dabum>Because someone else is on the other side of that trade and someone else is paying attention. Someone else is a professional and they are gonna take your money
How does a trained professional answer the questions I posed?
At what point do they (or their research departments or managers) say, "At this price, XOM has reached a price that represents discounted, REAL value"?
I appreciate emotions, but that is not THE issue for bond prices/rates, IMO. Why? Simply because the bond pays a redemption value. With a stock, the dividend rate (and the expectation that such will continue to pay a divy) represents, TO ME, A (not THE) way to value the company.
FDG, XOM, APPL and the Canadian Royalty Trusts, change in market price because of increased or increasing earnings. Fundamental sales of products and prices certainly are THE primary factor for investor willingness to pay even higher prices. I accept that trading can be emotional, and/or may be affected by emotions, but fundamental earnings drive investor willingness to buy/sell.
I am not looking for a system as such. I am trying to understand intellectual issues associated with market prices, and root economic values, i.e., narrow price bands which define the lowest possible market value.
I remain more focused on dividends and POR (payout ratio -- % of CF that is payed to holders). Why? Actually, primarily for the same reason that you moved away from FA...corporate corruption, creative accounting, lies, etc. Companies that pay dividends monthly can't re-work or re-adjust funds they already have payed to your account by check.
Example: APF Energy Trust vs RAD
If you hold a stock of each in your hand, what do you really own? APF will pay cash to the holder of about 15% annually (on a monthly basis). IF oil/gas prices remain at current levels, barring some idiosyncratic event, APF will continue to pay the owner, month after month.
Now, what will the holder of RAD receive, month after month? Perhaps, nothing more than the TOHOE that some other fool will buy the same piece of paper at a higher price. Why they would do such, of course, is beyond me, but perhaps there are many such buyers. Finding/hoping these buyers will arrive and buy the stock seems far more risky than assuming one will buy a unit of APF that currently pays you about 500% more than a bank CD.
I wish I had more time presently to discuss your other statements. However, a major storm is expected tomorrow and it poses a large problem for me and my construction project.
Regards,
wp |
