Replies to post #4185 on A.I.M. Users Bulletin Board (AIMUSERS)

[Foxlette]

9:05AM: S&P futures vs fair value: +5.5. Nasdaq futures vs fair value: +3.0. The futures are rebounding a bit here over the last half hour as earning reports continue to pile in. Lot of earning reports thus far with most meeting or exceeding consensus estimates. The companies that missed: BMY, COC, LGTO, LU, MGM, P, SPC, WAT, XTO... Nothing on the Economic Calendar today.

[Conrad]

Thanks Karel,

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.

Is it not an unreasonable method to fiddle with stock prices afterwards? How does Yahoo(retroactively) know at which point to start dropping the price before the divdend payout date?

I mean, before the dividend is declared the stock is pregnant, and the market buzz inflates the stock price. Many people might expect a healhy 4,537 kg baby and buy the stock because of that(Only the 'mother'and the 'doctor' know ahead of time if the baby is already dead). When the price dives after the afterbirth and the baby are sluiced away the recent buyers take heir profit, the dividend being peanuts or less, means then nothing, and the price rise and diving will then have been for nought. How does Yahoo adjust for that, afterwards?


Conrad

[Bernie Goldberg]

Hi,
You wrote:Stocks with dividends then show lower prices before the dividend.
This has nothing to do with Yahoo. When a company goes Ex-Dividend, which is the day the dividend is declared not paid, the price per share is reduced by the value of the dividend. This takes place anywheres from 4 to 6 or 8 weeks before the dividend is paid.
This is not a completely simple calculation and indeed has very little relevance.
Let's say under normal conditions the stock price would have gone up 83 cents on the same day a 17 cent dividend is declared.
The 83 cent increase is reduced to a 66 cent increase. This happens automatically in the marketplace. The price at the end of the day is quite simply the price of the stock. The prices as they appear in MSN are the prices that occurred at the end of the day.
Bernie