Comments on: Stock Analysis: Clorox Co. (CLX)

By: Dividends4Life

Dividends4Life — Mon, 29 Dec 2008 14:29:00 +0000

BW: I started monitoring the 20 Treasury year rate when I felt the MMA rates were not indicative of what would occur over the next 20 years. Ironically, at the time I felt the 20 year rate should be higher than the MMA rate – now the 20 year Treasury is less than the MMA rate that I am using.

Best Wishes,
D4L

By: bw

bw — Mon, 29 Dec 2008 04:33:00 +0000

D4L
I just saw your recent email and see that you are monitoring the 20 year Treasury as an objective interest rate as well as your MM calculation. That solves in some way my desire to have an objective number to compare.

By: bw

bw — Sun, 28 Dec 2008 22:17:00 +0000

I used to fool around with primitive artificial intelligence programs that did a very similar analysis to what you do with your screen. So if we were looking for 15% dividend growth but we discover a stock with a 10% increase,we could give it a 2 out of 3 or a 3 out of 5 rather than just a 1 or 0. It might add something to your analysis and at least quantify the work you have done rather than just discard the efforts you have made. Just a thought.

I have seen the buy and hold forever of dividend stocks work very well in real time and I like the common sense of it as well as your approach to quantify the analysis.

I offered the 3 or 5 year CD as a concept because I was imagining going into the market on Monday, for example, with $5000. I could put it under the mattress or in a MM , CD, bond or stock. Since you are looking for a risk free return comparison , I thought a longer term CD might give you a real investment comparison because of the locked in rate of return for a specific period of time. It might also make sense in that your analysis of dividends focuses primarily on the last 10 years of data and projecting that forward 3 or 5 years is a pretty conservative assumption. Three or five years is long enough to allow for the vicissitudes of market swings but not too distant for projecting possible returns from your stock investment. It allow a chance for the stock to do what you hope for and a reasonable time frame to reevaluate the initial decision.
As I said , I love what you are doing, and just felt like offering some , hopefully useful, food for thought.

By: Dividends4Life

Dividends4Life — Sun, 28 Dec 2008 20:48:00 +0000

BW: I am not sure I completely follow your logic? Specifically what are you suggesting with fuzzy logic?

I am a buy and hold "forever" investor. My horizon (or "forever") is 20 years. If interest rates are dropping and expected to continue to do so, it should be embedded in the 20 year Fed rate, which I think that it is since that rate continues to decline. A 3 or 5 year CD assumes my time horizon is 3 or 5 years, which is not the case for me.

I probably wasn't clear, but I don't require a 15% dividend growth rate. A stock just earns a bonus Star if it has done that.

Unfortunately, I don't have the data or time to to perform a statistically relevant back testing - I am having to adjust on the fly.

Thanks for the comments!

Best Wishes,
D4L

By: bw

bw — Sun, 28 Dec 2008 19:36:00 +0000

I love your style of analysis but I do wonder if you are being too rigid and arbitrary. For example, if a company grows a dividend at 14% or 1% it is treated the same way. Wouldn’t a fuzzy logic approach be more useful.
Also your use of a long term MMA average denies the fact that you are making a current decision for investment. If interest rates are going down and expected to continue ,your money has no real option , presently to invest at that rate. Wouldn’t a more useful comparison be a 3 or 5 year CD that is presently available?
One more thing is the demand for a 15% growth of dividends to produce a doubling in 5 years of your dividend. How many stocks can pass this test? I don’t have any idea.
Have you tried this test procedure out with historical data with a statistically sufficient amount of companies to see if it threw out too many good stocks or did actually weed out dogs?
Like I said , I love what you are doing ,but a bit of dialog about assumptions and conclusions might be useful.

By: Jae Jun

Jae Jun — Fri, 19 Dec 2008 07:32:00 +0000

A company that I like and use often. Just waiting for it to come down to my buy price but this is a stubborn fella.

By: Dividends4Life

Dividends4Life — Thu, 18 Dec 2008 21:58:00 +0000

Anon: With all due respect to you, the analysis is clearly described in the disclaimer as "quantitative" and "mechanically calculated". In addition, it is noted that before buying or selling any stock you should do your own research (qualitative) and reach your own conclusion.

There is such a high degree of subjectivity in a qualitative analysis, it is best left to individual.

Best Wishes,
D4L

By: Anonymous

Anonymous — Thu, 18 Dec 2008 21:16:00 +0000

With all due respect, your analysis doesn’t spend any time actually examining the fundamental business (competition, competitive advantages, management, revenue mix, business trends, etc.).

Don’t you think your analysis is a bit, shall we say, light?

By: Dividends4Life

Dividends4Life — Wed, 17 Dec 2008 18:30:00 +0000

Nurseb911: We’re here to serve!

Best Wishes,
D4L

By: Nurseb911

Nurseb911 — Wed, 17 Dec 2008 15:07:00 +0000

Thanks or the analysis D4L.

I just made a comment about the company yesterday on your previous post & here is a stock analysis in my google reader right away in the morning.

That's what I call customer SERVICE! (haha)