A few weeks ago a question about value and price that Mr. Divnomics had in one of his classes set off an interesting discussion. We talked about this subject and questioned ourselves if value and price were actually the same things. Or are based on different kinds of fundamentals. The outcome of that class was that price and value were the same things, which we both disagreed on. His teacher loved the discussion going forward and had planned a new discussion on the next class with some upfront preparation.
In order to get some more thoughts and opinions on this topic, I wrote a blog post on our thoughts of the matter. And there were great replies that made us think about our view towards value and price.
Last weekend the second class took place, and another discussion with the group got to a very interesting conclusion.
Two weeks in the new year. The past has been reflecting, lists have been maid and we have committed ourselves to new goals. But there is something else that reoccurs every year in January… The January Effect.
This phenomenon refers to the rise in stock prices in this particular month and the bullishness of the stock market in a whole. We all have harder times finding dividend stocks for a good value the past few weeks. Might this effect have something to do with it?
It’s common knowledge that a lot of the companies paying dividend for many years are based in the US. Being an European investor, it isn’t really a problem. We can buy (almost) every stock we want and the currencies are automatically being taken care off. Easy as that. Although, because it happens automatically we also don’t really know how much currency fluctuations is effecting our portfolio. So, time for me to check it out already.
When looking for growth within a company, often there will be money invested in their products or services and boost the sales for years to come. While this is always a plus side, there is another way in order to grow a company. Larger companies tend to pursue company growth by acquiring or take over small(er) companies and therefore expand there market or existing product line. Mergers and acquisitions are happening all year round, and there are a lot of speculations as to when and why companies are showing the ‘signs’ of doing an acquisition or are being preyed upon by other companies. And many times after a take-over, the stock price will take a flight up. For some investors this seems a quick way of increasing profit, but is it?
In Europe the ECB introduced a negative interest rate, over 2 years ago, on lenders deposits in attempt to give a positive impulse to the economy. A few weeks ago an article on Bloomberg, stated that a German bank will start with negative interest rates towards the consumer market. Meaning their retail customer will actually have to pay money for holding cash in a bank account.The last few years the media mentioned negative interest rates for retail customers quite a few times, but it never really happened. Until now…
But why is this important? Because this gives a signal to the global market that it can happen to everyone. Not only the big companies, but also regular people like you and me.