Are Dividends Perceived as Moral; Capital Value Changes as Immoral?

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bertilak
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Re: Are Dividends Perceived as Moral; Capital Value Changes as Immoral?

Post by bertilak » Thu Dec 07, 2017 7:31 am

Phineas J. Whoopee wrote:
Tue Dec 05, 2017 10:27 pm
We've been all around and all over the topic, but still I struggle with why so many investors so vehemently demand dividends as critical, and dismiss capital losses and gains as unimportant.
Can you provide any examples where that point of view is put forward?
Listen very carefully. I shall say this only once. (There! I've said it.)

Da5id
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Re: Are Dividends Perceived as Moral; Capital Value Changes as Immoral?

Post by Da5id » Thu Dec 07, 2017 8:03 am

bertilak wrote:
Thu Dec 07, 2017 7:31 am
Phineas J. Whoopee wrote:
Tue Dec 05, 2017 10:27 pm
We've been all around and all over the topic, but still I struggle with why so many investors so vehemently demand dividends as critical, and dismiss capital losses and gains as unimportant.
Can you provide any examples where that point of view is put forward?
If it weren't for the slaying of straw men, there wouldn't be so many casualties here :)

wrongfunds
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Re: Are Dividends Perceived as Moral; Capital Value Changes as Immoral?

Post by wrongfunds » Thu Dec 07, 2017 8:46 am

Am I the only one who thinks by staying out of the market, Warren Buffet has lost at least $10 billion dollars! Do you know anybody else who has managed to achieve such an impressive feat? :-) Or these type of advice is only applicable to plebeians and not to the big shots?

rkhusky
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Re: Are Dividends Perceived as Moral; Capital Value Changes as Immoral?

Post by rkhusky » Thu Dec 07, 2017 9:49 am

This paper might point to why some people like dividend paying stocks:

https://www.cfapubs.org/doi/pdf/10.2469/faj.v72.n6.1 (What Difference Do Dividends Make?)

The paper purports to show that dividend paying stocks have higher return with less volatility than non-dividend paying stocks. But there are differences between different stocks segments.

not4me
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Re: Are Dividends Perceived as Moral; Capital Value Changes as Immoral?

Post by not4me » Thu Dec 07, 2017 9:53 am

Phineas J. Whoopee wrote:
Wed Dec 06, 2017 4:27 pm

I do include realized and unrealized price changes, because not doing so is a distorted view of one's financial position, and can give rise to poor decision making. I don't know what an unrealized dividend would be. Can you be more specific?

PJW
Thanks for the chance to clarify & "unrealized dividend" may not be the best terminology. I meant to use "unrealized" the same for dividend as for capital value. That likely is clearer in the instance of an individual stock than a mutual fund (& I further have assumed you intended to include both in your discussion). I have seen some on this forum use the term "dividend" in cases where there is not cash spent, buyback, stock issued, etc. What I would call part of "retained earnings" or "cash" depending upon circumstances. (And no, I can't give specifics as I don't have that level of recall!)

As cited above you referenced a "view of one's financial position"...maybe another way for me to frame the question was whether that view was looking forward, year to date, or point in time....

But otherwise I'll not wade further in...

dbr
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Re: Are Dividends Perceived as Moral; Capital Value Changes as Immoral?

Post by dbr » Thu Dec 07, 2017 9:56 am

rkhusky wrote:
Thu Dec 07, 2017 9:49 am
This paper might point to why some people like dividend paying stocks:

https://www.cfapubs.org/doi/pdf/10.2469/faj.v72.n6.1 (What Difference Do Dividends Make?)

The paper purports to show that dividend paying stocks have higher return with less volatility than non-dividend paying stocks. But there are differences between different stocks segments.
If a person can find an asset allocation scheme across subclasses of the stockmarket that consistently can be expected to generate an advantageous combination of higher return for relatively less risk, then that person should invest in that asset allocation. That recommendation behind picking stock investments on a dividend criterion would always be valid if it is true and if the advantage is superior to alternatives using some other method of asset allocation.

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