QVM Group

Tough Times for Dividend Investors

market ace -- let me clarify -- there is no intention to suggest limitation to US stocks by equity income investors. in fact the article said "the need to think an invest globally more so than in prior years". this was simply an article about the US stocks universe -- I also agree with THolfer that there are substantial income opportunities in US stocks well beyond the 2-3% you mention -- some from trusts as you mention and some from regular corporations -- note that my emphasis was on "conservative" end-stage equity investors, so it may be inappropriate to look at too many small or obscure equities for them -- conservatism by its nature trades some upside for some greater stability

It's a Winter Warming Spell - But More Snow Ahead for Markets

basehitz:

Good point. Not sure how to quanitify that or if the overall effect of corporations moving offshore will be material, but it's a good point.

It's a Winter Warming Spell - But More Snow Ahead for Markets

Steve Pasq:

That is an easy "what if". If the index composition changes and the price move differently as a result, I would change my opinion accordingly. But so far neither has happened.

Bond ETF Yields in Historical Context

Bob Lunn:

Your Question:
"Does the National Muni Bond ETF have the same tax advantages as a traditional Muni? "

Response:

Yes and No.

MUB is a national muni fund, with bonds from more than one state. Those bonds not from your state are not exempt ffrom state taxes for you, so only a portion, if any, of the interest is state income tax-free for you.

The iShares MUB Fact Sheet says the fund is, or tries to be, AMT free; meaning that none of the interest is expected to be subject to the federal Alternate Minimum Tax.

If you buy a single muni bond from your state, it will be state income tax free (unless there are states that don't play that way, of which I am not aware) and federal income tax free (unless the bond was for private purposes, in which case it would be subject to the federal Alternate Minimum Tax).

Capital gains on disposal or maturity of the bond is another matter outside of the issue of tax-free interest.

That is the big picture as we understand it, but we are not tax advisors, and you should not rely on this comment for tax planning or filing purposes. This comment is not intended as "tax advice" and should not be used as such.

If your information need goes beyond curiosity, you must consult your personal tax advisor for clarity, completeness and guidance before taking any investment or tax filing action.

Richard Shaw

Relative Performance of Asset Categories

thank you granger -- very kind of you

Bye-Bye Dividends

Ronald:

The stock price would suffer, because (1) we are psychological machines, not computing machines -- fear and doubt would rise, and (2) those who bought because the need/want the cash flow would rotate out and it is not clear that others would necessarily rotate in.

Your argument is about the math equivalency of two states, which even if scientifically true, is not the way individuals and crowds think behave.

If the government said "no more dividends for bank stocks" for a while, their natural constituency for buying shares would diminish, and concern about what the government would do next would cause a level of uncertainty that is never good for prices.

Bye-Bye Dividends

Just Think for One Minute:

I see some problems with your IRA suggestion. Since dividends have been taxed preferentially in the past few years, it would have increased the taxes to the maximum by putting dividends into an IRA, because all money coming out above cost basis is ordinary income.

For investors who have assets outside of their IRA, they need to do something with them and dividends may have been most consistent with their needs and goals.

Also some investors have far more outside of the IRA than inside. For example, if a person sold a business for millions and had hundreds of thousands in their IRA or other tax deferred vehicle, there would be no way to confine dividends to the IRA.

It may be that dividends will be taxed at ordinary rates in the future, in which case the IRA argument becomes more suitable. However, because of capital gains potential with common stocks, securities with the least cap gains and most ordinary income should go into the IRA first -- such as bonds.

Muni Bonds: Constructive in Current Portfolio Asset Allocation

I.U.
There is nothing wrong with buying individual bonds, if you have sufficient capital to buy at size for low spreads, and diversely to minimize issue selection risk, and if you have the time and inclination.

It's virtually impossible to beat the risk reduction of a large bond fund on an individual basis. The Vanguard intermediate muni fund has about $20 billion in it and has over 1600 issues and charges only 8 basis points fee.

But, if you want to buy your own bonds that is a perfectly appropriate and feasible approach.

There is nothing in the article that would suggest you should not buy individual bonds. It is an article about funds, not an article about funds versus individual securities.

I would imagine that for the vast majority of readers, funds are the preferred route, but we have clients who own individual bonds too.

Muni Bonds: Constructive in Current Portfolio Asset Allocation

I will try to devote some time to corporates.

Thanks to all for the kind words.

I prefer funds over individual bonds to diversify issue selection risk. I prefer national funds over state specific funds is to diversify state specific risk. I would gravitate to concentration on general obligation bonds versus revenue bonds to minimize credit risk, and to concentrate what credit risk is assumed to sovereign risk backed by taxing power.

I agree that CA is a more problematic state than many others.

Key Asset Class Returns of the Week

Andrew, I would if they had public funds with prices my software could download. Mostly I focus on passive index funds in these tables. There are passive index and rules driven commodities funds in the list from Barclays and Deutsche Bank. Sorry I don't have the active managed futures funds.

Some Advice from Warren Buffet for Difficult Times

Tom,

You may be right, but it is important to differentiate between holding forever, regardless of the facts, and holding steady during a storm with companies that continue to earn your confidence in general. That is perhaps the more important message. The fear reaction is so strong that investors tend to dump at the worst time and then fail to reopen positions they like until much of the loss they took has been recouped by the market, but not by the investor.

Some Advice from Warren Buffet for Difficult Times

Thank you Mike. Very nice of you to say that.

Your request is a pretty tall order. I use so many sources that I actually have to keep a spreadsheet list of them so I don't forget them. I'd suggest you do the same, because it is sometimes difficult to find some sources a second time weeks, months or a year later when you need them.

Some in the international category you mentioned that are most frequently useful are:

MSCI BARRA,
S&P CITIGROUP GLOBAL INDICES
UNITED NATION,
OECD (Organization for Economic Cooperation and Development,)
CIA FACTBOOK.

There are others, but these are good "work horses".

As for the three magazines you mentioned, I personally find Barron's and the Economist more interesting than the WSJ, but all three are important to read regularly -- put Bloomberg and the Financial Times (London) in that list too.

I personally feel it is important to read the business news in other countries, such as the Kahleej Times (U.A.E.), Hindustan Times (India), China Daily (China), Nikkei Net (Japan).

A good multi-country new service (but for a subscription of $40/mo) is EINnews

Then when you find an article that intrigues you, Google the names of the people or the names of the institutions, companies or ideas and follow the trail around the web to fill out the news which comes from unpredictable places.

This is not a comprehensive answer, but it should give you a good start on your information quest.

All the best to you.

Richard

Some Advice from Warren Buffet for Difficult Times

whenmusictps and cheesecake

what is the relevance of your comments to the dialog? perhaps some expansion of your thoughts would help

Major Asset Class 1, 3, 5, 10 & 15 Year Returns

AJ30

No I have not studied separate commodities in this way yet, but I will put that sub-category study into my list of future studies. Some will be easier than others to gather information. HIstory for majors like gold and oil is easy, but minors may not be so easy to find.

Thanks.

Richard

A Closer Look at REIT-Treasury Yield Spreads (1971- Present)

buyitcheap --

you are correct that rising rates due to inflation or less of a flight to quality and liquidity in Treasuries could pose a real yield spread challenge to equity REITs