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Old 07-12-2015, 05:32 PM   #41
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based on the discussion we had on dividends in another thread there is no such thing as getting paid to wait because you are getting a dividend.

as we said you can sell off a piece of a stock and have the same cash flow with the same effect. either the company gives you a piece of the share price or you can sell a piece of the share without the reduction of a dividend . it is the same thing and you are just as down.

That is not true with preferred stocks in which I was inferring but didn't state . They trade under different variables as you definitely know. No they are not a panacea for investing excellence, but they fit my investing emotional criteria.
But we have discussed this before as you mentioned in a long ago post you would gladly take my money and give me 7% annually in return, so this is not "your cup of investing tea". And I should also state I was willing to do this provided I had investment grade rating backing it!


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Old 07-12-2015, 05:35 PM   #42
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oooh okay , you had not said you were referring to preferred stock.
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silly question re: dividends
Old 07-12-2015, 05:48 PM   #43
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silly question re: dividends

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Originally Posted by mathjak107 View Post
oooh okay , you had not said you were referring to preferred stock.

My bad on that. I stated in post I couldn't buy equities for fear of selling low and mentioned 7%. I am not well versed in individual equities, but I doubt many kick out a 7% very safe dividend. In the cross post you mentioned, I should have clarified the stocks that were not moving ExD were also preferreds. My brokerage account says I am 100% invested in equities, but when I need to call them to buy a preferred stock that cannot be bought online, they route me to fixed income department. So who knows what they are.


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Old 07-12-2015, 06:44 PM   #44
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... But I cant put it past myself to buy high and sell low in equities. ...
But a more typical situation is that someone is say, 60/40 AA or 75/25 AA, and maybe a fairly conservative 3.5% WR. Something like SPY already kicks out a 2% div. And if you rebalance when AA is out of whack, you sell equities when they are high. In a market downturn, to rebalance your AA you sell fixed income when equities are low.

You aren't selling equities low and buying high. And you only make up the diff from your SPY divs plus fixed income divs, which isn't much. Why do people fixate on this myth of buy high and sell low in equities ? It doesn't work that way.

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Old 07-12-2015, 07:17 PM   #45
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But a more typical situation is that someone is say, 60/40 AA or 75/25 AA, and maybe a fairly conservative 3.5% WR. Something like SPY already kicks out a 2% div. And if you rebalance when AA is out of whack, you sell equities when they are high. In a market downturn, to rebalance your AA you sell fixed income when equities are low.



You aren't selling equities low and buying high. And you only make up the diff from your SPY divs plus fixed income divs, which isn't much. Why do people fixate on this myth of buy high and sell low in equities ? It doesn't work that way.



-ERD50

I dont think its a complete myth to people without a systematic plan. (Not individuals such as yourself or others here). They buy when the market is good and when it drops they reach a point where they cant stand it anymore and sell. Invariably probably at the worst possible time. Especially when looking at individual securities. Now I own some Total Stock and International, but no individual regular equities. I don't even pay attention to it as it is about 25% of my money. But I wouldn't be surprised if I became a nervous nellie and sold if I had individual stocks thinking it was dropping more. And of course it wouldn't, and head back up.
That is why I prefer investing for safe higher income in preferreds. If they drop I get an even better investing yield on my reinvesting of divvies and monthly contributions.
If I had a huge portfolio and had to live off of it, I wouldn't invest the way I do. I leave proper investment strategies to my pension fund manager. I am just investing this way to someway keep me in the game. Over a period of 20 years, I believe this will net me more money than just having it all in IBonds or CDs which is where it would be if it wasn't in preferred stocks.


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Old 07-12-2015, 07:36 PM   #46
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I dont think its a complete myth to people without a systematic plan. (Not individuals such as yourself or others here). They buy when the market is good and when it drops they reach a point where they cant stand it anymore and sell. Invariably probably at the worst possible time. ...
Sure, but I thought the discussion was among the people on this forum.

Heck, we could turn every strategy on its head if we viewed it in terms of what some (most?) people might do, a few examples:

Get CC rewards and pay off the bill each month? - But 'people' won't pay it off and get charged high interest rates!

Keep the mortgage and invest the rest? - But people will just spend it, they won't invest!

Don't buy whole life insurance, buy term for the amount and time you'll need it and invest the rest? - But people will just spend it, they won't invest!

Delay SS to 70 for the 'longevity insurance'? - But people don't have enough saved to make it to 70 w/o SS!

and so on.

-ERD50
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Old 07-12-2015, 07:48 PM   #47
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Sure, but I thought the discussion was among the people on this forum.



Heck, we could turn every strategy on its head if we viewed it in terms of what some (most?) people might do, a few examples:



Get CC rewards and pay off the bill each month? - But 'people' won't pay it off and get charged high interest rates!



Keep the mortgage and invest the rest? - But people will just spend it, they won't invest!



Don't buy whole life insurance, buy term for the amount and time you'll need it and invest the rest? - But people will just spend it, they won't invest!



Delay SS to 70 for the 'longevity insurance'? - But people don't have enough saved to make it to 70 w/o SS!



and so on.



-ERD50

But that is what we do here, or there wouldn't be much to talk about.
You replied to my post ERD, because you said buying low and selling high is a myth. I was just responding the way I believe I would react. I believe I very likely I would fall into that camp. And no that is not something I am proud of.
If we hit one of those 15 year bear markets I will look great. If we hit a late 70s interest rate market, I will get smoked but eventually recapture the money. But that is also based on assumed variables that may or may not happen. It boils down to what your personal tolerance is.


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Old 07-12-2015, 08:05 PM   #48
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From a cash flow perspective a dollar of dividends is the same as a dollar of realized gains... in fact, they are both taxed the same assuming the dividend is qualified and the gain is long term.

When a dividend is declared it is the declaration is $x per share for shareholders of record on a specified date.

In times of financial stress some companies curtail or cut back on dividends and those company actions would flow through to index investors.
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Old 07-12-2015, 08:19 PM   #49
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But that is what we do here, or there wouldn't be much to talk about.
You replied to my post ERD, because you said buying low and selling high is a myth. I was just responding the way I believe I would react. I believe I very likely I would fall into that camp. And no that is not something I am proud of.
If we hit one of those 15 year bear markets I will look great. If we hit a late 70s interest rate market, I will get smoked but eventually recapture the money. But that is also based on assumed variables that may or may not happen. It boils down to what your personal tolerance is. ...
OK, and I think it is smart to for one to recognize their limitations and act accordingly - sure (Spock speaking), it is smarter to 'get over it', but we are humans.

I don't have any problem with someone admitting they might freak out and sell at the bottom, they should act accordingly. But I get the impression that some people here are saying dividend payers are just 'better' overall, and I'm just not seeing it. Again, I don't think there's anything 'wrong' with a diversified holding of dividend payers (hmmm, but sometimes the dividend payers are concentrated in a few market segments, so diversification might suffer?), I just don't see the overall attraction.

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Old 07-12-2015, 08:30 PM   #50
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OK, and I think it is smart to for one to recognize their limitations and act accordingly - sure (Spock speaking), it is smarter to 'get over it', but we are humans.

I don't have any problem with someone admitting they might freak out and sell at the bottom, they should act accordingly. But I get the impression that some people here are saying dividend payers are just 'better' overall, and I'm just not seeing it. Again, I don't think there's anything 'wrong' with a diversified holding of dividend payers (hmmm, but sometimes the dividend payers are concentrated in a few market segments, so diversification might suffer?), I just don't see the overall attraction.

-ERD50
I agree. Why would anyone do anything this weird? I am going to check into detox and re-education this week. Thank you for pulling the scales from my eyes.
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Old 07-12-2015, 08:59 PM   #51
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OK, and I think it is smart to for one to recognize their limitations and act accordingly - sure (Spock speaking), it is smarter to 'get over it', but we are humans.



I don't have any problem with someone admitting they might freak out and sell at the bottom, they should act accordingly. But I get the impression that some people here are saying dividend payers are just 'better' overall, and I'm just not seeing it. Again, I don't think there's anything 'wrong' with a diversified holding of dividend payers (hmmm, but sometimes the dividend payers are concentrated in a few market segments, so diversification might suffer?), I just don't see the overall attraction.



-ERD50

I personally am agnostic on which is TRULY better. But there certainly are people who believe dividends are better. This issue closely nudges up to the "total return" vs. "income investing" debate. Neither side has convinced the other on the Morningstar forums and the debate has been going on for years.
Just as an example, I talked to my dad last week and mentioned one of his bigger preferred stocks dropped a bit. He responded... "Is there something going on that may effect the dividend"
I told him no, and he said "I don't care what the price of the stock is as I am never going to sell it, I just want my 6% dividend on time".
Right or wrong there has to be many that believe that and will do fine in their parameters of investing they set. But once again I am not suggesting it is a superior or even as good of method as the other.


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Old 07-12-2015, 09:09 PM   #52
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Anybody that compares Bernie Madoff to solid div payers needs to put on ignore.
Is there a way to put someone on ignore on the forum? LOL That comment was a low blow, just uncalled for. In fact it warrents a warning from a MOD.
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Old 07-12-2015, 09:21 PM   #53
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Anybody that compares Bernie Madoff to solid div payers needs to put on ignore.
Is there a way to put someone on ignore on the forum? LOL That comment was a low blow, just uncalled for. In fact it warrents a warning from a MOD.
Well, if you have't figured it out already (in which case you won't see this helpful advice ), click "User CP" above, and on the left, under 'Settings and Options" you will find "Edit Ignore List" (I'm signed in under the V1.0 format, it might be different for v2.0).

Now, my Bernie Madoff line was tongue in cheek, you should relax a bit, IMO. As I said later, it was just a way to point out that dividend payers are just returning some of your principal, which is also what Madoff did. Sorry you didn't appreciate the attempt at a little levity.

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Old 07-12-2015, 09:24 PM   #54
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It's not a matter of right or wrong.

It is a matter of the real-world investor trading off between structural and psychological risks to arrive at a portfolio that they are comfortable with. A dividend portfolio as the stock portion of a broad set of asset allocations may be slightly less efficient than the total-return portfolio designs, but it reduces the perceived risk seen by the real-world investor who prefers to see a realized revenue stream in their portfolio.

Not all of us can be flawless Austrian School actors, free of inefficient emotional and human responses, investing with nerves of steel and flawless analysis of all things financial. (I am, of course, but I recognize that I am not representative of all humanity. It's hard being as perfect as we are, isn't it?)


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Old 07-12-2015, 10:00 PM   #55
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... It's hard being as perfect as we are, isn't it?
Your posts do have a certain glowing aura about them.

If I recall correctly, in The Intelligent Investor, Benjamin Graham recommended that one limit stock holdings to those that had a solid history of paying dividends (for 20+ years, I think), on the theory that it proved management was disciplined and dedicated to providing a return for investors rather than pursuing their own frolics and detours. Other than that, I see no reason not to invest on a total return basis.
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Old 07-12-2015, 10:57 PM   #56
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Anybody that compares Bernie Madoff to solid div payers needs to put on ignore.
Is there a way to put someone on ignore on the forum? LOL That comment was a low blow, just uncalled for. In fact it warrents a warning from a MOD.
Couple of things: Just so you know, you can't put yourself "on ignore"--I tried it a couple of years ago and discovered it wasn't allowed. However, maybe this glitch has been fixed by now. Let me know.

As regarding a warning from a MOD dealing with Bernie Madoff and solid dividend payers--what would be the basis of the warning?
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Old 07-12-2015, 11:23 PM   #57
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Ah, my friend redduck, I remember you talked about the "self ignore" a while back. And I wondered what would happen if the forum software administrator allowed it. Imagine what would happen when you made a post. Maybe you could not even see what you typed as you composed the post. Or if you could compose it, the moment you hit "Post", your own post disappeared from your screen. You could never edit it (which I do mine all the time to fix typo and grammar errors). Nor could you have a dialog in any thread. Can you even see your personal control page? That can be really weird, like you are in a Twilight Zone. I think the forum software people should turn "self ignore" on, so we can see how it would be.

About getting a warning for putting Bernie Madoff in the same class as dividend paying stocks (I thought he did pay dividends until he stopped, and some dividend stocks behaved the same too, though to a lesser frequency), I will say that I proclaim to be a market timer all the time (even though I trade a lot less than some people here) just to be a provocateur. Yet, nobody ever sends me any "cease and desist" message. Very nice and tolerating mods indeed (despite what other people may say).
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Old 07-12-2015, 11:39 PM   #58
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My friend, NW-Bound,

Once again, you did a terrific editing job on your above post.
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Old 07-12-2015, 11:52 PM   #59
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Oh hi there! I am glad you have not put me on ignore, and were able to see my post so soon.

In my recent travel, I ran across this rock sculpture, which made me think of your avatar. Here's the photo which I have meant to share.

Again, if the mods were not so tolerant, they would delete this post for a topic drift (but I shall desist now).


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Old 07-13-2015, 03:18 AM   #60
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From a cash flow perspective a dollar of dividends is the same as a dollar of realized gains... in fact, they are both taxed the same assuming the dividend is qualified and the gain is long term.

When a dividend is declared it is the declaration is $x per share for shareholders of record on a specified date.

In times of financial stress some companies curtail or cut back on dividends and those company actions would flow through to index investors.
Dividends can also force a nasty tax situation on you at times .

this being my first retirement year we are pretty much funding it with cash we set a side. since i am 62 i would have loved a subsidy on medical insurance for a year or 2 but because the " forced " dividends put us over the limit we can't .
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