Value Investing News

It is a great time of year! The Christmas music, decorations, family gatherings, holiday plays and stock picks. Stock picks? Yes, ’tis the season for stock predictions! Virtually every financial writer will pen an article selecting his or her top picks for the upcoming year. I enjoy reading them and the logic behind the picks.

I read an article titled “Rising Markets are Bad for Dividends”. The premise of the article was that rising stock prices tend to bring yields down. As a result the best time to invest in dividend stocks is during market meltdowns. As a long term dividend investor, I disagree with several points of the article.

There are many companies that have many years building moats around their businesses. This moat makes it difficult for competitors to encroach upon their market share. Suffice to say, business with moat have sustainable competitive advantage. In general, companies with moats in their business are very good dividend growth providers.

It’s here! In the UK! Bad news for US investors. According to Robert Shiller’s cyclically adjusted PE (CAPE) stock market prices are back in the most expensive quintile.