Easy $: Buy before dividend payout, sell after payout. Rinse/repeat

[JEDI]

dividend payout doesnt affect share prices.

lets say you get $1000 dividend payout.
buy the day b4, sell the day after = 3 days.

~200 stock trading days/yr
200/3 = 67

so you only need to do this with 67companies. out of the thousands of companies listed on the stock exchange, i'm sure you can find 67 on the days you need.

67 * 1000 = $67k

What's wrong w/this picture?!

 

[Scouzer]

most stocks immediately plummet a roughly equivalent amount as the dividend after the ex date

example

http://www.google.com/finance?q=ftr

see how it drops after the dividend date? yeah.

 

[kranky]

Scouzer explained it. Stock DOES go down by the amount of the dividend.

 

[Crusty]

You'll lose the money you made with the dividend when you sell the stock.

 

[Venix]

If it were as simple as "buy stock before ex-div, sell after" don't you think that every other participant in the stock market would have figured that out by now?

 

[boomerang]

Research ex-dividend date.

 

[rcpratt]

Yeah, you weren't the only one to think of this. As others have said, that has caused the market to pretty much self-compensate.

 

[her209]

Research ex-dividend date.

The OP is gonna cry when he realizes he bought after the ex-dividend date and loses out on the dividend payment, especially after the price drops after the payout.

 

[child of wonder]

You are the first person to ever think of this and you share it with ATOT?

 

[UncleWai]

Better yet, buy high, sell low.

 

[JS80]

dividend payout doesnt affect share prices.

lets say you get $1000 dividend payout.
buy the day b4, sell the day after = 3 days.

~200 stock trading days/yr
200/3 = 67

so you only need to do this with 67companies. out of the thousands of companies listed on the stock exchange, i'm sure you can find 67 on the days you need.

67 * 1000 = $67k

What's wrong w/this picture?!

This post is commensurate to your signature.

 

[Schfifty Five]

trollin' trollin' trollin'......

 

[AgaBoogaBoo]

The OP is gonna cry when he realizes he bought after the ex-dividend date and loses out on the dividend payment, especially after the price drops after the payout.

If you can confidently say that the price will drop during that period of time, I recommend taking short positions and making money on it.

The drop, at least for well traded stocks, should be nearly instantaneous.

 

[Regs]

Battleship sunk.

 

[AgaBoogaBoo]

Better yet, buy high, sell low.

While we joke about this, it is a large part of Wall Street. Most people will buy when business looks to be performing the best, which is the worst time to buy.

1) Investment performance is directly related to the price you paid for a stock, indirectly related to business performance
2) It's exciting to buy a company with lots of great prospects, leading to overvaluation

The investor's biggest risk is paying too much. The company we invest in could cure cancer or a major STD, and if we paid too much for it, we'll lose money. Business performance does not always translate into investment performance.

There are investors making more money on bankruptcies than they do on companies doing very well. It's not a bad thing either, it's very good in fact, but most people don't realize that business performance won't always translate into investment performance.

 

[Michael]

I hope you realize that you are responsible for paying the dividend when you short the stock. The prices of puts (or calls) also take into account the payment. There are minute differences between expected and actual behaviour of stocks related to ex-diviend dates, but you;re competing against machine traders then.

Michael

 

[AgaBoogaBoo]

I hope you realize that you are responsible for paying the dividend when you short the stock. The prices of puts (or calls) also take into account the payment. There are minute differences between expected and actual behaviour of stocks related to ex-diviend dates, but you;re competing against machine traders then.

Michael

If that was a reply to me - the person before talked about the drop following the ex-dividend date.

 

[Capt Caveman]

yajt

 

[FelixDeCat]

The market is going to crash by 15-20% next year when the national debt passes $15,000,000,000,000.00. China will finally say "no mas" and we will be forced in austerity after Moodys carries out its ALREADY threatened downgrade of America's AAA credit rating.

Its going to be hell on Earth when we finally default (like Russia, Mexico and Argentina did). All existing currency will be cancelled or can be exchanged for "new dollars" at a rate of .05 per 1.00. Thats what happened in those countries. :'(

 

[JEDI]

I hope you realize that you are responsible for paying the dividend when you short the stock. The prices of puts (or calls) also take into account the payment. There are minute differences between expected and actual behaviour of stocks related to ex-diviend dates, but you;re competing against machine traders then.

Michael

what do you mean machine traders?
auto programs that short 1 day b4 dividends are paid, and cover the day after?

ie: not responsible for paying dividends but getting the advantage of the price drop?

 

[Pliablemoose]

LOL @ this thread...

 

[Michael]

There are computers that constantly scan between the different exchanges looking for tiny differences in prices and quickly trade. Some of them are looking for differences between stocks that go ex-dividend. Typically they drop the amount of the dividend paid. If there is a way to arbitrage the expected behaviour compared to the actual behaviour, the computers identify it (far faster than any human could) and execute trades.

AgaBoogaBoo - shorting before the ex-dividend date doesn't work the way you seem to be suggesting. If you;re short the stock, you need to pay out the dividend. That cancels the potential gain made from the stock drop once the ex-dividend date is passed.

Michael

 

[DaveSimmons]

Invest in Iraqi Dinars instead, it's a can't-lose moneymaker!

Once you buy Dinar you'll never go hungary! http://www.edinarfinancial.net/

 

[poncherelli2]

The market is going to crash by 15-20% next year when the national debt passes $15,000,000,000,000.00. China will finally say "no mas" and we will be forced in austerity after Moodys carries out its ALREADY threatened downgrade of America's AAA credit rating.

Its going to be hell on Earth when we finally default (like Russia, Mexico and Argentina did). All existing currency will be cancelled or can be exchanged for "new dollars" at a rate of .05 per 1.00. Thats what happened in those countries. :'(

That is not what happened in those countries

 

[thepd7]

OP is brilliant