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Comment by EliRivers | Hacker News Reader

I believe that dividends are not priced in.

The reason I believe this is not related to stock picking working for me.

I believe it because the market is not efficient, and dividends being priced in relies on an efficient market. Any success I have in stock picking relies on this inefficiency; it's just a symptom.

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If dividends weren't priced in then prices wouldn't dip when stocks go ex-dividend.

Sometimes they don't. Sometimes they go up. Lots of people think they're priced in, and the point at which they go ex-dividend is a convenient point to decide that it's now worth a bit less. Was it "priced in" before? No idea. Going ex-dividend is a single, identifiable point at which people can say it surely must be worth less now.

I personally value dividend paying stocks more highly than non-dividend paying stocks. A history of dividends makes the stock appear more valuable to me (given that the majority of companies are rubbish at investing in themselves, giving me the money and letting me reinvest it myself is preferable). If they just went ex-dividend, that's a excellent very fresh data point that makes the stock look more valuable to me.

>the point at which they go ex-dividend is a convenient point to decide that it's now worth a bit less.

The company has less cash ex-dividend, so as a matter of fact is worth a bit less.

Valuation isn't, however, a matter of fact, but of values. We distinguish descriptive facts from prescriptive valuations. It is an important distinction, lost on many Rijksbank "Nobel" prize-winning economists.

Valuation isn't, however, a matter of fact

No, but that variation caused by going ex-dividend clearly is.

And while I do care what it is worth, that is only one factor in what its price will be, and of those two, the latter is the one that counts.

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