I have seen DividendMagic post here but rarely. I hope he can come and show me or us his working and let us scrutinize it. I wish to see his logic behind the numbers. I hope the dividendmagic poster is the same person who owns that blog.

But Ramjade, while waiting for DividendMagic to come back to us, reread my post again. Stock trading comes with a price. Unless you are the type who buys and holds it for umpteen years.

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On another hand however, your post highlight one thing that is quite common, that is, many of you noobs will read somewhere some articles written by some omputeh who talks about low index fund, low fees bla bla bla and then repeat it here in Malaysia context without first investigating that those articles are written for a certain country specific context, namely US market.

Yes, in the US you have ultra low cost ETFs and whatsnot. What is my bug bear is many noobs will quote these articles and treat it as gospel truth and not realizing that those articles are written for a different geographical and demographically different audience.

Xuzen

p/s Further more Dividend Magic makes an assumption that 7% ROI by a professional manager can be replicated by an ordinary run of the mill retail investor which I believe is over generalization.  On the other hand, he assert that fund manager consistently cannot beat the market. This assertion is another fallacy that he and many other repeats without first investigating the origin of this fallacy.

The oft repeated mantra "FM cannot beat the index" originates from Vanguard's John Bogle and John is correct..... for the US market. Unfortunately this mantra has been used too freely and applied as a blanket statement to all mutual funds, when if one investigated further and thoroughly it was originally intended for the US market.

However, if you look at Malaysia context, our beloved KGF / Kapchai beats the benchmark year in and year out for the past ten years and that is despite already factored in the MER.

If you look at his Freedom fund which he was kind enough to share, his return for 2015 was about 2.x % and 2016 was 3.x %

So investing in stock was not as easy in real life when you factor in all the variables. If you are a talented investor then for sure. But for an average Joe, who wants a simpler path, then maybe informed passive investment in mutual fund is a worthy consideration.

I mean for me that is, I don't care if UT can't beat the benchmarks in returns. My assumption is that UT did their due diligence in diversification so for sure that may dampen the returns, but if the UT loses more than benchmark in bad times then it says something negative about the fund. UT should be less volatile than the benchmark, that is my expectation.

I prefer to compare UT with all my existing crappy investment like FD, endowment and such. If UT is consistently >3% better in returns than these instruments then i am all for it.

That's just dividend. His capital gain + dividends - 14.69%
Respectable for malaysian market 

I mean, those numbers are kinda iffy lah. Sure, the figures add up, but you must consider, how often can individual stockholders beat or match the market?

Read this article: http://www.marketwatch.com/story/heres-why...gain-2017-02-09

Sure, I mean really if you got all the know-how and resources (knowledge + capital + contacts + experience) go directly into stocks, but those guys in Kenanga and Eastspring and CIMB Principal and Affin Hwang have got a dedicated team that visits factories and offices of small cap companies, meet up with senior management once every three months, have got insider contacts in each sector/industry, have extensive financial modelling programs, have access to Bloomberg terminals...need I go on?

The problem is with Malaysia we don't have an actual index benchmark. In the US they use S&P TR as the benchmark, in Malaysia they just use FBM KLCI as the benchmark, which is totally wrong. The benchmark to be representative must include the Total Returns (I.e. Dividends reinvested). FBM KLCI is only based on capital growth, not inclusive of dividends.

You think Warren Buffet had no insider contacts? Every successful large scale value investor needs insider contacts to get a better sector or industry wide feel.

Mind you, don't confuse insider contacts with insider information. The latter is illegal obviously.

How old is he? in the very long term, a mutual fund will still outperform him.

Thank you friend Dividend Magic for your reply. Yeah, I was using calculation based on my old data that is MYR 40.00 per trade. You can now roughly gauge how long ago my last trade was. I recall during my time as an active participant in the retail stock market, online trading was not in vogue and MYR 8.00 per trade is unheard of! I had to pay MYR 40.00 per trade, seriously and no kidding! I really pity those stock-broker who are still in business nowadays. How do they survive these days?

Dividend Magic and I perhaps represent the above average investors in our respective area of expertise. Hence most likely both of us possess the knowledge, tools, system or "luck" to sniff out winners more frequently than losers. 

In this sense, from a personal point of view, I do not have to worry about the 99% as I have a system to identify the one percent. Anyway, friend Dividend Magic, nice to have a verbal sparring with you. It is like a sifu meeting another sifu and have a friendly sparring with each other like the days of old. Appreciate it.  

Speaking of benchmark or index, for KGF, instead of KLCI, a better benchmark should be the EMAS index no?
I remembered during my days when I was an active direct stock market participant, I did read a lot of report and reports. One of the reason why I moved to unit trust participation is to simplify my life and let those professionals do it on my behalf.

Xuzen

Dividend Magic just wanna send you a shout out by saying how much I appreciate the hard work you put into your blog. Because of you and your blog I took the initiative to venture into stocks and stand on my principles not to chase returns but to invest long term. We are the same age and I must admit I wasted my youth chasing love and wasting money where I should have started off investing. This saddens me but at the same time I am now having a goal in my life.

MYR 1000 at a time to hit my myr 100k mark by the time I hit 30 years old. then from there 200k then 300k. If you find the days like nobody appreciates your work just know that you have helped many silent readers like me.

I owe you and Xuzen  a debt of gratitude

Hi Avangelice, may share your girlfriend portfolio ? My wife also wish to invest in UTs.

Dividend Magic I do see you preach for dividend income investing as the principle of long term investment to generate income

But, to my understanding, when a company declare dividend, its' share price fell, and if we did not reinvest the dividend, our capital in investment actually shrink.

But if we reinvest the dividend back into it, then it makes minimal difference to those stocks which do not declare dividend, instead they spend their earning into capital growth (provided both non-dividend paying and dividend paying stock have the same capital gain percentage)

Then what is the fundamental difference in focusing in dividend stocks vs growth stocks when we reinvest the dividend, it will be the same as growth stock which didn't declare dividend?

p/s: asking this is because, whenever people understand about mutual funds, some companies focus on the distribution numbers and pay big dividend even though the fund is negatively performing (is it similar to companies who declare dividend even though they have negative earning for the year, but use previous years earning to pay). I believe that the distribution=performing misconception comes from their understanding from stocks investing when they think, it applies to stock, it applies to mutual funds as well, since, from what I understand, mutual funds distribution is meaningless and a marketing tactic to push down unit price 

And what will the reason be?

If on ex dividend date, which the share price suppose to drop by the amount of dividend declare, but the day itself, the share price rice, then it will see like the share price did not drop by the dividend amount proportionately.

If that's the case, then mutual funds will have the same situation no?

Or they have different tax treatment between stocks or mutual funds? or something else? 
But some company do declare dividend even they have they have negative earning for the year, if they use their previous years earning to pay for the dividend.

Same for mutual funds no? 

Just invest in one fund ponzi 2.0 also can get that return for  5 years. No need to do any reading.

Prehaps I am not good in expressing myself, so I will try to make a simplistic example to express my question:

Say we have 2k to invest, 1k in stock A and 1k in stock B

Say Stock A is a dividend stock where they declare yearly dividend of 3%, and annual capital growth 10%

Say Stock B is a growth stock and also annual capital growth 10%

Assumed both have share price @ RM2 at the time you invest both at the same time

If after one year, your value in stock A grow to RM 1100 and declare dividend, if you did not reinvest the dividend, you will have RM33 dividend received and your capital is left with same 500 shares @ RM 2.134 value RM 1067

Suppose you reinvest the dividend into it @ RM 2.134 and received 15.46 shares, you will have 515.46 shares @ RM 2.134 value RM 1100

Stock B, without dividend declare, enjoy yearly 10% capital growth every year, so 1st year will grow to rm 1100 as well

Assume each year is having the same trend for simplistic purpose, wouldn't both stock have the same capital growth value if you opt for dividend reinvestment?

Unless as you said, you take the dividend declare for living purpose, but if you did not reinvest the dividend, wouldnt your capital in the stock decrease every year after the dividend declared? And assume the dividend yield and capital growth remain the same, wouldnt your dividend received become less and less after each year?

Unless I am confusing myself in something else, I am trying to understand more 

Because if one opt for dividend reinvestment, I cannot see the difference between dividend stock and growth stock in performance wise if they enjoy the same capital growth (unless what set them apart by their difference in fundamental that will caused them to grow differently?  )