The Relevance of Dividend Irrelevance (EP.201)

Today, on the Rational Reminder Podcast, we are tackling a few interesting topics that tie into recent and forthcoming conversations with our amazing guests. In this 'us only' episode, we are focusing on thematic ETFs and the truth about dividend investing. After a quick look at The Quick Fix by Jesse Singal, some reflections on the past six months at ARK Invest, and the lessons we can still learn from the dot-com crash, we get into the meat of today's episode by way of Ben's recent experiences on a discussion panel about the utility of thematic investing. From there, we transition into the 'relevance of dividend irrelevance' and share some of the most illuminating and pertinent findings. In the end, our argument is simply that dividends are not the way to go and are an inefficient policy on many fronts. This has not deterred many investors, however, and we get to grips with the kinds of behaviours associated with dividends before espousing what this can mean for you and your objectives. To catch all of this and links to some of the best research available, be sure to listen in with us today.

 

Key Points From This Episode:

 

• Today's book review of The Quick Fix by Jesse Singal and its critique of popular psychology. [0:12:30]
• Inflows at ARK Invest; the startling commitment that we are currently seeing. [0:21:48]
• Reflections and information that we dug up on the dot-com crash in the '90s. [0:22:30]
• Notes on thematic ETFs garnered from the recent panel Ben was on. [0:25:09]
• Disentangling the relevance of dividend irrelevance. [0:35:45]
• The performance of a dividend portfolio and a better idea of expected returns. [0:40:28]
• Empirical findings about dividend investors and their actions in relation to yields, diversification, and more. [0:42:01]
• The tax inefficiency of dividends and what this means for capital gains. [0:49:01]
• Underlining the importance of dividend investor's consumption and its sensitivity to dividends. [0:51:31]
• How the problem with dividends is compounded outside of the US. [0:57:11]