Yup, I saw it. Well written in my opinion, but it still misses the point I was trying to make. A point I really don't want to pursue over there.
All of these back tested articles base everything on a specific date in time and only include price and yield.
They don't take into consideration reinvesting of the dividend or adding to your position on dips, which is what happens in the real world.
I didn't buy PEP 15 years ago. My point was that PEP was overvalued for 15 years and if one were reinvesting dividends and adding to their positions on dips, even if price was overvalued, you'd have 15 years of compounding and I think, a fairly acceptable total return. 15 years is a long time.
Yes, it would be delightful if we could always buy the companies we like at a value, value meaning cheap, but it doesn't always happen in the real world.
So, if you have to pay up in price, I think buying quality is critical, especially if one is reinvesting the dividends and I am.
I did buy PEP this year though. I wanted a yield above 3%, so I don't think I overpaid too much based on Chuck's graphs, which I love by the way. |
