"Food For Thought", for those of us who still invest in Stocks . . . | Page 2 | Investing | Discussion forum

I agree, that's certainly one way of looking at it. My way was quite different, i.e. I bought into the buy and hold philosophy, whenever I had extra money I just bought blue chip dividend payers, over about 4 decades, never sold any, basically just ignored them, etc, and the results were spectacular. At least in my eyes. Which is my ultimate test of my investment decisions, i.e. how content do I end up with my situation supercedes raw calculations, for me.

Maybe I could have made more, no idea, but vital to me, no compromise, was that I spend minimal, if any, time on my money during those years. I was always hyper-sensitive about the sand slipping through the hourglass during life's prime family/busy time, and mission accomplished in that regard too. So, at least for me, that other way was not an appropriate choice, I know other folks who spent little time on their investments too so I wasn't the only one, might work for folks here too. All depends on how you want to spend your life's time.

Hello everyone. I've been viewing this site since 2019, but this is my first time posting. Over the years, I have found some interesting sources of information (including this website). Firstly, I've enjoyed Ben Felix's (of Ottawa's PWL Capital) evidence-based videos; given that dividends have been mentioned a few times in this thread, I thought that I would share this video on dividends: . I have no doubt that many of you will disagree with the information in this video, but if you have any interest in dividends, then this information is worth knowing.

Secondly, since 2019 I have also been following a blogger by the screen name of PretzelLogic at http://www.pretzelcharts.com. This guy uses Elliott Wave Theory, and he has been an excellent source of information who has helped me to have an idea of what's coming in the stock market. When, on February 6th, 2020, he predicted a massive price crash two weeks later on February 20th, I wondered how he could possibly make such a prediction. Sure enough, on February 20th, one of the largest single-day stock market price drops occurred, almost exactly as he had predicted. He has been bearish in stocks since December 2021 and, having followed his predictions, I have saved well over $100,000 by moving out of equities in both my personal and pension portfolios.

This is a long way of replying to the original poster's question regarding whether it's time to start buying stocks again. If PretzelLogic is right (which, in my experience, he generally has been), then we're heading into a nasty, long-term bear market. In his words: "I did want to again highlight that this is not a correction in a larger bull market. Meaning: It's not going to be over next month. Or the month after that. It's almost certainly going to take years to unfold, so (assuming I'm correct on the wave degree, and all early indicators suggest I am) it would help to adjust one's thinking in that direction."

Yield on cost is relevant when comparing stock returns with GIC's returns. It shows why the stocks end up so much ahead of GIC's after years.

There's not much difference between the current yield of stocks and GIC's. What was it? About 3% versus about 5%? Yet one end up with much higher return with stocks than the spread between the current yields.

The PWL video about the irrelevance of dividend is flawed. The video itself is irrelevant because there aren't companies that have the same profitability but one pays dividends while the other does not.

One of things that paying out 40% of profits as dividends is that the company can only direct the remaining profits on its best ideas. Company may now only be able try out its best 10 ideas instead of its best 20 ideas. Ideas #11 to #20 will never be as good as Ideas #1 to #10. The result is a company with higher profitability.

Ditto with the garbage about passive ETF's. Very few people actually believe in the superiority of passive management. What do you think you are practicing when you delay putting money into five year GIC's instead of passively renewing the GIC's in a ladder when the GIC's mature? Must be a waste of time then, all that effort tracking inflation and Bank of Canada's rate hikes to figure out when interest rates will peak!

Ok, I get that to maximize return, ideally, the financial landscape should be monitored every moment to determine where best, or at least where you guess it best, to have your current capital right now. And on this site I have "met" some folks who apparently spend a large part of every single day on their finances trying to do exactly that, it's honestly been an eye-opener for me but hey, go fill yer boots, do your passion, enjoy! (Note, not "complaining".)

But, aside from the fact it doesn't work that well (apparently), ultimately 99.99% of humans don't want to do that. So, hard as it might be for some to understand, that human behaviour to me then becomes an integral part of the calculation. Based on the humans I've known, and what they want to do every day, virtually no-one wants to run numbers on everything all the time. I personally rarely calculated anything aside from tfsa limits or other tax-related calculations, I have absolutely no idea what my annual rate of return, etc has ever been, and that's pretty close to same for everbody I know including, come to think of it, the few really wealthy guys I know, far as I can see. People monitor their strategy and money maybe every few years or so, that's just reality, notwithstanding there are a few that do it every day, so buy-and-hold or variations of it are what you'll see people doing. GICs are the epitome of buy-and-hold.

But, sure, if the point is my original cost is irrelevant in terms of deciding where best to put my money at this very moment, I guess I can agree with that.

Bill said
But, sure, if the point is my original cost is irrelevant in terms of deciding where best to put my money at this very moment, I guess I can agree with that.  

I think you miss the point. Knowing what your portfolio is doing "at the moment" and what your holdings are doing for you is figuratively speaking, not literal necessarily, and does not translate into monitoring the portfolio daily, or weekly, or even monthly. I would presume buy and hold investors look at what their portfolios are doing on at least an annual basis and that is as 'current' as it needs to be. They look at what their portfolio net worth change is since the last check, e.g. unrealized cap gains, what their investment income is for the year and what that is in terms of yield percentage of their portfolio. If they don't have software or a spread sheet for a consolidated view, their investment income by type/category is readily available of their T1 tax return, or by account from their brokerage statements.

YOC is simply not a factor in that assessment no matter how frequent or infrequent one does a performance assessment of the portfolio. It doesn't tell them they might consider some changes based on the annual (or multi-year) performance of individual holdings. Many blue chip dividend paying stocks (Canadian or otherwise) under perform for several years at a time. It behooves one to do a 'health check' on some frequency to see if changes are warranted.

I see what you're saying, AltaRed, I think. I guess I figured if the relevant thing to examine is your current yield on the FMV (vs cost) of your "current invested capital" then you've got to stay "current". That takes time. And you're always going to see other instruments that look better whenever you do that, i.e. what are the odds that that particular stock, whenever you check during the years of ownership, has the very best performance or is the very best option at that moment, zero? Of course they sometimes underperform, often for a long time.

You say it "behooves one" to do regular checks to see if "changes are warranted", all I'm saying is I had no interest in doing that annually or ever really, I just kept buying more basic blue chips that everybody knows about. But I will stop feeling good about my YOC, you've indicated it's misguided, so I can drop that. But I will stay pretty happy with what my overall approach ended up doing for me, return-wise and time-not-spent wise.

One doesn't need to wait 40 years. The difference can be seen in as little as 10 years.

Investors who were "unlucky" enough to be fully invested in stocks in 2007 and rode down through the crash in 2008 nearly doubled their investment by 2017. That's why I don't think that video interview with that TD Asset Management portfolio manager is of much value.

As well, the remarks about estimates not being revised downwards sound disingenuous. The institutional investors that dominate the large company stocks are not stupid. Their "buy-side" analysts don't release their findings publicly and can be more candid.

Those are in contrast to "sell-side" analysts who regularly give media interviews and are part of the marketing of brokerage firms. Companies don't tend to select a brokerage firm to advise them on a transaction while the firm has a stock analyst publicly saying unflattering things about the company's earnings.

Its a no brainer to be diversified between fixed income and equities. The mix will be dependent on your risk tolerance, age and your goals. Those that advocates 100% fixed income only regardless are simply ...

As for LTCM, they experienced a 6 sigma event, which mathematically based on history is NOT supposed to happen. Obviously they have been humbled. There are many similar stories. And guess what, they lost their shirt in fixed income, not equities 🙂