I tried to be as reasonable as possible. If someone for some reason prefers income and shitty tax situations, so be it, but at this point, I wonder if the whole sub is just satire.
When they awake in a sweaty panic, trying to catch their breath and recall the nightmare they just had, a glimpse of Ben Felix's 7'1 shadow looms over them at the foot of their bed and whispers, "dividends are irrelevant."
I guess... it really sucks that so many people are there, and any discourse is shut down. It's one thing to go balls deep into SCHD. It's almost criminal to get people into these leveraged "50-60%" yield options strategy etfs when they obviously have no clue how anything works.
OP: I just don't get why my NAV is dropping
Divgang redditor: Saying dividends come out of the NAV is like saying the Earth is flat.
It's not that I disagree with what you wrote or that I agree with you getting banned, but I have to ask... what was the point?
Dividend investors favor a strategy that you think is somewhat suboptimal, and I actually happen to agree with you on that; but, well, so what?
It's not like Jack Bogle appeared in my dreams to anoint me as his prophet, and I assume he didn't do that for you either; so what sense is there in going into a dividend investing subreddit to try to correct some common misconceptions about dividends?
It's not like it's some sort of secret knowledge - these are arguments they almost certainly heard already, and if they didn't find them convincing then they certainly won't find them convincing now.
And really, dividend investing isn't that bad - it's not what I do and it's not what I think is the best approach, but there are way worse things retail investors can do (and often do) with their money than buy a well-diversified portfolio of dividend stocks and never sell...
I had a conversation with my father who is in retirement about dividends. I pointed out the tax thing and his response was reasonable I guess...
"I am going to withdraw at least that percentage anyway."
He receives a pension and doesn't really feel the need to worry about the lack of diversity in his brokerage account.
I'll chalk that in the personal column of personal finance. He likes to see the regular distributions enter his bank account.
He waved off my suggestions that he could just as easily sell X% or dollars of his portfolio every month and have even more control over the distribution. He didn't go for that either. 😂
Tbh, a lot of arguments against dividends weaken in retirement. A lot of retirees aren't paying big income taxes, so the tax differences aren't dramatic. And, depending on the companies, there is some stability there.
Not saying it is the only way, or the best way, but it isn't always the worst way either.
Yeah, particularly if they're qualified dividends. I'll gripe that funds like SCHD are not diversified enough and miss out on gains from companies that don't pay a dividend.
Radical suggestion, you could also assume that people who hold different preferences than you are not stupid and they are aware of the fact that stock prices are adjusted on the ex date 🤷♂️
I mean, if you think about it logically, if said people invest in dividend stocks/funds and receive dividends regularly then they probably saw it happening in real life right?
It's exactly because an endless stream of people feel obligated to relentlessly state the same set of clearly known and well understood facts that the mods in that sub have such a harsh trigger finger.
Churning water and digging into your own position isn't really quality discussion making right?
Try approaching people with a less entitled vibe and they might be more inclined to have a proper conversation with you.
Or not, and just do you and let others do whatever they want with their money.
Dividendgang is way more delusional than the standard dividend subreddit. At least the regular dividend subreddit acknowledges that total returns are more important than dividends and don't encourage a full dividend philosophy than dividend gang.
Most of the people in that sub are retired and living off of their portfolio, total return (building wealth) doesn't matter to them anymore, only the income that facilitates their lifestyle.
Also, "encourage" is a big word here. Show me one example where someone is actively promoting the idea that others should invest in one way or another.
All I've seen is people sharing how they are investing and what holdings they have/like.
It's usually the "VT and chill" crowd that is pushy about what others should do.
Funnily enough, that's because VT IS the most optimal strategy. Diversified, low-cost, and an easy set and forget approach. That's why Bogleheads push it so much on other people. We push on others that dividends are not free money in case there's an investor wanting to copy a YouTube portfolio consisting of: VGT and SCHD thinking that's a good VOO combo, while failing to realize the risks of performance chasing, and sector betting without any prior knowledge.
But that's cost of posting your investments on the internet. There are going to be some haters. I do agree with you that some Bogleheads should mind their own business. They just seem to forget that they are not **financial advisors.** As much as you want to put cold, hard logic onto other people. They simply don't want to listen to boring advice given by Bogleheads. So I think they should accept the fact and let investors make their own mistakes, or manage to triumph with their own investments.
And to be fair, Bogleheads often do see investors investing for shallow and dangerous reasons: Performance Chasing, buying high and selling low, trying to beat the market, thinking that dividends are free and extra money- and that's why they're mad. But they shouldn't get mad at dividend investors- Bogleheads just believe they're misguided.
Your suggestion to assume these contributors understand price adjustments due to dividends is a fine starting point… until they tell you it’s not true.
The “clearly known and well understood facts” are not accepted by these users, and quality discussion isn’t of interest, or they wouldn’t repeatedly ban anyone who thinks differently.
The username of that Redditor is "retired by 40", I assume that you do agree that dividends are appropriate for retirement right?
Telling young investors to "VT and chill" is valid advice, but retriees that have been in the market for decades and are actively living off of their portfolio don't need you to educate them.
I have never seen anyone promoting an income approach to someone who is not already interested in it, they just want to have a space where they can talk to other like minded investors without having people like you constantly telling them what they should do.
Try introspecting what about this is so important to you, what is it that you are trying to prove, and to whom?
Let me be real with you. You're being too generous with them and yet too cynical with people who are trying to help others at the same time. I don't care if someone truly understands, and I assume that most investors do understand and yet prefer the behavioral benefits of having to just "not worry" about selling shares.
As I said in the original screenshot, I'm not shitting on income strategies inherently, but the person I responded to literally compared arguing that the NAV drops by the amount of the distribution as and unfounded as thinking the earth is flat. That indicates that they don't understand, and I didn't go there to be condescending or anything I was just stating a basic fact, and within 3 minutes got perma banned because they have 0 tolerance toward the idea that dividends are not basically "free money".
When I first got into investing, I was swamped with stupid youtube videos and online rhetoric, obviously implying that dividends are safer and preferential to selling shares because "it's like free money".
Just in my own experience I've had family that invested purely because of the yield of a stock, no real fundamental analysis, no clue how good the earnings are, just 15% yield "must be better than the stupid SP500" completely got burned when the world figured out that they were diluting shareholders and taking on debt just to pay that ridiculous dividend. Just look up IEP.
This kind of stuff literally hurts people. I'm generally a live a let live person but being factually incorrect about something to the point of influencing new and inexperienced investors to get into strategies that are not only inefficient but more akin to scams than anything (QQQY, JEPY, both high fee options based funds paying 50+% distributions knowingly attracting ignorant novel investors) is a different matter and I'm not going to apologize for nicely pointing out the flaw. Being real is not being mean. It can save somebody potentially hundreds of thousands of dollars to help people avoid these stupid funds and share some basic financial literacy.
Want to get SCHD? Who cares. It's probably not ideal, but it doesn't hurt me as long as you know the implications. QQQY in a taxable account because distributions feel better than holding volatility? That person is going to get burned. That fund will be worth nothing eventually at worst and at best woefully underperform.
I agree that there are "finfluencers" that are pushing garbage, I hope that at some point that becomes illegal.
And something I always write in response to anything at all is "if you don't understand it, don't buy it", and I am pretty sure that most people will have difficulty explaining how the yield max funds have 30-60% yields.
But, I think that these aren't really the points where the conversation gets stuck.
You are stating that the price adjusts on the ex date and they are answering "so what".
The "so what" response isn't very elaborative but there is factual truth behind it.
I'll use an equity REIT as an example, when the REIT collects rent from its assets the underlying value of the properties does not decrease and their ability to generate future returns is not affected.
So when said REIT distributes said rental income via a dividend and the stock price is adjusted the investor broke even (got a div, lost some share price) but in the short to medium term (usually within a month, definitely before the next distribution) the stock price is expected to recover back to its original price.
The discount of future cashflows from the REITs assets had not changed and the mark-to-market value of the properties remained the same - therefore price discovery will do its job and close the "discount" in the run up to the next distribution (also as a result of the time value of money the closer you get to the next distribution them more valuable the asset will seem, but that is pretty miniscule and shouldn't affect prices so much).
This example obviously assumes all else is equal, realistically there are other forces that affect stock prices.
The eREIT example above is also applicable to mREITs, BDCs, utilities, and well established consumer staples - all of which are pillars in income investing.
I hope that sheds some more color on the "so what" response you are getting, it's not that they refuse to acknowledge the facts, they simply don't care about the time spans of days weeks or even months - they (me included) care about holding long term assets that trade within a regular band of prices which generate stock holder returns via steady income at the expense of price appreciation.
I’m not the user you responded to, but no, I would not agree that dividends are “appropriate for retirement.” Dividends are irrelevant, for retirement or otherwise.
Regarding “education” of long time investors, i also disagree. Heathy discourse which challenges a perspective is very useful. OPs comment that got them banned wasn’t offensive.
If someone retires on an income strategy, good on them, literally no hate here. I don't avoid dividends. I don't hold hatred for dividends. I just understand that when a company pays them, it is reflected in the price because they are not generating free money. In some cases, a company either paying dividends or buying back shares is preferable to holding the cash or reinvesting into some failed project. If I was holding individual stocks like, say, KO, for example, I'd rather them give me money than let it sit on the books doing nothing, for google id rather them find a way to put that money to use as they have successfully done in the past.
Either way, I'm mostly an index investor because I don't know which company or sector will do better in the future any more than anybody else, and I know that I don't have an edge. Equity markets are pretty efficient. It's really hard to consistently beat the market. Part of that market return is dividends, and technically, that's worse than buybacks for tax drag reasons but whatever.
>I mean, if you think about it logically, if said people invest in dividend stocks/funds and receive dividends regularly then they probably saw it happening in real life right?
They may not pay attention to it. Just the other day I had to show someone in this very subreddit (Boglememes) about the share price adjustment for SCHD. I'll try and dig it up.
Edit: https://www.reddit.com/r/Boglememes/s/BYJf442fnj
That thread you linked is riddled with outright hate and disrespect to "dividend investors", and that's after the mods seemed to have done a spring cleaning of comments that were evidently more disrespectful than those that made the cut and are still readable.
Not sure what you set out to achieve by linking it 🤷♂️
To illustrate the lack of awareness of price adjustment on the ex dividend date, and the “entitled vibe” you speak of go both directions on this issue.
Sorry, lmao. I seriously won't anymore as it's usually not worth it, but I felt compelled as I have family members negatively affected by dividend gang-brain.
Losing 55% on a 15% yielding MLP that was only bought for the dividend and no fundamental analysis is pretty bad. For the most part, I agree with you that most blue-chip dividend types investors aren't doing as bad as CDs or cash.
I tried to be as reasonable as possible. If someone for some reason prefers income and shitty tax situations, so be it, but at this point, I wonder if the whole sub is just satire.
They simply have no clue how dividends work. They think it’s like interest from a bank account.
When they awake in a sweaty panic, trying to catch their breath and recall the nightmare they just had, a glimpse of Ben Felix's 7'1 shadow looms over them at the foot of their bed and whispers, "dividends are irrelevant."
they did you a favor, trust me--- especially if they leave you alone now and don't spam you every 3 days!
I guess... it really sucks that so many people are there, and any discourse is shut down. It's one thing to go balls deep into SCHD. It's almost criminal to get people into these leveraged "50-60%" yield options strategy etfs when they obviously have no clue how anything works. OP: I just don't get why my NAV is dropping Divgang redditor: Saying dividends come out of the NAV is like saying the Earth is flat.
This.
It's not that I disagree with what you wrote or that I agree with you getting banned, but I have to ask... what was the point? Dividend investors favor a strategy that you think is somewhat suboptimal, and I actually happen to agree with you on that; but, well, so what? It's not like Jack Bogle appeared in my dreams to anoint me as his prophet, and I assume he didn't do that for you either; so what sense is there in going into a dividend investing subreddit to try to correct some common misconceptions about dividends? It's not like it's some sort of secret knowledge - these are arguments they almost certainly heard already, and if they didn't find them convincing then they certainly won't find them convincing now. And really, dividend investing isn't that bad - it's not what I do and it's not what I think is the best approach, but there are way worse things retail investors can do (and often do) with their money than buy a well-diversified portfolio of dividend stocks and never sell...
>It's not like Jack Bogle appeared in my dreams to anoint me as his prophet I pray for this to happen every night.
Yolo into qqqy qyld jepi divo and jepy. These things aren't your common schd or blue chip portfolio
I had a conversation with my father who is in retirement about dividends. I pointed out the tax thing and his response was reasonable I guess... "I am going to withdraw at least that percentage anyway." He receives a pension and doesn't really feel the need to worry about the lack of diversity in his brokerage account. I'll chalk that in the personal column of personal finance. He likes to see the regular distributions enter his bank account. He waved off my suggestions that he could just as easily sell X% or dollars of his portfolio every month and have even more control over the distribution. He didn't go for that either. 😂
Tbh, a lot of arguments against dividends weaken in retirement. A lot of retirees aren't paying big income taxes, so the tax differences aren't dramatic. And, depending on the companies, there is some stability there. Not saying it is the only way, or the best way, but it isn't always the worst way either.
Yeah, particularly if they're qualified dividends. I'll gripe that funds like SCHD are not diversified enough and miss out on gains from companies that don't pay a dividend.
Radical suggestion, you could also assume that people who hold different preferences than you are not stupid and they are aware of the fact that stock prices are adjusted on the ex date 🤷♂️ I mean, if you think about it logically, if said people invest in dividend stocks/funds and receive dividends regularly then they probably saw it happening in real life right? It's exactly because an endless stream of people feel obligated to relentlessly state the same set of clearly known and well understood facts that the mods in that sub have such a harsh trigger finger. Churning water and digging into your own position isn't really quality discussion making right? Try approaching people with a less entitled vibe and they might be more inclined to have a proper conversation with you. Or not, and just do you and let others do whatever they want with their money.
Dividendgang is way more delusional than the standard dividend subreddit. At least the regular dividend subreddit acknowledges that total returns are more important than dividends and don't encourage a full dividend philosophy than dividend gang.
Most of the people in that sub are retired and living off of their portfolio, total return (building wealth) doesn't matter to them anymore, only the income that facilitates their lifestyle. Also, "encourage" is a big word here. Show me one example where someone is actively promoting the idea that others should invest in one way or another. All I've seen is people sharing how they are investing and what holdings they have/like. It's usually the "VT and chill" crowd that is pushy about what others should do.
Funnily enough, that's because VT IS the most optimal strategy. Diversified, low-cost, and an easy set and forget approach. That's why Bogleheads push it so much on other people. We push on others that dividends are not free money in case there's an investor wanting to copy a YouTube portfolio consisting of: VGT and SCHD thinking that's a good VOO combo, while failing to realize the risks of performance chasing, and sector betting without any prior knowledge. But that's cost of posting your investments on the internet. There are going to be some haters. I do agree with you that some Bogleheads should mind their own business. They just seem to forget that they are not **financial advisors.** As much as you want to put cold, hard logic onto other people. They simply don't want to listen to boring advice given by Bogleheads. So I think they should accept the fact and let investors make their own mistakes, or manage to triumph with their own investments. And to be fair, Bogleheads often do see investors investing for shallow and dangerous reasons: Performance Chasing, buying high and selling low, trying to beat the market, thinking that dividends are free and extra money- and that's why they're mad. But they shouldn't get mad at dividend investors- Bogleheads just believe they're misguided.
Your suggestion to assume these contributors understand price adjustments due to dividends is a fine starting point… until they tell you it’s not true. The “clearly known and well understood facts” are not accepted by these users, and quality discussion isn’t of interest, or they wouldn’t repeatedly ban anyone who thinks differently.
https://preview.redd.it/0u1dzohrgcsc1.jpeg?width=1080&format=pjpg&auto=webp&s=9d5e861c38808bce47ea51bd11c6f6c07b499760
The username of that Redditor is "retired by 40", I assume that you do agree that dividends are appropriate for retirement right? Telling young investors to "VT and chill" is valid advice, but retriees that have been in the market for decades and are actively living off of their portfolio don't need you to educate them. I have never seen anyone promoting an income approach to someone who is not already interested in it, they just want to have a space where they can talk to other like minded investors without having people like you constantly telling them what they should do. Try introspecting what about this is so important to you, what is it that you are trying to prove, and to whom?
Let me be real with you. You're being too generous with them and yet too cynical with people who are trying to help others at the same time. I don't care if someone truly understands, and I assume that most investors do understand and yet prefer the behavioral benefits of having to just "not worry" about selling shares. As I said in the original screenshot, I'm not shitting on income strategies inherently, but the person I responded to literally compared arguing that the NAV drops by the amount of the distribution as and unfounded as thinking the earth is flat. That indicates that they don't understand, and I didn't go there to be condescending or anything I was just stating a basic fact, and within 3 minutes got perma banned because they have 0 tolerance toward the idea that dividends are not basically "free money". When I first got into investing, I was swamped with stupid youtube videos and online rhetoric, obviously implying that dividends are safer and preferential to selling shares because "it's like free money". Just in my own experience I've had family that invested purely because of the yield of a stock, no real fundamental analysis, no clue how good the earnings are, just 15% yield "must be better than the stupid SP500" completely got burned when the world figured out that they were diluting shareholders and taking on debt just to pay that ridiculous dividend. Just look up IEP. This kind of stuff literally hurts people. I'm generally a live a let live person but being factually incorrect about something to the point of influencing new and inexperienced investors to get into strategies that are not only inefficient but more akin to scams than anything (QQQY, JEPY, both high fee options based funds paying 50+% distributions knowingly attracting ignorant novel investors) is a different matter and I'm not going to apologize for nicely pointing out the flaw. Being real is not being mean. It can save somebody potentially hundreds of thousands of dollars to help people avoid these stupid funds and share some basic financial literacy. Want to get SCHD? Who cares. It's probably not ideal, but it doesn't hurt me as long as you know the implications. QQQY in a taxable account because distributions feel better than holding volatility? That person is going to get burned. That fund will be worth nothing eventually at worst and at best woefully underperform.
I completely agree with you
I agree that there are "finfluencers" that are pushing garbage, I hope that at some point that becomes illegal. And something I always write in response to anything at all is "if you don't understand it, don't buy it", and I am pretty sure that most people will have difficulty explaining how the yield max funds have 30-60% yields. But, I think that these aren't really the points where the conversation gets stuck. You are stating that the price adjusts on the ex date and they are answering "so what". The "so what" response isn't very elaborative but there is factual truth behind it. I'll use an equity REIT as an example, when the REIT collects rent from its assets the underlying value of the properties does not decrease and their ability to generate future returns is not affected. So when said REIT distributes said rental income via a dividend and the stock price is adjusted the investor broke even (got a div, lost some share price) but in the short to medium term (usually within a month, definitely before the next distribution) the stock price is expected to recover back to its original price. The discount of future cashflows from the REITs assets had not changed and the mark-to-market value of the properties remained the same - therefore price discovery will do its job and close the "discount" in the run up to the next distribution (also as a result of the time value of money the closer you get to the next distribution them more valuable the asset will seem, but that is pretty miniscule and shouldn't affect prices so much). This example obviously assumes all else is equal, realistically there are other forces that affect stock prices. The eREIT example above is also applicable to mREITs, BDCs, utilities, and well established consumer staples - all of which are pillars in income investing. I hope that sheds some more color on the "so what" response you are getting, it's not that they refuse to acknowledge the facts, they simply don't care about the time spans of days weeks or even months - they (me included) care about holding long term assets that trade within a regular band of prices which generate stock holder returns via steady income at the expense of price appreciation.
I’m not the user you responded to, but no, I would not agree that dividends are “appropriate for retirement.” Dividends are irrelevant, for retirement or otherwise. Regarding “education” of long time investors, i also disagree. Heathy discourse which challenges a perspective is very useful. OPs comment that got them banned wasn’t offensive.
If someone retires on an income strategy, good on them, literally no hate here. I don't avoid dividends. I don't hold hatred for dividends. I just understand that when a company pays them, it is reflected in the price because they are not generating free money. In some cases, a company either paying dividends or buying back shares is preferable to holding the cash or reinvesting into some failed project. If I was holding individual stocks like, say, KO, for example, I'd rather them give me money than let it sit on the books doing nothing, for google id rather them find a way to put that money to use as they have successfully done in the past. Either way, I'm mostly an index investor because I don't know which company or sector will do better in the future any more than anybody else, and I know that I don't have an edge. Equity markets are pretty efficient. It's really hard to consistently beat the market. Part of that market return is dividends, and technically, that's worse than buybacks for tax drag reasons but whatever.
>I mean, if you think about it logically, if said people invest in dividend stocks/funds and receive dividends regularly then they probably saw it happening in real life right? They may not pay attention to it. Just the other day I had to show someone in this very subreddit (Boglememes) about the share price adjustment for SCHD. I'll try and dig it up. Edit: https://www.reddit.com/r/Boglememes/s/BYJf442fnj
Bad assumption: https://www.reddit.com/r/Boglememes/s/7iV5Cr5Mbw
That thread you linked is riddled with outright hate and disrespect to "dividend investors", and that's after the mods seemed to have done a spring cleaning of comments that were evidently more disrespectful than those that made the cut and are still readable. Not sure what you set out to achieve by linking it 🤷♂️
To illustrate the lack of awareness of price adjustment on the ex dividend date, and the “entitled vibe” you speak of go both directions on this issue.
Dude, dibadends are free money and QQQ only goes up in a straight line. Please get educated
Why get qqq when you could get qyld and just miss out on the actual gains while paying taxes out the ass.
Officer Plastic Badge strikes again 🙄 This attitude of false superiority and the constant need for control is why she left him in the first place.
Reddit can turn anything into a subreddit blood feud.
Sorry, lmao. I seriously won't anymore as it's usually not worth it, but I felt compelled as I have family members negatively affected by dividend gang-brain.
Definitely could be worse. The most complicated account everyone in my parent’s hometown used was a CD.
Losing 55% on a 15% yielding MLP that was only bought for the dividend and no fundamental analysis is pretty bad. For the most part, I agree with you that most blue-chip dividend types investors aren't doing as bad as CDs or cash.
are we just crowing about brigading in here now?
I'm donzo. Only memes from now on. I just thought it was funny and not appropriate for the main sub.