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retailinvestor

retailinvestor
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  • The Center Of Gravity For Retirees [View article]
    I don't agree that you can presume bonds will have the same damping effect of portfolio drawdowns now, as they did even a few years ago. Should you presume your bonds will rise in value by 15% again, if stocks tank as in 2008? Given the already high price of bond (low yield), how much higher should any expect bond prices to rise. If they rise another 15% what will the market yields then be?

    The 10 yr futures price is now about 128.69. A 15% increase would make it 150. That is 11% higher than the most recent top in mid 2012 when the yields were far lower than 2%. Assuming a duration = 10 that predicts yields falling 1% to far below 1%. Is that really a reasonable presumption?
    Mar 30, 2015. 10:22 AM | 1 Like Like |Link to Comment
  • When Beating The Market Is Not Enough [View article]
    My top reason to stock-pick is because I enjoy 'the game'. The time and effort is not a 'cost' to me. I also enjoy playing the ponies, but there is a net gain for all the players in the 'investments game'.

    I disagree that everyone has the objective of some stated absolute return. I think the vast majority of investors realize that their own personal outcomes will be hugely and unalterably dependent on chance - the chance of being the right age, with the right accumulated wealth, at the exact time when financial markets are peaking. http://bit.ly/1FRsVgs

    I disagree that anyone should consider their portfolio's yield to be their objective. You can set your yield to be anything you like by simply exchanging shares. It is your choice of strategy that determines your preference for different levels of yield.

    I agree with the author's reason for active management - to achieve the same returns with lower risk. My 30 year's results have matched the stock index but with a lot less volatility because I simply sell out to cash in really bad times.
    Mar 27, 2015. 10:41 AM | 3 Likes Like |Link to Comment
  • 'The Death Of The 'Millionaire Next Door' Dream' - A Reply [View article]
    The concepts of the Millionaire Next Door still hold true. They have not been realized by the Boomers because they were the first generation to define themselves by Consumerism. The Boomer generation started out as HIPPIES that lived cheaply and communally. When they hit 30 (TV show called "30 Something ring any bells) they morphed into YUPPIES. An ethical about face.

    All marketing quickly because focused on the free-spending YUPPIES. That spending ethic never went away although their label morphed into BOOMERS when they no longer qualified for any name including the word 'young'.
    Mar 25, 2015. 10:44 AM | Likes Like |Link to Comment
  • Dividend Growth Strategy: Benchmark Your Way To Success [View article]
    One of the very few articles here that correctly distinguish between investing strategies (div growth) and performance measurement (total return).
    Mar 25, 2015. 10:37 AM | 2 Likes Like |Link to Comment
  • Why Dividend Investors Could Withdraw More Than 4% Of Their Portfolio [View article]
    Agree with TF17. And not only is the future dividend growth not predictable or guaranteed, but also the inflation rate controlling your necessary increase in spending in future years is unknown. Make hay when the sun shines and don't squander it.
    Mar 24, 2015. 09:27 AM | 6 Likes Like |Link to Comment
  • The Myth Of Volatility Drag (Part 1) [View article]
    The calculation of a true arithmetic average return is the sum of the yearly returns divided by the number of years. The mutual fund industry correctly publishes geometric means instead. They call the metric an 'average' simply because that is what the vast majority of their clients understand.

    Volatility does indeed affect returns depending on your assumptions. For many people the volatility of stocks is measured by Beta. Comparing the outcomes of a high Beta priced equivalent of some benchmark set of returns, shows the high Beta stocks usually (but not always) do worse. http://bit.ly/1GPqY1h

    Volatility will also drag down outcomes when cash is being withdrawn and the reverse-dollar-cost-av... effect comes into play.

    The author is correct that the commonly heard ... "It is harder to recover from a loss because losses have a disproportionate impact on compound interest" is false because it reflects math and not real life. Real life happens in $$ not %%. Buffett's "Rule #1 - Don't lose money. Rule #2 - Never forget Rule #1" is wrong. http://bit.ly/1GPqYhv
    Mar 24, 2015. 09:09 AM | Likes Like |Link to Comment
  • Should You Buy The Oil Majors Now That Oil Is At A 6-Year Low? [View article]
    Compare the charts of WTI to US and CAN company stock index.http://bit.ly/1Fsrkfz This clearly shows that stock prices have historically moved in lock step with WTI in the medium term. (in the longer term things like reinvesting profits plays a role.

    Company stocks now have not followed the oil price down at all. Cdn stocks have reacted more, even though the current effect helps them.
    Mar 16, 2015. 12:43 PM | Likes Like |Link to Comment
  • Shocked And Surprised Is No Way To Manage Money [View article]
    The evidence is that YES indeed the professionals did NOT anticipate the effect of a changing Dollar. Whether the retail investor did or not i have no evidence. Each quarter end I take a copy of the S&P's spreadsheet of earnings and estimates. At Dec31, 2014 the earnings estimate for Q4 was $30.02. As of Mch12 it looks like the earnings are coming in at $22.81. That is 24% lower.

    The estimates for q4 2015 at Dec 31 were $33.84 and are now at $30.09. That is an 11% drop. You can find the spreadsheets http://bit.ly/1FjZW3a under the Additional Info tab, first in the list.
    Mar 15, 2015. 09:02 AM | 1 Like Like |Link to Comment
  • The Importance Of Total Return With Dividend Growth Investing [View article]
    But you see, that is just the author's point. Personally, I DO believe that these companies' dividend (and earnings) growth will flat-line because they continue to increase now in order to satisfy investors' preferences for distributions.

    Either you will be right or I will be right. Thus, the author's conclusion ... "If you ignore total return (evidence to the contrary), you had better be right about your investing thesis".
    Mar 11, 2015. 10:57 AM | Likes Like |Link to Comment
  • Why Holding Cash May Mean Losing Money [View article]
    Including the all-forgiving 'MAY' in the title says it all. Holding cash may be the best move you ever made.
    Mar 10, 2015. 10:20 AM | 6 Likes Like |Link to Comment
  • Hedge Funds And Their Weak Performance: The Other Side Of The Story [View article]
    The author quotes fees = 1.5%. Yet his source says on top of that management fee there is performance fees = 18%. The new 1.5 + 18 is not much different from the old 2 + 20.
    Mar 8, 2015. 09:34 AM | Likes Like |Link to Comment
  • The Often Overlooked Danger When Investing In S&P 500 Utility Stocks - Part 10A [View article]
    Suggestion for chart construction ---- since utilties are bond-replacements their pricing has traditionally been determined by market interest rates. The over-pricing your charts show may be perfectly rational when considering that there is now near-unanimous acceptance that low interest rates are here to stay for a long time. So using a static P/E line is not really appropriate.

    The benchmark P/E line should go higher when bond yields are lower. Yes this 'excuses' high valuations, and maybe destroys the information value of the graphs IF you presume that interest rates will revert to a mean. Personally I don't believe that.
    Mar 7, 2015. 11:30 AM | Likes Like |Link to Comment
  • The Often Overlooked Danger When Investing In S&P 500 Utility Stocks - Part 10A [View article]
    I agree with all the general arguments at the top. Another risk not mentioned attaches to Power Utilities, and seems to be ignored by analysts and the media.

    The problem is highlighted by what has already happened in Europe as a result of displacement of variable power generation by solar. The base-load utilities have seen their profits destroyed by alternate power sources skimming the cream off the top. I see the same thing very possible in the sun-states of the south US.
    Mar 7, 2015. 11:20 AM | Likes Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    I applaud any author who refrains from promoting specific stocks. The name of the stock in question is irrelevant. (unless you are claiming that the author is lying). I would guess the real reason why so many authors quote stocks is so that more readers are linked to the article by the SA system.

    I know from experience that readers DO consider any quoted stock as a recommendation to buy that stock. I am sure this author has absolutely no intention of 'recommending' any stock.
    Mar 6, 2015. 09:58 AM | 9 Likes Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    I disagree. The accepted doctrine on this site is nothing at all like what I grew up with or my parents.
    We never told ourselves that yield % should be calculated on lower historical prices. Or did any planning with the objective to achieve a 10% by this metric.
    We never told ourselves that the growth rate of the distributions was more important that the rate of return of our portfolios (total return).
    We never told ourselves that strict yearly dividend increases was more important than increasing earnings through the business cycle and maintaining a rational payout ratio.
    We never use current dividend yields to determine buy/sell decisions.
    We never did planning based on an expected current yield plus historical dividend growth.
    Mar 6, 2015. 09:52 AM | 16 Likes Like |Link to Comment
COMMENTS STATS
998 Comments
796 Likes