ROI Reddit Mentions | ChartExchange

Dividends is not free money “out of thin air” but the return of profits to shareholders…which has been the traditional reason to own stocks before growth and price expansion became the primary factor.
The drop from dividend payment is entirely a construct of the exchanges who mathematically drop the stock price after hours to offset the dividends so you cannot simply buy shares at the close of ex-dividend date, get recorded to get the dividend and then sell at the open for the same price which WOULD actually get you money out of thin air.
The argument that stock price changes because the book value of the company drops is entirely disingenuous. No other event that drops the book value of a company mechanically impacts stock prices in the same way that dividends do. Tim Cook could set fire to a million dollars and you wouldn’t get the “1-1 price drop” for APPL seen for dividend payments.
Not to mention price to book is far less looked at than price to earnings. How often is P/B mentioned here vs P/E?
They also talk about buybacks. Buybacks suck in comparison to dividends for buy and hold investors with long time horizons.
The guys in this podcast are traders. The average time horizon for NYSE is 10 months. If your time horizon is 10 months buybacks are great. You get to take advantage of the price bump before you sell. If your holding period is 10 months then dividends suck. You gotta keep holding shares to get dividends and stock traders don’t want to do that much.
The whole “I get to pick when to take profits” doesn’t apply to bogleheads. We take profits 30-40 YEARS later, not months. We don’t trade…we buy and hold. Not until retirement does it matter.
The total return discussion is also disingenuous. If you bought shares of VOO in 1995 your top purchase was GE at 2.6% and AT&T at 2.2%. GE did $2B in buybacks in 1995-1996.
Traders that bought and sold GE got a benefit from those buybacks. Executives whose compensation is based on stock grants got a big benefit…which is why they love them. However, 30 years later in 2025 the value of those buybacks is arguably zero and GE has lagged the S&P 500. So much for total returns.
https://testfol.io/?s=eXOlQnQhhab
We are invariably buying more ownership in companies at the peak of their valuations…based on earnings and not book value…because we buy into cap weighted index funds. Look at the top stocks from 30 years prior to any given date and few companies appear in both lists.
But every dollar of dividend payed by GE since 1995 was used to purchase more shares of VOO.
GM is an even more stark example since its value went to $0 in 2009 when it went bankrupt. Total returns were negative EXCEPT for the dividends returned to shareholders and reinvested into the broader market. The ROI for GM exists only in the form of APPL, NVDA, etc stocks purchased as dividend reinvestment back into VOO.
The presenters asked do you want to own TSLA that generates no dividends in your portfolio…but that question for us is appended with “if you wont sell it for 30 years”. I’m thinking…no. I have it as part of holdings through VTI but my expectation of the total return for TSLA in 2055 isn’t going to be very high with a current PE of 173.
If I was only holding for 10 months then there have certainly been times I would have held TSLA. Heck, I’d have bought some at $225 in March with the intention of selling in 12 months.
But that’s the difference between an active trader vs buy and hold.

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