A few weeks ago a question about value and price that Mr. Divnomics had in one of his classes set off an interesting discussion. We talked about this subject and questioned ourselves if value and price were actually the same things. Or are based on different kinds of fundamentals. The outcome of that class was that price and value were the same things, which we both disagreed on. His teacher loved the discussion going forward and had planned a new discussion on the next class with some upfront preparation.
In order to get some more thoughts and opinions on this topic, I wrote a blog post on our thoughts of the matter. And there were great replies that made us think about our view towards value and price.
Last weekend the second class took place, and another discussion with the group got to a very interesting conclusion.
Another month in the books. Only one left to go and we’re already halfway through this year! We’ve made some new steps in our real estate venture and our monthly dividend has never been this high before. Partially because of a very unexpected special dividend we have gotten. Always nice to earn some extra without lifting a finger. All in all, it was a great month.
After the deception of last months results, things couldn’t have gone better this time around. We’ve received the late dividends of Munich RE and got a surprise extra dividend from BESI. Resulting in our best month ever!
Some of the grandmasters in investing have always taught us that the price and value of an asset are 2 fundamentally different things. Value is something that can be calculated, for example with the Discounted Cashflow Model (DCM), and the price is based on supply and demand.
This is also what we use to determine our investments. Whether a stock is undervalued or not, and is fundamentally sound. And moreover, if the value would be higher than the price being paid for it.
But there are also other theories, which state that the value is equal to price. Like when the value of an asset is based on the price that others are willing to pay. Or as Oskar Morgenstern says it:
“A thing is only worth what someone else will pay for it.”
What’s the deal on this?
Well, it happened, for the first time ever our dividend hasn’t grown year over year. And to put it blankly, it actually decreased a lot. But, we haven’t lost anything. The biggest chunk of our ‘normal’ April payments will now be paid in May. Therefore our results for this month a quite a bit skewered.
I promise, that this hole will be filled though. Big Time. Because on the other part, we managed to get an amazing additional income for this month. Our savings have been flooded by something we had been waiting for, for over 6 months now….
We had our first encounter ever with a dividend freeze within our portfolio. I know, It’s not so bad though, imagine they would have cut their dividend… We never actually thought about what we would do if and when such a thing would happen. Although it’s very common and could basically happen anytime with any stock, it can also catch you by surprise.
We buy shares of companies that pay AND grow their dividends. Because of this, we can make use of the beautiful magic of compounding. Over (a long) time, the growth will accelerate our cash flow from dividends and our yield on cost will steadily increase.
I decided to check up on the why of the company in this particular case, and research how dividend cuts affected companies in the past. Hopefully, it will give us some insight into how to make decisions based on a cut and if it’s all that bad at all?
What a month. So many things have happened, both financially and personally. We just got back from a 2-week vacation. So what do you do when you’re home? Writing this dividend report over the past month, of course!
I haven’t spent much time checking up on the markets. Which was a bit strange at the beginning, since I was used to checking it every day… In the end, it doesn’t even matter. And from here on I will hopefully feel the urge less often than before.
When you’re not focussed on the markets, or investing whatsoever for a couple of weeks. It’s great to see you’re still getting some of those dividends. Our year on year growth was great and even higher than February. March was also the month we received our first 3 digit dividend income for this year.
Two months already have gone by this year. Time sure goes fast. This month started off really great, because of the meet-up we had in the first weekend, where we took in a whole lot of info. Since then I started to do more reading, Mr. Divnomics got more involved as well and although we haven’t set up our FIRE plan just yet, we are having very interesting talks in all of our plans towards FI.
We started the year of with some amazing yearly dividend growth. This month’s growth rate is a bit lower. Still, we’re very pleased with it. We didn’t make any recent stock buy’s, as we had to invest in something else (more on that later), and we received the first dividends of two new stocks in our portfolio.
Everyone will say you this: in order to become a better investor, don’t let emotion overtake your decisions. But, we’re human beings. We are made out of emotion (mostly) and with everything you do, even the little things, you will feel something. So how on earth can you invest without listening to your guts, that little voice in your head or your straight out feelings?
And what drives these emotions, is it really something we can shut down?