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varan

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  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    @mkbelly

    Nobody is 'against' dividend investing or 'anti-dividends'.

    The discussion is always about the statements made about the glories of dividend investing that either defy common sense or are based on quite trivial concepts. The link that you posted fell in the second category. There is a third category, into which this article and many others fall, wherein the defense of dividend investing against imaginary foes is made on the basis of assumptions which are laughable - in this case the assumption being that the people who do not accept the illogic of DG investors invest in only one stock.
    May 22, 2014. 09:44 AM | 4 Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    Anyone who started contributing to IRA on Jan. 1, 1979, and contributed the maximum allowable amount on January 1 of each year, and invested just in SPY (spy was not available in 1979, but let us overlook that) he would have about $720K by the end of 2013. Not bad. So far a couple both of whom worked and had wages high enough to max out the IRA, without any fuss, they would have close to $1.5M. A $2M portfolio is perhaps unrealistic for most people.

    On another note, that is a good benchmark for one's accumulation phase. If someone has been self-directing his IRA, and maxing out on it, if he has less than $720K after 35 years, perhaps his investment acumen was not really that great.
    May 21, 2014. 05:23 PM | 4 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    That's quite funny actually.

    From the title it appears that the author is comparing the two cases: 1. Buy KO, but spend the dividends, and 2. Buy KO, and reinvest the dividends.

    If it is a great revelation to someone that 2. is resoundingly better for the creation of wealth, and he needed an article to prove that, we should all go to some classroom and study basic arithmetic.
    May 21, 2014. 03:34 PM | 4 Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    Nobody who has even the most rudimentary understanding of investing in the stock market, constructs his portfolio and plans the distribution phase of the retirement on the basis of the assumption that the market will always go up. Apparently the primary goal of the whole exercise, as the author claims in one of the comments, was to show that if you make that assumption you are going to be left penniless, and, therefore, you should rely on dividends. Since no one makes that assumption, this one too, like the other article on SA that prompted this article, is based on a false premise, and is misleading at best.
    May 21, 2014. 02:12 PM | 3 Likes Like |Link to Comment
  • Is The Stock Market 'Overgrazed'? [View article]
    "but somehow sheldon adelsom became a billionaire building and running casinos."

    Sheldon has a lot of cows wearing magic pants dancing with the dividend fairies in his mansion in Vegas. Sometimes, potential GOP presidential candidates also visit to add to the revelry.

    That's the ticket.
    May 21, 2014. 11:34 AM | Likes Like |Link to Comment
  • Low Beta Stocks Help Me Sleep At Night [View article]
    Ponzi

    This is nothing.

    Your services are absolutely required for DGI articles on SA. The ignorance of basics on investing shown there will blow your mind and make your brain explode.
    May 21, 2014. 11:29 AM | Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    I think you should ask Mr. Occam to sharpen your razor, or better still, give you a new one.
    May 20, 2014. 09:37 AM | Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    Here are additional examples that lay rest to the notion that you will run out of shares to sell if you do not use only dividends. Actually passive investing which requires you to do only an hour's work a year on your portfolio comes out better. All this even if the investor chose to retire in one of the worst years to do so.

    Same Scenario: $1M Portfolio. $40K withdrawal on 1/1/2000. Withdrawal increases by 4% a year.

    1. 60% MidCap (MDY) 40% VUSTX

    Portfolio Value on 1/1/2014 $2.05M

    2. Balanced Value Portfolio: 20% of Large cap value (VWNDX) 20% Mid Cap Value (VASVX) 20% Small Cap Value (VSMAX) 40% VUSTX

    Portfolio Value on 1/1/2014 $2.11M

    3. Larry Swedroe Inspired Portfolio 30% VSMAX 70% VFITX

    Portfolio Value on 1/1/2014 $1.59M

    4. Passive DG portfolio (Equally Weighted Portfolio of JNJ KMB KO CL PG)

    Portfolio Value on 1/1/2014 $1.05M

    So NO, the investor will NOT run out of shares to sell. Actually he will do extremely well even with the simplest properly allocated portfolios, perhaps even better than a portfolio of DG stocks.
    May 20, 2014. 09:06 AM | 6 Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    All kidding aside, the scenario is completely ridiculous, as anyone with most rudimentary, first grade level understanding of the value of asset allocation and diversification will not invest in SP500 alone.

    Withdrawal Schedule:

    $1M initial portfolio. $40K withdrawal on Jan 2000. 4% increase in withdrawal every year. Withdrawal made on Jan 1 of every year.

    A. 60% SPY 40% VUSTX, yearly rebalanced.

    The portfolio value would have been $966573 on Jan. 1, 2014.

    B. Let us use the author's logic, and consider the portfolio of just one asset, the darling of the DG investors, KO. Same withdrawal schedule.

    The portfolio value would have been $610857 on Jan. 1, 2014.

    In my book $966573 is better than $610857. Much better.

    Some may claim that if you have KO, you don't sell any stocks, but just live on dividends. Then you will have to follow the same schedule for 60/40 SPY/VUSTX, and that will come out much better again.

    Of course you can claim that there are better DG stocks than KO for this period, but as likely there are so many other well diversified portfolios that can be constructed for generating income by selling assets.

    There may be a lot of valid reasons to embrace dividends, but this article fails to provide any.
    May 20, 2014. 12:33 AM | 8 Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    Finally someone has written an incredibly elegant and air-tight indictment against total return investing. The day before the total return investors is fraught with God knows what horrors.

    I will go back to enjoying the adventures of Ignatius J. Reilly.
    May 19, 2014. 11:09 PM | Likes Like |Link to Comment
  • Low Beta Stocks Help Me Sleep At Night [View article]
    "a stock that follows a path quite independent of the S&P500"

    Which is reflected in the fact that R^2 is too low for the regression to be meaningful. The beta computed from the regression is therefore indeed meaningless in such a context.
    May 19, 2014. 06:31 PM | Likes Like |Link to Comment
  • Retirement Strategy: Sorry Warren, But You're A Cheapskate [View article]
    Good havens, a lot of brains are going to explode.

    Much of what attracts the average investor to DGI is the prospect of enhancement in self-esteem engendered by the promises of being quickly and easily able to pick stocks (all you need is x+y> something or a two minute look at some squiggly lines in a multi-color chart) that will provide risk-less growth of income that outpaces the inflation with humongous capital appreciation to boot so that the next three generations would enjoy the fruits of the investor's brilliance.
    May 19, 2014. 03:19 PM | 1 Like Like |Link to Comment
  • Low Beta Stocks Help Me Sleep At Night [View article]
    yea, but if you talk about beta, you have to look at history, otherwise it makes it even less sense.
    May 19, 2014. 03:06 PM | Likes Like |Link to Comment
  • Transforming A Portfolio Without A Real Plan Into A Dividend Growth Portfolio: My First Step [View article]
    "Did I make the right decision by letting GILD go?"

    No one knows, and no one can tell you what is good for you, but for someone who is into buying individual equities, all the current relevant metrics suggest that GILD is going to be a very good stock in the next few years. GILD is a prime example of why it may not be a good idea for the construction a portfolio to focus just on a restricted set of metrics, especially if the zeal with which the metrics are recommended by the experts far exceeds the amount of real empirical evidence as to the superiority of those criteria.
    May 19, 2014. 01:15 PM | 3 Likes Like |Link to Comment
  • Low Beta Stocks Help Me Sleep At Night [View article]
    beta of ED based upon the one factor model and data for the three years 2011-2013 is indeed negative, but R^2 is so low that the regression that leads to the beta is meaningless. Consequently, to use that number as a metric for any purpose does not make any sense whatsoever.
    May 19, 2014. 11:54 AM | 2 Likes Like |Link to Comment
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