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  • Gilead - Good Newsflow Accelerates; All-Time Highs Now Achievable [View article]
    Doctor: I understand "budget" (low expense) but not sure what "generic" means. Here is a quote from a 2014 Market Watch article "Quietly, Vanguard's actively run funds have outperformed their more famous index siblings said Morningstar researcher John Rekenthaler, pointing to returns over the past 15 years".

    Think about that for a second--a huge percentage of actively managed funds under perform their index over any 10 year period, but Vanguard's actively managed funds (as a group) outperform. In another article the out performance was identified as .79% a year. Why isn't Vanguard pounding the table with the info--I think they don't want to embarrass John Bogle and his crusade on indexing.

    The Vanguard Health fund has been a five star/four star (based on past performance) fund for 30 years--although I would grant that it is slipping. It recently lost its long term manager and it has probably gotten too large with $51 billion in assets--but generic--I don't think so.
    Nov 8, 2015. 08:49 AM | Likes Like |Link to Comment
  • Gilead - Good Newsflow Accelerates; All-Time Highs Now Achievable [View article]
    Here's my theory. Vanguard Health Fund (VGHAX/VGHCX) has $51 billion in assets and holds 82 stocks, many of them biotech. And not a single share of GILD. They did own some in 2013/14. They see something they don't like right now about the stock. When they start buying the shares will move up.
    Nov 6, 2015. 02:08 PM | Likes Like |Link to Comment
  • Recession Will Blindside Those Focused On Unemployment Claims And Yield Curve [View article]
    John: A lot of good analysis and bold predictions but where's the beef? How about some investment advice to go with it. I see you are short SPY? What else--are you buying bonds? How about REITs?
    Nov 4, 2015. 09:58 AM | 1 Like Like |Link to Comment
  • We're Seeing A Massive Rally But You're Making The Wrong Investment [View article]
    Well, if we are talking usage you might as well learn the difference between "you're" and "your". Your comment means "you are wish, our command"!
    Oct 28, 2015. 01:37 PM | 4 Likes Like |Link to Comment
  • Why I Sold Berkshire Hathaway And Added Quality To My Portfolio [View article]
    LB: Missed out on the recent correction for QUAL so I guess I mean the next 15-20% correction that seems to be headed our way, based on falling earnings if nothing else. I agree totally with your statement on Buffett/Munger. My comment wasn't meant as a bashing--just an observation on what might happen when they depart Berkshire--can't imagine too many think it will be a positive for the company. I think it is a great risk to the stock--and not a volatility risk but a real one. If the stock is under performing with them what will it do without them?
    Oct 27, 2015. 08:20 AM | Likes Like |Link to Comment
  • Why I Sold Berkshire Hathaway And Added Quality To My Portfolio [View article]
    It is surprising to me that with 46 comments on BRK not a word about the ages of Buffett/Munger (85/90). Can they last forever? Are they as sharp as they were 10 years ago (are any of us--maybe purchase of IBM is a precursor)? Should we really expect the new managers to not make drastic changes--stock options for the managers--dividends for the stockholders--new HQ building in New York. I sold 5 years ago but wished I could have held forever. Think LB made a wise decision but maybe shouldn't have based it on a one year analysis of performance--and that performance not book value based but stock market price based. I am guessing that QUAL will be an excellent ETF (beating the vast majority of funds and investors)--with all the tax and expense advantages of many ETFs but I think I will wait until a market correction to buy it.
    Oct 26, 2015. 07:52 PM | 2 Likes Like |Link to Comment
  • Know When To Fold (And When To Hold) [View article]
    Mark: Good idea for an article. Always valuable to think about the philosophy we use to make that tough sell/hold decision and sharing your thought process gets all of us thinking. Would be great if you could expand on your Chevron decision. Looking at the 52 week range, Chevron has dropped 29 points from that high. Dividend is currently $4.28 so you have lost almost 7 years worth of dividends in the last year, offset by receiving a years worth of dividends (assuming no future dividend increase). But what seems to concern you is not so much that $29 loss or not even so much future losses that might occur if the price of oil drops (or maybe even stays at the current level) but the possibility that the dividend might not go up for the current year. I can almost understand that for the many buy and hold forever investors but you don't seem to fit in that category based on this article. It would seem that a dollar of stock value would be just about equal to a dollar of dividend in your decision process.
    Oct 24, 2015. 03:21 PM | 4 Likes Like |Link to Comment
  • Implications For Gilead Of The Problems With AbbVie's Competitive Hepatitis C Product [View article]
    Doctorx: I always love to read the comments when the shit hits the fan. Out of the woodwork those who just knew ABBV was a rotten company come to the surface. CEOs should be fired--maybe someone should go to jail! Seems like in your Oct. 20 article you showed a long position in ABBV. I am thinking that was two days ago. We can all be wrong and we all are wrong but let's not climb up on that high horse less we get thrown. Damn if that GILD isn't the best thing since sliced whole wheat biscotti.

    As investors we should be thinking about the future. Assuming that ABBV is a buy at some price, what is that price? I have a small part of my portfolio that I call "Blood in the Streets". When a stock gets creamed, even for a good reason, when does it get overcreamed? I am guessing it will get creamed again tomorrow. What is a good blood in the streets price? And what is a new fair price for GILD--will the market overreact tomorrow?
    Oct 22, 2015. 07:19 PM | 2 Likes Like |Link to Comment
  • A New ETF In Town: The PowerShares S&P 500 Value Portfolio [View article]
    Harm: Do you know how often they recompute the 100 stocks--and what turnover they should expect in an average year? Have they done any back testing to see how this system would have fared in recent years/decades?
    Oct 22, 2015. 12:27 PM | Likes Like |Link to Comment
  • Different Ways To Think About Dividend Reinvestment, Part 2 [View article]
    Bio: Don't see your logic. Buffett knows (or thinks) it is in the best interest of the stockholders of Berkshire not to get a dividend. I totally agree with him. He would be a hypocrite if he did issue a dividend. Both because of the tax efficiency issues I mention and because he thinks he can reinvest those funds more efficiently--and he has done that for 50 years (although those days seem to be past). He controls the dividend policy of Berkshire. He has also stated that he prefers to own entire businesses--that eliminates the dividends of those companies he buys. He doesn't control the dividend policy of Wells Fargo and Coke and has the same problem as I do--most of the well run companies feel forced to issue dividends so if he can't buy the entire business he often has to buy dividend paying stocks. Just like I end up buying dividend paying stocks when I would prefer not to. Add to that the fact that Berkshire (and all other C-Corps) don't pay as much tax on dividends as you and I. Now if you want to say that Buffett should speak out against the dividend policies of Wells Fargo and Coke--that is a little trickier since many pension and investment vehicles require that they only buy dividend paying stocks--Buffett doesn't care if they buy his stock but Wells Fargo and Coke might not have that luxury. I will also add that dividends make a lot of sense for investors in the 10 and 15% tax brackets, especially if they live in states without income taxes. So the issues vary depending on the investor.
    Oct 18, 2015. 12:44 PM | 1 Like Like |Link to Comment
  • Different Ways To Think About Dividend Reinvestment, Part 2 [View article]
    Nicholas: Wish it was true but I don't think there are plenty of high quality companies without dividends. I own some of them. Most stocks without dividends are tech stocks or start ups or companies on the downhill slide (think Sears and JC Penny). I can't find a single ETF or mutual fund that limits itself to non dividend stocks although there are many dividend ETFs. I think there are very few Warren Buffett's in the world who can withstand the screams for dividends (however misguided IMHO). You will even see many on this site who want Berkshire to start with the dividends and I think as soon as Buffett passes Berkshire will institute a dividend. You're right that when you sell some stock you pay a long term capital tax on the gain, which is the same 15% that most investors pay on qualified dividends. But there are three big differences (1)--if you get $20,000 of qualified dividends you pay 15% on the entire amount If you get $20,000 from selling stock you pay tax only on the portion that is profit (that might be $2,000 or it might be $10,000 but it is not $20,000) (2) you decide when you want and need the money, not the companies and (3) if you hold the non dividend stock until death you can pass it on to heirs and avoid totally the tax on the gain (except the super rich who might pay an estate tax). So if you have held Berkshire for 40 years you have never paid a penny in taxes and if you pass it to your heirs after death all of those deferred tax liabilities disappear. Personally I think there should be a tax on unrealized capital gains at time of death but I invest with the tax code we have.
    Oct 17, 2015. 04:48 PM | 1 Like Like |Link to Comment
  • Different Ways To Think About Dividend Reinvestment, Part 2 [View article]
    Nicholas: Let me add a third way to look at dividends. And after reading SA articles for the last four years I understand that I am in the very tiny minority with this opinion. I don't see dividends as new or free money. I see them as a return of capital. Not in the strictest sense of tax law return of capital (although there is some of that in the REIT world) but in the sense that as a stockholder I already own that cash--and I want the managers of my company to use that cash in the most efficient way possible (tax wise and future earnings wise). What I don't want is for those companies to return it to me. If I need the cash I can get it anytime I want by selling some of the shares. You make the statement that companies are "rewarding" shareholders by issuing a dividend. I see it more as a penalty--tax wise and future earnings wise. If I had a choice I would have a portfolio of Berkshire Hathaway type stocks with no dividends--thus perpetual tax deferral and as I need the funds I can get it anytime I want.
    Oct 17, 2015. 02:48 PM | 2 Likes Like |Link to Comment
  • Simon Property Group Or IBM? This Isn't A Joke [View article]
    Caljac" My broker is Vanguard so I can tell you how they show the return of capital and from what I remember from my volunteer tax preparation days the other brokerage firms provide similar info. I place almost all my REITs in my IRA but back in 2013 I owned one in my taxable account (as I remember I had read that almost all of the REIT distribution was return of capital so I thought taxable account would be the best spot--Campus Crest which turned out to be a loser for me). Look at your 1099-Div and look in the summary box entitled "20xx Dividends and Distributions". Look at box 3 and you will see the line is "Nondividend distributions". That is the number that won't go on your 1040 but if you read the IRS manual they will let you know to adjust your basis down for this untaxed distribution. Then Vanguard has the details of this number in the attached details by stock--hooked right onto the 1099-Div. For Campus Crest they show four columns of numbers for the four quarterly dividends. For my account those add up to $31.44 for total ordinary dividends (that amount was fully taxed at my marginal tax rate); then they had $2.38 for qualified dividends--that is the one that was taxed at 15% and I assume is non real estate earnings of the REIT; then they had a capital gain distribution number of $5.71 (I assume sale of property) that is being taxed at 15% as a long term gain; and then the kicker Nondividend distributions" of $159.35. This is the return of capital. So in this case 80% of the dividend was return of capital. I think this is an extreme example--Campus Crest was a new REIT with a lot of depreciation on new buildings and in my opinion trying to entice investors with what seems like a large dividend (which was mostly nothing more than return of capital). Simon, on the other hand, seems to distribute just above the minimum required by law (the tax law requires some 90% of taxable income be distributed and Simon stays pretty close as I remember). But many REITs distribute 150-200% of taxable income--looks good to investors but requires the REIT to constantly issue new shares if they want to grow assets. If you want to see the numbers find a Value Line at the library and look at the individual REIT pages and check the dividends per share versus income per share and you will get a rough ratio and see how many REITs distribute far more then needed.
    Oct 17, 2015. 12:47 PM | 2 Likes Like |Link to Comment
  • Simon Property Group Or IBM? This Isn't A Joke [View article]
    Caljac: Maybe not as much as it seems. Most REIT dividends include a lot of return of capital (not taxable although it does adjust your basis). I am also assuming that most investors would place REITs in their IRA/401k if they have a choice.
    Oct 17, 2015. 09:25 AM | 2 Likes Like |Link to Comment
  • Stocks: Once Predictive, Now Reactive [View article]
    You seem to be making a lot of assumptions about who moves the market. Who buys Fed Fund Futures? I would assume a very small percentage of professional investors. Who reads the WSJ--a much larger group with maybe very different opinions on where rates are going. So maybe 30.5% of professional investors think that rates will go up in 2015 but maybe 50% of non professionals think that rates will go up. And maybe it takes those non professionals longer than 5 minutes to read and digest the article. And maybe there is a large group of fence sitters in both categories that don't show up in the percentages. Seems to me that in a fairly range bound market it only takes a small change at the margin to move the markets.
    Oct 17, 2015. 09:16 AM | 1 Like Like |Link to Comment