Value Investing Flip Book Project
How do you explore investing while indulging in a childhood pastime?
Simple. You make a flip book of investment returns and that's exactly
what I did.
I started with a flip book for Canadian dividend investors which is
linked below. The book starts off with a long-term graph showing the
market's return and the return of a high yield portfolio, a low yield
portfolio, and a no-yield portfolio.
The rest of the book is composed of graphs that display 10-year return
histories starting from consecutive calendar years. If you scroll
through the book a page at a time, it turns into something of a flip
book showing the development of dividend investing over
time.
But, after having a little flip book fun, you might be wondering why I
went to the trouble of making all the graphs. You see, I wanted to
explore how often dividend investors might have had cause to regret
their decision to go with dividend stocks.
You'll notice that the high yield investor had little reason to
complain about their returns after a full ten years had elapsed. But
there were several times when it was hard to stick with high yield
stocks over shorter periods.
For instance, the first 10-year period was very hard on
dividend investors. Starting in 1977, the no-yield group grew each
dollar invested to over 8 dollars by the early 1980s while high yield
stocks didn't even make it to the 3 dollar mark. However, fortunes
reversed with dividend stocks faring well as the zero-yield group
collapsed over the next few years.
Importantly, the high-yield investor might have been tempted to swap
into what had been working recently. But those who moved to
zero-yield stocks after the run up would have been hurt badly.
The flip book helps to highlight a core problem for investors.
Namely, the urge to swap out of a good strategy during periods of
underperformance which happen frequently and can last for several
years. So, be warned.
Oh, and also have a little fun with the flip books.
Canadian Dividend Flip Book
Canadian Dividend Flip Book [PDF]
Notes: The high yield group follows stocks with the top 30% of yields,
the low yield group picks up the bottom 30% of yielders. All
portfolios are rebalanced annually.
U.S. Value & Glamour Flip Book
U.S. Value & Glamour Flip Book [PDF]
Notes: The value group follows the top B/P decile (i.e. the lowest P/B
ratios) and the glamour group follows the bottom B/P decile. The
market shown is the S&P500 and its predecessor indexes.
Stocks vs. Bonds for Canadians
Asset Allocation For Canadians [PDF]
A flip book showing the returns of Canadian T-Bills, the S&P/TSX
Composite, and the S&P500 in Canadian dollar terms.
Comments?
If you'd like to see more flip books, let me know.
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