You know what causes a 100% loss for investors of publicly held corporations? When the Board of Directors holds a vote to dissolve the corporation, gives advance notice to all creditors, files the dissolution paperwork with the Secretary of State, it then takes the residual assets and returns them proportionally to the shareholders. You know what doesn’t signal the death of a corporation? A dividend cut.
I nodded to Polonius there because there are people who respond to dividend cuts as if it were the end of a corporation’s existence when in fact the shareholders own something quite precious–a proportional claim on all future earnings and dividends that each share represents. Especially in the field of commodities, automatically selling in response to dividend cuts is one of the worst strategies you could ever employ because you will be selling low and then have to watch the stock price climb and … Read the rest of this article!