« in general I tend to agree with WB that the risks of being out of the game are huge compared to the risks of being in it. »
That's true if, and only if, your holding period is as long as WEB's. Do you plan to hold forever?
Thanks for the heads up, hc. I don't regularly read Mauldin, but I did see the link to his article over on the other board and I did read it. Being something of a history buff, I really enjoyed the "Monkey Hangers of Hartlepool" story
His estimate that the prospective nominal annualized total return for the S&P 500 over the next decade is likely to be 2.3% works for me.
I get 2.1% using the following assumptions: buy today at 160% of sales, sell ten years from now at 100% of sales, and, during that decade, sales grows 4.5% per year and one collects a dividend each year equal to 3% of sales.
With regard to my INTC bet:
What % of my portfolio did I commit?
What price per share did I pay?
What day did I make the buy?
Ask the censor, S/He knows.
OK, I guess that's it for me today. The censor clipped the end of my last post in mid-sentence.
Just off the top of my head, the absolute amount (~10 B$ T4Q) that AAPL pays out should NOT decrease in the future.
IMO, investors expect the dividend per share to be "sticky". Either pay the same amount next year, or preferable, more, but NO reductions allowed!
To make money available to buy back shares investors are involuntary giving up a fraction of their potential dividend per share TODAY, hoping for a larger dividend per share in the FUTURE. They're trading income today for growth tomorrow. If that doesn't happen, they'll justifiably punish the stock's price per share in the future.
FYI, I made a small bet on INTC, last month,
Sorry, hc, I don't know the answer to that one.
What I do believe is that buying back shares at a price per share below IV (Intrinsic Value) per share does increase IV per share, but only for those equities whose valuation is based on a projection of their future distributions (DIVIDENDS PER SHARE AND THEIR GROWTH PER SHARE).
That buying back shares at a price per share greater than Book Value per share decreases BV per share which in turn decreases iV (imaginary Value) for those equities whose valuation is based on using a multiple of Book Value per share.
JMO, hope that helps.
In spite of the fact that most of what he writes is over my head, I am a James Montier fan.
His latest white paper is a gem, but I am not allowed to discuss it here.
WHY did you delete my post: "OT - GMO Forecasts"?
Last night, I posted some absolutely worthless jibber jabber and you were fine with THAT.
This morning I post something of substance and within 39 seconds (I kept a screen copy) you blow it out of the water. WHY?
If you have "do's and don'ts" style guide, post it.
Only those poor souls who are coherst into buying overpriced hamburgers are going to complain.
On the other hand, and not surprisingly, the sellers will generally be ecstatic.
Every putt makes somebody happy.
By the way, my original reply was censored.
balt, you're right. I'll never own those puppies. I'm smart enough to know that I'm far too stupid to play that game and win. The good news is, I won't be competing with the sharpies who do sell those insurance policies to other speculators.
« seems odd ? »
Not at all.
If the goal of an insurance company is to run a tight operation and make the bulk of their money off investments of their float then the current credit & equity markets must be incredible frustrating.
And who's to blame for that?
balt, thanks for the concern, but I'll pass. At my age, I just don't want to make the effort to learn new ways of losing money. The old ways work well enough.
hc, I don't hate options, I just don't understand them well enough to want to get involved with them. While the Time Value of Money equation makes sense to me, the Black Scholes does not. I don't understand the pricing.
« Every period of outperformance starts with a post like this. »
That shouldn't be too hard to do going forward. My guess is that the S&P 500 would have only done about ~5% YTD if folks hadn't bid the multiple up ~24%. At the start of the year they were only willing to pay a $1.31 for a dollar of sales and now they have no problem with paying $1.63. Think about it. About 80% of the current YTD return is a joke. A dollar of sales only puts about three cents worth of dividends in your pocket and sales per share have been growing (nominally, which includes inflation) recently by about 3% to 4% per year. IMO, if your goal is to make a ~7% return on your investment then you shouldn't be bidding more than 1.00X sales. JMO.