Investing Catechism

nitro · Oct 25, 2009

Quote from spindr0:

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.

A synthetic dividend is a covered call writing, not naked.

trendlover · Oct 25, 2009

Quote from nitro:

A synthetic dividend is a covered call writing, not naked.

You mean you will buy that stock?
I do not understand all the option trade, but I want to follow this thread you start nitro. Is very educational to me.

nitro · Oct 25, 2009

Quote from trendlover:

You mean you will buy that stock?
I do not understand all the option trade, but I want to follow this thread you start nitro. Is very educational to me.

All a synthetic dividend means is that you buy the stock [that may not pay a dividend], and write calls against that stock. Once you realize this is a synthetic put, you see why this is not the same as owning the stock and receiving a dividend, but if done correctly by an expert, it can be at least as lucrative as dividends. The problem is 99% of investors don't have this skill.

Use google when you see keywords:

http://www.investopedia.com/terms/s/syntheticdividend.asp

trendlover · Oct 25, 2009

Quote from nitro:

All a synthetic dividend means is that you buy the stock [that may not pay a dividend], and write calls against that stock. Once you realize this is a synthetic put, you see why this is not the same as owning the stock and receiving a dividend, but if done correctly by an expert, it can be at least as lucrative as dividends. The problem is 99% of investors don't have this skill.

Use google when you see keywords:

http://www.investopedia.com/terms/s/syntheticdividend.asp

Ok.

nitro · Oct 25, 2009

Quote from crash n burn:

..
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?..

Well, I keep making it, but it is not one point.

One more try. Maybe you knuckleheads will get it if I keep blasting you with it:

1) As far as investors are concerned, stocks that don't pay dividends, the earnings of that company are of little concern to them. This is an assumption based on

2) Investors should mostly be interested in dividend paying stocks for the most part. Since in this case, earnings would mean something in the context of my dividend continiuing, or being raised by companies that use earnings to reward shareholders. No dividend, I don't give two shits about earnings, AS AN INVESTOR. However, this "philosophy" has been blurred by

3) The advent of the 401k, traders have tried to position themselves in front of institutional buying that sends most of the stock market higher, in one big ponzi scheme that has no rhyme or reason in stocks that pay no dividend. As a result, most traditional analysis of investing has been artifically debased to the common denominator that is momentum "investing", by this pray and pray mentality that is todays markets. If you are a trader, as I am, then you don't question this and you just ring the register. My point is, investors have been lured by the siren song of trading and confusing trading and investing metaphors, when they should tie themselves to the mast and not be seduced by the trade that they have very little chance of suceeding at.

trendlover · Oct 25, 2009

Quote from nitro:

Well, I keep making it, but it is not one point.

One more try. Maybe you knuckleheads will get it if I keep blasting you with it:

1) As far as investors are concerned, stocks that don't pay dividends, the earnings of that company are of little concern to them. This is an assumption based on

2) Investors should mostly be interested in dividend paying stocks for the most part. Since in this case, earnings would mean something in the context of my dividend continiuing, or being raised by companies that use earnings to reward shareholders. No dividend, I don't give two shits about earnings, AS AN INVESTOR. However, this "philosophy" has been blurred by

3) The advent of the 401k, traders have tried to position themselves in front of institutional buying that sends most of the stock market higher, in one big ponzi scheme that has no rhyme or reason in stocks that pay no dividend. As a result, most traditional analysis of investing has been artifically debased to the common denominator that is momentum "investing", by this pray and pray mentality that is todays markets. If you are a trader, as I am, then you don't question this and you just ring the register. My point is, investors have been lured by the siren song of trading and confusing trading and investing metaphors, when they should tie themselves to the mast and not be seduced by the trade that they have very little chance of suceeding at.

You are saying , How likely for the trader to buy (before) institutions that buy with (401K big money)?
nitro you can say yes or no. No asking you to explain for me, ok?

Hester · Oct 25, 2009

Quote from nitro:

Well, I keep making it, but it is not one point.

One more try. Maybe you knuckleheads will get it if I keep blasting you with it:

1) As far as investors are concerned, stocks that don't pay dividends, the earnings of that company are of little concern to them. This is an assumption based on

2) Investors should mostly be interested in dividend paying stocks for the most part. Since in this case, earnings would mean something in the context of my dividend continiuing, or being raised by companies that use earnings to reward shareholders. No dividend, I don't give two shits about earnings, AS AN INVESTOR. However, this "philosophy" has been blurred by

3) The advent of the 401k, traders have tried to position themselves in front of institutional buying that sends most of the stock market higher, in one big ponzi scheme that has no rhyme or reason in stocks that pay no dividend. As a result, most traditional analysis of investing has been artifically debased to the common denominator that is momentum "investing", by this pray and pray mentality that is todays markets. If you are a trader, as I am, then you don't question this and you just ring the register. My point is, investors have been lured by the siren song of trading and confusing trading and investing metaphors, when they should tie themselves to the mast and not be seduced by the trade that they have very little chance of suceeding at.

I don't think you answered the question of how a stock gaps up or down after earnings or some other random event. This has nothing to do with the 401k. Its all fundamentals.

I don't think you have full comprehension of what a ponzi scheme is. When you pay into a ponzi scheme you add no value. Just think of Madoff. He just spent all invested money at his discretion and kept a small reserve for those wanting out. When you buy a stock you are actually buying something physical behind it (the company). When a company is liquidated then all the assets go to the shareholders after the debt holders are paid off. In a ponzi scheme there is no physical thing behind an investment.

Also, the stock of a public traded company is supposed to track the earnings of the stock over the long run. That makes earnings the most important thing. If earnings keep going up then the stock should keep going up over the long run.

nitro · Oct 25, 2009

Quote from Hester:

I don't think you answered the question of how a stock gaps up or down after earnings or some other random event. This has nothing to do with the 401k. Its all fundamentals.

I don't think you have full comprehension of what a ponzi scheme is. When you pay into a ponzi scheme you add no value. Just think of Madoff. He just spent all invested money at his discretion and kept a small reserve for those wanting out. When you buy a stock you are actually buying something physical behind it (the company). When a company is liquidated then all the assets go to the shareholders after the debt holders are paid off. In a ponzi scheme there is no physical thing behind an investment.

Also, the stock of a public traded company is supposed to track the earnings of the stock over the long run. That makes earnings the most important thing. If earnings keep going up then the stock should keep going up over the long run.

LMAO. I am laughing, but I am laughing out of desperation.

nitro · Oct 25, 2009

Quote from trendlover:

You are saying , How likely for the trader to buy (before) institutions that buy with (401K big money)?
nitro you can say yes or no. No asking you to explain for me, ok?

All traders try to guess when institutions are buying and step in front of them. They are the tier 1 movers of stocks.

crash n burn · Oct 25, 2009

Quote from nitro:

Well, I keep making it, but it is not one point.

One more try. Maybe you knuckleheads will get it if I keep blasting you with it:

1) As far as investors are concerned, stocks that don't pay dividends, the earnings of that company are of little concern to them. This is an assumption based on

wrong. companies pay or not pay dividend based on their stage of development, the industry dynamics and needs of capital. investors should be concerned about the projected cash flow associated to any company rather than if pays or not dividends now.

Quote from nitro:

2) Investors should mostly be interested in dividend paying stocks for the most part. Since in this case, earnings would mean something in the context of my dividend continiuing, or being raised by companies that use earnings to reward shareholders. No dividend, I don't give two shits about earnings, AS AN INVESTOR. However, this "philosophy" has been blurred by

wrong again. earnings mean a lot (probably it is most important aspect) as it improves the company cash flow. the shareholders are entitled to the company economic value added, whether it is being distributed through a dividend today or held to finance the company operations in the near future. either way, the stock price always reflect that reality. a company could pay dividends now and stop paying in the near future due to operational problems while the opposite is obviously very likely as well. it is all part of the company life cycle.

Quote from nitro:

3) The advent of the 401k, traders have tried to position themselves in front of institutional buying that sends most of the stock market higher, in one big ponzi scheme that has no rhyme or reason in stocks that pay no dividend. As a result, most traditional analysis of investing has been artifically debased to the common denominator that is momentum "investing", by this pray and pray mentality that is todays markets. If you are a trader, as I am, then you don't question this and you just ring the register. My point is, investors have been lured by the siren song of trading and confusing trading and investing metaphors, when they should tie themselves to the mast and not be seduced by the trade that they have very little chance of suceeding at.

so your point is trading is a losing proposition rather than whether the company dividend policies turn them into ponzi schemes or not? ok, i accept that as a valid assertion.