Passive income, dividend portfolio and emel on the furnace

25 сентября, 2021 от fake Выкл

«Kingdom, lying on the side!»

(c) A.S. Pushkin

Readers scold me. And, by the way, unfair. Assice me in the comments «Speculant» constantly. And I’s offensive. So I decided — I will spend an explanatory work in this article. It is necessary for me to give a chance to justify. I myself relate myself to investors, to the most real.

And as usual — I will not just justify the clarification work — I also hide behind your back, and this so that no one can argue with him — Benjamin of our Graham to his side will attract. Well, let’s in order …

Little idea with such warmth and understanding was met by Russians as the idea of passive income. Do you think I was an exception? Nothing like this))) It is the search for the method «how to learn to receive money and not do anything» led me, like many, into the world of investment. The image of «emes on the furnace» of roads and is close to us all — before the investment has become my favorite hobby, I myself wanted to get just carefree income to burn life without thinking about money.


Let’s deal with together what a dividend strategy is in principle why she found so many fans and what she eventually turned into «skillful hands»))

Dividend strategy

What is the devilish temptation of this strategy? Why almost all new investors (not speculators — they have other landmarks, namely investors with careful goals and prudent thoughts) so like a dividend strategy ??? In two things, her insidious temptations lie:

That’s just both of these items — mistakes

But before we proceed to the analysis of errors, I emphasize for the attentive reader — the problem is that the dividend strategy, right on the proverb — «Make a fool to pray — he and his forehead» — terribly distorted at the present time.

And I will further criticize her distorted option. At the same time, I myself completely remained a supporter of the dividend strategy in its original, normal version — such as the Batyushka-Graham himself could have adhered to as an option for value investment)) the correct option, of course, will also be disassembled in the article. The trouble is that it was in the wrong (distorted) form a dividend strategy conquered the minds of most people — see above — with their «simplicity» and «accessibility.» Therefore, from criticism of the wrong option and begin.

«Simple» collection of shares

Shares can love the normal market fluctuations — this is normal volatility and investor it really may not worry. And can stock shares on objective reasons — the company’s revenues fall. And then it is stupid to expect that the stock price will decline, and dividends will forever will be highly «as nailed» recorded. Lost following the decrease in the company’s income and dividends. In the form of dividends, the company shares with its profits with shareholders. If «Pie», which the company shares decreased — and the shareholder slice will decrease — miracles does not happen.

And a significant drop in the course of the shares without hope for recovery can «eat» all the previously obtained profits from dividends, moreover, and the dividend flow on this background will decrease dramatically.

So it turns out that buying shares with large dividends should still evaluate the company’s business and its prospects, and not just the size of dividends. Well, the most visual example is the recent «titanic» dividends from centening — the event one-time event, which cannot be navigate in the dividend strategy, which is obvious)) less obvious situations — Avisma or NCSP. We assume that the first thesis is that

Let’s go to the second item

Never sell shares

Is this a good idea — never sell shares?

Perfect accurately — bad.

Now I am here a lot of anger from «True Investors» I will receive, but I send them to read the late Graham and to argue with him — His, it seems that no radish in speculators recorded)) And at the same time this, I will not be afraid of this word Father value Investing learned to sell the action as soon as you think that its growth prospects are exhausted.

For some reason, this thought I can not convey to readers, I will try to express it clearly.

There is an old meme — «It’s impossible to just take and not fix a profit of 1.5%» — so, guys, the line between the investor and the speculator runs precisely in this place. Now I will write a caps — the line of this thought has not yet managed to convey:

Speculant sells an action when he decided to fix profits

Investor sells an action when he does not believe in its further growth

That’s all the edge.

Another ancient Romans noticed — non Progredi EST Regredi — in free translation «not to develop, it means to degrade.» No company can stand still — she is not «fly in amber.» If the company is not becoming more expensive — it is cheaper (yes, yes, I also remind you of «Captain Obvious»)).

What did Benjamin Graham taught the reasonable investor? If in a nutshell — you find a fundamentally undervalued share. Own it. When the market will appreciate the company completely, so that its further growth becomes unlikely — selling a share — you get a profit and invest your money into a new share with a perspective of growth. And — yes — this is the name of investment. NOT speculation. Because you insert into the company on the basis of fundamental indicators and own it you can endlessly for a long time — while the company has growth prospects.

I will give a simple example on your own portfolio to not run for an example.

It just grew up in my opinion to the figure, above which it is unlikely to grow — so I decided to sell it.

Reverse example — Nickel. In my portfolio, it shows 29% of paper profits excellent for speculators. But I will not sell it — because I believe in his prospects for further growth. However, this is not fanaticism. If tomorrow Norilsk will grow five times — I’ll sell it immediately — not because the profit will become unbearably big, and because its further growth in the coming years will be (in my opinion) is extremely unlikely.

So the investor who decided to «never sell shares» — deprived himself an important tool for working with his portfolio.

It’s like a gardener who decided never to short the trees (and maybe even more appropriate to say — never harvest))

A more couple of words about sales and change in the portfolio, since this was discussed. Let’s see what the statistics says to us. And she will tell us interesting things. At the interval per year, for example, it is not difficult to guess that individual shares are market leaders — they are better than the index. Actually, it is obvious — that they are «leaders» to be better than the average market.

But on the long interval — thirty years, for example, — leaders start playing the index. Funny, isn’t it? This simple statistics tells us that if you firmly decided to «never sell shares» — it is better to buy an index — statistics shows that how well you chose stocks today, on a long period of time you will most likely lose the index.

But if you, as it is called the cyclist, use the tactics of «replaceable leader» — quite a chance that you will win the index.

And much will become much faster