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Sometimes they don't. Sometimes they go up. Lots of people think they're priced in, and the point at which they go ex-dividend is a convenient point to decide t
by EliRivers 10y ago
Sometimes they don't. Sometimes they go up. Lots of people think they're priced in, and the point at which they go ex-dividend is a convenient point to decide that it's now worth a bit less. Was it "priced in" before? No idea. Going ex-dividend is a single, identifiable point at which people can say it surely must be worth less now.
I personally value dividend paying stocks more highly than non-dividend paying stocks. A history of dividends makes the stock appear more valuable to me (given that the majority of companies are rubbish at investing in themselves, giving me the money and letting me reinvest it myself is preferable). If they just went ex-dividend, that's a excellent very fresh data point that makes the stock look more valuable to me.
- forgetsusername 10y ago>the point at which they go ex-dividend is a convenient point to decide that it's now worth a bit less. The company has less cash ex-dividend, so as a matter of fact is worth a bit less.
- aminorex 10y agoValuation isn't, however, a matter of fact, but of values. We distinguish descriptive facts from prescriptive valuations. It is an important distinction, lost on many Rijksbank "Nobel" prize-winning economists.
- tonyedgecombe 10y agoValuation isn't, however, a matter of fact No, but that variation caused by going ex-dividend clearly is.
- EliRivers 10y agoAnd while I do care what it is worth, that is only one factor in what its price will be, and of those two, the latter is the one that counts.
- deleted 10y ago[deleted]