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AgAuMoney

AgAuMoney
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  • Misguided Interest In Dividend Paying Stocks [View article]
    '''Just answer the simple question. Your buying a company, it has more cash or less cash, which one would you pay more for? '''

    The one that was worth more, which depends on cash flow far more than it depends on cash assets.
    Dec 31 03:21 PM | Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''All I've pointed out is that it makes no difference in bear market if you take the dividends or sell stock equal to the amount of dividends. Both are the same disinvestment'''

    Only in a first year textbook.

    In the real world they are very, very different. Which is why if you account for the 18% deflation, and receive dividends at the market yield near 14%, the market was back before 1935. If you held you were also. But not if you sold.
    Dec 22 01:06 AM | 2 Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''What is truly amazing is that this stuff is the most basic of things taught in first year finance classes.'''

    And if you never progress beyond that first year, you will never learn why the simplifying assumptions invalidate the argument.

    Or maybe in finance they don't get that advanced?

    In physics we use the same simplifying assumptions for first year students. But you cannot pass advanced classes if you do not learn the difference between theory with simplified assumptions, and the real world.
    Dec 22 01:05 AM | 2 Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''A dividend payment is the exact same disinvestment in a company as if no dividend payment were made and you sold the number of shares to get the same dividend'''

    Then please explain to me how:
    1) I own 2x the number of PG shares I purchased
    2) I have been paid back all but $4/share of my purchase price
    3) PG closed over $81/share on Friday.
    ?
    Dec 22 01:02 AM | 1 Like Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''Simplifying assumption, let's assume companies trade at book value'''

    Everything based on that assumption is invalid.
    Dec 22 12:59 AM | 1 Like Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''m active today in buying and selling companies and work with investment banking firms to value them '''

    So when a company is purchased, is the tender offer equal to the book value?

    Or is the company worth more or less than book value?
    Dec 22 12:48 AM | Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    Assets are used only to compute the liquidation value of a company.

    A company also has revenue and profit (hopefully) and those make the company worth more than the sum of assets minus liabilities.
    Dec 22 12:45 AM | Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''Not a belief but simple math--companies with more assets all else equal are worth more.'''

    The "all else equal" part is what makes the math not so simple.

    And trying to assume that a dividend payment is the only transaction having an effect on assets that day.
    Dec 22 12:43 AM | 1 Like Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''some other transaction at the company level causes the book value to increase or decrease.'''

    You mean like receiving or disbursing funds such as making or receiving payment for goods and/or services? Transactions which happen many times per day, every day?
    Dec 22 12:42 AM | 1 Like Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''Simplifying assumptions that a company always trades at its book value'''

    And THAT is PRECISELY the assumption which invalidates the entire argument.
    Dec 22 12:37 AM | 2 Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''Reinvesting the dividends is the exact same thing as if the dividends were never paid in first place.'''

    No. That is a THEORY.

    In reality reinvesting dividends increases my ownership of the company. For example, if the average yield of a company is 3%, at the end of the first year I would own 3% more than I owned at the beginning, or 103% of start. After two years I would own 106.1%, after 3 years 109.3%.

    If not reinvesting dividends (or no dividends paid) and no selling, after three years I would own 100% of what I started with.

    If no dividends and I had to sell 3%, then after 3 years I would own only 91.3% of start.

    Which is preferable, owning 91.3%, 100% or 109.3%?
    Dec 22 12:35 AM | 2 Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''What matters is the amount of dollars invested in the company.'''

    What matters to me is the amount of dollars I can get OUT of the company.
    Dec 22 12:29 AM | 1 Like Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    '''long term earnings, which must be HIGHER with the cash than without it'''

    Theory, not reality.
    Dec 22 12:20 AM | 1 Like Like |Link to Comment
  • Paul Krugman's Fallacies [View article]
    '''And what about government investment in General Motors?'''

    Huge losses.

    What direct payment did Tesla receive?

    Solyndra: Huge losses.

    It has nothing to do with capitalism, only chronyism.
    Dec 22 12:15 AM | Likes Like |Link to Comment
  • Paul Krugman's Fallacies [View article]
    '''I guess I'm guilty of believing that only Bad Government is bad, but that Good Government is both good and possible, at least in theory and in our memories.'''

    Good government does not exist. Government was a necessary evil, which is why "that government is best which governs least." (Thomas Jefferson)
    Dec 22 12:13 AM | 1 Like Like |Link to Comment
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