PP vs Dividend Growth Investing

Discussion of the Stock portion of the Permanent Portfolio

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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 3:41 am

boglerdude wrote:
Mon Feb 17, 2020 10:19 pm
Xan you said buybacks are a form of dividend, so instead of using the term "dividend" use net profits or total return. Dividend is special case of forced quarterly cash distribution, sometimes even when profits are declining.
one of the confusing parts to the whole thing is people use the wrong words at times .. dividends are never just a distribution of profits . they are a distribution -period even when money is being lost ...

once companies pay dividends and hit a rough spot it can be the kiss of death suspending them . so it just compounds the downward spiral .

a company sliding down and paying out has the damage compounded . if markets take the stock down 5% and that dividend is 5% that is a 10% drop in share price .

so dividends are not a distribution of profits . they are merely a forced withdrawal of your already invested dollars .those profits if any are reflected in the share price already pre ex div .. what dividends represent and how they work are one of the misunderstood topics in investing because people look at it like interest . interest goes on top of your balance , dividends are a withdrawal off your balance ...

so all profits must be represented in that share price pre ex div because there is nothing else to give you ..your total return is the share price plus distributions which were subtracted off the share price . that is identical to a total return on a portfolio which is the portfolio value plus all distributions off the portfolio .

no difference except taxes .

so people confuse themselves by the words dividends are a paying of profits , because there does don't have to be any profits at all that year or years . , plus they don't understand that there is a subtraction of equal dollars off their invested balance represented by number of shares x share price . .

how may times do you hear i don't care what the stock is doing because i am getting paid a healthy dividend .. well all that means is you are taking a bigger withdrawal in a down market and the dollars compounding in the recovery will be that much less .

it really is hard to understand the fact that reinvesting dividends in a down market has no advantage either . that is because of the fact they hand you money off your balance , call it 100k ... they pay you 10% so you have 90k invested 10k to reinvest . the price per share falls the same 10% ... so your 10k being put back in gives you back the same 100k again for compounding. actually less because before you can put those dollars back they are taxed in a taxable brokerage account . how many shares make it up is irrelevant . all compounding is on total dollars invested .

so this is why there are and always will be discussions about dividends , simply because they are just not understood even by the most experienced investors .

whether the dividend payers do better or worse is a whole other topic and has nothing to do with the mechanics of that withdrawal
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Re: PP vs Dividend Growth Investing

Post by dualstow » Tue Feb 18, 2020 7:16 am

🍕 soppressata!

Xan, I don’t know if you saw my Q back on page 7. When you get a chance?
dualstow wrote:
Sat Feb 15, 2020 3:00 pm
Xan, I am curious. On page 1 you wrote -
Xan wrote:
Fri Feb 14, 2020 9:03 am
Dividends keep a company's collective mind and priorities on the right thing: making money for stockholders. It's easy for a company that doesn't pay dividends to get wrapped up it itself. Dividends keep a company humble. Dividend companies remember the whole point of being in business: to make money.

My opinion, anyway. My stock allocation is a broad market index that includes many dividend and non-dividend companies, so I'm shielded against being wrong!
Your first paragraph made me think you're more into dividends than I am, and I have a bunch of dividend growing indy stocks in a pre-pp vp.
Your second paragraph, then, made me wonder: if that's how you feel, why are you not invested in dividend stocks?
It is it a matter of not having any variable portfolio?
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 3:19 pm

Perfect example about what i said above about companies paying out despite huge losses for investors ..khc has now fallen almost 80% from its highs ...its debt was reduced to junk a few days ago ...but the dividend still gets paid ..not only does a dividend get paid but they are not even cutting it .

Kraft Heinz on Friday saw not one, but two ratings agencies downgrade the company’s debt — meaning it had lost its coveted investment grade status. Both Fitch Ratings and S&P Global Ratings trimmed their assessments.

As of Dec. 28, the company’s total debt outstanding was $29.2 billion, the Fitch report noted.

So repeat after me —— never confuse a dividend payment with anything but a withdrawal off your balance ..it is not a distribution of gains or profits .getting a withdrawal from an investment does not mean you made a dime on the investment.

Berkshire lost 4.3 billion in one day .

https://www.cnbc.com/2019/02/22/warren- ... lunge.html


https://www.post-gazette.com/business/m ... 2002170090
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 3:52 pm

On the other hand bed bath and beyond announced they are using 1 billion dollars to buy back stock , upgrade stores and the supply chain and pay down debt ...bed bath and beyond lost 30% the last 12 months ....
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Re: PP vs Dividend Growth Investing

Post by Xan » Tue Feb 18, 2020 3:53 pm

dualstow wrote:
Tue Feb 18, 2020 7:16 am
🍕 soppressata!

Xan, I don’t know if you saw my Q back on page 7. When you get a chance?
dualstow wrote:
Sat Feb 15, 2020 3:00 pm
Xan, I am curious. On page 1 you wrote -
Xan wrote:
Fri Feb 14, 2020 9:03 am
Dividends keep a company's collective mind and priorities on the right thing: making money for stockholders. It's easy for a company that doesn't pay dividends to get wrapped up it itself. Dividends keep a company humble. Dividend companies remember the whole point of being in business: to make money.

My opinion, anyway. My stock allocation is a broad market index that includes many dividend and non-dividend companies, so I'm shielded against being wrong!
Your first paragraph made me think you're more into dividends than I am, and I have a bunch of dividend growing indy stocks in a pre-pp vp.
Your second paragraph, then, made me wonder: if that's how you feel, why are you not invested in dividend stocks?
It is it a matter of not having any variable portfolio?
Sorry, dualstow, missed it.

I hadn't really thought very much about a preference for dividend stocks before. It's still fairly weakly-held. Mostly I really don't want to spend any time picking stocks. Too busy with an actual job, kids, and arguing here. :-)
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 4:08 pm

Headed to see the eagles tonight at Madison square garden ...a Christmas gift from all our kids ....

So no more posts Ha ha
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Re: PP vs Dividend Growth Investing

Post by dualstow » Tue Feb 18, 2020 4:09 pm

Xan wrote:
Tue Feb 18, 2020 3:53 pm
I hadn't really thought very much about a preference for dividend stocks before. It's still fairly weakly-held. Mostly I really don't want to spend any time picking stocks. Too busy with an actual job, kids, and arguing here. :-)
😂
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Re: PP vs Dividend Growth Investing

Post by Xan » Tue Feb 18, 2020 4:25 pm

mathjak107 wrote:
Tue Feb 18, 2020 4:08 pm
Headed to see the eagles tonight at Madison square garden ...a Christmas gift from all our kids ....

So no more posts Ha ha
The Eagles didn't even make the playoffs this year!
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 4:42 pm

I liked joe Walsh better with the James gang I am not really an eagles fan but they do sell a lot of albums

I think the most in history. Got six minutes to the train comes. I have to get ready to embarrass my wife
I always jump up and down when it gets here. It is about 25 minutes to Manhattan
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Re: PP vs Dividend Growth Investing

Post by dualstow » Tue Feb 18, 2020 6:09 pm

Love the Eagles. So many talents in one band - they are a supergroup!
I also loved their playful rivalry with Steely Dan.

Hope Mathjak is having a good time.
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Re: PP vs Dividend Growth Investing

Post by vnatale » Tue Feb 18, 2020 7:33 pm

mathjak107 wrote:
Tue Feb 18, 2020 4:42 pm
I liked joe Walsh better with the James gang I am not really an eagles fan but they do sell a lot of albums

I think the most in history. Got six minutes to the train comes. I have to get ready to embarrass my wife
I always jump up and down when it gets here. It is about 25 minutes to Manhattan
When first read here about you going to see the Eagles, I was wondering what sports team are the Eagles!??!

It was not until I got to this post did I realize you were referring to THOSE Eagles!

And, on top of that, while I was reading all of this Hotel California is playing in my headphones-- their signature song after Joe Walsh joined them.

I agree in much preferring The James Band over The Eagles. The band I managed did an extended version of The James Gang, Funk 49, throwing a few other cover songs into it. It was always the highlight song of the set.

My Eagles story.

I saw them in the summer of 1973 in one of those small theaters that also had rock band shows.

They opened for The J. Geils Band. We were all there to see the J. Geils Band and just about the whole crowd had never heard of The Eagles. Their type of music was not what would please a J. Geils Band crowd. Nowhere the unrelenting energy.

Therefore, all while they were playing, people in the audience kept shouting, "J. Geils!"

At one point it got so frustrating for The Eagles that their lead guitarist (I think or another one of them for certain) pleadingly said, "GIve us a chance!" Shortly after they played their only song that had even a modicum of excitement in it (by J. Geils standards) and the crowd finally cheered for them.

When The J. Geils Band came on they, of course, completely blew away The Eagles (as we all knew would happen). After the show I picked up a hitchhiker. I asked him if he's been at the show. He said, "Yes". I asked him what he thought about The Eagles. He said, "Oh. You mean the pigeons??!!"

!!!!!!!!!!!!!

I thought that so perfectly summed up how The Eagles came across that night to a J. Geils Band crowd - TOTAL lightweights!

Of course, was I shocked when two years later The same Eagles were now headlining HUGE arenas. Would NEVER have predicted or foreseen that from that summer 1973 show!

And, to circle back to The J. Geils Band.

Three members of the band went to Worcester Polytechnic Institute (WPI) , where they all met. J. Geils, Magic Dick and the bass player.

First time I had interaction with the band was when I interviewed Peter Wolf, J. Geils, and the keyboard player on the radio (I was a college DJ on the WPI radio station and they'd just finished playing in the room below the station). That night I found out why the keyboard player's nickname was The Sphinx -- he never said a single word during the entire interview.

Second time I had interaction with the band was when they played at a beach club. This was about a month after the above. I went up to Peter Wolf and said, "Remember me?" He said, "Oh, yeah. You were here last time." I said, "No. I interviewed you on the radio last month." He said, "Oh, year. I'm going to change and then I'll come back and rap with you." That was the last I saw of him that night.

Tried to talk to Magic Dick but he'd never look at me, just grunting out one word answers to my questions.

Finally, J. Geils was the same nice guy he always was. He was a few years or so older than me.

My WPI class was the first year that ROTC was NOT mandatory.

I asked him how he had dealt with ROTC because it was mandatory when he was there. He said, "They gave me the shirt, I cut off the sleeves, and I never went!" !!!!!!!!!!!

My third and last time I met him was when myself and a few others were at his apartment, trying to sell him a first year issue Les Paul (an expensive and highly desirable guitar--we were trying to get at least $1,000 for it nearly 50 years ago). It was a week or so after the closing of the Fillmore East, which he had been at, and he was saying things to us like, "You should have seen the guitar that Duane Allman was playing."

Aside from him being a totally nice person and regular person the only other thing I remember was that he had a huge record collection like I did. Except there was almost no intersection between our collections. Just about all his records were blues records. His band's original name was The J. Geils BLUES Band).

I"m guessing I've seen the J.Geils Band in the 10 times neighborhood. The first time I saw them was also the first time I saw Ten Years After. J. Geils and Alvin Lee are both up there in my all-time favorite guitarists. Too bad that they both not that long ago both died too young. However, each of their music playings will last for eternity.

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Re: PP vs Dividend Growth Investing

Post by dualstow » Tue Feb 18, 2020 7:38 pm

Interesting stories.
I love Alvin Lee.
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