“Margin of Safety” by Seth Klarman

[Dividend Watcher]

(05-05-2014, 05:50 PM)Kerim Wrote: Value investors, Klarman states, are interested in returns only insofar as they relate to the achievement of their own investment goals. While there is some appeal in this position, and I have certainly heard it espoused by many dividend growth investors, I’ve never understood why anyone would want to blind themselves to how their strategy performs relative to, say, broad market index funds. If I knew that my strategy, after a long-enough time period, was underperforming the indexes, I like to think I’d be smart enough to admit that either my strategy or execution was flawed and save a bunch of time and money by switching to index funds. My goal is not specifically to “beat” the index, but if I learned I was consistently trailing it, that would be a strong signal that changes are needed.

Thanks for continuing ( finally ), Kerim. I bolded what's been driving me lately.

I'm starting to parrot RAS and chowder here but the income stream and its safety has been more and more of my focus lately.

If my portfolio value stopped growing today yet the dividend stream kept growing at 6% a year for the next 20 years, I'd be extremely happy. My income stream has increased about 9% since year-end 2013 in the first 4 months. Part of that was from rebalancing and the rest from all the dividend increases managements keep throwing at me just for being an old fart like BAX did today.

It's like owning an AMC Gremlin versus a Maserati. Both will get you pulled over if you exceed the speed limit but one will only use a cup of gasoline instead of a couple gallons getting there. (OK, that's a metaphor only the geezers amongst us will get. )

Regardless, thanks for sharing again. Interested in hearing the next chapter.