Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
It cost me 700$ to form 100 stocks portfolio in Scottrade. With average holding period 7 years it cost me 200$/year. Let say ETF charges 0.5%, so I win if my portfolio is above 40K$ (200$ * 0.5%) .
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
Robert, I agree that "the more stocks you own, the closer you approximate an index fund" and if good DGI fund with less than 0.1% fees appears I probably be their customer. SDS
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
Chowder,
It seems we share very similar ideology but as native contrarian I'd like to point: a) there are more than 3 leaders in some sectors; b) there are other countries than US (although in majority dividend culture is quite bad) and good opportunities there (see my SA blog); c) 5 years a bit too much for me. I do (as e.g. DVK) semi-annuals (did annual before 2009) and from them ~ 15% companies are required to see their quarterly reports if their dividends are questionable (may be because these 40+ stock in my and not yours portfolio are not so good as 60 stocks in your and my portfolios) .
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
DVK I think Buffett has ~ 80 stocks (at least had few years ago) but his goals probably different from yours and my.
CCC list has ~ 500 stocks, even if half of them aren't good (low yield, DCR, volume /although for retail investor liquidity factor is relaxed/) and let's say 50% of rest are overvalued now, still ~ 100 stocks might be attractive.
BTW, I'm not aware about study that compare performance of fund manager versus number of holdings. MF must have above I think 20 (because of 5-50 rule) so low end of such dependence from such study can be fuzzy, nevertheless results might be interesting.
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
chowder I just commented article itself and stated to be in fund if you have less than 50k$ but it seems that your childs are in toy4learn stage and your approach might be valid for this. SDS
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
IS, I guess your "Your ability to tolerate volatility." and "magic 25-30 came from standard calculations with assumption about quasi-normal distribution of stock prices. For many dividend investors stock price and it volatility are minor, so standard calculations are irrelevant.
I have 100+ dividend stocks, track each year less than 20% (for others I have no doubt that they cancel dividends), my fees and commissions below 0.1% (details in my SA blog).
It seems that you mix money you going to invest ("The size of your passive income portfolio" with money you receive back ("I reach a passive income of $100,000 ") if I read you correctly. I agree that average investment in one company should be at least ~2-5K$ - it allows you minimize fees so till 100k$ investment you might be right although I'd suggest invest in index fund if you have below 50k$. Then you have 55k$, keep 50K in index and buy 1st stock, Then you have 60k$, keep 50K in index and buy 2nd stock, etc....
WisdomTree Dividend ETFs, Plus Overall Conclusions About Dividend ETFs [View article]
Just FYI:
My fees and expenses were 0.06% in 2011 for eclectic dividend investing (mostly DGI), Vanguard S&P500 charges me 0.05% in 401k plan, all dividend ETFs and MFs I aware of have higher fees. On another side, if I pay myself for time I spent for investing at the same rate as my salary, I'd behind many dividend funds because they win in scale factor.
Are Dividend-Focused Strategies Viable For Investors? [View article]
Larry,
I did not consider it as help, I consider it as research.
Please define "fast growth in dividends". On the first glance it seems you did look in wrong place. I did not read Modigliani and Miller paper and know it only from "second-hand". It seems they oversimplified reality to keep math reasonable but other side that in this simplification they lost common sense. In physics such case is well known and as soon as experiment doesn't confirm a model, the model is considered invalid even if it won Nobel price and 1000000 academics like the model. IMO this basic tenets of financial theory is invalid and this statement was proven. BTW, I read FF92 paper in original -it is quite good to compare with many other publications but nevertheless they are wrong.
I have write and refer numerous papers in top peer reviewed journals in my fields of expertise and I (as all other scientists) know that at least 60% of results became wrong after dozen years of extensive research and IMO it is much more easy to make mistake in finance than in natural sciences even at the initial step of design experiment or of selection of postulates (BTW, 60% came from Physics Review Letters, other are even worse).
As to brainwashing, I came as a political refugee from a communist country there overwhelming body of propaganda in combination with people destruction in prisons was (and probably still is) much more stronger than I guess anything you faced in largest financial firms. Also to brainwashing, I bought index fund idea supported with hundreds of research and still keep my 401k in Vanguard S&P500. I know now it is not the best in total return but only choice in my 401k and their fees 0.05% matches with my 0.06% fees and commissions for stocks in DGI.
I'd not 100% agree that "There is none that I have ever read that supports the idea that dividend investing is a superior strategy." - there are scattered indications that it might be on top, but these indications do NOT convince me on 100% (here I disagree with some other DGI), so I'm interested in proper backtest I asked you to run. I expect that DGI does NOT overperform significantly in common terms because it is indeed based on public information but comparison of DGI total return with any broad (e.g.value) stocks index total return is not straightforward because purpose of DGI at list for some folks is different, price volatility isn't good metric, etc... That is why I concluded that you did not grasp concept and suggested you to read books I mentioned in my SA blog.
"... nothing more than a factor exposure." If I read you correctly I have to say a) if it is proven that the factor has fundamental impact that does not depend on time period, market you operate, etc... I'd like to be expose to such factor; b) look on particle physics - are you sure that the factor is monolitic and cannot be split into good, neutral and bad sub-factors?; c) you must know that FF92 factors were introduced to safe their baby from catastrophe but they are unstable and MPT catastrophe occurred - see e.g. "Finding Alpha".
Let's stop here and we can continue after you read the books I suggested (should I play professor and apply to you tricks I do with my students?).
Are Dividend-Focused Strategies Viable For Investors? [View article]
Larry,
I do not recall that I asked help. I asked to write SA article on DGI and also I pointed that your backtest was designed probably incorrectly but you cannot /as far as I understand/ re-run it. As you know I did read "Quest for Alpha" and IMO you wrote better book(s).
I ask conformation each time when anybody says that investment strategy ABC outperform everything known. If ABC is simple enough and can be figure out by data mining I very suspicious for such declaration. If the claim is correct for what hell the person who found crystal ball will tell public about it? ABC can be HY or DGI or small-cap or value or January effect or ..... So I did not surprise that one of your/DFA backtest with sick clone of dividend investing demonstrated the same performance as total market index if we INCORRECTLY look on both in effective frontier terms.
I said that you AND ME are probably brainwashed differently, no personal attack (I'm just not polite person). I just suggested you to read book that shows weakness of Risk/Return duet, CAMP, MPT, FF92, etc. and be open-minded.
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
I agree that "the more stocks you own, the closer you approximate an index fund" and if good DGI fund with less than 0.1% fees appears I probably be their customer.
SDS
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
It seems we share very similar ideology but as native contrarian I'd like to point:
a) there are more than 3 leaders in some sectors;
b) there are other countries than US (although in majority dividend culture is quite bad) and good opportunities there (see my SA blog);
c) 5 years a bit too much for me. I do (as e.g. DVK) semi-annuals (did annual before 2009) and from them ~ 15% companies are required to see their quarterly reports if their dividends are questionable (may be because these 40+ stock in my and not yours portfolio are not so good as 60 stocks in your and my portfolios) .
Good luck
SDS
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
I think Buffett has ~ 80 stocks (at least had few years ago) but his goals probably different from yours and my.
CCC list has ~ 500 stocks, even if half of them aren't good (low yield, DCR, volume /although for retail investor liquidity factor is relaxed/) and let's say 50% of rest are overvalued now, still ~ 100 stocks might be attractive.
BTW, I'm not aware about study that compare performance of fund manager versus number of holdings. MF must have above I think 20 (because of 5-50 rule) so low end of such dependence from such study can be fuzzy, nevertheless results might be interesting.
SDS
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
I just commented article itself and stated to be in fund if you have less than 50k$ but it seems that your childs are in toy4learn stage and your approach might be valid for this.
SDS
Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]
I guess your "Your ability to tolerate volatility." and "magic 25-30 came from standard calculations with assumption about quasi-normal distribution of stock prices. For many dividend investors stock price and it volatility are minor, so standard calculations are irrelevant.
I have 100+ dividend stocks, track each year less than 20% (for others I have no doubt that they cancel dividends), my fees and commissions below 0.1% (details in my SA blog).
It seems that you mix money you going to invest ("The size of your passive income portfolio" with money you receive back ("I reach a passive income of $100,000 ") if I read you correctly.
I agree that average investment in one company should be at least ~2-5K$ - it allows you minimize fees so till 100k$ investment you might be right although I'd suggest invest in index fund if you have below 50k$. Then you have 55k$, keep 50K in index and buy 1st stock, Then you have 60k$, keep 50K in index and buy 2nd stock, etc....
SDS
WisdomTree Dividend ETFs, Plus Overall Conclusions About Dividend ETFs [View article]
My fees and expenses were 0.06% in 2011 for eclectic dividend investing (mostly DGI), Vanguard S&P500 charges me 0.05% in 401k plan, all dividend ETFs and MFs I aware of have higher fees. On another side, if I pay myself for time I spent for investing at the same rate as my salary, I'd behind many dividend funds because they win in scale factor.
SDS
"In God We Trust, All Others Pay Cash"
Are Dividend-Focused Strategies Viable For Investors? [View article]
I did not consider it as help, I consider it as research.
Please define "fast growth in dividends". On the first glance it seems you did look in wrong place.
I did not read Modigliani and Miller paper and know it only from "second-hand". It seems they oversimplified reality to keep math reasonable but other side that in this simplification they lost common sense. In physics such case is well known and as soon as experiment doesn't confirm a model, the model is considered invalid even if it won Nobel price and 1000000 academics like the model. IMO this basic tenets of financial theory is invalid and this statement was proven. BTW, I read FF92 paper in original -it is quite good to compare with many other publications but nevertheless they are wrong.
I have write and refer numerous papers in top peer reviewed journals in my fields of expertise and I (as all other scientists) know that at least 60% of results became wrong after dozen years of extensive research and IMO it is much more easy to make mistake in finance than in natural sciences even at the initial step of design experiment or of selection of postulates (BTW, 60% came from Physics Review Letters, other are even worse).
As to brainwashing, I came as a political refugee from a communist country there overwhelming body of propaganda in combination with people destruction in prisons was (and probably still is) much more stronger than I guess anything you faced in largest financial firms. Also to brainwashing, I bought index fund idea supported with hundreds of research and still keep my 401k in Vanguard S&P500. I know now it is not the best in total return but only choice in my 401k and their fees 0.05% matches with my 0.06% fees and commissions for stocks in DGI.
I'd not 100% agree that "There is none that I have ever read that supports the idea that dividend investing is a superior strategy." - there are scattered indications that it might be on top, but these indications do NOT convince me on 100% (here I disagree with some other DGI), so I'm interested in proper backtest I asked you to run. I expect that DGI does NOT overperform significantly in common terms because it is indeed based on public information but comparison of DGI total return with any broad (e.g.value) stocks index total return is not straightforward because purpose of DGI at list for some folks is different, price volatility isn't good metric, etc... That is why I concluded that you did not grasp concept and suggested you to read books I mentioned in my SA blog.
"... nothing more than a factor exposure." If I read you correctly I have to say
a) if it is proven that the factor has fundamental impact that does not depend on time period, market you operate, etc... I'd like to be expose to such factor;
b) look on particle physics - are you sure that the factor is monolitic and cannot be split into good, neutral and bad sub-factors?;
c) you must know that FF92 factors were introduced to safe their baby from catastrophe but they are unstable and MPT catastrophe occurred - see e.g. "Finding Alpha".
Let's stop here and we can continue after you read the books I suggested (should I play professor and apply to you tricks I do with my students?).
SDS
10 Quick Facts About The Upcoming Conoco Phillips Spin-Off [View article]
Thank you for the good article. What is about taxes?
SDS
Are Dividend-Focused Strategies Viable For Investors? [View article]
I do not recall that I asked help. I asked to write SA article on DGI and also I pointed that your backtest was designed probably incorrectly but you cannot /as far as I understand/ re-run it.
As you know I did read "Quest for Alpha" and IMO you wrote better book(s).
I ask conformation each time when anybody says that investment strategy ABC outperform everything known. If ABC is simple enough and can be figure out by data mining I very suspicious for such declaration. If the claim is correct for what hell the person who found crystal ball will tell public about it? ABC can be HY or DGI or small-cap or value or January effect or .....
So I did not surprise that one of your/DFA backtest with sick clone of dividend investing demonstrated the same performance as total market index if we INCORRECTLY look on both in effective frontier terms.
I said that you AND ME are probably brainwashed differently, no personal attack (I'm just not polite person). I just suggested you to read book that shows weakness of Risk/Return duet, CAMP, MPT, FF92, etc. and be open-minded.
SDS