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  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]
    I'm not antagonist to the DG strategy at all, I'm sorry if I came off that way. I know we've disagreements in the past, but I try not to be overtly hostile. Over half my portfolio is in income-producing securities and I love DG stocks for the sleep-well-at-night factor.

    However, I am antagonist to faulty logic, including statements like "dividends have no effect on the share price because the ex-date adjustment is temporary and is swamped by daily fluctuations in the market". I believe it's comments like these that imply the concept of a dividend fairy.
    May 23, 2014. 12:15 AM | 4 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]

    I'm not a DG antagonist. I love dividends for the same reasons as you do. The only difference is that I also invest in non-dividend payers (like Buffett) would, whereas many others here would shun them like the plague. I recognise that a portfolio with both dividend and non-dividend payers would be more diversified than a portfolio with only dividend payers. I expect my non-dividend payers to have a higher share price appreciation than the dividend payers, which I could harvest in the future, if I wanted to, by selling some shares.

    So how does this make me anti-dividend?

    "here are the results he showed having researched stocks from 1926 through 2005 invested in the highest decile of yields (highest 10% of dividend yields).

    $10,000 invested in 1926 turned into $102,331,244 by 2005 which is an 11.77% compounded annual growth rate over the 80 year span.

    This MERCILESSLY beat the S&P CAGR of 9.78% over the same span which grew $10,000 into $23,171,851."

    Did he also compare this with the performance of stocks in the highest decile of P/E? (lowest 10% of P/E ratios) Thanks.
    May 22, 2014. 11:23 PM | 1 Like Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]

    Supporting the idea that BRK should not pay a dividend is not "anti-dividend". Anti-dividend would be refusing to invest in ANY dividend-paying stocks, believing dividend payers to be inferior to non-dividend payers. Who holds that view?

    Don't disagree with blind allegiance to studies. But surely studies would still hold more weight than numbers made up on the spot to support your conclusion?

    Sorry for lumping you into that category. I know you are obviously a smart person. I should have qualified my statement with "most" or something like that.
    May 22, 2014. 11:17 PM | Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]
    "Probably because other non-DG investors write absurd articles about how DG is the surefire route to rack and ruin."

    Where, gior?

    It's actually pretty funny than many of these articles will promote DGI as "THE" way to avoid running out of assets in retirement, using the filmiest of "models" that are, as Varan puts it, not even wrong.

    For example, check this out: http://seekingalpha.co... where the commenter gives an example of how DGI investing is superior to growth investing at retirement, by magically giving the the DGI investor a larger starting portfolio size! Comments like this are typically followed by the DGI adherents chorusing in unison, with no one seemingly able (or willing) to pick up this basic flaw. And yet, when one points out the simple error, comments like this are received: "Welcome to America 2014, where the average citizen is math challenged and incapable of forming a logical conclusion. "

    The same goes for this article, which attempts to "prove" that selling shares leads to you having less shares. Is this supposed to be profound?

    That's not even the best part. The funniest thing is when others present REAL models from REAL studies based on REAL data published in REAL journals, the response is "well that's all academic, who cares". Double standards much?

    Lastly, if I were to print out on paper every instance of that the term "anti-dividend", "anti-DGI", "DGI critics", etc. where used, I would have enough material to make a strawman the size of a house. No one is anti-dividends. Repeat after me. No one is anti-dividends. Repeat it 100 times to rid yourselves of the persecution complex.
    May 22, 2014. 08:59 PM | 3 Likes Like |Link to Comment
  • The Stock Market Isn't Where You Get Rich  [View article]
    While everyone wants to get rich, not everyone can, or should, become an entrepreneur.
    May 22, 2014. 03:39 AM | 3 Likes Like |Link to Comment
  • American Realty Capital Properties Announces Pricing of an Upsized Offering of 120,000,000 Shares of its Common Stock 
    Ouch...long 200 shares :(
    May 22, 2014. 01:40 AM | Likes Like
  • Myths About Momentum: Part I  [View article]
    Hi Larry thanks for the article. Wonder if you have thoughts on momentum ETFS currently available on the market? Thanks!

    May 20, 2014. 12:05 PM | Likes Like |Link to Comment
  • Is The Stock Market 'Overgrazed'?  [View article]

    Question: if KO did not pay a dividend but instead was able to use the earnings to compound shareholder value at an acceptable rate, do you think WB would buy it or not?

    2nd question: Why does WB buy non-dividend paying companies?
    May 19, 2014. 07:07 PM | Likes Like |Link to Comment
  • Need A 'Steady Eddy' Income Source?  [View article]
    Can you do a comparison with DPG also? Thanks!
    May 19, 2014. 03:10 AM | Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]

    That's a good point. Agree with you on that one.
    May 18, 2014. 10:45 PM | 2 Likes Like |Link to Comment
  • Volatility Breakout?  [View article]
    I hope you're right, long uvxy.
    May 18, 2014. 05:53 AM | 3 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]
    Buffett is investing exactly how he is suggesting others to invest. To conclude otherwise is to suggest that WB is being hypocritical and dishonest. Is that what you are claiming?

    To repeat, Buffett buys profitable companies, both dividend and non-dividend payers at value. If you need income, you may have harvest dividends from the dividend payers, or harvest capital gains from the non-dividend payers.
    May 18, 2014. 05:05 AM | 2 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]
    To think: when you say "Buffett says one thing and does another", you really do give Buffett too little (or too much?) credit. What does the two-faced Buffett stand to gain by deceiving the retail investor? Is he part of the evil Wall Street-broker-bank complex, trying to cheat the little guy, get them to trade more often, or to sell their shares at low prices so that he can scoop them up for pennies, fleecing the sheeples? And you, being that astute observer, sees through this and proposes a theory that rationalizes his actions with he truly thinks in his heart?

    Or maybe, Buffett is trying to educate, trying to share his wisdom to others, and we would do well to learn from him. If you take a step back from your preconceived notions, and think about what Buffett is trying to say, you will see that there is no contradiction.
    May 17, 2014. 01:28 PM | 3 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]

    The reason that Buffett buys those companies is because they are PROFITABLE, not BECAUSE they pay dividends. If KO did not pay dividends, and was able to reinvest its earnings profitably via organic growth or buybacks, Buffett would still buy KO. Do you agree or disagree with this point?

    If none of BRK's companies paid dividends, Buffett would be very happy selling shares of those companies to fund his next acquisition. But given that many profitable and steady businesses today that are owned by Buffett pays dividends, he does not need to do that.

    Buffett is NOT saying that every company should not give a dividend, nor that one should only invest in non-dividend paying companies. He's saying if a profitable company does not pay a dividend but reinvests its profits at a decent rate, then you could sell shares of that company to "self-make" a dividend, should you need to.
    May 17, 2014. 12:29 PM | 2 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend  [View article]

    There's no need to wonder. Buffett buys value companies that have a wide moat, and growing earnings REGARDLESS of their dividend policy. He writes in the letter that for some companies (e.g. BRK), it makes more sense to not pay a dividend than to pay it. Shareholders will be rewarded with a higher share appreciation, and a likely higher total return. He also highlights that dividends have two disadvantages, taxes and forced payout. It's all in the letter (did you even read it?)

    For mature companies with limited growth opportunities (e.g. KO), it is reasonable to return money to shareholders as the return on investment in those companies is less. Buybacks are another possibility, and there are pros and cons for each approach.

    Now how you go from the above to saying that Buffett should only invest in non-dividend paying companies escapes me.
    May 17, 2014. 03:05 AM | 2 Likes Like |Link to Comment