Posts filed under “Dividends”
Reading through the classic textbook, Technical Analysis of Stock Trends, last night I stumbled upon a stunning stat comparing the returns of a strategy using Dow Theory versus buy and hold.
Using Dow Theory buy and sell signals would have turned an initial investment of $100 in 1897 into $492,597.38 by the end of 2010. This compares to a buy and hold strategy of $25,952.72, which even assumes buying the Dow low at 29.64 and selling at December 2010 close.
Of the 41,444 days from 1897 to 2010, the Dow Theory investor would have been on the sidelines 14,378 days, or 37 percent of the time. A nice place to be given some of the epic bear markets over the past hundred years. Imagine watching your portfolio evaporate during the “Hoover drawdown” of 1929-32 with the Dow falling 89 percent. No thanks!
Even more impressive is the return on trading both sides of the market, both long and short, using the Dow Theory buy and sell signals. This strategy would have turned the initial $100 investment in 1897 into $2,697,535.01 by the end of 2010.
The data ignores reinvestment and dividends. Stunning, nonetheless!
Also see: TheDowTheory.com
Click to enlarge Great chart via Josh from WisdomTree regarding MidCap Dividend payers. Source: WisdomTree Research Jeremy Schwartz and Tripp Zimmerman The Forgotten Dividend Payers: Mid- & Small-Cap Equities, April 2013
Interesting discussion in the office today with some of our analytical team: Will any of the cash rich companies who have been sitting on the fence about issuing dividends reconsider their positions? What about a one time special cash dividend before the tax rates go up next year? Think of companies like Apple (AAPL), Berkshire…Read More
Over the last few weeks, we have discussed the questionable data and mediocre results of Jeremy Siegel’s Stocks for the Long Run (See this, this and this). When we step back and take a look at The Really Long Run, we see a much clearer picture. The deep historical perspective as it pertains to the…Read More
Doug Kass on Donald Luskin: Many are concerned that a combination of higher tax rates and lower spending puts the U.S. on a fiscal cliff at year-end. (CNBC’s Maria Bartiromo has been particularly vocal about the subject.) On the tax point, Don Luskin wrote an op-ed in The Wall Street Journal over the weekend,…Read More
Invictus here. A few items of interest (I hope) that I’ve been thinking of lately. What Type of Jobs Recovery Are We Having? Everyone’s seen Bill McBride’s employment chart, which he dutifully updates every month (along with just about every other economic release that comes out). Bill’s chart shows the percent change in employment relative…Read More
Bloomberg Businessweek – The Confusion Over Stock Dividends Yet treating stocks as income-generators comes with a cost. “Rather than viewing dividend stocks as a way to capture extra yield, in the past we have stressed that dividend stocks should simply be viewed as a slightly less risky form of stock investing,” Jim Bianco of Bianco…Read More
With dividend payments at an all-time high and much of the Treasury yield curve effectively at zero, dividend-paying stocks have been in vogue as of late. Many investors are willing to reach out a bit further on the risk curve to capture this extra yield. Rather than viewing dividend stocks as a way to capture…Read More