Fiddling about with stocks, funds, etc. No conspiracy theories, please.

771 posts in this topic

Just now, MikeMelga said:

The money being spent is from the ones who either are not fired or simply have enough disposable income.

 

Money is being printed and handed over in huge amounts to big corporations. Some of my consumer electronic customers in Asia are investing like crazy, because of "free money" and they see consumption going high in a few months.

 

Good post Mike this is also part of the unknown.

 

It is not free money, it does have to be repaid.

 

So we borrow, borrow and borrow, at the end the debt still has to be repaid.

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1 hour ago, RenegadeFurther said:

So we borrow, borrow and borrow, at the end the debt still has to be repaid.

 

As always. Take credit card debt, for example. It is huge.

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1 hour ago, RenegadeFurther said:

 

Good post Mike this is also part of the unknown.

 

It is not free money, it does have to be repaid.

 

So we borrow, borrow and borrow, at the end the debt still has to be repaid.

Sure, in the end it could bring back a sovereign debt as in 2008, followed by austerity. But that is long term. On the short/mid term, free money everyone! By everyone, I mean big companies :/

 

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10 hours ago, MikeMelga said:

Sure, in the end it could bring back a sovereign debt as in 2008, followed by austerity. But that is long term. On the short/mid term, free money everyone! By everyone, I mean big companies :/

 

 

This is exactly the problem with this pack of cards.

 

House Prices must go up (ECB and Governments firing up the printing presses), Stocks must go up (Fed now doing everything to prevent stocks going down).

 

This in return creates populism. You will have a huge gap between the haves (people who invested in stock and property) and the have nots (people who saved and have seen their life savings eroded away, or those with nothing).

 

The actions of the Central Banks in 2008/2009 started the wave of populism (Brexit and Trump) and it seems they are doing the same mistake all over again.

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Seems to me its really the only way to handle this situation, printing money / loan lots of money - keep the economy going at some level, so that when the recovery occurs. The ecomancy can recover at a  faster rate. And yes, that will mean more austerity and higher taxes for some time to come. Try to make as much money now, while its the relatively sunny days and accept the long cold / rainy times to come.

 

The only other option is to let lots more people die and accept the ecomany will take a much bigger hit, thus leading to a much longer revovery period.

 

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20 minutes ago, RenegadeFurther said:

This in return creates populism. You will have a huge gap between the haves (people who invested in stock and property) and the have nots (people who saved and have seen their life savings eroded away, or those with nothing).

 

The actions of the Central Banks in 2008/2009 started the wave of populism (Brexit and Trump) and it seems they are doing the same mistake all over again.

Yep. Income inequality fuels populism. In the US too many of the big players got bailed out while the little guys were left out to dry. Not good. I also fear we will see even more income inequality post Corona, in the US for sure.

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22 minutes ago, RenegadeFurther said:

the have nots (people who saved and have seen their life savings eroded away, or those with nothing).

 

Could you please elaborate on this? How have their life savings "eroded" away.

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6 minutes ago, fraufruit said:

 

Could you please elaborate on this? How have their life savings "eroded" away.

 

Inflation.

 

CPI figure maybe below 2%, but the real cost of living is probably a lot higher.

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I'm going to bring this discussion over here to the appropriate thread.

 

@MikeMelga said,

 

Quote

Must be different for each country, but for companies on the stock exchange in Portugal there is absolutely no fiscal difference if you receive dividends or if you sell stock of the same value. So for me the "dividends" is a not a source of income. In the case of countries like Portugal who make no fiscal distinction, dividends is just a useless and archaic tool, from the investor perspective.

 

My portfolio has grown over the years like it has because I had all dividends reinvested. Much easier than getting the dividends and then buying and zero fees involved. I do not think it is archaic. My mama taught me to do it this way. It has worked well.

 

These days, now that we are retired, I have a couple of accounts where dividends aren't re-invested. That is a little extra cash that comes in handy.

 

What do you have against stocks that pay dividends?

 

Was just on the phone with my broker for an hour. He still doesn't think it is time to buy. Another dip coming. Chasing the market is a fool's game. I'm not a day trader.
 

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1 hour ago, fraufruit said:

What do you have against stocks that pay dividends?

Dividends themselves are not required neither for companies nor for stock holders (exception for small companies).

Apple pays no or almost no dividends, still it is a strong company. Same as Alphabet, FB, Amazon and others.

IMO for countries with no fiscal advantage in dividends, and for companies in the stock exchange, this is just a psychological gimmick for older investors.

Example: company stock is worth 100€. Company gives 5€ of dividends per stock. Stock immediately devalues to 95€. In the end you have exactly the same amount. If they gave you ZERO dividends and if you sold 5% of the stock, you would have exactly the same situation. You are not actually receiving money, it is just being transferred from the stock.

 

Of course some countries have special rules (or lack of them) so it does pay off to receive dividends. But in general, it´s a tool the economy, the investors and the companies don´t need.

 

Quote

 

Was just on the phone with my broker for an hour. He still doesn't think it is time to buy. Another dip coming. Chasing the market is a fool's game. I'm not a day trader.

I agree. I invested more a month ago, I made quite a very good gain, but I still have reserves for when it dips again.

I think the point here is: how long does the lockdown lasts in America? Americans can survive 1 month without salary, 2 months is stretching, but 3 months is a disaster.

But then it´s going up like crazy for the rest of the year.

I´m holding quite a lot of Tesla stock now. TBH, I should sell and buy again later, but on Tesla I am LONG, so I will not sell anything, only buy more.

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5 hours ago, MikeMelga said:

Example: company stock is worth 100€. Company gives 5€ of dividends per stock. Stock immediately devalues to 95€.

 

I have not seen this devaluation in stock prices when I get dividends. (And I also have Apple and others who don't pay dividends.) I've been in this game going on 40 years. It may happen sometimes but not as a rule in my experience. Of course, we have different investments. Point being that all of my dividends that were reinvested have made my portfolio grow exponentially. 

 

I took some off the table in my Tactical Growth account before the big dive. The cash has been sitting there and not losing. Will reinvest that bit when we think the time is right.

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Here is an explanation why dividend-driven investment is not the best option (depending on fiscal policies):

https://seekingalpha.com/article/246637-why-dividends-dont-matter

 

Here is a quote that highlights my point:

Quote

Management’s decision to pay a dividend does not matter because shareholders can mimic the result of dividend by choosing to sell shares and therefore determine the time at which they receive cash. In other words, if they want their earnings distributed in cash, an investor can sell shares.

 

and

Quote

After a stock goes ex-dividend (when a dividend has just been paid, so there is no anticipation of another imminent dividend payment), the stock price should drop.

To calculate the amount of the drop, the traditional method is to view the financial effects of the dividend from the perspective of the company. Since the company has paid say £x in dividends per share out of its cash account on the left hand side of the balance sheet, the equity account on the right side should decrease an equivalent amount. This means that a £x dividend should result in a £x drop in the share price.

 

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Your first quote stands to reason. 

 

As for the second, I've had a look and my dividend stocks do not tend to drop after a payout.

 

My understanding of ex-dividend is if you buy a stock after it has declared a dividend. You won't get that one.

 

Anyway, I still maintain that having dividends automatically reinvested is the best and cheapest way for me to accrue more shares. It's like having money taken out of your paycheck before you see it and putting it in a savings plan of some sort.

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2 hours ago, fraufruit said:

My understanding of ex-dividend is if you buy a stock after it has declared a dividend

The ex-dividend date is the day on which the stock is traded without a claim for the dividend, not the date it was declared. Of course, the dividend is discounted that day which is why the stock would trade lower by the amount reflecting the dividend - all else being equal. Who in their right mind would pay the same price for a stock with a claim to the dividend as without that claim?

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Tesla might make it into S&P 500. That explains the boost, as entering the index would probably double its value very fast. 

https://www.cnbc.com/2020/04/28/tesla-is-poised-to-beat-earnings-and-possibly-qualify-for-sp-500-inclusion-barclays-says.html

 

Of course if it does not make it, stock will sunk some 15-20%. Which creates a buy opportunity.

My conservative prediction is $1000 by the end of the year without entering S&P. By entering S&P would make it above $1200, but no idea by how much.

 

The recent autopilot releases have been quite impressive, it's already stopping at stop signs and traffic lights. Estimated city driving beta in 3-4 months. If they can achieve a decent city driving until the end of the year, together with battery tech updates, get ready for a stock price well above $2000 by the end of the year.

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13 hours ago, MikeMelga said:

Here is an explanation why dividend-driven investment is not the best option (depending on fiscal policies):

https://seekingalpha.com/article/246637-why-dividends-dont-matter

 

Here is a quote that highlights my point:

 

and

 

 

It depends also on risk-aversity. If financial fraud is uncovered, or if business conditions change quickly, a company's reputation and stock can quickly head towards 0, and leave shareholders holding worthless paper and wishing the company had paid out dividends in the past.

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1 hour ago, MikeMelga said:

Tesla might make it into S&P 500. That explains the boost, as entering the index would probably double its value very fast. 

https://www.cnbc.com/2020/04/28/tesla-is-poised-to-beat-earnings-and-possibly-qualify-for-sp-500-inclusion-barclays-says.html

 

Of course if it does not make it, stock will sunk some 15-20%. Which creates a buy opportunity.

My conservative prediction is $1000 by the end of the year without entering S&P. By entering S&P would make it above $1200, but no idea by how much.

 

The recent autopilot releases have been quite impressive, it's already stopping at stop signs and traffic lights. Estimated city driving beta in 3-4 months. If they can achieve a decent city driving until the end of the year, together with battery tech updates, get ready for a stock price well above $2000 by the end of the year.

Crystal ball, Mike!

Just imagine the court cases if a professional financial advisor signed that prophesy and his client lost money...

Nobody knows anything about the future - not even tomorrow morning.

I am a professional independent insurance broker and authorised advertiser. Contact me.
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21 minutes ago, john g. said:

Crystal ball, Mike!

Just imagine the court cases if a professional financial advisor signed that prophesy and his client lost money...

Nobody knows anything about the future - not even tomorrow morning.

humm, I though that was the whole purpose of the thread... regarding Tesla, you know I've been defending the stock even when it went down to 160€ last year and everyone was saying it would go bankrupt. My guess is that most professional financial advisors were recommending to sell Tesla by then. I did the opposite and shared my "tip" here. In the meantime it rose 350% to today's value...

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6 hours ago, MikeMelga said:

humm, I though that was the whole purpose of the thread... regarding Tesla, you know I've been defending the stock even when it went down to 160€ last year and everyone was saying it would go bankrupt. My guess is that most professional financial advisors were recommending to sell Tesla by then. I did the opposite and shared my "tip" here. In the meantime it rose 350% to today's value...

Yes, but that´s still gambling, not investing. Not that there is anythinhg wrong with gambling - as long as you can afford to lose.

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