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Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 3:40 pm
by Itsallaguess
simoan wrote:
Itsallaguess wrote:
I always get the impression that you're often happy to simply 'box-up' your little gems of disagreements with various income-investors, and then just assume for the sake of your well-advertised bias against them that they all then subscribe to the whole 'collection' of individual disagreements in your box...


Well, your impression is completely wrong.


I can only go off the evidence you continue to provide I'm afraid, and your most recent and brilliantly-timed accusation that I was somehow 'making an argument for HYP' when I have actually done nothing of the sort is just another example of the faulty prism that you continue to use in these types of income-investment debates.

If you perhaps stopped rushing to quite false assumptions like that and then trying to work back from there with a box full of biases then there would be much less chance of these types of issues...

Cheers,

Itsallaguess

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 5:17 pm
by OhNoNotimAgain
simoan wrote:
I think we've now established there is no fund manager who uses this approach solely, maybe because he'd likely have been sacked by now , Si


Unless it was an algorithm used by an index.

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 5:24 pm
by simoan
OhNoNotimAgain wrote:
simoan wrote:
I think we've now established there is no fund manager who uses this approach solely, maybe because he'd likely have been sacked by now , Si


Unless it was an algorithm used by an index.

The nearest thing I’ve seen is IUKD which is an iShares ETF where every so often they fiddle with the portfolio. IIRC the performance has been dreadful over the years.

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 6:56 pm
by Lootman
OhNoNotimAgain wrote:
simoan wrote:I think we've now established there is no fund manager who uses this approach solely, maybe because he'd likely have been sacked by now , Si

Unless it was an algorithm used by an index.

Something like this, do you mean?

https://www.valu-trac.com/administratio ... nts/munro/

According to its latest factsheet its 10-year performance is 4th quartile.

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 7:02 pm
by GeoffF100
OhNoNotimAgain wrote:
simoan wrote:I have no idea what you're talking about? Clearly the meaning of the analogy is lost on you. No-one has mentioned rubbish, over hyped, ridiculously overpriced companies like Amazon and Tesla. That's one hell of a big straw man you've built there!! Anyway, I hope you enjoyed your rant...


Sorry, I didn't explain myself very well.

What I was trying to illustrate was that the "bath " of retained value is of no use to the investor until he gets the cash which he can either use or reinvest in a different "bath". Either he sells the bath or gets the dividends. However, if those retained earnings vapourise, and the stock never paid dividends, then he has nothing.

Not if he sold some stock. The dividends paid evaporate if they are reinvested, and the company loses money. You have to pay tax on dividends, but not on retained earnings or share buy backs. Dividends are not good if you pay tax on them.

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 7:07 pm
by dealtn
MrFoolish wrote:I don't disagree with the bath analogy, though I feel it does miss some important details.

To start with, does the bath represent the underlying companies or the end-user's portfolio?


A bath is one company, with the water from the taps its earnings, the water leaving the plug its dividends , the efficacy, if you like of the plug determined by its Directors

MrFoolish wrote:At the company level, if the directors of that company can find no good use for their excess water then why hang on to it? Pass it on to be invested elsewhere. Otherwise they might waste it on big bonuses, jollies and unsafe ventures. Most directors are not as sensible as Buffett.


Yes Directors could, and investors should be wary and mindful of trusting Directors (whose motives might not be aligned with them). Most companies, and their Directors are more likely to be wasteful on poor acquisitions, or even overly paying dividends when reinvestment, or balance sheet management might be better. Bonuses and jollies, whilst they exist, are less of a cost in aggregate I would think.

MrFoolish wrote:At the portfolio level, the bath analogy assumes all water from the taps is equally priced. But all companies are not equally priced. Often those high yielding shares sit on a lower P/E ratio. So possibly you fill your tub more cheaply with the high yielders.


No. Each company is a bath. For a portfolio you (or the market) owns multiple baths - each of which could be differently valued (I haven't used market valuation anywhere in my description) what I call value is simply volume of water determined by how water flows from the taps, and how much leaves by the plug. If you (or the market) wish to value different baths at different prices as the taps have bigger flows, or plugs let out more water, or some other determinant, that's fine, even if that means similar volumes have different market prices.

MrFoolish wrote:I do agree that Total Return is what matters. But the bathtub analogy is too simplistic to explain it.
Its deliberately simplistic to illustrate the theory of what the world should look like. In practice we live in a complicated world populated by complicated, and less than perfectly rationale people.

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 8:33 pm
by simoan
OhNoNotimAgain wrote:
Sorry, I didn't explain myself very well.

What I was trying to illustrate was that the "bath " of retained value is of no use to the investor until he gets the cash which he can either use or reinvest in a different "bath". Either he sells the bath or gets the dividends. However, if those retained earnings vapourise, and the stock never paid dividends, then he has nothing.

This is just one way of looking at it and not necessarily the best way of using the bath water as an investor. Some of the bath water can be removed to buy bigger taps whilst the plug is only removed to allow water into the bucket for a short period. As the tap volume gets bigger and bigger the bath fills up quicker and the plug is removed for longer periods to compensate. These are the kinds of baths I want to own.

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 8:37 pm
by simoan
Itsallaguess wrote:
simoan wrote:
Itsallaguess wrote:
I always get the impression that you're often happy to simply 'box-up' your little gems of disagreements with various income-investors, and then just assume for the sake of your well-advertised bias against them that they all then subscribe to the whole 'collection' of individual disagreements in your box...


Well, your impression is completely wrong.


I can only go off the evidence you continue to provide I'm afraid, and your most recent and brilliantly-timed accusation that I was somehow 'making an argument for HYP' when I have actually done nothing of the sort is just another example of the faulty prism that you continue to use in these types of income-investment debates.

If you perhaps stopped rushing to quite false assumptions like that and then trying to work back from there with a box full of biases then there would be much less chance of these types of issues...

Cheers,

Itsallaguess

Tell you what, I’ll be the kettle, you can be the pot. As for everyone else, they must be bored rigid reading this rubbish.

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 9:01 pm
by Itsallaguess
simoan wrote:
Tell you what, I’ll be the kettle, you can be the pot. As for everyone else, they must be bored rigid reading this rubbish.


Nah - I've enjoyed it.

We've got yet another great reference point for your faulty income-investment prism and we've had a deeper mooch around inside your anti-HYP bias-box.

What's not to like?

Cheers,

Itsallaguess

Re: 50 years of "A Random Walk Down Wall Street"

Posted: November 12th, 2022, 10:26 pm
by MDW1954
Moderator Message:
Based on moderator reports, I think that this has gone as far as it can. Thread duly closed. --MDW1954