DH: Lets start with your new subject. How come I agree with you?
You should add, they are Narcisists and love to hear themselves.
They need to make a living like all of us.
They know not what they are talking about, more or less like you and I.
And, how about, they are part of Wall Street's Big Conspiracy to lead us to eternal poverty.
As for the old subject, yes some parts of this market are overvalued but not as much as we think. I hear all the bears complaining about dividends at historical lows, and I think they are misleading us, and doing it on purpose or from utter ignorance. I have maintained for sometime right now that all buy backs of stock are actually tax free dividends to existing shareholders. I have a core position in MRK and arranged for automatic reinvestments in MRK stock of all dividends, in the meanwhile when I think that MRK is running ahead of its torrential earning growth, I increase my dividends with writting covered calls (it works like a charm). But in both cases, this additional income is taxed. Now, when MRK goes ahead an buy its own stock, I increase in essence my holding in MRK without paying any taxes. If you look at IBM, last year they bought back $9 Billion or so of their own stock, that comes to about $9/share untaxed dividends or about $13/share in taxed dividends, add to that their actual dividend of about $1 and you get $14/share dividends, well, on a stock of $160, it is not too shabby.
Zeev
PS. Do not tell this fact to the Congress or they'll find a way to tax these dividends as well, let's keep this a secret between us) |
