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Value Investing Flip Book Project

How do you explore investing while indulging in a childhood pastime? Simple. You make a flip book of investment returns and that's exactly what I did.

I started with a flip book for Canadian dividend investors which is linked below. The book starts off with a long-term graph showing the market's return and the return of a high yield portfolio, a low yield portfolio, and a no-yield portfolio.

The rest of the book is composed of graphs that display 10-year return histories starting from consecutive calendar years. If you scroll through the book a page at a time, it turns into something of a flip book showing the development of dividend investing over time.

But, after having a little flip book fun, you might be wondering why I went to the trouble of making all the graphs. You see, I wanted to explore how often dividend investors might have had cause to regret their decision to go with dividend stocks.

You'll notice that the high yield investor had little reason to complain about their returns after a full ten years had elapsed. But there were several times when it was hard to stick with high yield stocks over shorter periods.

For instance, the first 10-year period was very hard on dividend investors. Starting in 1977, the no-yield group grew each dollar invested to over 8 dollars by the early 1980s while high yield stocks didn't even make it to the 3 dollar mark. However, fortunes reversed with dividend stocks faring well as the zero-yield group collapsed over the next few years.

Importantly, the high-yield investor might have been tempted to swap into what had been working recently. But those who moved to zero-yield stocks after the run up would have been hurt badly.

The flip book helps to highlight a core problem for investors. Namely, the urge to swap out of a good strategy during periods of underperformance which happen frequently and can last for several years. So, be warned.

Oh, and also have a little fun with the flip books.

Canadian Dividend Flip Book

      Canadian Dividend Flip Book [PDF]

Notes: The high yield group follows stocks with the top 30% of yields, the low yield group picks up the bottom 30% of yielders. All portfolios are rebalanced annually.

U.S. Value & Glamour Flip Book

      U.S. Value & Glamour Flip Book [PDF]

Notes: The value group follows the top B/P decile (i.e. the lowest P/B ratios) and the glamour group follows the bottom B/P decile. The market shown is the S&P500 and its predecessor indexes.

Stocks vs. Bonds for Canadians

      Asset Allocation For Canadians [PDF]

A flip book showing the returns of Canadian T-Bills, the S&P/TSX Composite, and the S&P500 in Canadian dollar terms.

Comments?

If you'd like to see more flip books, let me know.

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