Putting S&P 500 Index “dividend growth” in context….

For those of you keeping score, the S&P 500 Index managed to eke out in 2020 a small increase in the index dividend, 0.07%, over 2019. $58.24 went to $58.28. That’s pretty impressive given the economic circumstances and the reality that dividend-focused products had a tough time in 2020 actually collecting their dividends. The economic downturn affected the Old-Economy dividend payers more than the New-Economy work-from-home companies. So bully for the S&P 500 Index. But it is important to put that achievement in context. Growing the dividend off such a low base isn’t really much of an achevement. The S&P …

Continue Reading

The dividend chorus is getting louder. Will it make a difference?

Blackrock is jumping on the dividend bandwagon. According to a recent Bloomberg article, Blackrock is calling for strong dividend payers to benefit in 2021 from the paucity of income generated in the bond market. Their argument is more in regard to fixed income securities than it is versus other equities, but they are still highlighting the attractiveness of higher-dividend paying equities in a yield-starved market. Blackrock joins a lengthening list of market participants and commentators making the same call. Will it make a difference?  Interest rates have been low and declining for years without a major rotation into dividend stocks …

Continue Reading

“Dividends will have their day again,” says the WSJ. So will business investors.

Happy to have this Dividends will have their day again call out from the Wall Street Journal, but it is worth filling out the story a bit. Distributable profits are the most natural, logical way of generating return for minority shareholders in an on-going, for-profit enterprise. If that enterprise happens to be publicly traded they are called dividends. It is a form of business ownership.  Successful businesses that do not distribute their excess cashflow to company owners can be owned as stocks, and stocks only. Their only cash return comes from going into the market place and selling a stake–hopefully at a …

Continue Reading

Floating above history….

Nearly forty years after encountering The Education of Henry Adams in a college classroom, I was recently treated to a summary as to why the work was and remains so fascinating.  Dan Chiasson’s New Yorker review reminds readers of how Adams floated over history as much as he lived in it and wrote about it. Adam’s wonder at the new technology at the turn of the 20th century is as fresh today as when it was written over a century ago.

Continue Reading

NBN Interview with Paul Donovan: Profit & Prejudice

Prejudice is bad for business. That’s the long and short of it. Paul Donovan amply documents this in his recent work of Shiller narrative economics, Profit and Prejudice: The Luddites of the Fourth Industrial Revolution (Routledge, 2020). With that out in the open, shouldn’t prejudice in business cease? Well, that’s a tall order. Not every business person is a profit maximizing Fisherian with an MBA from the University of Chicago. Pointing out to prejudiced business people that they are leaving money on the table is, on its own, unlikely to put an end to their discriminatory practices.  Culture matters, as …

Continue Reading

Markets are everywhere, even where they are strictly forbidden….

Markets are everywhere, including where they strictly forbidden. This excellent research by Jim Heinzen on the Soviet second economy just came out in Slavic Review. The full article is behind a paywall but should be accessible via universities and libraries.  Link is here. Below is the abstract from the Slavic Review site. Soviet Entrepreneurs in the Late Socialist Shadow Economy: The Case of the Kyrgyz Affair James Heinzen Supported by new archival material, this article delves deeply into one landmark criminal case to explore key aspects of the social, economic, and cultural history of illegal production and markets in the …

Continue Reading

December’s real-time test of market efficiency.

We have this month both a test of and an immediate HBS case study in market efficiency. A highly innovative electronic vehicle company is about to enter the major market index. Is that a problem for the many investors in the index funds and ETFs based on the S&P 500 Index, or are things as they should be in an efficient market? Market efficiency is presumed to be greatest in large-cap, liquid, well-researched companies. The EV company clears all three thresholds easily, with a market cap of over a half trillion (!) dollars, plenty of trading volume, and 36 separate …

Continue Reading

What if we counted differently……

Saijel Kishan’s recent Bloomberg article, provocatively titled, How Wrong was Milton Friedman is intriguing on many levels. It summarizes the work of George Serafeim, an HBS professor who wants to change how we measure company success and failure. Specifically, he wants to reward and punish companies on the income statement based on ESG impacts. That is, he proposes to put a dollar value on diversity or lack thereof, on polluting or not, etc. And then have those companies report profit and loss after consideration of their social impact. It’s an ambitious plan, and some would say just a natural extension …

Continue Reading

NBN Interview with Vadim Shneyder: Russia’s Capitalist Realism

Vadim Shneyder’s new book, Russia’s Capitalist Realism: Tolstoy, Dostoevsky, and Chekhov (Northwestern, 2020) examines how the literary tradition that produced the great works of Leo Tolstoy, Fyodor Dostoevsky, and Anton Chekhov responded to the dangers and possibilities posed by Russia’s industrial revolution. During Russia’s first tumultuous transition to capitalism, social problems became issues of literary form for writers trying to make sense of economic change. The new environments created by industry, such as giant factories and mills, demanded some kind of response from writers but defied all existing forms of language. Prepare yourself for an innovative perspective on Anna Karenina, The Idiot and other 19th-century …

Continue Reading