GE – “Bringing Investment Mistakes To Life”
Many investors chase yield. There are a group of buyers out there who do not care about stock price since they only buy "yield".
These people believe that having a $20 stock that pays $1 means they got a yield of 5%. That is incorrect. They were paid a dollar for each share of stock they owned. Yield is simply a mathematical calculation.
What happens if the stock dives 50% but the dividend is the same? Obviously, we have a yield of 10%, much better than before.
This is what happened with GE before they cut the divident to 1 cent.
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I’ve made a killing buying puts on this! If we don’t hold 10 I think we could be seeing $5 shortly.
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