Quote:
Originally Posted by Rain Man
I've never quite figured out how that works. It seems logical that you could take $XX and invest it in twelve different stocks that each pay out a dividend on a different month, and pretty much have a guaranteed high return. But that's so obvious that I have to think that the market corrects for it.
It seems that the common theory is that a stock price naturally fluctuates to take into account the fact that a dividend is about to be paid, and it does so in a way that corrects for the differences. That seems kind of suspicious to me, because it still seems like you could take advantage of that since it's a known future change in the stock price. But I've never studied it to see if there's a predictable change. Maybe I should, but it seems that if there was something that simple and predictable, Wall Street would be all over it.
Short answer: I don't know, and it's a good question. It seems like there should be a way to game the system, but I suspect there's some rule that keeps us from doing it.
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I'm hoping wall street people don't have common sense like us regular people.