I agree, of course, that you have to have increased earnings to increase dividends at some point (though an occasional year is not bad). But in 1973-1974 I saw Control Data drop from $35/sh to $10/sh (I sold out at $25/sh) and BFI drop from $35/sh to $5/sh (among others) and my broker talked me out of selling it at $25/sh (and BFI had only one bad quarter). If I had held on for several years, I would have come out all right, but I couldn't stand the heat and evenually lost everything (my broker had me buying on the margin, something I surely will not do again). When you are in a bear market, stocks fall no matter how good the earnings, but dividends may keep rising and at least you get that much while you wait for a recovery (stocks dropped from a market capitalization of 78.1% of Gross Domestic Product in December of 1972 to 33.7% in September of 1974). There can be many false starts so you don't really know when the recovery really begins. If you keep buying and selling at a loss, you end up losing big. Note: today the market capitalization is about 150% of Gross Domestic Product, vastly more than ever before (it was 81.4% in August 1929, the previous high). It perhaps can go to 200%, who knows, but we are in a scary situation.brucedoe
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