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Telefónica, S.A. Message Board

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  • lincolnparker60614 lincolnparker60614 Feb 7, 2011 12:49 PM Flag

    TEF Dividend

    Actually what you have is a very good stock pick that you have held onto. If you pull up a 10-year chart of the S&P 500 you will see two very large 50% drops in the last 10-years. This argues to keep some cash in reserve to buy more good stocks when the market "crashes." Or to make sure you do some asset allocation to keep 30% money markets, CDs and 2-year to 10-year notes. The S&P 500 is actually down over the last 10-years -- not a good way to preserve capital.

    Put TEF up on the same chart. You will see that TEF underperformed and then outperformed the S&P 500 until about 2006. Then TEF really took off and has outperformed the S&P 500.

    Reinvesting dividends gives 40-60% of the return that you can attribute to stocks. If you have reinvested the dividends, you would be buying some stock at low prices, some at high prices and some at average prices. But you would have a much bigger pot of TEF gold.

    Bear with me now and put S up on the 10-year chart. This shows that holding onto an individual stock can really waste away capital, so you need to be very careful. A friend of mine sat on S from $20+ to the recent ~$4. this is quite a hit to your capital and much more likely to happen to an individual stock than the market overall. So, check up on your long term investments and get out as the story changes to bad from good.

    I like TEF albeit at lower prices. With a market cap of $344 billion, it may slow down just due to its large size.

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