Why don't investors buy stock just before the dividend date

>>1582335
The stock value gets artificially boosted and subsequently devalued for the ex-dividend date, if I recall correctly

>>1582384
Wouldn't this also effect normal stock holders

>>1582335
In order to get a dividend payment you usually need to have owned the stock for a period of time.

>>1582389
Yes it does, but as you already own the stock you will not be negatively affected by its value.

>>1582384
This.

>>1582389
Kind of. But it only affects them if they sell around the dividend date.

>>1582384
>>>1582335 (OP)
>The stock value gets artificially boosted and subsequently devalued for the ex-dividend date, if I recall correctly
OK, why don't they short and buy then?

>>1582497
Some do
>this guy

>>1582506
When you short a stock and the stock goes ex-div. you have to pay out an amount equal to the dividend. In effect, if the price drops equal to the dividend, you'll have made zero money.

(Of course, any fees will be have to covered from your own pocket. Net is therefore under zero, unless the share price drops equal to the fee and the dividend.)

>>1582335
People do, it's called dividend arbitrage. Google it.

>>1582444
Not true, you only need to own it at the exact second the dividend gets paid.
Just think, who would get the dividend otherwise, does the company just keep it? No, there is always one dividend payment per stock.

>>1582581
>Not true, you only need to own it at the exact second the dividend gets paid.
Nigga are you really this stupid

>>1582588
Basic stocks 101. As long as you are the shareholder of record at the stroke of midnight on the ex dividend date then you get the dividend. You don't need to hold the stock for any length of required time. You can literally right before and sell on the ex-dividend date and still get the dividend. Whoever owns it at that time will get the payout, and by necessity SOMEONE always owns the stock.

>"As an example, ABC Inc declares a $1 dividend with an ex-dividend date of January 10th. Anybody who buys the shares on the 7th, 8th, or 9th—or any date prior to the 10th—will get that dividend. When the stock opens on the 10th, it will be adjusted down by $1 from the 9th’s closing price. Anybody who buys on the 10th or thereafter will not get the dividend."

>>1582588
>calls anon stupid
>anon was 100% correct
/biz/

>>1582335
Also because you're incurring two $7 fees for a stock that probably pays out 50 cents per share. Plus taxes, you're looking at having to trade at least 20 shares just to break even. Some systems, like Scottrade, won't even guarantee an atomic transaction for any less than 100 shares.

The small investor, assuming a stock value for $50 on average, would have to have $5000 cash idle in their account to make a safe trade. Even if an imminent dividend didn't manipulate prices, you're letting $5000 idle to fund an effort to make $50. If you have $5000 you can have just sit idle, is $50 worth bothering with?

>>1582704
>If you have $5000 you can have just sit idle, is $50 worth bothering with?

Of course it is

>>1582615
>>1582650
The ex-dividend date is not the date the dividend is paid you morons.
>On July 26, 2013, Company XYZ declares a dividend payable on September 10, 2013 to its shareholders. XYZ also announces that shareholders of record on the company's books on or before August 12, 2013 are entitled to the dividend. The stock would then go ex-dividend two business days before the record date.

>>1582841
The record date is the date you must have the stock to get the dividend. Because of the T+3 system in North America, it actually takes 3 days for a trade to settle, yes even HFT. The ex-dividend is, by definition, two days before the record date. So if you buy the stock the day before the ex-date, in 3 days when your trade settles you will be the rightful owner on the record date. Sell on the ex-date and your trade settles after the record gets taken.

So you need to buy the stock anytime before the ex-dividend date to get the dividend, and you can sell the stock on the ex-date no problem.

>>1582879
I'm well aware of how it works.

>>1582581 said the dividend is paid to whoever owns the stock at the moment of payment. That's not at all how it works. That's what I was pointing out. The ex-dividend date is often a month before payment.

>>1582335
Dividend payments are predictable events & factored into stock price.

You won't make money doing this. It's obvious, so everyone would do it -- correcting for the price.

You may make a small amount of money as the amount the stock drops by will be not always equal to the value of the dividend at t=0, but also taking into account a discounted value of future expected dividend payments... but this strategy will not yield you any additional alpha... Especially on any heavily traded stock. Markets are too efficient nowadays and opportunities like this have been arbitraged away

>>1582335
its a gamble that it will rise to the projected price