Dividends and From zero to billions, investors chase the Trump stock hype

In every market there is hype because you always need someone to buy something. There is hype in consumer marketing to ensure you buy before the good deals are gone and somehow we all know it, but we all look for a good deal. On the stock market there is plenty of hype and for the average investor if you can stay away from it, you will make money because the number one rule in investing is try not to lose money. Having said that when there are high than normal returns, it gets all types of people talking, writing and some actually believing in the hype. For the most part, hype is hype and next week or next month there is something else to be hyped. If you go for something that is hyped, ensure it is money you have that you are willing to lose because for the average person, they will buy and the stock will fall. Once it a while it is possible to buy and sell to the greater fool or believing investor (sometimes there is no difference).

In the case of former President Donald Trump as we all know he was banned from social media, although he still pretends he is President sending notices from the 45th President. In Washington sits the 46th President.

In an article by Krystal Hu and Anirban Sen of Reuters, Donald Trump has decided to have a new social media platform through an app from the SPAC company Digital World Acquisition Corp. The company went public through the SPAC process and has been in talks with Trump Media & Technology Group that would produce an app that has yet to be rolled out even on a trial basis. In other words, there maybe an app for Donald Trump on social media which is the hype.

SPAC shares come out at $10, but people reading or hearing about the app have bid up the shares to close to $200 or the company is valued at over $12 billion, because it involves the former President and ad revenues.

In the story it tells the story of 2 people, one who bought and sold 50% of his holdings then another 25% to hold shares and see. If they go down in value, he has taken his profits. Another person bought and hold because he loves the ex President.

Linking to dividend paying stocks, ideally dividend paying stocks do not rally to moon on hype, they rally because they make profits and can pay dividends. It is slower process but investors earn a return in the form of dividends and over time the capital gain from profitable stocks makes the stock worth holding. If you are going to get along with hype, ensure that it not your entire portfolio, hype is gambling and you need to ensure that when capital gains are made on the market from higher prices, capital gains are locked in and sold to ensure the money goes into your account. Capital gains come from selling, before that they are on paper only. We are human, we want the easy capital gain and once in a while it happens, but understand once the people doing the hype move onto the next time, the stock price will fall to what the revenues dictate the stock should be worth. A company which says it will have an app, but the app is not functioning does not have an revenues.

There are more questions than answers, till the next time – to raising questions.

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