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Strategies & Market Trends : Young and Older Folk Portfolio -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (991)	6/19/2022 7:44:38 AM
From: ontherancocas	2 Recommendations Recommended By Bocor Menominee Respond to of 21859

Thanks chowder for all you do. Your a first time ballot hall of famer. Just hope you don't have to be retired before your eligible.

To: chowder who wrote (991)	6/19/2022 10:18:15 AM
From: dylan murphy	1 Recommendation Recommended By Markbn Respond to of 21859

I've always thought one of the keys to Buffett's success was that he never paid his shareholders a dividend. If memory serves he paid a dividend in one quarter once in the mid '60's and then never again. As you say he would buy companies with good cash flows that if they were public would pay their shareholders a dividend. Companies like banks, food, and insurance. Once he got control of them he used that money to pay the debt he took on pay for the company. Once paid for that money would flow to the bottom line to buy more companies. It was a cycle he could repeat over and over. It worked so well he now has billions of dollars to invest and few places to put it. Like an index fund he buys stocks to take advantage of capital gains and dividends. The money continues to pile up and he still refuses to pay his shareholders a dividend. I've read he received over 5 billion in dividends in 2021. I do understand his reasons for not paying and they are sound and has worked great. Are the shareholders happy? I'm sure they are. The stock returns have been among the best around for years. But a shareholder is also a owner of a small part of the business. You can have stock worth a million dollars but can't really take advantage of that without selling. And once you sell you own less of the company and have to pay tax on the capital gain. A small dividend would allow you to see a return on your ownership and retain your investment. I don't own the stock so I am just on the outside looking in. Seems a special dividend every few years would be a nice reward for long term shareholders.

To: chowder who wrote (991)	6/20/2022 11:15:28 AM
From: Rarebird	Read Replies (2) \| Respond to of 21859

That sounds fine and good, but presupposes that future bear markets will be brief and capped timewise to a year or two. However, how does this work in a multi-decade secular bear market where dividends are cut pretty drastically and the drawdown is 60%-90%. That old folk portfolio of yours would be devastated. I only mention this because the day is coming when a secular bear of the magnitude and time extent I described above will be starting later this decade. What will you do then? I think you will be forced to liquidate that old folk portfolio of yours and possibly the mid folk portfolio too. My point here is that there is a lot of risk in terms of what you are doing. The reward, of course, is great as long as markets cooperate and keep bear markets relatively short.