Short Posts

Adding a Dividend-Only Extension

What happens if you live only on dividends during the first decade of your retirement? Answer: you extend your portfolio's lifetime by ten years.

Not so obvious: this is true even if your portfolio balance declines during the first decade.

Adding a Dividend-Only Extension
Adding a Dividend-Only Extension: Follow On
S&P500 Dividend Yields

Monthly Returns

Our investigations into Managing Downside Risk in Financial Markets have led us to an unexpected conclusion: Much of academic investment research should be tossed out.

The critical flaw is the use of monthly returns.

Monthly Returns

Refusing to See: Dividends

I read recently that dividend yields have no power to predict stock returns. Ridiculous.

Here are my speculations as to how someone could reach such a conclusion.

Refusing to See: Dividends

Historical Perspective

Benjamin Graham gave good advice. Benjamin Graham’s constraint (25% to 75% for both stocks and bonds) minimizes regret.

Historical Perspective

Historical Perspective: Dividends and Earnings

We have had great success with our dividend-based strategies.

Central to any dividend-based strategy is assessing the quality of dividends. Critical to assessing the quality of dividends is assessing the quality of earnings.

I have extracted more of the wisdom found in The Intelligent Investor by Benjamin Graham.

Historical Perspective: Dividends and Earnings

Dividend-Based Design Outline

I called my first attempt a Dividend-Based Design Example. It was a success.

That original approach delivered 4.0% (plus inflation) far into the future. The downside risk was a 4-year reduction of 5%, which would be a withdrawal rate of 3.8% (plus inflation), followed by 4.0% or more (plus inflation).

I have followed the Example with this Dividend-Based Design Outline. We are up to 4.8% (plus inflation), safely and perpetually, starting from today's market.

For a quick read, see the Dividend Sound Bite.

Dividend-Based Design Outline
Dividend Sound Bite

Lessons from the Dow Jones Utilities

We get great letters. Unclemick recently asked me to look at the Dow Jones Utilities Average. It has a long history with high dividend yields.

Here is how you can achieve a 4.0% to 4.8% (plus inflation) perpetual safe withdrawal rate.

Lessons from the Dow Jones Utilities

Individuals Pick Winners

The myth about not being able to identify superior mutual fund managers ahead of time is only a myth. Individuals do it all the time.

Somebody has to get above average returns. Why not us?

Individuals Pick Winners

Risky Alternatives

We have developed several intermediate-term timing strategies recently. Retirees invest in TIPS at 2% (real) interest up to a decade waiting for valuations to improve.

But what about alternatives? What if we hold stocks and 2% TIPS for the first decade?

Edited: Risky Alternatives
Risky Alternatives

DCA Today: The Point of Frustration

It is easy to understand why many investors abandon stocks even when dollar cost averaging. Relative to deposits, deficits can be HUGE. The point of frustration with dollar cost averaging (DCA) today is 10 or 15 years.

DCA Today: The Point of Frustration
Dollar Cost Averaging Today: Edited

Diminishing Returns

This is how I address portfolio safety and diminishing returns.

Diminishing Returns

Dividends and Constant Terminal Value Rates

Constant Terminal Value Rates (CTVR) are withdrawal rates that leave the balance at the end of a period identical to the initial balance plus inflation. They are especially useful for young retirees because withdrawals continue indefinitely.

CTVR withdrawals allow for the selling of shares. Most dividend-based strategies do not. This makes for an interesting comparison.

Dividends and Constant Terminal Value Rates

Older Short Posts

Here are the original Short Posts. They were written before September 27, 2005.

Older Short Posts