U.S. stocks continue to soar!

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Snowbird
Posts: 6
Joined: Sun May 26, 2019 8:18 am

Re: U.S. stocks continue to soar!

Post by Snowbird » Fri Sep 13, 2019 6:21 pm

Never mind. I've been educated.

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305pelusa
Posts: 587
Joined: Fri Nov 16, 2018 10:20 pm

Re: U.S. stocks continue to soar!

Post by 305pelusa » Fri Sep 13, 2019 6:30 pm

Snowbird wrote:
Fri Sep 13, 2019 6:07 pm
305pelusa wrote:
Fri Sep 13, 2019 5:39 pm
stocknoob4111 wrote:
Fri Sep 13, 2019 5:32 pm
Any idea why VTSAX (Vanguard Total Market) fell 0.5% today while the S&P 500 fell only 0.07% and checking most of the mid caps funds were down 0.3% or so, small caps were slightly up. I was thinking an aggregate of all those asset classes would result in almost a flat outcome. Bonds were the only thing that fell sharply today, but VTSAX for some reason did as well.
I think because it went ex-dividend today.
Please excuse my ignorance but wouldn't that tend to make it be higher than the S&P instead of lower?
The day a fund/stock goes ex-dividend, it pays its holders the dividend amount and the price of the fund/stock immediately decreases by that dividend amount. Otherwise, one could just buy the day before, receive the dividend, and then sell right back at the purchase price, having made a profit out of nowhere. The market is efficient and arbitrages this such that whoever holds the stock/fund and does receive a dividend also ends up with a stock/fund worth one dividend less in price.

I believe the S&P 500 goes ex-dividend on 9/20 but VTSAX went ex-dividend today. So VTSAX seemingly dropped today but the S&P didn't. I would expect next Friday we'd see the opposite; a security like SPY will drop around 0.5% more than VTSAX. VFIAX goes ex-dividend on 9/24 so keep your eyes out; on that Monday, VFIAX will drop around 0.5% more than VTSAX.

Does that make sense?

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Bluce
Posts: 129
Joined: Tue May 10, 2011 11:01 pm
Location: Finger Lakes, NYS

Re: U.S. stocks continue to soar!

Post by Bluce » Fri Sep 13, 2019 7:32 pm

UberGrub wrote:
Fri Sep 13, 2019 3:07 pm
Bluce wrote:
Fri Sep 13, 2019 2:23 pm
AnalogKid22 wrote:
Fri Sep 13, 2019 10:54 am
What about the Friday the 13th scenario?! :)
Yeah that really scared me, not to mention the double-whammy of the harvest moon tonight, so I sold everything this morning and bought gold bullion, batteries, milk, bread, and ammunition. :shock:
Based on the conversation earlier:
But was the bread international or only domestic? :mrgreen:
DOMESTIC!!! :sharebeer

stocknoob4111
Posts: 733
Joined: Sun Jan 07, 2018 12:52 pm

Re: U.S. stocks continue to soar!

Post by stocknoob4111 » Fri Sep 13, 2019 8:55 pm

305pelusa wrote:
Fri Sep 13, 2019 5:39 pm
I think because it went ex-dividend today.
aah! did not realize that. Thanks!

Snowbird
Posts: 6
Joined: Sun May 26, 2019 8:18 am

Re: U.S. stocks continue to soar!

Post by Snowbird » Sat Sep 14, 2019 9:03 am

305pelusa wrote:
Fri Sep 13, 2019 6:30 pm
Snowbird wrote:
Fri Sep 13, 2019 6:07 pm
305pelusa wrote:
Fri Sep 13, 2019 5:39 pm
stocknoob4111 wrote:
Fri Sep 13, 2019 5:32 pm
Any idea why VTSAX (Vanguard Total Market) fell 0.5% today while the S&P 500 fell only 0.07% and checking most of the mid caps funds were down 0.3% or so, small caps were slightly up. I was thinking an aggregate of all those asset classes would result in almost a flat outcome. Bonds were the only thing that fell sharply today, but VTSAX for some reason did as well.
I think because it went ex-dividend today.
Please excuse my ignorance but wouldn't that tend to make it be higher than the S&P instead of lower?
The day a fund/stock goes ex-dividend, it pays its holders the dividend amount and the price of the fund/stock immediately decreases by that dividend amount. Otherwise, one could just buy the day before, receive the dividend, and then sell right back at the purchase price, having made a profit out of nowhere. The market is efficient and arbitrages this such that whoever holds the stock/fund and does receive a dividend also ends up with a stock/fund worth one dividend less in price.

I believe the S&P 500 goes ex-dividend on 9/20 but VTSAX went ex-dividend today. So VTSAX seemingly dropped today but the S&P didn't. I would expect next Friday we'd see the opposite; a security like SPY will drop around 0.5% more than VTSAX. VFIAX goes ex-dividend on 9/24 so keep your eyes out; on that Monday, VFIAX will drop around 0.5% more than VTSAX.

Does that make sense?
Yes. Thank you.

MJS
Posts: 378
Joined: Sat Aug 05, 2017 10:55 pm

Re: U.S. stocks continue to soar!

Post by MJS » Sat Sep 14, 2019 12:17 pm

305pelusa wrote:
Fri Sep 13, 2019 6:30 pm
...
I believe the S&P 500 goes ex-dividend on 9/20 but VTSAX went ex-dividend today. So VTSAX seemingly dropped today but the S&P didn't. I would expect next Friday we'd see the opposite; a security like SPY will drop around 0.5% more than VTSAX. VFIAX goes ex-dividend on 9/24 so keep your eyes out; on that Monday, VFIAX will drop around 0.5% more than VTSAX.

Does that make sense?
This why I love the Soar/Free fall threads. Things you didn't know you didn't know are first discussed and then explained. Thanks Stocknoob and Pelusa!

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Stinky
Posts: 1727
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: U.S. stocks continue to soar!

Post by Stinky » Sat Sep 14, 2019 12:30 pm

MJS wrote:
Sat Sep 14, 2019 12:17 pm
305pelusa wrote:
Fri Sep 13, 2019 6:30 pm
...
I believe the S&P 500 goes ex-dividend on 9/20 but VTSAX went ex-dividend today. So VTSAX seemingly dropped today but the S&P didn't. I would expect next Friday we'd see the opposite; a security like SPY will drop around 0.5% more than VTSAX. VFIAX goes ex-dividend on 9/24 so keep your eyes out; on that Monday, VFIAX will drop around 0.5% more than VTSAX.

Does that make sense?
This why I love the Soar/Free fall threads. Things you didn't know you didn't know are first discussed and then explained. Thanks Stocknoob and Pelusa!
And that’s why I like the Bogleheads site in general. About twice a week I learn something useful, that I wasn’t even looking for, by just browsing the active threads.
It's a GREAT day to be alive - Travis Tritt

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