Why Buy?

why_buyI got asked the other day, Why should I buy that crummy stock?  I answered quickly on the fly; so you might have seen some of this, but it seemed worth a bit more thought.

I get that from a pure game play perspective, there are some investments that are problematic.  Some stocks have such low dividends that an investment back is painful.  Specifically that dividend number is  .31 (e) today.  We get to that number by finding the top 5,000 dividend paying stocks on EA.  Since EA only will pay dividends on your top 5,000 investments, you need to eventually max in those accounts to maximize your daily income.  That is a question of raw dividends regardless of the price of a stock.

Even understanding that, I think there are some good reasons to invest in the folks who invest in you.

 

1.  The most important reason to buy back is because it is the best way to increase your share price.  More people will invest in you if they know that you invest back.  I buy you; you buy me; we both increase our share price.  It is little happy dance that benefits us all.

2.  The second reason to buy back is a bit defensive.  If you don’t own any of my shares, you have very little leverage to keep me from selling you.  Everyone finds a rough patch in the game.  Divs drop a bit or your share price slows or perhaps an unguarded comment somewhere.  Almost any reason including simply being mad at you for not investing back might provoke a sale.  Personally I refer to the profiles that don’t invest back as my savings account.  On the other hand, a substantial investment in me will almost always keep me from selling; since I know that you could sell me also.

3.  I think it is good manners.  When someone does something kind, I think it is good form to do something kind in return.  We all smile when someone invests in us.  Why not return the favor?

4.  Social media at its core is a reciprocal adventure.  I am not simply talking about a quid pro quo  sort of you do this and I do that.  I am talking about engaged relationships.  I invest in you because I know that it helps you.  You do the same because you know that my rising share price increases your net wealth.

5.  There are often relationship benefits that you find from investing even in players who have a less than stellar ROI.  Everyone on the Avenue knows what dividend they pay.  Everyone on the Avenue knows her share price.  Many folks who struggle with improving their dividends run shareholder only bonus missions.  Others reach out with retweets or like bombs.

6.  Finally you can’t grow your dividend payment forever, but all of us probably hope to keep growing our share price. That is sort of a sneaky way to tell you that eventually some new player is likely to look at you and wonder….Why would I invest in that?

 

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6 thoughts on “Why Buy?

  1. Hi Harold, great information here. I do appreciate you have invested in me. The thing I can’t do is come close to matching you even if I want to since you stock is so high. I do believe and I attempt to invest as much as I can who invests in me. Like you said “It is good manners”

    What I am seeing is that some people are investing me with just 1 share, does this help everyone- do they spread this 1 share buying to all their investors to buy back? I usually will do 10 -20 or if I am larger then them I do my max, cause you never know how they will do, if they will keep playing and investing or loose interest.. But I can since it is more affordable.

    • I promise I really was answering a question and didn’t intend this post as a personal promotion. Every player who is expensive…I still remember a few months ago the first time somebody called me expensive…understands that new players just don’t have enough eaves to try to match. My idea is that a good effort is what makes a difference.

      The 1 share at a time buyers are under the mistaken belief that single share buys will increase their EA activity score. Dups, the CEO of EA, has specifically said that they remove the small buys from consideration to minimize the spammy technique. I too try to invest deeply into my portfolio to support a large number of players.

      Good ideas & questions. Good luck with EA. Let me know if you have questions that I might be able to answer.

  2. Ok, if I have more I will shoot them your way. I did also shoot some to Paul 🙂 let’s see if he knows the answers – thanks – By the way your not expensive you are worth every virtual penny I get 🙂

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