The document discusses five factors of return that influence stock returns: inflation, dividend yield, real book value growth, share dilution, and the "dream factor". It analyzes the impact of these factors on total returns in various Asian markets between 2001-2013. The analysis shows that real book value growth and dividend yield are typically the main drivers of long-term returns and terminal wealth, while the "dream factor" contributes more variably. Real book value growth and inflation tended to be the largest factors for returns in Indonesia, while returns in Singapore saw more influence from nightmares. Overall, the five factors framework provides insight into past return drivers in different markets.

1. STOP
Wasting Time
START
Adding Value2014-05-20
Do YOU Know How to Make
Money from Dreams
& Nightmares?
Part IV: Five Factors of Return

2. Pick stocks
Managing
a portfolio
Forecasting
Value drivers
Five factors of return
Risk matters more
Stop targets
Reduce action
Every day is new 20 May 2014 2
In six parts Andrew Stotz will teach how to
Stop Wasting Time and Start Adding Value
in stock picking and portfolio management.
In Part IV the focus will be on five factors of return.
Source: A. Stotz Investment Research

3. FIVE RETURN FACTORS
Inflation
Dividend yield
Real book value
growth
Share dilution*
“Dream factor”
20 May 2014 3
*Share dilution is captured in the Real book value growth factor which is shown in the charts on
the following pages
Source: A. Stotz Investment Research

4. 5 FACTORS IN ASIA, DREAMS AND
NIGHTMARES EVEN OUT
20 May 2014 4
*Inflation is a simple average of the inflation in the Asian countries that constitutes Asia ex-Japan
Sources: A. Stotz Investment Research, Thomson Reuters
(Years)
(10) (8)
50
19 21
36
45
(52)
71
21
(18)
24
1
(80)
(60)
(40)
(20)
-
20
40
60
80
01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation*
(Total return Asiaex-Japan,%)

5. 5 FACTORS IN INDONESIA, BIG
DREAMS, STEADY INFLATION
20 May 2014 5Sources: A. Stotz Investment Research, Thomson Reuters
(Years)
(14)
13 55 51
18
56 52
(51)
93
47
4 15
0
(80)
(60)
(40)
(20)
-
20
40
60
80
100
120
01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
(Total return Indonesia,%)

6. 5 FACTORS IN SINGAPORE, EVEN
CONTRIBUTION, NIGHTMARES
20 May 2014 6
(Years)
(12)
(17)
39
17 19
33
22
(49)
75
15
(14)
26
1
(80)
(60)
(40)
(20)
-
20
40
60
80
100
01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
(Total return Singapore,%)
Sources: A. Stotz Investment Research, Thomson Reuters

7. 5 FACTORS IN MALAYSIA,
ALL FACTORS EVEN
20 May 2014 7
(Years)
6
(2)
26
16
3
27
34
(36)
48
24
4
12
14
(50)
(40)
(30)
(20)
(10)
-
10
20
30
40
50
60
01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
(Total return Malaysia,%)
Sources: A. Stotz Investment Research, Thomson Reuters

8. 5 FACTORS IN PHILIPPINES,
EVERY YEAR A DREAM
20 May 2014 8
(Years)
(19)
(10)
37 26
18
48
18
(44)
61
66
1
23
1
(60)
(40)
(20)
-
20
40
60
80
01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
(Total return Philippines,%)
Sources: A. Stotz Investment Research, Thomson Reuters

9. 5 FACTORS IN CHINA, DREAMS
TURN TO NIGHTMARES
20 May 2014 9
(Years)
(26)
(13)
28
(16) (11)
103
117
(65)
82
(13) (21)
6
(6)
(100)
(50)
-
50
100
150
01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
(Total return ChinaA-shares,%)
Sources: A. Stotz Investment Research, Thomson Reuters

10. CUMULATIVE RETURNS ASIA,
DREAMS TO NIGHTMARES
20 May 2014 10
*Inflation is a simple average of the inflation in the Asian countries that constitute Asia ex-Japan
(Years)
113
97
75
(27)
258
(100)
(50)
-
50
100
150
200
250
300
(100)
(50)
-
50
100
150
200
250
300
00 01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation*
Terminal wealth
(Cumulative return in US$,Asiaex-Japan)
Sources: A. Stotz Investment Research, Thomson Reuters

11. INDONESIA TWO THIRDS DREAM FACTOR
AND INFLATION
20 May 2014 11
(Years)
313
218
136
296
964
(200)
-
200
400
600
800
1,000
1,200
(200)
-
200
400
600
800
1,000
1,200
00 01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
Terminal wealth
(Cumulative return in US$,Indonesia)
Sources: A. Stotz Investment Research, Thomson Reuters

12. NIGHTMARES IN SINGAPORE
20 May 2014 12
68
70
67
(44)
160
(100)
(50)
-
50
100
150
200
250
(100)
(50)
-
50
100
150
200
250
00 01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
Terminal wealth
(Cumulative return in US$,Singapore)
(Years)
Sources: A. Stotz Investment Research, Thomson Reuters

13. SOLID ALL AROUND PERFORMANCE
IN MALAYSIA
20 May 2014 13
(Years)
69
73
91
88
321
-
50
100
150
200
250
300
350
(100)
(50)
-
50
100
150
200
250
300
350
00 01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
Terminal wealth
(Cumulative return in US$,Malaysia)
Sources: A. Stotz Investment Research, Thomson Reuters

14. NEARLY ALL DREAMS IN PHILIPPINES,
NO BOOK VALUE GROWTH
20 May 2014 14
104
9
56
219
388
(50)
-
50
100
150
200
250
300
350
400
450
(100)
(50)
-
50
100
150
200
250
300
350
400
450
00 01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
Terminal wealth
(Cumulative return in US$,Philippines)
(Years)
Sources: A. Stotz Investment Research, Thomson Reuters

15. 48
97
30
(157)
18
(200)
(150)
(100)
(50)
-
50
100
150
200
(200)
(150)
(100)
(50)
-
50
100
150
200
00 01 02 03 04 05 06 07 08 09 10 11 12 13
"Dream factor"
Dividend yield
Real book value growth
Inflation
Terminal wealth
(Cumulative return in US$,ChinaA-shares)
CHINA, 13 YEARS OF NIGHTMARES,
BUT HAS BOOK VALUE GROWTH
20 May 2014 15
(Years)
Sources: A. Stotz Investment Research, Thomson Reuters

16.  Real book value growth and dividend yield are
the main drivers of terminal wealth
 The “Dream factor” contributes little in Asia
ex-Japan, but swings widely
 Know when gains come from the “Dream
factor”
20 May 2014 16
WHAT WE HAVE LEARNED
Source: A. Stotz Investment Research

17. Share this with your friends
www.andrewstotz.com
Follow
me on: