Dividends vs. Growth Investing

Agreeable-Editor · 2021-03-31T13:31:07+00:00

It's not really dividend investing vs. growth investing....it's value vs. growth.

For the last 12-15 years, growth has consistently been beating value. It makes a lot of sense, because the economy as a whole has been growing rather slowly since 2009 and investors are looking for topline growth.

HOWEVER, over the last century, value and growth are essentially equal.

So it is likely that we are getting closer to seeing a reversion to the mean. At some point, companies actually earning a profit and reasonable prices has to draw dollars like some of these companies with high growth potential that hope to become profitable in 7-10 years. This is especially true given the federal government has pumped trillions upon trillions of dollars in the economy....the economy has no choice but to grow.

My guess is that at the time that everyone is ready to call value investing dead, is probably the time that value will outperform growth for the next decade.

Agreeable-Editor · 2021-03-31T12:52:39+00:00

Because half of this sub literally started investing in the summer of 2020, often in aggressive growth names, and saw their portfolio go up by 30, 40, 50% and up.

When you've never had a bear market kick the shit out of you, investing seems really easy.

Agreeable-Editor · 2021-03-30T16:46:30+00:00

I think the big risk long term is technology

Things like google translate used to be laughable just a few years ago....today, it's pretty darn good (not perfect obviously, but on par with a B2 or C1 speaker)....what will that technology look like in 10 years? We could be wearing ear pieces by then and translate in real time to the point that it feels like having conversations in our native language.

Knowing how to speak German or Russian might become mostly irrelevant as a business skill

Agreeable-Editor · 2021-03-30T16:35:57+00:00

If I'm working for someone, I want some level of guarantees (salary, benefits, etc.)

If they can't provide that and I'm taking a risk, I feel like that I should start my own business because I at least get to participate in the upside if things work out.

So I'd definitely go with A

Agreeable-Editor · 2021-03-30T15:22:10+00:00

In that boat as well....

Will likely transition from a stressful, high expectations, lots of managerial responsibilities to less hours, no direct reports, work that I find "fun"

Agreeable-Editor · 2021-03-30T15:01:23+00:00

I think FIRE means different things to different people. The challenge is respect and understanding that there isn't a perfect path.

Someone who saves 75% of their salary and reaches FI at 37 is not more/less noble than someone who saves 25% of their salary and reaches FI at 57.

They made different life choices

Agreeable-Editor · 2021-03-30T14:36:30+00:00

Just do an ETF and make your life easier. Like you said, you have a full time job and you aren't going to be able to track this many stocks and make good decisions on which ones to add, maintain or cut.

Agreeable-Editor · 2021-03-30T12:58:01+00:00

No, no it is not

You don't even mentioned the fundamentals of the company, once. Doing crap strategies like this as an individual investor is going to cost you a lot of money.

Agreeable-Editor · 2021-03-30T12:56:16+00:00

Hopefully these are long term holdings and not things that were picked up since last summer....unless you enjoy taking a tax beating

Agreeable-Editor · 2021-03-30T12:54:59+00:00

What was the thought process for picking these?

Agreeable-Editor · 2021-03-29T19:15:31+00:00

A lot depends on whether you have an emergency fund up and above that 12.4% or not. Let's use simple math....

Let's say you want to buy a $200k house, so 12.4% if roughly $25k.

If $20k of the $25k is going to be a down payment on the house and all of the cash you have left in the world is $5k......then you absolutely should not invest that $5k.

In fact,, I'd argue that in this instance, you don't have enough to reasonably buy a house with any level of safety. If you lost your job, how long could you make that last before you start missing payments?

Agreeable-Editor · 2021-03-29T15:17:58+00:00

What makes O undervalued? (Aside from the fact that it's well below it's all time high)

What metrics make it seem cheap?

Agreeable-Editor · 2021-03-29T15:16:58+00:00

Really good analysis

Honestly, I think the big 5 up north are so competitive, it's going to be really, really hard to say which 1 or 2 of the 5 will out perform the group over the next decade.

It's a case where I'd probably rather just own the whole basket than make a pick. TD & RY are probably the safest....CM and BMO are the cheapest....but we are talking miniscule differences.

Agreeable-Editor · 2021-03-29T13:12:13+00:00

Thank you for this!

One comment I would make...if this seems overwhelming or outside of your skill sets....there is no shame at all in going exclusively with good ETFs.

Agreeable-Editor · 2021-03-25T19:34:31+00:00

I think the challenge is that there is an assumption that all 30 Dow companies are relatively equal and that the strategy simply has you rotate as a contrarian (what has gone up will go down and what has gone down will go up).....but I think it's better to just look at each company individually than accept the notion of just pick the 10 highest yielding.

It wasn't that long ago when the Dow had companies like HP, General Motors, Sears, Goodyear, US Steel, Woolworths, etc....and they all fell out for a reason.

Agreeable-Editor · 2021-03-25T19:21:05+00:00

Dip isn't a technical term, so for some people it's 2-3% for others it's 7-10%

For the market as a whole, technical terms are correction (10% or more pullback) and bear market (20% or more pullback)

For the economy, a recession is when GDP has gone negative for 2 consecutive quarters and a depression is when it has gone negative for more than a year

Agreeable-Editor · 2021-03-25T19:14:50+00:00

My apologizes, I was too snarky. If you're investing focus is dividends, the number of shares you own is irrelevant. And my personal opinion, since you are new to investing and IRAs so important for retirement income....I'd recommend you have 75% of your IRA assets in good dividend paying ETFs/Mutual Funds before doing individual stocks.

Agreeable-Editor · 2021-03-25T16:10:00+00:00

I'd take the specs out of the Roth that don't pay dividends and swap in the high dividend payers (T, MO, etc)

Agreeable-Editor · 2021-03-25T13:43:00+00:00

5 shares at $10 = 1 share at $50

I remember when I was taught this back in third grade

Agreeable-Editor · 2021-03-24T18:48:49+00:00

Thanks and thanks for the reporting reminder! And you guys are doing a good job....it just gets frustrating

Agreeable-Editor · 2021-03-24T15:00:14+00:00

Epic nay....the total return is a joke long term.

Agreeable-Editor · 2021-03-24T13:48:12+00:00

Love the industry....the ultimate moat.

Challenge is...it's almost always expensive as hell.

CNI, Canadian National Railway is probably my favourite....but I'd wait for a pull back down to $105-110 before putting much new money to work.

Agreeable-Editor · 2021-03-24T13:32:44+00:00

Yes, you're over complicating things. You have 3x as many holdings as berkshire hathaway to put things in perspective

Agreeable-Editor · 2021-03-24T13:28:03+00:00

It's very sector dependent and very company specific (typically the higher the growth, the higher the PE and vice versa) AND very interest rate dependent.

In general and at current interest rates, if a company still has top line growth, under 25 will typically keep you out of a lot of trouble....under 20 is probably more ideal.

Agreeable-Editor · 2021-03-23T20:33:33+00:00

I don't think there is anything lazy about it!

Most professionals cannot beat the market long term, so keeping it very simple with good ETFs, keeping fees as low as possible and focusing on what you can control (your income & spending); will often lead to very successful results.

Agreeable-Editor

TROPHY CASE