The Stingy News Weekly (09/19/2014)
New from StingyInvestor
Cursed dividend stocks
"My last post was devoted to dividend stocks with pep, which highlighted dividend payers that have outperformed over the last year. Such stocks are said to have positive momentum. But momentum works both ways. On the plus side, studies have shown that top performers usually go on to do well. On the other hand, stocks that have trailed the market often continue to slide."
The wrath of Warren Buffett
"But this was one time where Buffett's laissez-faire management style would fail him. Some years later, a Benjamin Moore CEO began pursuing a strategy that chipped away at Buffett's pledge. By 2012 the CEO was nearing a deal-an agreement to sell through Lowe's-that would have shattered the promise. Buffett got wind of the plan, intervened, and scotched the arrangement. But the damage was done: Dealers revolted and today, two years later, the company is still recovering from the tumult, still searching for ways to expand its sales, and still working to regain the trust of its 4,200 dealers." [Buffett]
The large-stock value premium
"Recently, we have seen a rise in the level of discussion about whether there is a significant value premium in large-cap stocks. The value premium is the tendency of stocks with low prices relative to measures of their value to outperform stocks with high relative prices. Since large-cap stocks make up about 90 percent of the total global market capitalization, this is an important issue." [Value Investing]
Strategic news releases
"We show that CEOs strategically time corporate news releases to coincide with months in which their equity vests. These vesting months are determined by equity grants made several years prior, and thus unlikely driven by the current information environment. CEOs reallocate news into vesting months, and away from prior and subsequent months. They release 5% more discretionary news in vesting months than prior months, but there is no difference for non-discretionary news. These news releases lead to favourable media coverage, suggesting they are positive in tone. They also generate a temporary run-up in stock prices and market liquidity, potentially resulting from increased investor attention or reduced information asymmetry. The CEO takes advantage of these effects by cashing out shortly after the news releases." [Academia]
Dreaming of a cheap tropical retirement?
"Moving to a low-cost, tropical paradise, where $30,000 a year can put a couple into the upper middle class, is fast becoming the dream du jour for fifty-somethings who find themselves short on retirement funds." [Retirement]
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