Investing Catechism

[nitro]

Quote from crash n burn:

you seem to forget that eventually all companies will become dividend paying companies, as they stop growing EPS and cash flows.

Ok, a new argument and one worth responding to.

But this is completely incorrect. Why would I then, as an investor, invest in a company to get to the point where your business is stable to THEN give me a dividend? In fact, the dividend should be higher in this case, not zero!!!!

So what you are really saying is, you want me to gamble in the ponzy scheme UNTIL the company is really a business, THEN you will give me dividends? LMAO. Like I said, companies with no dividends do not do a thing for my pocketbook. The people that subsidize my gains are other morons that I can buy and sell the stock to in a ponzy scheme until the company actually has stable business.

this has to do with the maturity of their industry and the stage of their life. now they need cash, so they dont pay dividend to shareholders, as they'll require that cash to expand their business. then, when they become big enough and well funded, they start paying dividends as there is no point in retaining earnings anymore.

In case you didn't notice, you MUST be a stable business of some sort to list the stock on the NYSE, and in fact there are rules. On the NASDAQ, well, that whole place in one big joke and it is mean mostly for the ponzy schemes because these stocks rarely if ever pay a dividend. Heck, if I were listing a stock, I too would list it on the NAZ, where my requirements are almost zero, and I can extract as much as possible from gullible investors.

you also miss another important aspect. the real owner of the company are the share holders. hence, the management team will decide paying dividends whenever the shareholders demand it. so paying dividends or not doing so does not differentiate the type of stocks in its essence, just in its associated projected cash flow.

We are? You have bought into this? Maybe activist investors like Carl Ichan are the real share owners because they can inflict real change in a company. The rest of us are bacteria on the back of an elephant. However, I get your drift. In theory, enough investors demand a dividend, and eventually one materializes out of company. MSFT was "forced" into this by large pension funds. The rest of us, good luck.

saying that AMZN is not an investment because it doesn't pay dividend today is totally off base.

It isn't.

 

[nitro]

Quote from ang_99:

So I don't get why you're whining like a 10 yo girl then.


What the hell was the point of your thread?


You're pretty lost for somebody that has been here since '01, I suggest you find a new hobby.

My point in starting this thread was in hopes of bringing to the fore the big lie that is non-dividend paying stocks FROM AN INVESTMENT POINT OF VIEW, and to discuss that with people that aren't as dense as a neutron star.

 

[ang_99]

Quote from nitro:

My point in starting this thread was in hopes of bringing to the fore the big lie that is non-dividend paying stocks FROM AN INVESTMENT POINT OF VIEW, and to discuss that with people that aren't as dense as a neutron star.

Dividends are a PART of investing but not the end all be all.

Generally speaking, stocks that pay dividends are far less likely to have explosive growth.

If you're going for stability, then dividend paying stocks may be something you might want to be involved with.

Microsoft didn't pay a dividend in 1986, yet was in hind sight, a great INVESTMENT.

I don't get what you don't understand here...

 

[trendlover]

Nitro, you make sense because the company who pay the dividend is PROOF they make enough money to profit for themself AND give profit to the share holder, and show that profit is separate from how many buy or sell their stock.

 

[ang_99]

Quote from trendlover:

Nitro, you make sense because the company who pay the dividend is PROOF they make enough money to profit for themself AND give profit to the share holder, and show that profit is separate from how many buy or sell their stock.

And annual reports are proof of making money also.


By the time they start paying dividends, most of the appreciation of stock already happened.

I can tell you guys never went beyond high school.

 

[riskfreetrading]

No one asked whether Nitro is short AMZN prior to earnings or another similar stock that does not pay dividends? Maybe Nitro is pissed off?

PS: Nitro: you did not answer my point about DRIPS. I also noticed that you have finally answered the point of future dividends I raised earlier by answering the post of someone else who makes similar points.

 

[jack hershey]

ET is an amazing place.

Its funny to look back after 50 some years of trading and using money for various things. It was also fun to be part of the academic community for different periods.

It is amazing the conversations that may be had with the govermnent position holders on financial matters.

The financial industry is built of sales and commissions while the free enterprise system thrives on taking good ideas to the market place.

It is so terrific to see the interplay of theory and actual commerce in various economic constructs.

I have a great deal of empathy for those who do not understand how the parts make up the whole and how everything integrates.

Capital is like a person. Put a person to work constructively and he creates value over time.

Capital is rented at one rate and it creates value at another rate. A person can apply his capital to any machine that is creating wealth in any way that appeals to the person.

Micro and macro economics and the econometrics of the integration of the parts is all well known and used by those who create wealth.

Its a good idea for a trader to be educated and knowledgeable. At some point most people just harvest income from their capital and use it to do anything they wish. An annuity or whole life would be good examples. Pensions work that way as well as does social security.

Younger people make money work for them in less passive ways. Most younger people settle for doing work to add value in order to create income. when Nitro blew out in December a few years back, he shifted to doing work for others who were willing to pay him. He no longer uses capital to create income form the capital.

Intraday trading with leveraged capital provides a very high money velocity. 40,000 dollars of capital can earn the average salary (160,000/Y)of an MD in 12 hours.

Position trading stocks @ 3+ % a day return gives 100 turns a year @ 10% a turn. Here, 8 turns is a doubling and 8 into the 240 trading days a year shows how many doublings a year are created. (30 is the rough answer). See the weekly batting order streams posted, for example.

Doing large blocks of capital using sector rotation @ 4% a week and doing 4 1/2 week rotations provides a much slower money velocity for earning of capital. But it is slower because the blocks ae so large.

Amazon can be traded or used as an investment. The persons who idea it was, converted the idea into a corporation that applies profits to grow for them. Their pictures appear in many publications as do the staff's pictures when the staffers apply new refinements to the corporate main idea. An IPO creates money to apply to an idea. The idea is manifested in commercial ways and income is used to pay expenses and profits are accumulated and spent on the next research and development ideas coming down the pipeline. BTL was a great example for AT&T. It got busted up into pieces since it was so prolific.

All flow economic diagrams from the beginning to end have one particular part that is most inviting. It is the box that has both a seller and a buyer advantage in one box. Capitalizing that box is always the most fun.

For the "green" part of the economy, making use of this box is the most fun of all.

One fun aspect of doing boxes is the kind of thing where a TFSE is the mechanism. The mail box part is the best. The new parent get checks from its subs with no additional marginal or fixed costs. The parent's P/E can go from 15 to 60 in four quarters. Putting 5 subs in a parent would cost 80% of the parental stock. The prior holders are reduced to 20% of something that is 4 times more valuable in a year. How does an old stockholder feel about being four times wealthier in a year? Annual meetings are fun .

Adding value is where the action is; there are all kinds of ways. for people who only have money, they can just hitch a ride by putting their money to work where others are putting ideas or combo's of companies to work.

Watch spin off's; they are fun to do too.

I liked starting companies from scratch and then doing TFSE's. A lot of sweat at first but a lot of fun after the knee of the curve.

 

[nitro]

Quote from ang_99:

Dividends are a PART of investing but not the end all be all.

Generally speaking, stocks that pay dividends are far less likely to have explosive growth.

If you're going for stability, then dividend paying stocks may be something you might want to be involved with.

Microsoft didn't pay a dividend in 1986, yet was in hind sight, a great INVESTMENT.

I don't get what you don't understand here...

So MSFT was a great investment in hindsight because we know iti s a success? What the 100 companies that go broke for every MSFT that comes to market? Or are we allowed to go back in time and invest in 1986? Ever hear of something called suvivorship bias?

You are not reading what I am writting. Go back, read every post, every explanation, and try to follow the logic. I can't respond to everyone with the same question as to why ___I___ believe non-dividend paying stocks is just gambling on a ponzy scheme. It's already been explained.

For example, JUST one post above yours, I explain that it took massive efforts from pension funds that control ungodly amounts of money to extract a dividend from MSFT. But you ignore that. Why on earth, if I am Jeff Bezos, would I EVER give some punk that invests in my company through my stock ANYTHING or a dime, unless forced to?

 

[nitro]

Quote from riskfreetrading:

No one asked whether Nitro is short AMZN prior to earnings or another similar stock that does not pay dividends? Maybe Nitro is pissed off?

PS: Nitro: you did not answer my point about DRIPS. I also noticed that you have finally answered the point of future dividends I raised earlier by answering the post of someone else who makes similar points.

No position in AMZN, stock or options, before of after earnings. If I did, I would disclose that.

 

[trendlover]

Quote from ang_99:

And annual reports are proof of making money also.


By the time they start paying dividends, most of the appreciation of stock already happened.

I can tell you guys never went beyond high school.

Ok, that report is proof the company make money for THEM.
So, it is possible for the company to make money (pay no dividend) AND the stock price stay flat or down only because more seller than buyer?