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chowder

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  • I Have No Fear Of A Market Crash Or A Significant Correction, Here's Why: Part 1 [View article]
    During the Great Recession, the S&P 500 Index, from peak to valley dropped 57.7%. TLT which is supposed to be very safe, I think, dropped 27.6% from peak to valley.

    Nearly all of my core positions dropped less than that. From peak to valley KO only dropped 20.8%. CL down 32.2%. GIS down 34.7%. KMB down 35.8%. MCD down 31.2%. SO down 32.2%. D down 42.1%. JNJ down 35.4%, MO down 39.2%. ADP down 36.2%. All doing a much better job of protecting the downside than the index and the index is supposed to provide a safety net via its diversity.

    From my perspective, when I look at risk I believe that risk takes two very basic forms and everything else is an offshoot of those basic forms of risk. They are referred to as "Shallow Risk" and "Deep Risk."

    "Shallow Risk" is as inevitable as the weather. You can't invest in anything other than cash without being hit by sharp falls in price. "Shallow" doesn't mean that the losses can't cut deep or last long ... only that they aren't permanent.

    "Deep Risk" on the other hand is a loss of capital that you won't recover for decades ... if ever. The four causes of deep risk are inflation, deflation, confiscation and devastation. These forces can make assets lose most of their value and never recover.

    So, I ask myself which category of risk do my current holdings come under? Since most come under "shallow risk" I have no problem holding nothing but equities, equities that pay an income while I wait for share price to reverse, and an income stream that continues to grow in spite of falling prices.

    I understand this doesn't fit with those who have different objectives than me, but it does explain why I, like Chuck, have no fear of the next recession.
    Jun 13 09:08 PM | 64 Likes Like |Link to Comment
  • I Love My 'Magic Pants' And My Partners Wear Them Proudly [View article]
    Speaking for myself, I don't care if dividends do or don't add value to owning a specific company or not. I only care that it adds value to my peace of mind.

    I don't invest the way academic studies do their studies, and I don't passively invest the way index funds do. I would wager that a lot of people who index don't invest the way index funds are designed to invest. One would have a difficult time convincing me that index investors don't panic and sell when the market is in the midst of a serious correction. Wouldn't this go against what passive index investing is all about?

    I have been through 3 major market corrections during my investing career. The first one nearly wiped me out, but I chalked that up to inexperience. The second intrigued me enough, after losing half of my portfolio value, that I needed to get serious and find something I could stick with.

    The third and most recent one convinced me that regardless of how successful someone else's results were, I had to stick with a system that could answer three questions for me.

    How much do I need? ... When do I need it? ... How sure am I of it being there?

    I know people who were getting ready to retire in late 2007 and early 2008. They didn't know the Great Recession was coming. They were getting ready to convert part of their long-held funds into income producing investments. Another 50% loss in portfolio value was coming their way at a time when they could afford it least. Retirement was postponed.

    They knew when they needed it, and they thought they had what they needed. They couldn't answer the how sure are you of it being there because it wasn't.

    The market can lose another 50% in value, Schiller predicted last year we would get at least a 42% loss in market value, but I didn't get a 50% cut in dividend income during the Great Recession, I got a pay raise. Most of my companies continued to raise dividends enough to offset those those who cut theirs.

    Now that was peace of mind. That was my Alpha!

    If peace of mind means I may have to give up some potential market return, then so be it. It's a small price to pay for being imperfect. I don't want to have to rely on a system that requires perfection in order for me to have the income required to satisfy my needs in retirement. Academic studies can't help me there, dividend income can.

    The only section of SA I read is the Dividend & Income section. I don't have an interest in bonds or funds of any kind, but I don't mind if others do. I come here to see if people can share ideas to help me do my chosen investing style a little better than I had been doing. Chuck has helped me immensely in that aspect, and for that I am truly grateful.
    Mar 19 09:19 PM | 47 Likes Like |Link to Comment
  • What Stock Market? These Dividend Contenders Are Not Overvalued - Part 2 [View article]
    The time to buy is whenever you have the cash to do so. You just have to know where to look. That's what this article is about.
    Nov 20 05:35 PM | 39 Likes Like |Link to Comment
  • Is The Bear About To Maul The Bull? Here's How We're Investing [View article]
    Fear sure causes people to create scenario's that make no sense.

    The Great Recession wasn't an overvaluation correction. It was a breakdown of the financial sector and spread to the real estate market. Now I'm not suggesting something similar won't show up but we're not going to see a correction like that based on overvaluation.

    The historical PE for the S&P 500 over the last 10 years has been 17.0. The current PE is 17.4. The market is fairly valued. It is not grossly overvalued and in a position that generates 20% market corrections.

    The earnings growth over the last 10 years for the S&P 500 has been 6.7%. Looking forward over the next 5 years, and I realize these are just estimates, is 9.9%. ... Earnings are expected to rise going forward. If earnings continue to rise, then hoping for a 20% correction is whistling in the wind, in my opinion.

    People who manage money for a living have to be aware of where the market's been, where it's at and where it's headed. There is mild profit taking and that supply coming to market is being gobbled up just as quickly. Net volume is on the buy side and is why the trend is as strong as it is.

    We'll see where we stand during next earnings season. As long as most companies continue to meet earnings expectations, you ain't gonna get no 20% correction. Fuhgeddaboutit. The only way that comes about is some world wide event that spooks the market. It won't be a result of overvaluations.

    I could be wrong but, I stay the course. I planned my work, now I work my plan.
    Jun 18 08:02 PM | 38 Likes Like |Link to Comment
  • Dividend Growth Investing: Myths 11-15 [View article]
    >>> The method described here relies on successful stock picking, and independent research shows that few (or at least a negligible percentage) managers consistently beat market averages. <<<

    Successful stock picking is the point. Regardless of what method you choose, it has to be successful in some shape or form. From my perspective, one simply needs to learn what goes into picking successful positions, and that's why this community is so valuable. People are willing to share what has worked for them.

    I don't have anything to sell. In fact, I write articles but post them as instablogs so that there won't be a conflict of interest by being paid for the information.

    I also post a real portfolio online, using real money, and I announce moves "before" they are made. I not only show the current results with monthly updates, but I also show the companies no longer held so people can see the losses, not just the gains. Total transparency!

    One needs to know how money managers work in order to understand why they don't consistently outperform the market.

    First of all, funds have charters that determine what type of investments can be made. Sectors go in and out of favor. The manager has to stick with companies that the charter says they can invest in.

    Second of all, fund managers have to answer to fund owners. Money comes in, it has to be invested. Most charters say the fund must be 90% invested at all times. When incoming money flows are high while the market is up, fund managers are buying overvalued positions. They have to put the money to work.

    And third, when the public panics and wants their money back, the fund manager has to sell winning positions they don't want to sell, but they must meet those redemption's. If you've ever traded on margin, and I have, those margin calls come at a time when you don't want them, and you have to sell a winner to meet the margin call. Often times you knew if they would just let the margin call ride for another week, the market will rebound. Unfortunately, it didn't work that way. I met the call, lost the money, and then the market rebounded. ... Lesson learned.

    I don't like the concept of focusing on total return. How do you define it? I know it's dividend plus share price appreciation, but how do you put a number on it? How do come up with an action plan to hit a target when you don't know what the target is? Any goal you set has to have a number or some way to measure it.

    Although total return is my ultimate goal, it isn't something I focus on. I have to go at it from another angle.

    I have spent most of my adult life in sales. Although the final sales number (total return) was the objective, when we focused on the sale we added undue pressure on ourselves because we needed total return. The prospect often felt that pressure because we were pushing to make a sale, especially when it was near the end of the week and we had no sales. We would miss sales because of it.

    We decided to take a different approach. We decided to focus on the number of "quality" presentations. We needed to determine early in the presentation if the person was a prospect or a suspect. If they were a suspect, we didn't waste our time.

    We knew if we gave a certain number of quality presentations to prospects, the numbers would work out in the long run. And they did.

    That's how I look at dividend growth investing. I use a similar formula.

    High Quality + High Current Yield + High Growth of Yield = High Total Return.

    As long as I focus on those 3 ingredients, total return will there in the long run. If one of those ingredients is missing, the recipe doesn't turn out right.

    That's the success formula that never fails! People may fail the formula, but the formula will never fail the people, as long as they adhere to it.

    People can successfully pick winning stocks as long as they are able to control their emotions.

    Another of my favorite formula's: ... Direct your thoughts, control your emotions, obtain your destiny.
    Mar 28 10:38 AM | 38 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    It blows my mind how scared people are of the tax man. If you are going to be successful, you are going to pay taxes, so my attitude is get over it. It's why I call it a success tax!

    What's the alternative?

    I look at it the same way I do my bookie. If I lose, he gets it all and I have nothing. If I win, he collects the "vig" or the "juice" and I get to keep the rest. That's okay with me.

    The Government is going to collect the "vig." Time to get over it and move on.
    Jul 19 06:18 PM | 37 Likes Like |Link to Comment
  • 45 Attractive Dividend Growth Stocks In Today's Overheated Stock Market - Part 1 [View article]
    >>> It appears that one has to be a Buffet level genius to do this right. My most sincere congratulations and kudos to the readers who are at that level. <<<

    Thank you! I appreciate it.
    Oct 9 04:15 PM | 36 Likes Like |Link to Comment
  • Dividend Growth Investing Is A Perfect Strategy For Young Investors [View article]
    buyandhold, congratulations on earning a very handsome income at your age. Good for you!

    Like most people your age, you don't have a clue about what it is you don't know. That will come with time and wisdom. There is a reason people under 35 can't run for President, they don't know nuthin. They are intelligent but intelligence only goes so far without experience and wisdom.

    To be honest, and I say this as respectfully as possible, you are pretty damn smug to be telling people if they can't invest at least $1,000 per month that they need to be doing something else. I can see why you aren't a financial planner.

    There are very few people under 35 who can invest $3,000 per month. Some of you who are blessed where you can should visit the real world.

    My advice to the young is that I don't care if it's $50 per month or $5,000 per month, adopt a strategy and work with it. As you grow older and improve your stead in life, you can increase the amount of your investments. Don't let these smug people discourage you. Stay focused on your goals! Success is achieved by those who try and keep trying.
    Jul 2 10:15 PM | 36 Likes Like |Link to Comment
  • Can Everyone Succeed With Dividend Paying Stocks? [View article]
    It's funny how over the last 100 years, people come out of the woodwork with their, "the sky is falling" and "the lobster is coming" and the market is going to fall apart.

    Bubbles, ZIRP, taxes, wars, terrorism, countries going bankrupt, corporate corruption, Carter years inflation, you name it, there's an excuse why the market is going to fall apart.

    Meanwhile, KO, PG, GIS and others simply continue to pay their dividends, quarter after quarter after quarter, year after year after year, decade after decade after decade, and the critics are oblivious. ... Market corrections don't affect dividends, company fundamentals do.

    I ignore price action and focus on whether the company is earning money or not. If the company is earning money, I get paid whether the market is up, down or sideways.

    Check this out! When Wall Street shuts the market down due to excessive price volatility, I still get paid. There's a lot of comfort in knowing that and letting it play out.
    Jul 3 06:34 PM | 35 Likes Like |Link to Comment
  • Dividend Growth Investing: Creating A Portfolio [View article]
    I was a swing trader and in 2008 I decided to go all in on dividend growth investing. I didn't even know what a dividend growth investor was, I had owned some companies that paid a dividend while I primarily traded.

    People tell me it's no wonder I have done well with my dividend growth strategy because I picked the ideal time to pick up companies at historical lows.

    I didn't feel that way in 2008 and especially in early 2009. Everything I purchased kept going lower. My quote tracker was a field of red. I can assure you, I felt the cramps from the tension I experienced and wondered if I had screwed up ... royally.

    I had to summon all of my powers to provide myself with positive reinforcement, and it was Cramer of all people who helped me stay the course.

    Someone had asked him about Alcoa and he said, this is crazy. Alcoa at $6.00? This company is going broke. Buy it. ... So I did, and it kept going lower.

    Cramer made sense though. All of these companies weren't going to go broke, so I held on as I was drowning in the sea of red.

    I ended up selling AA with a profit in excess of 100% and in retrospect, it was easy money. It just wasn't easy at the time.

    I don't know if I was lucky or good. All I know is I applied the most important asset I learned as a trader, go with the high probability odds. That told me to go with the Blue Chip companies.

    The difficult part was not giving into temptation and taking profits. The difficult part was staying 100% invested. The difficult part was averaging up on my positions in the following years and not swaying from the business plan.

    From my perspective, people can say what they want about my results. I don't care. Results are what count and I don't care how they come.

    Crosetti understands that concept as he held his legacy companies for decades. His dividend income from his Fabulous Five generate more income than he earns from his job. People are quick to point out that past performance, etc., etc. etc.

    With some people, it's always excuses. Cajones was the proper word. One had to have them at the time, still do.
    Jun 7 12:54 PM | 29 Likes Like |Link to Comment
  • My Q4 Portfolio Review - 2012 Wrap Up [View article]
    >>> you do not seem too bothered by the 'socially responsible' factor. I know the tobacco companies have a great financial history, but. <<<

    I try not to judge others who sin differently than me.
    Feb 15 08:28 PM | 29 Likes Like |Link to Comment
  • I Am A Dividend Growth Investor. I Want Dividends, Growth, And Dividend Growth [View article]
    Put me in the camp of young people not putting their money into SPY or any other index, unless they are forced to through their 401K for example.

    As long as this author continues to purchase high quality companies selling at a discount to fair value, this author is going to do fine in the long run.

    It's funny how some people will tell us not to over pay for equities, but it's okay to continue to invest in an index when it is overvalued. ... Does this scan?

    The reason an index does what it does over the long-term, and outperforms most people is because the index doesn't change its strategy as it goes along. People change, the index does not.

    Successful investing is about identifying a strategy with the highest probability of long-term success, and sticking with that strategy through good times and bad.

    Every strategy has its ups and downs. The S&P 500 dropped 57% in value peak to valley during the Great Recession, but the index kept on doing what the index always does. It sticks with the strategy.

    That's what we should do. We should embrace the volatility that accompanies our strategy and shore up our defenses during those corrections, not run from it.

    I tip my cap to this author. Well done.
    Sep 24 11:31 AM | 28 Likes Like |Link to Comment
  • 10 Stocks To Buy Now: Be Cautious - But Don't Panic: Part 2 [View article]
    @7716391 ... >>> First of all, as I'm sure you're all aware, this whole exercise is geared to get you on that FAST Graphs and start spending hours, days and months sifting through a bunch of garbage to find some gems <<<

    I'm sorry you aren't capable of reading an article and being able to understand the moral of the story.

    I think it's sad that some people have to have things pointed out to them as opposed to being able to recognize, relate and assimilate concepts and principles in order to put them into practice. I suppose that comes from playing too much golf and not enough time studying how the market works. But, that's okay. We're all adults here, we all have the power to choose our own course. (pun intended)

    I suppose in an effort to be funny, I'm assuming that was your objective since I don't see any substance in your comment, you haven't got a clue about F.A.S.T. Graphs. If you did know anything about it, the word F.A.S.T. would be your first clue.

    The information that would take hours to accumulate through various sources are at your service with the touch of a finger. It now takes me minutes to do what used to take me hours.

    Now, being adults, it would serve us better to look past whether someone is trying to sell a product or not. Being an adult, we should look for the moral of the story. Chuck is showing us what to look for when investing in the market. He is trying to say that if you want to do better than an Index there are certain principles one must use in order to be successful at it. Chuck is explaining that the road to success is owning high quality companies and buying them when they offer a discount to fair value.

    Now anyone using an ounce of common sense, and common sense is a requirement in being a self-directed investor if you want to beat an index, then you own the best of that Index and you buy them when they are selling at a discount to that Index fair value number. Then you hold on and let the concept play out.

    Chuck merely shows you these concepts using a tool he invented. If you don't wish to own it, then don't. However, rather than shoot the messenger, try to recognize, relate, assimilate and put into action the principles his tool is showing us. If you wish to get the information from free sources, then do so.

    You won't do that because it would interfere with your golf game, and that's okay. You'd rather have someone else do your work for you and that's okay too. You're willing to accept a 2% premium to an Index. There's nothing wrong with low expectations if low expectations are what you are comfortable with.

    Your RAFI index methodology time frame is too short for my tastes. I prefer to see what a company can do over multiple business cycles. I invest in companies that have shown they know how to overcome adversity and have survived the worst the market can throw at them.

    I prefer to look at a 15 year minimum time frame because that represents two business cycles and two major recessions. We should be able to separate the wheat from the chaff within that time frame, I would think.

    In looking at just one of the portfolio's I manage, nearly all of the companies have outperformed the Indices.

    A 15 year time frame, annualized returns from a real portfolio.

    MMP ... 22.0%
    EPD ... 18.4%
    KMP ... 13.6%
    DE ... 12.8%
    LMT ... 10.2%
    CVX ... 9.0%
    DEO ... 8.5%
    SYY ... 8.3%
    CL ... 8.2%
    GIS ... 8.2%
    MCD ... 7.9%
    JNJ ... 7.7%
    KMB ... 6.4%
    PEP ... 6.4%
    SO ... 5.7%
    ADP ... 5.6%

    S&P 500 ... 4.0%

    KO ... 2.8%

    Now I understand that past performance doesn't blah, blah, blah. But I look for the moral of the story. What do these companies have in common that would cause them to outperform the market going forward and I can find that information much quicker now thanks to Chuck's V.E.R.Y. F.A.S.T. Graphs. If you had researched this first, before running your gums, you'd know this. ... Ha!
    May 18 01:03 PM | 28 Likes Like |Link to Comment
  • Let's Talk About The Nifty Fifty And Dividend Growth Investing [View article]
    >>> Sheesh, is that the best DGI news there is? That your list did 0.55% better than the now available index? <<<

    When one understands the power of dividend growth investing they might have a better understanding of it's power over an Index, even if the total return numbers were identical.

    When it comes time to start living off of your investment, my portfolio, which is conservative via yield as opposed to some, will throw off TWICE as much income as the S&P 500 will.

    The yield on the S&P 500 is 1.8%, my portfolio has a yield of 3.8%.

    Your argument that dividend growth investing doesn't outperform what an Index investor does, breaks down when it comes time to pay out, and it will pay out one day.

    I don't have to outperform the Index. I can match it and receive twice the income. Why that concept is so difficult for people to wrap their head around, is beyond my capability of understanding.
    Sep 26 09:29 AM | 27 Likes Like |Link to Comment
  • DGI For Dummies: Managing Your Dividend Growth Portfolio [View article]
    I don't mean any disrespect here, so I hope none is taken.

    Does anyone reading this comment actually think BRK is going to achieve 19% annual returns over any meaningful holding period of at least 5 years or more?

    Over the last 20 years they have returned 11.0% annually.

    Over the last 15 years ... 8.5% annually.

    Over the last 10 years ... 10.4% annually.

    Over the last 5 years ... 15.3% annually but at the same time the S&P did 14.3%.

    I'm not saying that owning BRK is a bad idea or that it won't even outperform the S&P 500, but 19% annual returns is unrealistic. Additionally, does anyone believe the S&P 500 is going to provide 14.3% annual returns over the next 5 years? If so, you'd better be all-in.

    By the same token, if the S&P 500 isn't going to provide those kinds of returns going forward, neither is BRK in my opinion.
    Sep 6 03:18 PM | 27 Likes Like |Link to Comment
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