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Long term "80 percent of your total return is generated by the price you pay for the investment plus growth in the underlying cash flow" James Montier p.155 //The Little Book of Behavioural Investing// Long term "80 percent of your total return is generated by the price you pay for the investment plus growth in the underlying cash flow" James Montier p.155 //The Little Book of Behavioural Investing//
  * THE INERTIA BENCHMARK : Mutual funds do not, but should, compare their returns to the inertia benchmark: what performance would have been achieved if the portfolio manager had done nothing. In his gem of a book, James Montier has a chapter (thirteen) called 'The perils of ADHD Investing': attention deficit hyper-activity disorder. The average holding period on the NYSE is six months today. In the 1950s and 1960s it was seven or eight years. Montier puts it this way on page 155 of The Little Book of Behavioural Investing: “At a one-year time horizon, the vast majority of your total return comes from changes in valuation - which are effectively random fluctuations in price. However, at the five-year time horizon, 80 percent of your total return is generated by the price you pay for the investment plus growth in the underlying cash flow.” TC: You noticed the last few word, eh, “growth in the underlying cash flow”. That is why we do what we do. We hold dividend growing common stocks for their cash flow.   * THE INERTIA BENCHMARK : Mutual funds do not, but should, compare their returns to the inertia benchmark: what performance would have been achieved if the portfolio manager had done nothing. In his gem of a book, James Montier has a chapter (thirteen) called 'The perils of ADHD Investing': attention deficit hyper-activity disorder. The average holding period on the NYSE is six months today. In the 1950s and 1960s it was seven or eight years. Montier puts it this way on page 155 of The Little Book of Behavioural Investing: “At a one-year time horizon, the vast majority of your total return comes from changes in valuation - which are effectively random fluctuations in price. However, at the five-year time horizon, 80 percent of your total return is generated by the price you pay for the investment plus growth in the underlying cash flow.” TC: You noticed the last few word, eh, “growth in the underlying cash flow”. That is why we do what we do. We hold dividend growing common stocks for their cash flow.
-  * Ten Year P/E Ratio: I've completed my little project of computing the ten year P/E ratios for all the dividend-paying stocks we follow. The data will be in the August 2010 Connolly Report (Look under report summaries on my front page). At 25, the most expensive are Fortis and Metro. If you purchase expensive stocks, your future return will be lower. Now we have one more value screen (besides yield, yield difference, dividend record, payout ratio and Graham value) 
  * Foreign stocks - I've added a paragraph on global investing under Diversification on the [[Investment Topics]] page.   * Foreign stocks - I've added a paragraph on global investing under Diversification on the [[Investment Topics]] page.
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**Beat the benchmark** - **Beat the benchmark** -
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