Sorry for the lack of posts but I’ve been busy at work. Will be busy until early June. Anyway, markets have been rangebound and unexciting.
Dividends matter, growing dividends matters more
(Klement on Investing)
Not really an interesting finding but I thought the finding is important because it confirms that from a behavioural investing point of view, there is some merit to those who believe in dividend investing.
Klement reports that a study by Paul Schultz finds that most investors don’t sell down their stocks to fund their expenses and therefore dividend-paying companies tend to see less turnover in their stock (i.e. more loyal shareholders).
I’m saying this because there was some debate on this following a post by Kyith of Investment Moats. I think the topic was relatively hot here in Singapore because many of the Singapore-listed stocks tend to be dividend payers rather than the more growth-y companies you find in the US markets.
Is the 60/40 Portfolio Still Relevant?
(Enterprising Investor)
The CFA blog runs some data on various portfolios (including the 60/40) across a few different markets. The tl;dr and caveats are:
Based on the lumpsum Sharpe ratios, the 100% equity portfolio had the best risk-adjusted performance through 2022 in all markets save Italy. For the period ending 31 December 2021, the 60/40 allocation fared best on a risk-adjusted basis in each country but not globally. The 80/20 allocation did better than 100% equity and 100% bond allocations in some markets and worse in others. Overall, the bond disaster of 2022 dragged down annualized and risk-adjusted returns.
To draw further conclusions about the utility of the 60/40 portfolio versus the 80/20 or any other allocation strategy requires further research. Indeed, our colleagues are in the midst of conducting it. But as our analysis shows, a portfolio redeemed at year-end 2021 would have outperformed the same portfolio redeemed at year-end 2022. This is a good reminder of the risk of end-point bias in any time series analysis.
To be sure, our investigation has limitations beyond those mentioned above. It does not account for the impact of foreign currency conversions, exclusively focuses on developed markets, and has an abbreviated investing period. Nevertheless, it does provide a window into how different asset allocation strategies played out over the past decade and illustrates how the 60/40 portfolio can add to risk-adjusted returns and how outlier years can drag down performance.
Is Britain Finally Ready To Admit Brexit Was a (Catastrophic) Mistake?
(Eand.co)
Who would have guessed? -_-“
Ok, everyone with half a mind was saying that it’s a bad thing. Also, I had a look at JPM’s Guide to the Markets for 2Q23 and guess which Developed Economy is still struggling with a close to 10% inflation rate?
BudgetMealGoWhere: New website lets you find cheap eats from S$3 at nearby HDB coffeeshops
(Vulcan Post)
The list of places in my ‘hood is sad. =(
The Greatest Wealth Transfer in History Is Here, With Familiar (Rich) Winners
(The New York Times)
It’s not just in New York. I’ve been telling friends that we’re about to see something similar in Singapore.
Ryan Goh: Life through these eyes 
Regarding dividends, the key phrase is “growing dividends”. The problem with most if not all S’pore stocks is that they tend to slash dividends during recessions. Hence for local dividend stock investors, they need to build in this shortfall buffer in their portfolio/liquidity bucket.
Or to build up a larger dividend portfolio in the 1st place such that the initial dividends are much more than the initial spending needs e.g. 1.5X or 2X.
Thus Kyith’s argument that this is akin to implementing a lower SWR from a div portfolio pov.