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Strategies & Market Trends : Waiting for the big Kahuna

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To: Tommaso who wrote (22293)	7/25/1998 2:02:00 PM
From: SargeK	Read Replies (2) of 94695

You gotta be kidding!! Did Galbraith really say this?: Galbraith: "Profits have been very high and growing. But returns from owning common stock, particularly in the major companies, have actually gone down to nominal levels. Dividend income of major stocks is almost insignificant. To own common stock that has a wonderful capital value and no income is a slight anomaly that only the better financial minds can explain." Perhaps my lesser financial mind can explain the "no income from stock anomaly". Double taxation of profits distributed in the form of dividends has forced corporations to reinvest almost all profits into growth instead of allocating a percentage of profits to dividends for stock holders. By taxing first the corporation and then the individual on dividend income, it should come as no surprise to Mr. Galbraith nor anyone else that corporations would choose to reward investors with growth (to be cashed in at capital gains rates on potentially higher stock prices) versus dividends (taxed as ordinary income). As usual, I probably didn't explain it very well, but the point should be abundantly clear. SargeK

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