johntlim

Comments:

• Another insightful and thought provoking article, Jonathan. I think one of the hardest things about investing is the patience and fortitude that is required, especially when going against the grain. You wrote about US versus international but the same piece could be written about value versus growth. We may not know whether our decisions, say to diversify internationally today, will have been "right" for another decade. That is an eternity in today's investing landscape. I believe that the coming decade will see international equities outperform US equities. But even if correct, no one will remember the articles or comments written a decade earlier urging international diversification. I've been keeping a financial journal, making quarterly entries. It will be interesting to go back in ten years and review the 40 prior entries to see my "batting average."

  Post: Stuck at Home

  Link to comment from November 23, 2024

• Yes. As Rob Arnott has said, "Diversification is a regret maximizer."

  Post: Stuck at Home

  Link to comment from November 23, 2024

• Great points. So many behavioral factors for your observations, Mr. Roth. Recency bias, performance chasing, and envy to name a few. Reversion to the mean is a powerful force, but what's difficult is that its timing is impossible to predict. It's a matter of when, not if.

  Post: Stuck at Home

  Link to comment from November 23, 2024

• Excellent point, Jonathan!

  Post: Stuck at Home

  Link to comment from November 23, 2024

• Dividend paying stocks tend to lean toward the value side of the spectrum. Depending on your time frame, value stocks do have a value premium (i.e. they tend to outperform over the long run). That said, value has been in a long period of underperformance. I believe that value is an enduring premium that will reemerge. I do not believe that "Value investing is dead." But patience and a long-term investing approach is required.

  Post: Death to Dividends

  Link to comment from October 19, 2024

• Nice article. You can approach this from an analytical standpoint and a psychological or behavioral perspective. Analytically, we want to maximize after tax returns. As Adam pointed out, in taxable accounts dividends are less tax efficient than capital gains. Also, as some readers have pointed out, companies do not always use their cash prudently. If a company can invest its cash or earnings back into its core business with a high return (return on equity-- which is the return owners/shareholders get from invested capital), than that is probably preferable. But if the return on equity is low, shareholders may be better off receiving dividends. ROE might be higher for smaller, younger companies as Adam suggested (but not always). The behavioral aspect is very important too. People, rightly or wrongly, like receiving dividends because they can hold onto their shares and still have money to spend. This is a bit of mental accounting, but such is life. I find myself in the camp of enjoying dividends and holding onto shares, even though the analytic side of me knows its not entirely rational. All in all, a very good piece!

  Post: Yielding No Advantage

  Link to comment from October 19, 2024

• I was wondering if anyone had data on annual dividends over decades for international stocks. (such data for US stocks seems far easier to come by) In other words, how have dividends for international or emerging market stocks (I realize data on EM will be more limited) varied by year over the past one hundred years or so? I think this would be useful information for dividend investors since it would show the risk of dividend income variability in extreme market events (recessions, etc). Thanks in advance.

  Post: How do I invest for Dividend Income? Should I?

  Link to comment from October 19, 2024

• Great post, Jonathan. One point I would add is to reframe how one thinks of "stocks." It's very easy to view stocks as tickers on a screen or numbers on a financial statement. If you can train yourself to think of stocks as ownership in real businesses that pay dividends and reinvest profits to grow future cash flow (return on equity), you will be way ahead of the game. Btw, I have been slow to learn this lesson myself. (Warren Buffett probably learned it as a teenager.)

  Post: Sticking With Stocks

  Link to comment from October 13, 2024

• Time is the one resource that cannot be recouped. It is also a resource that doesn't have an obvious scorecard-- after all, how much time each of us has left is rarely known with any certainty. Hence, it is easy to "waste" it without even realizing we are doing so. If I could go back in time, I would spend far less time on investing. Investing is the one arena in life where less is more. The harder we work at it (and sink more time into it), the less we reap in financial gain. The famous "Fidelity study" showed that investors who were more active had lower returns and vice versa. Those who forgot they had accounts apparently fared the best. However, I do not at all regret the time I learned about personal finance. The time spent learning and thinking about compound interest, mortgages/loans, savings rates, and the like have been invaluable to me and my road toward financial security. It is a shame that there isn't a standard curriculum or "bible" that teaches us the these pearls of personal finance. Instead, most of us are bombarded by financial media that lowers our financial IQ, not raises it. Imagine how much people's lives could be improved if there was such a standard book or curriculum that everyone learned early in life.

  Post: Getting to the Point

  Link to comment from June 20, 2024

• According to data from Jeremy Siegel's Stocks for the Long Run, stocks are historically less risky (lower standard deviation and variance) than bonds over holding periods between 15 to 20 years. Inflation and the tendency for stocks to revert towards the mean seem to explain this (interestingly, bonds do not apparently revert towards the mean). Also, from 1871-2021 stocks outperformed bonds over ten-year periods 80% of the time and over 20-year periods 95% of the time.

  Post: Is a 100% stock portfolio reckless?

  Link to comment from June 20, 2024