Guess why he does not pay out dividends, investments in stocks are not about cash flow management and to reap some quick riches. Sorry but you can't convince me with this argument of yours, but thanks for the time to explain your rational, I do respect your response, I just don't buy it. My experience has taught me otherwise. Corporate CEOs are very often times bowing to shareholder pressure. And shareholders are addicts, who crave for returns, as you already explained, returned in different shape and form and payout timing. Why corporate America and capitalism is "only" the currently better model to implement than other trains of thought, but why it is by far not even a mediocre system of long term survival and prosperity and happiness is because of corporations who are absolutely beholden to their shareholders when most value is actually not created by shareholders. This forces corporations to act in sub optimal ways because of shareholder demand. And that's what I call the dividend payment game. "pay up, shut up, and move on". There is very little thought going into more optimally allocating surplus cash, at many corporations at the very least from own experience. Heck, they all call up their bankers for every little issue and advise, most hardly understand how even vanilla swaps work. Give me a break trying to convince me how smart corporates are. Yes the Apples know their shit for sure but for each apple there are at least a 100 other corporations who have no fuxxing clue about treasury functions.
I don't get the Dividend Game :-)
- Thread starter earth_imperator
- Start date
Your generic statements sound like they are coming from a 14 year old whose reading too much Drudge Report.
companies exist to serve their owners (public shareholders). In fact it’s largely argued that management has stacked the corporate structure to make it difficult for shareholders to have a say in the company they own.
nothing you said shows why dividends are inherently bad. You have proven that you are angry and don’t understand how corporations are designed to operate.
Buffett doesn’t pay dividends because he feels he can invest better than anyone else. He and his cohorts own a significant amount of stock. He also controls the board. It’s actually an example of bad corporate governance.
However, Warren does demand his portfolio companies pay dividends to the holdco: A shareholder demanding cashflow from a company it owns. These companies must be running suboptimally!
Are we moving to the part where the discussion is about “American capitalism” vs some fictitious ideal system you envision? That’s where people with your arguments will end up in these discussions.
companies exist to serve their owners (public shareholders). In fact it’s largely argued that management has stacked the corporate structure to make it difficult for shareholders to have a say in the company they own.
nothing you said shows why dividends are inherently bad. You have proven that you are angry and don’t understand how corporations are designed to operate.
Buffett doesn’t pay dividends because he feels he can invest better than anyone else. He and his cohorts own a significant amount of stock. He also controls the board. It’s actually an example of bad corporate governance.
However, Warren does demand his portfolio companies pay dividends to the holdco: A shareholder demanding cashflow from a company it owns. These companies must be running suboptimally!
Are we moving to the part where the discussion is about “American capitalism” vs some fictitious ideal system you envision? That’s where people with your arguments will end up in these discussions.
This line of thought is exactly why the system is so utterly broken. I will remind you when the middle class and it's drowning in debt will be the cause of the next major crisis. Until then enjoy believing that all decision makers make wise choices and behave optimally. I know for sure that it can't be further from the truth. The term "stakeholders" must be anathema to any hard core capitalist who believes corporations must serve shareholders, only.
I have listed the major reason why dividends are bad for any corporation that prides itself with engaging in innovation and growth. It makes perfect sense for utilities to pay dividends, entities that exist to serve the broad public with services that hardly entail investments for future growth. If a corporation can't identify any projects for future growth and innovation then it's actually most optimal to fold and return all funds to shareholders rather than paying a dividend, unless, as I just mentioned, such entities sole purpose is to serve communities with essential services. From a corporate finance perspective the concept of hurdle rate does matter and in that sense the dividend yield, and expected returns from investments matter in determining the usefulness of paying dividends. But I keep repeating myself and have already stated my point and backed it up multiple times.
Luckily I never had to engage in the game of the lowest hanging fruit, equity trading, in my previous career as prop Bank trader. I focused on macro trends and my goal was to extract pnl from other market participants by being more often right than them by interpreting trends and major macro economic decision making on a sovereign scale, including the valuation and pricing of derivatives in fixed income space. The equity side of things was always a little wacko and more a guessing and gambling game than anything else, precisely because corporate decision makers behaved often times perfectly irrationally. That resulted in folks on the equity side often times going home with the rather lower paychecks.
I leave it as that, agreeing to disagree with you. Of course you will come back and state for the 3rd or 4th time that I did not make a point against dividends... ;-)
P. S. Those fictional alternative systems are not fictional, they as real as Scandinavia, Switzerland, Japan, Germany, Belgium, Holland, France, Spain, Austria,......but you probably have never been there or studied them...
I have listed the major reason why dividends are bad for any corporation that prides itself with engaging in innovation and growth. It makes perfect sense for utilities to pay dividends, entities that exist to serve the broad public with services that hardly entail investments for future growth. If a corporation can't identify any projects for future growth and innovation then it's actually most optimal to fold and return all funds to shareholders rather than paying a dividend, unless, as I just mentioned, such entities sole purpose is to serve communities with essential services. From a corporate finance perspective the concept of hurdle rate does matter and in that sense the dividend yield, and expected returns from investments matter in determining the usefulness of paying dividends. But I keep repeating myself and have already stated my point and backed it up multiple times.
Luckily I never had to engage in the game of the lowest hanging fruit, equity trading, in my previous career as prop Bank trader. I focused on macro trends and my goal was to extract pnl from other market participants by being more often right than them by interpreting trends and major macro economic decision making on a sovereign scale, including the valuation and pricing of derivatives in fixed income space. The equity side of things was always a little wacko and more a guessing and gambling game than anything else, precisely because corporate decision makers behaved often times perfectly irrationally. That resulted in folks on the equity side often times going home with the rather lower paychecks.
I leave it as that, agreeing to disagree with you. Of course you will come back and state for the 3rd or 4th time that I did not make a point against dividends... ;-)
P. S. Those fictional alternative systems are not fictional, they as real as Scandinavia, Switzerland, Japan, Germany, Belgium, Holland, France, Spain, Austria,......but you probably have never been there or studied them...
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The companies in the countries you mentioned pay the higher dividend rates than the US. Are the middle class doing better or worse there? Are the CEO’s of those companies sheeple? Are those companies lacking innovation and growth opportunities?
There we go talking about the middle class and “hard core capitalists.” I am waiting for a comparison to nazi Germany.
good for you that you traded prop for a bank. I did too. I made enough trading equity derivatives to “retire” at 33 and started a search fund. So while you are trading your half a billion dollars of fx like a “secondhander” (to quote a hardcore capitalist), I am creating hundreds of jobs.
There we go talking about the middle class and “hard core capitalists.” I am waiting for a comparison to nazi Germany.
good for you that you traded prop for a bank. I did too. I made enough trading equity derivatives to “retire” at 33 and started a search fund. So while you are trading your half a billion dollars of fx like a “secondhander” (to quote a hardcore capitalist), I am creating hundreds of jobs.
How patriotic of you. I hope you pay your investors a large dividend ;-) apparently the "edge" you enjoyed as former prop trader must have vanished. Those who can trade trade, the rest write books or move from one venture to the next. The "secondhander" called two large fuckups by the market recently correctly, the Fed pivot that never existed and the recent softer CPI that in the end did not change the Fed's stance whatsoever. On both I was ridiculed here when I posted yet profited very nicely while the naysayers had to eat shit. That's macro trading. But go ahead with hiring people, it seems you do better at that than trading.
The rest of the post does not warrant a reply as you stumble from one miss-perceived issue to the next.
The rest of the post does not warrant a reply as you stumble from one miss-perceived issue to the next.
Ooh… now we are to the “you must be a bad trader.” I really thought you were better than this.
I still trade. Like Warren Buffett, I spend a lot of time allocating capital between the company and my trading account.
and I love the hypocrisy. You insult me for creating jobs but then rail about how corporations are screwing the middle class with dividends (only in America though).
come on. Your points don’t make sense. Admit it and move on. You would know this if you had the background you claim to.
I still trade. Like Warren Buffett, I spend a lot of time allocating capital between the company and my trading account.
and I love the hypocrisy. You insult me for creating jobs but then rail about how corporations are screwing the middle class with dividends (only in America though).
come on. Your points don’t make sense. Admit it and move on. You would know this if you had the background you claim to.
They don't make sense to you because you completely misread my posts, all of them. I never brought up any differentiation by country in regards to dividend payments. It was you who came up with fictional economic systems after I brought into question the pure capitalist model that only shows servitude to shareholders. I proved you wrong in that there are many viable alternative models that result in much better outcomes for the middle class where the ultimate benefactors are not shareholders. You keep on twisting my posts (and others by the way) and then get outraged about your own misinterpretation.
By the way, don't play all soft now when others call you names after you yourself handed out without reservation. You wanna be tough then take it like a tough guy.
I guess there is not much more to say, the exchange here was quite a waste of time and meaningless after you twisted pretty much every word that was said. Hopefully we won't get off the wrong foot in other threads.
By the way, don't play all soft now when others call you names after you yourself handed out without reservation. You wanna be tough then take it like a tough guy.
I guess there is not much more to say, the exchange here was quite a waste of time and meaningless after you twisted pretty much every word that was said. Hopefully we won't get off the wrong foot in other threads.
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FWIW:
"An investment of $10,000 in the S&P 500 Index at its 1926 inception with all dividends reinvested would by the end of September 2007 have grown to approximately $33,100,000 (10.4% compounded). If dividends had not been reinvested, the value of that investment would have been just over $1,200,000 (6.1% compounded)—an amazing gap of $32 million.” The reinvestment of dividends accounted for almost all of the stocks’ long-term total return."
John Bogle
"An investment of $10,000 in the S&P 500 Index at its 1926 inception with all dividends reinvested would by the end of September 2007 have grown to approximately $33,100,000 (10.4% compounded). If dividends had not been reinvested, the value of that investment would have been just over $1,200,000 (6.1% compounded)—an amazing gap of $32 million.” The reinvestment of dividends accounted for almost all of the stocks’ long-term total return."
John Bogle
Reread your posts. My conclusions of your points are consistent to what you are writing. I’m not sure you understand your own point because your just trying to argue. You are all over the place. And you don’t actually respond to my facts (like warrens portfolio companies paying divs or European companies paying high divs).
I was mocking your insult doofus. It’s hard to personally offend me. But do you remember your own posts about personal insults? I’m sure you dont.
I really thought you were different but you degenerated into tired internet arguments while exposing your hypocrisy. That’s a shame. I actually wonder if you are another poster who was similar, but I don’t think you are because you aren’t racist against everyone but Germans.
I was mocking your insult doofus. It’s hard to personally offend me. But do you remember your own posts about personal insults? I’m sure you dont.
I really thought you were different but you degenerated into tired internet arguments while exposing your hypocrisy. That’s a shame. I actually wonder if you are another poster who was similar, but I don’t think you are because you aren’t racist against everyone but Germans.
%%
OK;
+ people that like dividends may or may not get a clue when someone stops paying dividends\LOL
But really a \dividend maybe a mark of an underperformer\DOW/DIA tends to pay a good dividend; + underperforms many times , except last week some..........................
SPY tends to outperform DIA + pays a smaller dividend/Go figure.
But UDOW pays a smaller dividend + mostly outperforms DIA\DOW.