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Finster
03-29-09, 02:10 PM
The real dividend yield on a stock index is the same as the nominal yield. No inflation adjustment is appropriate.

There has been some confusion on this issue, perhaps stemming from the convention of stating the dividend rate in terms of dollars/year, regardless of the time frame under consideration. This does not, however, mean that that number of dollars has been or will be paid over the course of a full year. Just as a speedometer reading in your car of 40 miles per hour does not mean you have driven a distance of 40 miles over the past hour. It is an instantaneous rate. It is the distance you would travel if you maintained the same speed over a full hour.

Likewise, the term "indicated dividend" is used to denote the current rate of dividend payment. It does not denote a full years' dividend, but rather expresses the current rate in annualized form. It is the dividend you would be paid if you maintained the same rate over a full year.

It can be demonstrated mathematically that the real yield on a stock index is identical to the nominal yield. There are any number of ways of doing this; see, for example, this discussion at Morningstar (http://socialize.morningstar.com/NewSocialize/forums/p/152981/152981.aspx):


I think you are correct dividend yield, also earnings yield, are real rates like TIPS real rate.

Both are ratios of two nominal values so the inflation adjustment terms cancel

Dividend Yield = Nominal Dividend / Nominal Price
= infadj* Real Dividend / infadj * Real Price
= Real Divided / Real Price

where infadj = CPI(today)/CPI(base year)

So comparing dividend yield and P/E to nominal interest rates makes no sense.


This may be illustrated with actual data. Robert Shiller, professor of economics at Yale University and author of the book Irrational Exuberance, has put together a long term series of the S&P 500 price, earnings, and yield data that can be accessed at http://www.econ.yale.edu/~shiller/data.htm. The following is a sample of data from his series:

S&P 500<table><COL WIDTH=80></COL> <COL WIDTH=80></COL> <COL WIDTH=80></COL> <COL WIDTH=80></COL> <COL WIDTH=80></COL>
<TR> <TH>Date</TH> <TH>Price</TH> <TH>Dividend</TH> <TH>CPI</TH> <TH>Real Price</TH> <TH>Real Dividend</TH><TR><TD>2000.01</TD><TD>1425.59</TD> <TD>16.5733</TD><TD>168.8</TD><TD>1602.10</TD><TD>18.6254</TD><TR><TD>2000.02</TD><TD>1388.87</TD><TD>16.6667</TD> <TD>169.8</TD> <TD>1551.64</TD> <TD>18.6200</TD><TR> <TD>2000.03</TD><TD>1442.21</TD> <TD>16.7600</TD> <TD>171.2</TD> <TD>1598.06</TD><TD>18.5711</TD><TR><TD>2000.04</TD><TD>1461.36</TD> <TD>16.7400</TD> <TD>171.3</TD> <TD>1618.33</TD> <TD>18.5381</TD>

</table>


Note that Shiller includes both a nominal & real price and a nominal & real dividend. We can therefore calculate both a nominal and real yield directly from Shiller’s data. Below we add two more columns for this purpose:

The first is the "Nominal Yield" - the "Dividend" divided by the "Price";

The second is the "Real Yield" - "Real Dividend" divided by the "Real Price":

S&P 500
<table>
<COL WIDTH=80></COL><COL WIDTH=80></COL><COL WIDTH=80></COL> <COL WIDTH=80></COL><COL WIDTH=80></COL> <COL WIDTH=80></COL> <COL WIDTH=80></COL><TR> <TH>Date</TH> <TH>Price</TH> <TH>Dividend</TH> <TH>CPI</TH> <TH>Real Price</TH> <TH>Real Dividend</TH> <TH>Nominal Yield</TH> <TH>Real Yield</TH><TR><TD>2000.01</TD><TD>1425.59</TD><TD>16.5733</TD><TD>168.8</TD><TD>1602.10</TD><TD>18.6254</TD><TD>0.01163</TD><TD>0.01163</TD><TR><TD>2000.02</TD><TD>1388.87</TD><TD>16.6667</TD><TD>169.8</TD><TD>1551.64</TD><TD>18.6200</TD><TD>0.01200</TD> <TD>0.01200</TD><TR> <TD>2000.03</TD> <TD>1442.21</TD> <TD>16.7600</TD> <TD>171.2</TD> <TD>1598.06</TD> <TD>18.5711</TD> <TD>0.01162</TD> <TD>0.01162</TD>
<TR> <TD>2000.04</TD> <TD>1461.36</TD> <TD>16.7400</TD> <TD>171.3</TD> <TD>1618.33</TD> <TD>18.5381</TD> <TD>0.01146</TD> <TD>0.01146</TD>
</table>

Of course, as expected from the formula above showing cancelation of the inflation term, in each case the "Real Yield" equals the "Nominal Yield". Interested readers can download Shiller's data and try it themselves.

Another route involves calculating a total return, both nominal and inflation adjusted. One can apply an inflation adjustment to a total return, and also apply an inflation adjustment to the price return and dividend return individually. But if one does so, the total inflation adjusted return does not equal the combination of the inflation adjusted price and inflation adjusted dividend returns!

The contradictory result betrays a flaw in the premises: in this case, the premise that one adjusts the dividend return for inflation.

In order to get mutually consistent results, one must adjust only the price return and total return, not the dividend yield. Only if one applies the inflation adjustment to the price return and omits an inflation adjustment to the dividend return, does the resulting combination give the same result as applying the inflation adjustment to the total return.

This can be illustrated with numbers as well:

Suppose you start with $1000 in a stock index that over the course of one year has no net price change and yields a 5% dividend. Over the same year, there is 5% inflation. One year later you have $1050, which after the 5% inflation has the same purchasing power as the $1000 you started with. Your real total return is 0%.

But if you first break that total return down into price and yield components, apply the 5% inflation adjustment to both of them, then recombine them to get total return, you get -5% plus 0% equals -5%. Specifically, the $1000 price stayed the same, so you back out 5% inflation to get -5%. The dividend return was 5%, so you back out 5% to get 0%. Then add them to get a real total return of -5%. This is incorrect - we just saw in the last paragraph that the real total return was 0%.

Since the inflation adjustment to the price is correct, the source of the error must be in the adjustment to the dividend. It's double-counted inflation.

Consequently, if you want to find real total return by adjusting the price and yield separately, you must adjust only the price, not the yield.

jtabeb
03-29-09, 03:25 PM
shouldn't the math really be

$1000 @ 5% = 1000 + 50

$1000 - 5% inflation = $950

$50 - 5% inflation = $47.5

Total Gain = ( $950 + $47.5) real return - $1000 Pre-investment

or -$2.50

or -.25% for the example above? Not 0% return?

(Something about commutative and associative comes to mind)

Just asking BTW.

Finster
03-29-09, 03:40 PM
shouldn't the math really be

$1000 @ 5% = 1000 + 50

$1000 - 5% inflation = $950

$50 - 5% inflation = $47.5

Total Gain = ( $950 + $47.5) real return - $1000 Pre-investment

or -$2.50

or -.25% for the example above? Not 0% return?

(Something about commutative and associative comes to mind)

Just asking BTW.

Still more exactly, to discount $1000 @ 5% inflation you would have $1000/1.05 = $952.3809524... To discount $50 you would have $50/1.05 = $47.6190476...
To discount $1050 @ 5% inflation you would have $1050/1.05 = $1000.

The original example was designed to illustrate the fallacy of applying a bond-like inflation adjustment to stocks. That is, taking 5% nominal yield and backing out 5% inflation to get 0% real yield. You could also err by backing 5% inflation out of a 5% yield like this: 5%/1.05 = 4.76190476...%.

There are, of course, an infinite number of ways to do it incorrectly!

jtabeb
03-29-09, 04:21 PM
Still more exactly, to discount $1000 @ 5% inflation you would have $1000/1.05 = $952.3809524... To discount $50 you would have $50/1.05 = $47.6190476...
To discount $1050 @ 5% inflation you would have $1050/1.05 = $1000.

The original example was designed to illustrate the fallacy of applying a bond-like inflation adjustment to stocks. That is, taking 5% nominal yield and backing out 5% inflation to get 0% real yield. You could also err by backing 5% inflation out of a 5% yield like this: 5%/1.05 = 4.76190476...%.

There are, of course, an infinite number of ways to do it incorrectly!

Okay, Okay I GIVE!

(just asking, remember?):o

Finster
03-29-09, 04:43 PM
Okay, Okay I GIVE!

(just asking, remember?):o

No malice intended, Jtabeb! Perhaps I'm being over cautious due to a certain pedantic type spreading misinformation on this topic... :)

Supercilious
03-29-09, 07:36 PM
Okay, Okay I GIVE!

(just asking, remember?):o


Yea, it's a good idea to give up. Finster doesn't seem to able understand some simple basic facts and he replaces reality with BS like this:


Indicated dividends are not the same as "trailing 12-month dividends", which I specifically distinguished above. The former - and the ones I cited - are the current dividend annualized. Not a sum over a full year.
which is blatantly false, at least to the S&P documentation. But he probably believes he knows better than those who are actually calculating the data he is using...:rolleyes:

And the BS to be complete his sources are the .... Moningstar forum ..., respectively a post (http://socialize.morningstar.com/NewSocialize/forums/p/152981/152981.aspx) made by a very credible source (http://socialize.morningstar.com/NewSocialize/user/Profile.aspx?q=BECBD9DADEE362BB) ...yeah right... what is next? .. quoting from the Sesame Street Forum ? :rolleyes:

What I find hilarious is he can't understand simple things but assumes a position of arrogant superiority... I agree with you jtabeb, giving up is a proper thing to do in this case :)

Finster
03-30-09, 12:45 PM
I agree with you jtabeb, giving up is a proper thing to do in this case :)

Yet you donít take your own advice. Evidently you realize it comes from a shaky sourceÖ


And the BS to be complete his sources are the .... Moningstar forum ..., respectively a post (http://socialize.morningstar.com/NewSocialize/forums/p/152981/152981.aspx) made by a very credible source (http://socialize.morningstar.com/NewSocialize/user/Profile.aspx?q=BECBD9DADEE362BB) ...yeah right... what is next? .. quoting from the Sesame Street Forum ? :rolleyes: ...

When it comes to hard mathematics, I donít rely on appeals to authority. The math speaks for itself. I cite the exchange over at Morningstar merely to show that itís not so esoteric that it escapes everyone but me.

In that vein, before I decide whether to continue this conversation, is there anyone else here besides $#* that still doesnít understand why no inflation adjustment is appropriate for the dividend yield? If so, please speak up. If you are sincerely struggling with this, Iíll be glad to try and clarify further. If itís just for $#*ís benefit, it may not be worth it. Iíve learned through long experience that those who are determined to remain ignorant usually succeed.

jtabeb
03-30-09, 02:11 PM
[quote=Finster;87645]In that vein, before I decide whether to continue this conversation, is there anyone else here besides $#* that still doesn’t understand why no inflation adjustment is appropriate for the dividend yield? If so, please speak up. If you are sincerely struggling with this, I’ll be glad to try and clarify further.quote]

Finster, I honestlty don't get it. I shut up because I thought I was just annoying you.

But the reality is I DON'T UNDERSTAND why yield is not deflated for inflation.

(please take the following only for what it is, humble ignorance)

it seems that if inflation acts to reduce the real principle, then (to me) it should follow that it would also act to reduce the real gain.

I accept that the math I did is wrong, but I don't understand WHY. And other than accepting that you tell me that it's wrong ( which I do accept), I would have no ability to explain the rational behind the error to someone else.

So my understanding at this point is limited to "Finster says so". Which is better than holding fast to the wrong idea, don't get me wrong on that point, but not very useful.

I don't know if this is because I'm thinking okay I have $1000 at the start of the year. I put it in a bond that yeilds 10%. But there is also 10% inflation during that year. The question I'm asking is how much have I made in real terms at the end of the year.

If the
numbers are $1000 + 10% ($100) = $1100 nominal

But there was 10% inflation.

then it makes sense in my mind to do the math I did above

$1000 - 10% inflation + $100 - 10% inflation = real gain.

Again, I accept that the above is not correct, but I can't logically tell you the error.

Sorry for the dumb question (again). But I've learned in life that you can learn alot by asking dumb questions (althought if frustrates the hell out of the person doing the teaching).

Signed in humble ignorance, (please note: no sarcasm implied nor intended)

JT

Supercilious
03-30-09, 02:23 PM
Yet you donít take your own advice. Evidently you realize it comes from a shaky sourceÖ
What shaky source? So far what I said was correct according to S&P documentation.




When it comes to hard mathematics, I donít rely on appeals to authority. The math speaks for itself.
Yup. Your math speaks for yourself


I cite the exchange over at Morningstar merely to show that itís not so esoteric that it escapes everyone but me.
:rolleyes: C'mon Finster, so you quote an irrelevant source ... just to show your position is not so esoteric? I ask again: next time you will quote from Sesame Street Forum in order to make your point?


In that vein, before I decide whether to continue this conversation, is there anyone else here besides $#* that still doesnít understand why no inflation adjustment is appropriate for the dividend yield? If so, please speak up.
I think most people understand there is a need to make an inflation adjustment in order to calculate the dividend rate in terms of real wealth. Otherwise, according to you, if the S&P Zimbabwe has a dividend yield of 15%, those stocks are very cheap and and a true bargain...:D


If itís just for $#*ís benefit, it may not be worth it. Iíve learned through long experience that those who are determined to remain ignorant usually succeed.
For a person who doesn't know what is a intended dividend, (see the Investopedia definition and the S&P documentation on the other thread), this is a little bit hilarious. Once again, to make things clear, the S&P intended dividend is not an instantaneous measurement, "right now" (and with a speed of 40 miles per hour), but the sum of 12 months trailing dividends, divided by the S&P value the data is reported. At least you have learned something new from this...:)

Finster
03-30-09, 02:33 PM
In that vein, before I decide whether to continue this conversation, is there anyone else here besides $#* that still doesn’t understand why no inflation adjustment is appropriate for the dividend yield? If so, please speak up. If you are sincerely struggling with this, I’ll be glad to try and clarify further.

Finster, I honestlty don't get it. I shut up because I thought I was just annoying you.

But the reality is I DON'T UNDERSTAND why yield is not deflated for inflation.

(please take the following only for what it is, humble ignorance)

it seems that if inflation acts to reduce the real principle, then (to me) it should follow that it would also act to reduce the real gain.

I accept that the math I did is wrong, but I don't understand WHY. And other than accepting that you tell me that it's wrong ( which I do accept), I would have no ability to explain the rational behind the error to someone else.

So my understanding at this point is limited to "Finster says so". Which is better than holding fast to the wrong idea, don't get me wrong on that point, but not very useful.

I don't know if this is because I'm thinking okay I have $1000 at the start of the year. I put it in a bond that yeilds 10%. But there is also 10% inflation during that year. The question I'm asking is how much have I made in real terms at the end of the year.

If the
numbers are $1000 + 10% ($100) = $1100 nominal

But there was 10% inflation.

then it makes sense in my mind to do the math I did above

$1000 - 10% inflation + $100 - 10% inflation = real gain.

Again, I accept that the above is not correct, but I can't logically tell you the error.

Sorry for the dumb question (again). But I've learned in life that you can learn alot by asking dumb questions (althought if frustrates the hell out of the person doing the teaching).

Signed in humble ignorance, (please note: no sarcasm implied nor intended)

JT

Your analysis is correct, JT! If you have a bond yielding 10% and there is 10% inflation, your real yield is zero. (After taxes, it's negative, of course, but that's another issue.)

Our contention is that the dividend yield on stocks must be treated differently. Let's see why.

First, why do we adjust bond yields for inflation? Because they invoke different dollars. We know when we buy a bond that we are due a fixed amount of principal repayment and a fixed amount of interest in the future. And we know that the value of those future dollars will be different than today's dollars; a dollar ten years from now is not the same unit as a dollar today.

But wait ... you might then object that the same thing applies to dividends! It might, except for one thing: We don't use dollars in the distant future to express dividend yield. We simply don't know what the dividend rate will be five or ten years from now, so by convention we use current dividends. In other words, the ratio (yield) compares today's dividend with today's price, keeping our units firmly in total cancellation mode. There is no time span across which to adjust for a changing value of the dollar.

This is not the case with bonds; since they are "fixed income" we do know what the future rate will be, and that's just what we use. Moreover - and this is key - bonds have a "principal" that needs to adjusted, because when we buy a bond we are forking over some amount of dollars today and getting the same some amount of dollars back in the future. But again, quite different dollars, so we have to adjust for that. But what is the "principal" for a stock investment? There isn't any ... no maturity, so there's no known time frame to use for adjustment, and no fixed dollar value to adjust. We can hold a bond to maturity and know today exactly what we are due at some point in the future. This is not the case with stocks, where all the dollar values we have to work with are current dollars. Even if you wanted to adjust the (unknown) future dividend for inflation, the adjustment would be much smaller, because there is no (much larger) principal amount to adjust.

We can see this illustrated with actual, real-life numbers in Professor Shiller's data excerpted above. Notice that he lists price and dividend in the second and third columns, and the inflation adjusted "real" price and dividend in the fifth and sixth columns. When we divide the dividend by the price to obtain the dividend yield, we get exactly the same answer whether we use the plain vanilla version or the inflation-adjusted "real" version. This is entirely expected, of course, since we applied the same adjustment to both plain vanilla numbers to get the real numbers. The adjustment (as the quoted Morningstar poster noted) cancels out in the algebra.

Supercilious
03-30-09, 02:53 PM
In other words, the ratio (yield) compares today's dividend with today's price, keeping our units firmly in total cancellation mode. There is no time span across which to adjust for a changing value of the dollar.
This is absolutely wrong and in denial of reality. S&P in their methodology documentation states that:


Cash Dividend Yield. Standard & Poor’s multiplies the cash dividends per share recorded for each index constituent by the shares outstanding for that constituent in order to arrive at a gross amount of cash dividends paid. It then adds these over a period of 12 months and divides the sum by the end-of-period market capitalization of the index.If S&P adds all the dividend gathered during one year in order to calculate the rate and the yield, those cannot be today's dividend rate and yield expressed in today's dollars. It is as simple as that. That's a matter of basic understating of differential calculus.

What is that so hard to understand? Should I draw o picture with Thomas The Little Engine Who Could .... go with 40 miles per hour bases on his performance during the last 12 months?:)

WDCRob
03-30-09, 03:00 PM
Despite Finster giving me credit for 'getting it' I'm not sure I do.

So it's possible this is wrong...

Is the difference between what #^*@)# and Finster is saying this?

&*$@) wants to adjust the last reported dividends to account for the time gap between when they were issued, and today...

While Finster is saying that today's dividend yield is reported using the last actual dividends and assuming that those same dividends are in effect today.

Again, it's completely possible that I've missed the crux of the argument entirely - I'm certainly surprised to find how little I remember of the real math being thrown around here.

idianov
03-30-09, 03:16 PM
Finster,

Good post. The dividends will be cut/eliminated further based on the drop in Net Corporate Cash Flows and Corporate Profits to service outstanding loans.

Igor

http://research.stlouisfed.org/fred2/data/CP_Max_630_378.png

http://research.stlouisfed.org/fred2/data/CNCF_Max_630_378.png

http://research.stlouisfed.org/fred2/data/BUSLOANS_Max_630_378.png

http://research.stlouisfed.org/fred2/data/DIVIDEND_Max_630_378.png

Finster
03-30-09, 03:18 PM
Despite Finster giving me credit for 'getting it' I'm not sure I do.

So it's possible this is wrong...

Is the difference between what #^*@)# and Finster is saying this?

&*$@) wants to adjust the last reported dividends to account for the time gap between when they were issued, and today...

While Finster is saying that today's dividend yield is reported using the last actual dividends and assuming that those same dividends are in effect today.

Again, it's completely possible that I've missed the crux of the argument entirely - I'm certainly surprised to find how little I remember of the real math being thrown around here.

It appears the difference lies in the sources used for dividend data. Mine uses current dividends and current prices. #^*@)# has found a source for dividend data that may have a built-in time lapse by virtue of summing dividends over a year's time, and then comparing them to a price (presumably) taken at some specific point in time. He then attempts to use this property of his data to invalidate a conclusion based on mine. Naturally, I reject the assumption that a convention used by one data source must be assumed to apply to another!

Finster
03-30-09, 03:25 PM
Finster,

Good post. The dividends will be cut/eliminated further based on the drop in Net Corporate Cash Flows and Corporate Profits to service outstanding loans.

Igor

Sad but true. For stock investors, at least. Dividends are not rising. They are not even holding steady. They are rapidly declining. One year ago the dividend payout on the S&P was $28.72. It is now $24.13. That's an annualized rate of decline of 16%. The dividend swap market is pegging this yearís dividends at $20.28, which would translate into a price-to-dividend ratio in excess of 40 at todayís S&P price. This is higher than any level in the history of the S&P 500 except for the bubble years since 1995.

Supercilious
03-30-09, 03:28 PM
Mine uses current dividends and current prices. #^*@)# has found a source for dividend data that may have a built-in time lapse by virtue of summing dividends over a year's time, and then comparing them to a price (presumably) taken at some specific point in time.
The data calculated by S&P is 12 months trailing. Period. This is also the data you get ( unless you are calculating yourself the today dividends, as the dividends collected during those 24 hours corresponding to today. The data you get from Barons is 12 month trailing for S&P. Read in Investopedia what the indicative dividend really is.... (and Investopedia is just one notch above the Sesame Street Investing Society)


The indicated dividend (http://www.investorglossary.com/indicated-dividend.htm) is the estimated cash (http://www.investorglossary.com/cash.htm) dividends a stock (http://www.investorglossary.com/stock.htm) will pay in the next four quarters, based on what it paid in the most recent period. Stock (http://www.investorglossary.com/stock.htm) tables commonly include the indicated dividend (http://www.investorglossary.com/indicated-dividend.htm) to tell investors the annual cash (http://www.investorglossary.com/cash.htm) return they can expect from payouts of earnings (http://www.investorglossary.com/earnings.htm); the indicated dividend (http://www.investorglossary.com/indicated-dividend.htm) can then be compared with returns from other securities, like bonds (http://www.investorglossary.com/bonds.htm). In the Wall Street (http://www.investorglossary.com/wall-street.htm) Journal (http://www.investorglossary.com/journal.htm) stock (http://www.investorglossary.com/stock.htm) tables, the indicated dividend (http://www.investorglossary.com/indicated-dividend.htm) comes directly after the stock (http://www.investorglossary.com/stock.htm) name; in Barron's tables, the indicated dividend (http://www.investorglossary.com/indicated-dividend.htm) is in the last column. While the indicated dividend (http://www.investorglossary.com/indicated-dividend.htm) is based on what the stock (http://www.investorglossary.com/stock.htm) paid in the most recent quarter, be aware that companies declare dividend (http://www.investorglossary.com/dividend.htm) rates for varied time-spans. Thus the indicated dividend (http://www.investorglossary.com/indicated-dividend.htm) rate in a stock (http://www.investorglossary.com/stock.htm) table may reflect the declared dividend (http://www.investorglossary.com/dividend.htm) rate for the company's most recent quarterly, six-month, or annual period.
Gee.... is it so hard to acknowledge you were wrong all this time ??? :)

If you get your data from Barron's then it is 12 month trailing. Period.

Finster
03-30-09, 03:55 PM
Mine uses current dividends and current prices. #^*@)# has found a source for dividend data that may have a built-in time lapse by virtue of summing dividends over a year's time, and then comparing them to a price (presumably) taken at some specific point in time.

The data calculated by S&P is 12 months trailing. Period. This is also the data you get ( unless you are calculating yourself the today dividends, as the dividends collected during those 24 hours corresponding to today. The data you get from Barons is 12 month trailing for S&P. Read in Investopedia what the indicative dividend really is.... (and Investopedia is just one notch above the Sesame Street Investing Society)


Gee.... is it so hard to acknowledge you were wrong all this time ??? :)

If you get your data from Barron's then it is 12 month trailing. Period.

Is this a problem for anyone else?

Supercilious
03-30-09, 04:05 PM
I'm still trying to find out where is that elusive today's data published in Barron's, that only Finster seems to have access to. If we look at Barron's Market Lab we see the following statements on top of their table with yields and dividends:

http://online.barrons.com/public/page/9_0210-indexespeyields.html


DJ latest 52-week earnings and dividends adjusted by Dow Divisors at Friday's close. S & P Dec. 4-quarter's earnings as reported and indicated dividends based on Friday close.S & P 500 P/E ratios based on earnings as reported. For additional earnings series, please refer to www.spglobal.com. DJ latest available book values for FY 2007 and 2006, and S & P latest for 2007 and 2006.

So where are those current and today's data only Finster seems to have access to ?:rolleyes:

Finster
03-30-09, 05:28 PM
Is this a problem for anyone else?

Looks like no one else thinks my data source is a meaningful issue. So long as that appears to be the case, I won't waste any further time on it.

Supercilious
03-30-09, 07:12 PM
Looks like no one else thinks my data source is a meaningful issue. So long as that appears to be the case, I won't waste any further time on it.
C'mon Finster...:)
And what do you want them to say? To start throwing rocks at you, because you made an error? Let's put things into perspective. At least for the FDI, your picture is on my piano and it will stay there regardless what is happening with the indicated dividend.

I just believe with respect to this issue you made a mistake because you got "corrupted" data from Barron's. And with minor adjustment your chart from " Are the stocks cheap yet?" can become even more interesting.

My problem is that you like many smart persons, who are right almost all the time, may have been mislead into believing you ought to be right every time. Well, nobody holds the monopoly over absolute truth... Erare Humanum Est, Perseveram Diabolicum.

People here will not start to believe that you are suddenly dumb,just because you got the wrong data/interpretation once...I believe they are rather annoyed this heated debate still lingers, because it is distractive. With a capital of sympathy you have, and with the number of people I've severely annoyed on iTulip, in normal conditions I would have been torn to pieces. But things are quite obvious.

We had this discussion of inflation and dividends a few month ago, and at that time I said nothing. Now well my fuse was shorter and I couldn't take anymore your explanation.... That is all.

Finster
03-31-09, 12:28 PM
C'mon Finster...:)
And what do you want them to say? To start throwing rocks at you, because you made an error? Let's put things into perspective. At least for the FDI, your picture is on my piano and it will stay there regardless what is happening with the indicated dividend.

I just believe with respect to this issue you made a mistake because you got "corrupted" data from Barron's. And with minor adjustment your chart from " Are the stocks cheap yet?" can become even more interesting.

My problem is that you like many smart persons, who are right almost all the time, may have been mislead into believing you ought to be right every time. Well, nobody holds the monopoly over absolute truth... Erare Humanum Est, Perseveram Diabolicum.

People here will not start to believe that you are suddenly dumb,just because you got the wrong data/interpretation once...I believe they are rather annoyed this heated debate still lingers, because it is distractive. With a capital of sympathy you have, and with the number of people I've severely annoyed on iTulip, in normal conditions I would have been torn to pieces. But things are quite obvious.

We had this discussion of inflation and dividends a few month ago, and at that time I said nothing. Now well my fuse was shorter and I couldn't take anymore your explanation.... That is all.

$#*. I take the position I do because it is correct. If you think this is about some kind of psychological hang-up about admitting error, you haven’t been following my posting much. I have done so numerous times here in iTulip, for example just a few days ago here: http://www.itulip.com/forums/showthread.php?p=84732#post84732. I simply see no need to individually rebut every post you put up when all the information needed for rebuttal lies in the preceding posts. Nor will I repeatedly call attention to the same factual errors in your comments even if you repeatedly make them; it will have to suffice for me to point out that your assertions about indicated dividends and Barron’s data are false just once. I will not re-plow already-plowed ground for the sole benefit of someone who does not appear to be sincerely in pursuit of the truth, but rather has either 1) closed his mind to the facts and logic already posted that contradict or moot his assertions, or 2) actually realized I am right and is desperately scraping the bottom of the barrel for scraps of technicalities that he might weave together to snow onlookers into thinking he has a point and thereby avoid personal embarrassment at having made such a big to-do about nothing.

I opened this thread with an example of a typical stock data series with time-aligned dividends and prices. As I have already pointed out, I am glad to try and help anyone who sincerely wants to understand why the associated stock index dividend yields need not be "adjusted for inflation".

Why do I suspect you do not fall into that category of sincere seekers of truth on this matter? Simple. Time and again you have ignored what has actually been presented, preferring to seize upon any available substitute that strikes you as contravening. For instance, having noted the potential confusion in the other thread between data published in online and print versions of Barron’s, I chose a different data set for this thread. Did you even notice? If so, you haven’t acknowledged it, instead repeating ad nauseum diatribes about Barron’s data and semantic minutiae about an "intended" [sic] dividend, tying yourself into a Gordian knot of differential calculus and Riemann integrals while the basic ninth-grade algebra soars clean over your head; so obsessed with counting gnats on the screen door you miss the elephant in the middle of the living room. If you have even read what I wrote, let alone sincerely attempted to understand it, you give little hint of it.

Meanwhile, you theorize that you stand alone because others don’t want to "start throwing rocks". Is it not possible that they actually looked at that simple ninth-grade algebra and saw the inflation terms cancel out for themselves? Or that they actually did the simple calculation I suggested - on real life data - and saw for themselves that the nominal and real yields were identical? The very stuff you could have done yourself if you weren’t so busy scrounging about for rocks?

No sir. I cannot help you if you refuse to listen, and I will not waste time trying. I have a band to run, investments to manage, family and friends to … well, in short, I have a life. I repeat, if any reader sincerely wants to get to the bottom of this and still harbors doubt of the truth of what I am saying, I am glad to try to address that doubt. But the interlocutor who persistently and loudly if unwittingly proclaims ulterior motives will have to do so without my involvement.

xela
03-31-09, 01:33 PM
Go ahead then and ask, like Finster does, for a 'yay' by each person which happens to agree to your revolutionary approach of the application of an estimated (or past) inflation on an estimated (or current) dividend :)

Supercilious
03-31-09, 06:14 PM
your assertions about indicated dividends and Barron’s data are false just once.
They are not my assertions. This is how S&P calculates the data Barron's is publishing. If you know better than the people at S&P who are calculating that data ... then ... :rolleyes:

I am glad to try and help anyone who sincerely wants to understand why the associated stock index dividend yields need not be "adjusted for inflation".
In the case of a 12 month trailing sum of dividends divided by today's S&P value the inflation doesn't "cancel" anymore. That is a basic fact. You can spin around this fact as much as you want, but the reality doesn't change.


Or that they actually did the simple calculation I suggested - on real life data - and saw for themselves that the nominal and real yields were identical?
If they did the real vs nominal calculations correctly, they could see for themselves it is not necessarily the same...If they repeated you mistake they saw identical numbers ...:rolleyes:


and I will not waste time trying. I have a band to run, investments to manage, family and friends to … well, in short, I have a life.
.... and you write this in a long lukesterian message ... that makes sense ...http://www.itulip.com/forums/picture.php?albumid=7&pictureid=29