03-29-2017, 06:05 AM
(03-29-2017, 02:28 AM)Vincenzo Wrote: I'm interested in hearing reactions to this Forbes article, "How Dividends Can Cost You Money".The article while mathematically correct doesn't account for the very large emotional side of investing. For example their passage
https://www.forbes.com/sites/alexverkhiv...-you-money
"In other words, if an investor buys two stocks at $5, they view the stocks differently if one goes to a price of $7 with no dividend and one goes to a price of $6 with a dollar dividend. Income seeking investors prefer the latter, even though they receive the same amount of total value. Hartzmark and Solomon call this mistake the free dividend fallacy –
all true except one must know when to sell at $7 in order to be equal to the other scenario. Miss $7 and the math doesn't work.
The dividend style doesn't require market timing as the other method does. Additionally, dividend portfolio size grows over time while buy/sell shrinks over time.
The math is correct however real life ain't math.