Hi,
If you go back a few posts to 4184. you will find a discussion between Conrad and Karel.
Conrad wrote:These prices are so different that I doubt that we are dealing with the same stock data.
Conrad also wrote in post 4193:The link I gave you was for SPY, an ETF that follows the SP500 index. The prices may not compare to Bernie's, as Yahoo, the data source, gives the historical prices adjusted for dividends. Stocks with dividends then show lower prices before the dividend. Bernie's value of 84.71 is the closing price of 7-19.
Regarding Mr. L's treatment of dividends: he sort of ignores them. He makes a couple of references saying you can go out to dinner for one. Or another reference was to using them to cover the costs of trading.He doesn't make any recommendation for adjustments for dividends. Dividends in otheer words are spending money. You can do with them whatever you want to.
What I do with dividends is make an adjustment twice a year. I take the amount of of $$ in my MMF and compare it to the amount that Newport says I should have in my Cash Reserve. There is always more in the MMF than Cash Reserve because of interest in the MMF and the dividends. If there is enough to make a transaction I will add it to an AIM program of my choice and add shares to it.
You are correct that dividends have no effect on cost basis as far as income tax goes.
I was speaking figuratively. If you buy a share of stock for $1.00 and receive a 50 cent dividend twice you have in a sense gotten your money back and still own the stock. If you get a third 50 cent dividend and the company goes borke and no longer exists you will be holding a worthless stock certificate, but you will have your original dollar plus 50 extra cents that you didn't have when you started with. The $1.50 in dividends is taxed as income, the $1.00 loss on the stock is a Capital Loss.
Bernie
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