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  • Silly Rabbit, Dividends Do Matter In Retirement [View article]
    Buffett has not said Berkshire would never pay a dividend, to my knowledge.
    I believe he has said that at some future point BRK may not be able to invest at greater than market returns due to its size, at which point the dividend policy would be reviewed.
    Jul 22, 2014. 01:31 AM | Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    I like the debate as it makes me think.

    Generalizations are limited, but there are some things you can know.
    It is obvious that a company that can invest capital at high rates of return serves shareholders best when they do that. If they reach a point where they can't they should buy back shares (if they are reasonably priced) or pay dividends.
    Borrowing to pay a dividend or buy back shares is a risky proposition.
    Companies that pay increasing dividends for years or decades are some of the great companies and can often be great investments, as the author states. It comes down to what is the best use of the money.

    For the individual investor it also comes down to comfort level and lifestyle preferences, & how much time someone wants to spend deciding which shares to sell off for one's income needs, which might be time consuming and nerve racking. For some a nice dividend stream would get around having to do this, or do it as much.

    To suggest Berkshire should pay a dividend makes no sense. This is a conglomerate run by a world beating investor, with no limitations on what can be invested in. Earnings should be reinvested as most investors not likely to beat Buffett longer term, or his successors, given the quality of existing holdings and the grooved in Berkshire culture.

    On Buffett's retirement allocation of 10% cash and 90% S & P, one has to admire the simplicity. It is like an annuity without the fees. This would be an ideal allocation for anyone, given enough money. A $5 million portfolio would contain $500,000 cash, which would likely provide ample insurance & spending power for a widow in Omaha in case of sudden substantial declines in the market. A set up like this would be low maintenance for the widow, and very low cost.

    I was a bit surprised he used the S & P instead of BRK stock for the 90%, however. Perhaps he has more confidence long long term in the S & P if the estate is intended to be multi-generational.
    Jul 17, 2014. 10:36 AM | 4 Likes Like |Link to Comment
  • Enterprise Products announces two-for-one stock split [View news story]
    A waitress once asked Yogi Berra if he wanted his pizza cut into 4 slices or 8.
    Better make it 4, he said.
    I don't think I could eat 8.
    Jul 16, 2014. 04:10 AM | 6 Likes Like |Link to Comment
  • Value Over Glamor: 2 New Studies Reinforce The Argument That Book Value Is The Best Metric [View article]

    It would appear that as Berkshire has increased holdings in portfolio companies that book value has not increased as much as if the ratio of wholly owned subsidiaries and common stocks had remained the same.

    Is this not reflected in the stock price and hence makes Berkshire a better value than is currently give by investors?
    Jul 1, 2014. 03:50 PM | 1 Like Like |Link to Comment
  • Kinder Morgan: There Is No Need To Worry [View article]
    All these articles on the Kinder's remind me of Carlton Fisk waving his home run ball fair in the World Series.
    Jun 20, 2014. 04:28 PM | 2 Likes Like |Link to Comment
  • The One Thing That I Know For Sure: I May Be Wrong [View article]
    Once as a kid the family took a long road trip, and I was given a book of jokes and riddles. The folks came to regret giving me the book, as I felt obliged to read each one aloud multiple times, and they were mostly pretty bad...

    One went like this--

    A guy was flying and the plane's engine stalled.

    Fortunately he had a parachute.

    Unfortunately the parachute didn't open.

    Fortunately there was a large haystack beneath him.

    Unfortunately there was a pitchfork in the haystack.

    Fortunately he missed the pitchfork.

    Unfortunately he missed the haystack.

    In investing you want to hit the haystack.
    Jun 13, 2014. 11:55 AM | 1 Like Like |Link to Comment
  • Do Dividends Lower Stock Prices? Part II [View article]
    Stocks go up due to earnings growth and/or expansion of the PE due to positive sentiment on the stock or the market.

    A dividend paid takes away from the value of the company, lowering the stock price.

    If earnings didn't grow and the stock price kept rising the PE would rise,
    to infinity.
    Jun 11, 2014. 10:57 AM | 1 Like Like |Link to Comment
  • Kinder Morgan: The Worm Has Definitely Turned [View article]

    Good points.

    I have owned & been acquiring KMP since 1999 & gotten all my investment back, & then some.

    Tax basis is zero, so to sell means max cap gains tax. Current distribution is very very nice indeed. Bruce is correct that other MLPs have performed much better the last few years, and may have better cap gains prospects because of the lack of a GP. But the future has a way of being uncertain.

    Like Bruce I took note when EPD took out their GP (I was acquiring it at the time), and have been further buys along the way, to the point, with appreciation, it is my largest holding. Though I felt it was a good investment- I bought it 14 times- I had no idea it would do as well as it has.

    I'm not buying more EPD here but instead have been buying KMR, KiMI, and long dated options on KMI because I thought they were good value.
    KMR in my view is better now than KMP as it sells at a discount to KMP and owns equivalent assets, no k1's, and has a higher yield. There is an argument that KMR is a way of "self funding" for the pipeline Co that may partially offset the payments KMP makes to KMI. Also investors in KMI don't mind so much the GP rake off as they ARE the GP.

    The KMP distributions have grown nicely and form a fair chunk of my investment income. I don't own any bonds so for me KMP is throwing off bond-like income, and with a zero tax basis I have no incentive to sell.

    And since I believe the assets in place produce a relatively secure (& growing) income (unlike bonds) there is no reason to sell anyway.
    Jun 5, 2014. 12:44 PM | 3 Likes Like |Link to Comment
  • 3 Reasons The Current Equities Market Is Exhausted [View article]
    The market makes the majority of its gains in a relatively few days a year.

    Jumping in & out is not advised.

    Obviously one is cautious when new highs are being made, and buying when blood is in the streets is much safer.

    Buy value, don't get excited.

    Have a sandwich, glass of milk.
    May 31, 2014. 10:38 AM | 1 Like Like |Link to Comment
  • Time To Sell Enterprise Products [View article]
    Re: selling EPD, after a substantial gain, and a greatly lesser tax basis, one would have to weigh how much he would be left with after taxes on the sale, and what a likely return on that might be, versus keeping EPD and collecting the future distributions, which are pretty assured and increasing somewhat, given that the future capital gains are likely to be less robust than in the past.

    Whether you concur with me or not on the above, I think you will agree that it was a very long sentence.

    EPD is my largest holding as well, and I'm holding on, FWIW.
    May 30, 2014. 03:41 PM | Likes Like |Link to Comment
  • If I Were Starting All Over Again [View article]
    I wish to applaud the author.

    It is his decision to make and his life to live and he is happy with it. It is not for us to comment, other than to congratulate him for finding a purpose and sticking to it.

    I say Bravo!
    May 21, 2014. 05:50 AM | 2 Likes Like |Link to Comment
  • Kinder Morgan: Rich Kinder Backs Up The Truck [View article]
    Since Kinder already has $7.5 B in KMI he likely is putting his dividend income back in rather than the recent (small) amount indicating much of anything else.
    Even billionaires can have a relatively small amount of cash, like the rest of us.
    His incremental investment will return 5.2% and growing and he likes the valuation.
    May 13, 2014. 03:54 PM | 2 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    Excuse me, pardon me, but this discussion is like arguing about gravity, or plumbing.
    This is 5th grade math.
    Clear up compounding and tax efficiency along with the meaning of book value and you will have no confusions as to the effect a dividend has on the intrinsic value and long term price appreciation of a stock.
    May 9, 2014. 12:44 PM | 2 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    "You're confusing stock price with intrinsic value.."
    May 9, 2014. 12:39 PM | 1 Like Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    @ Frog
    Great comment, timeless view.
    May 9, 2014. 12:33 PM | 2 Likes Like |Link to Comment