Investing Catechism

Quote from alexandercho:

So, your theory on companies that make you money without dividends should also be ignored? After all your ignoring the possibility of making money from dividends. After all both are theories. So let's ignore your theory to.
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Sorry dude, you are totally out of your element. I am not the one trying to prove to everyone that my theory is correct. The burden of proof is not on me. All I am saying is that if you don't invest in stocks that don't pay dividends, you are excluding a huge section of the market that can overperform. If you claim that shouldn't happen because those companies don't pay dividends, you are just ignoring reality.

Companies that pay out dividends have a history of being less volatile. They produce a decent return for the investors as well. Their share prices also increase in a more natural uptrend .
If you want to play the game of buying and selling you have to pay a capital gains tax. If you make money through dividends you still have to pay the same tax. So what the hell are you getting on about?
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First of all, I was not the one to bring up the tax problems with dividends. Second of all, for every "natural uptrend" stock, there are also companies out there crushing numbers and they do not pay a dividend. In other words, for every nice dividend stock you give me as an example, I can give you a better performer in the no-dividend land.


Your freaking retarded no offense, your like every cow. MOO, MOO before they are turned into beef patties. :cool:
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Classy.
 
Quote from sprstpd:

Sorry dude, you are totally out of your element. I am not the one trying to prove to everyone that my theory is correct. The burden of proof is not on me. All I am saying is that if you don't invest in stocks that don't pay dividends, you are excluding a huge section of the market that can overperform. If you claim that shouldn't happen because those companies don't pay dividends, you are just ignoring reality.

I'm not talking against buying stocks that do perform well, with or without a dividend. All I'm saying is that your in the process of trying to disprove another persons theory by forcing upon your own. Then, when I pull the same stunt you say I'm out of my Element. Lol



First of all, I was not the one to bring up the tax problems with dividends. Second of all, for every "natural uptrend" stock, there are also companies out there crushing numbers and they do not pay a dividend. In other words, for every nice dividend stock you give me as an example, I can give you a better performer in the no-dividend land.

At least with dividends I can reinvest to earn more dividends. If your with a stock that has no dividends whatsoever, where will you get the extra money to buy more company shares? You can't really compound your earnings. All you really do, is sit on a stock that gradually appreciates. Sounds good to you, but if you saw my example earlier I clearly pointed out the advantage of compound dividend yields constantly reinvested into the stock.

Classy.
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Thanks, normally I hate ignorant people. But at least you came back and defined what you were trying to say unlike most people.
 
Let me give you something to chew on.

Annaly Capital Management. 16.04% dividend yield

5 Yr dividend growth 1.3%

If I invested $100,000 and reinvested all of the dividends I have earned this is how much I will have in 10 years.

$481,952.08

Very few stocks have returned a 381.952% ROI over a period of 10 years. Many stocks are just barely recovering.

This is just factoring dividends earning me more dividends. I did not put into consideration the capital appreciation this company achieves on a year by year basis.

If I factor a 12% stock equity return on average from Dollar Cost Averaging into every dip on the charts. (12% is considered the standard)I would have: $1,246,460.35

A 1,146.46% ROI, I think that's excellent. Even Apple Doesn't top that, although over the past 10 years It did earn an investor if they bought 10 years ago a 650% ROI and since you don't get a dividend you can't reinvest into the company. Sucks for you. Looks like my comparison wins.

Second, to avoid paying taxes I would use an IRA so I can shelter my taxable earnings till I withdraw all of my money at once. So tax is not a factor in my compounding strategy.

Third, It's not that I don't acknowledge great growth stocks. I have my investment portfolio's set-up like this.

40% long term/low risk
30% Mid Term/medium risk
20% Short Term/high risk

REITS, and high-yield dividends stocks. for long-term(low-risk). I also invest into Tax Liens they don't appreciate in cash value but they will return a 16% return. Bonds (few), mutual Funds (NONE).

My (medium risk) middle term: is set aside for growth and value stocks. Channel trading, and buying upon the assumption a company will earn more and more.

My Short - term (highest risk) is set aside for FOREX, and Option premium trading.

It's not that I'm inflexible - I just have varying viewpoints depending on what type of investing I'm doing based upon the different investment portfolios I may own.
 
As an investor, and an elite trader it's important for me to take advantage of short-term opportunities. While building wealth for the long-term. :cool:
 
Quote from Chausey:

It's true that money chases money hoping to sell and make money before there is no money.
Stock ownership is a scheme. It takes outside money to make an outsider any money.
The market was to exist to help companies raise money. But the largest companies didn't see that as the reason to come into the market. The stock market is emphasized in society, money comes into it directly from the Federal Reserve now to help maintain that "historic multiple". There would be no benefit to bringing a private company public if it was not a means to a richer end. Period. Bill Gates didn't need the hassle of quarterly guidance, he and Paul Allen could have just collected the company profit...except the stock market allowed them to cash out the future earnings all at once which is a better bet to take rather than risk that there will be future earnings.
Again, the stock market needs to be valued by society for it to work. This is why politicians (figureheads for corporate interests) wanted to create Health Savings Accounts. The 401k is the same idea, pin Joe-6-Pack's retirement to fundamentally change his political position. However, as the public does leave the market, it will be less important to the public to maintain high multiples. The stock market is a means to an end for company owners looking to cash out.
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The stock market is not a fully-fleged ponzi scheme, but more partially. Future earnings are retained in the stock price, but future earnings are never certain. In that sense the stock market is like a creditcard. You are bringing sales from the future into the present. A creditcard in that regard can be a form of cheating the future, like with the stock market. It is cheating society, like the stock market is cheating ther investors.

Does it matter? For traders not so much. For investors, it is however an interesting philosophy and does have a grain of truth. The main advantage of dividend yield over interest yield is that dividend are quarterly. This means dividend yield can be lower then yearly yields. That is an interesting prospect for compounding strategies.

Even more interesting would be monthly dividends.. if you reinvest in the stock itself for low or no costs and dividend is stable, it is way more profitable.
 
Quote from alexandercho:

I'm not talking against buying stocks that do perform well, with or without a dividend. All I'm saying is that your in the process of trying to disprove another persons theory by forcing upon your own. Then, when I pull the same stunt you say I'm out of my Element. Lol
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Who started the thread? Who has the burden of proof for his somewhat outrageous claim?
 
The share price needs to rise because there is always the possibility that dividends could be paid in the future/company could be acquired/buybacks.

Think about the implications if that was not the case, ABC company with a market cap of $100m while holding $1B in cash, $100m in annual cashflow which grew in the last 10 years, no debt, no dividends. The stock would be massively mispriced which would get the management to start plans to 'solve' that issue, that includes paying a one time large dividend that would be many times the market cap, this would be a riskless profit for shareholders as the stock can gap the day after more than what the dividend was. AMZN will never trade at $5 without massive change in the company fundamentals

Those mispricings dont occur because markets close those gaps in particular during earnings reports. Furthermore even if the CEO said he will never pay a dividend/sell the company/buyback stocks that would not matter because one day he will die or will leave

Since markets are forward looking dividends that can paid in the future/possible M&A activity should be part of share pricing
 
Quote from nitro:
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AS AN INVESTOR, WTF do I care what a company earns if it doesn't pay a dividend, AND has shown a record that the dividend it pays is correlated to its earnings? I have said this countless number of times, but people don't get it.
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More fuel to my belief that dividends will play a greater role in the future.

I read an article in the recent SFO. It discusses a proposal for solving the issue of naked short selling by instituting new rules to the effect that there is daily cost to doing so. So, shorting equities that pay a dividend would mirror the way interest accrues daily in shorting of bonds. Why this was not the norm before can be understood, i.e., the complexity of the accounting would be too great. In the age of computers, it is an extra run on a server EOD.

http://www.sfomag.com/article.aspx?ID=1431&issueID=104

This is absolutely the right way to do it. In fact, the rule change would make stock trading that much more interesting, since dividends would now accrue daily. Even better, it encourages companies to pay a dividend if they don't want their shares shorted.

Put your money where your mouth is.
 
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