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re: Some common myths about the markets that are untrue and/or 99% do not know
Posted on 4/17/24 at 4:28 pm to Big Scrub TX
Posted on 4/17/24 at 4:28 pm to Big Scrub TX
All those names are vastly higher now, but I still think it's crazy that the agencies haven't just started paying the divvies again. For like $1B total annually, they could make them all go back to par and get rid of all the lawsuits.
Also, Lehman exposure wasn't that bad - I think almost all counterparties got paid in full.
This right here tells me you are a professional money manager of some type, cheers. This issue with Lehman is if you are at a public company you still usually have to sell before the full recovery occurs. This is how vulture investors make money. But you are spot on. As for the FNM/FRE they got close to going back private back during Trump but it has been a long wait for investors like Paulsen who has a BIG bet on the prefs. And even if they start paying the divs are not cumulative.
Also, Lehman exposure wasn't that bad - I think almost all counterparties got paid in full.
This right here tells me you are a professional money manager of some type, cheers. This issue with Lehman is if you are at a public company you still usually have to sell before the full recovery occurs. This is how vulture investors make money. But you are spot on. As for the FNM/FRE they got close to going back private back during Trump but it has been a long wait for investors like Paulsen who has a BIG bet on the prefs. And even if they start paying the divs are not cumulative.
This post was edited on 4/17/24 at 4:32 pm
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Posted on 4/17/24 at 4:54 pm to Big Scrub TX
The FHFA and the Treasury have been sweeping all of their profits ever since they found out the GSEs were profitable. They forced them into conservatorship on the hilarious grounds that they had solvency risk even though it was just some deferred tax liability reversal causing cashflow issues. The Feds knew it was B.S. but frothed at the mouth over the billions in profits they could steal. I think the sweep ended a few years back but not sure.
Posted on 4/17/24 at 6:20 pm to wutangfinancial
quote:Yeah, it's been crazy over the years. I'm pretty sure it was the "net worth sweep" that gave Obama leverage to stare down the original debt-ceiling standoff for much longer. He knew the Treasury was still taking in billions.
The FHFA and the Treasury have been sweeping all of their profits ever since they found out the GSEs were profitable. They forced them into conservatorship on the hilarious grounds that they had solvency risk even though it was just some deferred tax liability reversal causing cashflow issues. The Feds knew it was B.S. but frothed at the mouth over the billions in profits they could steal. I think the sweep ended a few years back but not sure.
I personally believe it's all unconstitutional, but man, it's just a plate of spaghetti now. I believe Mnuchin had $100M of these in his PA when he entered office - and he tried like hell to get them to pay off...STILL to no avail. Probably stuck forever.
I think there have already been books written about it, but perhaps one day like 50 years from now, someone will write the definitive account and this will be understood by history students to have been a ridiculous travesty.
Posted on 4/18/24 at 3:01 am to slackster
"Reinvesting divdends generates typically around 50% more growth over time?"
What does that mean? Why would I reinvest my dividends in the company? It's the exact same if they just left it in the stock and didn't pay dividend. Over time is very vague too, over 10 years or what? Specifics matter when talking % gain.
"There are long stretches where dividend players outperformed growth stocks"
Anything to back that up?
What does that mean? Why would I reinvest my dividends in the company? It's the exact same if they just left it in the stock and didn't pay dividend. Over time is very vague too, over 10 years or what? Specifics matter when talking % gain.
"There are long stretches where dividend players outperformed growth stocks"
Anything to back that up?
Posted on 4/18/24 at 4:23 am to Saunson69
quote:
What does that mean? Why would I reinvest my dividends in the company? It's the exact same if they just left it in the stock and didn't pay dividend.
Its not the exact same. Your share of the company increases as you reinvest dividends.
That’s the logic…. Even though, yes, a larger share of a smaller company = a smaller share of a larger company.
Posted on 4/18/24 at 6:31 am to Saunson69
quote:
Anything to back that up?
LINK
quote:
For an average holding period of 1 year, dividends accounted for 27% of total returns for the S&P500 since 1940. If we increase the holding period to 3 years, dividends account for 38%, 5 years it increases to 42%, over a 10 year period it rises to 48%, and with a 20 year holding period dividends account for some 60% of total returns. It is important to note, too, that here we are just looking at the S&P500 as a whole and not focusing purely on companies that actually pay a dividend. If we did, we think these results would likely be even more striking.”
Additionally, it’s disingenuous to complain about dividend payers being a simple return of capital and not on capital without acknowledging how large share buybacks have become.
Nearly every major non-dividend payer has bought back stock, which is essentially the same logic.
Posted on 4/18/24 at 11:55 am to Saunson69
quote:so I can have more shares and more dividends and more shares and more dividends
What does that mean? Why would I reinvest my dividends in the company?
Posted on 4/18/24 at 12:10 pm to tigerfoot
Not theoretically possible. Company gives 2% dividend, market cap lowers by 2%. If it does go up 5% after a dividend payment, then it theoretically would've gone up 7% without dividends. All the same. Dividends aren't free money. No such thing as free money.
This post was edited on 4/18/24 at 12:11 pm
Posted on 4/18/24 at 12:34 pm to Saunson69
So I got more money
The market cap won’t go up! Ok maybe 5%. But it coulda been more!
Are you sure you have a point
The market cap won’t go up! Ok maybe 5%. But it coulda been more!
Are you sure you have a point
Posted on 4/18/24 at 2:59 pm to tigerfoot
Nearly every major non-dividend payer has bought back stock, which is essentially the same logic.
agreed, another admission that you have no better way to invest the money.
agreed, another admission that you have no better way to invest the money.
Posted on 4/18/24 at 5:11 pm to Saunson69
quote:Not sure what point you're actually trying to make. If the company is generating cash earnings and distributing them as dividends, then that is return ON capital not OF capital. I don't care what the market cap is. It's still true value generated and conveyed.
Not theoretically possible. Company gives 2% dividend, market cap lowers by 2%. If it does go up 5% after a dividend payment, then it theoretically would've gone up 7% without dividends. All the same. Dividends aren't free money. No such thing as free money.
Posted on 4/18/24 at 10:56 pm to secfballfan
In economics, there is the point of diminishing returns. Some companies have utility maxed and are able to keep it that way by issuing dividends.
Posted on 4/19/24 at 4:37 am to secfballfan
I like dividends.
Earnings can be manipulated. Dividends have to either be paid out or not.
Lowe/Weiss wrote a simple book called Dividends Don’t Lie.
I hope they were right.
Earnings can be manipulated. Dividends have to either be paid out or not.
Lowe/Weiss wrote a simple book called Dividends Don’t Lie.
I hope they were right.
Posted on 4/19/24 at 9:35 am to secfballfan
quote:
Nearly every major non-dividend payer has bought back stock, which is essentially the same logic. agreed, another admission that you have no better way to invest the money.
Ok so to sum up your thesis so far:
1. Dont invest in dividend payers.
2. Dont invest in nearly every non-dividend payer.
3. ???
4. Profit
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