Up 30....Down 30

[ripper1]

What the heck is going on here. I think this is hilarious....

 

[2B]

Down 30? It's now almost down 40.

 

[eta2020]

I have difficulty seeing it on 20 year chart.....so who cares about Mickey Mouse changes

 

[FUEGO]

It goes up and down! Wheeee!

 

[W2R]

It goes up and down! Wheeee!

You need an image to go with that!

 

[marko]

I have difficulty seeing it on 20 year chart.

+1 Best answer!!

 

[Palmtree]

I just lost a nice mid sized car today. Maybe tomorrow it will show back up! Such is the ride with Mr. Market.

 

[heeyy_joe]

I'll reinvest those dividends at lower prices..thank you!

 

[MichaelB]

Louis Winthorpe III said it best

One minute you're up half a million in soybeans and the next, boom, your kids don't go to college and they've repossessed your Bentley.

 

[steelyman]

I wasn't planning on selling yesterday nor today/tomorrow. I'll buy some later this month but had decided to do that nearly two years ago.

 

[UnrealizedPotential]

We are obviously in the grips of a Market correction.Momentum is in the downward direction.It took a long time in coming.In the long term it really does not matter.This too shall pass.If it keeps going down I can purchase shares cheaper.I have seen this movie before.

 

[youbet]

What the heck is going on here. I think this is hilarious....

Did you mean "up 300.... down 300?"

 

[Moemg]

I just lost a nice mid sized car today. Maybe tomorrow it will show back up! Such is the ride with Mr. Market.

Don't feel bad in the 2008-2009 meltdown I lost a beachfront condo !

 

[RAE]

We are obviously in the grips of a Market correction.Momentum is in the downward direction.It took a long time in coming.In the long term it really does not matter.This too shall pass.If it keeps going down I can purchase shares cheaper.I have seen this movie before.

+1. The Fed has propped up this market for years now with QE, but that could not go on forever. Growth has slowed around the world, earnings are not very good, and the market will continue to correct until things come back into balance and reflect reality. Not a big deal if you are a long-term investor, and can stomach the ups and downs, but get ready for some big up and down moves in the short term (probably more down days than up).

 

[EastWest Gal]

Given the thread about stock market manipulation, does the stock market ever reflect reality? I too lost a car today.


Sent from my iPhone using Early Retirement Forum

 

[RAE]

Given the thread about stock market manipulation, does the stock market ever reflect reality? I too lost a car today.

I think it does reflect reality at times, but there can be long stretches where it doesn't. The last 6 years or so are a prime example of the market being manipulated (in a major way by the Fed), causing a disconnect with reality, IMHO. I think reality is going to win out (for a while anyway) from this point forward, but maybe not.......we'll see.

 

[tmm99]

Is anybody predicting 14,000 range?

 

[Fermion]

Well, earlier this month I *was* up three cars in my trading account but now I am only up one car and a rickshaw with a loose wheel.

 

[steelyman]

The Jones next door are riding it with everyone else.

 

[bob boag]

Don't feel bad in the 2008-2009 meltdown I lost a beachfront condo !

I lost my keys once but that's ridiculous

 

[powerplay]

Does this mean the sky is falling and we should have sold a week ago or so!

Perhaps it is better viewed as sale time and time to load up on discounted funds.

 

[mathjak107]

I'll reinvest those dividends at lower prices..thank you!

great , but total return is still identical. more shares at lower prices is not a bargain when they reduce the share price at the same time by the same amount...

each payment you get and reinvest is just the company breaking a piece of your share price off , reducing the price of your share by that amount and then you put it back in.

all in all total return stays the same.

it is really no different than reinvesting the dividend payment of a mutual fund which is just a collection of stocks . nothing gained ,nothing lost from the payment itself..

the mechanics of a dividend are one of the least understood areas in investing because folks equate it to interest .

interest once it is paid is on top of your previous balance. a dividend is paid and the share price is reduced by the amount paid leaving you no better or worse than before it was paid.

after a dividend is payed the next quarter is spent trying to retrace what was paid out or more and then the process starts over again.

a total return of 6% made up of 2% dividends reinvested and 4% appreciation is identical to a non dividend payer that had 6% from appreciation only and no reinvested dividends.

dividends just make it easier because each quarter you get a check in the mail box as opposed to generating the same payment on our own from our portfolio but given the same return on the same dollars the process is identical.

if the dividends are qualified they may have a tax advantage if you are selling off pieces of your portfolio but other than that nothing gained or lost from reinvested dividends.

one other point about dividends that the folks at s&p are discovering..

compounding on investor money is the key to growing money.

a penny doubled and compounded every day for only 31 days is over 10 million bucks . such is the power of compounding.

what is interesting is dividends have increased to the highest levels since 1998 with a record increase of 17.8 billion dollars in increased dividends payed out just 1st quarter. the 2nd quarter was even bigger.

all dow stocks pay dividends and 84% of the s&p 500 does too.

but according to a study done by howard silverblatt at s&p those dividends have been coming at a price as they go up and up..

a good part of that capital from free cash flow is gone forever and no longer available for compounding.

mid-caps and small caps who pay little in dividends have been far and away providing far better compounding and use of investor money for much greater returns..

in fact one of the least efficient ways to grow investor money now is paying it out as a dividend.

as chuck akre said ,free cash flow in a company can be used to compound by buying back its own stock, investing in its own company or buying other companies . cash flow paid out as dividends loses its compounding ability and much of it is gone forever and can no longer compound.

many of the great companies in the s&p 500 have lagged behind their non dividend payers in the midcap and small cap markets who now seem to be much more efficient at generating compounding on investor money.

midcaps and small caps have compounded the last 5 years at rate of 5-6% higher then their dividend paying cousins.

time will tell if the big ole dividend payers are still providing much compounding of investor money as they did in their more nimble days but in either case it all boils down to total return and the same total return will always yield the same return no matter how it is arrived at ,whether reinvesting dividends or straight appreciation...

 

[eta2020]

dividends just make it easier because each quarter you get a check in the mail box as opposed to generating the same payment on our own from our portfolio but given the same return on the same dollars the process is identical.

They also make it easier to identify great companies. I like dividends charts that look like stairways going up and up IE: CL, KO, PEP, PG.

Great companies GROW dividends and that means after X years of holding great company you are getting 5% or 10% dividend on your initial investment.

 

[mathjak107]

there are great companies on boths sides of the fence .

the only thing a a rising dividend really says is look at me , i am so healthy i have money we don't even need.

of course the flip side is as a group the dividend payers have not grown investors capital the way the none payers have as rising dividends to new levels have been taking more and more capital out of the company..

basically any company that hands back money to us today and says here maybe you can invest it better than i can really leaves me in a lurch. if you can't compound this money and you are the "great company" what chance do i have and if i have to invest it elsewhere why do i need you?,

at one time these great companies were just that , but the last decade they have been the old wrinkled prom queens of years ago.

don't get me wrong , i still want these companies in my mix for stability and volatility reasons but the dividends are not really a factor. i look at my total return on my portfolio no matter how it is achieved. some times i own more dividend heavy funds and sometimes less but it is only to adjust better to the big picture. .

 

[eta2020]

Companies that don't/can't grow dividends have a tendency to squander money.

This may not be the case for Small Caps though.

Bottom line is Dividend Growth is sign of strength/health and on a long run is profitable for patient investors.

And we are talking about income that is tax free on federal level at up to 90k.