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  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    Cranky, maybe I have my "threading" settings wrong, but on my screen it appears that you have 6 replies to various posters, but its impossible to tell to whom you are replying, and therefore hard to follow the train of thought.

    Perhaps a short quote from the poster you're replying to wouldn't go amiss?

    Mar 1, 2014. 08:42 AM | 5 Likes Like |Link to Comment
  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    Bob Wells said:
    "I feel strongly that you are incorrect when you suggest that anyone can transition to a Dividend Growth portfolio that provides consistent quarterly income the day after their retirement.
    For folks transitioning during bull markets it can be a daunting task."

    Hmm... Bob, I'm thinking its daunting anytime.

    With apologies to Mr. Buffet;

    The money I get for selling my stocks comes out of a voting machine. The money I get in dividends every quarter is paid out of a weighing machine.

    Feb 28, 2014. 05:00 PM | 6 Likes Like |Link to Comment
  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    "No one has the right to tell you that you have the "wrong" investing goals, strategies, or tactics..."

    ... or "factors". :D

    Hilo the Factorless
    Feb 25, 2014. 10:34 PM | 3 Likes Like |Link to Comment
  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    "For the 3 year period, the upside capture was 89.55 and the downside was 60.72%. The values had the same pattern for 1 year and 5 years."

    Thank you, Bob! That's what I thought I was seeing in my own portfolio. I appreciate the link and the effort that went into it.

    All the best,
    Feb 25, 2014. 10:19 PM | 2 Likes Like |Link to Comment
  • Apple's Inventory: The Sum Of All Fears [View article]
    Piptief, I'm with ya.

    <grumble mode: ON>

    Reading comment streams on AAPL articles is the main reason I wish Apple would immediately split their shares 10 for 1.

    Apple trades down from 560 to 520 and commentators are looking around for Cook so they can hold a crucifixion.

    If it went from 56 to 52, I doubt they'd even consider it worth their time to read the articles.

    Hell, I've got _utilities_ that float around more than that.

    <grumble mode: OFF>

    To be fair, a thank-you to all the commentators who offer a voice of moderation and reason to the comment stream. :)

    Feb 25, 2014. 05:50 PM | Likes Like |Link to Comment
  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    "Last time I measured it, simply by averaging individual betas, the DGP had a blended beta of around 0.6-0.7, IIRC."

    Hey David, (and anyone else that cares to chime in),

    Grab a cup of coffee and help me think through something here:

    When I look at "blended beta" I just look at the % up or down the S&P moved, and compare it to the difference in value of my entire portfolio over the same time period- after subtracting out any accrued dividends, of course.

    Like you, I consistently come up with between 60 and 70-ish percent.

    But what I _think_ I've been seeing over the past couple of years is that when the S&P is down, my beta tends to be very close to the low side, and when the S&P is up, my portfolio's beta tends to be much closer to the "up" market as a whole.

    _If_ this is true, (and not just me falling unintentionally victim to confirmation bias), then it would seem like one more data point in the set of arguments on why a dividend growth portfolio offers greater safety than other investing means.

    "More up when its up, less down when its down."

    I think I'm going to start a formal tracking of this on a spreadsheet.

    And I'm thinking maybe the regulars here might like to join in. I don't think the results will change the investing world, but it might be a fun crowd-sourcing project nonetheless.

    Or, maybe this has already been done and I just don't know about it. ;)


    Feb 25, 2014. 11:55 AM | 3 Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    JD, here's a chart with settings at 5 years, and a 40-day moving average for LMT.

    You can customize the time and SMA, among others, to anything you want. If the link doesn't work on this reply, PM me.

    Feb 14, 2014. 02:34 PM | 1 Like Like |Link to Comment
  • The Parity Conundrum [View article]
    Oh my...

    "I prefer to trim my winners to realize some of the gains, but let the rest run."

    I trim my winners, too. But you and I aren't the author of the article. The observation I made, above, was for the author and _his_ particular situation, not yours. What you and I do is irrelevant. We're not walking in his shoes and living with his consequences.

    "Pigs get slaughtered... You never know what is going to happen..."

    Nice sound bite, but a straw-man none the less. I didn't suggest he should be greedy, only that he allow his winners to run until they headed lower, as measured by generally accepted benchmarks. It's what trailing stops are for.

    "...especially with a market that has been due for a general correction for so long."

    Like it has been for the last 11 months?

    Honestly, I'm not seeing what any of your comment has to do with the original article or the comment I made that you're referring to but, frankly, it reads like you just felt like tossing out some safe-sounding one-size-fits-all advice.

    I think the author is working his a** off to improve his situation, and deserves a bit more empathy than that.

    Just my opinion, but hey, you do what you want.
    Feb 14, 2014. 01:47 PM | 3 Likes Like |Link to Comment
  • The Parity Conundrum [View article]
    JD asked: "Or, in the interest of my stated goal of generating the most income from my portfolio as possible, should I harvest profits from...LMT so that I can add more shares to those positions that are higher yielders...?"

    JD, my friend, it might be time for a paradigm change.

    Look at how you started the question: "Or, in the interest of my stated goal of generating the most income...?"

    I see a conflict here.

    You claim your stated goal is generating the most income, and it might be your _stated_ goal. But as I read your situation it isn't your _actual_ goal.

    Your actual goal is to _catch_up_. If you don't "catch up", it doesn't matter how "maximized" your income is; it's still cat food time. The only way I can see for you to maximize your income-generating capital between now and retirement, (when it _will_ be the appropriate time to maximize income), is to let your winners run for as long as they can run and hold them for as long as possible no matter how high they go or how large a portion of your portfolio they take up.

    It seems to me that given your situation, you don't have the luxury of a "balanced" portfolio, or even of maximizing your current dividend stream. Trying to maximize your income stream starting from so far behind is the equivalent of a coach trying to get the most home runs before he's got all nine players.

    Were I in your shoes, I wouldn't be trimming my LMT, I'd be watching it closely and cheering every day it broke new records. Breaking new records is NEW MONEY you never had before! You don't need to trim LMT, you need more LMTs. :)

    (In my own case, I bought LMT at 93. Consider: How many YEARS of "maximizing" my dividends would I need to pass before my portfolio returned me the 70% NEW money LMT has made me this past year alone?)

    Dividends are great. But 5% is 5%. And 70% is 70%. It is those 70%-ers that will be the difference between Filet Mignon and Friskies.

    So when should you sell winners like LMT? Well...

    I know that for DGI investors "timing the market" is sacrilege. But there's no reason you couldn't monitor LMT as it goes to 80, 90, 100% or more, and decide to let it run until it crosses below, say, the 30- or 50-day moving average to the downside before you sell and realize all the new money you never had before. You _need_ that new money, JD, or you might never catch up.


    JD, although I don't often comment on them, I read every one of your articles. They help me think. So don't get me wrong, I like all your charts and graphs and all the effort you've put into trying to figure this out, I really do.

    But I like you more.

    Please don't sell your winning capital gainers too early.
    Run, JD, run! And let your winners run with you. :)

    See you at the steak house,
    Feb 13, 2014. 11:14 PM | 10 Likes Like |Link to Comment
  • Stocks For 2014: High-Yield And Fairly Valued Dividend Stocks For High Current Income - Part 5 [View article]
    Chuck Carnevale wrote:

    "But with this said, my 40+ years of experience investing in equities leads me to conclude that most people overestimate the greater level of risk that equities possess [versus a portfolio containing a portion of bonds]. This is especially true regarding equities with long histories of paying dividends. Yes, I agree that there is greater risk, but I do not agree that the risk of owning equities is as great as many people contend or believe."


    Firstly, thank you for yet another outstanding contribution to the body of knowledge here.

    I am becoming increasingly convinced that there is not "a greater risk" in holding a portfolio consisting solely of dividend growth stocks, and believe that an income portfolio that includes any percentage of bonds actually offers less "safety".

    As you and many other authors here have pointed out so many times, there are two risks investors face- the risk of capital losses, and (the ultimate risk facing those who build portfolios for their income)- the risk of losing purchasing power through inflation.

    With that in mind, I spent a few minutes gathering some data, in order to answer the following question: Is a Dividend Growth Portfolio really any riskier than a bond portfolio?

    In order to be more than fair, I have set this example up to give every possible benefit to the bond holder, and set limits on the Dividend Growth Investor onerous enough that in any reasonable sense, he or she is really “fighting with one hand tied behind his back”.


    1) The DG Investor happens to construct his portfolio at the very worse time in recent history; the 10-year period beginning with the irrational exhuberance of the late 90’s and ending with the Great Recession low point of March 9, 2009. On March 9th of 1999, close to the height of the mania, he goes to the market with $50,000 and buys his entire portfolio in one shot.

    2) Our DG Investor follows none of the rules of good portfolio management. He buys only 7 stocks, (instead of the more commonly recognized couple-of-dozen which ensures greater safety), and he completely ignores them for the entire 10 years. As the market starts to crash in 2008, he remains oblivious. He never re-balances, never trims profits, he just buys and forgets. Anyone familiar with best practices would reasonably assume this investor during this particular 10-year time frame is headed for disaster. The only possible saving grace is that he bought 7 of those dividend growth stocks someone told him about. He chose, (for no reason in particular), Coke and Pepsi, Johnson & Johnson, some General Mills, Proctor & Gamble, Exxon, and some Southern. He didn't even want a utility, because they "don't grow their dividends very fast". But he bought some anyway because someone told him he's supposed to. That’s it. He has spent $49,863, buying an even dollar amount of whole shares in his seven stocks.

    If you’re cringing now, I don’t blame you. Mr. Oblivious has bought at the height of euphoria and is headed like sheep to the slaughter right for the recession of 2003, and the Great recession of 2009. He’s in for pain like he’s never felt before.

    Meanwhile, Mr. Bond is set for the decade. He’s bought 50 Grand worth, ($49,863 in this example to keep it even with the stock investor), of 10-year Treasuries on the very same day which are yielding 5.23%!

    Flash forward. It’s March 9, 2009.

    Mr. Bond is pretty happy. In spite of the market crash he has collected $2,607 on his Treasuries every year for 10 years. Today his portfolio holds the original $49,863, plus his $26,078.90 in interest.

    And how has Mr. Oblivious done? Well, with the collapse of Lehman, GM in government receivership, the collapse of great financial houses across the country, Mr. Oblivious finally comes out of his stupor long enough to panic and dump the _entire_ portfolio! He does the worst _possible_ thing he could have done.

    It sure doesn't start out looking very good for Mr. Oblivious.

    His 214 shares of Coke, bought at $33.31 are now worth $20.61. Ouch. His stock value is down from $7,128 to $4,411. His total dividends for the 10 years were $1,085. Even still, his Coke total return is down 23% for the decade.

    If this keeps up, he’s in trouble. But it doesn’t. The rest of his portfolio yields the following:

    His P&G value went from $7,115 to $7,136 with $1,558 in dividends for a 22.6% profit.

    J&J went from $7,103 to $7,900 + $1,741 in dividends for a gain of 35.7%.

    Pepsi went from $7,123 to $8,995 + $1,741 (same as JNJ!) in dividends for a gain of 50.7%.

    General Mills increased from $7,129 to $9,915 + $2,265 in dividends for a gain of 70.6%.

    Exxon gained from $7,123 to $13,104 + dividends of $2,168 for a total gain of 114.4%.

    And Southern, that stodgy old boring grandma stock, absolutely crushed it. SO went from a starting value of $7,142 in 1999 to a total value of $13,461 10 years later. But it ‘s dividends gave our Dividend Growth investor an astounding $6,693 for a total gain of over 182%!

    The net result of all this is that:

    Mr. Bond, with total safety, turned a $49,863 investment into $75,942 gaining 52%.

    And our clueless investor, who bought at exactly the wrong time, and sold out at the bottom of the worst recession in any living investor’s history, who cobbled together only 7 stocks in his whole portfolio, who never optimized in any way the gains offered him…

    …still managed to grow a portfolio from $49,863 to $82,203 for a gain of just under 65%.

    Mr. Oblivious took on every risk there is, every risk we’re warned about, and did it at the worst possible time, and through absolutely no credit to him, managed to come out ahead.

    All the best, Chuck, and thanks again for all you contribute here.
    Feb 13, 2014. 02:45 PM | 15 Likes Like |Link to Comment
  • Dividend Growth Investing: Misguided And Doing It All Wrong [View article]
    Bought my first home in 1980.
    Carter went out, Reagan came in.
    Mount St. Helens blew up.
    Devo whipped it, The Vapors turned japanese, and Blondie asked us to call her.
    And while we all wondered who shot JR, we stood in shock to learn someone had shot John Lennon.
    And my mortgage was 18%.
    Yeah. 18%. Those good ole days sucked. ;)
    Feb 1, 2014. 09:25 AM | 5 Likes Like |Link to Comment
  • Apple Tanking - On Its Way To $650? [View article]
    "Also, there is nothing wrong using Astrology along with technical analysis to achieve superior results."

    1) RSI
    2) MACD
    3) Volatility Fast
    4) Slow Stochastic
    5) Libra Woo-Woo
    One of these is not like the others.
    Jan 29, 2014. 11:53 PM | Likes Like |Link to Comment
  • Apple Tanking - On Its Way To $650? [View article]

    The fact that he's interested in astrology isn't nearly as concerning as that he's a PhD Chemist who believes in astrology.


    <headscratch> is that even possible?
    Jan 28, 2014. 06:00 PM | 2 Likes Like |Link to Comment
  • The Case Against Selling In The Wake Of A Dividend Freeze [View article]
    rob123 asked: "But isn't that 20/20 hindsight? How would you know ahead of time?"


    No, it wouldn't be hindsight at all! While I couldn't have _known_, I could have been much less suprised / dissappointed had I done a better job of researching their history before I took a full position in it. As richjoy correctly pointed out, below, INTC hasn't done anything "wrong".

    What was wrong was my lack of understanding of how INTC's reaction to adverse business conditions would affect my income stream. The information was there for me to see, but I didn't see it. The fault was mine.

    [Which is good news. If the problem's not me, there's no solution.]

    As I stated in my original response, I need to be in companies that have a history of managing their cash such that adverse business conditions don't necessitate a dividend cut. As soon as I took a _full_ position in INTC, I failed. Their history was there for me to see, and I didn't. Time to own up and move on.


    Compared to the mistakes I've made investing, "too much INTC" doesn't even make the top 10. :D

    Jan 27, 2014. 03:51 PM | 3 Likes Like |Link to Comment
  • The Case Against Selling In The Wake Of A Dividend Freeze [View article]
    No apology necessary, Richjoy. I was wrong to allow INTC to occupy the place of prominence it had in my portfolio, and happily admit that I'm in the group you cited, given my needs for my portfolio.

    As such, I'm (mostly) removing myself from the kitchen. The 20% of INTC that I still hold will merit a place as one of many "1/4 positions" I keep.

    Jan 27, 2014. 03:35 PM | 1 Like Like |Link to Comment