donzelion

Dividend Aristocrats Will Continue to Outperform

Beg to differ with Whidbey. Historically, dividends were offered to lure investors to buy a stock when investors were squeamish about the integrity of the manager and skeptical about company financials. Hindsight lets us impute additional motives to investors, but nobody investing in dividend payers in 1930 knew which companies would continue to exist as dividend paying enterprises. Dividends have as much staying power as investors have skepticism about management.

Ultimately, the driving factors aren't so different from fees at mutual funds - a dividend payer may or may not be a better run company, just as a fund's stock picker may or may not be a smarter stock picker, but reasonable dividends/low fees translates into advantages that compound over time.

How Inflation Became the Good Guy

"Deflation terrifies capitalists." Indeed, it's a troubling concern for everyone, but the magnitude of the threat posed varies depending upon the quantum of management stupidity.

Deflation rewards savers and penalizes debtors; in practice, deflation should drive down producer prices (for raw materials and labor), so that declining revenues are offset by declining costs.

However, long-term fixed costs and sunk costs (aka long term debt and operational costs) will remain - so managers who overpaid on these fixed items will kill their companies.

Hence: "growth companies" (which earned their money by merging/acquiring others, possibly overpaying), debt-riddled companies, and banks (which earn their money promoting debt financing) will all suffer severely.

But that doesn't mean the economy will enter catastrophe, any more than inflation means everyone suffers equally.