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  • Some Thoughts On Relevancy [View instapost]
    Thanks David Crosetti for this article. One of my principles is "Paper wealth is not money", so I'm 100% DG/HY investor. At the end of accumulation phase I re-invest all dividends in undervalued companies which pay dividends (mostly new for me). Again the principle is simple: “In God We Trust, All Others Pay Cash”. I think that quasi-equal capital investment ( in wide range of dividend companies with non-negative DCR helps to reduce idiosyncratic risk.
    Feb 28, 2014. 07:30 PM | Likes Like |Link to Comment
  • Reversion To The Mean Phenomenon: Part IV [View article]
    In this case I don't mean dividends. Just common sense: many people like to buy high quality items at low prices outside investment, so equities should not be different.
    BTW, thank you for pointing Lussier's book - it's really good.
    Feb 28, 2014. 12:06 PM | Likes Like |Link to Comment
  • Reversion To The Mean Phenomenon: Part IV [View article]
    Thank you for articles and comments. Honestly you confuse me - you commented that RTM does not exist as objective reality and doesn't important for rebalancing but wrote 4 articles about it and stated that "reversion to the mean is a powerful force"...... Probably you should title articles more precisely or I should forgot physics terminology.... Well in theology even bigger effort is made IMO, so let NOT discuss our opinions - I got tired already.

    I'd not comment here if I haven't idea/question: FF92 introduced ad hoc 3 parameters model, which were improved adding more parameters (momentum, liquidity, quality). As far as I know researches combined "new parameters" with size and value. Can we get reasonable good results comparable with FF92 if we IGNORE one or two of FF92 parameters and play ONLY with "new parameters"?
    IMO quality can have many working definitions (e.g. creating excess cash flow to compare with company needs) - so there is room for investigation to answer question above. Just intuitively I think that VALUE+QUALITY might be as good as FF92 or even more parametric model.

    Feb 28, 2014. 10:01 AM | Likes Like |Link to Comment
  • Why Dividends Actually Might Be Relevant [View article]
    IMO most of so-called academics in finance are named by this word by the place they work. They do NOT do science, they just write tons of papers with discussion of non-observable numbers like risk premium. Hence opinions of these so-called academics /including pseudo-Nobel winners/ on dividends are irrelevant for investors and for companies. (Note: There is a relatively small group of financial professors who study dividends and they shed useful light on numbers. Signal "theory" is only one /and not the best/ of explanations of dividends).

    Yes, there were a few Ponzi-like frauds with dividends before SEC creation but their number in 3 orders of magnitude smaller than earnings frauds (
    Yes, CEO/BoD might fool with dividend growth in complex with misstatements about earnings, debt, cash flow, etc.... but not for long time. Investor suppose to do DD for any company. One trick: watch such coin artists - they should sell their stocks at a good announcement.

    If investor wants to use so-called "theory of rational expectations" she needs to know role of dividends (~95% of total return in long run - see

    "What matters here is not how much dividends move, but how much their movement differs from expectations." - Yep, might be.... it is called Keynesian beauty contest.

    I disagree with "dividend policy becomes a pure choice of financing strategy irrelevant to value" just for example knowing the fact that almost any company needs to do a fruitful secondary equity offering and this option must be considered in good financial strategy. Author still doesn't understand the difference between homemade and real dividends, in some cases it is clinical....

    Feb 27, 2014. 09:59 AM | 4 Likes Like |Link to Comment
  • Are High-Yield Equities Riskier Than Dividend Growth Stocks? [View article]

    Thank you for good article.
    I combine HY and DG stocks in my pre-retirement portfolio and use different risk criteria for stocks selection. My biggest position is less than 1.8%, most others are below 1%. Diversification IMO should be wide (across sectors and countries) but not naïve ( to manage portfolio risk. One trick, known to SA folks, is check prices rarely (I do once in 1-2 months) if you consider yourself a dividend investor, another trick, less known to SA folks, is ignore DGR fluctuations and use 5-7-10 year averages.

    Feb 26, 2014. 07:14 PM | 2 Likes Like |Link to Comment
  • Where can small dividend growth investor find alpha? [View instapost]
    Roger G. Ibbotson and coworkers published in 2013 interesting article "Liquidity as an Investment Style" ( where they show that low-liquidity stocks outperform (not as strong as value but better than size using FF92 terminology). Another psychological factor was nicely outlined by William J. Bernstein in "... the risk tolerance of an investor is determined largely by how often he checks his portfolio. .... Benjamin Graham commented in "The Intelligent Investor" that holders of obscure mortgage bonds happily held onto them through the depths of the Depression until they eventually recovered their value because they were highly illiquid and not often quoted. On the other hand, holders of frequently-quoted corporate bonds (far less risky but priced daily in the papers) panicked and sold after their initial drop. The largest financial holding of most families is their house—it's a good thing we don't see its value printed every day in the financial section. "

    Disclaimer: I hold some low-liquid stocks (such as SYBT FRS WHG JCS WEYS ESP) in my portfolio

    Feb 26, 2014. 10:33 AM | 1 Like Like |Link to Comment
  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    I forgot: I posted S&P Dividend Aristocrats performance for 1994-2010 about year ago in addition.
    Feb 26, 2014. 10:13 AM | Likes Like |Link to Comment
  • Stocks For 2014: Are Dividend Paying Cyclical Stocks Acceptable Investments For Retirement Portfolios? - Part 6 [View article]
    Thank you for good article. Couple notes:
    “Companies are as unique as people are.” - Well MPT assumes that people are not unique and all the same rational total return investors .
    Good companies often recovered after dividend cut -
    Feb 26, 2014. 12:01 AM | 1 Like Like |Link to Comment
  • Value Investing In Volatile Times [View article]
    Thank you for good article.
    There are several approaches for value investing and dozen books on it, so each person can choose (or reject whole concept).
    Being a contrarian I "have to" 8-) /see my profile criticize at least 1 point:
    "Be certain of your understanding of the technology." - Yes it is good to understand the technology, but how many technologies an investor might really understand? My answer - less than it is necessary for proper diversification.
    Good luck
    Feb 25, 2014. 06:06 PM | 2 Likes Like |Link to Comment
  • A Look Inside The Fama-French 3-Factor Model [View article]
    Thank you for good article. IMO ad hoc FF model is only attempt (might be best) to fit data, the more parameters (3,4,5,6, ...., 9999999) it used the far it from real science. As far as I know Fama got the pseudo-Nobel price not for FF model but for EMH which he correctly named hypothesis and which is more fruitful IMO.
    Feb 24, 2014. 07:09 PM | Likes Like |Link to Comment
  • Are VYM And SDY Good Dividend Growth Investments? [View article]
    Thank you for good article. Some notes:

    One of the sources of the myth 1 is academic studies where all investors are homogeneous in the sake of math simplicity. Fortunately (even for gays and lesbians) humans are heterogeneous 8-).
    Also DGI might be a killer for Wall Street income even at nice Vanguard’s fees (, so they purposely ignore it.
    Another might be valid point: Let say at first retirement year a family needs 50K$ in today prices. Even if investor started DGI early and her YoC is 10% at first retirement year, she still needs 500K$ portfolio – probably too high number for many US families. But probably common 4% withdraw rule also cannot work for them.

    I’m a DG/HY investor. By construction VYM might satisfy ONLY goal of HY part.

    Index itself is often hidden for various ETFs but they often disclose all holdings. I analyzed some of them for dividend ETFs (don’t remember exactly which, might be SDY) – it seems that 30%-50% there is pure garbage like companies which paid dividends only once in last decade or have irregular dividends (often omitted in 2008-2010).

    Yahoo gives dividend histories for ETFs.

    There are almost no reasons for big funds to invest in tiny dividend companies. IMO it is the field there retail investor might win (

    Well I hold ABT and ABBV but how S&P got dividends from ABBV in last 20 years 8-) ?

    “The decrease in 2013 is especially difficult to understand” - I also got less dividends in 2013 to compare with 2012 because I got a lot of special dividends in 2012.

    Feb 24, 2014. 03:43 PM | 2 Likes Like |Link to Comment
  • BCE Inc. Dividend Fact Sheet [View article]
    Dividend Engineer
    Thank you for good article. BCE is in my watch list but I rather use some point between Morningstar's "Fair Value Estimate" (43$) and their "Consider Buy" (30$) to enter.
    Feb 24, 2014. 10:21 AM | Likes Like |Link to Comment
  • Intel: The End Of Moore's Law [View article]
    Well, lot of technical mistakes in the article but conclusion might be correct - winner(s) will be company(ies) with deep pocket and advance R&D capabilities. Samsung and Intel are candidates. BTW 450 mm wafers is another way to postpone the end.
    Feb 24, 2014. 10:02 AM | Likes Like |Link to Comment
  • Reversion To The Mean Phenomenon: Part II [View article]

    I guess my interpretation of "the ninth wonder of the world: reversion to the mean. Today, we continue the discussion on this phenomenon" was incorrect. In my pure English based on physics "phenomenon" is something that objectively exists (like gravitation). I just check Google and it gives "phenomenon" is "the object of a person's perception; what the senses or the mind notice". I guess you use this definition.

    Thank you. I do not worry about tendencies and semantics. Case is closed.

    Feb 24, 2014. 09:53 AM | Likes Like |Link to Comment
  • Reversion To The Mean Phenomenon: Part II [View article]
    Let me rephrase you to make a bit more general:
    If high ABC predict low future XYZ and vice versa (!!!) as you pointed it means that RTM as a math concept exists. Does RTM important for stocks or it just visual fiction is another question. As you know 2013 pseudo-Nobel winners do not agree on bubbles and hence on RTM.

    I'm not an expert in Kondratieff and other waves, but again if a wave exists for GDP and as you pointed "growth rates of GDP, which are NEGATIVELY correlated with stock returns" it means that another wave exists for stock returns. If the correlation is -1 and a wave is perfect we have sinus versus cosine case with mean = 0 and nice functions on time, so again RTM as a math concept exists.

    Feb 23, 2014. 07:20 PM | Likes Like |Link to Comment