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Old 01-23-2018, 07:48 AM   #121
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Iíve been thinking about this. While intellectually I understand that lots of evidence says that a total return strategy is superior to dividend payers, Iím not clear on how the execution really works in practicality. If your portfolio is throwing off substantial dividend income, there is no need to sell stocks at a loss during downturns. If you donít hold dividend payers and focus on growth stocks that donít pay dividends, presumably you will be selling stocks at losses during downturns. While on average over a long period of time, evidence suggests the total return strategy is superior, would you need to hold perhaps a larger percentage of your overall portfolio in cash/bonds to avoid selling equities during a downturn, thereby permanently locking in losses? Or is it just something one accepts as a fact of life that equities will periodically be sold at losses?

If one prefers not to lock in losses by selling during downturns, it seems that either one would have to hold more cash/bonds than one might otherwise do to avoid selling depressed equities during downturns, or dividend paying stocks could be an alternative to increasing the cash/bond allocation. While dividend payers underperform growth stocks, they donít underperform cash/bonds.

Are there flaws in my thinking here?
In practicality, assuming you have a diversified portfolio (anything between 70/30 and 30/70) you would sell FI, not stocks, in a big downturn. Selling bonds/cash would be to fund your WR and to purchase stocks to rebalance.

The scenario you describe is for someone 100% equities. If you are still in the accumulation phase you would ride it out and continue to buy low. If you are 100% stock in the decumulation phase and living off your portfolio you have bigger risk issues than divs/no divs.
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Old 01-23-2018, 08:53 AM   #122
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Originally Posted by Scuba View Post
I’ve been thinking about this. While intellectually I understand that lots of evidence says that a total return strategy is superior to dividend payers, ...
Let's pause here. I personally never said that one 'strategy' was superior over another. All the charts I posted seemed to show that the funds focused on div-payers performed pretty much the same as the broad market. I'm saying that assigning some great benefits to the div-payer sector doesn't seem to be backed by the evidence, or analysis.

And I don't consider "total return" a "strategy", it's arithmetic. Look at the earlier examples, $48 + $2 = $50.

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... I’m not clear on how the execution really works in practicality. If your portfolio is throwing off substantial dividend income, there is no need to sell stocks at a loss during downturns. ....
Go back to the excerpts from my post #87. A dividend is essentially the same as the company "selling off" themselves. If they are $50 before their ex-div date, provide a $2 div, and are then $48 ex-div, they essentially "sold" $2 of their stock (compared to the alternative - retaining it as part of their value). If they did not pay a div, and you needed $2, they would have been @ $50, and you could sell 2/50ths of your holdings if/when you needed them, and you control how much, rather than letting the company determine if, when, and how much you would sell.

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If you don’t hold dividend payers and focus on growth stocks that don’t pay dividends, ...
I don't, I focus on the broad-based indexes, not any sector.

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presumably you will be selling stocks at losses during downturns. While on average over a long period of time, evidence suggests the total return strategy is superior, would you need to hold perhaps a larger percentage of your overall portfolio in cash/bonds to avoid selling equities during a downturn, thereby permanently locking in losses? Or is it just something one accepts as a fact of life that equities will periodically be sold at losses?
IN addition to the other good answers about having your AA (and typical index divs), you are again creating an illusion here - that div payer is also "selling" on a downturn. Remember, the $ either come from the stock or they are retained. There is no magic "fountain of dividends" that come from somewhere else - it's all income, it goes to divs or NAV - there is no other accounting.



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Old 01-23-2018, 09:09 AM   #123
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The way I look at it. When you buy the market, you also buy all the pets.com, Enrons, etc, while you buy the home depot's & Netflix's of the world. Some times just a cursory examination of the books of those company's will tell you that they are eventually going to zero. However, you own the market, so you are going to zero with them. ...
And yet, the studies show that the strategy of just buying the market seems to outperform most stock/sector pickers over time. So while it seems obvious we don't want 'losers' in our portfolio, no one seems to be able to reliably identify the future losers. Some losers do turn around, some winners go on to fail.

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Dividends are harder to fake (or talk up) then growth. You need to have a cash flow to pay them out, and there are only two ways to get that cash, through profits or debt. Both of which can be monitored.
Even if we accept that as true, does it matter? Some companies that were paying high dividends went on to cut their divs and fail. Some average-div payers also failed. As I pointed out in the earlier posts, the div isn't "magic money", it's just part of their overall value.

Again, if the divs were such a great indicator, why don't my charts show that?

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This past year is the first time I've gotten serious about it. Prior to that I've concentrated on rentals, and used a dartboard to buy individual stocks.

As a result, I'm running several experiments in investing marketable securities. I'm running money through Thomas Partners with Chuck, some ETF's suggested by this group, and my own picks. I'm talking with two additional % asset advisers, and a fee only adviser, just to see what if anything they might be able to bring to the table.

This, along with the many bond threads, have been a good discussion, and it is helping me to learn about the marketable securities world.
Nothing funny about the dartboard, that's pretty much what a Total Market Index fund is, they just have lots of darts!

I don't think your experiment will tell you much, too small a sample size, and not enough exposure to various market conditions. Rather than re-invent the wheel, why not just look at the studies that have been done, with a far broader data base than you can put together. Do you really think you can pick out something that 85% of active investors cannot? And do it for the next period as well?

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Old 01-23-2018, 09:16 AM   #124
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This is from Seeking Alpha: The author is Part-Time Investor:
note: redduck is NOT Part-Time Investor

"To make the comparisons accurate, I run three paper portfolios made up of each of the three indices above. For each of these portfolios, whenever I have cash contributions put into my real-life account, I also put the same amount into the paper portfolios and "buy" more shares of the individual indices. And when SPY, SDY or VDIGX pays a dividend, it gets reinvested into more paper shares, just like I reinvest my real-life dividends in my portfolio. As far as I can tell, this is the most accurate way I have to compare their performances.

This year the returns of my(Part-Time Investor) benchmarks were:
SPY - 21.15%
SDY - 12.21%
VDIGX - 18.84%
As a reminder my return was 21.13%
Over the life of the portfolio, which is now a full 5 years, my portfolio continues to beat the S&P and the other benchmarks by a significant amount.
Average Annual Return over the past 5 years (as calculated using the XIRR function on Excel).
KISS - 16.06% (This is Part-Time Investor's portfolio)
SPY (S&P ETF) - 14.70%
SDY (dividend ETF) - 13.55%
VDIGX (Dividend Mutual Fund) - 12.77%"

Part-Time Investor displays his portfolio along with his buys/sells on Seeking Alpha four times a year.
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Old 01-23-2018, 11:20 AM   #125
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Let's pause here. I personally never said that one 'strategy' was superior over another. All the charts I posted seemed to show that the funds focused on div-payers performed pretty much the same as the broad market. I'm saying that assigning some great benefits to the div-payer sector doesn't seem to be backed by the evidence, or analysis.

And I don't consider "total return" a "strategy", it's arithmetic. Look at the earlier examples, $48 + $2 = $50.



Go back to the excerpts from my post #87. A dividend is essentially the same as the company "selling off" themselves. If they are $50 before their ex-div date, provide a $2 div, and are then $48 ex-div, they essentially "sold" $2 of their stock (compared to the alternative - retaining it as part of their value). If they did not pay a div, and you needed $2, they would have been @ $50, and you could sell 2/50ths of your holdings if/when you needed them, and you control how much, rather than letting the company determine if, when, and how much you would sell.

I don't, I focus on the broad-based indexes, not any sector.

IN addition to the other good answers about having your AA (and typical index divs), you are again creating an illusion here - that div payer is also "selling" on a downturn. Remember, the $ either come from the stock or they are retained. There is no magic "fountain of dividends" that come from somewhere else - it's all income, it goes to divs or NAV - there is no other accounting.



-ERD50


I understand in theory, but in practice if one has a portfolio of dividend paying stocks plus some allocation to cash & FI, presumably one can ride out most downturns without taking a real loss. If I had fewer dividends, I think Iíd want to have a higher allocation to cash & FI to reduce the risk of incurring real losses. Even if the equity part of the portfolio performed better with a total return strategy, my overall return would be dragged down by holding more cash & FI. So overall, my returns are enhanced by having dividend payers because it enables me to have a more aggressive asset allocation than I otherwise would.

If this thinking is flawed, please help me understand why.
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Old 01-23-2018, 12:16 PM   #126
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Old 01-23-2018, 12:41 PM   #127
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I understand in theory, but in practice if one has a portfolio of dividend paying stocks plus some allocation to cash & FI, presumably one can ride out most downturns without taking a real loss. If I had fewer dividends, I think Iíd want to have a higher allocation to cash & FI to reduce the risk of incurring real losses. Even if the equity part of the portfolio performed better with a total return strategy, my overall return would be dragged down by holding more cash & FI. So overall, my returns are enhanced by having dividend payers because it enables me to have a more aggressive asset allocation than I otherwise would.

If this thinking is flawed, please help me understand why.
Yes, I think it is flawed - your example of "in practice" doesn't match the actual, factual history I've reported, or an analysis of the situation. It ios a false construct. I've done the analysis with/without withdrawals and with/without bonds, and the story doesn't change (which is why I didn't post them, but feel free to replicate my 'experiment').

I've already explained it - there really is no difference between a company paying a dividend, and me deciding to sell off some of my shares to provide the same $.

Wherever the market is, let's say at a trough - if that $50 company makes a $2 div payment (4%), and drops to $48 ex-div, there is no material difference between that and selling off 4% of the investment in that $50 company. In either case, you have $2 cash and a $48 stock.

Do you see - it's really as if the company sold off $2 worth. If it wasn't, their stock would still be at $50. Any way you slice it, $50-$2 = $48, whether I sell off the $2 worth, or the company does it. It was a pert of the company's value, until they gave it (sold it) to you.

And if I'm really selling at a loss - I'll pay no taxes on my $2, while you might pay 15%. But we still own the same $ worth of stock.

The next argument presented by the high-div crowd is that their stock won't drop as much, bla-bla-bla (despite them claiming they won't sell them anyhow and don't care?). But they do. If they didn't, that would mean that the divs plus NAV would show a higher total return than the broad-market index. If you can show me that, I'd love to buy into it - that's what I'm looking for. But I don't see it - do you?

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Old 01-23-2018, 07:13 PM   #128
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Iím not trying to make an argument. What Iím trying to do is think about how the execution of a total return approach would work for me vs a dividend income approach. With dividends, I just sit back and collect the income, which for me is taxable, but at a low rate. And my principal is fully intact.

If I were to replace my dividend paying stocks with a total market fund, to have the same lifestyle, any gap in cash flow net of tax would need to be made up by selling stocks, correct? And in a down market, Iíd have to lock in losses that would only be on paper if I didnít sell.

Of course I could avoid these losses by carrying a higher cash/fixed income amount and drawing on that during downturns instead. However my overall portfolio returns would likely be lower in this case.

Iím not aware of any charts or graphs showing this, nor do I want to take the time to try to ďproveĒ this. Itís logical to me and Iím not sure what if anything Iím missing.
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Old 01-23-2018, 07:50 PM   #129
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Excellent points ERD. In the comparisons of Divs vs TV, you are correct about future predictably in the general ďknow one knowsĒ sense. But (and Iím not a div person per se, though I am weighted in utilities) I think that most Div preferred investors would argue that most aristocrat div stocks have less volitility and less chance of a total meltdown compared to new kids on the block general funds. GE is a prime example of how wrong that can be. And most of the Div people here seem to claim a ďbuy it and leave it if it is maintaining or growingĒ position, and prefer the automatic quarterly influx. The granularity at that level is more comfortable. Charts (especially historical) never show the whole picture. In hindsight, many stocks appear far more sure footed and ďhow could I have missed thatĒ average performance. But on a live granular experience they are often far from that. Too much information updates hourly can lead to a totally wrong representation. I have not seen, but suspect, that a comparison of noble div paying stocks volatility to index volatility, the extremes are far less for the Div payers, regardless of the actual NV and performance.

Iím not a good investor. But compared to most people I know, Iím a freaking genius, ( not here by any stretch) only because my returns during this bull have been on the low side of what is typical here, like 16% overall per year the last 2 years. 2015 stunk (about 5%), but 2013 & 14 were stellar as well. The difference is I keep pouring in money (still working), with a general long term mindset and stay in. We all know people that got out in 2012 because ď the crash is imminent ď mentality, and never got back in. I can easily show that had I put the vast majority in an S&P index for the last 10 years, I would be well ahead. Instead, I take some educated guesses and end up with some vastly better than and some vastly lower than the S&P with the average being under.

I know plenty of bright, intelligent people at work that are financial morons. I have to constantly watch what I say and keep my thoughts to myself unless asked. I know 2 different engineers that never even took the 3/6 401k match because they knew they could do better investing outside the 401k, yet actually never got around to doing just that, or lost much of it (real estate, sure things etc) . They are both back working after retiring because of that one simple decision. And I know many more that put everything always in to company stock, never considered a safe move. In our case, that actually was the best performer of all the funds if one looks at the last 25 years. I did the dutifully diversified thing and ended up with an overall lower return vs them.

I would venture to say that whatever keeps you invested and not panicking or selling at the wrong time is the best choice. There is less selling by the Div crowd, so that alone could be the performance edge vs them only looking at Total value.
Excellent post, and I particularly like your closing paragraph.
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Old 01-23-2018, 08:01 PM   #130
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... What Iím trying to do is think about how the execution of a total return approach would work for me vs a dividend income approach. ...

Iím not aware of any charts or graphs showing this, nor do I want to take the time to try to ďproveĒ this. Itís logical to me and Iím not sure what if anything Iím missing.
I don't know what more to say. You say you want to learn how this works, but you are making some false assumptions, yet don't want to use charts and graphs to prove anything?

Sometimes things appear logical on the surface, or maybe even after digging a bit, but don't hold up under further scrutiny. It happens to me, and it is always a head-scratcher until the light comes on.

No offense, and of course you can do as you please (and I've never 'objected' to anyone deciding to use high-div payers, and they'll probably do fine, I only object to them assigning false attributes to them), but that comes across as "I've made up my mind, don't confuse me with the facts"?


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... If I were to replace my dividend paying stocks with a total market fund, to have the same lifestyle, any gap in cash flow net of tax would need to be made up by selling stocks, correct? And in a down market, Iíd have to lock in losses that would only be on paper if I didnít sell. ...
If you really want to learn, go back to my $48 + $2 = $50 thought process. There is no meaningful difference between you selling $2 worth of the stock, and the company "selling" you a $2 dividend, which comes out of their stock price. It's not coincidence that they refer to it as "buying the dividend" You buy it and they sell it.

Until you understand this, you will be stuck in a "but, but, but, with a low div portfolio I'm selling" non-helpful, false paradigm.

And I already did the work for you (for me actually) - review post #49. I added 4% inflation adjusted withdrawals, and the charts show that VTI (Total Market) still beat the high div payer funds/ETFs - even with the requirement to sell to make the withdrawals during the monster 2008-2009 drop. Isn't that the 'proof' you are looking for (or the best we can do with an unknown future)? Selling even into this historic downturn didn't hurt VTI, and the divs didn't help the high-div-payer funds.

http://www.early-retirement.org/foru...ml#post2000116

It's all there. If someone can show where I'm going off the rails (and maybe I am?), rather than just say that they believe div-payers have these powers, I'm all eyes & ears.

Hope that helps, I think I'm out explanations and examples.

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Old 01-23-2018, 08:05 PM   #131
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I would venture to say that whatever keeps you invested and not panicking or selling at the wrong time is the best choice. There is less selling by the Div crowd, so that alone could be the performance edge vs them only looking at Total value.
Wow. This is an excellent insight.

I'll assume there is "less selling by the Div crowd" but don't know of any proof. Anecdotally I sell less often because with dividends I'm in the 'what problem am I trying to fix?' mode.

Still an excellent point IMO
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Old 01-23-2018, 08:21 PM   #132
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Quote:
Originally Posted by Perryinva
I would venture to say that whatever keeps you invested and not panicking or selling at the wrong time is the best choice. There is less selling by the Div crowd, so that alone could be the performance edge vs them only looking at Total value.
Excellent post, and I particularly like your closing paragraph.
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Wow. This is an excellent insight.

I'll assume there is "less selling by the Div crowd" but don't know of any proof. Anecdotally I sell less often because with dividends I'm in the 'what problem am I trying to fix?' mode.

Still an excellent point IMO
Except, it's an illusion. From the charts I posted, there is no need to sell off any more value from the broad-index than there is from the high-div payers.

I could understand the point if I were saying ignore volatility, and pay attention only to total return, but I'm not. I think it is perfectly rational to trade return for volatility, and that is exactly why very few people here are 100% stocks (which is also fine if you understand and accept the tradeoffs).

But the studies I have done show little difference in the volatility of the value of either portfolio. So why should this give anyone 'comfort'?

Or allow me to restate that in the positive. If the high-div funds did show reduced volatility with lower returns, I'd see it as a choice and little to discuss. No different to me than someone who decides a 50/50 AA is more suitable for them than a 70/30 AA, because they are willing to trade a likely lower total return for likely lower volatility. But we aren't seeing reduced volatility with these div-payers, so what's the point in moving away from the total market? People seem to be deceiving themselves.

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Old 01-23-2018, 08:30 PM   #133
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I alluded to this in one of my earlier posts, but it bears repeating. Two yeras ago, all the forecasts were for slow growth, maybe 6% max. With this low growth, I decided a TR approach was too risky for me. Would my portfolio actually outlast my 30-35 year drawdown period, considering the corrections and crashes we would experience during that time. This is what drove me to create a DGI portfolio which is designed to provide the needed cash flow without needing to sell any stocks. My forecasts show my relatively small cash cushion will last until just a few months prior to my FRA for SSA, because it should be replenished with dividends every year.

So this moves me to ask what growth rate you're planning for your TR portfolio. A backtest, even since the Great Recession will include some pretty fabulous growth rates. Can those still be expected? I no longer pay attention to forecasters, because my portfolio should be fine even with no growth. What growth is expected, and what growth is the minimum needed for your portfolio to outlive you?
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Old 01-23-2018, 09:42 PM   #134
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A dividend is essentially the same as the company "selling off" themselves.
You've said that before, and I bit my tongue. This thread seems to ignore the fact that some companies are simply not in the position to reinvest profits. Let's take a utility, for example. They have their "patch" and pay their people to negotiate rates with the utilities commission. They keep things running and put in a new power pole now and then. They might be looking for geography to expand into, but in the mean time, they're making money and that needs to go somewhere. None of the company assets are being sold-off so that the stock holders get a dividend! These companies have book values that hold over decades. Ok, I'm done.
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Old 01-23-2018, 10:19 PM   #135
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You've said that before, and I bit my tongue. This thread seems to ignore the fact that some companies are simply not in the position to reinvest profits. Let's take a utility, for example. They have their "patch" and pay their people to negotiate rates with the utilities commission. They keep things running and put in a new power pole now and then. They might be looking for geography to expand into, but in the mean time, they're making money and that needs to go somewhere. None of the company assets are being sold-off so that the stock holders get a dividend! These companies have book values that hold over decades. Ok, I'm done.
Utilities are a special case, being regulated and such. But if they didn't have those restrictions which require them to distribute their income, they would retain it (there is no other choice, is there?). If it was retained, it would be reflected in their NAV in that case, no? If not, where would it go? So it's the same thing.

Isn't the cash they collect from their customers an "asset"? So when they distribute it, it is the same as "selling it" (like I said earlier, it's why they call it "buying a dividend", for every buyer there is a seller, right?).

If it's not, please enlighten me, I just don't see it.

I've never researched Utility sector funds, I'm not really interested in sector picks, I like the Total Market. I would imagine utilities tend to act more like bonds. So I'm probably fine with Bonds and whatever utilities are in a Total Market fund.

You don't have to be done, I'd appreciate you filling me in if that doesn't square.

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Old 01-23-2018, 10:27 PM   #136
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I don't know what more to say. You say you want to learn how this works, but you are making some false assumptions, yet don't want to use charts and graphs to prove anything?

Sometimes things appear logical on the surface, or maybe even after digging a bit, but don't hold up under further scrutiny. It happens to me, and it is always a head-scratcher until the light comes on.

No offense, and of course you can do as you please (and I've never 'objected' to anyone deciding to use high-div payers, and they'll probably do fine, I only object to them assigning false attributes to them), but that comes across as "I've made up my mind, don't confuse me with the facts"?




If you really want to learn, go back to my $48 + $2 = $50 thought process. There is no meaningful difference between you selling $2 worth of the stock, and the company "selling" you a $2 dividend, which comes out of their stock price. It's not coincidence that they refer to it as "buying the dividend" You buy it and they sell it.

Until you understand this, you will be stuck in a "but, but, but, with a low div portfolio I'm selling" non-helpful, false paradigm.

And I already did the work for you (for me actually) - review post #49. I added 4% inflation adjusted withdrawals, and the charts show that VTI (Total Market) still beat the high div payer funds/ETFs - even with the requirement to sell to make the withdrawals during the monster 2008-2009 drop. Isn't that the 'proof' you are looking for (or the best we can do with an unknown future)? Selling even into this historic downturn didn't hurt VTI, and the divs didn't help the high-div-payer funds.

http://www.early-retirement.org/foru...ml#post2000116

It's all there. If someone can show where I'm going off the rails (and maybe I am?), rather than just say that they believe div-payers have these powers, I'm all eyes & ears.

Hope that helps, I think I'm out explanations and examples.

-ERD50


What isnít gelling for me is that I believe there is a difference between my selling shares of a stock and locking in a permanent loss, vs a company ďsellingĒ me a dividend which provides me with cash flow and a temporary on paper loss. I donít get too concerned about paper losses. Cash is king, at least for me.
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Old 01-23-2018, 10:55 PM   #137
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I alluded to this in one of my earlier posts, but it bears repeating. Two years ago, all the forecasts were for slow growth, maybe 6% max. ...
As you say later, forget about forecasts, they are not useful.

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... With this low growth, I decided a TR approach was too risky for me. ...
Again, Total Return is not an "approach". It is the way value is measured. It is arithmetic.

You can call focusing on high-div payers an "approach", or a Total Market portfolio an "approach", but Total Return is accounting.

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Originally Posted by Bruceski44 View Post
... Would my portfolio actually outlast my 30-35 year drawdown period, considering the corrections and crashes we would experience during that time. This is what drove me to create a DGI portfolio ...
And as I've shown, there is no indication/evidence that a "DGI" (Dividend Growth..Investing?) portfolio holds it's value any better than the Total Market.

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Originally Posted by Bruceski44 View Post
... This is what drove me to create a DGI portfolio which is designed to provide the needed cash flow without needing to sell any stocks. ...
And I don't think you've ever shown me why this is important enough to invest in a market sector versus the Total Market. And as I've pointed out, it could be a disadvantage tax-wise.

Sure, if a DGI portfolio kicks off the 4% divs you want, and VTI kicks off 2%, you need to sell to make up that 2%. So you can do that once a year. Please don't repeat your fear of selling in a down market - the charts showed that wasn't an issue even in the 2008-2009 meltdown.

Bottom line, the market held its value even with the selling. Because those DGI are not magic, the extra divs came out of their NAV, and that's a wash. If we start with $1M and after X years of 4% withdraws, we both end up with $800K, what difference does it make where we got our income from?

After all the examples and explanations, I'm not sure why this is not getting through. One explanation is that I'm 100% wrong - but then why has no one shown me where I am wrong?


Quote:
Originally Posted by Bruceski44 View Post
... So this moves me to ask what growth rate you're planning for your TR portfolio. A backtest, even since the Great Recession will include some pretty fabulous growth rates. Can those still be expected?...
I don't look at it in terms of expectations. Since neither of us trusts forecasts, how can I have expectations? That makes no sense to me. So I've prepared for the worst of the worst in our history, and what comes will come. All I'll be able to say is, that should put me far ahead of average, and unlikely to need assistance from anyone (much more likely to leave an inheritance). So I'm at peace with that.

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Originally Posted by Bruceski44 View Post
... I no longer pay attention to forecasters, because my portfolio should be fine even with no growth. What growth is expected, and what growth is the minimum needed for your portfolio to outlive you?
And this and the above gets to the crux of this. Since I see no evidence that a DGI approach has provided any more security to a portfolio than the Total Market approach, so why ask this question? Div payers do go bust, divs do get cut, or don't keep up with inflation. How is questioning the growth of the Total Market (which isn't "handicapped by paying out as much in divs), any different than me questioning if your companies can continue to pay divs? For all we know, a long record just means they are due for a crash! No, I'm not saying that's true, just that you can't know anymore about the security of the companies paying those divs, than I do about the Total Market. Again, some evidence please.

There is no difference between the growth required to pay 2% divs and 2% sales, and the growth required to support 4% divs. Do you still not see that the divs would contribute to NAV if they were retained? In one case you see it as "growth", in the div-payer case, some of that "growth" is distributed each year. Show me the difference.

-ERD50
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Old 01-23-2018, 11:07 PM   #138
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What isnít gelling for me is that I believe there is a difference between my selling shares of a stock and locking in a permanent loss, vs a company ďsellingĒ me a dividend which provides me with cash flow and a temporary on paper loss. I donít get too concerned about paper losses. Cash is king, at least for me.
Then why don't the charts I posted show a huge benefit for the "DGI" funds at any point? Not during the collapse, not after the collapse, not from beginning to end? What "paper loss" are you talking about? Those charts showed the values to be similar.

If your $50 stocks pays you a $2 div and drops to $48 (it will, plus/minus other market effects), and mine pays a $1 div (and drops to $49), and I make up $1 with sales, we both have a $48 investment. There is no difference, paper or otherwise, that I can see.

Regardless, paper losses turn into real losses if you hit an unexpected bind and need to sell.


I learned long ago that if I designed a circuit to provide 12V, and I'm only getting 9V, and I've checked my meter calibration, tried different meters, and different ways of measuring it, like an oscilloscope, to make sure I'm not missing an AC component something that is affecting the reading, and I keep getting 9V, it's time to question my design, not the result.

I can't understand why some people here keep saying that DGI provides this or that result, but we don't see it in the charts?

-ERD50
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Old 01-24-2018, 01:00 AM   #139
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Utilities are a special case, being regulated and such. But if they didn't have those restrictions which require them to distribute their income, they would retain it (there is no other choice, is there?). If it was retained, it would be reflected in their NAV in that case, no? If not, where would it go? So it's the same thing.

Isn't the cash they collect from their customers an "asset"? So when they distribute it, it is the same as "selling it" (like I said earlier, it's why they call it "buying a dividend", for every buyer there is a seller, right?).

If it's not, please enlighten me, I just don't see it.

I've never researched Utility sector funds, I'm not really interested in sector picks, I like the Total Market. I would imagine utilities tend to act more like bonds. So I'm probably fine with Bonds and whatever utilities are in a Total Market fund.

You don't have to be done, I'd appreciate you filling me in if that doesn't square.

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Old 01-24-2018, 01:33 AM   #140
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