Tad -

Thank you - I keep hearing about Yahoo's finance site, now I think I'll
check it out. I know many companies hire historians to write the
company history, but my only past attempt there failed, probably
because your typical liberal arts major doesn't relate well to
quarterly earnings numbers. Tch. They sure care enough about the
current and projected numbers!

Reason I asked you about Graham is I really think it's "the book" to
read, and I recommend it frequently.

dapperdobbs wrote:
- quote -

Yes, it's on my bookshelf...I think though my intro to the nifty 50 was
in "Random Walk" by Malkiel.


- quote -

You mentioned earnings data from > 5 years ago...I don't know of a
free/searchable source for that kind of info. For more recent data any
of the free quote services might be what you're looking for? eg Yahoo,
marketwatch, etc. - there are free screeners on some of these sites as well.

-Tad

Tad -

<<That's the lesson of the nifty fifty...that even if you think a
company
<<is going to be long-term profitable, you take on enormous risks by
<<buying at high multiples of earnings.

Yes. "The Intelligent Investor" speaks to a lot of other discussion in
this topic, with a very emphatic set of references to what you
correctly stated, above. (I'm not trying to be sarcastic here, I'm just
curious - have you read it?) I personally, also hold an opinion that
the lesson from the nifty-fifty is: follow the crowds to find a hot
nightclub, to get in out of the rain, but sometimes it's wise to walk
slowly away from crowded investments.

With all the research and methodology checks on dividends you guys are
industriously pursuing ... the dividends of the company rely upon
their earnings .... Not wishing to be a black sheep, but one of the
problems I have run into is getting accurate data on the earnings. It's
easily available, by quarters, going back 3, 4, and sometimes five
years, from 10K filings, but going further back than that, well, CRSP
doesn't seem to cover it (and I'm sure I couldn't afford their pricing
even if they did). (Amazing. Absolutely amazing. Prices, but no
earnings. Huh...! Cart before the horse.)

Could you refer me to a source for company earnings, preferrably by
quarter, that would cover more than VL's universe of 1700 stocks? I
know VL has a separate publication covering another universe of
companies, but from what I've seen I'd rather do my own screening. Long
Term Values stopped publication a few years back - they used to cover
some 7000 stocks. I asked them if they would tell me where they got
their data, but they never answered.

"Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote
- quote -

Sure. But that doesn't mean one should then dump it. Given that taxes are
inevitable, Coke might have been making more money than many alternatives.

Maybe you didn't mean such an investment should be dumped.

But I didn't say what seemed to me did not need to be said: The dividend
payout kept up with inflation and then some. So as an income investment, KO
was better than stuffing $1000 bills into a mattress for the given 13-year
period, paying no interest and being worth less at the end of the period,
with little hope of ever being worth more.

KO was better than a lot of other stocks as an income investment...

Rich Carreiro wrote:
- quote -


Yep, definitely brainoed - meant NAIC, typed AAII.

But spelling out either takes more keystrokes than
http://www.google.com/search?q=aaii+naic

;-)

-Tad

"Tad Borek" <borekfm[at]pacbell.net> wrote
- quote -

With hindsight, I would be as rich as Warren Buffet. :-)

- quote -

Pretty harsh comment, isn't that?

Coca-cola's dividend increases of about 10% each year beat inflation
(averaging about 7% a year) over the given 13 year period. Those dividend
increases also beat the S&P's for the same time period, with the S&P
averaging 7.2% increases over the 13-year period. You want it to beat taxes
too??

- quote -

I think you mean something other than dividend yield here.

- quote -

I wish I'd gotten out of the stock market entirely around 2000. And also
around September, 1987, returning to stocks around November, 1987. But alas,
I never could afford those glasses that let a person see into the future so
as to be able to time stock purchases.

- quote -

I think "enormous" is an enormous exaggeration. ;-)

It really depends on the investor's goals.

snip
- quote -

I don't know what AAII is.

Dunno about you but at my high school, we were taught that acronyms should
be used only after the full name for which they stood was spelled out.

"Elle" <elle_navorski[at]nospam.earthlink.net> writes:

- quote -

Of course you would want it to, unless Congress has given you
an exemption from paying income tax.

If an investment isn't making money after adjusting for inflation and
taxes, then it purely and simply didn't make money, regardless of what
the number in the account balance box on the statement says.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

"Elle" <elle_navorski[at]nospam.earthlink.net> writes:

- quote -

Given the website, I assume Tad typoed/brainoed NAIC.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

Elle wrote:
- quote -

Regardless, waiting a couple years until the price had settled resulted
in a much-greater payoff. And the dividend yield was still losing money
after inflation and taxes, that may have taken over 20 years to catch
up. All the while, an investor who made that choice to purchase KO could
have just left the money in cash and seen no loss of principal and
higher returns, both real and nominal, for a period exceeding 13 years.

That's the lesson of the nifty fifty...that even if you think a company
is going to be long-term profitable, you take on enormous risks by
buying at high multiples of earnings. Even if those earnings
materialize, there's a good chance you'll be able to sit on your hands
and buy it back in a few years.

During the dot-com bubble some MBA type actually went through the bother
of proving that Tulipomania (a surge in bulb prices in the 1600s often
mentioed in lists of financial "manias") was reasonable, that the
long-term value of tulip bulbs didn't really get unjustifiably high, as
long as you looked long-term enough. Only an MBA could do that kind of
study...which avoids the issue that any half-wit knows, which is that a
couple years after the bubble in tulip bulbs you could have bought 20X
more of them and made that much more money. The guy's probably writting
sympathy letters now to VA Linux investors. Buyers at high valuations
have only a slim chance of seeing acceptable returns - or put another
way, need to wait longer for them (all the while bearing opportunity
costs on their invested dollars).


- quote -

Elle, none of us who aren't subscribers know what AAII's strategy is!

-Tad

"Bucky" <uw_badgers[at]email.com> wrote
snip for brevity
Re Coca-cola stock and a mention of it in BI's magazine:
- quote -

This was the next number I wanted to compute. For Nov 73 to Nov 86, the
annualized gain is about 8.0%.

The S&P went from 96 to 246 from Nov 73 to Nov 86. That's about 7.5%, but it
ignores dividend reinvestment of an equivalent index fund. The dividend
yield of the S&P 500 for that time period and annualized was about 4.7%, so
an S&P 500 index fund would have beat KO by a significant amount.

Inflation averaged about 7.3% per year during this period. So KO's dividend
increases, averaging about 10% a year, kept up, and so a retired investor
living off dividends would have stayed ahead of inflation.

Thank you for your assistance, Bucky, with Yahoo and in the rest of this
little investigation.

Elle wrote:
- quote -

Assuming that my new-found discovery about Yahoo adj close and total
return is correct, I compared the history for KO. On Nov 7, 1973, KO
was at 144.50 (adj close of 1.22). It would not be until Nov 3, 1982
that the total return (including reinvested dividends) would break even
again. Even though that is not as long as 13 years that the article
mentioned, 9 years is still a long time to be in the red.

What if you held from 1973 to 1987? The adj close on Nov 7, 1987 was
3.72. That's an annualized gain of (3.72/1.22)^(1/14)-1 = 8.3%. Hey,
that sounds pretty decent.

In its September magazine, Betterinvesting.org states:
---
[In] the early 1970s... the "Nifty 50" approach was the rage. The theory at
that time was to buy any of the 50 stocks that were considered classic
growth companies. Price didn't matter because as long as they grew, the
price was warranted.

Like any investment approach, if it becomes too popular the bubble can
burst. The era, of course, came to an end. Investors who bought Coca-Cola at
its high in 1973 had to wait 13 years for the stock to get back to that
price.
---

The article says nothing about Coca-cola's dividends during this period. In
fact, from Yahoo's charts (if I am reading them correctly), in June 1973,
the dividend yield was about 2.9% . For the next 13 years, dividend payouts
grew very steadily and at a rate of about 10% a year. Thus the dividend
yield on a Coca-cola investment made in 1973 grew to almost 11% by 1987. (At
other times during the early 1980s, the dividend yield was over 12%, due to
KO's low price relative to 1973.) If an investor factored in dividend
re-investment, he/she might in fact be doing much better than what
BetterInvesting.org implies.

Coca-cola's dividends have continued to grow steadily.

Betterinvesting.org seems to me a tad too geared towards timing and chasing
returns (with the concommittant failure that studies I understand indicate
occur with such a strategy) rather than long-term financial security. Or
maybe a "growth investing" strategy is inherently vulnerable to the hazards
of trying to time.

Doesn't Coca-cola's history from 1973-1986 for the greater part advocate
buying-and-holding (of dividend paying, slow classic growth stocks) vs.
BetterInvesting.org's growth strategy?

Just a thought as I continue to study long-term financial security for
individuals.