This Bit Coin "Bull Market" Is Nothing

Wall-Street's floors are littered limbs.
Bit coin, disregarded as geeky crime-bucks before a couple of weeks past, has jumped from approximately 00 in the start of the season to -- during that right time of writing over ,000. All these are the forms of flabbergasting yields it takes ordinary assets decades to create, together with inflation gnawing off all of the while. Bit Coin is a tulip, a South Sea Company, a Bernard L. Madoff Investment Securities LLC, choose your choice. It only cannot maintain up this in defiance of logic.
As long-time holders (sic) want to indicate, however, nay-saying n00bs (sic) do not bother to see up in their Bit coin history. Since its beginning in '09, the crypto currency has enjoyed a couple of major run-ups. We are going to discount the very first, as it moved from nothing to be worth several pennies: Calculating that yield necessitates breaking. When compared with another two, even though, this Bit coin bull-market is still actually a tiddler.
By June 25, 2010 on June 7, 2011, Bit coin's closing price taken from mainpagetext.05 to .92, a 47,740% yield. By Nov. 18, 2011 into Dec. 3, 2013, that the purchase price went from .05 to ,068.67: a growth in 52,030 percent.
Evaluate those yields to the 6,262 percent Bit coin has come back as Jan. 17, 2015. Nothing to write home about, by Bit coin standards.
A couple of laughs naturally appear. Think about the keep markets? Sweet satoshinakamoto have there been tolerate markets. The forms of crashes which will cause prompt recessions, when these were to happen while in the S&P 500, come and move in just a matter of hours at bitcoin land. And also, the actual bears require a significant cost: the main one from June 8, 2011 into Nov. 17, 2011 ripped off 92 percent of Bit-coin's value. Even the post-MtGox keep, in Dec. 4, 2013 into Jan. 16, 2015, watched the cost drop 82 percent.
Past performance is no indication of future yields, however if it was, Bit coin will be flirting 0,000 in only a matter of months, then reverted to approximately ,000 per couple weeks then, and anyone who had bought at the start of 20 17 would still possess decupled their own money. A couple of repetitions of the will turn Earth to an ASIC farm, so things will likely need to relax so on.

Knowledge is Power: Compound Interest, Retirement Tips, Tax Reform Questions Edition

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Australian Stocks: Dividend Contribution to Total Returns Since 1900

Australian stocks are known for their high dividend yields. Aussie firms tend to stable and growing dividends and investors also benefit from franking credits.

Dividend payments have been consistent over the long-term when compared to stock price appreciation according to an article by Dr Shane Oliver at AMP Capital.

From the article:

Chart #4 A bird in the hand is worth two in the bush

A high and sustainable starting point yield provides some security during volatile times. Since 1900, dividends (prior to allowing for franking credits) have provided just over half of the 11.8% average annual return from Australian shares and as can be seen in the next chart their contribution has been stable in contrast to the capital value of shares.

Source: Global Financial Data, Bloomberg, AMP Capital

Dividends are relatively smooth over time because most companies hate having to cut them as they know it annoys shareholders so they prefer to keep them sustainable.

Key message: a high and sustainable income yield for an investment provides some security during volatile times. It’s a bit like a down payment on future returns.

Source: Five great charts on investing for income (or cash flow), AMP Capital

On The Importance Of Dividend Growth To Long-Term Returns

Dividends play an important role in long-term equity returns. In fact, dividend growth is more important to long-term returns than dividend yield and P/E expansions. According to an post by Matthew A. Young at Young Investments, dividend growth accounts for a large portion of returns. From the article:

Dividend Growth is Key

MSCI published a report last year highlighting the importance of dividend growth to the return of global equity benchmarks. The chart below, taken from the report, shows that the longer the time horizon, the more important dividend growth becomes to overall return. Over short periods of time, returns are dominated by changes in valuation, but over the long run, dividend growth dominates. For the 20-year period ending in 2015, dividend growth contributed 65% to the total return of the MSCI All-Country World Index.

Average absolute return contribution from Dividend Yield, Dividend Growth, and Valuation Adjustments for different holding periods.

Source: Client Letter – July 2017, Young Investments

Five dividend growth stocks are listed below with their current yields for further research:

1.Company: General Mills Inc (GIS)
Current Dividend Yield: 3.42%
Sector: Food Products

2.Company: Royal Bank of Canada (RY)
Current Dividend Yield: 3.62%
Sector: Banking

3.Company: 3M Co (MMM)
Current Dividend Yield: 1.97%
Sector: Manufacturing Conglomerate

4.Company: Johnson & Johnson (JNJ)
Current Dividend Yield: 2.41%
Sector: Pharmaceuticals

5.Company:PPG Industries Inc (PPG)
Current Dividend Yield: 1.54%
Sector: Chemicals

Note: Dividend yields noted above are as of Dec 6, 2017. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: Long GIS and RY

Is Active Investing Better in Emerging Markets?

Active investing is not s good investment strategy for most retail investors. Passive investing trumps active investing in the developed markets. But does it make sense to follow active investing in emerging markets?

According to a recent article at CityWire, active investing makes sense in emerging market due to many reasons. The article notes some important justifications for active investing. From the article:

One of the first decisions any investor has to make is whether to invest with an active manager or seek to track an index. This is no different for emerging markets. However, we believe the decision is more complex for emerging markets, which have a number of idiosyncratic characteristics. Investors need to take this into account when making a choice.

The factors that influence the performance of emerging markets are often as much about external events as they are about internal events, and this is important when considering how to invest. Emerging markets will go up and down depending on what is happening globally as much as their domestic situation. For example, the global financial crisis had profound effects on emerging markets, even though it was largely a developed markets problem.

There is no question that these markets are more volatile than developed markets – around 1.5x, although there is some variance around that in individual markets and stocks. There are clear reasons for this: turnover is lower in most stocks. Equally, the free float for most emerging market companies is around 30-40% compared to 60-70% for developed markets. The free float is the number of shares available for sale to private investors, as opposed to – for example – company executives, or the government. Lower turnover and free float means that a pound going in and out has a greater impact on the share price of an emerging market company.

Source: Why it pays to be active in emerging markets, CityWire UK

The full article is worth a read.

Related ETFs:

  • iShares MSCI Emerging Markets ETF (EEM)
  • Vanguard MSCI Emerging Markets ETF (VWO)

Disclosure: No Positions

Gold Offers Protection During Market Downturns

Gold is an important asset class that investors should not avoid. Though gold does not produce income such as dividends from stocks for example, they offer many other advantages. For example, gold has low co-relation to equities and traditionally offer downside protection to a diversified portfolio during adverse market conditions. When equity markets crash investors tend to flock safe-have assets such as gold.

During the recent global financial crisis, equity markets worldwide fell in tandem. However gold offered protection and yielded positive return for investors in the 2007-09 period as shown in the following chart:

2. Protection in a downturn

Gold has historically been used to provide potential tail risk mitigation during times of market stress, as it has tended to rise during stock market pullbacks. As shown below, gold delivered competitive returns and outperformed other asset classes during the 2007-2009 Global Financial Crisis. Many asset classes fell in tandem, but gold’s performance was positive. In addition, gold has delivered competitive returns and outperformed other asset classes during a number of other similar Black Swan events.

Click to enlarge

Source: The Role of Gold in Today’s Multi-Asset Portfolio, SPDR Blog

For some of the other advantages of owning gold please read the above-linked article.


Related ETF:

  • SPDR Gold Trust (GLD)

Disclosure: No Positons