Some stocks may show completely different trends before and after dividends. The stock price may continue to rise before dividends, and will fall after dividends are ex-dividends. Why is this?

For a stock, there are many reasons for the rise and fall, such as dividend ex-rights, which is one of them. Some stocks may show completely different trends before and after dividends. The stock price may continue to rise before dividends, and will fall after dividends are ex-dividends. Why is this?

What are the reasons why stocks will fall on the ex-dividend day?

The so-called ex-dividend date is the dividend date. If a stock rises well before dividends, but starts to fall after ex-dividend day, there may be several reasons.

First of all, the value of stocks has declined. After a stock is distributed dividends, it is actually equivalent to distributing part of the company's assets to shareholders. Although this will not cause changes in the total assets of the original shareholders, for other investors who want to purchase the company's shares, since some of the company's assets are separated by the original shareholders, the value of its shares will undoubtedly decline.

For example, a stock implements a dividend plan of 10 yuan, that is, a cash dividend of 10 yuan will be paid for every 10 shares. Before the dividend, the price per share was 10 yuan. After the dividend, the original shareholders holding the company's shares distributed 1 yuan in cash for every 1 share they held. The distributed cash must have belonged to the company's assets before. Now that they have been taken away by the original shareholders, the company's assets will naturally decrease.

Since the company's assets decreased after dividends, the price of its stocks should be lowered accordingly. One share will have a cash dividend of 1 yuan, and the stock price will also be lowered by 1 yuan on the day of dividends. Otherwise, it will be unfair to other investors who want to buy this stock. Therefore, after a stock is ex-weighted by , the price drop is inevitable because its own value has dropped.

Secondly, after ex-rights, stocks lose the gimmick of speculation and lose the motivation to rise. may be speculated by the market as a positive for those stocks with high dividends before dividends, so their stock price may rise sharply before dividends.

However, dividends from a stock cannot increase the value of the stock. Therefore, the price of a stock will rise sharply in the short term because it needs to make high dividends, but it is just the result of market speculation. After the stock has already implemented dividends, the gimmick of speculation no longer exists, and funds may begin to retreat. Once the speculative funds exit, the stock's valuation will return to normal and the stock price will fall.

Again, it is the reason for the market. is the stock in the market, and it will definitely not block the impact of the entire market. After ex-rights, if a stock happens to encounter the decline of the entire stock market or the stock industry in which the stock is located, its price will inevitably be dragged down and fall.

So, since the stock price will fall after dividends, does this mean that the stock after dividends cannot be bought?

Can you buy stocks after dividends?

Although the stock price will fall after dividends, it does not mean that you cannot buy it.

After the dividend is distributed, if the stock price drop is caused by the decline in the stock value, it will have no impact on investors. After the dividends of stocks are distributed, for investors holding stocks, although the price has fallen, they also receive corresponding compensation from the dividends, and the total assets will not decrease. For new investors, the market price of stocks has reduced the part of the reduction in stock value. Although the value of the stocks purchased has decreased, the cost of buying has also decreased.

Therefore, whether a stock can be bought after dividends depends on other reasons that can cause the stock price to rise and fall. For example, if the stock price is very high before dividends, it may fall after dividends, so naturally you cannot buy it. But not all stocks that rose before dividends will definitely fall after dividends, and not all stocks will rise before dividends.

A stock after dividends, the decline in the stock price caused by the decrease in value will leave a huge gap in the stock price trend. Some stocks may also experience rapid rises to fill this gap. This process is called filling rights.If the stocks are filled in after dividends, such stocks can obviously be bought, and they may have good returns as soon as they are bought.

In short, except for the decline in stock prices caused by the decrease in stock value after dividends, the rise and fall of stocks after dividends are not much different from other stocks, and the decline in stock prices caused by the decrease in stock value has no impact on investors. Therefore, whether stocks after dividends can be bought depends on the situation, and it is not completely impossible to buy.

Author: Long Xiaolin/ ​​Review: Zhao Xi