In my web wanderings, I encounter many disparate views on investing. Some I agree with, others I don’t. Then there are the few I can’t even wrap my head around. About a year ago, it appeared that sentiment had begun to shift. One post, The dark side of dividend income by Bite-Sized Income (now dormant) highlighted this change. In a nutshell he presented an argument that dividend investing (@ 4%) is not worth the time. A plausible scenario is presented but it is unlikely the majority of us could capitalize on it.
It seems that at times I seem to be a little late to the party. In late 2013, I stumbled across investment blogs and the DGI community in particular. With a knowledge of databases, I began to enter blogs I encountered into a table followed shortly thereafter by their holdings in another table. Obviously Ferdi (DivGro) had a similar thought as in February 2014 he presented the initial Blogger’s Portfolio. Initially 31 stocks within 20 portfolios, it was subsequently expanded to its’ current form of 60 companies within 43 portfolios.
Not to belabor a beaten down topic, but as we all know the story – and in many instances rehashed – versions of the Kinder Morgan fiasco and the subsequent fallout. A perspective I haven’t seen addressed is human nature. In a previous life, a role I held was to design and create contingency plans for telecom networks – and subsequently data centers – in the event of a major outage. The obvious corollary being a massive dividend cut (i.e., catastrophic failure).
It would appear that another fixture in the DGI community has bitten the dust. I don’t know the full story – and I doubt many do – but whether it was greed, misrepresentation, miscalculation, lack of understanding, or a combination of these Dividend Mantra is no more. Long Live The Dividend Mantra Team?
Reviled by some, but revered by many, through his knowledge and hard work successfully monetized his passion. From media interviews to authoring a book, he built the Dividend Mantra brand from nothing to something. But his most lasting accomplishment is the number of people that became investors through his inspiration.
This is not to say I agreed with all of his decisions, I didn’t. Orchids Paper is not a DGI stock. It’s yield chasing. I was surprised when he added it. Yes I own it – but I’ve been to their Oklahoma plant. And I reduced my holdings prior to their secondary. He and I also disagreed on his decision to sell Sysco. So it’s dividend wasn’t growing fast enough? Well when you buy into a company just after the ex-div date and sell it prior to an ex-div date you’ve artificially reduced your return. He had a extreme dislike for the YoC metric, I tend to favor it. His doubling into BBL is questionable, particularly with their exposure to Materials and China. It could wind up being very profitable but their loss of a dam at their Brazilian mine last week doesn’t help.
His overall success has been well documented, which makes this latest chapter all the more perplexing. Previously he stated a desire to offload the work required with his blog’s popularity. He obviously was a willing seller and he located an obviously willing buyer. My guess is after the contracts were signed, DM realized he gave up editorial control, evidenced by his post that some blog sections would no longer be published. Likewise, the buyers have come to realize (belatedly) that a blog’s popularity is a reflection of its creator – not the owner.
Is it now too late to recover? Well the jury’s still out. I fear that DM the man will be late to realize he has lost – perhaps destroyed – the orchestra. It is unfortunate the benefits he enjoyed will be diminished as well. And DM the team is obviously late to recognize they bought the music but not the conductor. Meanwhile the patrons are fleeing to the exits. Any hope for recovery is reduced by the day.