Total Return Strategy vs. Income and Dividend Strategy for a Nestegg

[Coolius]

The key is to deftly time market when value dividend payers are in, then switch to growth at appropriate time, sell out when market is about to swoon, then max out when market bottoms out. If you can do those four simple things getting maximum market returns is actually very simple to do.


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Mulligan, your words can be very succinctly summed up in the well known phrase : " Buy low, sell high "

 

[Mulligan]

Mulligan, your words can be very succinctly summed up in the well known phrase : " Buy low, sell high "

Even though you have made it an even simpler plan to follow than mine, I still cant even do that correctly, so I have quit trying.... Mostly....


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[mathjak107]

But if this extra buying occurred every quarter in significant numbers/amounts, it would be a growth stock as well!

Again (and again) - the dividends are not 'magic money' that appears from fairies and is sprinkled on investors - it comes out of the underlying value of the stock price. If paying dividends was the sign of a 'better than average' stock, there would be active mutual funds with managers picking these fairy dust emitting stocks, and routinely outperforming the market on a total return basis (allowing for any risk adjustments - there may be a volatility versus performance benefit to dividend payers, but we didn't see it in DVY in 2008 ).

But we don't see that, do we? Why not? Maybe because the advantage does not exist?

-ERD50

it isn't even a question of whether it recovers the dividend or not . the fact is what ever percentage it went up would be on less dollars then the night before if you didn't reinvest those dividends .

if you do reinvest the dividends then whatever compounding up or down happens would be on the same dollars you had the night before the dividend .

 

[marko]

That still doesn't mean change what you believe in. If your investment style is sound and you believe in it, you will be better off as you wont bail at the wrong time from lack of conviction. My style is not conventional but it is relatively conservative and safe and I am comfortable with it.


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Thanks for the support Mulligan.

One of my personal weaknesses in life has been a tendency to say things in broad, hyperbolic brush strokes, assuming that everyone knows what I'm trying to say. It has failed me throughout my work career and life in general.

Too many times on this forum I've found myself replying with "you've missed my point!" only later realizing that my point was not clearly stated from the beginning.

When I originally re-initiated this thread my simple point (poorly stated) was this:

Considering that the market had tanked so badly in the first few weeks of January, I was happy that I had banked my year-end dividends in a safe spot and not forced to sell equities at the current market prices (now well below the ex-dividend price) to cover my annual expenses; by January I'm running out of cash. Had I reinvested and then needed cash, selling at a much lower price (below ex-div) would be a bad thing.

This was based upon my false belief that true TR investors must sell equities at whatever price is current when cash is needed.

Yes, the dividend paid will lower the NAV to equilibrium but the market has further dropped the NAVs a whole lot further downward. I viewed having those dividends not losing value while the equity itself fell in January as a good thing. Again this was based upon a false premise.

So......apologies to all you good folks for all the digital ink spent on my 1) poor communications and 2) my hardheadedness.

I think it's time for me to visit "what did you do today" or something less volatile.

M

 

[Mulligan]

Thanks for the support Mulligan.

One of my personal weaknesses in life has been a tendency to say things in broad, hyperbolic brush strokes, assuming that everyone knows what I'm trying to say. It has failed me throughout my work career and life in general.

Too many times on this forum I've found myself replying with "you've missed my point!" only later realizing that my point was not clearly stated from the beginning.

When I originally re-initiated this thread my simple point (poorly stated) was this:

Considering that the market had tanked so badly in the first few weeks of January, I was happy that I had banked my year-end dividends in a safe spot and not forced to sell equities at the current market prices (now well below the ex-dividend price) to cover my annual expenses; by January I'm running out of cash. Had I reinvested and then needed cash, selling at a much lower price (below ex-div) would be a bad thing.

This was based upon my false belief that true TR investors must sell equities at whatever price is current when cash is needed.

Yes, the dividend paid will lower the NAV to equilibrium but the market has further dropped the NAVs a whole lot further downward. I viewed having those dividends not losing value while the equity itself fell in January as a good thing. Again this was based upon a false premise.

So......apologies to all you good folks for all the digital ink spent on my 1) poor communications and 2) my hardheadedness.

I think it's time for me to visit "what did you do today" or something less volatile.

M

Nah, stay here and have some fun! I was reading in another forum and research basically came up with 3 reasons for investing in dividend securities. And yes they were all psychological only in nature. But they still acknowledged that these were important reasons for some individual investors.


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