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Vanguard 500 Index Inv Message Board

jad1148 81 posts  |  Last Activity: Apr 15, 2014 1:52 PM Member since: Dec 8, 2002
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  • Reply to

    jad, watch aapl bro, doc henry lee would say,

    by hjclasvegas6969 Apr 15, 2014 12:23 PM
    jad1148 jad1148 Apr 15, 2014 1:52 PM Flag

    AAPL is in my too hard pile.

  • jad1148 jad1148 Apr 15, 2014 11:25 AM Flag

    Yup, I look at that chart every month.

    Did you notice that they're forecasting a a NEGATIVE, Real (net of inflation), ATR of 1.3% for the S&P 500 ("US Large") over the next seven years?

    The only thing worth looking at, in my opinion, is "US High Quality", for which they're forecasting a positive, real ATR of 2.1%. Oh, what the heck, with any luck at all that should beat holding cash.

    Exciting times, hc, looking forward to making 2.1% over inflation on a carefully selected bunch of equities for the next seven years.

    Thank you Alan, Ben & Janet ... and let's not forget to thank their cheerleaders as well: Warren & Charlie.

  • Reply to

    this board

    by tomandjanewright Apr 14, 2014 8:45 AM
    jad1148 jad1148 Apr 14, 2014 5:23 PM Flag

    « I have held this stock since it was BN back in 1979. I will tell you a lot of positive things about it. I bought in around $25.00. »

    Very impressive.

    My 1998 Edition of Andrew Kilpatrick's book: "Of Permanent Value - The Story of Warren Buffett" shows (page 854), that in 1979, the stock price ranged between $154 and $350.

  • jad1148 jad1148 Apr 14, 2014 12:50 PM Flag

    True, very true.

    Just my opinions:

    If you have no intention of having to sell anytime within the next ten years for the PURPOSE of taking a distribution to fund living expenses, then you should probable just hold.

    Buying? If you buy today at 50X the TTM dividend, AND the dividend grows 5% per year, AND then you have to sell ten years from now at 33X instead of 50X, your ATR drops from 7.1% to 3.3%, which is still better than holding cash. The break-even point (ATR same as cash) for the above example looks like it is about 5.6 years.

    I know that a dividend yield of 2% vs 3% just doesn't seem like a very big deal. But to get from 2% to 3% requires a capital loss of 34% (the Price to Dividend ratio has to fall from 50 to 33). The more years you can spread that loss over, the better. If you're an old geezer like me who has just started taking distributions, that's important.

  • jad1148 jad1148 Apr 14, 2014 10:30 AM Flag

    « 7 months flies by when you are having fun !! »

    or as one toad said to another: "Time sure is fun when you're having flies!"

  • jad1148 jad1148 Apr 14, 2014 9:05 AM Flag

    hc, JMO, but you're putting waaaaay too much faith in politicians and con-artists.

  • jad1148 jad1148 Apr 14, 2014 5:39 AM Flag

    The 3-D chart at the bottom of the page is interesting. It implies that the best time to buy (earn a high return on your investment) occurs when both the TTM profit margin, E/Rev, and the TTM multiple, P/E, are simultaneously low. and the worse returns occur when they are both simultaneously high. And since P/E times E/Rev equals Price/Revenue, that can be simplify further to: buy when the P/Rev is low and sell when the P/Rev is high.

    Let's see how that works in reality.

    The lowest and highest P/Rev over the last 13 years were taken from the S&P 500 analyst's spreadsheet and the 5-Year subsequent annualized total return for that date was calculated using Yahoo's adjusted (for reinvestment of dividends) closing Price for SPY.

    Date, P/Rev, 5-Yr ATR
    12/31/2000, 1.77, 0.58%
    03/31/2009, 0.80, 16.43%
    and
    12/31/2013, 1.66, To Be Determined

  • jad1148 jad1148 Apr 9, 2014 4:33 PM Flag

    « Warren is going to be around for decades. »

    Social Security Online's "Life Expectancy Calculator" gives him another 6.8 years.

  • Reply to

    Grandma Buys T for the Dividend-5.6% Yield

    by axpkocop Feb 4, 2014 10:46 AM
    jad1148 jad1148 Apr 9, 2014 1:26 PM Flag

    Hi, hc, I'm sure you know that the only reason I post here is to tease you AND to aggravate the cheerleaders. So don't take me or my posts too seriously.

    When the going gets tough almost everything loses big time.

    Year-over-year (52 week, actually) percentage change in actual closing price for 6Mar2009.

    Among the Biggest Losers:
    -47.8 BRK-B {the high quality, non-dividend paying, "flight-to-safety" stock - LOL!}
    -47.2% S&P500
    -44.3% DJIA

    Among the smallest losers (no surprises here):
    -0.3% MCD
    -2.0% WMT

    Not surprisingly, Consumer Staples fared better than Consumer Discretionary.
    -28.2% VDC (Staples ETF)
    -48.5% VCR (Discretionary ETF)

    Not that anyone cares:
    -38.6% VPU (Utilities ETF)
    -35.5% T
    -22.2% VZ (I don't get it, why is VZ better than T? FD: I own both).
    -33.6% KO

  • Reply to

    Grandma Buys T for the Dividend-5.6% Yield

    by axpkocop Feb 4, 2014 10:46 AM
    jad1148 jad1148 Apr 9, 2014 9:38 AM Flag

    OK, my curiosity got the better of me. I looked up and calculated the 4-Year (4/8/2010 to 4/8/2014) ATRs (based on Yahoo's adjusted closing prices, which correct for splits & dividend reinvestment).

    14.06% SPY

    13.96% T, that's only 10 basis points per year less than the index. I was pleasantly surprised.

    11.49% BRK-B, that's a whopping 257 basis points per year less than the index and 247 basis points per year less than T. Rhetorical question: Why (YYYYY) do people want this? For the love of Warren (that's probably the best answer!) I'll never understand why.

  • Reply to

    Grandma Buys T for the Dividend-5.6% Yield

    by axpkocop Feb 4, 2014 10:46 AM
    jad1148 jad1148 Apr 9, 2014 7:01 AM Flag

    I don't know and I don't care (ignorance & apathy). Investing isn't a contest for me. I'm in it for income with capital preservation.

  • Reply to

    Grandma Buys T for the Dividend-5.6% Yield

    by axpkocop Feb 4, 2014 10:46 AM
    jad1148 jad1148 Apr 9, 2014 4:16 AM Flag

    I first bought T four years ago at $25.60 when the dividend was $0.42 per share per quarter. Since then I have made two additional buys bringing it up to 10% (my limit for a stock) of my portfolio. Investment-wise it has provided a XIRR of 13.1%. The dividend has been raised four times during my ownership: 0.42 to 0.43 to 0.44 to 0.45 to the current 0.46, or about 2.3% per year, so I see it as the corporate equity equivalent of an inflation-indexed bond with a current real yield of 5.2%. The current real YTM on the 30-Yr TIPS is 1.28%, so that's an equity risk premium of about 4%. I'm happy with it.

  • Reply to

    Glad I got out before the merger

    by lrw2841 Apr 5, 2014 5:08 AM
    jad1148 jad1148 Apr 7, 2014 5:07 AM Flag

    A junk bond fund?

    My fear would be that today's promise of a higher yield would eventually be offset by future capital losses.

    And, someday in the far future, when Janet decides to start raising interest rates, that might induce additional capital losses. With a current duration of 3.9 years and a yield of 4.7%, an instantaneous increase of 1% in the interest rate would theoretical wipe out about a year's worth of income.

    Just my opinion.

  • jad1148 jad1148 Apr 7, 2014 4:32 AM Flag

    Balt, I don't understand why someone who is risk averse would favor BRK-B. What is the justification for the current trading price? Something WEB SAID? Something along the lines of: BRK is worth more than what I'm willing to pay to buy back shares and I'd consider buying back shares if the price fell below 120% of book value per share? If push came to shove, would he really buy back shares or would he just move the goal posts? And if he did buy back shares would the volume be substantial or just symbolic (a mere fraction of the shares being offered)? In BRK's case IV calculations tend to be based on fantasy distributions (the so called "Page 4, 2 Column" method, comes to mind) that are highly unlikely to ever take place in the real world. BRK, in spite of its size, looks a lot like a family business to me. If, in the next several years, Charlie dies, Warren dies, and Howard preceeds Warren in death, who is left to run the show? The "3-Ts" with an assist from Susie and Peter? And if I wanted to make a bet on America, I'd buy VTI (Vanguard's Total US Stock Market ETF), not BRK-B. Just my two cents.

  • jad1148 jad1148 Apr 6, 2014 11:22 AM Flag

    Seriously hc. with regard to demand, why, other than the bragging rights ( my money is being run by the "World's Greatest Investor". So THERE! Na-nana-naa-nah! ), would anyone WANT to own BRK?

    I'm not really a meany. I'm just playing the devil's advocate. Although the thought of bringing a plate full of deviled eggs to a church picnic just busts me up « Miracle Whip and Proud of It: Stacy's Deviled Eggs ».

  • jad1148 jad1148 Apr 6, 2014 10:21 AM Flag

    5-Year Period (YE2008-YE2013)

    BRK-A: (1 + 13.86%) * (1 + 0% - 0.74%) - 1 = 13.0%

    In words: book value per share grows 13.86% per year (better than average!), BRK refuses to pay a dividend, and the multiple (P/BV) undergoes a modest contraction of 0.74% per year.

    S&P500: (1 + 1.39%) * (1 + 2.64% + 13.79%) - 1 = 18.0%

    In words: Revenue/Sales per share grows a pathetic 1.39% per year (less than inflation!), the "500" pays a dividend that averages 2.64% of sales per year, and the multiple (P/Rev), thanks to equity bulls & pumpers, undergoes a ridiculous expansion that averages 13.79% per year.

  • jad1148 jad1148 Apr 6, 2014 9:47 AM Flag

    IMO WEB is his own worse enemy.

    He knows how to turn the faucet on, but refuses to speak up when it comes time to close it off.

    Five years ago, he touted equities at least twice.

    Directly, "Buy American. I Am", 17Oct2008, and indirectly (Carol Loomis), "Buffett's metric says it's time to buy", 4Feb2009.

    The result? The S&P 500 went from slightly undervalued at YE2008 (P/Rev of 87%) to ridiculously overvalued by YE2013 (P/Rev of 166%) and the S&P 500 outperformed BRK.

    Serves him right for not having the courage to speak up.

    IMO, he's no better than Alan, Ben & Janet.

  • Reply to

    I dont get it

    by tomandjanewright Apr 4, 2014 10:42 AM
    jad1148 jad1148 Apr 6, 2014 12:02 AM Flag

    At first sight, a sales growth rate of 12.8% per year over the last two years sounds impressive until one realizes that growth isn't entirely organic (growth from within) but is also partially attributable to growth from bolt-on-acquisitions, purchases made from retained earnings that could have been paid out as dividends.

  • Reply to

    Value

    by alan_pad Mar 19, 2014 10:56 AM
    jad1148 jad1148 Apr 5, 2014 9:58 AM Flag

    Simple arithmetic, if BRK grows, on average, by about 10% per year, it will probably take another 70 years for BRK-B to grow from ~124 to ~100,000 $/share.

  • Reply to

    Value

    by alan_pad Mar 19, 2014 10:56 AM
    jad1148 jad1148 Apr 5, 2014 9:45 AM Flag

    « Why is this not selling for around $100,000 per share?? »

    Because WEB has put folks on notice that he would consider buying back shares if the price fell below 120% of book value per share.

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