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  • Thinking About Selling Stocks? Consider This First [View article]
    Cape: I agree with your point about income stream being more reliable with a good dividend stocks compared to non dividend stocks--making a new investment and looking forward. But in the example used by the author, the income stream from appreciation has already occurred --all the author has to do is sell the stock--what could be more reliable than that income stream? He even seems to recognize the danger of dividend stocks in an environment of rising interest rates. He can sell and reinvest the proceeds in the best available dividend stock and still get an income stream. If he holds, that income stream (from unrealized appreciation) could disappear. In that case any dividends received are just offset by lost appreciation. Income stream of maybe zero or more likely negative income stream. It works for some DGI because many don't consider appreciation as being income. If the author thinks the two stocks are the best investment available then his actions (or lack of) make sense to me
    Oct 31 08:59 AM | Likes Like |Link to Comment
  • Thinking About Selling Stocks? Consider This First [View article]
    I can understand the first part of your article but when you talk about holding BMY and RTN it gets a little fuzzy. Are you saying you are holding because you think the market is efficient and thus you have as good a chance to profit going forward with these stocks as any other? Or are you saying that you don't see appreciation as income, so you don't mind giving up appreciation but you want dividends that you do consider income? Would you, for example, give up half of your appreciation if you thought these two stocks would lose that much (which is probably equal to 10 years worth of dividends) just so you can say you have an income stream from the dividends?
    Oct 31 08:02 AM | Likes Like |Link to Comment
  • A 9.7% Bond Yield With Limited Risk [View article]
    Wonder if that margin debt has any interest cost?
    Oct 29 09:53 AM | Likes Like |Link to Comment
  • A 9.7% Bond Yield With Limited Risk [View article]
    Seems like there must be more negatives to the bond or PIMCO and every other bond fund would buy them up and bring the yield back to the pack.
    Oct 29 08:10 AM | Likes Like |Link to Comment
  • The Stock Market Bubble's Achilles' Heel [View article]
    You make some good points about the level of IPOs and margin debt and looking at the 10 year Shiller PE would support your case. On the other hand your points on share buybacks seem nothing more than bloated cliches. You say that capital was wasted in 2006 and 2007 by buying back shares. Easy to make that case in the rear view mirror but isn't the market higher now than in those years? In most cases aren't the shares more expensive now then what companies paid for them in 2006 and 2007? So your point seems to be that if a company doesn't buy at the very bottom of a market they are wasting capital. How about all the SA readers who reinvested their dividends in 2006 and 2007--did they waste their capital? Are you recommending that SA readers not reinvest their dividends at current prices because they will be "wasting their capital"?
    Oct 27 08:03 AM | 4 Likes Like |Link to Comment
  • 3 Reasons I Enjoy Watching Stocks I Own Decline In Price [View article]
    GIO: I don't really disagree with your specifics. I will just point out two things. I am pretty sure that the performance of actively managed mutual funds is no better for the mid cap and the larger of the small cap funds (S&P 600). I am sure you are right about those really small caps (and many foreign investments of developing countries) that get little research and following but they make up such a small part of the investment universe and most investors don't have the skills to analyze them anyhow. And--if they were that inefficient why aren't there mutual funds going into that space and getting great long term returns?

    Second--overshooting on both the upside and downside is something that is normally understood after the fact. Many (including me) would say we have already overshoot on the upside at current levels but how many SA readers are selling? If the markets tank from here, many people will say "aha the market overshot again--it is inefficient". It is kinda like all those DGIs that bemoan share buybacks because many of them occur at high prices, at the same time they are reinvesting those dividends at exactly the same prices.
    Oct 25 02:04 PM | Likes Like |Link to Comment
  • I Concede Defeat In [View article]
    Looks like you're still short Amazon so maybe you haven't completely conceded defeat. Maybe it's February 2000 and the top of the internet bubble is near.
    Oct 25 08:52 AM | 8 Likes Like |Link to Comment
  • 3 Reasons I Enjoy Watching Stocks I Own Decline In Price [View article]
    GIO: I think we are mostly in agreement. If the markets were totally efficient (and I'm not saying they are) then mutual funds SHOULD underperform by the amount of the expenses, transaction costs and fees. That's happening. If the markets were inefficient then good stock picking would be able to overcome those fees--that is only happening in a very small percent of mutual funds. That tells me that markets are mostly efficient and only those with Buffett/Peter Lynch type skills can overcome the fees.

    I have never seen a study that would compare mutual fund performance against their benchmark, after excluding expenses and fees. In an efficient market it would seem like 50% of the funds would underperform and 50% outperform.
    Oct 25 07:27 AM | Likes Like |Link to Comment
  • 3 Reasons I Enjoy Watching Stocks I Own Decline In Price [View article]
    Mantra: I dealt with your issue of human imperfection in the message above but if you think markets are so inefficient please answer the question of why mutual funds, pension funds and most individual investors can't beat the markets? I think most investors spot inefficiencies after the fact.
    Oct 24 07:57 AM | 1 Like Like |Link to Comment
  • 3 Reasons I Enjoy Watching Stocks I Own Decline In Price [View article]
    Forever: I agree, markets (and few other things) are perfectly efficient. I go with Buffett's opinion that markets are mostly efficient but not always efficient. Thus the internet bubble. But very few mutual funds and very few individual investors can come close to beating the market long term--if markets had much inefficiency it would seem that wouldn't be the case. As you say, humans are emotional beings (and often ignorant) but offsetting their emotions and ignorance are people who take advantage of those emotions and make money from that--thus keeping the market "mostly" fairly priced. Reading this site you would think that investing is a simple thing--huge number of readers are so absolute in their opinions and totally convinced that their philosophy is almost a slam dunk. They are closed to any questioning of their systems. So I agree with you--it is extremely difficult to make any money (beyond your benchmark)--but it's fun to try.
    Oct 23 02:17 PM | 1 Like Like |Link to Comment
  • 3 Reasons I Enjoy Watching Stocks I Own Decline In Price [View article]
    I could understand your philosophy if the market was going down and your stocks were just along for the ride. Maybe that would be a great time to buy more of your long term favorites (unless like 1999 and 2006 we were in bubble territory). But if the market is rising and your KO and IBM are dropping or stagnant then the market thinks there IS a fundamental problem with those companies. In that case you seem to be saying (1) the market--at least for my stocks--is inefficient and (2) I have some knowledge that the market doesn't. I get the feeling that you fall in love with your stocks and think they can only go one direction and those dividends are not only safe forever but will offset any drop in the price of the stock.
    Oct 23 08:13 AM | 5 Likes Like |Link to Comment
  • Another Reason Why Dividend Growth Investors Like Price Pullbacks [View article]
    No kidding. You make the ending price the same ( and it is higher than the starting price) of course you will be better buying on pullbacks--either with dividends or new money. You don't need to be a math guy or do any calculations to know that. I think what the investor you quoted was saying is that he doesn't want any pullbacks and he also wants a higher ending price, in which case you will also be better off with new purchases or dividend reinvestments.
    Oct 22 11:06 AM | 2 Likes Like |Link to Comment
  • 3 Catalysts Behind My Decision To Remain Bullish On Shares Of Kodiak Oil & Gas [View article]
    The Paulson comment was new to me, as well as the discussion of the hedging strategy that KOG uses so thanks for sharing that info.
    Oct 21 07:24 PM | 1 Like Like |Link to Comment
  • The Irony Of IBM's Buyback Program After The Revenue Miss [View article]
    Not sure if your "holistic" viewpoint is supposed to be positive or negative. You say that revenues over the last 10 years have gone up from $89 billion and it "might" clear $100 billion this year. That works out to an average of just over 1% a year. My guess is that inflation for that period has averaged 2.5% a year. So revenues have been falling, in real terms, by 1.5% a year for 10 years. Seems like a long time for a company not to be "on rhythm".
    Oct 20 09:17 AM | 7 Likes Like |Link to Comment
  • Buying Opportunity Ahead For Union Pacific [View article]
    I'm guessing that all the western railroads have been making big money on transporting oil. I'm also thinking that the pipeline buildout from ND and other oil areas will take most of this business over the next 5 years. It might go lower than you think.
    Oct 18 06:42 PM | Likes Like |Link to Comment