Dividend Mantra Sells Out (Literally)

[innerscorecard]

http://www.dividendmantra.com/2015/09/an-exciting-new-beginning/

Edit: Hmm, maybe I shouldn't have used "sell out." Sounds pejorative...which I really didn't mean. I just mean to say that he literally seems to be selling the site.

[Ziggurat]

I don't subscribe to many sites, but I did to his, because I was intrigued by following someone's progress in real time.  I continued to follow even though (through discussion on this forum) I no longer believed in the pure dividend growth philosophy.

Although he states he will continue to post some of his numbers, I doubt that it will be as satisfying and compelling for me.

Goes to show MMM's position of strength arguments, though.  I can't help but feel that Jason's new 'financial arrangements' might have played out much differently if he was already FI.

[Retired To Win]

I can totally relate to Jason's rationale for selling all (or part?) of his interest in his blog.  I feel exactly the same way he does about blogging: the writing is a passion and satisfying fun, but what I call "blog ops" can easily -- and too often -- end up feeling like an unwanted job obligation.

So, good for him.  (Particularly if this move re-energizes his writing.)

[Financial.Velociraptor]

I can totally relate to Jason's rationale for selling all (or part?) of his interest in his blog.  I feel exactly the same way he does about blogging: the writing is a passion and satisfying fun, but what I call "blog ops" can easily -- and too often -- end up feeling like an unwanted job obligation.

So, good for him.  (Particularly if this move re-energizes his writing.)

Second this.  My blog is tiny compared to his so I can only imagine how large the burden must have become.

[innerscorecard]

I know what you guys mean. But it's interesting, because selling the site isn't the only way to not do those things. You could also outsource operations to people you pay, while retaining ownership, control and freedom. Tim Ferriss and Ramit Sethi don't do their own Wordpress, but they can write whatever they want.

It's just interesting to think about the different set of tradeoffs that exist for different operators in this space.

[rmendpara]

No different than paying a fee to someone to manage your assets. It's an exchange of your money for your time in some way or another. Not everyone is interested in the operating activities of a business, or managing assets, mowing the lawn, maintaining a car, etc.

[grettman]

It will really be interesting to see how his site, and others, fair during a major down turn.  While I have been an investor through many of the downturns since the early 90s, I have only been looking at personal finance sites during the latest market boom.  When the shit really hits the fan, I wonder what the affect will be on his site.  I really don't have a hypothesis.  It could boom further, get crushed, or stay the same. 

[EscapeVelocity2020]

It might be a little premature, but I tend to avoid PF sites that I know have been bought out.  Jason is a good writer (good enough to keep me checking in although I'm a 'total return' investor vs. focus on dividend yield), but the site is now owned by a faceless entity with a goal for ROI on that space and installed user base.  I'm sure Jason will be fine without me, and I can empathize with disliking the back-office job of blogging, but agree with others that selling out is the worst solution for an owner that is passionate about his main message.  With the community he had built, I'm sure he could've reached out and maintained control.  In fact, I think readers enjoy being a part of that.  Even MMM went through a phase getting submissions for a logo and moderators to volunteer on the forum. 

I sometimes get the impression that J.D. misses 'Get Rich Slowly' and advised MMM to hold on to his site even though millions of dollars were waved under his nose at one point.  We'll never know the details of the transaction, but I'm betting DM will look quite different when I go back to check in 3 or so months from now...

[Indexmantra]

I think Jason played all of us perfectly. Being the skeptic that I am, I think he had a lot of "passion as a writer", but unfortunately he was not a good investor - he was just a good marketer who knew how to connect with reporters and major sites like MMM.

I was a big fan of his, until I went back to his investments and compared them to simply buying VTI. Example - I calculated total returns on each one of his stocks at the date he says he bought it, versus say an equivalent amount invested at the same time in Vanguard Total Index Fund VTI.

My calculations could have been off, but I found out that overall he did only a little bit worse than VTI - possibly a couple percent overall. Since late 2012 however, his picks have performed much worse than VTI. Ironically, after 2012 he has put most money to work into his strategy, so the effects of underperformance are felt more and more.

I also realized that his dividend income was increasing mostly because he kept adding a lot of money to his portfolio. And his portfolio increased in value mostly because he was adding money to it. 

The thing that really bugged me was that he didn't understand the power of Roth IRA's like GoCurryCracker or MadFientist. So his advise has been dangerous to others.

PS Edit: Should have said a bit worse than VTI, not better.

[tooqk4u22]

I think Jason played all of us perfectly. Being the skeptic that I am, I think he had a lot of "passion as a writer", but unfortunately he was not a good investor - he was just a good marketer who knew how to connect with reporters and major sites like MMM.

I was a big fan of his, until I went back to his investments and compared them to simply buying VTI. Example - I calculated total returns on each one of his stocks at the date he says he bought it, versus say an equivalent amount invested at the same time in Vanguard Total Index Fund VTI.

My calculations could have been off, but I found out that overall he did only a little bit better than VTI - possibly a couple percent overall. Since late 2012 however, his picks have performed much worse than VTI. Ironically, after 2012 he has put most money to work into his strategy, so the effects of underperformance are felt more and more.

I also realized that his dividend income was increasing mostly because he kept adding a lot of money to his portfolio. And his portfolio increased in value mostly because he was adding money to it. 

The thing that really bugged me was that he didn't understand the power of Roth IRA's like GoCurryCracker or MadFientist. So his advise has been dangerous to others.

I agree, I checked in early on because of his marketing links but lost interest because most of his articles were recent buys (essentially change ticker symbol and post) or monthly updates.  On the investment side, ignoring total return, there was no real comparative analysis to his writing......it has a PE of this so it is good....

I am more curious about what it sold for....we will never know but I am sure there are enough people here that have an idea on how sites are monetized and ultimately valued to make informed guesstimates.

Anybody?????

Modified to note that I have started this thread to discuss blog value and why to discuss separately

http://forum.mrmoneymustache.com/off-topic/what-are-blogs-worth-(in-light-of-dm-selling-out)/

[MarciaB]

I can totally relate to Jason's rationale for selling all (or part?) of his interest in his blog.  I feel exactly the same way he does about blogging: the writing is a passion and satisfying fun, but what I call "blog ops" can easily -- and too often -- end up feeling like an unwanted job obligation.

So, good for him.  (Particularly if this move re-energizes his writing.)

Second this.  My blog is tiny compared to his so I can only imagine how large the burden must have become.

And +1 to this - I have a tiny blog (46 subscribers and counting...go team!) and the back end can be time consuming (mostly because I'm clueless with technical stuff and can't ever find things I'm looking for).

Jason's had ad revenues and affiliate links though, so should have plenty of funds to underwrite any administrative help he needs.

I got the impression he's hired a firm to help with all this, but it sounds like from you'alls posts that he has actually sold his blog (and then they retain him as a staff writer)? Too bad we won't see the actual details (with numbers) on this.

[sheepstache]

I'm reminded of a supposed difference between American and British television shows. American producers assume series should keep going on as long as possible while British shows end when they're, well, done. (I think some American producers have come around a bit to the British view more recently.) 

I feel like for most personal finance blogs, when it's done it's done. It doesn't need to turn into a conglomerate of other writers. Unless it's got a big enough readership that it's really going to compete for top dog all-purpose personal finance site within its category so that it's kind of hub, bringing in different writers, particularly without even any oversight from or curating by the original one, is sort of pointless.

Leave the site up and maybe new readers will come read beginning to end, or if you had a good comments software each article will be kind of a quasi-forum that might stay active; if the server fees get too high compared to revenue, pare it down to some sample posts and offer the rest as an ebook for a couple bucks.

I feel like this takes some discipline on the part of the internet audience too. We should accept higher quality that eventually ends, and recognize that that value often remains even if it stops being "up-to-date." Rather than demanding more and more and then whining when it's diluted.

[innerscorecard]

Yes, Get Rich Slowly and other sold sites really suck.

[fiveoh]

I noticed from his twitter feed hes writing for dailytradealert as well. Maybe they wanted him exclusive or bought him out. 

I agree with pretty much everything thats been posted.  He recently just seems to be "shoveling" money in and not worrying at all about valuation/return as long as it pays a decent dividend.  I also wont be checking his blog because the personal aspect of it is what I enjoyed.

[mizzourah2006]

The thing that really bugged me was that he didn't understand the power of Roth IRA's like GoCurryCracker or MadFientist. So his advise has been dangerous to others.

He talks about why he is not going with a Roth though. He knows his income would never get to the point where he triggers capital gains on taxable investment accounts and the concerns with the Roth and early withdrawals beyond contributions. I can't remember exactly, but I thought he explained his reasoning pretty thoroughly. If he never triggers capital gains on his taxable accounts there is no difference between the taxable account and a Roth IRA. He also lives in Florida, which currently doesn't have a state income tax.

[grettman]

The thing that really bugged me was that he didn't understand the power of Roth IRA's like GoCurryCracker or MadFientist. So his advise has been dangerous to others.

+++1 I completely agree that his advice has been dangerous to others.  I kept reading his blog because of my fascination with his low expense life style and enthusiasm for freedom.  However, I would never take his investing advice.  Other than SAVE, SAVE, SAVE, and then SAVE more, I wouldn't do what he says.  I would rather put the money in VTI, SWTSX, and etc. than the dividend funds he was buying.  You can NEVER get back the time you lose by not leveraging retirement accounts.

[Indexmantra]

The thing that really bugged me was that he didn't understand the power of Roth IRA's like GoCurryCracker or MadFientist. So his advise has been dangerous to others.

He talks about why he is not going with a Roth though. He knows his income would never get to the point where he triggers capital gains on taxable investment accounts and the concerns with the Roth and early withdrawals beyond contributions. I can't remember exactly, but I thought he explained his reasoning pretty thoroughly. If he never triggers capital gains on his taxable accounts there is no difference between the taxable account and a Roth IRA. He also lives in Florida, which currently doesn't have a state income tax.

He earns a ton from his blog and writing now - 6 figures pre-tax. So I would say he is paying a ton in taxes on income and dividends now- possibly $20,000 or more in 2015 taxes so far. He can easily avoid paying out taxes by creating a solo 401 (k) or HSA.  So if in the future he doesn't need more than $20K to live off, he can just do a Roth Conversion Ladder.

GoCurryCracker and Root of Good have been talking about how to convert money from 401K to Roth with the Roth Ladders.

But DM is not willing to do it.

He also keeps talking about Buffett, but he is not Buffett. Buffett has been doing complex deals to avoid paying taxes - DM willing pays as much tax as possible. And plus, his stock picks have not done so well either. Buffett also writes out only one letter to shareholders per year - his time is too valuable to post individual stock analysis.

That's why I think DM's goal from the get go was to just make money online, and then 'motivate" all of his zealots out of their money.

I would stick to Bogle - the guys is a saint who has made is easy for those like me who know nothing to invest their savings prudently. I would run away from promotional salespeople, whose goal is to better themselves.

[Financial.Velociraptor]

So many haters.  Jason seems like a perfectly likable guy to me.  I'm glad he has been able to make money from his writing (he beats the douche who raised the price on the AIDS drug 700 bucks by a mile for deservability).  More power to him if he found a way to cash out.  That is capitalism at work.

[mizzourah2006]

The thing that really bugged me was that he didn't understand the power of Roth IRA's like GoCurryCracker or MadFientist. So his advise has been dangerous to others.

He talks about why he is not going with a Roth though. He knows his income would never get to the point where he triggers capital gains on taxable investment accounts and the concerns with the Roth and early withdrawals beyond contributions. I can't remember exactly, but I thought he explained his reasoning pretty thoroughly. If he never triggers capital gains on his taxable accounts there is no difference between the taxable account and a Roth IRA. He also lives in Florida, which currently doesn't have a state income tax.

He earns a ton from his blog and writing now - 6 figures pre-tax. So I would say he is paying a ton in taxes on income and dividends now- possibly $20,000 or more in 2015 taxes so far. He can easily avoid paying out taxes by creating a solo 401 (k) or HSA.  So if in the future he doesn't need more than $20K to live off, he can just do a Roth Conversion Ladder.

GoCurryCracker and Root of Good have been talking about how to convert money from 401K to Roth with the Roth Ladders.

But DM is not willing to do it.

He also keeps talking about Buffett, but he is not Buffett. Buffett has been doing complex deals to avoid paying taxes - DM willing pays as much tax as possible. And plus, his stock picks have not done so well either. Buffett also writes out only one letter to shareholders per year - his time is too valuable to post individual stock analysis.

That's why I think DM's goal from the get go was to just make money online, and then 'motivate" all of his zealots out of their money.

I would stick to Bogle - the guys is a saint who has made is easy for those like me who know nothing to invest their savings prudently. I would run away from promotional salespeople, whose goal is to better themselves.

We have no clue how he structures his online income. If he runs it like a business and deducts expenses after paying double FICA taxes and after deducting business expenses I bet you he keeps his actual income under 50-60k. Hell it wasn't until the last 3 months that his online income even became substantial. His June online income was 6.25k. For May it was 5.4k in March it was 1.5k. It wasn't until very recently that his income started to look like he would get closer to 6 figures. Before that his total income was closer to an annualized income of < 40k and that is before deducting business expenses and FICA taxes.

It seems like now, yes it would make sense to move to some tax deferred or tax sheltered accounts, but when his income projections were in the 40-50k/yr range and he was planning to live off of 25-35k/yr in dividends there would be no difference between taxable accounts and a Roth and paying income taxes on a 401k would have been a wash.

[CorpRaider]

I dont see what the appeal of the site will be if he doesnt share real numbers to track his progress to his goal, but congrats to him.

[patrickza]

I dont see what the appeal of the site will be if he doesnt share real numbers to track his progress to his goal, but congrats to him.

This is it for me. I only read for the income/expense reports, and his portfolio numbers. I think he's a likable guy, but I don't care for stock picks.

[mizzourah2006]

I dont see what the appeal of the site will be if he doesnt share real numbers to track his progress to his goal, but congrats to him.

oh I thought he was still going to track his dividends and keep his portfolio live, just stop with the monthly income/expenses updates. I agree it wouldn't be a very valuable site without any of this. His stock picks aren't all that great IMO. He just got hammered on CAT. Bought the falling knife all the way down.

[Indexmantra]

The thing that really bugged me was that he didn't understand the power of Roth IRA's like GoCurryCracker or MadFientist. So his advise has been dangerous to others.

He talks about why he is not going with a Roth though. He knows his income would never get to the point where he triggers capital gains on taxable investment accounts and the concerns with the Roth and early withdrawals beyond contributions. I can't remember exactly, but I thought he explained his reasoning pretty thoroughly. If he never triggers capital gains on his taxable accounts there is no difference between the taxable account and a Roth IRA. He also lives in Florida, which currently doesn't have a state income tax.

He earns a ton from his blog and writing now - 6 figures pre-tax. So I would say he is paying a ton in taxes on income and dividends now- possibly $20,000 or more in 2015 taxes so far. He can easily avoid paying out taxes by creating a solo 401 (k) or HSA.  So if in the future he doesn't need more than $20K to live off, he can just do a Roth Conversion Ladder.

GoCurryCracker and Root of Good have been talking about how to convert money from 401K to Roth with the Roth Ladders.

But DM is not willing to do it.

He also keeps talking about Buffett, but he is not Buffett. Buffett has been doing complex deals to avoid paying taxes - DM willing pays as much tax as possible. And plus, his stock picks have not done so well either. Buffett also writes out only one letter to shareholders per year - his time is too valuable to post individual stock analysis.

That's why I think DM's goal from the get go was to just make money online, and then 'motivate" all of his zealots out of their money.

I would stick to Bogle - the guys is a saint who has made is easy for those like me who know nothing to invest their savings prudently. I would run away from promotional salespeople, whose goal is to better themselves.

We have no clue how he structures his online income. If he runs it like a business and deducts expenses after paying double FICA taxes and after deducting business expenses I bet you he keeps his actual income under 50-60k. Hell it wasn't until the last 3 months that his online income even became substantial. His June online income was 6.25k. For May it was 5.4k in March it was 1.5k. It wasn't until very recently that his income started to look like he would get closer to 6 figures. Before that his total income was closer to an annualized income of < 40k and that is before deducting business expenses and FICA taxes.

It seems like now, yes it would make sense to move to some tax deferred or tax sheltered accounts, but when his income projections were in the 40-50k/yr range and he was planning to live off of 25-35k/yr in dividends there would be no difference between taxable accounts and a Roth and paying income taxes on a 401k would have been a wash.

He posts income after taxes. If you look at his April report, he tells that ( he paid a ton in taxes that month).

And the expenses he shares are supposedly really low, so business deductions would be low as well.

Actually, if he had placed his money in a good old S&P 500 fund/VTI Fund in a 401K or IRA, he would have more money than today due to the hefty tax breaks and index funds outperforming his stock picks. So his advice is dangerous:

http://www.dividendmantra.com/2015/09/an-exciting-new-beginning/#comment-221574

[Indexmantra]

So many haters.  Jason seems like a perfectly likable guy to me.  I'm glad he has been able to make money from his writing (he beats the douche who raised the price on the AIDS drug 700 bucks by a mile for deservability).  More power to him if he found a way to cash out.  That is capitalism at work.

You cannot argue with facts.

The fact is, DM is a good marketer/businessman. But not a good investor. Yet people read him for investing ideas. The only value he has provided in investing is to himself. John Bogle provided value for investors by allowing Vanguard to be investor owned, and allowing investors to get their fair share of returns at low costs. He is the one that inspires me, not DM. I am just an ordinary person, and yet I have matched the return on VTI/VTSAX by investing into the market.

Inspiration to get your house in order is great. But inspiration could be dangerous if you or your readers do not understand their limitations, and put their hard earned money to work in a risky endeavour. Like the person I linked to above, who sold his index fund to purchase 15 dividend stocks in a taxable account.

DM's returns are not that good. And since his blog took off in late 2012, his stock picks have not done very well. This is a fact. He has spent all this time to pick stocks, and he hasn't even beat a simple index fund. The only reason why he still sticks to investing in my opinion is because he can earn more money writing about his investing than from his actual investment returns.

Just think for a second - he is earning 100,000/year pre-tax in 2015, writing about his $200,000 portfolio. The only reason he is still picking stocks after underperforming the market is because he is earning a lot of money from the writing about picking stocks.

Robert Kiyosaki also claims to be a good investor and also tries to motivate or inspire people, but in reality, he is just a good marketer. And his advice is also downright dangerous. So those who sell motivation make me highly skeptical.

[mizzourah2006]

So many haters.  Jason seems like a perfectly likable guy to me.  I'm glad he has been able to make money from his writing (he beats the douche who raised the price on the AIDS drug 700 bucks by a mile for deservability).  More power to him if he found a way to cash out.  That is capitalism at work.

You cannot argue with facts.

The fact is, DM is a good marketer/businessman. But not a good investor. Yet people read him for investing ideas. The only value he has provided in investing is to himself. John Bogle provided value for investors by allowing Vanguard to be investor owned, and allowing investors to get their fair share of returns at low costs. He is the one that inspires me, not DM. I am just an ordinary person, and yet I have matched the return on VTI/VTSAX by investing into the market.

Inspiration to get your house in order is great. But inspiration could be dangerous if you or your readers do not understand their limitations, and put their hard earned money to work in a risky endeavour. Like the person I linked to above, who sold his index fund to purchase 15 dividend stocks in a taxable account.

DM's returns are not that good. And since his blog took off in late 2012, his stock picks have not done very well. This is a fact. He has spent all this time to pick stocks, and he hasn't even beat a simple index fund. The only reason why he still sticks to investing in my opinion is because he can earn more money writing about his investing than from his actual investment returns.

Just think for a second - he is earning 100,000/year pre-tax in 2015, writing about his $200,000 portfolio. The only reason he is still picking stocks after underperforming the market is because he is earning a lot of money from the writing about picking stocks.

Robert Kiyosaki also claims to be a good investor and also tries to motivate or inspire people, but in reality, he is just a good marketer. And his advice is also downright dangerous. So those who sell motivation make me highly skeptical.

I certainly never read him for stock picking advice. He might have put some stocks on my radar, but if you are that lazy that you will pick a company just because some random guy on the internet bought it you deserve to lose all of your money. He provides a different perspective to investing. If you can't decipher whether it is good/as good as index investing or not how is that his problem? Should we only allow investing in index fund discussions to be had on the internet and censor everything else because it's "dangerous".

[wtjbatman]

Indexmantra (With that name I can guess how you feel about a site named Dividendmantra...), you are saying a lot of things that I don't believe are true.

The first is that DM/Jason has a goal to "motivate his zealots out of their money". I'm sorry, what? I enjoy reading DM, but I don't remember sending him my money. I must have missed that part of being one of his zealots.

Secondly, you state that people read him for investing ideas. I argue that the majority of people don't read him for investing ideas. And that's not a judgement about his investing, it's based on what people in his comments and people here say. They enjoy reading his posts about his monthly income and spending most of all, followed by details of his investment growth and rising dividend income. Honestly I skip over most of his stock analysis, because as someone who occasionally invests in stocks, I prefer to do my own research/analysis and would never blindly follow the strategy of one person online. Something he advises against anyway!

Calling Jason from DividendMantra a promotional salesman is laughable. What exactly is he selling? The idea of living frugally, and saving/investing all of your extra cash? Gee, what horrible advice. I don't know anyone around here who thinks like that.

[Jeremy]

I've never met Jason, but I like him a great deal.  I've had quite a few conversations with him over the past few years, both in comments and email, and he has been nothing but open and supportive

Congrats to Jason on his success and continuing to live life on his own terms

[zephyr911]

The post screams "trying too hard" as he strives to sell the "exciting" new change - it's loaded with FAR too much marketing language. He doesn't admit until somewhere down in the comments that this boils down to an unwilling surrender of creative control. And he never explains why something as basic as unsustainable back-end workload would necessitate that, instead of simply outsourcing key support functions that any number of vendors could do for a flat fee or a reasonable percentage.

If I had been following this blog regularly, I'd bail now.

Congrats to Jason on his success and continuing to live life on his own terms

Except he admits he's not doing it all on his own terms:

I never wanted to give up control like I did

[Aphalite]

You cannot argue with facts.

The fact is, DM is a good marketer/businessman. But not a good investor. Yet people read him for investing ideas. The only value he has provided in investing is to himself. John Bogle provided value for investors by allowing Vanguard to be investor owned, and allowing investors to get their fair share of returns at low costs. He is the one that inspires me, not DM. I am just an ordinary person, and yet I have matched the return on VTI/VTSAX by investing into the market.

DM's returns are not that good. And since his blog took off in late 2012, his stock picks have not done very well. This is a fact. He has spent all this time to pick stocks, and he hasn't even beat a simple index fund. The only reason why he still sticks to investing in my opinion is because he can earn more money writing about his investing than from his actual investment returns.

You're cherry picking a three year window of time where we had a major bull run. Dividend stocks tend to underperform during bull cycles, why not wait a couple more years and then see how the stock picks have done then? Or even simpler, just go back further in time and grab a longer period of time. An index fund is hardly "simple" - VTI has quite a lot of junk in it that's guaranteed to lose you money in the near future, just because you won't notice it because it's a small portion of the fund doesn't mean it's not there.

And your hero Jack Bogle? He has said in his most famous works that holding individual securities is even more tax efficient and less costly (provided you don't create excess turnover through activity) than buying an index fund. The reason he created index funds is because 1) most people can't stand to just sit there and do nothing when there's volatility, something that Jason hardly has trouble with since he's steadily collecting income and 2) people pay too much in transaction costs and fees (including AUM fees on mutual funds), which again, since Jason isn't a trader, he doesn't have that problem.

Here's a quote from a recent interview:

"The stock market is not what creates value. Value is created by corporate America. That's dividend yield plus the earnings growth that ensues. And that's my formula for investment return.

That 9% annual rate of return long-term for stocks that you read about? It's because the average long-term yield is 4.5%. The other half is the growth of 4.5%. Of course, yield isn't anywhere near 4.5% (on long-term Treasurys) now, which is a warning that future returns will be lower.

My point is that you hope to capture as much of that average 9% return a year as you can. You do it by minimizing your costs."

Read more: http://www.nasdaq.com/article/john-bogle-vanguard-founder-discusses-how-to-invest-cm340997#ixzz3n8rZlsm1

[Jeremy]

The post screams "trying too hard" as he strives to sell the "exciting" new change - it's loaded with FAR too much marketing language. He doesn't admit until somewhere down in the comments that this boils down to an unwilling surrender of creative control. And he never explains why something as basic as unsustainable back-end workload would necessitate that, instead of simply outsourcing key support functions that any number of vendors could do for a flat fee or a reasonable percentage.

If I had been following this blog regularly, I'd bail now.

Congrats to Jason on his success and continuing to live life on his own terms

Except he admits he's not doing it all on his own terms:

I never wanted to give up control like I did

I never wanted to give up my bicycle like I did. 

But it no longer fit with the direction I wanted my life to go


Not caring about your or my opinion is living life on his own terms

[Financial.Velociraptor]

Haterz gonna hate...

[EscapeVelocity2020]

Just a little speculation on my part, but I bet if he would've come out with a post like 'I just turned down $xxx,000 to maintain control of my site and keep living the dream', his readership would have skyrocketed.  Maybe affiliate and online ad revenue is getting harder to come by. 

He certainly could've spent a day or two and outsourced the back office stuff, or reached out to an IT-inclined partner to handle the scalability / hosting / webdesign stuff.  I also don't understand why he takes so much time to respond to hundreds of comments, when many of the responses are cut and paste.

At the end of the day, selling a PF blog about FI by doing x (getting rich slowly, building a dividend snowball, retiring early and carefully managing the finances) loses the message when your readers see most of the FI came from y (building and selling a business, having a spouse that works, inheriting, winning the lottery...). 

The reality of DM was that many readers associated with his story of quitting a job he hated, pursue his passion, and ultimately securing his future by building a perpetually growing dividend snowball.  By being transparent and honest (about his relationship with his SO, family, etc.) and unapologetic about his strategy picking individual dividend stocks, he had cemented his niche.  So I can understand how this sudden 'sell out' could feel like a betrayal.  He gets the sack of cash and the readers are left with a half-finished story.

I would've loved it if his story had ended in the way of MMM, with DM spitting in the eye of a faceless corporation to strike out valiantly on his own, only to have the minor setback lead to even more untold riches and autonomy than ever before...  but that's just me :)

[sheepstache]

So many haters.  Jason seems like a perfectly likable guy to me.  I'm glad he has been able to make money from his writing (he beats the douche who raised the price on the AIDS drug 700 bucks by a mile for deservability).  More power to him if he found a way to cash out.  That is capitalism at work.

I think you can support the guy making bank while still commenting that it's a sub par outcome for the readers.

[Indexmantra]

You cannot argue with facts.

The fact is, DM is a good marketer/businessman. But not a good investor. Yet people read him for investing ideas. The only value he has provided in investing is to himself. John Bogle provided value for investors by allowing Vanguard to be investor owned, and allowing investors to get their fair share of returns at low costs. He is the one that inspires me, not DM. I am just an ordinary person, and yet I have matched the return on VTI/VTSAX by investing into the market.

DM's returns are not that good. And since his blog took off in late 2012, his stock picks have not done very well. This is a fact. He has spent all this time to pick stocks, and he hasn't even beat a simple index fund. The only reason why he still sticks to investing in my opinion is because he can earn more money writing about his investing than from his actual investment returns.

You're cherry picking a three year window of time where we had a major bull run. Dividend stocks tend to underperform during bull cycles, why not wait a couple more years and then see how the stock picks have done then? Or even simpler, just go back further in time and grab a longer period of time. An index fund is hardly "simple" - VTI has quite a lot of junk in it that's guaranteed to lose you money in the near future, just because you won't notice it because it's a small portion of the fund doesn't mean it's not there.

And your hero Jack Bogle? He has said in his most famous works that holding individual securities is even more tax efficient and less costly (provided you don't create excess turnover through activity) than buying an index fund. The reason he created index funds is because 1) most people can't stand to just sit there and do nothing when there's volatility, something that Jason hardly has trouble with since he's steadily collecting income and 2) people pay too much in transaction costs and fees (including AUM fees on mutual funds), which again, since Jason isn't a trader, he doesn't have that problem.

Here's a quote from a recent interview:

"The stock market is not what creates value. Value is created by corporate America. That's dividend yield plus the earnings growth that ensues. And that's my formula for investment return.

That 9% annual rate of return long-term for stocks that you read about? It's because the average long-term yield is 4.5%. The other half is the growth of 4.5%. Of course, yield isn't anywhere near 4.5% (on long-term Treasurys) now, which is a warning that future returns will be lower.

My point is that you hope to capture as much of that average 9% return a year as you can. You do it by minimizing your costs."

Read more: http://www.nasdaq.com/article/john-bogle-vanguard-founder-discusses-how-to-invest-cm340997#ixzz3n8rZlsm1

Thanks for cherry picking information in your answer ;-)

Just calculate his returns since 2011 and then let's talk. I am fine checking up on this thread a few years too.

Your response reminds me of the saying: Penny Wise, Dollar Foolish

If you pick your stocks, you risk that your returns will be lower than the market. Most investors do worse than the stock market. Most mutual funds and hedge funds do worse than the market.
I would gladly pay 0.05%/year in perpetuity on my VTI because I know I get the market return. I also don’t pay taxes until I withdraw money from my tax-deferred accounts. With a Roth Conversion Ladder, I will not pay taxes on my profits.

You do pay a one-time commission on stocks. But then you might not have picked the right stocks and the total cost is much larger than paying 0.05% of assets/year. If you check dividend mantra, he has paid much more than 0.05%/year on commissions over the past 4 years that he has been investing. And he has paid a ton in taxes too.

[Indexmantra]

Indexmantra (With that name I can guess how you feel about a site named Dividendmantra...), you are saying a lot of things that I don't believe are true.

The first is that DM/Jason has a goal to "motivate his zealots out of their money". I'm sorry, what? I enjoy reading DM, but I don't remember sending him my money. I must have missed that part of being one of his zealots.

Secondly, you state that people read him for investing ideas. I argue that the majority of people don't read him for investing ideas. And that's not a judgement about his investing, it's based on what people in his comments and people here say. They enjoy reading his posts about his monthly income and spending most of all, followed by details of his investment growth and rising dividend income. Honestly I skip over most of his stock analysis, because as someone who occasionally invests in stocks, I prefer to do my own research/analysis and would never blindly follow the strategy of one person online. Something he advises against anyway!

Calling Jason from DividendMantra a promotional salesman is laughable. What exactly is he selling? The idea of living frugally, and saving/investing all of your extra cash? Gee, what horrible advice. I don't know anyone around here who thinks like that.

He is selling the Dividend Mantra way. If you do not understand what is wrong with that, then nothing can help you.

(A) Is he FI? No

(B) How does he make his money? Talking about FI.

(C) Is he a good investor? No - VTI/VTIAX have done better than him.

MMM, JC, GCC became FI in a way that all of us can relate to - working, saving and investing. This is how I became FI - working for a long time, saving a lot, making investing mistakes along the way, and switching to indexing. I didn't make my money selling a dream. Maybe I should have become a guru.

I am happy for DM though. He managed to build a following of zealots, who follow him and support him without question no matter what he does.

[innerscorecard]

Now I wonder how much he got for selling.

[mizzourah2006]

You cannot argue with facts.

The fact is, DM is a good marketer/businessman. But not a good investor. Yet people read him for investing ideas. The only value he has provided in investing is to himself. John Bogle provided value for investors by allowing Vanguard to be investor owned, and allowing investors to get their fair share of returns at low costs. He is the one that inspires me, not DM. I am just an ordinary person, and yet I have matched the return on VTI/VTSAX by investing into the market.

DM's returns are not that good. And since his blog took off in late 2012, his stock picks have not done very well. This is a fact. He has spent all this time to pick stocks, and he hasn't even beat a simple index fund. The only reason why he still sticks to investing in my opinion is because he can earn more money writing about his investing than from his actual investment returns.

You're cherry picking a three year window of time where we had a major bull run. Dividend stocks tend to underperform during bull cycles, why not wait a couple more years and then see how the stock picks have done then? Or even simpler, just go back further in time and grab a longer period of time. An index fund is hardly "simple" - VTI has quite a lot of junk in it that's guaranteed to lose you money in the near future, just because you won't notice it because it's a small portion of the fund doesn't mean it's not there.

And your hero Jack Bogle? He has said in his most famous works that holding individual securities is even more tax efficient and less costly (provided you don't create excess turnover through activity) than buying an index fund. The reason he created index funds is because 1) most people can't stand to just sit there and do nothing when there's volatility, something that Jason hardly has trouble with since he's steadily collecting income and 2) people pay too much in transaction costs and fees (including AUM fees on mutual funds), which again, since Jason isn't a trader, he doesn't have that problem.

Here's a quote from a recent interview:

"The stock market is not what creates value. Value is created by corporate America. That's dividend yield plus the earnings growth that ensues. And that's my formula for investment return.

That 9% annual rate of return long-term for stocks that you read about? It's because the average long-term yield is 4.5%. The other half is the growth of 4.5%. Of course, yield isn't anywhere near 4.5% (on long-term Treasurys) now, which is a warning that future returns will be lower.

My point is that you hope to capture as much of that average 9% return a year as you can. You do it by minimizing your costs."

Read more: http://www.nasdaq.com/article/john-bogle-vanguard-founder-discusses-how-to-invest-cm340997#ixzz3n8rZlsm1

Thanks for cherry picking information in your answer ;-)

Just calculate his returns since 2011 and then let's talk. I am fine checking up on this thread a few years too.

Your response reminds me of the saying: Penny Wise, Dollar Foolish

If you pick your stocks, you risk that your returns will be lower than the market. Most investors do worse than the stock market. Most mutual funds and hedge funds do worse than the market.
I would gladly pay 0.05%/year in perpetuity on my VTI because I know I get the market return. I also don’t pay taxes until I withdraw money from my tax-deferred accounts. With a Roth Conversion Ladder, I will not pay taxes on my profits.

You do pay a one-time commission on stocks. But then you might not have picked the right stocks and the total cost is much larger than paying 0.05% of assets/year. If you check dividend mantra, he has paid much more than 0.05%/year on commissions over the past 4 years that he has been investing. And he has paid a ton in taxes too.

To be fair the way this is calculated is designed to make most people underperform the market. Instead of looking at total returns over a 10-20 year period they look at what percentage of hedge funds or mutual funds outperformed their index each year.

If I earn 35% on my portfolio in year 1 and the S&P earns 20% and then in the second year I earn 8% in my portfolio and the S&P earns 11% the determination is that I don't outperform the market.

There are plenty of mutual funds and individual investors that outperform their benchmark in total returns over long periods of time, they just don't beat their benchmark year in and year out.

I always find it funny that if 55% of investors don't outperform the market people are perfectly fine admitting they would be part of the 55%. What other area of your life would you say well, the stats say most people don't succeed, so I might as well not try. What about marriage and the divorce statistic? Why get married, most marriages end in divorce.

I invest in index funds, I like them, but I also invest in individual stocks because I enjoy learning about businesses and following them. How many people buy stocks because someone told them it was going to be the next big thing? I'd say over 50% of the people that purchase stocks. So right there, if you know why you are buying what you are buying and have a good understanding of what the intrinsic value of the company should be you are a better investor than 50% of people. Hell I've read research that says that the majority of people don't even earn market returns in an index because they buy and sell at the worst times. Why even invest in the market? What is the possibility that you aren't the majority?

Use the statistics when it benefits your argument, ignore them when it does not.

[EscapeVelocity2020]

Now I wonder how much he got for selling.

It would be interesting if a professional weighs in, but in the meantime I had a look at http://www.siteprice.org/website-worth/www.dividendmantra.com

They value the site at 37k, which I would guess is off by 2 - 3x.  So my guess is $75 - 100k.  He probably figured that the site itself generates about 2 - 3k/mo sustainably, with the rest of his 1-2k income being freelance writing, so getting to transform his portfolio from 200k (and 7k dividend income) into 300k (and 10k income) would solidify his FI, along with his income from freelance writing.

Just to do a little 'reality check', I plugged in MMM and got a value of ~535k (with somewhat old data).  MMM himself said the site was worth 1 - 2 million a while back, in the comments to one of his posts, so I figure my numbers are pretty close.

[innerscorecard]

Seems right. I think MMM is about 15x better than DM.

[dcunitedfan]

I enjoyed DM's site a lot more while he still had his dreary day job. He obviously was happier once he could ditch that, completely understandable, but at the same time that's where it lost its relatability for me, since I'm still in the working stiff stage of my career.  The whole "you can't go home again"/"prodigal son" bit was interesting too.  I'll keep watching his site off and on (I had already lost some interest over the last few months) but to a large extent, it's already lost a lot of relevance for me.  I wasn't exactly hanging on his stock tips before - I got the jist of his strategy, agreed with some parts, disagreed with others.

[Indexmantra]

You cannot argue with facts.

To be fair the way this is calculated is designed to make most people underperform the market. Instead of looking at total returns over a 10-20 year period they look at what percentage of hedge funds or mutual funds outperformed their index each year.

If I earn 35% on my portfolio in year 1 and the S&P earns 20% and then in the second year I earn 8% in my portfolio and the S&P earns 11% the determination is that I don't outperform the market.

There are plenty of mutual funds and individual investors that outperform their benchmark in total returns over long periods of time, they just don't beat their benchmark year in and year out.

I always find it funny that if 55% of investors don't outperform the market people are perfectly fine admitting they would be part of the 55%. What other area of your life would you say well, the stats say most people don't succeed, so I might as well not try. What about marriage and the divorce statistic? Why get married, most marriages end in divorce.

I invest in index funds, I like them, but I also invest in individual stocks because I enjoy learning about businesses and following them. How many people buy stocks because someone told them it was going to be the next big thing? I'd say over 50% of the people that purchase stocks. So right there, if you know why you are buying what you are buying and have a good understanding of what the intrinsic value of the company should be you are a better investor than 50% of people. Hell I've read research that says that the majority of people don't even earn market returns in an index because they buy and sell at the worst times. Why even invest in the market? What is the possibility that you aren't the majority?

Use the statistics when it benefits your argument, ignore them when it does not.

Hi Mizzourah,

Actually, most mutual funds fail to beat their benchmark over 1, 5, 10, 20 year periods. Just a handful of mutual funds that survive have managed to beat their benchmark over long periods of time.

Since I switched to indexing, I have matched the return of the index I invested in. I am a buy and hold investor. How have your picks done relative to the mark?

Have you checked SPIVA reports by S&P?

http://www.spindices.com/documents/spiva/spiva-us-year-end-2014.pdf

If the professionals cannot beat their benchmarks, what are the odds that you will?

I value my time a lot. This is why I do not see the reason to spend time picking stocks if I am not going to beat the benchmark over time.

I stopped reading Dividend Mantra's site when I realized that he spends 500 – 1000 hours per year to manage his portfolio. The end result is that he trails the index. He pays taxes on his income, then pays taxes on dividends and capital gains. He has been investing inefficiently for five years in a row. If he had been investing all these years in a 401 (k) or IRA, his dividend income would have been high as well.

I spend 10 – 20 hours per year managing my portfolio. I match the index – less the tiny cost of the fund.

I defer taxes on income and capital gains. Then my money compounds tax-free.

I stopped reading DM because you have to work smart, not hard.This is called common sense.

I have nothing further to add.

[ridonkulous52]

As a dividend growth investor, I pretty much could care less about the stock price/portfolio value after making a purchase.  I only care at the time of purchase.  I'll do my analysis of their balance sheet, revenue, earnings, dividends, and free cash flow and see if the company's dividend is sustainable over the long term.  If I find the stock to be attractive, then I'll make a purchase.  After that, I don't really care about the stock price and in actuality, hope the stock goes down so I can purchase more shares at cheaper valuations!  My goal is to produce a reliable stream of dividend income in retirement that beats inflation.  If my portfolio can spit out $50,000 a year reliably and increase 5-8% per year, I don't care if my portfolio value is $100,000 or $1,000,000,000!!!

I'm pretty sure DM feels the same way.  To argue his total return to an index is pretty much useless because fundamentally, the goals of a dividend growth investor and an index investor are very different. 

[Indexmantra]

As a dividend growth investor, I pretty much could care less about the stock price/portfolio value after making a purchase.  I only care at the time of purchase.  I'll do my analysis of their balance sheet, revenue, earnings, dividends, and free cash flow and see if the company's dividend is sustainable over the long term.  If I find the stock to be attractive, then I'll make a purchase.  After that, I don't really care about the stock price and in actuality, hope the stock goes down so I can purchase more shares at cheaper valuations!  My goal is to produce a reliable stream of dividend income in retirement that beats inflation.  If my portfolio can spit out $50,000 a year reliably and increase 5-8% per year, I don't care if my portfolio value is $100,000 or $1,000,000,000!!!

I'm pretty sure DM feels the same way.  To argue his total return to an index is pretty much useless because fundamentally, the goals of a dividend growth investor and an index investor are very different.

Dividend Mantra keeps quoting Warren Buffett, and speaking fondly of him. However, Warren Buffett measures his success in terms of total returns. He has done this for the past 60 years with his partnership and Berkshire days.

Total returns is the only way to measure how you did. Those like Dividend Mantra have wasted thousands of hours of their lives and still failed to beat the benchmark. That's why they say that they are only looking at dividend income.

If all you end up earning is a 4% yield, you are much worse off than simply buying an index fund in a tax-deferred account, and earning higher total returns. This is not rocket science.  Just check what happened to Phillip Morris since 2012 and compare the returns to S&P 500.

It deeply saddens me that there are so many inexperienced investors who blindly follow guru's like Dividend Mantra. You should not be gambling your hard-earned money following a guru.

This is the last message I am going to post on this thread.

[Seppia]

A few comments:

- I seldom read his blog as I am mostly an index investor, plus when I buy individual stocks I like to make my own mistakes :)

- I am happy for him if he made a lot of money by selling. Not everybody has the mental fortitude or the already achieved financial independence to turn down 6 figures easily.

- it seems statistically improbable that "most people underperform the market". That can happen if they buy actively managed funds or if we assume there's lots of people losing small amounts and few people making a lot, but technically if we consider those who buy and sell individual stocks only, they ARE the market.
What underperforms the market consistently are funds with high fees.

[Telecaster]

- it seems statistically improbable that "most people underperform the market". That can happen if they buy actively managed funds or if we assume there's lots of people losing small amounts and few people making a lot, but technically if we consider those who buy and sell individual stocks only, they ARE the market.
What underperforms the market consistently are funds with high fees.

That's pretty much it right there.  Once you include fees, then it makes it tough to match the market, let alone beat.  The number of managers who beat the market can be explained by random chance.  However, statistical studies have shown that the worst managers are so bad it can't be explained by chance.    Funds that do over perform, tend to do so only for short periods of time. 

[ridonkulous52]

Dividend Mantra keeps quoting Warren Buffett, and speaking fondly of him. However, Warren Buffett measures his success in terms of total returns. He has done this for the past 60 years with his partnership and Berkshire days.

Total returns is the only way to measure how you did. Those like Dividend Mantra have wasted thousands of hours of their lives and still failed to beat the benchmark. That's why they say that they are only looking at dividend income.

If all you end up earning is a 4% yield, you are much worse off than simply buying an index fund in a tax-deferred account, and earning higher total returns. This is not rocket science.  Just check what happened to Phillip Morris since 2012 and compare the returns to S&P 500.

It deeply saddens me that there are so many inexperienced investors who blindly follow guru's like Dividend Mantra. You should not be gambling your hard-earned money following a guru.

This is the last message I am going to post on this thread.

We will just agree to disagree.  Dividend growth investors care about cash flow, not net worth or portfolio value.  I'd even argue DGI strategy is a bit more robust than index investing due to DGIs very rarely selling assets.  Once a DGI reaches FI, they plan on using their dividends to pay for their life style,  not their shares of stock.  You can be pretty confident that JNJ will continually maintain and raise their dividends 6-8% per year.  They do have a 53 year streak of raising dividends :).  However, Index Investing can be dangerous during bear markets for the person in their retirement.  What if an index investor retired in 2006 and then 2007-2008 hits, they are now selling their assets at the bottom and hurting their nest egg.  While the DGI'er who also retired in 2006, most likely saw their dividends/cash flow go UP in 2007-2008.  Not many dividend growth stocks cut their dividend during the great recession.  Traditional Dividend Growth Stocks like IBM, CAT, JNJ, XOM, MMM, KO, PG, WMT, MCD, EMR, PEP, TGT and T raised their dividends during the great recession.  Yes, during bull markets the index investing may provide a better total return but i'd say for many of us who are looking at a 40-50 year retirement, DGI strategy may be a bit more robust to handle those bear markets. 

However, I'm not saying DGI is better than Index Investing, I just think fundamentally, index investors and DGIs just think differently.  That is absolutely fine!  Do what you are comfortable with!  I think both ways can get everyone to where they want! 

BTW, you are cherry picking data regarding PM.  Sure, since 2012 PM hasn't done better than S&P 500/VTI.  But let's look at VTI vs PM since PMs spin off from Altria on March 17, 2008.  PM has an annualized return of 11.24% and VTI has returned 8.51%.  Remember, this is a long term game ;).  Source: http://longrundata.com/

[Telecaster]

We will just agree to disagree.  Dividend growth investors care about cash flow, not net worth or portfolio value.   

Careful, you are treading dangerously close to fallacious thinking.  AFAICT, Indexmantra did not criticize strategy, he pointed out the need for measuring performance.   Your bank account has absolutely no idea if the deposit came from selling an appreciated stock or accepting a dividend.  It is still income, or as you put it, cash flow, either way.  Although dividend growth investors might not care net worth or portfolio value, they should be caring about return on investment.  That's true for real estate investing, investing in gold, or what have you.

That doesn't mean you must beat the index, mind you.  One might be perfectly comfortable with a lower rate of return in exchange for lower volatility.  Nothing wrong with that if that's what you want.   But if you don't know how you are performing, then you could be taking a blow torch to your money and not even know it. 

Changing the subject slightly, I certainly agree it doesn't matter how you get to FIRE, but I've never seen any evidence that dividend strategies get you there faster than simply indexing, and a good amount of evidence that it is actually slower.  JNJ might have been great, but previous sure-fire dividend bets like GE and GM evaporated in 2009. 

The great William Bernstein suggests (maybe a bit tongue in cheek) that a great investing strategy is to look at what is popular and do the exact opposite.  Dividend investing is red hot right now.  I'm just old enough that I've seen a few red hot strategies come and go, and when they go, it usually ends badly.  Dividend investing is a little different in that even the gurus haven't shown red hot results, despite the red hot interest.  This whole thing has every sign of not ending well.  Personal opinion, that.

Full disclosure:  I do use dividend strategies, and I have a separate account at Fidelity where I manage those trades.  I use a separate account so I can easily track performance.  I use a dividend strategy for a small portion of my portfolio as a hedge.  It probably drags down overall performance, but I'm fine with that.  Point is, I'm not bagging on dividend strategies per se, my main points are that it is foolish not to track performance and to keep all the eggs in one strategy basket.   

However, I'm not saying DGI is better than Index Investing, I just think fundamentally, index investors and DGIs just think differently.  That is absolutely fine!  Do what you are comfortable with!  I think both ways can get everyone to where they want! 

I heartily agree, and if you can make dividend investing work for you, then more power to ya and I will raise a pint in your honor. 

[Jags4186]

We will just agree to disagree.  Dividend growth investors care about cash flow, not net worth or portfolio value.  I'd even argue DGI strategy is a bit more robust than index investing due to DGIs very rarely selling assets.  Once a DGI reaches FI, they plan on using their dividends to pay for their life style,  not their shares of stock.  You can be pretty confident that JNJ will continually maintain and raise their dividends 6-8% per year.  They do have a 53 year streak of raising dividends :).  However, Index Investing can be dangerous during bear markets for the person in their retirement.  What if an index investor retired in 2006 and then 2007-2008 hits, they are now selling their assets at the bottom and hurting their nest egg.  While the DGI'er who also retired in 2006, most likely saw their dividends/cash flow go UP in 2007-2008.  Not many dividend growth stocks cut their dividend during the great recession.  Traditional Dividend Growth Stocks like IBM, CAT, JNJ, XOM, MMM, KO, PG, WMT, MCD, EMR, PEP, TGT and T raised their dividends during the great recession.  Yes, during bull markets the index investing may provide a better total return but i'd say for many of us who are looking at a 40-50 year retirement, DGI strategy may be a bit more robust to handle those bear markets. 

More than half of dividend stocks cut or eliminated their dividends during the 2008-2009 crash. 

[Aphalite]

More than half of dividend stocks cut or eliminated their dividends during the 2008-2009 crash.

Citation?

[Jags4186]

http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/02/04/7-myths-about-dividend-paying-stocks


Also, if you look at the dividend payout of VTI over the time period you will see the payout was down each quarter compared to the previous year. Since VTI owns all of the dividend paying US stocks, you an surmise that dividends on a whole were cut. Same goes for VT which covers all of the dividend paying stocks in the world.