Jamie

Insane statistic no one ever talks about- The ridiculous outperformance of the Dow Jones U.S. Dividend 100 Index versus the S&P 500 since 1998. Most people see this data and assume it is “cherry-picked” because it starts immediately before the dot-com bubble burst. However, that misses a very important point. I recently interviewed David Bahnsen, a dividend growth investor who manages $10B+ about this very statistic. The reality is investors who retired right before the dot com bubble ran out of money if relying on the 4% rule. In early 2000, investors who refused to chase unprofitable technology companies were mocked. Today, everyone dismisses that period as an obvious bubble, but it was only obvious in hindsight. That is precisely why the starting date matters. As David put it: “No one knows what the timing is. Something that failed with one start date but doesn’t fail with another still failed.” Investors don’t get to choose the market environment that follows the day they begin investing or retire. Dividend growth investing’s success through that period wasn’t a flaw in the data. It demonstrated exactly what the strategy was designed to do: Avoid overpaying for speculation, emphasize profitable companies, and continue producing growing cash flow through brutal market environments. A few important things to understand about this data: 1. This is official back-tested data from S&P Global 2. Again, some people have pointed out that the data starts immediately before the dot-com bubble burst. But what happens if we adjust the starting date? In another S&P Global study covering June 2001 through June 2023, the Dow Jones U.S. Dividend 100 Index produced an 11.7% annualized return, compared with 10.2% for the broader Dow Jones U.S. stock market benchmark. The outperformance remained even after moving the starting date. This also supports what Hartford Funds found when studying dividend stocks over approximately 50 years. Dividend growers have outperformed over the long term, largely because their relative performance has been so strong during market downturns. During the average bear market: • Non-dividend payers declined 30.3% • Dividend growers declined just 11.7% Dividend growth stocks don’t need to outperform during every bull market to outperform over a full cycle. Sometimes, the most important part of compounding is simply losing significantly less.

⚠️ WARNING Every global crash starts with South Korea. It sounds ridiculous. Until you look at the history. 1997: - The Korean won collapsed - KOSPI crashed - Foreign exchange reserves nearly ran out - Then the Asian Financial Crisis spread across the world 2000: - South Korean semiconductor stocks topped first - Months later, Nasdaq dumped 78% - The Dot Com Bubble popped 2008: - Korean stocks started breaking down - Just over a month later, Lehman Brothers collapsed - The global financial system went with it 2021: - Bill Hwang used extreme leverage through Archegos - The fund exploded - Global banks lost more than $10 billion - Credit Suisse alone lost $5.5 billion 2022: - Do Kwon launched LUNA and UST - More than $40 billion vanished almost overnight - Then came Three Arrows Capital, Celsius, and FTX Now the warning is coming from KOSPI again. Samsung and SK Hynix dominate the index. More than $30 billion flowed into leveraged products tied to the two companies. These products rebalance every day. When prices rise, they buy more. When prices fall, they are forced to sell. The deeper the market falls, the more selling the products create. KOSPI has already fallen 25% in just a month. The leverage that created the boom is now creating the crash. Forced selling is feeding more forced selling. South Korea has warned the world before. It's warning us again. Pay attention.