Investing Catechism

[nitro]

Quote from sprstpd:

Aren't all investors traders? You yourself said that you would have sold WAG because its dividend is now too low.

WHAT?

Where is the definition that investors can't sell stock they own? Stocks are meant to be leased, not married, and one of the defining factors to lease a stock as an investor is earnings that support dividends.

Absolultely investors sell and buy stocks, and rotate in and out of them.

 

[sprstpd]

Quote from nitro:

WHAT?

Where is the definition that investors can't sell stock they own? Stocks are meant to be leased, not married.

Absolultely investors sell and buy stocks, and rotate in and out of them.

So there is no difference between trading and investing then?

 

[nitro]

Quote from sprstpd:

So there is no difference between trading and investing then?

The differences are subtle, but mostly it has to do with length of time holding an asset, and the decision making that goes into a trade vs an investment. With the advent of things like "Swing" Investing, the two poles meet somewhere in the middle.

Traders work for their money. Investors have their money work for them. That is the essence of the difference.

 

[sprstpd]

If your argument boils down to trading versus investing (I think there is no difference), then I don't think it has much merit.

 

[nitro]

Quote from sprstpd:

If your argument boils down to trading versus investing (I think there is no difference), then I don't think it has much merit.

Well, you can think whatever you want. However, nothing that you have written down as logical argument proves your proposition. You could be right, but you have not communicated a strong argument to convince.

As I said, the synthetic dividend is a hole in my argument, but one I can patch relatively easily.

 

[sprstpd]

Quote from nitro:

Well, you can think whatever you want. Nothing that you have written down as logical argument proves your proposition.

I don't consider your case to be logical either so there you go.

 

[nitro]

Quote from sprstpd:

I don't consider your case to be logical either so there you go.

Then we disagree. That is fine.

 

[spindr0]

Quote from sprstpd:

This might be slightly off topic, but this discussion reminds me of Jim Cramer who always talks about getting into high-dividend stocks. I have even heard him say once or twice that people should get in before the dividend is paid. But the dividend comes out of the stock price so there is no free money in the process (unless you are factoring in tax issues). Whenever I hear "you should get into the stock before the dividend is paid", I know I am listening to someone who does not understand what is going on.

I don't know anything about Cramer's shtick but there is some grain of truth to getting into a high dividend paying stock before the dividend since there is often a modest rise into the ex-div date. It works well in pairs trading. Conversely, once ex-div occurs, it often drops above and beyond the dividend reduction. So exit before the div may be more appropriate.

Many noobs show up with the free money concept of a dividend. As you noted, they're paying you with your own money and you also incur a taxable event. In and of itself, it's a negative until the stock rises.

 

[spindr0]

Quote from nitro:

This on the other hand, is an extremely interesting suggestion. I have thought about it the whole night. I have to do a little more research, but I will post my thought on it a little later.

LOL. Wait until you see how little sleep you're going to get when those OTM naked calls go ITM and bang you for beaucoup dollars.

 

[crash n burn]

no offense nitro, but you look like one of these blokes that have failed miserably at trading and now has come up with a investing doctrine that justifies your beliefs and exorcizes your fears.

it is like saying the fiat currency system is a ponzi scheme based on the fact new money will be printed to pay off the existing debt. of course it is but that's how the whole fiduciary monetary system is built upon. so what's your point really?

the non-dividend paying shares are as much as ponzi scheme as the rest of the shares publicly available. the price of share is based on the projected cash flow associated to it, whether it pays timely dividends or not. there is nothing to discuss beyond this point really.