Investing Catechism

[nitro]

Perhaps this video and chart TOGETHER captures the grand illusion better than anything I can say:



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[nitro]

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[nitro]

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[nitro]

"Wall Street Reaps Profit Volatility It Sowed"

"Here's a pop quiz: Bank of America in the third quarter generated: a) 56 cents a share in earnings, b) 27 cents, c) a loss of two cents, or d) all of the above....The answer is "d," thanks to a dozen special items investors can include or exclude when trying to figure out how the bank actually performed"


http://online.wsj.com/article/SB10001424052970204505304577004223202476152.html

 

[nitro]

"One Cure for Accounting Shenanigans"

http://online.wsj.com/article/SB10001424052970203721704577159062085026058.html

I wonder what percentage of fraud occurs by dividend paying stocks. The market itself should be the ultimate cure. If you have to pay a dividend, the odds of fraud probably go down immensely.

 

[sprstpd]

Quote from nitro:

I wonder what percentage of fraud occurs by dividend paying stocks. The market itself should be the ultimate cure. If you have to pay a dividend, the odds of fraud probably go down immensely.

Just make the CEOs financially liable for their own companies and things will straighten out really quickly.

 

[Nine_Ender]

Quote from nitro:

"One Cure for Accounting Shenanigans"

http://online.wsj.com/article/SB10001424052970203721704577159062085026058.html

I wonder what percentage of fraud occurs by dividend paying stocks. The market itself should be the ultimate cure. If you have to pay a dividend, the odds of fraud probably go down immensely.

This whole thread is stupid. You don't understand equities at all.
If you want to see how meaningless dividends can be in some situations, I invite you to chart out the stock price of Yellow Pages in Canada ( now called Yellow Media ). Had a nice dividend which became a huge yield as the stock price slowly cascaded down. Then the bottom fell out and they had to cut the dividend. Now their solvancy is in question.

For years, investors ( often risk adverse ones ) phoned up the business channel in Canada asking about Yellow Pages/Media. They loved the yield. Advisors kind of hinted that it was a bad play. The equity is now worth less then the quarterly dividend used to be.

 

[trendlover]

Nine Ender, I will guess that nitro if he buy that yellow media for the dividend, he will sell that for realized gain when he see the dividend go down. You think nitro is saying to buy dividend companys, and never look to see what is happening? He is not stupid.

Quote from nitro:

Demand a dividend for companies you invest in, and demand an increase of dividends if they are doing well. Otherwise, dump it

 

[Nine_Ender]

Quote from trendlover:

Nine Ender, I will guess that nitro if he buy that yellow media for the dividend, he will sell that for realized gain when he see the dividend go down. You think nitro is saying to buy dividend companys, and never look to see what is happening? He is not stupid.

Quote from nitro:

Demand a dividend for companies you invest in, and demand an increase of dividends if they are doing well. Otherwise, dump it

Equities like Yellow Media crashed well before their dividend was cut. Anyone putting too much importance on dividends and yield got their heads handed to them. Ironically, its supposably risk adverse investors getting hammered here.

Some of the most successful companies in history pay little or no dividend. You need to read the rest of the thread to understand why I say its stupid theory.

 

[trendlover]

The difference with the dividend stock and no dividend stock is if nitro buy yellow media, he have cash in his pocket realized from the dividend. So I say he will be smart and see the stock price go down, and he will to sell so he is not giving back all the dividend profit. Maybe nitro will see change of the fundamentals (debt) then sell because he know that company can not keep giving the big dividend? But if that company have never the dividend, then no hedge for the stock price going down.