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Many stocks don't pay dividends and re-investment is extremely fuzzy and hard to value because it depends on insider knowledge.
by sushibuffet 5y ago
Many stocks don't pay dividends and re-investment is extremely fuzzy and hard to value because it depends on insider knowledge.
- e1g 5y agoIn the US specifically, issuing dividends is a suboptimal strategy for returning money to shareholders due to taxation. While dividends are common elsewhere, the two standard strategies in the USA are share buybacks and reinvesting into growth. Buybacks work because increase demand + reduced supply = your holdings go up. Reinvestments work because higher returns in the future = people will buy the contract from you for more than you paid for it. In either case, it's the equivalent of the company "giving" you $X that month, just not as a bank transfer but as capital gains that you can shuffle as per your tax strategy. >... and re-investment is extremely fuzzy and hard to value. Yes. And the more this is true, the more that "stock" becomes a "stonk".