In a paper entitled “Worried About the Downside?”, Richard Bernstein did a fascinating analysis of asset classes tracking how each did in
both an upside (bull market) and downside (bear market) environment. His
findings were a real eye-opener. First, very few asset classes actually
provide downside protection. His research shows most asset classes
capture both the upside and downside of bull and bear markets.
Second, only long-term US treasuries had a negative correlation –
meaning they lost value in a bull market but gained in a bear market.
Last, hedge funds – named because of their capabilities – actually
aren’t very good hedges against a bear market.
So what has been Wall Street’s answer to these findings? In typical
form they have developed a plethora of high cost strategies that include
Constant Proportion Portfolio Insurance (CPPI), Volatility Cap
Strategies, Volatility Options (VIX Options), Third Party Indices,
Variance Swaps, Put Options, Dynamic Asset Allocation Hedging, and
something called Interest Rate Swaptions.
Frankly, we are at a loss to describe what these strategies are
doing, let alone how they function. We believe Wall Street in general is
looking at market corrections and downside protection in exactly the
wrong way. At Nintai we see market corrections more as an opportunity
than an event to fear. As long-term investors, what could be better than
to invest in great companies at a cheaper price? We strongly believe it
is far better to be value oriented and use the correction as an
opportunity, than spend high amounts of dollars attempting to avoid what
might be your best investing prospects in years.
Tuesday, April 28, 2015
Monday, April 27, 2015
Joel Greenblatt on value investing
[11/24/13] Well, actually the secret to value investing is patience, and that's
generally in short supply now. The reason it doesn't get arbitraged away
is that in typical arbitrage, the usual explanation is that you buy
gold in New York and simultaneously sell it in London for $1 more. And
what tends to happen in typical arbitrage, there are professionals out
there who see those price difference, and so they'll keep buying gold in
New York and selling it in London until the prices converge. That
happens so fast that individual investors certainly can't take advantage
of it, a few very quick institutional investors can.
But if I told you as a value investor that you could buy gold in New York today and sometime in the next two or three years, it's likely you'll be able to sell it for a profit, but you may lose 40% while you are waiting around for that to happen, it's much harder to find someone to arbitrage that away. Time horizons are actually shrinking over the last 20-30 years even. So, things are actually getting better for value investors, not worse. The world is becoming more institutionalized, there is more access to performance information, it's much easier to trade. So, patience is in short supply, and it really makes it much nicer for patient value investors.
If value investing worked every day and every month and every year, of course, it would get arbitraged away, but it doesn't. It works over time, and it's quite irregular. But it does still work like clockwork; your clock has to be really slow.
...
Dasaro: How do you avoid investing in stocks where the numbers may disagree with the story behind the stock?
Greenblatt: Oh, value traps, right. Well, we're very tough on cash flows, is what I would say. Ben Graham said, buy cheap. Figure out what something's worth and pay a lot less. And Warren Buffett, Graham's most famous student, made one little twist that made him one of the richest people in the world. And he said, if I can buy a good business cheap, even better.
*** [4/27/15]
The point is that Greenblatt’s favorite ideas were the ones where he felt there was very little chance of losing money — not necessarily the highest potential returns.
In the video below, he emphasizes this point. (By the way, thanks to Joe Koster who posted this video—I found it on his site—and Joe also emphasized this quote, which is a good one):
“My largest positions are not the ones I think I'm going to make the most money from. My largest positions are the ones I don't think I'm going to lose money in.”
[The article also discusses Druckenmiller.]
But if I told you as a value investor that you could buy gold in New York today and sometime in the next two or three years, it's likely you'll be able to sell it for a profit, but you may lose 40% while you are waiting around for that to happen, it's much harder to find someone to arbitrage that away. Time horizons are actually shrinking over the last 20-30 years even. So, things are actually getting better for value investors, not worse. The world is becoming more institutionalized, there is more access to performance information, it's much easier to trade. So, patience is in short supply, and it really makes it much nicer for patient value investors.
If value investing worked every day and every month and every year, of course, it would get arbitraged away, but it doesn't. It works over time, and it's quite irregular. But it does still work like clockwork; your clock has to be really slow.
...
Dasaro: How do you avoid investing in stocks where the numbers may disagree with the story behind the stock?
Greenblatt: Oh, value traps, right. Well, we're very tough on cash flows, is what I would say. Ben Graham said, buy cheap. Figure out what something's worth and pay a lot less. And Warren Buffett, Graham's most famous student, made one little twist that made him one of the richest people in the world. And he said, if I can buy a good business cheap, even better.
*** [4/27/15]
The point is that Greenblatt’s favorite ideas were the ones where he felt there was very little chance of losing money — not necessarily the highest potential returns.
In the video below, he emphasizes this point. (By the way, thanks to Joe Koster who posted this video—I found it on his site—and Joe also emphasized this quote, which is a good one):
“My largest positions are not the ones I think I'm going to make the most money from. My largest positions are the ones I don't think I'm going to lose money in.”
[The article also discusses Druckenmiller.]
consider the downside
most people suffer from the hindsight problem. If you continue
buying, and it works out, they say, “See? He was bold when he needed to
be bold, seized opportunity, and was rewarded.” If it doesn’t work
out, they say, “See? He was reckless and foolish, getting what he
deserved.”
To begin, always consider the downside. If you need motivation, watch the clip of Season 3, Episode 1 of Downton Abbey when Earl Grantham is called to his advisor’s office to discuss the estate’s railroad holdings. That scene has played out throughout all of history, over and over, among many cultures. That is what you are seeking to avoid. If your affairs are managed in a way such an outcome can occur, you are failing your primary responsibility.
We live in a world where crazy things can happen. There was a point in the past century when companies like Coca-Cola traded for less than the cash in the corporate bank account because it was so undervalued. There was also a point when that same company traded at an earnings yield significantly less than inflation because it was so overvalued. There are unexpected earthquakes and fires, tornados and hurricanes, political changes to the tax code and riots, wars and terrorist attacks, technological disruption and shifts in consumer tastes.
Be honest with yourself. Is your motivation to make money or is it the rush of speculation? If it is a gambling thing, setup a separate, isolated account, with no margin debt, funded with a fixed amount of money that never touches your actual investment portfolio. If you find yourself in a situation where you are consistently putting more than 20% of your entire net worth in a single asset at cost (not market), you have the heart of a gambler and need to protect yourself accordingly.
Why word it so strongly? There are more than 14,000 publicly traded stocks and with a $100,000 portfolio, the entire world of them is open to you. If you can only find one – a single issue – that is worth such a high percentage of your assets, you aren’t looking hard enough or you are caught in an adrenaline rush.
To begin, always consider the downside. If you need motivation, watch the clip of Season 3, Episode 1 of Downton Abbey when Earl Grantham is called to his advisor’s office to discuss the estate’s railroad holdings. That scene has played out throughout all of history, over and over, among many cultures. That is what you are seeking to avoid. If your affairs are managed in a way such an outcome can occur, you are failing your primary responsibility.
We live in a world where crazy things can happen. There was a point in the past century when companies like Coca-Cola traded for less than the cash in the corporate bank account because it was so undervalued. There was also a point when that same company traded at an earnings yield significantly less than inflation because it was so overvalued. There are unexpected earthquakes and fires, tornados and hurricanes, political changes to the tax code and riots, wars and terrorist attacks, technological disruption and shifts in consumer tastes.
Be honest with yourself. Is your motivation to make money or is it the rush of speculation? If it is a gambling thing, setup a separate, isolated account, with no margin debt, funded with a fixed amount of money that never touches your actual investment portfolio. If you find yourself in a situation where you are consistently putting more than 20% of your entire net worth in a single asset at cost (not market), you have the heart of a gambler and need to protect yourself accordingly.
Why word it so strongly? There are more than 14,000 publicly traded stocks and with a $100,000 portfolio, the entire world of them is open to you. If you can only find one – a single issue – that is worth such a high percentage of your assets, you aren’t looking hard enough or you are caught in an adrenaline rush.
Thursday, April 23, 2015
Nasdaq sets record high
U.S. stocks traded near highs on Thursday as investors eyed a heavy day of earnings and some economic data.
The S&P 500 attempted to hold above its record close of 2,117.39 but below its record intra-day high of 2,119.59. The Nasdaq traded above its record close of 5,048.62 from March 2000 as all the major indices turned higher around noon.
The Dow Jones industrial average was within 1 percent of its record close.
***
I'm checking (at 8:07 HST). Today's intra-day high for the Nasdaq is 5062.45. The all-time intra-day high was 5132.52 set on March 10, 2000. So not really close to that yet.
So the Nasdaq might indeed set a record high today, but hasn't hit the all-time high yet.
***
It took more than 5,500 days and a helluva lot of help from Apple (AAPL, Tech30), but the Nasdaq is finally celebrating a new all-time closing high. The index that's home to tech stars like Facebook (FB, Tech30), Google (GOOGL, Tech30) and Amazon (AMZN, Tech30) climbed to 5,056 on Thursday. That's the highest level the Nasdaq has ever closed at, whipping out the previous record set on March 10, 2000 of 5,048.62.
Today marks a major milestone in the investing world, in part because it means the Nasdaq has finally gotten over the Dot-com bubble that popped in early 2000.
"It's an enormous deal psychologically," said Peter Kenny, chief market strategist at the Clearpool Group.
It's also getting closer to its intraday record level of 5,132.52 that was also set on March 10, 2000.
This is especially momentous because the Dow and S&P 500 hit record territory years ago, but it took the Nasdaq a long time to climb back from the bursting of the bubble.
Related: Why this tech party isn't like 1999
Another bubble in tech? The Nasdaq record may also serve as a spooky reminder for many investors about what can go wrong in the market. Fifteen years ago people were going crazy over money-losing tech stocks like Pets.com (and bad Ricky Martin songs) that eventually imploded, hurting the retirement accounts of millions of Americans.
The S&P 500 attempted to hold above its record close of 2,117.39 but below its record intra-day high of 2,119.59. The Nasdaq traded above its record close of 5,048.62 from March 2000 as all the major indices turned higher around noon.
The Dow Jones industrial average was within 1 percent of its record close.
***
I'm checking (at 8:07 HST). Today's intra-day high for the Nasdaq is 5062.45. The all-time intra-day high was 5132.52 set on March 10, 2000. So not really close to that yet.
So the Nasdaq might indeed set a record high today, but hasn't hit the all-time high yet.
***
It took more than 5,500 days and a helluva lot of help from Apple (AAPL, Tech30), but the Nasdaq is finally celebrating a new all-time closing high. The index that's home to tech stars like Facebook (FB, Tech30), Google (GOOGL, Tech30) and Amazon (AMZN, Tech30) climbed to 5,056 on Thursday. That's the highest level the Nasdaq has ever closed at, whipping out the previous record set on March 10, 2000 of 5,048.62.
Today marks a major milestone in the investing world, in part because it means the Nasdaq has finally gotten over the Dot-com bubble that popped in early 2000.
"It's an enormous deal psychologically," said Peter Kenny, chief market strategist at the Clearpool Group.
It's also getting closer to its intraday record level of 5,132.52 that was also set on March 10, 2000.
This is especially momentous because the Dow and S&P 500 hit record territory years ago, but it took the Nasdaq a long time to climb back from the bursting of the bubble.
Related: Why this tech party isn't like 1999
Another bubble in tech? The Nasdaq record may also serve as a spooky reminder for many investors about what can go wrong in the market. Fifteen years ago people were going crazy over money-losing tech stocks like Pets.com (and bad Ricky Martin songs) that eventually imploded, hurting the retirement accounts of millions of Americans.
Wednesday, April 22, 2015
Stanley Druckenmiller is a pig / (on diversification)
Recently, fellow GuruFocus contributor Canadian Value posted the
transcript from Stanley Druckenmiller’s speech to the Lost Tree Club
from earlier in the year (link).
Let’s start with why you should care what he has to say: According to Sam Reeves, who introduced the speaker, Mr. Druckenmiller generated after tax returns for his shareholders of nearly 21% per annum over his 30 years managing outside funds (through 2010); at that rate, each $1,000 managed by Mr. Druckenmiller at Duquesne Capital was worth roughly $300,000 three decades later (fees aren’t mentioned in the transcript). And for the kicker, Mr. Druckenmiller never reported a down year over that period. [I find that hard to believe.]
In the speech to the Lost Tree Club, Mr. Druckenmiller spent a lot of time answering a question all of us are undoubtedly wondering: How the heck did he manage to do so well for so long?
I won’t waste your time by copying his entire speech, which is a must read; I want to focus on a single factor that he addressed in some detail:
"The third thing I’d say is I developed a very unique risk management system. The first thing I heard when I got in the business – not from my mentor – was bulls make money, bears make money, and pigs get slaughtered. I’m here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig. I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept ever.
"And if you look at all the great investors that are as different as Warren Buffett (Trades, Portfolio), Carl Icahn (Trades, Portfolio), Ken Langone, they tend to be very, very concentrated bets. They see something, they bet it, and they bet the ranch on it. And that’s kind of the way my philosophy evolved… The mistake I’d say 98% of money managers and individuals make is they feel like they’ve got to be playing in a bunch of stuff. And if you really see it, put all your eggs in one basket and then watch the basket carefully."
Later on in the speech, Mr. Druckenmiller tells a story from his early days as a fund manager:
"When I started at Duquesne, Ronald Reagan had become president, and we had a radical man named Paul Volcker running the Federal Reserve. And inflation was 12%. The whole world thought it was going to go through the roof, and Paul Volker had other ideas. And he had raised interest rates to 18 percent on the short end, and I could see that there was no way this man was going to let inflation go. So I had just started Duquesne and had a small amount of capital: I took 50% of the capital and put it in 30-year treasury bonds yielding 14% – and I owned nothing else… And sure enough, the bonds went up despite a bear market in equities.
"It shaped my philosophy: you don’t need 15 stocks or this currency or that. If you see it, you’ve got to go for it because that’s a better bet than 90% of the other stuff you would add onto it."
If you’ve read my writing in the past, you know I agree with that sentiment wholeheartedly; as usual, I think Warren Buffett (Trades, Portfolio) put it best: “Diversification is protection against ignorance. It makes little sense if you know what you are doing.”
***
Greenblatt’s strategy is nothing like Druckenmiller's, but there are a few philosophical similarities, namely that Greenblatt tended to put most of his capital into the 5 to 8 best ideas he had at any one time. He felt strongly that beyond this level, diversification didn’t really reduce any additional risk, but did water down results.
*** [me]
The key words are "if you know what you are doing." Obviously Buffett and Munger know what they're doing, But I'd say the majority don't really know what they're doing. So, IMHO, not diversifying could be a recipe for disaster. Buffett actually recommends an index fund for most investors.
And how diversified is Buffett anyway? Berkshire Hathaway owns 59 wholly owned (or practically owned) subsidiaries. They also have 47 stocks in their portfolio, though 63% of that portolio is in four stocks (WFC, KO, AXP, IBM).
Looking at the 2014 letter, Berkshire's stocks were worth $117 billion. They hold $42 billion in cash. And according to celebritynetworth, Berkshire Hathaway is worth $144 billion. So that means the businesses are worth less than zero (which can't be right). This article calculates the business value at $91 billion (assuming a P/E of 10 on earnings). So that would make Berkshire worth approximately $250 billion. They have 2 million shares outstanding (according to Morningstar), so that would make the stock worth $125,000 (current quote $215,000).
Well I guess he used to be less diversified in the early days.
Let’s start with why you should care what he has to say: According to Sam Reeves, who introduced the speaker, Mr. Druckenmiller generated after tax returns for his shareholders of nearly 21% per annum over his 30 years managing outside funds (through 2010); at that rate, each $1,000 managed by Mr. Druckenmiller at Duquesne Capital was worth roughly $300,000 three decades later (fees aren’t mentioned in the transcript). And for the kicker, Mr. Druckenmiller never reported a down year over that period. [I find that hard to believe.]
In the speech to the Lost Tree Club, Mr. Druckenmiller spent a lot of time answering a question all of us are undoubtedly wondering: How the heck did he manage to do so well for so long?
I won’t waste your time by copying his entire speech, which is a must read; I want to focus on a single factor that he addressed in some detail:
"The third thing I’d say is I developed a very unique risk management system. The first thing I heard when I got in the business – not from my mentor – was bulls make money, bears make money, and pigs get slaughtered. I’m here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig. I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept ever.
"And if you look at all the great investors that are as different as Warren Buffett (Trades, Portfolio), Carl Icahn (Trades, Portfolio), Ken Langone, they tend to be very, very concentrated bets. They see something, they bet it, and they bet the ranch on it. And that’s kind of the way my philosophy evolved… The mistake I’d say 98% of money managers and individuals make is they feel like they’ve got to be playing in a bunch of stuff. And if you really see it, put all your eggs in one basket and then watch the basket carefully."
Later on in the speech, Mr. Druckenmiller tells a story from his early days as a fund manager:
"When I started at Duquesne, Ronald Reagan had become president, and we had a radical man named Paul Volcker running the Federal Reserve. And inflation was 12%. The whole world thought it was going to go through the roof, and Paul Volker had other ideas. And he had raised interest rates to 18 percent on the short end, and I could see that there was no way this man was going to let inflation go. So I had just started Duquesne and had a small amount of capital: I took 50% of the capital and put it in 30-year treasury bonds yielding 14% – and I owned nothing else… And sure enough, the bonds went up despite a bear market in equities.
"It shaped my philosophy: you don’t need 15 stocks or this currency or that. If you see it, you’ve got to go for it because that’s a better bet than 90% of the other stuff you would add onto it."
If you’ve read my writing in the past, you know I agree with that sentiment wholeheartedly; as usual, I think Warren Buffett (Trades, Portfolio) put it best: “Diversification is protection against ignorance. It makes little sense if you know what you are doing.”
***
Greenblatt’s strategy is nothing like Druckenmiller's, but there are a few philosophical similarities, namely that Greenblatt tended to put most of his capital into the 5 to 8 best ideas he had at any one time. He felt strongly that beyond this level, diversification didn’t really reduce any additional risk, but did water down results.
*** [me]
The key words are "if you know what you are doing." Obviously Buffett and Munger know what they're doing, But I'd say the majority don't really know what they're doing. So, IMHO, not diversifying could be a recipe for disaster. Buffett actually recommends an index fund for most investors.
And how diversified is Buffett anyway? Berkshire Hathaway owns 59 wholly owned (or practically owned) subsidiaries. They also have 47 stocks in their portfolio, though 63% of that portolio is in four stocks (WFC, KO, AXP, IBM).
Looking at the 2014 letter, Berkshire's stocks were worth $117 billion. They hold $42 billion in cash. And according to celebritynetworth, Berkshire Hathaway is worth $144 billion. So that means the businesses are worth less than zero (which can't be right). This article calculates the business value at $91 billion (assuming a P/E of 10 on earnings). So that would make Berkshire worth approximately $250 billion. They have 2 million shares outstanding (according to Morningstar), so that would make the stock worth $125,000 (current quote $215,000).
Well I guess he used to be less diversified in the early days.
Tuesday, April 21, 2015
signs that you're too cheap
Everyone loves to save but some people take penny-pinching way too far. Here are 5 signs you’re too cheap.
Skimping on your health.
If you’d rather “self medicate” or you’ve ever cut your pills in half
to save money on medicine, then here’s a wake-up call: you’re cheap!
Health care is ridiculously expensive, we get that, but you shouldn’t
sacrifice your health to save a buck. Not taking the right dose of
medication now or skipping the doctor's office when you're ill could
lead to bigger -- and more expensive -- health issues later.
Wasting time saving money.
You shouldn’t have to sacrifice your time and sanity just to save
money. When you spend money on a housekeeper, a laundry service, or a
REAL plumber to fix that leaky faucet, you’re buying yourself something
valuable in return — time.
Not investing in activities that make you happy.
What good is saving money if you’re completely miserable all the time?
You should spend money on activities and things that you actually value.
You may not find double coupons for a relaxing day at the spa, but
there is value in investing in activities that make you HAPPY. You can’t
put a price tag on a relaxation.
You choose cost over quality.
There are some things in life that are worth the extra cash — go ahead
and splurge on a quality pair of shoes or a suit that will last you many
years. Treat yourself to a decent meal once in a while and stop hitting
up the $1 menu. Your body’s got to last you a few more decades, right?
You buy fixer-uppers.
Whether it’s an extreme fixer-upper home or a used bike, don’t kid
yourself into thinking you can handle repairs by yourself (unless, of
course, you're a veritable MacGyver, then by all means, buy the run-down
house with the leaky roof). You may save money, but you might only make
your problems worse in the process – and wind up hiring a professional
to clean up after you anyway.
Monday, April 20, 2015
freaks and misfits
There is no shortage of hypesters and hucksters offering the
"secret" to getting rich. The reality is that all kinds of people get
rich in all kinds of ways, most of them involving being the right person
in the right place at the right time.
Sure, working hard, being smart, overcoming failure and breaking convention can all play a role. But lots of people do those things and never get rich.
Yet billionaires often share common attributes. And one of those traits is eloquently explained by Justine Musk, the ex-wife of billionaire inventor Elon Musk.
In a piece in Quora, Justine Musk said that "extreme success results from an extreme personality," and that billionaires like Elon Musk or Bill Gates "tend to be freaks and misfits" who developed extreme strategies for survival as kids and later applied those strategies to business.
But their chief characteristic can be summed up in two words: "Be obsessed."
"If you're not obsessed, then stop what you're doing and find whatever does obsess you," she said. "It helps to have an ego, but you must be in service to something bigger if you are to inspire the people you need to help you (and make no mistake, you will need them)."
She said that people who are obsessed with a problem or issue can work through all the distractions and barriers that life puts in their way. And that obsession needs to be your own, to the point where it borders on insanity.
Sure, working hard, being smart, overcoming failure and breaking convention can all play a role. But lots of people do those things and never get rich.
Yet billionaires often share common attributes. And one of those traits is eloquently explained by Justine Musk, the ex-wife of billionaire inventor Elon Musk.
In a piece in Quora, Justine Musk said that "extreme success results from an extreme personality," and that billionaires like Elon Musk or Bill Gates "tend to be freaks and misfits" who developed extreme strategies for survival as kids and later applied those strategies to business.
But their chief characteristic can be summed up in two words: "Be obsessed."
"If you're not obsessed, then stop what you're doing and find whatever does obsess you," she said. "It helps to have an ego, but you must be in service to something bigger if you are to inspire the people you need to help you (and make no mistake, you will need them)."
She said that people who are obsessed with a problem or issue can work through all the distractions and barriers that life puts in their way. And that obsession needs to be your own, to the point where it borders on insanity.
Saturday, April 04, 2015
Morningstar's moats
What is the difference between a wide moat and a narrow moat?
Morningstar assigns an economic moat rating based on the degree to which a company has sustainable competitive advantages. All of the nearly 1,500 companies covered by Morningstar's equity analysts receive a moat rating of wide, narrow, or no moat based on the degree to which these competitive advantages are present. (Sources of economic moat include intangible assets, switching costs, and network effect, as described in this document and this video.)
The distinction between companies with wide and narrow economic moats is one of duration rather than degree and is arguably less important than the distinction between those with moats and those without them. According to the methodology Morningstar uses to calculate moats (described in this paper), companies with wide moats are expected to earn excess returns on capital for at least 20 years, while those with narrow moats are expected to do so for at least 15 years. Or, to put it another way, a wide-moat company's sustainable competitive advantages are projected to last longer than those of a narrow-moat company.
Morningstar assigns an economic moat rating based on the degree to which a company has sustainable competitive advantages. All of the nearly 1,500 companies covered by Morningstar's equity analysts receive a moat rating of wide, narrow, or no moat based on the degree to which these competitive advantages are present. (Sources of economic moat include intangible assets, switching costs, and network effect, as described in this document and this video.)
The distinction between companies with wide and narrow economic moats is one of duration rather than degree and is arguably less important than the distinction between those with moats and those without them. According to the methodology Morningstar uses to calculate moats (described in this paper), companies with wide moats are expected to earn excess returns on capital for at least 20 years, while those with narrow moats are expected to do so for at least 15 years. Or, to put it another way, a wide-moat company's sustainable competitive advantages are projected to last longer than those of a narrow-moat company.
Friday, April 03, 2015
if I had only bought Microsoft and Oracle back then...
Microsoft celebrates their 40th anniversary, but only went public in 1986. Oracle interestingly had their IPO one day previous. CNBC looks back at what they've done since. Let me take a look too.
Checking Yahoo, MSFT first day of trading was on 3/13/86 (a mere 29 years ago). It opened at 25.50 which was the low of the day, hit a high of 29.25, and closed at 28.00. [Bloomberg says it closed at 27.75.]
So say you bought 100 shares of MSFT at the closing price that day. So you paid $2800. The split adjusted price of MSFT on that day is 7 cents. Which means the stock increased 28/.07 or 400 times. So your $2800 would now be worth $1.12 million!
How about Oracle? Interestingly, Yahoo has their first day of trading on that same day of 3/13/86. It opened at 21.00 which was the low for the day, hit a high of 21.25, and closed at 21.00. (So it really didn't do much that day.)
So say you bought 100 shares that day, paying $2100. Yahoo has the adjusted close at 6 cents. So the stock has increased 2100/.06 = 350 times. So your $2100 would be now worth $735,000.
Those figures might not be exactly right since CNBC said MSFT gained 33% on the first day and ORCL gained 37%. And they said that ORCL has outperformed MSFT, gaining 92600% vs. 64000%. That's quite a bit off my calculations. But why quibble with your (near) million bucks?
Oddly, looking at Google, they have ORCL's price at 5.14 on that 3/12/86. And Google has MSFT's price at .10 on 3/13/86. I dunno, but I trust Yahoo more in this case.
***
Then again, if you had sold on 12/1/99...
Checking Yahoo, MSFT first day of trading was on 3/13/86 (a mere 29 years ago). It opened at 25.50 which was the low of the day, hit a high of 29.25, and closed at 28.00. [Bloomberg says it closed at 27.75.]
So say you bought 100 shares of MSFT at the closing price that day. So you paid $2800. The split adjusted price of MSFT on that day is 7 cents. Which means the stock increased 28/.07 or 400 times. So your $2800 would now be worth $1.12 million!
How about Oracle? Interestingly, Yahoo has their first day of trading on that same day of 3/13/86. It opened at 21.00 which was the low for the day, hit a high of 21.25, and closed at 21.00. (So it really didn't do much that day.)
So say you bought 100 shares that day, paying $2100. Yahoo has the adjusted close at 6 cents. So the stock has increased 2100/.06 = 350 times. So your $2100 would be now worth $735,000.
Those figures might not be exactly right since CNBC said MSFT gained 33% on the first day and ORCL gained 37%. And they said that ORCL has outperformed MSFT, gaining 92600% vs. 64000%. That's quite a bit off my calculations. But why quibble with your (near) million bucks?
Oddly, looking at Google, they have ORCL's price at 5.14 on that 3/12/86. And Google has MSFT's price at .10 on 3/13/86. I dunno, but I trust Yahoo more in this case.
***
Then again, if you had sold on 12/1/99...
Wednesday, April 01, 2015
the current dividend yield of the market
What's the current dividend yield of the S&P 500, I wondered. Look it up.
OK, here's a good site.
The average yield of all S&P 500 stocks is 1.97%.
The highest yielders in the S&P 500 are Integrys Energy Group (3.78%), Weyerhauser (3.77%), Public Serv. Enterprise (3.77%). Not really all that high.
That doesn't seem right, VZ is yielding 4.0% for example. Ah, I see S&P 500 complained and they aren't showing all the stocks.
Look it up. Don't see a list with all the stock, but here's a list of the top ten from January: FCX, WMB, CTL, T, OKE, FTR, NE, ESV, WIN, RIG. At the time of the writing, RIG was yielding 19.57%. They have since cut the dividend from $3.00 to $0.60. Current yield is now 4.0%.
Back to the first site, they also have the yield for the Dow 30 which is a pretty high 2.7%. The top yielding stock is VZ at 4.65%. (OK, I better update my spreadsheet for VZ dividend. My spreadsheet calculates 4.5% for VZ which matches Yahoo's number. What gives? Ah, I see their yield is an estimated yield based on the estimated dividend for the coming year. So they're figuring an increase in the dividend.)
But the current market dividend yield is pretty low historically.
OK, here's a good site.
The average yield of all S&P 500 stocks is 1.97%.
The highest yielders in the S&P 500 are Integrys Energy Group (3.78%), Weyerhauser (3.77%), Public Serv. Enterprise (3.77%). Not really all that high.
That doesn't seem right, VZ is yielding 4.0% for example. Ah, I see S&P 500 complained and they aren't showing all the stocks.
Look it up. Don't see a list with all the stock, but here's a list of the top ten from January: FCX, WMB, CTL, T, OKE, FTR, NE, ESV, WIN, RIG. At the time of the writing, RIG was yielding 19.57%. They have since cut the dividend from $3.00 to $0.60. Current yield is now 4.0%.
Back to the first site, they also have the yield for the Dow 30 which is a pretty high 2.7%. The top yielding stock is VZ at 4.65%. (OK, I better update my spreadsheet for VZ dividend. My spreadsheet calculates 4.5% for VZ which matches Yahoo's number. What gives? Ah, I see their yield is an estimated yield based on the estimated dividend for the coming year. So they're figuring an increase in the dividend.)
But the current market dividend yield is pretty low historically.
