When you go to a medical doctor, you don't want an explanation of how the human circulatory system works, you just want your medicine and be on your way. Firstly, you wouldn't understand the doctor's explanation of the human circulatory system. Secondly, you wouldn't know how to apply the knowledge, even if you understood it.
But regardless, I'll start with the philosophical points of leveraged and hedged dividend growth. If there's any interest, I'll respond, but I doubt anybody gives a shit. Remember, these are not just ideas that stand alone... These ideas all have empirical evidence supporting them. I advise being careful about the ideas people talk about on this forum... They make sense, but have horrible empirical results. Yet these amateurs spout their bullshit as the Gospel truth, despite having done zero experimentation and having zero evidence.
The 7 point philosophy below can be easily understood by anybody.
1) Fundamental Dividend Growth Ability: Dynamic financial statement analysis and environmental scan, which determines a company’s fundamental dividend growth ability relative to benchmarks. Benchmarks lead to more reasonable criteria, which adjust in different economic climates.
Relative analysis works. Borrowing from another point, a 2% dividend yield may seem reasonable now. Over the course of 10 years, market rates might significantly increase, and 2% would not sufficiently discriminate between investment choices. Bench-marking dividend yield to the yield-to-maturity on the 10-Year T-Note or the average dividend yield on the S&P 500 would lead to more realistic expectations of current yield. Many factors effect dividend growth ability, the following are only a few:
A) Adequate and successful capital expenditures add significant value in the form of both total return and dividend income. Capex is a priority ahead of creditor obligations and dividend payments. In order to generate a return in a business, capex is a normal requirement. A company can increase short-term dividends by neglecting investment back into the company; however future dividends could be in jeopardy due to a depreciated business. It is difficult to analyze the adequacy and success of capital expenditures as an outsider. Current measures of capex on the statement of cash flows should be considered. In investing, and especially in capex, there is a certain amount of trust in management to make the right capex decisions. This trust in management can be earned based on historical financial results.
B) Legally speaking, creditors are in line before equity owners, so that can affect the use of capital for dividends. However, under certain circumstances, a wealth transfer from creditors to equity owners will prudently enhance dividend growth ability.
C) The high earnings qualities of certain companies add significant value in the form of both total return and dividend income. Financial shenanigans can artificially inflate earnings and deceive an investor into thinking there’s room for dividend growth. Skilled accounting can greatly reduce the risk of falling for shenanigans by performing an earnings quality analysis.
There are many land-mines in determining dividend growth ability and no quick and dirty method that can be used with fiduciary responsibility intact. For example, the financial statements could look great, but in the management discussion there may be a disclosure stating something such as, “all patents are expiring in one year,” or “66% of customers’ contracts expire and won’t be renewed.” Clearly, you cannot blankly make rules and rankings. One must have a refined business intuition and spend time in deep due-diligence to prudently make investment decisions.
2) Optimum Risk-to-Reward Profile: Highly synergistic effect on security selection, which compares a company’s risk-to-reward profile relative to the overall market and the effect on an overall portfolio. There are many ways to optimize portfolio performance, and although they make good sense, many techniques provide little to no empirical results. The key difference is the quality of the estimates of risk and reward, and the execution. There’s many ridiculous ways to estimate future rewards and just as many ridiculous ways to estimate risk. My measures of risk and reward accomplish great empirical results in the form of total return and dividend income.
3) Ability to Meet Creditors’ Obligations: Quality credit may allow economically beneficial transactions for equity owners in the form of borrowing capacity, less restrictive covenants, and low interest rates. A company with poor credit could not transfer wealth from creditors to equity owners in a prudent manner. Many poor credit companies have creditor covenants on their financials which limit a company’s ability to make lucrative dividend policy for equity owners. Lastly, solid credit may extend a life-line to companies in periods of great systemic risk.
4) Current Yield at Time of Purchase Greater Than the 10-Year T-Note Yield to Maturity: Although I do not seek high yields, the yield on the 10-Yr is a good benchmark for determining a reasonable yield. High yielders relative to the 10-Yr tend to be weeded out in the financial statement analysis.
5) No Dividend Decreases Within the Past One Year: Although historical dividend policy is not necessarily a good predictor of future dividend policy, I want management to show me they’re on board with the idea of at least maintaining dividends.
6) Using Leverage Can Be a Calculated Risk: The securities selected according to the philosophy above tend to be lesser-risked securities. A margin loan is a great tool to push investments into a more optimum point on the return-risk profile. I stress test the optimal amount of margin across several financial crises to determine the “point of no margin call” on a Reg T margin account.
7) Hedging is Necessary in a Boom and Bust Market: Markets have become more secure through regulation and more transparent through increased accounting quality. However, there are still enough booms and busts to make hedging a value added transaction. No hedge can realistically mitigate losses 100% of the time. In one day in 1987, the market sold-off 20%. In one week in 2008, the market sold-off 20%. It is virtually impossible to enter a hedge in time to fight those quick sell-offs. However, a successful hedge will allow a dividend growth investor to increase leverage and hold dividend payers, rather than sell them off to meet a margin call.
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I appreciate your article but would caution you about two things:
1. "nobody has any empirical results but me." Your statements indicate that nobody is able to do the kind of research that you do, and nobody has any real results except you. Of course, from what I can tell, your results are not real but rather backtested.
2. "nobody gives a sh**". Probably a wrong attitude to have on a forum where people sign up hoping to learn, grow, change, adapt. Possibly nobody gives a sh** about your desire to see people sign up at portfolio123 but I assure you, most people are here specifically because we do care to learn.
In other words, your attitude is somewhat demeaning to most intelligent thinking individuals. I would encourage you toward humility. You do not know it all, and could stand to learn from some of the professional investors in this community.
(06-26-2015, 05:22 PM)800peace Wrote: When you go to a medical doctor, you don't want an explanation of how the human circulatory system works, you just want your medicine and be on your way. Firstly, you wouldn't understand the doctor's explanation of the human circulatory system. Secondly, you wouldn't know how to apply the knowledge, even if you understood it.
But regardless, I'll start with the philosophical points of leveraged and hedged dividend growth. If there's any interest, I'll respond, but I doubt anybody gives a shit. Remember, these are not just ideas that stand alone... These ideas all have empirical evidence supporting them. I advise being careful about the ideas people talk about on this forum... They make sense, but have horrible empirical results. Yet these amateurs spout their bullshit as the Gospel truth, despite having done zero experimentation and having zero evidence.
The 7 point philosophy below can be easily understood by anybody.
1) Fundamental Dividend Growth Ability: Dynamic financial statement analysis and environmental scan, which determines a company’s fundamental dividend growth ability relative to benchmarks. Benchmarks lead to more reasonable criteria, which adjust in different economic climates.
Relative analysis works. Borrowing from another point, a 2% dividend yield may seem reasonable now. Over the course of 10 years, market rates might significantly increase, and 2% would not sufficiently discriminate between investment choices. Bench-marking dividend yield to the yield-to-maturity on the 10-Year T-Note or the average dividend yield on the S&P 500 would lead to more realistic expectations of current yield. Many factors effect dividend growth ability, the following are only a few:
A) Adequate and successful capital expenditures add significant value in the form of both total return and dividend income. Capex is a priority ahead of creditor obligations and dividend payments. In order to generate a return in a business, capex is a normal requirement. A company can increase short-term dividends by neglecting investment back into the company; however future dividends could be in jeopardy due to a depreciated business. It is difficult to analyze the adequacy and success of capital expenditures as an outsider. Current measures of capex on the statement of cash flows should be considered. In investing, and especially in capex, there is a certain amount of trust in management to make the right capex decisions. This trust in management can be earned based on historical financial results.
B) Legally speaking, creditors are in line before equity owners, so that can affect the use of capital for dividends. However, under certain circumstances, a wealth transfer from creditors to equity owners will prudently enhance dividend growth ability.
C) The high earnings qualities of certain companies add significant value in the form of both total return and dividend income. Financial shenanigans can artificially inflate earnings and deceive an investor into thinking there’s room for dividend growth. Skilled accounting can greatly reduce the risk of falling for shenanigans by performing an earnings quality analysis.
There are many land-mines in determining dividend growth ability and no quick and dirty method that can be used with fiduciary responsibility intact. For example, the financial statements could look great, but in the management discussion there may be a disclosure stating something such as, “all patents are expiring in one year,” or “66% of customers’ contracts expire and won’t be renewed.” Clearly, you cannot blankly make rules and rankings. One must have a refined business intuition and spend time in deep due-diligence to prudently make investment decisions.
2) Optimum Risk-to-Reward Profile: Highly synergistic effect on security selection, which compares a company’s risk-to-reward profile relative to the overall market and the effect on an overall portfolio. There are many ways to optimize portfolio performance, and although they make good sense, many techniques provide little to no empirical results. The key difference is the quality of the estimates of risk and reward, and the execution. There’s many ridiculous ways to estimate future rewards and just as many ridiculous ways to estimate risk. My measures of risk and reward accomplish great empirical results in the form of total return and dividend income.
3) Ability to Meet Creditors’ Obligations: Quality credit may allow economically beneficial transactions for equity owners in the form of borrowing capacity, less restrictive covenants, and low interest rates. A company with poor credit could not transfer wealth from creditors to equity owners in a prudent manner. Many poor credit companies have creditor covenants on their financials which limit a company’s ability to make lucrative dividend policy for equity owners. Lastly, solid credit may extend a life-line to companies in periods of great systemic risk.
4) Current Yield at Time of Purchase Greater Than the 10-Year T-Note Yield to Maturity: Although I do not seek high yields, the yield on the 10-Yr is a good benchmark for determining a reasonable yield. High yielders relative to the 10-Yr tend to be weeded out in the financial statement analysis.
5) No Dividend Decreases Within the Past One Year: Although historical dividend policy is not necessarily a good predictor of future dividend policy, I want management to show me they’re on board with the idea of at least maintaining dividends.
6) Using Leverage Can Be a Calculated Risk: The securities selected according to the philosophy above tend to be lesser-risked securities. A margin loan is a great tool to push investments into a more optimum point on the return-risk profile. I stress test the optimal amount of margin across several financial crises to determine the “point of no margin call” on a Reg T margin account.
7) Hedging is Necessary in a Boom and Bust Market: Markets have become more secure through regulation and more transparent through increased accounting quality. However, there are still enough booms and busts to make hedging a value added transaction. No hedge can realistically mitigate losses 100% of the time. In one day in 1987, the market sold-off 20%. In one week in 2008, the market sold-off 20%. It is virtually impossible to enter a hedge in time to fight those quick sell-offs. However, a successful hedge will allow a dividend growth investor to increase leverage and hold dividend payers, rather than sell them off to meet a margin call.
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06-27-2015, 09:39 AM
(This post was last modified: 06-27-2015, 09:56 AM by rayray.)
(06-23-2015, 02:06 PM)800peace Wrote: OK, I tweaked my hedge, which allowed me to increase leverage, which increased the dividends received. I made another tweak to decrease my turnover, and now annual turnover averages 0.45%. Now I have the following historical dividend payments, net of margin interest paid, on a one-time $10,000 investment:
Year Amount
1999 $488
2000 $624
2001 $1,713
2002 $2,271
2003 $2,750
2004 $3,831
2005 $8,432
2006 $12,962
2007 $26,664
2008 $24,521
2009 $27,514
2010 $49,609
2011 $64,455
2012 $67,319
2013 $71,087
2014 $93,426
2015 Estimate $122,420
The payback period is 6 years. More than the original principle is being paid in annual dividends after 8 years. Telling doubters where to stick it after 12 years.
I like this time horizon because it includes 1) internet bubble popping, 2) 9/11, 3) housing bubble popping, and 4) The Great Recession. Below are some risk measures since inception in 1999:
Model
Inception Date 01/02/99
Total Return (%) 29,393.21
Annualized Return (%) 41.27
Max Drawdown (%) -38.37
Standard Deviation (%) 27.71
Sharpe Ratio 1.35
Sortino Ratio 1.90
Correlation with Benchmark 0.33
R-Squared 0.11
Beta 0.45
Alpha (%) (annualized) 36.30
If compounding interest is the 8th wonder of the world, dgi is the 9th wonder of the world.
You had an initial one time investment of 10K.
But how much did you hedge over the years and how often?
On a side note, everyone is here because we do care. Not only do I care about my own finances/investments but I care about my fellow DGI's and I want others, as myself to make good financial decisions. We all come here to learn and share, it's a Dividend Growth Forum.
Every single person can "backtest" his own stuff.
David Van Knap even went through the trouble of keeping a live-cash investment account in order to demonstrate the power of dividend investing and it's all offered freely.
You come here claiming you have a "crystal ball" that tells you when/how to hedge and expect people to trust you and then pay you to share that crystal ball with them based on nothing but results that as far as anyone here can tell may be fabricated (or back-tested, we don't know because you aren't giving us any information that is required to tell the difference).
As for myself I don't believe in crystal balls and I did back-testing of my own.
I used the following strategy which you can check for yourself:
1. Get the list of companies in David Fish's CCC list on December 2007
2. Use LongRunData website to simulate a purchase of $1000 in each company in December 2007 through September 2014.
3. Try to track down companies that changed names or were merged.
4. See the total sum of money you got from all of them.
I managed to get 77% return while the S&P got 36% (IIRC) in those 6.5 years and I wasn't able to track down all the companies so the real return should have been higher.
So there you have a real test which includes the strategy that everybody here can use and I don't charge anyone anything for it!
You keep trying to sell your crystal ball if you want to, I won't be buying it...
(06-26-2015, 06:06 PM)mikejody Wrote: I appreciate your article but would caution you about two things:
1. "nobody has any empirical results but me." Your statements indicate that nobody is able to do the kind of research that you do, and nobody has any real results except you. Of course, from what I can tell, your results are not real but rather backtested.
2. "nobody gives a sh**". Probably a wrong attitude to have on a forum where people sign up hoping to learn, grow, change, adapt. Possibly nobody gives a sh** about your desire to see people sign up at portfolio123 but I assure you, most people are here specifically because we do care to learn.
In other words, your attitude is somewhat demeaning to most intelligent thinking individuals. I would encourage you toward humility. You do not know it all, and could stand to learn from some of the professional investors in this community.
(06-26-2015, 05:22 PM)800peace Wrote: When you go to a medical doctor, you don't want an explanation of how the human circulatory system works, you just want your medicine and be on your way. Firstly, you wouldn't understand the doctor's explanation of the human circulatory system. Secondly, you wouldn't know how to apply the knowledge, even if you understood it.
But regardless, I'll start with the philosophical points of leveraged and hedged dividend growth. If there's any interest, I'll respond, but I doubt anybody gives a shit. Remember, these are not just ideas that stand alone... These ideas all have empirical evidence supporting them. I advise being careful about the ideas people talk about on this forum... They make sense, but have horrible empirical results. Yet these amateurs spout their bullshit as the Gospel truth, despite having done zero experimentation and having zero evidence.
The 7 point philosophy below can be easily understood by anybody.
1) Fundamental Dividend Growth Ability: Dynamic financial statement analysis and environmental scan, which determines a company’s fundamental dividend growth ability relative to benchmarks. Benchmarks lead to more reasonable criteria, which adjust in different economic climates.
Relative analysis works. Borrowing from another point, a 2% dividend yield may seem reasonable now. Over the course of 10 years, market rates might significantly increase, and 2% would not sufficiently discriminate between investment choices. Bench-marking dividend yield to the yield-to-maturity on the 10-Year T-Note or the average dividend yield on the S&P 500 would lead to more realistic expectations of current yield. Many factors effect dividend growth ability, the following are only a few:
A) Adequate and successful capital expenditures add significant value in the form of both total return and dividend income. Capex is a priority ahead of creditor obligations and dividend payments. In order to generate a return in a business, capex is a normal requirement. A company can increase short-term dividends by neglecting investment back into the company; however future dividends could be in jeopardy due to a depreciated business. It is difficult to analyze the adequacy and success of capital expenditures as an outsider. Current measures of capex on the statement of cash flows should be considered. In investing, and especially in capex, there is a certain amount of trust in management to make the right capex decisions. This trust in management can be earned based on historical financial results.
B) Legally speaking, creditors are in line before equity owners, so that can affect the use of capital for dividends. However, under certain circumstances, a wealth transfer from creditors to equity owners will prudently enhance dividend growth ability.
C) The high earnings qualities of certain companies add significant value in the form of both total return and dividend income. Financial shenanigans can artificially inflate earnings and deceive an investor into thinking there’s room for dividend growth. Skilled accounting can greatly reduce the risk of falling for shenanigans by performing an earnings quality analysis.
There are many land-mines in determining dividend growth ability and no quick and dirty method that can be used with fiduciary responsibility intact. For example, the financial statements could look great, but in the management discussion there may be a disclosure stating something such as, “all patents are expiring in one year,” or “66% of customers’ contracts expire and won’t be renewed.” Clearly, you cannot blankly make rules and rankings. One must have a refined business intuition and spend time in deep due-diligence to prudently make investment decisions.
2) Optimum Risk-to-Reward Profile: Highly synergistic effect on security selection, which compares a company’s risk-to-reward profile relative to the overall market and the effect on an overall portfolio. There are many ways to optimize portfolio performance, and although they make good sense, many techniques provide little to no empirical results. The key difference is the quality of the estimates of risk and reward, and the execution. There’s many ridiculous ways to estimate future rewards and just as many ridiculous ways to estimate risk. My measures of risk and reward accomplish great empirical results in the form of total return and dividend income.
3) Ability to Meet Creditors’ Obligations: Quality credit may allow economically beneficial transactions for equity owners in the form of borrowing capacity, less restrictive covenants, and low interest rates. A company with poor credit could not transfer wealth from creditors to equity owners in a prudent manner. Many poor credit companies have creditor covenants on their financials which limit a company’s ability to make lucrative dividend policy for equity owners. Lastly, solid credit may extend a life-line to companies in periods of great systemic risk.
4) Current Yield at Time of Purchase Greater Than the 10-Year T-Note Yield to Maturity: Although I do not seek high yields, the yield on the 10-Yr is a good benchmark for determining a reasonable yield. High yielders relative to the 10-Yr tend to be weeded out in the financial statement analysis.
5) No Dividend Decreases Within the Past One Year: Although historical dividend policy is not necessarily a good predictor of future dividend policy, I want management to show me they’re on board with the idea of at least maintaining dividends.
6) Using Leverage Can Be a Calculated Risk: The securities selected according to the philosophy above tend to be lesser-risked securities. A margin loan is a great tool to push investments into a more optimum point on the return-risk profile. I stress test the optimal amount of margin across several financial crises to determine the “point of no margin call” on a Reg T margin account.
7) Hedging is Necessary in a Boom and Bust Market: Markets have become more secure through regulation and more transparent through increased accounting quality. However, there are still enough booms and busts to make hedging a value added transaction. No hedge can realistically mitigate losses 100% of the time. In one day in 1987, the market sold-off 20%. In one week in 2008, the market sold-off 20%. It is virtually impossible to enter a hedge in time to fight those quick sell-offs. However, a successful hedge will allow a dividend growth investor to increase leverage and hold dividend payers, rather than sell them off to meet a margin call.
I never said, "nobody gets empirical results but me." I said, people on here give advice which has no evidence, which is true. It isn't fair for you to bend my words and then base a criticism on it.
If people give a shit, why do I get nothing but lectures? People are just haters and do not give a shit about anything but trolling.
I did come here to learn, however I find a lot of what I read on here to be straight reckless, and no real professional could maintain their license giving that advice. I'm not gonna ignore the elephant in the room, that there's a lot of bullshit advice at every level of the game. As a kid, I was the anti-bully, and as an adult I'm an anti-bully in finance, and when I see people talking bullshit, I'm gonna call it.
As far as my attitude goes, how do you expect me to react when people are telling me my results are meaningless. I'm not going to sit on my hands and be disrespected... If you talk shit on my thread, I'm going to be combative with you. If you got a problem with that than go to another thread where some pussy will tolerate your trolling and take your bullshit advice.
No matter how hard you troll, I'm laughing all the way to the bank bitch.
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Wow. Just wow. I will not dignify your outburst below with any further responses from here on.
(06-30-2015, 03:31 PM)800peace Wrote: (06-26-2015, 06:06 PM)mikejody Wrote: I appreciate your article but would caution you about two things:
1. "nobody has any empirical results but me." Your statements indicate that nobody is able to do the kind of research that you do, and nobody has any real results except you. Of course, from what I can tell, your results are not real but rather backtested.
2. "nobody gives a sh**". Probably a wrong attitude to have on a forum where people sign up hoping to learn, grow, change, adapt. Possibly nobody gives a sh** about your desire to see people sign up at portfolio123 but I assure you, most people are here specifically because we do care to learn.
In other words, your attitude is somewhat demeaning to most intelligent thinking individuals. I would encourage you toward humility. You do not know it all, and could stand to learn from some of the professional investors in this community.
(06-26-2015, 05:22 PM)800peace Wrote: When you go to a medical doctor, you don't want an explanation of how the human circulatory system works, you just want your medicine and be on your way. Firstly, you wouldn't understand the doctor's explanation of the human circulatory system. Secondly, you wouldn't know how to apply the knowledge, even if you understood it.
But regardless, I'll start with the philosophical points of leveraged and hedged dividend growth. If there's any interest, I'll respond, but I doubt anybody gives a shit. Remember, these are not just ideas that stand alone... These ideas all have empirical evidence supporting them. I advise being careful about the ideas people talk about on this forum... They make sense, but have horrible empirical results. Yet these amateurs spout their bullshit as the Gospel truth, despite having done zero experimentation and having zero evidence.
The 7 point philosophy below can be easily understood by anybody.
1) Fundamental Dividend Growth Ability: Dynamic financial statement analysis and environmental scan, which determines a company’s fundamental dividend growth ability relative to benchmarks. Benchmarks lead to more reasonable criteria, which adjust in different economic climates.
Relative analysis works. Borrowing from another point, a 2% dividend yield may seem reasonable now. Over the course of 10 years, market rates might significantly increase, and 2% would not sufficiently discriminate between investment choices. Bench-marking dividend yield to the yield-to-maturity on the 10-Year T-Note or the average dividend yield on the S&P 500 would lead to more realistic expectations of current yield. Many factors effect dividend growth ability, the following are only a few:
A) Adequate and successful capital expenditures add significant value in the form of both total return and dividend income. Capex is a priority ahead of creditor obligations and dividend payments. In order to generate a return in a business, capex is a normal requirement. A company can increase short-term dividends by neglecting investment back into the company; however future dividends could be in jeopardy due to a depreciated business. It is difficult to analyze the adequacy and success of capital expenditures as an outsider. Current measures of capex on the statement of cash flows should be considered. In investing, and especially in capex, there is a certain amount of trust in management to make the right capex decisions. This trust in management can be earned based on historical financial results.
B) Legally speaking, creditors are in line before equity owners, so that can affect the use of capital for dividends. However, under certain circumstances, a wealth transfer from creditors to equity owners will prudently enhance dividend growth ability.
C) The high earnings qualities of certain companies add significant value in the form of both total return and dividend income. Financial shenanigans can artificially inflate earnings and deceive an investor into thinking there’s room for dividend growth. Skilled accounting can greatly reduce the risk of falling for shenanigans by performing an earnings quality analysis.
There are many land-mines in determining dividend growth ability and no quick and dirty method that can be used with fiduciary responsibility intact. For example, the financial statements could look great, but in the management discussion there may be a disclosure stating something such as, “all patents are expiring in one year,” or “66% of customers’ contracts expire and won’t be renewed.” Clearly, you cannot blankly make rules and rankings. One must have a refined business intuition and spend time in deep due-diligence to prudently make investment decisions.
2) Optimum Risk-to-Reward Profile: Highly synergistic effect on security selection, which compares a company’s risk-to-reward profile relative to the overall market and the effect on an overall portfolio. There are many ways to optimize portfolio performance, and although they make good sense, many techniques provide little to no empirical results. The key difference is the quality of the estimates of risk and reward, and the execution. There’s many ridiculous ways to estimate future rewards and just as many ridiculous ways to estimate risk. My measures of risk and reward accomplish great empirical results in the form of total return and dividend income.
3) Ability to Meet Creditors’ Obligations: Quality credit may allow economically beneficial transactions for equity owners in the form of borrowing capacity, less restrictive covenants, and low interest rates. A company with poor credit could not transfer wealth from creditors to equity owners in a prudent manner. Many poor credit companies have creditor covenants on their financials which limit a company’s ability to make lucrative dividend policy for equity owners. Lastly, solid credit may extend a life-line to companies in periods of great systemic risk.
4) Current Yield at Time of Purchase Greater Than the 10-Year T-Note Yield to Maturity: Although I do not seek high yields, the yield on the 10-Yr is a good benchmark for determining a reasonable yield. High yielders relative to the 10-Yr tend to be weeded out in the financial statement analysis.
5) No Dividend Decreases Within the Past One Year: Although historical dividend policy is not necessarily a good predictor of future dividend policy, I want management to show me they’re on board with the idea of at least maintaining dividends.
6) Using Leverage Can Be a Calculated Risk: The securities selected according to the philosophy above tend to be lesser-risked securities. A margin loan is a great tool to push investments into a more optimum point on the return-risk profile. I stress test the optimal amount of margin across several financial crises to determine the “point of no margin call” on a Reg T margin account.
7) Hedging is Necessary in a Boom and Bust Market: Markets have become more secure through regulation and more transparent through increased accounting quality. However, there are still enough booms and busts to make hedging a value added transaction. No hedge can realistically mitigate losses 100% of the time. In one day in 1987, the market sold-off 20%. In one week in 2008, the market sold-off 20%. It is virtually impossible to enter a hedge in time to fight those quick sell-offs. However, a successful hedge will allow a dividend growth investor to increase leverage and hold dividend payers, rather than sell them off to meet a margin call.
I never said, "nobody gets empirical results but me." I said, people on here give advice which has no evidence, which is true. It isn't fair for you to bend my words and then base a criticism on it.
If people give a shit, why do I get nothing but lectures? People are just haters and do not give a shit about anything but trolling.
I did come here to learn, however I find a lot of what I read on here to be straight reckless, and no real professional could maintain their license giving that advice. I'm not gonna ignore the elephant in the room, that there's a lot of bullshit advice at every level of the game. As a kid, I was the anti-bully, and as an adult I'm an anti-bully in finance, and when I see people talking bullshit, I'm gonna call it.
As far as my attitude goes, how do you expect me to react when people are telling me my results are meaningless. I'm not going to sit on my hands and be disrespected... If you talk shit on my thread, I'm going to be combative with you. If you got a problem with that than go to another thread where some pussy will tolerate your trolling and take your bullshit advice.
No matter how hard you troll, I'm laughing all the way to the bank bitch.
(06-27-2015, 09:39 AM)rayray Wrote: (06-23-2015, 02:06 PM)800peace Wrote: OK, I tweaked my hedge, which allowed me to increase leverage, which increased the dividends received. I made another tweak to decrease my turnover, and now annual turnover averages 0.45%. Now I have the following historical dividend payments, net of margin interest paid, on a one-time $10,000 investment:
Year Amount
1999 $488
2000 $624
2001 $1,713
2002 $2,271
2003 $2,750
2004 $3,831
2005 $8,432
2006 $12,962
2007 $26,664
2008 $24,521
2009 $27,514
2010 $49,609
2011 $64,455
2012 $67,319
2013 $71,087
2014 $93,426
2015 Estimate $122,420
The payback period is 6 years. More than the original principle is being paid in annual dividends after 8 years. Telling doubters where to stick it after 12 years.
I like this time horizon because it includes 1) internet bubble popping, 2) 9/11, 3) housing bubble popping, and 4) The Great Recession. Below are some risk measures since inception in 1999:
Model
Inception Date 01/02/99
Total Return (%) 29,393.21
Annualized Return (%) 41.27
Max Drawdown (%) -38.37
Standard Deviation (%) 27.71
Sharpe Ratio 1.35
Sortino Ratio 1.90
Correlation with Benchmark 0.33
R-Squared 0.11
Beta 0.45
Alpha (%) (annualized) 36.30
If compounding interest is the 8th wonder of the world, dgi is the 9th wonder of the world.
You had an initial one time investment of 10K.
But how much did you hedge over the years and how often?
On a side note, everyone is here because we do care. Not only do I care about my own finances/investments but I care about my fellow DGI's and I want others, as myself to make good financial decisions. We all come here to learn and share, it's a Dividend Growth Forum.
OK great, finally not a sour criticism. I hedged 6 times since 1999, but wasn't successful every time. The longest hedge period was during The Great Recession... It lasted from approximately around Jan 2008 to Oct 2009... I don't know if those are the exact dates, but it is around there. Anyways, the hedges I use are going short SPY (100% of holdings) or UPRO (35% of holdings), depending on a couple of factors. You could also buy puts on SPY, but options have an expiration date, so you can either buy as long of time as is available, or make a foolish guess on when you'll have to exit the hedge. This is the only area where I partially use advice of other people, (Standard & Poors). Once Standard & Poors estimates are confirmed by the market, I enter the hedge or exit the hedge. Thankfully, P123 is linked to S&P database, so I can just program what I want to see on my hedge and P123 with give me a notice when the stars align. P123 is even working on linking brokerage accounts to the trades in the models. It is a really great tool and I advise everyone check it out.
If you think my returns are crazy, you should see what the P123 community is accomplishing. There are a lot of smart finance folks, and you can see if they're a successful investor or not.
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