Session goal: Evaluate dividend reinvestment impact on total return — a V2 next-step from trade-pattern-v1.md. Answer: does reinvesting dividends beat price-only buy-and-hold on the ASX large-cap universe?
Context:
- Phase 1 complete: BH + quarterly rebalancing is optimal (arch-phase-1-conclusions.md)
- All ideas (IDEA-001–004) completed and resolved
- trade-pattern-v1.md lists “Evaluate dividend reinvestment impact on total return” as next V2 step
- Previous session 2026-05-20 was a stub — this picks up that thread properly
Progress log:
- 00:30 — Read project index, arch-phase-1-conclusions.md, trade-pattern-v1.md. Phase 1 confirmed complete. BH baseline +4.9pp on full universe EW (walk-forward validated 2019–2026).
- 00:40 — Reviewed ideas.md. IDEA-002 tested dividend yield screening (+253pp walk-forward, commodity-cycle driven) but did NOT test pure dividend reinvestment mechanics. This is the missing piece.
- 00:45 — Reviewed watchlist.yaml (6 tickers with explicit entries/stops). Watchlist not directly relevant to this research question — need full ASX large-cap universe.
Research plan:
- Write backtest comparing pure price return vs total return (dividends reinvested) for BH on ASX200 large-caps
- Test over same period as Phase 1: 2019–2026, quarterly rebalancing
- Key question: does DRIP add meaningful alpha beyond the +4.9pp EW rebalancing premium?
Next action: Run backtest comparing price-only BH vs dividend-reinvested BH on ASX large caps.
Status: in-progress (research planned, execution next)