It is very funny that my decision to hold on to CDK and HYH after the spin-off paid off better than it did for your S&P 500 index fund.
My entire post was about an investor's underlying knowledge of the systems, not about performance (the very first line I wrote summarized that key point!), so I'm not sure why the first thing
you mention is performance? I don't doubt that a buy-and-hold dividend-focused investor
who understands where dividends come from will perform roughly the same as dividend-agnostic investor. That said, you're crowing about a 4 month period where one stock (CDK) significantly outperformed the S&P 500, and the other (HYH) matched the S&P 500 (with significant underperformance for much of the term); that's not quite the point where I'd be skating around with the Stanley Cup hoisted over my head if "my" stocks were in the lead.
Your index fund had to sell at much lower prices than we have today, and it did it automatically without any analysis.
Er, no it didn't. The index fund I recommended, VTSAX, is a total stock market fund. As long as the spinoff remains a US exchange-traded stock, it stays in the fund. Maybe you're thinking of something like an S&P 500 index fund? Those funds are essentially obsolete historical artifacts, and no one has suggested such a fund. Not that holding such a fund is bad choice, because every spinoff that gets sold out of a large-cap-only index fund at a "low price" gets bought by a less-large-cap index fund at the same "low price", so it's difficult to see how index investors lose out on the whole.
This shortcoming has cost investors money in the past, and has been well known for 20+ years (Source: Seth Klarman) So yes, my analysis of pros and cons, looking at history, and understanding that index funds selling no matter what did prove to be fruitful. It is ironic that of all the articles I have written, you chose to mock me for the one that actually shows the inefficiencies that index funds create. Your index fund costed you a lot of money with its selling of spin-offs (which of course is not calculated anywhere), and of course costed you a lot in taxes paid on gains realized. So it is funny you chose exactly the article that shows the side of index funds that shows their fallibility. Yet, I am the "bad one".
So what are you claiming, that spinoffs always go up in value relative to the index? How else does an index fund selling them cost me a lot of money? Even if we're talking about an S&P500 fund, in the case of HYH, there is only about 1 month in its 4 month existence where the fund would have been worth more if it held on to HYH. In the other three months, it would have been better off if it had sold immediately.
In terms of taxes, Vanguard's S&P 500 fund hasn't distributed any capital gains in this century. I guess
if selling the spinoff always results in a gain rather than a loss (I have no idea how capital gains are calculated on spinoffs), then this theoretically reduces the fund's available losses that can be balanced against future gains, but I'd probably be dead before that became an issue for me.
And again, all of this probably-not-an-issue stuff turns into definitely-not-an-issue if you just use a total market fund, which is what MMM and everyone else has been recommending for years. Someone should probably tell Seth Klarman.
If you are just realizing that I use earnings per share, and that I see it as an important fuel for future growth in dividends, then you probably need to do more research before you make any comments.
No, I had already assumed you use earnings in your stock analysis; how did my post make you think this was news to me? (hopefully your reading comprehension of company reports is better than it is of Internet troll postings!) What was news to me was that you said earnings are a "more important thing" when choosing to own a stock. Though you didn't state it explicitly, I used the context to presume that you meant "earnings are a more important thing
than dividends" when choosing a stock, and that's what I agreed with.
If that's what you were saying (and please correct me if I'm wrong) then I don't understand why you continue to use dividend payment (just one of the several options a corporation has for sharing earnings with its owners) as your primary screen. Wouldn't it make more sense to use a "more important thing", like earnings, and put a less-important thing like dividends further down the list (or not include them as a screen at all)?
It seems like you're
so close to an epiphany here!
The fact that you are forming opinions and shitting on peoples hard work proves to me that you are another useless internet troll, whose only goal is to confuse and anger, but not to add anything meaningful of value.
Again, hopefully your company analysis is more astute than your human-being analysis!
And by the way, unlike others which you follow without any thought, I have never peddled products that don't add any value to investors but charge them annual fees. Yes, I am talking about Betterment, which is useful only to its creators and for the "famous bloggers" who receive affiliate fees by telling their subscribers about it.
Er, ok, I'm not sure what that has to do with anything. If it helps, your belief that I follow MMM without any thought is also wrong, since I agree with
you that Betterment is a sub-optimal choice for most people. But, I do disagree with your belief that MMM is "peddling it" for the affiliate bonus; I think he just didn't analyze the fall-off in the Tax Loss Harvesting benefit as thoroughly as our faithful Dodge did.
PS Dividend Growth Investing works. You can never prove that it doesn't work.
You should read the first line of this post, and then the first line of the one before that.