Too many people who desire investment incomes don't understand what moves stock market prices.
Think Bargaining, Not Fixed Prices
I think that's related to how here in the United States, Europe, Japan and the rest of the developed world, we're not used to bargaining.
If we go to a supermarket to buy a loaf of bread, we'll see a price on the package. If it's $1.69 per loaf and we think it's worth only $1.49 a loaf, we have only a few choices.
Pay the extra twenty cents -- in which case we're acknowledging that the bread really is worth the $1.69.
But a cheaper loaf or decide we don't want any bread at all.
Go to another supermarket where we hope the price will be lower.
We never think to ask a clerk, or even the supermarket manager, to reduce the price. We know that's pointless. They charge the price the supermarket company tells them to charge, and they're not allowed to change it.
Bargaining is More Common in Much of the World
However, if you go to a developing country, you can often bargain. Not at the modern brand name stores, but when you're facing the store -- or sidewalk stand -- owner.
In many situations, if you don't bargain you'll be taken for a foreign sucker.
If you think 200 pesos is too high a price for a kilo of mangoes, tell them you won't pay over 150 pesos. Maybe they'll come down, and maybe they won't. But it's worth trying.
If they refuse to go lower than 200 pesos, you have the choice of paying what they ask (in which case you're again acknowledging the price is really fair and they were correct not to give in to your request).
You also have the choice of walking away and looking for someone who will sell you mangoes for a lower price.
Your Emotional Attachment to the Transaction Decides
How hungry are you? How much money do you have? How many mango merchants are there? If it's mango harvesting season and there're five sidewalk stands on every block, you have your choice.
If these are the only mangoes available at any price, that will affect your attitude.
Or maybe there are lots of mangoes available half a mile away, but only this one merchant is operating in front of your hotel, and you're tired and sweaty and need to go inside.
And how desperate is the seller? You can't know that, but it affects the outcome. If they know they have the only mangoes around, they'll be harder to bargain with than if they're desperate to unload the mangoes for any kind of profit so they can buy enough rice to feed their kids that night.
The One Who Needs the Deal the Most is the One Who Gives In
The person who needs the transaction the most is the loser. If you're desperate for fresh mangoes, you'll pay the 200 pesos per kilo if you have to. If you're a mango merchant desperate to sell your stock before they rot, you'll come down to that 150 pesos per kilo.
The stock market is a bargaining process such as small local markets, not a fixed price situation such as big supermarkets.
Therefore, the price you wind up paying for investment incomes from stocks that pay dividends will vary depending on the relative strength of the bulls and bears.
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