Gyroscopic Investing

I've always favored contrarian style investing. It seems like dividend stocks are hot now, because interest rates are very low, and un-initiated people seek yield instead of total return, and are flocking to these stocks.

Theoretically, if there's $x total invested in the stock market, split as y% to "high" dividend and z% to other stocks, then as money flows into the dividend, it's flowing out of the "other."

That should artificially raises the prices on the dividend and artificially reduces the prices on the non-dividend. Maybe this means it's time to invest in growth style index funds? Or maybe it's time to find a basket of high quality non-dividend stocks to invest in.

Theoretically once interest rates rise again, people wont care about dividend stocks and money will flow back into the low or 0 dividend ones.

Triple B, I guess the key point about non-dividend stocks is to capture the volatility of the individual stocks. If you had a variable portfolio that was say 50% LTT and 50% 10 individual stocks and kept each at approx 5% of the total portfolio by rebalancing then I wonder whether that would allow you to tap into their profits.

My guess is that non-dividend stocks differentiate massively in terms of how much profit can be taken from them versus how much profit an index investor actually does take from them.

TripleB wrote: I've always favored contrarian style investing. It seems like dividend stocks are hot now, because interest rates are very low, and un-initiated people seek yield instead of total return, and are flocking to these stocks.

I agree with you.  People are treating dividend stocks as if they were bonds.  I'm just not sure how it's an actionable observation. 

I think that during a secular bear market for stocks, this could go on for a long while.