For the past couple of years, an active discussion or debate has been going on between proponents of dividend growth investing [DGI] and proponents of modern portfolio theory [MPT]. I have been in the middle of some of those debates. I often wonder whether the two strategies for portfolio construction can be reconciled. MPT intrigues me, and I have made many efforts to compare the two paradigms of investing. MPT's main principle - that it is possible both to decrease the volatility and increase the total returns of a portfolio by investing in uncorrelated asset classes - strikes me as both non-intuitive and very much supported by most of the data and many studies
I am troubled by the absolutist nature of what MPT has become, which is dogma in many pockets of the investment advice industry. Most troubling is that MPT is focused on a single objective - maximizing total return for a given amount of "risk" - when many investors have other objectives or are looking for solutions to specific problems. In particular, many investors desire to build reliable growing income streams for retirement, income streams that they can live off without selling the underlying assets. MPT does not address this goal directly.
Source: Seeking Alpha
Related Articles:
- What To Do When A Stock Fails To Raise Its Dividend
- A Diversified Approach To International Dividends
- 9 High-Yield Dividend Achievers With 25 Years of Increases
- 7 Dividend Stocks For A Confident And Secure Future
- Cash Just May Be Your Riskiest Investment
Dividend Growth Investing And Modern Portfolio Theory
Posted by D4L | Sunday, September 30, 2012 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
Dividends and diversification -- those two things can help you achieve a comfortable retirement when combined with the income you will recei...
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
The best dividend stocks have one thing in common: resiliency. They can continue increasing their dividends even in the harshest economic en...
-
Investors wanting to enjoy steady and consistent income should consider dividend aristocrats. In fact, even in these chaotic times, dividend...
-
A good dividend stock has more than a high yield. Dividends need to be supported by cash flow, and cash flow depends on the long-term streng...
-
It's hard to beat a sustainable, high-yield dividend paired with a beaten-down valuation. The best dividend stocks offer high yields and...
-
Higher dividend yields often imply that the underlying company paying the dividend has a higher risk profile. However, that's not always...
-
When hunting for discounted investments, one excellent starting point is to look for businesses with dividend yields trading above their fiv...
-
Strange but true: seniors fear death less than running out of money in retirement. And unfortunately, even retirees who have built a nest eg...
-
BDCs can be excellent investment options for those seeking high returns, particularly when acquired at favorable valuations and supported by...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.