Seeking Alpha

dc984

dc984
Send Message
View as an RSS Feed
View dc984's Comments BY TICKER:
Latest  |  Highest rated
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    David C.

    The "relatively" is important. I don't doubt that your portfolio value has grown, and with dividends to boot, too. The earnings of your companies has increased, and this drives the share price higher.

    All I'm simply saying is that the act of paying the dividend reduces the stock price RELATIVE to what it would have been before the dividend is paid.

    What you seem to imply that I'm saying is that dividends would cause as a steady erosion of the stock price as the money is paid out, or at least, that share prices would never increase because "Dividends reduce share prices". I never meant that, and I'm sorry if I gave you that idea.
    May 13, 2014. 08:27 AM | 2 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    Yes, David Fish. Please note the term "relatively".

    The announcement of increased earnings (or increased expectations thereof) should "permanently" increase the price that market participants are willing to pay for a stock, RELATIVE to the price that they would have paid before the announcement. In fact, David Crosetti has stated before that earnings drive stock prices. I agree with him.

    Similarly, it is rational to expect than investors would pay less for a stock after the ex-date, RELATIVELY speaking, than before the ex-date, since they are no longer entitled to the dividend.
    May 13, 2014. 03:01 AM | 3 Likes Like |Link to Comment
  • How To Beat The Low Yield Cycle [View article]
    How about puts? (HVPW)
    May 12, 2014. 08:42 PM | Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    DVK:

    It's not possible, IMO, to maintain the view that dividends don't permanently lower the price on a permanent RELATIVE and aggregate basis. I.e. the ex-date adjustment is permanent (relatively speaking).

    Even though stock prices change all the time, and even though the effect of the ex-date adjustment can be swamped by the fluctuations in daily trading - the dividend capture strategy doesn't work. Why?

    The answer is NOT simply "mr market". If one holds the view that dividends don't have a permanent relative reduction on the stock price, then the dividend capture strategy should work on an aggregate basis because sometimes the price of the stock (after the ex-date) fluctuates above the price before the dividend was paid, and sometimes fluctuates below.

    The answer IMO is that the market participants collectively agree that since the book value of the company has been reduced, this lowers somehow the value of the company, which translates into a permanent RELATIVELY lower stock price, such that one is not able to simply sell the stock, on an average basis, at the price before the ex-date.

    I don't know if this is what you were referring to above, but that's just my take on it.
    May 12, 2014. 07:10 PM | 2 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    I think that is where the much of the contention lies:

    DVK above:
    "My article's scope was narrow, focusing only on equating dividends with share sales. In commenting on it, it is clear that many readers want to expand the discussion to the dollar impact (not the share impact) of selling shares compared to receiving a dividend. That's fair enough. When the topic is broadened that way, then it becomes important to be very specific about how one is calculating the dollar impact of the two events."

    IMO the original intended scope of the article (share impact only) is narrow indeed, and is actually true. Selling shares reduces your share count.
    May 12, 2014. 11:14 AM | 3 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    I believe that DVK is trying to prove mathematically that one investor A has fewer shares than B, and is disregarding the total dollar value of the shares.
    May 11, 2014. 08:05 PM | 1 Like Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    Dave,

    What you say is true. On the other hand, there will be times that BRK rises more than 6-10% a year. In that case, the BRK investor will be selling fewer shares. It might work out to be the same in the end, though the dividend investor will likely feel more secure in his/her income stream.
    May 11, 2014. 11:33 AM | 1 Like Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    Martin,

    I agree with all you say, I apologise as I must have misunderstood your remark as well.
    May 10, 2014. 05:14 AM | 2 Likes Like |Link to Comment
  • How To Make Four Hundred Times Your Money [View instapost]
    Thank you Mark for your expert advice. Keep up the impressive work !!!
    May 9, 2014. 10:04 PM | 1 Like Like |Link to Comment
  • How To Make Four Hundred Times Your Money [View instapost]
    Awesome work Mark. Wish I could afford your service. I get the newsletter but am always a day late and (hence) a dollar short. Down bigon DLIA and AERO. :(
    May 9, 2014. 08:22 PM | Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    DVK. Thanks for the clarification. I believe that when people state proposition 1, they do mean the total dollar value of the shares. Hence the lively comment stream you have in this thread (though I don't think you're complaining! ). It does highlight the fact though that who make statements such as proposition 1 should clarify their point to avoid confusion.
    May 9, 2014. 07:53 PM | 1 Like Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    Martin,

    If the ex-div drop is only temporary, and not a permanent relative adjustment, the dividend capture strategy should work because some stocks go up on their, some go down, and you're saying that it evens out?

    My view is that the dividend capture strategy doesn't work, but not for the reason you say it is.
    May 9, 2014. 07:49 PM | Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    DVK, reading your comments below it seems that you are focusing solely on the number of shares and not the dollar value of said shares?

    If that's the case then obviously selling shares is different from receiving a dividend...by definition. It's like saying if you buy new shares your number of shares goes up. There's no need to use propositions and algebra and what not, just simple logic.
    May 9, 2014. 11:43 AM | 3 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    David C. The stock price is rising because the earnings are rising faster than the dividends being paid out. No one's debating that. I understand this simple idea. What you are missing is the concept of "relatively".
    May 9, 2014. 08:37 AM | 3 Likes Like |Link to Comment
  • Why Selling A Few Shares Is Not The Same As Getting A Dividend [View article]
    "Dividends don't reduce the price of a stock."

    So you can buy a stock for the dividend the day before the ex-date and sell right after? Easy $$$
    May 9, 2014. 03:46 AM | 10 Likes Like |Link to Comment
COMMENTS STATS
637 Comments
521 Likes