Being a relatively new investor, I'm just trying to understand the recent
(11/8 ?) drop of approximately 14% in Dreyfus Emerging Leaders followed by a
nearly equivalent dividend. Is this just the result of the value dropping
due to the higher demand as everyone tries to take advantage of the dividend
or is something else going on?
"Mark" <> wrote
> Being a relatively new investor, I'm just trying to understand the recent
> (11/8 ?) drop of approximately 14% in Dreyfus Emerging Leaders followed by
> a nearly equivalent dividend. Is this just the result of the value
> dropping due to the higher demand as everyone tries to take advantage of
> the dividend or is something else going on?
It's not a dividend, it's a distribution. Distributions are made up of 1 to
3 parts. Long term capital gains, short term capital gains, and dividends.
Higher demand usually works the other way, the price would go up, not down.
Your fund is made up of mostly the stocks of different companies. These
stocks are bought and sold by the fund manager. If a stock is sold for more
than the fund paid for it ot generates a capital gain, the difference
between the buy and sell price less expenses. If a stock pays a dividend,
this money is collected by the fund and paid out to shareholders at
predetermined intervals, usually annually for a stock fund. Capital gains
and dividends must be paid out to shareholders, the price of the shares will
drop by the amount paid out. If you elected to reinvest the distributions
you now have more shares in your account.
Mark:
This is a popular, quarterly question in this group. By law, at some point,
you made an assertion that you had read the prospectus of this fund before
you invested in it. Clearly you didn't read it too carefully, if at all.
This is how mutual fund dividends work. The dividend is paid out of the
assets of the fund, reducing the net asset value (NAV) by the amount of the
dividend. You will either receive a check for the amount or you will have
this money automatically re-invested at the new NAV. In either case, the
balance of your investment should remain unchanged.
-herb
"Mark" <> wrote in message
news:
> Being a relatively new investor, I'm just trying to understand the recent
> (11/8 ?) drop of approximately 14% in Dreyfus Emerging Leaders followed by
a
> nearly equivalent dividend. Is this just the result of the value dropping
> due to the higher demand as everyone tries to take advantage of the
dividend
> or is something else going on?
>
>
"Herb" <> wrote
> This is a popular, quarterly question in this group. By
law, at some point,
> you made an assertion that you had read the prospectus of
this fund before
> you invested in it. Clearly you didn't read it too
carefully, if at all.
Kinda harsh. I think few new investors read the prospectus
this carefully. I doubt I learned of this little feature of
mutual funds via the prospectus.
"Tess Millay" <> wrote in message
news:Wgnnf.3110$
> "Herb" <> wrote
> > This is a popular, quarterly question in this group. By
> law, at some point,
> > you made an assertion that you had read the prospectus of
> this fund before
> > you invested in it. Clearly you didn't read it too
> carefully, if at all.
>
> Kinda harsh. I think few new investors read the prospectus
> this carefully. I doubt I learned of this little feature of
> mutual funds via the prospectus.
Tess:
I'm sorry. I thought I was being rather mild. I'm sure you are right about
few new investors reading the prospectus. I'm sure most of us haven't read
them all, but to ask this question indicates that he never read any
prospectus. I didn't mean it as a personal criticism of the OP but rather
to make the point that one should understand something BEFORE investing in
it. That's why the law requires you to make that assertion.
-herb
"Herb" <> wrote
> "Tess Millay" <> wrote
> > "Herb" <> wrote
> > > This is a popular, quarterly question in this group.
By
> > law, at some point,
> > > you made an assertion that you had read the prospectus
of
> > this fund before
> > > you invested in it. Clearly you didn't read it too
> > carefully, if at all.
> >
> > Kinda harsh. I think few new investors read the
prospectus
> > this carefully. I doubt I learned of this little feature
of
> > mutual funds via the prospectus.
>
> Tess:
>
> I'm sorry. I thought I was being rather mild. I'm sure
you are right about
> few new investors reading the prospectus. I'm sure most
of us haven't read
> them all, but to ask this question indicates that he never
read any
> prospectus.
I'd say all we know is that he did not carefully read it.
This is elle, by the way. I like creative names, hence the
slightly altered signature.
> I didn't mean it as a personal criticism of the OP but
rather
> to make the point that one should understand something
BEFORE investing in
> it. That's why the law requires you to make that
assertion.
Yes, okay. Though seems like we could nail a half dozen or
so in the last few months for asking this question.
"Herb" <> wrote in message
news:ffpnf.149212$
>
> "Tess Millay" <> wrote in message
> news:Wgnnf.3110$
>> "Herb" <> wrote
>> > This is a popular, quarterly question in this group. By
>> law, at some point,
>> > you made an assertion that you had read the prospectus of
>> this fund before
>> > you invested in it. Clearly you didn't read it too
>> carefully, if at all.
>>
>> Kinda harsh. I think few new investors read the prospectus
>> this carefully. I doubt I learned of this little feature of
>> mutual funds via the prospectus.
>
> Tess:
>
> I'm sorry. I thought I was being rather mild. I'm sure you are right
> about
> few new investors reading the prospectus. I'm sure most of us haven't
> read
> them all, but to ask this question indicates that he never read any
> prospectus. I didn't mean it as a personal criticism of the OP but rather
> to make the point that one should understand something BEFORE investing in
> it. That's why the law requires you to make that assertion.
>
> -herb
>
Actually, I had read the prospectus and, having just read it again for good
measure, I still needed the above responses to make sense out of it. I had
read a couple of other threads noting similar questions coming up this time
of year but no explanation until now. Perhaps a bit dense. Thank you. My
reversal of price vs. demand, even though not applicable here, did deserve a
slap up against the side of the head, however.
"Tess Millay" <> wrote
> This is elle, by the way. I like creative names, hence the
> slightly altered signature.
Then you must love my new name!
Mark wrote:
> "Herb" <> wrote in message
> news:ffpnf.149212$
>
>>"Tess Millay" <> wrote in message
>>news:Wgnnf.3110$
>>
>>>"Herb" <> wrote
>>>
>>>>This is a popular, quarterly question in this group. By
>>>
>>>law, at some point,
>>>
>>>>you made an assertion that you had read the prospectus of
>>>
>>>this fund before
>>>
>>>>you invested in it. Clearly you didn't read it too
>>>
>>>carefully, if at all.
>>>
>>>Kinda harsh. I think few new investors read the prospectus
>>>this carefully. I doubt I learned of this little feature of
>>>mutual funds via the prospectus.
>>
>>Tess:
>>
>>I'm sorry. I thought I was being rather mild. I'm sure you are right
>>about
>>few new investors reading the prospectus. I'm sure most of us haven't
>>read
>>them all, but to ask this question indicates that he never read any
>>prospectus. I didn't mean it as a personal criticism of the OP but rather
>>to make the point that one should understand something BEFORE investing in
>>it. That's why the law requires you to make that assertion.
>>
>>-herb
>>
>
> Actually, I had read the prospectus and, having just read it again for good
> measure, I still needed the above responses to make sense out of it. I had
> read a couple of other threads noting similar questions coming up this time
> of year but no explanation until now. Perhaps a bit dense. Thank you.
Until they start writing prospectuses in simple English, it behooves new
investors to first learn about how mutual funds work in general, from
one of the many books or Internet websites that explain it. Once that's
understood, the jargon in the prospectus will make more sense.
--
Steven D. Litvintchouk
Email:
Remove the NOSPAM before replying to me.
"Tess Millay" <> wrote in message
news:Dppnf.3142$
> "Herb" <> wrote
>> "Tess Millay" <> wrote
>> > "Herb" <> wrote
>> > > This is a popular, quarterly question in this group.
> By
>> > law, at some point,
>> > > you made an assertion that you had read the prospectus
> of
>> > this fund before
>> > > you invested in it. Clearly you didn't read it too
>> > carefully, if at all.
>> >
>> > Kinda harsh. I think few new investors read the
> prospectus
>> > this carefully. I doubt I learned of this little feature
> of
>> > mutual funds via the prospectus.
>>
>> Tess:
>>
>> I'm sorry. I thought I was being rather mild. I'm sure
> you are right about
>> few new investors reading the prospectus. I'm sure most
> of us haven't read
>> them all, but to ask this question indicates that he never
> read any
>> prospectus.
>
> I'd say all we know is that he did not carefully read it.
The law doesn't require that people read the entire prospectus, nor does it
require people to understand it...obviously, it is a legal protection
designed to protect the investor by providing full disclosure of the
parameters.
Herb's original point about not investing in something you don't understand
is a good one, but many people--myself included--learn best by doing. My
experience cost me over $400 in penalties from an early CD withdrawal, $600
from not understanding how a stop-loss works, and $100's in options
investing...chalk it up to educational expenses--still cheaper than many
courses in finance and investing nowadays.
In his case, assuming he didn't sell, and that it was for a retirement
account, he didn't suffer any damage, unless he sold when it went
low...hopefully, he saw the drop and bought more. If it wasn't for a
retirement account, his only downside is having to pay some taxes (let's
hope he didn't think mutual fund profits were tax-free).
D