Elfenbein Correct, Internet Wrong

Yesterday, I posted this on Twitter:

My point is that even with a revolutionary business like Apple, its stock may not be a winner in the very long term. Markets are inherently dynamic and as such, they can be very frustrating.

The tweet got a lot of attention, and I think my point was clear. Being the internet, however, I got a few unusual responses.

For example:

Oh boy.

1. No, it’s not wrong. It’s accurate.
2. Of course I picked the exact high and low. That’s my point.
3. Of course I’d be wealthier. Again, that’s the point. Even an amazing company like Apple can be dead money for a long time. Plus, I’m an odd person to lecture on the merits of buy-and-hold.

Some people pointed out that I didn’t include dividends.

In my defense, I never claimed they were dividend-adjusted returns. Apple did pay a modest dividend from 1987 to 1995. That dividend wasn’t raised after 1990. It was discontinued and eventually brought back in 2012.

The dividend would have helped returns, but not by much, and certainly not “much bigger.” Unfortunately, the numbers at Yahoo Finance don’t adjust the dividends for splits. As a result, the adjusted returns look much larger than they really are.

Here’s an example:

No, no, no. You can tell Yahoo Finance’s numbers are wrong because it means Apple would have had a double-digit dividend yield over 20 years even though it only paid a dividend for eight years. That, or Yahoo Finance’s numbers are wrong. They have the dividend right, they just didn’t split it.

According to this website, with dividends, the $10,000 would have become $9,137.76, which sounds about right. The dividends would have added about 9% to the total haul.

Many more responses, including the uninformed:

Nope, not on drugs and they only did two splits in those 20 years.

Posted by on November 27th, 2018 at 1:55 pm


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