Sanstar
Recycles dryer sheets
Thank you, Kevink for the Humbledollar link. Am really enjoying the articles and comments.
Why, at this price, and given my ability to withstand some market flux, is this so much worse than bonds?
But, mrfeh, that is my point - just using my one example, does the data on my one example support the broad assessment? Total return over three years on T vs same on pick-your-maturity bond?
Hmmm ...
I am trying to compare the way very boring dividend stocks are behaving vs bonds - now, versus 30 years ago - I recognize the topic is inflammatory, but just stating "Apples and oranges" doesn't get me to where it makes sense.
Not really a concern to a long-term investor. The steady rise in equities' value over 100+ years is about as sure a thing as there is in investing. There is no doubt that over the long term equities are the total return winner.Because total return is all that matters. And when it comes to equities, significant depreciation is a very real possibility.
OK - all good stuff.
BUT ... I know I am treading on hallowed ground, here. Solid stocks - ones that decrease during market resets at about the same rate as recent bond resets during those market drop have dividends 3-5X the bonds - with somewhat more volatility - and, discounting the upside volatility.
Just bought ATT at 29.15 ... at that it pays more than 7% ... not a high flyer and just using it as a specific case.
Why, at this price, and given my ability to withstand some market flux, is this so much worse than bonds?
pb4uski,
Sure, but I would need first to pick stocks that DON'T exhibit that kind of behavior, and then follow that stock to ensure nothing weird is happening. Now, I know ALL stocks could do that sort of thing, but there are many that never have been that volatile.
I'm just weirded out by such low bond returns - trying to make sure I am not missing something.
Hmmm ... but don't we chase yield when buying bonds? With CDs?
Again, this may sound irritating to some, but I still wonder why not look for higher "yield" in this manner?
pb4uski,
I'm just weirded out by such low bond returns - trying to make sure I am not missing something.
Hmmm ... but don't we chase yield when buying bonds? With CDs?...
I would think this largely applies to muni bond funds as well. If Vanguard today has a fund holding a bunch of bonds paying 5% it is more valuable given rates a current bond would go for.
.... but I still wonder why not look for higher "yield" in this manner?
There are a handful of large companies I'm familiar with that pay|paid decent dividends. Pointing out one loser again serves no purpose.Did that awhile back - got the "apples and oranges" answer - I'll keep looking for statistical scenarios of dull dividend stocks vs bonds.
If you buy bond funds, you may be somewhat oblivious to what is taking place in the bond market. I don't fault you or anyone else who takes this approach. However, if you look at the underlying bonds, there is real risk "today". The market is almost completely discounting risk at this time. This is being pushed forward by the Fed, providing demand where there really is not demand, and for those who want to remain in bonds (all the funds which continue to experience inflows), forces them to pay up and continue buying in to this overpriced bond bubble. Things are very different today than over the prior 10 years.
In my mind, it's not just about "waiting", it's about looking around and making a judgement about what is taking place. Artificial support is being applied. This is not what the Fed does or where it is supposed to operate. In the corporate bond market, you have plenty of zombie companies that should be out of business, but because money is so cheap to borrow and there is an entire market of yield chasers, they just keep borrowing playing a financial shell game. It very likely doesn't end well.
In any case, if you are comfortable holding bond funds, more power to you.
So, is the majority of thought is to drop the portfolio theory of maintaining 20-30% in bonds? If so, should you be 100% in stocks, or 20-30% in cash?
Agree. I look at AA, but when the SHTF my fixed income tranche starts to look like a bucket and I spend from there until things stabilize. We probably have enough in that bucket for a five-year ride. There will come a time to restore the AA.... My own point of view is to have enough in stable investments (cash, CD's, annuities, etc.) so that when the stock market takes a dive, you don't panic, sell at or near the bottom, never get back in, and lose all the long term benefits of stocks. ...
So, is the majority of thought is to drop the portfolio theory of maintaining 20-30% in bonds? If so, should you be 100% in stocks, or 20-30% in cash?