The Real Question

Where to Get Retirement Income: Neil’s View

Welcome to Autumn! We enter the fall season following the most beautiful summer I remember in my 25 years in Syracuse. It was also a strong period for the stock market with the S&P 500 up a healthy 6.74% through September 15th. The top performing sectors were Utilities and Energy, while Financial Services and Healthcare lagged behind. The portion of the Broad Market which Morningstar classifies as US Value, increased by 10.21% while US Growth Stocks increased by only 2.19%. In general terms “Value Stocks” are characterized by solid fundamentals based on analysis of price earnings ratio, yield and other factors. Growth Stocks are characterized by higher earnings growth rates, higher price earnings multiples, and typically lower dividend yields. The top 5 positions in Morningstar’s Value Index are Exxon Mobile, AT&T, J.P. Morgan Chase, Wells Fargo, and Proctor and Gamble. The top 5 positions in their Growth Index are Amazon, Facebook, Alphabet (Google), Home Depot and Comcast. 1

Last month I gave a speech at a Michael Roberts Associates event, where I made a case for over-weighting “value” stocks in investment portfolios. My contention is that over time by focusing on Value Stocks, particularly higher dividend payers and dividend growers, you can enhance your overall investment return. I also made a case for patience and trading less frequently. This month I provide hard numbers to bolster my assertion: