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Author: tosainu Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5993  
Subject: Re: The Dividend Investor Date: 6/15/2001 12:12 AM
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"They have an obligation to provide the greatest benefit to the shareholder (that's you)"

I think that implying that a company management's point of view should be to oblige shareholders with the greatest benefit is flawed thinking at best. I do not see business as being so altruistic in nature. I believe that if a company, such as a date storage company, could find a way to store information in the stomachs of otherwise starving children rather than lifegiving food, it would do so for it's own gain. I laugh when I see ads from cigarette and alcohol manufacturers touting how they do so much to help the community at large, it's a joke. I wish some of those executives had to see the results that come from lying to the public(as they have been convicted of doing in the past) about the harm that their products can cause.

"Ever wonder why a stock will increase in price when a stock buy back plan is announced ? The reason is that the stock is now more attractive because the number of shares outstanding is going to decrease."

From what I have read so far, alot of legitimate and not so legitimate companies use stock options as a way to survive without having to pay employees in cash. By doing that, they are also exposing said employees to extremely high levels of unnecessary risk should that stock tank as many so called new economy stocks have recently. On the flip side, IF the stock rises as has historically been with Microsoft, then yes, the shareholder gains. Unfortunatley, few stocks are going to show you the type of dramatic gains that Microsoft has though, and if you can reliably predict those stocks, than I am sure you would not be reading this post, you would be sipping Mai Tai's on Turks and Caicos right now, at least I know I would.

"For example, I will NOT buy dividend generating stocks, because every year I will get a tax bill for those dividends. Long after I've forgotten the small amount of money I received, I'll see that tax bill."

I feel that the dividend should be automatically invested, that is money that you have earned, analagous to finding a quarter on the steet. Would you not pick up a quarter on the street because it was annoying to bend over and pick it up or because you had to pay taxes on that quarter? Regardless, it still is real money, that you have in your immediate possesion, that you otherwise may miss if you decide to take a quarter out of your OWN income, and invest it in a company which may go out of business. There are many reasons a stock can rise, even a stock with unreasonable valuations(e.g Yahoo at it's peak). A volatile stock can rise due to covered shorts, analyst upgrades, cooking the books etc. etc. I find it curious that you mentioned only Microsoft in your example, one of the few stocks that did well recently, but failed to mention what i am pretty sure are other not so wise, non didvideng paying investments in your portfolio(do not mean to disrespect you sir).

In reference to those that mentioned the Foolish Four portfolio, from what I read, it did beat the market at least once, and i don't think it was given a real shot in that it was not continually invested in, from what i understand, dividends were not reinvested, and it was chucked after only two years. A true bear market, such as the bear market of 1969, lasted all the way until 1978, yet over that period, the top 10 dividend paying stocks in the DJIA delivered a return of 11.30% during seemingly the worst of times. I don't know about you, but if I could have returns in a bear market of plus 11%, I would jump at the chance. I am not a proponent of the dividend investing model(yet), but i intend to fully research what it can do or can't do for me. I look forward to your reply, as well as the reply of many others. I want to learn more about this topic, please respond one and all.

Fool On!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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