Comments by "JP 72" (@739jep) on "Dividends are not investment returns. They are not free money, and do not offer downside protection." video.

  1. What you’re saying essentially is that you’re happy about money going from your left pocket to your right pocket just so you can put it back in your left pocket
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  2. Those things may make them ‘good’ companies but they don’t make them good investments.
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  3.  @cemdursun  the algorithms are written by humans sure , but they are rule based and certainly not ‘emotional beings’.
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  4.  @cemdursun yeh ok I think I get what you’re saying but not quite sure how it means that dividends are relevant to stock returns?
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  5.  @scottiebumich  dividends are irrelevant to total returns , that doesn’t change during ‘times of undervaluation’
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  6. Yes , but that’s missing the point, and it doesn’t mean dividends are relevant. Just because returns did come from dividends historically does not mean the same returns wouldn’t have occurred had companies decided to instead distribute capital via means other than dividends.
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  7.  @jvarszegi they may not call it free money but their behaviour suggests that that’s what they’re treating it as. What many people do call it however is ‘income’ or ‘passive income’ and it’s a mistake to treat dividends that way for the same reasons as outlined by the ‘free dividend fallacy’.
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  8. Infinite money glitch? 😂 they’re not free money.
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  9. A significant portion of daily trade volume is actually executed by computer algorithms
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  10. If you’re the owner of the business - your income has already been earned by your business before a dividend is paid. When a dividend is paid you’re taking money out of your business and putting it into your private bank account. Hence the pocket analogy. A dividend is not extra income , you have a claim to the assets on the businesses balance sheet as a part owner - so it’s irrelevant to your total return whether a dividend is paid or not. What’s relevant is the amount of money the business makes.
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  11. Dividends being irrelevant doesn’t rely on an ‘ideal’ model or perfect market efficiency. However if dividends were relevant this would be evidence that the market is incredibly inefficient, to the point of just being plain broken. Luckily there isn’t any good evidence that the market is that broken and in fact , when dividends are investigated specifically the data confirms that they are not relevant - which lends support to market efficiency.
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  12. They’re just moving your returns from one location to another. Or put another way the size of your investment return pie is unchanged , but the size of the slices are.
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  13. ⁠ @jake9764 well you’ve just described them as ‘income investors’ and if you’re treating dividends as income then you’re making the same mistakes as described in the video. It’s just semantics really. How many people have you heard refer to dividends as ‘passive income’?
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  14. Businesses don’t have to and should not spend money on projects that don’t have a positive net present value to them. They’re allowed to keep the cash on their balance sheet. And as a part owner you have a claim to that asset.
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