QUOTE(SKY 1809 @ Oct 9 2008, 12:50 AM)
Advantage could be
let say you put in 50 sen to buy a share, then co pays you back 45sen. Then you still the same number of shares , but at lower risk of 5sen only.
Most likely , these companies have cash pile. if they afford to you extra dividends of let say 20sen a share.
So you got back more than you put in, and you still have the same of shares in that co.
If the share is goreng up, then more profit for you. If the co goes bust, you have nothing to lose.
Just one of the examples.
Another thing is they paint a rosy picture for some of their ratio, e.g. return on capital as capital is now smaller number, but gearing will be on the other way (but normally when they do that, they should have very little debt let say you put in 50 sen to buy a share, then co pays you back 45sen. Then you still the same number of shares , but at lower risk of 5sen only.
Most likely , these companies have cash pile. if they afford to you extra dividends of let say 20sen a share.
So you got back more than you put in, and you still have the same of shares in that co.
If the share is goreng up, then more profit for you. If the co goes bust, you have nothing to lose.
Just one of the examples.
Oct 9 2008, 04:50 PM

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