Dividend, Share Price: Is there a connection?

rozella · 18 January 2005

Re: Dividend, Share Price. Is there a connection?

Re-entered WDC today with 2 separate parcels @ 1721.0 with a margin of 75%.
Investment 430.25/share. Profit announcement expected in February.

rozella

Tric · 19 January 2005

Re: Dividend, Share Price. Is there a connection?

posted by rozella: This is the 2nd round of trades with WDC on the lead up to the profit announcement.....bit of a gamble period atm, so I take the profits as we go, & will re-enter on a pullback.

I like the way you showed that, protecting profit & capital, and you were spot on about the pullback. Good example of experience & skill = very classy I think.

rozella · 19 January 2005

Re: Dividend, Share Price. Is there a connection?

Bought AWC yesterday @ 617.0 with a margin of 70%. Investment 185.1/share.
Profit announcement expected around 28th Jan & exdiv around 3rd Feb. Last years div was 10.0/share fully franked.

Tric, I jumped back in on WDC a bit too early in hindsight.

rozella

rozella · 19 January 2005

Re: Dividend, Share Price. Is there a connection?

Bought OST today @ 279.8 with a margin of 65% Investment 97.93/share.
Profit report expected early February. Last years dividend was 5.0/share fully franked.

Bought BLD today @ 719.0 with a margin of 70% Investment 215.7/share fully franked.
Profit report expected early February. Last years dividend 14.0/share fully franked.

Re-entered DJW today @ 368.16 with a margin of 70% Investment 110.45/share.
Profit report expected early February. Last years dividend 10.0/share fully franked.

Sold JBM today on the close @ 472.0 Bought 12th January @ 455.0 with a margin of 50%
Investment 227.5/share.
Gross profit 17.0/share = 7.47% return on investment. 7 day trade.
2nd trade on JBM this month. I will re-enter given the right situation.

rozella

rozella · 20 January 2005

Re: Dividend, Share Price. Is there a connection?

Bought PPX today @ 470.0 with a margin of 70%. Investment 141.0/share.
Profit report expected the end of February. Last years div was 13.5/share zero franked.

rozella

rozella · 21 January 2005

Re: Dividend, Share Price. Is there a connection?

Bought another parcel of WDC today @ 1684.0 with a margin of 75%.
Investment 421.0/share. Profit announcement expected in February.

rozella

rozella · 25 January 2005

Re: Dividend, Share Price. Is there a connection?

Sold a parcel of WDC today @ 1730.0 Bought on 21st January @ 1684.0 with a 75% margin. Investment 421.0/share.
Gross profit 46.0/share = 10.92% return on investment. 4 day trade.

AWC, BLD, & CRG managed to head north again, .....good gains with BLD & CRG, so I will stay with them another day & see what happens.

rozella

rozella · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

Just come back from golf to see lots of green arrows, so re-entered WDC @ 1730.0 with a margin of 75% ( maybe wrong move "U" seller just entered @ 1730.0)
Investment 432.5/share.

rozella

Bodhi2500 · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

Hi Rozella,
I was wondering if you could please explain some elements of your posts?

1730 = ?
margin of 75% = ?
Investment 432.5/share =?

Thankyou

rozella said:
Just come back from golf to see lots of green arrows, so re-entered WDC @ 1730.0 with a margin of 75% ( maybe wrong move "U" seller just entered @ 1730.0)
Investment 432.5/share.

rozella

rozella · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

G'day Bodhi2500,

Buy price of WDC was 1730.0 or $17.30/share
I say a margin of 75%, but it is really the LVR given to that stock by the marginlender.

Example:

Buy 3000 WDC @ 1730.0 = $51900.00
LVR is 75% with most marginlenders
so the marginlender puts up 75% = $38925.00
& you put up 25% = $12975.00

Therefore your investment is $12975.00
or 25% of the share price = 432.5 or $4.325/share

My marginlender is 8.15% p.a. so therefore the borrowed part ($38925.00) will cost $8.69 per day.

Cheers,

rozella

mime · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

$8.69 per day??

Isn't that alot?

rozella · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

mime said:
$8.69 per day??

Isn't that alot?

WDC rose 14 cents today,
so on the example, that is a rise of 3000 x $0.14 = $420.00 - $8.69 = $411.31

Without marginlending using the same invested amount ($12975.00)
This would only buy 750 WDC
Therefore 750 x $0.14 = $105.00 in comparison.

rozella

Warren Buffet II · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

Hi Rozella,

Do you use any stop losses technique? How do you set it up with a Margin Leading strategic?

Regards

rozella · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

Warren Buffet II said:
Hi Rozella,

Do you use any stop losses technique? How do you set it up with a Margin Leading strategic?

Regards

Yes, the stoploss is the key to protect your capital.....it is easier for me to direct you to my website on the trading diary pages which will explain my stoploss rules & examples

Trading Diary 1

Trading Diary 2

The marginlending is just a way of financing the purchase & does not affect the stoploss.

rozella

Warren Buffet II · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

rozella said:
G'day Bodhi2500,

Buy price of WDC was 1730.0 or $17.30/share
I say a margin of 75%, but it is really the LVR given to that stock by the marginlender.

Example:

Buy 3000 WDC @ 1730.0 = $51900.00
LVR is 75% with most marginlenders
so the marginlender puts up 75% = $38925.00
& you put up 25% = $12975.00

Therefore your investment is $12975.00
or 25% of the share price = 432.5 or $4.325/share

My marginlender is 8.15% p.a. so therefore the borrowed part ($38925.00) will cost $8.69 per day.

Cheers,

rozella

Hi Rozella,

I asked the question before because if you are running your investments with your own capital will be more flexible with the stoploss you use.

Eg:

As your previous example:

3000 WDC @ 1730.0

Let say this share drops 3% = 1678.1

that will give you a loss of around 12.06%

If you are running with your own capital a drop of 3% will give you a loss of around the same percentage, so you are more susceptible because of the risk you have.

So, what I am saying here is that a 3% stoploss with a 75% ML will give you a 12% real loss.

Do you think a 10% or 12% stoploss for own capital is reasonable? Do you have different stoplosses for different kind of shares?

Regards,

rozella · 27 January 2005

Re: Dividend, Share Price. Is there a connection?

Your calculations are right Warren Buffet II, marginlending magnifies losses as well as wins, but you can't win on every trade. With a good strategy you will have more wins than losses. Marginlending just gives you the opportunity to have more in the market, but obviously it must be a winning strategy.

With the stoploss it does not matter per share whether you have marginlending or not. 3% of 1730.0 is 51.9/share. Its just with marginlending you would have a bigger quantity.

The idea is to have a few more rules. My maximum held in any one stock is 15% of the total portfolio, so if my stoploss is 3% per stock, then my total risk on the portfolio is 0.45%

I think 10% or 12% of the purchase price is far too much using the dividend strategy.

rozella

Warren Buffet II · 28 January 2005

Re: Dividend, Share Price. Is there a connection?

rozella said:
Your calculations are right Warren Buffet II, marginlending magnifies losses as well as wins, but you can't win on every trade. With a good strategy you will have more wins than losses. Marginlending just gives you the opportunity to have more in the market, but obviously it must be a winning strategy.

With the stoploss it does not matter per share whether you have marginlending or not. 3% of 1730.0 is 51.9/share. Its just with marginlending you would have a bigger quantity.

The idea is to have a few more rules. My maximum held in any one stock is 15% of the total portfolio, so if my stoploss is 3% per stock, then my total risk on the portfolio is 0.45%

I think 10% or 12% of the purchase price is far too much using the dividend strategy.

rozella

Rozella, thanks for your reply. It is as always very constructive.

I have some more questions for you:

1) As you said, stoploss is the key to protect your capital, do you have any "profit taken" strategy?. What I mean here is:

Eg

Let say 2 day trade without ML.
Buy 1000 ANZ @ 2000.0
Div = 54/share
Profit could be $27 = 2.7% (Buy price = sell price without fees)

So in this case you are targeting a 2.7% profit. Now what if the share price rises 3% or 5%. Do you sell or wait to get the dividends? Any suggestions?

I know the question is a bit open and it has many variable but I really would like to know what you think.

Regards,

rozella · 28 January 2005

Re: Dividend, Share Price. Is there a connection?

Warren Buffet II,

This market is very good, & every now & again it has a rest, & a stock like ANZ does not rise 2% every day, so on the lead up to the dividend, I like to take profits if the stock has risen an amount approx equal to the dividend if it hesitates, then wait for the rest day & go back in. I do not have any formula for this, it is purely discretionary. The exercise is to strip the dividend, so if I can do this 3 or 4 times with the one stock, then I am happy.

Of course the brokerage plays a part & it depends whether it is a negligible amount or not.

In a bear market, you don't usually have the luxury of making much in trading profits, so you are purely stripping the dividend, sometimes not making the full dividend because it may be more fruitful to sell at less than you bought it for & move onto the next deal. When in a bear market I trade as I have shown on my website, the cycles are longer & don't sell until the stoploss is hit, but it still profitable & regular. The website trading took a hit last week & 17 trades hit their stoploss levels, but it is still showing approx 48% return in the last 205 days after brokerage & interest.

Hope this is of some help.

rozella

rozella · 31 January 2005

Re: Dividend, Share Price. Is there a connection?

Bought PTD on Friday 28th January @ 184.0 with a margin of 50%.
Investment 92.0/share. exdiv 8th February, div 8.0/share fully franked.
I am not that comfortable with this one & will exit before exdiv or stoploss of 178.0, whichever is sooner.

rozella

rozella · 31 January 2005

Re: Dividend, Share Price. Is there a connection?

Took profits on 2 parcels of CBA today.
Sold both @ 3357.0

Bought 1st parcel on 12th January @ 3251.0 with a margin of 75%.
Investment 812.75/share
Gross profit 106.0/share = 13.04% return on investment. 19 day trade

Bought 2nd parcel on 13th January @ 3247.0 with a margin of 75%.
Investment 811.75/share
Gross profit 110. /share = 13.55% return on investment. 18 day trade

Before re-entering, see what happens after the RBA announces interest rates on Wednesday.

rozella

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