today that is of higher standards.

    In the case at hand, it would not surprise me in the least to learn that the government auditors spent more money in the auditing process than they will 'recover' from the overbilling.

    Thanks for providing some of the details of the entire situation. Let's hope that the two companies can work out a mutually satisfactory arrangement depspite the extra costs imposed by the government auditors and continue to reward shareholders in the long run.
    Jun 7, 2015. 09:26 PM | 2 Likes Like |Link to Comment
  • Retired Or Soon To Be? Here's A Back Test You Need To Review [View article]
    "Uh oh, you cracked my code." - giorgiolb

    You should've expected that. After all, I'm smarter than the average pants.

    :-)
    Jun 4, 2015. 06:23 PM | 2 Likes Like |Link to Comment
  • Retired Or Soon To Be? Here's A Back Test You Need To Review [View article]
    "So call me a lawbreaker." - giorgiolb

    Huh. So THAT's what the last two letters of your nome de plume stand for.
    Jun 3, 2015. 09:11 PM | 1 Like Like |Link to Comment
  • Dividend Growth Investing: The Perfect Portfolio Moving Forward (Part 1) [View article]
    "Jack Daniels? :-) " - Robert

    With Coke, naturally.
    Jun 3, 2015. 03:44 PM | 1 Like Like |Link to Comment
  • Retired Or Soon To Be? Here's A Back Test You Need To Review [View article]
    "Is this not calling the kettle black." - BoomBoom99

    And, it's that they won't be satisfied unless the 'competition' is held on their terms. Defining your own success metric isn't allowed, because it's not the one they use (and obviously THAT can't be right).
    Jun 3, 2015. 03:42 PM | 5 Likes Like |Link to Comment
  • Retired Or Soon To Be? Here's A Back Test You Need To Review [View article]
    "the equally weighed SP500 was beaten by less than 1% CAGR" - Financial Dave

    Oh my. The standard of comparison appears to be slipping. Simply beating an index based ETF isn't enough for DGI to "win". DGI has to beat the ETF by more than 1% CAGR (or greater?) over an entire interval to suggest a 'better' performance.

    You guys crack me up. Really.

    FWIW, outperforming an ETF by 0.5% CAGR over a span of a 35 year investment career will leave you with 17+% more money at the end. That's hardly chicken feed.

    On top of that, once you reach retirement, the ETF plan has you selling your ETF (yielding ~1.5%), paying capital gains tax, then buying income producing assets. So now your 100% value ETF will be reduced by taxes and you will have about 85% left to use when buying income. Meanwhile, the DGI portfolio holder will simply stop reinvesting their dividends and spend them.

    So dividends on 85% vs. dividends on 117% would seem to indicate that the DGI portfolio will provide quite a bit more income in retirement, given the comparison of Bob's portfolio vs. RSP holds over the long term like it has over the past 7 years.
    Jun 3, 2015. 03:30 PM | 5 Likes Like |Link to Comment
  • Retired Or Soon To Be? Here's A Back Test You Need To Review [View article]
    "On the other hand, guys like Dave Crosetti pick stocks and still have plenty of time to fish."

    Maybe the fish know something we don't.

    Dave Crosetti - the Fish Whisperer. ;-)
    Jun 2, 2015. 06:30 PM | 4 Likes Like |Link to Comment
  • Happy Birthday! My Dividend Growth Portfolio's 7th Birthday Report [View article]
    "I thought Digital Growth was maybe some biotech startup working on a solution for undersized fingers." - giorgiolb

    Don't forget toes!! They're digits too.

    Or do you subscribe to the theory which paraphrases George Orwell in that "All digits are equal, but some digits are more important than others."?

    ;-)
    Jun 1, 2015. 09:38 PM | 5 Likes Like |Link to Comment
  • Retired Or Soon To Be? Here's A Back Test You Need To Review [View article]
    "Selection bias comes in all flavors, even among "simpler alternatives"" - giorgiolb

    Indeed. But I've noticed that some people only want to point out the biases used by others while ignoring the ones they employ themselves as counter-examples.

    In the case of TLT, it has a standard deviation of price movement that is half of SPY's standard deviation. That's supposed to be a safe place to park your money?

    In addition, the whole 60/40 stock/bond split using ETFs is not at all what the original theory suggested. Originally the 40% in bonds was intended to be put into individual bonds with a specific maturity date selected to provide a known amount of income (~40% of what you needed) in retirement. Those individual bonds were to be purchased when yields were 'above' usual levels and held to maturity to maximize their total return. There was no annual rebalancing.

    You bought the bonds to hold, when the price was right (and when yields were much higher than today). If bond prices weren't "right", then you put your money into stocks and waited for bond prices to come down to sell the stocks and buy bonds. The bonds didn't serve to 'reduce' risk, they eliminated part of it for the time interval selected. A portion of your retirement income was locked in once you bought the bonds and laddered them across your retirement years. The stocks were then supposed to provide the rest of your retirement income.

    This whole 60/40 stock/bond ETF split with annual rebalancing is nothing at all like the original approach. It's a kludged up simulacrum of the original intent whose effectiveness over the past 30 years has had more to do with falling interest rates than MPT theory.

    So if you're going to use a kludge, why not go all the way and use a mildly leveraged 20+ year bond ETF, like EDV, just to exaggerate those bond price swings even MORE between rebalancing? That should really juice things up, especially in that declining interest rate environment.

    But, you know, choosing a selectivity bias in hindsight often isn't about evaluating a process for being suitable, it's about "being right". Whatever that means. I'll be simply amazed if varan responds and admits that using AGG instead of TLT would be more in line with the intent of the original 60/40 split, even if that means ending up with significantly less money in the end. I don't think he could accept suggesting a simpler method that came up second best, by a significant margin.

    So, if you like using the more volatile ETFs for your "safe" bond holdings, have at it. I hope for varan's sake (or those who elect to follow his suggested example) that interest rates stay low forever so that you have a chance to build up some sort of retirement nest egg.

    As for the DGI evaluations, at least we're debating 'how much' selectivity is involved, and trying to use information from history to reduce that selectivity level in our evaluations in an effort to learn something we aren't sure about.

    One group tries to expand their knowledge, the other attempts to restrict it. That's how I see it. Me, I prefer to learn what I don't know and see if that acquired knowledge can help me build a better tomorrow, with less risk than I have now.
    Jun 1, 2015. 09:30 PM | 5 Likes Like |Link to Comment
  • Happy Birthday! My Dividend Growth Portfolio's 7th Birthday Report [View article]
    "Digital Growth investing?" - giorgiolb

    giorgiolb, you gotta keep up with the times:

    There used to be a company called Digital Equipment Corporation (symbol DEC). They used to make VAX mainframe computers that were widely used in the 1980s and early 1990s.

    They were acquired by Compaq for a cool $9.6 Billion in 1998, just before the tech crash.

    http://bit.ly/1daGH1B


    There's also Western Digital, makers of hard drives.


    And finally, don't overlook Digital Realty Trust (DLR), a member of the CCC.
    Jun 1, 2015. 07:59 PM | 2 Likes Like |Link to Comment
  • Happy Birthday! My Dividend Growth Portfolio's 7th Birthday Report [View article]
    "your strategy of gathering $1,000 from dividends and then buying shares of "X" company. I was just curious about how this would apply for someone who is new to investing or doesn't have a whole lot of money invested." - ExoticAnimal

    That's a very good question. The answer depends on the investor's plan.

    One way might be to add in monthly savings to the dividends so the $X investment amount is reached sooner.

    Another might be to lower the $1,000 to a smaller number. Most ETF's have an annual fee that is charged. Use that as a basis for choosing your own 'fee' for the one time purchase of a stock. If I pay $10 per trade, and I want to limit the 'fee' to 1.0%, then I have to buy ($10 / 0.01) = $1,000.00. If I am willing to accept a 'fee' of 2%, then I can invest $500.00 at a time.

    That's two ways to look at setting a different minimum investment level. You might even think up a different one that makes more sense to you. It's your money, do what seems reasonable. It doesn't have to be perfect.
    May 31, 2015. 10:08 PM | 6 Likes Like |Link to Comment
  • Happy Birthday! My Dividend Growth Portfolio's 7th Birthday Report [View article]
    "I joined SA in late 2012 and your articles, Chuck Carnevale, and other dividend growth investors have gotten me off to a good start preparing for retirement." -
    Dave Ryan

    With a first name like Dave, you should be a natural for DGI. Thanks for joining the discussion. Please continue, I'm sure there's something you can teach the rest of us that we would be better off for learning.
    May 31, 2015. 09:38 PM | 5 Likes Like |Link to Comment
  • Happy Birthday! My Dividend Growth Portfolio's 7th Birthday Report [View article]
    DVK,

    On further reflection, I wanted to also point out the difficulty of your original goal. To grow income without adding capital from ~$1,400 annually to $4,678 requires a compounded dividend growth rate of 12.82% for ten straight years. That's a pretty tall order for anyone to tackle.

    The fact that your results are tracking right along the income goal curve is an amazing performance in that light.

    Additionally, the fact that your Total Return is running equal with SPY when your portfolio has a beta of around 0.70 (my guess-timate) is also a mind-bender. The so called 'hyper-compounding' effect is just something to see in real time.

    Einstein would be proud.

    (That's an indirect reference to Albert Einstein's comment that Compounding was the 8th Wonder of the World, for those without a program.)
    May 31, 2015. 09:20 PM | 17 Likes Like |Link to Comment
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