Passive Income From Shares - See History through Charts

Discussion in 'Share Investing Strategies, Theories & Education' started by oracle, 27th Sep, 2017.

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  1. Redwing

    Redwing Well-Known Member

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    @dunno :D
     
  2. MWI

    MWI Well-Known Member

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    The whole point what makes property attractive is leverage, otherwise it isn't worth of bother for me to invest.
    I had once one of those 'aha' moments as the key to the question or analysis was not a comparison of percentage growth (as currently presented in media) on any investment (cash, property, shares) but rather leverage. I don't doubt for a minute that a share can have much greater percentage growth than say IP. However, property allows me to be exposed with little risk and no margin calls to the tune of millions.
    Could I personally sleep at night with that exposure to the ASX or other more volatile markets? The answer is resounding "No!".
    So subsequently I dabble occasionally with a share portfolio, until I can buy another IP.
    When I understood that leverage is the key and not gambling (IMO), for percentage growth, shares become an income exercise (like the thread mentions about passive income not financial wealth) while IPs become my financial wealth creation exercise (strategy is to never sell!).
     
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  3. dunno

    dunno Well-Known Member

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    DJW overall CAGR return for entire data set is 10.8% including franking.
    upload_2017-10-25_13-44-28.png

    upload_2017-10-25_13-45-9.png

    This one is not for me – Over the long run it appears the yield enhancement via selling options is coming at too high a price to NTA growth. Is it really a good idea to swap unlimited growth upside for a time decay income via options? That’s the wrong asymmetrical risk profile for a long-term holder IMO. Not surprised the long-term results aren’t as good as the more traditional old time LIC’s.


    I also can’t see any real reduction in volatility risk coming through the price chart for the use of options, But you can see the long term effect of failing to capture capital growth in the NTA.

    upload_2017-10-25_13-49-10.png
     

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  4. dunno

    dunno Well-Known Member

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    I just noticed DJW’s NTA at 30 Sep was $3.13 and current market price is a fairly hefty premium of $3.54 – So obviously a lot of peope pretty strongly disagrees with my analysis of DJW being an inferior investment. Oh well – been there before.
     
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  5. Nodrog

    Nodrog Well-Known Member

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    Yep she’s not a growth story at all. No one has ever said it is. May even fall under the category of yield trap. As mentioned in another post it’s more suited to retirees wanting higher income NOW.

    All valid comments but it depends on each investor’s circumstances / goals / stage of life / psychology / SANF etc etc. What you may like is not necessarily what every other investor is seeking. There’s more to investing than just seeking maximum performance otherwise why would any investors hold bonds, excess cash and the like. And DJW is mostly an income fund.
     
  6. dunno

    dunno Well-Known Member

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    Higher income now, but at what cost in equivalent purchasing power income terms in 10 or 20 years time?

    Not what I am looking for but like I said above, going by the premium plenty of people don't agree with me and thats just fine. Hopefully they are all making informed decesion to trade the future for now - the sustainabilty of the premium probably depends on the majority continuing to agree its a good trade off.
     
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  7. Nodrog

    Nodrog Well-Known Member

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    All valid points. Age does strange things to some of us:confused:. Add in home brew then anything’s possible:cool:. Be afraid, be very afraid:D.

    Not sure many investors were making informed decisions looking back at the huge premiums they were paying for DJW. More of a case of a hunt for yield than good decision making. Below $3.50 is when I get interest. The closer to $3 the more interested I become.

    It works for us at this stage given our current circumstances. It’s just part of a number of holdings working together in different portfolios / environments to meet our objectives.

    Great analysis as usual @dunno. It will certainly help others especially accumulators in making an informed decision.
     
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  8. Hosko

    Hosko Well-Known Member

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    Dunno, Curiosity gets the better of me every time, question from a Learner You say that it is at a hefty premium to NTA. At what point does the premium turn to "Acceptable" to pay? Does it ever get to the stage where it is cheaper than NTA?
    I'd understand if it is a moving target and if the uptrend was there you might pay a little more at times? Or am I on the wrong path?
    I am a complete noob to this kind of stuff, previously only played in direct shares and other derivative type products for shorter term cash.
    Thanks for your time
     
  9. dunno

    dunno Well-Known Member

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    The price you are prepared to pay is a subjective thing – the is no objective right answer, that is why there is a market – to find the clearing price of subjective opinions of value.

    The DJW price trades at a premium – Why? I dunno, but I don’t have to know or justify other people’s valuation opinions. It is what it is. All I need to know is what I’m prepared to pay and look to see if there is opportunity – there is no opportunity for me with DJW at the moment because I would only be interested at a discount.

    My opinion of a discount being necessary is because I don’t favour income over growth (I value them equally) The long-term performance (Growth + Income) is inferior to the market return itself and my opinion of their option strategy makes me think this underperformance will continue. Unless DJW is at a discount, a broad-based ETF which trades at NTA is likely to be a better investment and that’s a very easy alternative to implement.

    How big a discount would I need? Well that’s subjective again but I would be looking for something big enough that they would look at disbanding their active options trading. Clearly the market currently disagrees and I assume likes their options strategy.

    This stock does not work for my game plan of maintaining/increasing purchasing power passively over the long term and won’t do until it’s at a discount. But obviously it works for other people’s game plans whatever they may be despite being at a premium and they may keep it a premium forever – I don’t know – don’t need to know. It doesn’t work for me at a premium – So I won’t buy it and that’s all I need to know.
     
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  10. Snowball

    Snowball Well-Known Member

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    Hey @oracle did you ever do analysis of the dividend growth from VGS or even VEU?

    May be interesting to compare to VTS.
    Would likely be a lower growth rate but interesting to see.

    And did we come to consensus on the most accurate dividend growth figures for the aussie LICs?

    I know there was some debate and also confusion.
    I for one was definitely confused :)
     
  11. thydzik

    thydzik Well-Known Member

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    If anyone is looking at dividend payers, have a look at the King Index
    King Indices - King Indices
    email subscription that provides a list of constituents focusing on consistent dividend growth.

    [​IMG]
     
  12. manga

    manga Member

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    I was curious about the King Indices. Has anyone used this service and if so was it worth the cost ($880 p.a)? I can foresee issues in purchasing (and managing) 20 stocks as opposed to simply investing in an ETF.
     
  13. Alex_Alex

    Alex_Alex Active Member

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    Can't see that anyone replied to this and not 100% sure this is what your after but Amibroker using Norgate PremiumData you can have a chart displayed of the dividends
     
  14. Soul

    Soul Well-Known Member

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    Your efforts are greatlly appreciated.