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Another good question: Why are S&P500 stock dividends so low? The average S&P500 stock dividend yield is like 2%. In theory, you buy stocks to receive earnings. But if companies only give out a fraction of those earnings, you as an investor are not really getting much. So how can companies get away with a 2% dividend yield?
Another good question: Why are S&P500 stock dividends so low? The average S&P500 stock dividend yield is like 2%. In theory, you buy stocks to receive earnings. But if companies only give out a fraction of those earnings, you as an investor are not really getting much. So how can companies get away with a 2% dividend yield?
Dividends are a tax inefficient way to compensate share holders because dividends are taxable. I hope dividends disappear. Share buybacks increase net asset value without any tax impact. There might be a downside, but I haven't heard it yet.
As mentioned in Todays Alex
http://www.telegraph.co.uk/finance/alex/?cartoon=11503607&cc...
Because the economy stopped growing, which means there is little demand for money. If there is a large demand for capital then interest rates will rise. It's ordinary supply and demand only applied to money rather than some good or service.
> there is little demand for money. Wrong side of the equation. There is an oversupply of money, leading to low interest rates.
Money at around -2% real return is still pricing private stores of value, read new investment, out of the market. Money needs a real return that is lower than that so that fiat is not over valued compared to market stores of value, and people, banks and businesses don't hold their savings in excess idle reserves instead of in things that have intrinsic value and that are backed by economic activity.
Why the obsession of economic growth? In Sweden we currently have negative prime interest rate and people have higher salaries than ever and housing prices are all time high. This greed doesn't lead to less global warming or happier people. I think politicians and economists should start thinking about what actually makes people happy. Economics is efficient management of resources nothing else. Giving the population…
Easy. Essentially unknowable/unpredictable future growth expectations/extrapolations were already baked into present-day voter promises, welfare obligations and many bank/insurance/pension calculations, plus current "financial asset" valuations. Now the big scramble is on to will said growth assumptions into actually happening, lest "all bets will be off", literally.
Another good question: Why are S&P500 stock dividends so low? The average S&P500 stock dividend yield is like 2%. In theory, you buy stocks to receive earnings. But if companies only give out a fraction of those earnings, you as an investor are not really getting much. So how can companies get away with a 2% dividend yield?
Warren Buffet avoids companies that pay out dividends. His opinion is that it is better for a company to take excess cash and invest it into itself. If a company pays out a dividend, it means that it would be better for everyone involved if the money was invested in something completely different from that company. This is a sign that either the company is mismanaged, has little room for growth, or is more focused on…
This is important because as a large/sole shareholder you have a huge say in how the company is run. In such a case, money that would otherwise be paid out in dividends can be reinvested in the company in a way which you can influence or control. If merely you buy $1000 of ACME Corp. stock you won't have that kind of influence, so knowing that the company is withholding dividends and reinvesting it is not nearly as sweet of a deal. And if you view the company's reinvestment plan as a net negative for the company and its stock, it would be better to simply have the dividend.
Basically, some investors are mostly interested in using equities as a source of cash flow, and some are mostly interested in using them as a way to grow a pile of money into a bigger pile.
Earlier quoted context omitted.
I'm not sure I follow. The Federal Reserve has manipulated the interest rates and money supply since 1913. The money market demand can't help determine the supply of money since the cost of money is the interest rate. Consumers aren't allowed to see if its worth while to save their money and earn interest rather than spend their money. Businesses can't see if its worth it to focus on current production or invest in i…
But the article states exactly the opposite. Rates are determined by the state of the economy, and hence there is no such thing as artificial rates.
Why the obsession of economic growth? In Sweden we currently have negative prime interest rate and people have higher salaries than ever and housing prices are all time high. This greed doesn't lead to less global warming or happier people. I think politicians and economists should start thinking about what actually makes people happy. Economics is efficient management of resources nothing else. Giving the population…
As you state, we need to think about what makes people happy. Economics is a great tool to do that, but it will require a rethinking of how the economy is measured.
Another good question: Why are S&P500 stock dividends so low? The average S&P500 stock dividend yield is like 2%. In theory, you buy stocks to receive earnings. But if companies only give out a fraction of those earnings, you as an investor are not really getting much. So how can companies get away with a 2% dividend yield?
Warren Buffet avoids companies that pay out dividends. His opinion is that it is better for a company to take excess cash and invest it into itself. If a company pays out a dividend, it means that it would be better for everyone involved if the money was invested in something completely different from that company. This is a sign that either the company is mismanaged, has little room for growth, or is more focused on…
> Most companies pay consistent dividends, generally trying to increase them annually and cutting them very reluctantly. Our “Big Four” portfolio companies follow this sensible and understandable approach and, in certain cases, also repurchase shares quite aggressively. We applaud their actions and hope they continue on their present paths. We like increased dividends, and we love repurchases at appropriate prices.
Berkshire itself doesn't pay dividends, but the reasons are largely technical. First, an investor can just sell shares to get a return on their investment. Second, there are tax benefits to doing it this way.
In general, value investors like Buffet don't like the mentality that companies should always invest in themselves. Instead, they like well-managed companies that specialize in what they do well. Growing beyond this is what they consider a bad sign.
Earlier quoted context omitted.
I guess it depends on which side you are thinking from in arguments like these. The interest rate a bank will give you depends on how much demand there is for the money that you are about to give that bank. If the bank has no way to make a profit on the money they give you because there is little demand then they will offer you a low interest percentage (or even none or a negative one). So yes, there is an oversupply…
The monetary system hasn't been about 'me and my savings', for at least 3 decades. Reasoning about banks, capital, supply/demand, return on investment, in terms of whether consumers spend their savings or leave it sitting on a bank account, will not make you any wiser about the state of the economy or our monetary system. Current rates are low because central banks everywhere are basically flooding the world with fre…
I keep some musings about this here if you are curious: http://bessiambre.tumblr.com/
Why the obsession of economic growth? In Sweden we currently have negative prime interest rate and people have higher salaries than ever and housing prices are all time high. This greed doesn't lead to less global warming or happier people. I think politicians and economists should start thinking about what actually makes people happy. Economics is efficient management of resources nothing else. Giving the population…
Why the obsession of economic growth? One alternate question might be, "At what point in time do you consider the economy to have become 'big enough' that you don't care about growth?" Today? 2000? 1990? 1970? The people who might think today is "big enough" might also have thought that say 1990 was big enough, and yet very few people would want to be limited to 1990's tech / culture. It seems reasonable to imagine t…