Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you: No adverts like this in the forums anymore. Times and dates in your local timezone. Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance. Email notifications for threads you want to watch closely. Being a part of the oldest wargaming community on the net. If you are already a member then feel free to login now.

Phryxis wrote:

By not paying a dividend the company is hanging on to equity/assets of which you own a certain percentage through your stock.

I'm not saying that companies should pay dividends, or that it's the smartest thing for their bottom line. I'm just saying that without dividends, it's just a popularity contest. What value does a stock have, if owning it doesn't pay you anything? The only value it has is the perceived value other people attach to it.

Like a baseball card.

A little piece of cardboard doesn't have any real value, but people will pay a lot for a card if it's rare and the player on it is "good."

And don't get me wrong, I like money as much as (or more than) the next guy. If I knew a stock was going to go up 100% over the next year, I'd happily buy it, dividend or not.

Ultimately business is about companies making a profit. Dividends (nominally) reflect the sharing of this profit with the company's ownership. There's a direct tie to actual economic processes. When you remove that reality, and just make it about a speculative popularity contest, it stops being about what the company is doing, and more about what random people THINK the company is doing. You're no longer investing in actual business, now you're investing in popular opinion.

To me, that's a damaging phenomenon, and it leads to the sorts of speculative BS that brought on the dotcom bust, etc.

Actually, I don't think we ever recovered from that mentality. Stock trading is still something of a flighty, faddy, get-rich-quick scam, rather than actual thoughtful investment in real, profitable companies.

I don’t mean to offend but I think you are confused on what stocks really are. A dividend less stock DOES have REAL value. You have X% ownership of real assets. That has an attributable dollar value worth. People aren’t trading dividend-less stock because it is the cool thing to do. They are trading it because they want a piece of that company’s assets (and the expected to growth) similar to how they might otherwise want a piece of the company’s dividends (and the expected future payments). Both of these determine the stock price and both are speculative and depend on what the prevailing number of people in the market predict. What you refer to as a popularity contest I would refer to as prudent investors trying to buy securities with the highest return. As I have said already, that return could be in the form of cash payments or asset growth.

And an owner of a dividend-less stock shares in the company’s profits just as much as an owner of a dividend paying stock. Instead of getting X% of the profits in a cash payout you own X% of the assets purchased with the profit which will go on to make you more profit and get you more assets in the future.

I don’t mean to offend but I think you are confused on what stocks really are.

No, I fully understand what they are. For example, I understand that if you owned 51% of all issued stock for a given company, you'd actually have some say over how the company runs.

Stock is, nominally, ownership of the company. Nominally.

A dividend less stock DOES have REAL value.

I understand that it's SUPPOSED to. It's SUPPOSED to be worth roughly ($ value of company) / shares.

But that's not really what it's worth. What it's worth is what people will pay for it.

What you refer to as a popularity contest I would refer to as prudent investors trying to buy securities with the highest return.

And I could point out that the stock market was down (at one point) 1000 points today, in part because of a "glitch" in reporting.

I could also point out that during the crazy periods of volatility in 2008, the market was going up and down by 8% a day.

When the entire market goes up and down 8% in a day, you know what that tells me? It tells me that at some point, either at the start or at the end of the day, these "prudent investors" you refer to had incorrectly assessed the value of the ENTIRE MARKET by 8%.

Did these companies really change that much over the course of the day? No.

My point is that stock trading isn't ACTUALLY trading in ownership of companies. It's trading in popular opinion of what a company is worth.

Let's say you think a company is going to do well in the future, so you buy some stock. Let's further assume that the company does do well, grows, posts good earnings... But the popular media reporting happens to be down on that company's sector. Popular opinion is that there will be bad times in that sector. So the stock stays flat.

You bet the company would do well. You bought stock. It did well. You made no money.

So what are you REALLY making money off of?

What REALLY matters is if people will pay more for the stock now than when you bought it. That only relates to the performance of the company to the extent that potential buyers of the stock pay attention to the performance of the company.

Now, I'm not saying that a company's peformance has no impact on stock valuation. A lot of the time it does, and if you could reliably predict performance for companies, you'd do well in the market. What I'm saying, is that trading has become increasingly speculative, frivolous and baseless. This phenomenon peaked during the dotcom era, but it still goes on today. A dividend yielding stock, while still vulnerable to that sort of frivolity, is at least somewhat tied to a real business goal (earnings), making it marginally more grounded in fiscal reality.

scuddman wrote:That is true. I did say once that GW sold more miniatures than any other company, so why don't they make any money? Because they spend too much...

1. They still do multiples of the sales of the next biggest miniature company.
2. Not a whole hell of a lot of miniature companies make much money.
3. Haven't seen the accounts of everyone since some are privately held, but I think GW's gross profit also beat any miniature company by several factors.

If anyone has the gross profits for Privateer, Battlefront, and Reaper, I'd love to see a comparison of both the proits and yearly sales numbers in comparison to GW.

id save more investing in a plastic caster, and some devious ideas

Osbad wrote:Improved profit isn't bad of course, but they say nothing about improved turnover, which if it ever happens is when they are really starting to improve. I'm waiting for the final accounts to see whether they have improved their volume of sales at all, or whether they are simply being more efficient at squeezing more money out of less people, and are pissing less of it away in excess costs...

That. I await your analysis.