The Strategic Dividend Investor by Daniel Peris

Author:Daniel Peris
Language: eng
Format: epub
Publisher: McGraw-Hill
Published: 2011-09-03T04:00:00+00:00

The Industry of Trader Nation

The brokerage industry is as old as the stock market, but in the past 25 years, the infrastructure in support of Trader Nation has grown vast. Legions of people now make a living creating and then trying to take advantage of near-term stock price movements. Corporate managements participate in the process through endless investor presentations at which the company provides “guidance” for earnings per share that it then beats by a penny or more—funny that. In many instances, the company has provided that guidance just a few weeks or so before the end of the quarter, when it presumably had pretty good visibility to its operations. Then it beats, and Wall Street celebrates. A naive observer might conclude that the company was intentionally misleading investors when it issued its guidance or that its forecasting skills, even for near-in events, are pretty poor. In either instance, I have to wonder whether we as dividend investors want to be a minority owner of a company led by that type of management team. Unfortunately, if we excluded every large corporation that ever “played the game,” we wouldn’t have much to choose from, but we remain strongly averse to such practices.

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