# Great time to buy



## Shaun8030 (Jul 25, 2018)

With the Nasdaq and S and p 500 expected to correct ten percent with rising rates and the weakness of Canadian energy , utility and Telco stocks is this a great time to buy more then usual before the bounce back .


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## londoncalling (Sep 17, 2011)

Absolutely Most Definitely. Maybe. The past few days have seen a decline but I would say it is way too early to tell if this is a blip and the market will keep chugging or if it is the end of the bull run. Regardless, I allocated some cash to Telcos today because I have a personal Investment Policy Statement. My rules are much looser than others but at least I have some basic guidelines. The decision to buy for me is based entirely on % of cash the entire portfolio. The decision to buy or sell may also be different based on phase of investing (accumulation vs. withdrawal.) one is in at this moment in time.


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## lonewolf :) (Sep 13, 2016)

Historically this is the seasonal time time buy stocks though not energy stocks.

Momentum was very week going into recent top. 3 X as many stocks hitting 52 week lows then hitting 52 weeks highs when DJI made the recent new all time highs.


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## james4beach (Nov 15, 2012)

We're 10 years into a bull market phase (where bulls usually last 5 to 8 years) and central banks are in a tightening phase, which happens near the end of cycles.

I don't follow why this would be a good time to buy. This isn't a correction which is happening early in a cycle, or mid cycle.

Stocks are weakening near the end of this cycle. To me that sounds like a dangerous time to buy.

A video, not sure this will load: https://www.youtube.com/watch?v=ESPZZsAIogM


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## hboy54 (Sep 16, 2016)

Don't know if it s a good time to buy. What I can tell you is that OSB was about $55 a month ago and is $36 today. I know that 36 is 19 less than 55. This last sentence on the surface sounds facetious but I mean it in all seriousness. Unlike James who is implying he can predict the end of the bull market and the start of the bear, I have no such facility. All I can do is try to buy low and sell high. Given the improvement in the OSB balance sheet and capital assets over the past decade, if I did not already have a very large position, I would consider starting around this level. Last sale low $40s, last buy low $20s IIRC.

Likely other stocks out there that might be of interest. OSB just happens to be staring me in the face.

hboy54


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## james4beach (Nov 15, 2012)

I don't say I can predict the end. The market could go up 20% again this year. I'm just saying that there are business cycles, and bull markets don't last forever. It's already been 10 years so we are clearly closer to the end of a bull market than the start.

I've also said, and still stand by, the idea of just sticking to one's asset allocation targets. That's what I'm doing. I'm 25% in stocks.


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## scorpion_ca (Nov 3, 2014)

If your investment time horizon is more than 10 or 20 years, the market will be higher at that time.

In Feb when market was down, I put a buy order of VUN for $44.75 and it didn't go that down but now it's trading around $51. It went to around $54 too. I hope market keeps going down in the next couple of months that I can spend $50k to invest...who doesn't like sale?


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## like_to_retire (Oct 9, 2016)

scorpion_ca said:


> ...who doesn't like sale?


Well, I suppose retired investors that have growth portfolios that produce their income by selling shares rather than clipping dividends wouldn't like a sale.

ltr


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## james4beach (Nov 15, 2012)

scorpion_ca said:


> If your investment time horizon is more than 10 or 20 years, the market will be higher at that time.


From my studies of stock market history, I'd say it takes more like 20 to 30 years to have high confidence that stocks will be higher -- but it's never guaranteed (this is why stocks are risky).

10 years is a pretty short time horizon and just about anything could happen. If an investor only has a 10 year time horizon, they should be heavy in fixed income.


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## gibor365 (Apr 1, 2011)

> I allocated some cash to Telcos today because I have a personal Investment Policy Statement.


 Had limit buy for Telus today at 44.1, it didn't get executed yet. Telus looks a bit undervalued. I checked Forward P/E for some dividend stocks I own, if P/E becomes 5%+ lower than 5 y average, I'm buying.

I also making sure that ratio equites/FI will be 50/50 (+/-5%)

I'm more focused on dividends than total return....last year the only my stock that cut dividends was CUF.UN that I sold, and many stocks increased dividends..


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## like_to_retire (Oct 9, 2016)

james4beach said:


> If an investor only has a 10 year time horizon, they should be heavy in fixed income.


Just not true. Everything I've read, both USA and Canada, around 90% of 10 year equity investment periods are positive. (and most of the results include the 1930-1939 situation. After 1940, it's almost 100% for 10 years).

ltr


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## MarcoE (May 3, 2018)

If it were possible to time the market, we'd all be trillionaires. I don't know if this is a good time to buy. I don't know if this is the beginning of the end of the bull market, or whether the S&P will rise 20% over the next year. I'm not Ray Dalio or Warren Buffet. I just try to stick to an asset allocation I feel comfortable with. My strategy hasn't changed.


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## james4beach (Nov 15, 2012)

like_to_retire said:


> Just not true. Everything I've read, both USA and Canada, around 90% of 10 year equity investment periods are positive.


"Positive" is not really the question. The comparison should be done versus a risk free rate such as treasury bond returns. Equity investment is only successful when they deliver a return that exceeds the (safe) bond return by some risk premium.

From the research I've done, 10 years is too short a time horizon to have high confidence for a good outcome in stocks, meaning that they handily beat fixed income. At 20+ years there's a strong case to be made for equities.


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## like_to_retire (Oct 9, 2016)

Took at look at my watchlist and I see I lost a small car today.

I take solace in the fact that I still beat the index by about 0.5%

I note that BCE is up about .65% in my stocks. It's just like gold in tough times.

ltr


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## newfoundlander61 (Feb 6, 2011)

I was considering stepping in today for the first time with my non-reg account and decided to wait. After checking some potential stocks on my watch list I think CNR will be my first buy, it was down $6.45 or -5.45%.


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## like_to_retire (Oct 9, 2016)

newfoundlander61 said:


> I was considering stepping in today for the first time with my non-reg account and decided to wait. After checking some potential stocks on my watch list I think CNR will be my first buy, it was down $6.45 or -5.45%.


Of my 24 stocks CNR is one of a very few that's actually up on the year.. Wouldn't it be better to choose a stock that's actually beat up?

ltr


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## Eder (Feb 16, 2011)

I couldn't look at my watchlist today...instead I took a look at my dividend growth compared to this time last year...makes me smile.


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## Dilbert (Nov 20, 2016)

^^Yes, maybe have a look at Fortis and maybe Northland Power?


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## newfoundlander61 (Feb 6, 2011)

Will do.


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## agent99 (Sep 11, 2013)

It's days like this that remind me why I hold mostly dividend paying stocks and not growth stocks or funds. Sure as hell wouldn't want to have to sell growth equitiesin this environment to provide for our retirement income.


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## My Own Advisor (Sep 24, 2012)

agent99 said:


> It's days like this that remind me why I hold mostly dividend paying stocks and not growth stocks or funds. Sure as hell wouldn't want to have to sell growth equitiesin this environment to provide for our retirement income.


Agreed. Happy to own about 30 CDN stocks and 10 U.S. payers for that reason. Selling equities in retirement, when you absolutely have to, seems like a dangerous proposition.

Maybe this is the start of the -10% or -20% correction? An well, who knows, just keep saving up some money for new/more purchases. I would be happy to buy more CNR myself and get this guy DRIPping eventually.


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## milhouse (Nov 16, 2016)

I have to admit too that while it's kind of sad seeing my overall numbers take a hit it's also kind of nice to be able to focus on my dividend growth numbers too. 
That said, some of the companies in my portfolio have made some bold dividend growth forecasts. We'll see if they'll be able to stick to them if thing go pear shaped.


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## james4beach (Nov 15, 2012)

agent99 said:


> It's days like this that remind me why I hold mostly dividend paying stocks and not growth stocks or funds. Sure as hell wouldn't want to have to sell growth equitiesin this environment to provide for our retirement income.


Except that each dividend payment is equivalent to selling shares. Unless you reinvest the dividend, it's removal of equity, and if you receive it at a low price (price drop) it's just as hazardous as selling during a downturn.

Every dividend knocks down the share price by the amount of $ removed from equity. Dividends received during stock downturns are quite detrimental to capital -- unless you reinvest them.

From my understanding of this stuff, taking a dividend as cash is equivalent to selling off shares. Both methods convert equity to cash. They are just different mechanisms for doing the same thing.


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## like_to_retire (Oct 9, 2016)

james4beach said:


> Except that each dividend payment is equivalent to selling shares. Unless you reinvest the dividend, it's removal of equity, and if you receive it at a low price (price drop) it's just as hazardous as selling during a downturn.
> 
> Every dividend knocks down the share price by the amount of $ removed from equity. Dividends received during stock downturns are quite detrimental to capital -- unless you reinvest them.
> 
> From my understanding of this stuff, taking a dividend as cash is equivalent to selling off shares. Both methods convert equity to cash. They are just different mechanisms for doing the same thing.


When Mr. Market decides that a stock is suddenly worth (for example) 20% less during a bear, do you feel that the companies earnings are suddenly reduced by 20%?

Dividends are paid out of actual earnings. 

Selling shares to create income, comes from selling at a price that crazy Mr. Market decides it's worth on any given day.

ltr


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## agent99 (Sep 11, 2013)

Agree ltr.

Funnily enough, one reason given for yesterdays crash in US market was that US economy is doing well. Producing companies are increasing their prices. This of course stokes inflation. And to control inflation, interest rates need to go even higher. Higher interest rates result in lower stock prices. Which just happened. Maybe over reaction, but market retraction was probably due anyway. 

Other factors like tarriffs, hurricanes, POTUS concerns etc no doubt also contributed.


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## new dog (Jun 21, 2016)

The market is forward looking and is seeing what things will look like if nothing changes. If the Fed suddenly starts lowering rates or there is a massive tax cut or something then the market would price that into the forward picture. Since 2009 the market should probably have hit some very rough patches and the market was in the process of pricing that in a number of times. However the Fed and other central banks stepped in with QE and other measures that changed the markets outlook.


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## Koogie (Dec 15, 2014)

agent99 said:


> It's days like this that remind me why I hold mostly dividend paying stocks and not growth stocks or funds. Sure as hell wouldn't want to have to sell growth equitiesin this environment to provide for our retirement income.


Isn't that what you should have Fixed Income for ? Anyone with a reasonable amount of FI should be able to sit this sort of thing out for years without selling depressed equities.


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## agent99 (Sep 11, 2013)

Koogie said:


> Isn't that what you should have Fixed Income for ? Anyone with a reasonable amount of FI should be able to sit this sort of thing out for years without selling depressed equities.


Well, of course you should have a good allocation to FI (and we do). It doesn't really affect our ability to sit out a market downturn, and we don't have growth stocks that need to be sold to provide us with income. The dividend payers keep on paying and we don't care how the market values those stocks. The FI is just a buffer. Interest from FI does accumulate in our RRIFs so FI does grow and match or better inflation. But it is not a factor in downturns like this. Besides, selling FI because your growth stocks are tanking would not be good either!


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## Eder (Feb 16, 2011)

Koogie said:


> Isn't that what you should have Fixed Income for ? Anyone with a reasonable amount of FI should be able to sit this sort of thing out for years without selling depressed equities.


I have a lot of fixed income investments but I have never sold any of them...just roll them over & over and hope I can beat inflation with them. We mostly live off my dividends which feels a lot better than having to sell anything ever.


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## Koogie (Dec 15, 2014)

agent99 said:


> Besides, selling FI because your growth stocks are tanking would not be good either!


The point I was addressing was this one: "_Sure as hell wouldn't want to have to sell growth equities in this environment to provide for our retirement income."_

I would sure as hell sell my FI to provide income before I sold depressed equities. It can be replenished later from accrued dividends and interest.
That is, it is a course of action for those of us not lucky enough to live solely of a dividend stream.


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## like_to_retire (Oct 9, 2016)

Koogie said:


> I would sure as hell sell my FI to provide income before I sold depressed equities.


That would be tough with GIC's and any large bonds in a ladder, but I guess bond ETF's would work since you could sell small quantities. 

To me, if someone has the strategy of selling growth stocks for income, they would know that you don't do it when the market is down, so they would have to always have perhaps 3 years worth of HISA emergency fund to draw from. During the time when they're drawing that down, they could wait for a ladder GIC or bond to come due, and hold back enough cash to top up the 3 year emergency fund, and then purchase their GIC with the remainder. 

Then when their stocks recovered (could be a long time), they would begin selling stocks again to top up the emergency fund and also re-balance their fixed income allocation.

ltr


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## gibor365 (Apr 1, 2011)

It sux, in 2 days my portfolio dropped from +3% YTD to -0.15%. Yes, my dividend income is going up, but usually when severe correction/recession starts, companies are cutting/suspending dividends or raising them less than inflation rates


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## like_to_retire (Oct 9, 2016)

gibor365 said:


> It sux, in 2 days my portfolio dropped from +3% YTD to -0.15%. Yes, my dividend income is going up, but usually when severe correction/recession starts, companies are cutting/suspending dividends or raising them less than inflation rates


Really? Dividends are usually cut due to factors such as weakening earnings, so the fact that Mr. Market decides to inadvertently drop the share price is usually just noise to a company. Historically, most companies continue to pay their dividends and are loath to reduce or drop them as they understand the consequences. During the last two bear/pullback markets, none of my dividends were cut.

ltr


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## Shaun8030 (Jul 25, 2018)

Nasdaq index and S and P up over 1 percent after hours hope it stays that way and we get a bounce back tomorrow.


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## agent99 (Sep 11, 2013)

like_to_retire said:


> That would be tough with GIC's and any large bonds in a ladder, but I guess bond ETF's would work since you could sell small quantities.
> 
> To me, if someone has the strategy of selling growth stocks for income, they would know that you don't do it when the market is down, so they would have to always have perhaps 3 years worth of HISA emergency fund to draw from. During the time when they're drawing that down, they could wait for a ladder GIC or bond to come due, and hold back enough cash to top up the 3 year emergency fund, and then purchase their GIC with the remainder.
> 
> ...


That does make sense. But I wouldn't want to be there. 

Both FI and Equities would be depressed if interest rates are higher. So I guess someone in that situation might sell some of each.


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## gibor365 (Apr 1, 2011)

like_to_retire said:


> Really? Dividends are usually cut due to factors such as weakening earnings, so the fact that Mr. Market decides to inadvertently drop the share price is usually just noise to a company. Historically, most companies continue to pay their dividends and are loath to reduce or drop them as they understand the consequences. During the last two bear/pullback markets, none of my dividends were cut.
> 
> ltr


During last big recession all "5 big banks" , BCE , INTC didn't increase dividends, many , like MFC , MG, COP.N cut, HSE suspended... others , ex PM, PG increased dividends by "nothing".


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## Eder (Feb 16, 2011)

Ok...now list all the ones that raised their dividends during that period.


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## scorpion_ca (Nov 3, 2014)

gibor365 said:


> It sux, in 2 days my portfolio dropped from +3% YTD to -0.15%.


I lost around 5% or $20k since the middle of Sep, 2018. However, I spent another $21k to purchase more ETFs such as XEF & XEC.


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## newfoundlander61 (Feb 6, 2011)

Taking a position in TD this morning for my non-reg account. Planning on entering slowy over time in various sectors instead of jumping all in. No rush as I am still working for a few years yet


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## Pluto (Sep 12, 2013)

james4beach said:


> Except that each dividend payment is equivalent to selling shares. Unless you reinvest the dividend, it's removal of equity, and if you receive it at a low price (price drop) it's just as hazardous as selling during a downturn.
> 
> Every dividend knocks down the share price by the amount of $ removed from equity. Dividends received during stock downturns are quite detrimental to capital -- unless you reinvest them.
> 
> From my understanding of this stuff, taking a dividend as cash is equivalent to selling off shares. Both methods convert equity to cash. They are just different mechanisms for doing the same thing.


CDN dividends are taxed less than cap gains for most people. So it is a tax effecient way to get profit generated by the company. the claimed "share price drop" upon dividend payout, if it happens, is temporary due to retained and growing earnings. So its not exactly the same thing.


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## Eder (Feb 16, 2011)

As has been pointed out many times, a company paying out dividends is no different than the same company paying out salaries to its employees. Does the enterprise value of BCE drop every second Friday?


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## kcowan (Jul 1, 2010)

Pluto said:


> the claimed "share price drop" upon dividend payout, if it happens, is temporary due to retained and growing earnings. So its not exactly the same thing.


Exactly. In fact, if that was the only cause, then total return would be the same as dividend return. I think the pause in buybacks for 30 days before earnings reports is a bigger factor.

Obviously the Fed Interest Rate rise is a big factor. Just ask Trump!


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## Pluto (Sep 12, 2013)

Shaun8030 said:


> With the Nasdaq and S and p 500 expected to correct ten percent with rising rates and the weakness of Canadian energy , utility and Telco stocks is this a great time to buy more then usual before the bounce back .


My opinion is its too early to buy. This is not over. This could be it for this bull market. Bull markets typically end when unemployment is low, and rates are rising. Another way of saying it is bull markets top out when the economy is doing great. Bear markets bottom out when unemployment is high or rising, the economy is terrible, and rates are falling. 

I'm not super optimistic. Lots of talking heads, when asked about the outlook for the stock market will point to the great economy, implying thereby, the the outlook for stocks is fine. Don't get sucked into that talk. The economy does not lead the market, the market leads the economy.


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## hboy54 (Sep 16, 2016)

james4beach said:


> Except that each dividend payment is equivalent to selling shares.


Say there is a $1 dividend on 100 shares. I quite agree, this is a dollar removed from equity.

However, you then state unqualified that this is equivalent to selling shares.

So for the following, there is no dividend, only a sale of shares:

OK, SP is $10. To generate, $100, we sell 10 shares leaving 90 remaining.
Or SP is $5. To generate $100, we sell 20 shares leaving 80 remaining.

According to your assertion 80 = 90???? because "each dividend payment is equivalent to selling shares." I am lost.

hboy54


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## like_to_retire (Oct 9, 2016)

hboy54 said:


> ...... because "each dividend payment is equivalent to selling shares." I am lost.
> 
> hboy54



The notion that _"selling shares for income"_ versus _"receiving a dividend for income"_ as equivalents only holds true if the markets irrationality is removed.

The math is certainly correct on this issue - no denying that. But it only works if an accountant/mathematician was in charge of the market price of shares. 

If the shares were fixed at the proper calculated evaluation of the company, then of course there would be no difference between removing earnings to pay a dividend versus selling a share where the company retained all the earnings.

In the real world, dividends are paid out of actual earnings, but unfortunately in the case where the investor has to sell shares to receive the same income, an irrational fool is in charge of the price and often is not representative of the calculated value of the company.

Investors who rely on selling shares to produce income must keep a fund of cash to use for income during times when the market is losing its way.

Unfortunately not everyone can produce enough dividend income to fund their life, so they must sell some shares, and should keep an emergency fund for these situations.

ltr


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## john.cray (Dec 7, 2016)

like_to_retire said:


> The notion that _"selling shares for income"_ versus _"receiving a dividend for income"_ as equivalents only holds true if the markets irrationality is removed.
> 
> The math is certainly correct on this issue - no denying that. But it only works if an accountant/mathematician was in charge of the market price of shares.
> 
> ...


I have thought a lot about this in the recent past. I totally agree with all your statements ltr.

James, while I think you're correct about removing equity from the company in both cases I think you can't deny that it's the *method* of removal that we're fussing about.

This is my rudimentary understanding:

1. Equity extracted as a dividend payment is coming directly out of the balance sheet - irrespective of the (irrational) market's opinion on the share price. So getting $1 as a dividend payment is always going to be $1 regardless what the price is. No volatility (ignoring dividend changes).

2. Selling shares to generate income on the other hand must come with both the benefit and the disadvantage of going *through* the market. I might be wrong here but extracting $1 of retained earnings/equity by selling shares via the market would be equivalent to extracting $1 * (times) the PE ratio. So there's a boosting effect but also comes with volatility and thus sometimes you have to sell more shares to generate the same target income. Please correct me if you think I am wrong in this interpretation here.

Regards,
JC


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## james4beach (Nov 15, 2012)

Money is fungible. When corporations have earnings, any net income goes into the company and increases the equity value. Some of that may be paid out as dividends, but in any case, the money has to come from somewhere. If it pays out as dividends, it comes out of equity.

The point raised earlier about how 'the dividend is paid out of revenue' completely misses the point that if the dividend was _not_ paid, those earnings directly boost the equity value.

If you take that cash (receive the dividend) you have removed $ from equity. A stream of dividend payouts while a stock is depressed will only depress the stock price further, such that total return is preserved. I still say it makes no difference, dividend vs selling ... except selling is more tax efficient, and gives you the power to only sell when you want, _instead of forcing equity depletion during bear markets_ as dividends will do.

Here's a video from PWL Capital's Ben Felix, a very good explanation: https://www.youtube.com/watch?v=9j6DInAMMaM



> Today I want to tell you why focusing on investing to generate income is a flawed strategy altogether, and why a total return approach to investing will lead to a more reliable outcome.


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## like_to_retire (Oct 9, 2016)

john.cray said:


> Please correct me if you think I am wrong in this interpretation here.


Yeah, I think you're correct. There are obviously a lot of subtleties someone might consider. Over longer periods of time, the market price of a share will be both irrationally high and irrationally low as you've noted, and someone who sold shares as their income might argue that it will all average out over time, and I suspect they're correct. But that amount of time may be very long indeed as company shares could remain undervalued for extended periods. You might burn up a lot of low valued shares generating income before the tables turn in your favour. Best to have a decent amount of cash on hand. It's just not a strategy I would want to hang my hat on when I need my monthly income. 

Earnings is such an absolute, as is a dividend that is paid from those earnings. A drop in the share price doesn't immediately affect that dividend, and so I don't have to worry as much about the irrational market over short periods. 

The investor that sells shares for income might argue that even though a drop in the share price doesn't immediately affect earnings, eventually it could, so the dividend investor would also eventually be in a pickle. Companies that rely on borrowing money to fund operations or issue shares to fund operations could eventually be affected by a low share price if it drags on for long periods and that would affect growth and subsequently earnings.

So yeah, like many of the other dividend investors here, I wouldn't want to sell shares this week to produce my income. Opponents will post how it doesn't matter and offer you the math involved as to why. I've read many articles why it doesn't matter. 

ltr


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## kcowan (Jul 1, 2010)

ISTR that total return for the banks over 5 years is 7% and dividend return is only 4% of that. So the difference can be sustained over a long period.


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## gibor365 (Apr 1, 2011)

Eder said:


> Ok...now list all the ones that raised their dividends during that period.


Eder, my point was that when market is going up, my dividend income going up faster than when we have recessions


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## james4beach (Nov 15, 2012)

like_to_retire said:


> Just not true. Everything I've read, both USA and Canada, around 90% of 10 year equity investment periods are positive. (and most of the results include the 1930-1939 situation. After 1940, it's almost 100% for 10 years).


Your number wasn't far off. According to PWL Capital, in 85% of the 10 year equity periods, stocks beat t-bills, for both US & Canada.

Though I disagree with you on the 'after 1940' part being 100%. This resource shows rolling X year returns since 1970, and I'm counting positive real returns in 85% of 10 year periods.

Comparing to fixed income (more relevant to the stock vs bond decision) with the intrinsically higher returns of bonds, that means that stocks beat bonds in about 80% rolling 10 year periods. The linked resource supports that as well based on real returns, using 1% real return for bonds.

*If the time horizon is 10 years, there's about 80% chance of stocks beating fixed income*. Pretty good odds, but not certain.


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## lonewolf :) (Sep 13, 2016)

The Transportation average was lower something like 70 years after a major market high. Japan is still lower after the 1989 top if the Grand super cycle tops here or in the next few years Japan will still be years a way from making a new high & may be like gold when it was lower after 100 years latter after a major top.


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## hboy54 (Sep 16, 2016)

james4beach said:


> *If the time horizon is 10 years, there's about 80% chance of stocks beating fixed income*. Pretty good odds, but not certain.


If we could have 80% odds of not getting a cronic health condition in old age, or 80% odds of finishing university after starting, or 80% odds of our marriages lasting, or any number of other things big and small throughout our lives, we would be hand thumping on the desk delighted. However, 80% odds at investing are considered by many to be horrible.

Just something to consider.


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## Pluto (Sep 12, 2013)

james4beach said:


> Money is fungible. When corporations have earnings, any net income goes into the company and increases the equity value. Some of that may be paid out as dividends, but in any case, the money has to come from somewhere. If it pays out as dividends, it comes out of equity.
> 
> The point raised earlier about how 'the dividend is paid out of revenue' completely misses the point that if the dividend was _not_ paid, those earnings directly boost the equity value.
> 
> ...


1. Ben Felix is too general and overlooking some particulars. In an actual case ( a friend of mine) has about 500,000 invested in dividend paying stocks. He is retired and his marginal tax rate is 20%. last year he paid no tax on his dividends. In fact he got a tax credit ot $640. Dividends are not taxed the same as capital gains. But Ben implies they are. Reportedly, if ones income is only from dividends, one has to earn over 50,000 before paying any tax. 
2. Currently I am not reinvesting my dividends, just saving them in cash. If the bear market arrives, as you have mentioned, virtually all stocks fall. But cash doesn't. so the equity I received in dividends before the bear market is a plus. Moreover, the dividends received during a bear market can be used to buy shares in any company I desire while the value is present. 
3. In some cases there are companies with huge piles of cash that is not reflected in the share price. You and Ben talk as if cash in company coffers is always accurately reflected in the share price. Not so.


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## yousufj56 (Oct 4, 2018)

james4beach said:


> We're 10 years into a bull market phase (where bulls usually last 5 to 8 years) and central banks are in a tightening phase, which happens near the end of cycles.
> 
> I don't follow why this would be a good time to buy. This isn't a correction which is happening early in a cycle, or mid cycle.
> 
> ...


I 100% agree with you. But we've been proven wrong so many times. Screaming about a crash caused many missed opportunities. 

How exactly do we know if we are in a correction vs a "blip"?


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## MarcoE (May 3, 2018)

yousufj56 said:


> How exactly do we know if we are in a correction vs a "blip"?


I believe that when people talk about a "correction" they normally mean a drop of 10% from recent highs. Things can recover quickly (what you might call a "blip") or take their time. A "bear market" or "recession" is something more severe and longer-lasting.


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## MarcoE (May 3, 2018)

..


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## Pluto (Sep 12, 2013)

^
You can't really know. 
A common error is to try to use the economy to predict the market. It doesn't work because the economic fundamentals always look rosey at the market top. 
And if one waits until a recession is officially announced, one will notice that the stock market is already down.


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## robfordlives (Sep 18, 2014)

NFLX up massive after hours. Markets will be a runaway freight train until end of Q4


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## Earl (Apr 5, 2016)

I lost a lot of money in the past few weeks. Most of my money is in VCN, XDV, XPF, ZAG, XAW, VTI, and REI.UN. I just topped most of these up about 2 months ago and then they all went way down. My TFSA is full and there's not much cash there so I can't buy anything there, but I have a decent amoutn of cash in my RRSP and unreg account, should I buy now or wait? This is why I hate buying lots at once, if you buy a little at a time you avoid the regret if the market goes down after you buy.


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## scorpion_ca (Nov 3, 2014)

Earl said:


> I lost a lot of money in the past few weeks.


If you are in accumulation stage, you should be happy. I am happy even though I lost $20K but bought another $21k of ETFs.


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## james4beach (Nov 15, 2012)

Earl said:


> I lost a lot of money in the past few weeks. Most of my money is in VCN, XDV, XPF, ZAG, XAW, VTI, and REI.UN. I just topped most of these up about 2 months ago and then they all went way down.


Over the last 2 months these are down 3% to 4% on average. In the world of stocks this is considered virtually nil movement. Take a look at this picture of historical one year changes in stocks, scroll down to the green & red bar graph: https://www.mymoneyblog.com/sp-500-histogram-annual-returns.html

Looking at that historical graph, I'd say that "normal" annual returns are between -10% and +20%. I raise this because the way you wrote your post, it sounds like you're experiencing discomfort from that 4% ish drop over two months (you said "went way down"). Have you considered that you might be holding too much in stocks?

It's important to choose an asset allocation that is matched to your personal taste for risk and volatility. You could hold more in GICs to stabilize the portfolio and soften the volatility. Stocks are crazy, volatile things that swing around. I'm just saying, it's good to be honest with yourself about how much stock exposure you can handle.

I have 30% invested in stocks, but everyone's situation is different.


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## Earl (Apr 5, 2016)

That all makes sense logically, but it's still painful to see the loss. I think I just gotta put my emotions aside and trust in my asset allocation. Luckily I don't need the money now so I can wait for the stocks to climb back up.


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## Koogie (Dec 15, 2014)

It is tough to watch. In the parlance of another forum, I "lost" 2.5 Honda Civics. But, like I told DW, I wasn't a genius when the market was going up and I ain't a dummy because it is going down.

Snipe bargains when they present themselves and focus on other, more enjoyable things. "This to shall pass, young hobbit"


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## Thal81 (Sep 5, 2017)

If it was a great time to buy before, it sure is an even better time now!


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## MarcoE (May 3, 2018)

Thal81 said:


> If it was a great time to buy before, it sure is an even better time now!


Maybe. Most indexes aren't even in a correction yet (though the NASDAQ is). They could still potentially drop another 10-15% in addition to what we've already seen, taking us into bear territory. We don't know. Hell, they could drop by 50% for all I know.

But yes, stocks are definitely cheaper to buy today than yesterday. And if you're a long-term investor, whether your stocks go up or down in value, you still own those assets, and they will still (many of them) pay you dividends.


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## Italicum (Feb 10, 2017)

Thal81 said:


> If it was a great time to buy before, it sure is an even better time now!


To each their own. I am doing now exactly what i was doing with the market on the way up: absolutely nothing that is conditioned by these swings and collecting my ~40k/year and growing. Fortis just increased again, nice.


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## MarcoE (May 3, 2018)

Italicum said:


> ...collecting my ~40k/year and growing.


Is the ~40k what you're earning in dividends and interest from your portfolio?


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## newfoundlander61 (Feb 6, 2011)

Added $7k today to buy more units in the Mawer Balanced Fund in my TFSA.


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## Italicum (Feb 10, 2017)

MarcoE said:


> Is the ~40k what you're earning in dividends and interest from your portfolio?


It is.


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## scorpion_ca (Nov 3, 2014)

Purchased XEF @ $27.7 today and hopefully XEC @ $23 tomorrow . After that, no more money to spend for a little while.


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