The official "ASX is tanking!" panic thread

[NewTrade]

Hello everyone - I'm kinda new here. I ran a search on Dividends and got here.

I wanted to ask a quick question, and that is; are dividend paying stocks really the best conservative means to investing for regular income? What are the real downfalls of dividends?

I don't understand dividends too much but am reading certain articles on them at the moment - though I wanted an experienced investors POV...

My brief stint in investing was actually not that bad, however if I had held my stocks longer, around a year, I would have gotten a huge profit - roughly 28K per every thousand dollars invested in this particular company. It was a speculative stock that really payed off, as they were 0.03 and hit 0.90 in 12 months. So I thought to myself perhaps mid/long term investing would be better, and on that note wish to know more about the real pitfalls of dividend stocks...

 

[drsmith]

So I thought to myself perhaps mid/long term investing would be better, and on that note wish to know more about the real pitfalls of dividend stocks...

The biggie is companies that pay out more in dividends than they earn in profits as this is obviously unstainable over the long haul.

 

[notting]

So I thought to myself perhaps mid/long term investing would be better, and on that note wish to know more about the real pitfalls of dividend stocks...

Another would be decreasing earnings per share as apposed to increasing, also share buy backs can make earning per share appear better than they really are when it comes to assessing over all company performance.
A basic Dogs of the Dow stratergy is a popular and relativly successful stratergy.

 

[NewTrade]

The biggie is companies that pay out more in dividends than they earn in profits as this is obviously unstainable over the long haul.

I can see how that would become an issue.

Do dividends pay out decent amounts? That could be a rather silly question but the underlying sentiment is whether or not dividends can be a decent method of making an income?

 

[Julia]

In all honestly TLS is down, on paper for the batch that I have now. But I bought and sold this stock heavily at the T3 float. I originally sold 20,000 TLS stock that was in 2 names and that I paid $3.60 for. They hit $4.60 after the float and I sold off the lot for a profit. Then I waited a while and re bought them for lower prices. Although TLS is in the red for this batch I am about square on the capital part of it. In the years since T3 the dividend has been happily collected. TLS is by no means the star of the portfolio.

I do a full weekly summary of all my assets, down to the final calculation, as is warts and all. My portfolio is still going up and I am well up from last year however my portfolio has not increased since February this year. Well it has but this correction has bought me back to February. I am not at all worried about this, it is well positioned for when the market does finally kick off. To be holding firm (for this year) considering all the spending I do and with the major correction that we are experiencing I think that is not such a bad position. Just to clarify to those that don't know me, I am a self funded retiree, I am not a trader of any sorts. I spend several Months a year travelling outside of OZ and I do not need to look at a computer screen daily to manage my investments, cheers.

Thanks, Bill.
So, can you say if you were buying a company which offers what you consider a decent dividend and the SP is in a downtrend, is that an acceptable buy for you?

What's your comment about Mr Jeff's post including the chart of QBE which shows a 62% fall in the value of the capital?

No obligation, of course, Bill, but if you were to share a list of the companies you own, I'd be interested.

 

[Bill M]

Thanks, Bill.
So, can you say if you were buying a company which offers what you consider a decent dividend and the SP is in a downtrend, is that an acceptable buy for you?

Not if it keeps going down day after day, week after week. Eventually it will stop then I might take a look at it.

What's your comment about Mr Jeff's post including the chart of QBE which shows a 62% fall in the value of the capital?

That is a woeful performance, it is at 7 year lows right now. I nearly bought this stock at $16, glad I didn't but I feel the bottom will be nearing soon. Right now I am only watching it, not a great deal of interest right now but this could change. There are less risky stocks out there like the hybrids. During this correction CBAPA hit $195, CBA must repurchase at $200 whilst paying a very healthy yield in the mean time. Within 3 days everybody woke up and the price closed at $203.94 yesterday, it is these types of opportunities I take up on, cheers.

 

[wayneL]

Why is it such a stretch to believe that most people have cash reserves?

No. Just saying the comments at different points in the market don't match

Do you two seriously put every dollar that you have into the market at any one time?

I can't speak for life choices, but there are times when I am all cash, and times when I am not, but I'm not primarily an investor, I'm a trader so I tend to have a fair amount of cash on hand.

Sounds like the joke is on you if you do not have any cash reserves.

No. Sounds like you have leapt to a delusion based on zero research.

 

[LifeChoices]

Do you two seriously put every dollar that you have into the market at any one time?

At the moment my share portfolio is about 50% cash 50% invested. But yes in late 2007 I had everything invested in shares - I became quite greedy and paid a big price for it.

Some of my most greedy investments included Bankbock & Brown and Centro. Some days there were huge profits, however ultimately the market killed me and I lost and was forced to take a back seat for a few years.

Between 2004 - 2007 we were all experts - it didn't really matter, everything was a winner.

The GFC has been a great learning curve. I'm still down about 20% on what I started with, but I've got a good plan and step by step I'm just clawing it slowly back now, even in this tough market.

If I've learnt anything, over the past few years in trading. It's more about selling than buying.

At the end of this experience, I know I will become a better trader.

 

[craft]

QBE is a great example of the futility of buying because (a) it has a decent dividend, and/or (b) It's a so called great business.

This is the thing I just don't get about so many who buy for yield. That's fine if the stock is also growing, or at least trading sideways, but to hold on to a stock where you are losing capital at a far greater rate than your grossed up dividend just makes no sense to me.

Unless, perhaps, you're washed up in a nursing home, don't care about your capital any more, and just need the income to pay the fees.

What If

What If your time frame is longer?

What if you only buy when you feel the price is right?

What if you had purchased QBE in 2001 after 9/11 for say $5.00? although it was available for as low as $3.30ish.

Dividends paid since then have been $8.31 franked to about 40ish %

What if you were not an omniscient investor and didn’t sell at $30+ dollars because of the CGT implications and the fact you didn’t know it was about to fall to $13 bucks even if it did seem a little expensive. Or you had your eye off the ball because you were too busy living life?

What If we could be so dumb as to miss the $30+ sell price and still be holding with a measly 22.5%pa IRR (not including franking) for one good decision in 10 years?

What If

 

[notting]

A most dangerous post!

I hope this isn't too out there for people. On selling. just take it as an observation.

I'v always had a little interest in being a bit of an omniscient invester!

Well, OK, at least one that every now and then just clearly sees something.

I know it's totally stupid to trust your gut and all of that. Totally stupid to think that it will work all the time or most of the time or even a little bit of the time.

But every now and then, infact quite a lot I'll go to make a trade and I'll get this weird weight in my arm as it goes to move the mouse and I often ignore it and it turns out that the weight was correct in that I shouldn't have taken the trade.

Fear can be a factor of course, so I need to constantly question it when it happens and learn to see the difference between the two. For instance if it is in my guts it tends to be fear or if it just like my presence sense body energy hard to describe buy everyone one has it then it's accurate if it's clear.

It's a bit like kicking for gaol. Or tossing a bit of screwed up paper into a bin. Sometimes you just know your not not going to nail it. Doesn't matter what you do it's just not going through the sticks or in the bin. So you pass it off to another player, everyone thinks your crazy to have done that and clearly should have taken the shot.

My experience tells me when you take the shot in that situation you end up losing.
We are feely creatures, possibly even more than thinky creature.

This is quite complex but is just something I note. Rather than act upon when it comes to identifying a trade. Once I have identified a trade, then begin to act on it if that sense occurs pull out you need to be quite disciplined.

Though I have acted on it a couple of times and it worked very nicely for a fresh buy.

I'm aware of deeper intelligence that is not necessarily cognative.

It's just interesting.

Better not to be stresses or full of testoserone or making bold regular trades.

I have had three really clear sell signals when I felt it would be good to sell my entire portfolio. Every time they were accurate to the day! I took none of them because things were going well and it just seemed like the recent fun was going to be spoilt. Not today surely. I paid dearly!

When I sell too early which is almost all of the time, so far, oddly enough in the light of the above it's usually based on reason which of course is counter to markets that well - you know.
I understand trailing stops and all that.
I'm just sighting this because it shouldn't be completely ignored. I'm working on it.

I'm expecting to have the courage to act if it happens again.

Gotta remember that it will happen when I almost least want to sell.

 

[Tysonboss1]

I know what Warren said and I know what you said, but I have no idea what you think you said.

What did you think you said?

Why don't you just link an example of somthing that I have said on the property thread that opposes the view that lower prices are good for investors in the accumulation phase. I don't think I have every said I am against property price falls, I have said that in my opinion I didn't think it was likely, But if it happened I would welcome it.

Here is a thread I started 18months ago which I explained my thoughts, and I used the abstract example of car spaces (which are a property investment)

https://www.aussiestockforums.com/forums/showthread.php?t=18576

Still waiting for an answer to this one wayne,

I've asked this question of others elsewhere.

Folks talk as if fully invested and suddenly have boxes of cash when the market goes down the ****-chute.

Not pointing the finger at anyone in particular, but I think there is a fair bit of embellishment at times here.

Some of us have successful businesses that produce a steady flow of cash that we can put to work, not to mention rental payments from property and dividends rolling in.

not to mention that some of us might see fit to start a conservative plan of deploy some capital from debt if markets turn down.

 

[Ferret]

QBE is a great example of the futility of buying because (a) it has a decent dividend, and/or (b) It's a so called great business.

And isn't it funny that QBE seems to be one of those stocks that brokers always have a buy on!

 

[So_Cynical]

QBE has always paid a decent div, sometimes as much as 6.6% per year.

View attachment 44030
4 year chart. OUCH.
(blue chip all the way, can't go wrong, pays a great reliable dividend yield, always about 6%. 6% x $ 13 = 0.78 cps, 0.78 cps / $34.00 ps = 2.3 cps plus you have 62% capital loss. Be careful which stocks pay dividends for you.

What's your comment about Mr Jeff's post including the chart of QBE which shows a 62% fall in the value of the capital?

What If

What If your time frame is longer?

What if you only buy when you feel the price is right?

What if you had purchased QBE in 2001 after 9/11 for say $5.00? although it was available for as low as $3.30ish.

Dividends paid since then have been $8.31 franked to about 40ish %

What if you were not an omniscient investor and didn’t sell at $30+ dollars because of the CGT implications and the fact you didn’t know it was about to fall to $13 bucks even if it did seem a little expensive. Or you had your eye off the ball because you were too busy living life?

What If we could be so dumb as to miss the $30+ sell price and still be holding with a measly 22.5%pa IRR (not including franking) for one good decision in 10 years?

What If

And isn't it funny that QBE seems to be one of those stocks that brokers always have a buy on!

The QBE 10 year chart shows 6 up years 1 flat year and 4 down years and a total 10 year return with divis of about $15 per share (gross)...hardly a Disastrous long term investment. a 10 year gross return of around 146% with no compounding...lol and that's the absolute worst case scenario for selling after 2005.
~

 

[wayneL]

Still waiting for an answer to this one wayne,

Well I'm not going to trawl through the thread to do a he said she said, so let's just take your word for it.

Some of us have successful businesses that produce a steady flow of cash that we can put to work, not to mention rental payments from property and dividends rolling in.

not to mention that some of us might see fit to start a conservative plan of deploy some capital from debt if markets turn down.

That's fine Tyson, but we both know some here post stuff that doesn't have the ring of truth, some of it just obviously imaginary. I'm sorry if you feel that I implicated you personally, but if you look, I pointed the finger at no individual.

If it makes you feel better, I wasn't thinking of you when I typed that.

 

[notting]

We must be board.
Bring the markets back on so we can start panicing again.
QBE - Re insurance seems to believe in global warming.
Investers believe in the au$ till recently.
Flat earnings in bonds - obvious.
If re insurance is wrong it's a screamer in my opion.
Believe in it or not?

 

[wayneL]

We must be bored.
Bring the markets back on so we can start panicing again.
QBE - Re insurance seems to believe in global warming.
Investors believe in the au$ till recently.
Flat earnings in bonds - obvious.
If re insurance is wrong it's a screamer in my opinion.
Believe in it or not?

That's a good point actually.

However there may be some artifact there. It seems to me (and I've seen some figures somewhere to back this up, just can't remember where) that more people are living in areas subject to weather events.

Even if AGW is a furphy, risk is still higher because of increasing numbers in these areas.

 

[notting]

Something to read if your really, really board.

http://en.wikipedia.org/wiki/Global_dimming

Adding to that, when the planes were stopped for 3 days after 9/11 temperatures soared measurably against days with simalar conditions at that time in NY!

 

[Ves]

That's fine Tyson, but we both know some here post stuff that doesn't have the ring of truth, some of it just obviously imaginary. I'm sorry if you feel that I implicated you personally, but if you look, I pointed the finger at no individual.

I will agree that on any forum at any one time that there will be a small majority that post as if they have made a killing out of the market's misfortune. But it is no small stretch, especially in a forum with lots of "value" investors that there are plenty of cashed up and willing posters ready to try to make a killing from any pull-back.

I reacted to when you said there was a "fair bit" (ie. Aussie slang for "a lot") of dishonesty. Perhaps I misinterpreted your intentions, but you have said it several times lately!

No harm intended.

 

[mazzatelli]

I will agree that on any forum at any one time that there will be a small majority that post as if they have made a killing out of the market's misfortune.

What's small majority aussie slang for?

 

[wayneL]

I will agree that on any forum at any one time that there will be a small majority that post as if they have made a killing out of the market's misfortune. But it is no small stretch, especially in a forum with lots of "value" investors that there are plenty of cashed up and willing posters ready to try to make a killing from any pull-back.

I reacted to when you said there was a "fair bit" (ie. Aussie slang for "a lot") of dishonesty. Perhaps I misinterpreted your intentions, but you have said it several times lately!

No harm intended.

Actually I've said it only twice.

You haven't been here long, but ASF has had to contend with a lot of bogus claims and hindsight success, so forgive the cynicism.

But it is necessary to keep things a bit real.

Just a point... I am fairly well acquainted with Aussie slang