We are one third of the way in selecting 25 high-quality dividend payers for the No-End Dividend (NED) Index.
Each addition carries a 4% weight in the portfolio. After the 25 are selected we will continue to manage the portfolio by adding and removing names as opportunities shift over time.
At a time when stocks are selling for sky-high valuations, and under the spell of AI, AGI, Trump 2.0 dreams etc., it’s dangerous to be an investor that needs to create a return on his capital.
Refer to Money Vs Skill for more thoughts on this dynamic.
But sources of investment risk right now do not only stem from themes that have pushed valuations up but also result from:
A fundamental misunderstanding of business models in many names
Inability to understand and price risk stemming from micro-paradigm changes in the world
Solving this problem can be achieved by 1) reasoning via inversion, an under appreciated skill and tactic and 2) using that to select names with robust business characteristics for the portfolio.
As for the expensive valuations plaguing (forced) buyers at the moment. It’s true that many times it’s difficult to just wait. Especially when things are moving up — and so people just buy the index and convince themselves that it’s going to be OK.
Besides, it has been in the past, why not now? But linear extrapolation can be extremely dangerous.
We launched the NED in the spirit of solving problems for Philoinvestors and perpetually extending the value proposition.
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