[Cryptostocks] (DIVC) Dividend Crazy

[DividendCrazy]

The goal of this fund is to create some diversity in the bitcoin stock market. This fund will invest all of the BTC raised from this project into dividend paying stocks that are listed on the US stock market.

The bitcoins will be sent to mt.gox, then sent to a brokerage account. From there, when dividends are paid, the money will be sent to mt.gox, converted immediately, then transferred to Cryptostocks to be paid out as a dividend too all of the shareholders.

Here's a simple flowchart:
Invested BTC -> MT.GOX -> Brokerage -> Invested in Div stocks -> Dividends paid -> 35% of dividends sent to MT.GOX -> dividends converted immediately at market price -> BTC paid out to Cryptostock share holders

What fees are involved?
Taxation! I will be taxed at a rate of 15% by the US government. There is no way around this. Taxes are expected to go back up next year! I will link to tax information as it arises.
http://en.wikipedia.org/wiki/Dividend_tax

How do you plan to grow the fund?
I want to reinvest 50% of the dividends.     (This will not happen until we achieve full funding)
We can also vote to sell more shares.

Here is a breakdown of what I will do with the dividends as they're paid:
50% of the dividends gets put back into the stock.          (This will not happen until we achieve full funding)
35% of the dividends comes back to BTC land where its converted and paid back to you!
15% gets held back for taxes that I will owe.

Fractional shares will not be purchased.
For example:
If stock A pays $100 in dividends and is trading at $8.00 per share, $50 will be reinvested into it at $8 per share with $2.00 left over. $15 will be set aside for taxes and the remaining $37 (35% + $2 leftover) will be sent to mt.gox, converted, and distributed.

What's the benefit of all of this?
**Diversity. There are no other funds out there like this.
**Growth. Every time I send the dividends to MT.GOX, BTC will be purchased at market price. Thus injecting money into the BTC economy that was not there prior!
**Love. I invest money in my spare time. I want to help us all out by donating those skills to the BTC community.

In the case of any shut down, all US stock shares will be sold and the BTC will be used to buy back all outstanding shares.

How to contact me:
PM me here
E-Mail me: DividendCrazy@tormail.org
I'll look into getting an IRC going.

Feel free to post questions and I'll do my best to answer them.

[DividendCrazy]

There are a lot of steps, and there are fees at every step. Can you list all those fees and show a typical transaction with the fees? Also, what is your cut? Are you doing this for free?

Cryptostocks collects a fee of 0.0015 per BTC raised. In this case, 0.000375 BTC per share sold. I've placed 4000 shares for sale at 0.25BTC per share. I'll use 100 BTC as an example to keep it simple.
From Cryptostocks, they will go to MT.GOX to be traded at market price. We can use $10 as an example. I pay a fee of 0.5% currently with my MT.GOX account. (I day trade often)
MT.GOX then send it to Dwolla and I get charged a $0.25 fee for withdrawing it
It's then sent to the brokerage (no fee).
When executing an order, there's a fee of $3.95 per trade. I'll use a $10 stock in my example.

Using the numbers above here's what will happen:
100 BTC is obtained from the sales of shares. Of that, Cryptostocks collects a fee of 0.15 BTC. Thus leaving us with 99.85 BTC.
It is then transferred to MT.GOX where it is traded for $10 per BTC with a fee of $4.9925 taken out. We now have $993.5075
I then send it to Dwolla and lose $0.25. We now have 993.25 (The $0.0075 will be left in the MT.GOX account to be used to purchase fractional BTC later)
I then send it to my brokerage account. (for free)
I buy a monthly dividend paying stock @ $10 per share. There is a flat fee of $3.95 attached to it.

993.25 - 3.95 = 989.30 / 10 = 98 Shares of said stock with $9.30 left over. Once dividends are paid out, any leftovers will be rolled in with the dividend to be paid back to share holders.

Fees after dividends:
Let's say that the above stock pays us $30 in dividends that month. (That's a lot based on only $1000, but for the sake of simplicity) 50% will get revested in it. So $15 - 3.95 trading fee leaves us with $11.05 - 10 for the cost of the stock, which leaves us with $1.05 left over. 15% ($4.50) is put aside for taxes which will be due at the end of the year. 35% ($10.50) on top of the $1.05 left over since fractional shares can not be purchased. $11.55 will be sent to dwolla with a $0.25 fee collected there. $11.35 will arrive at MT.GOX and 1.135 BTC will be purchased and a fee of 0.005675 BTC collected by MT.GOX. Thus leaving us with 1.129325 to be paid as dividends.

I plan on investing in at least two monthly dividends that pay them about two weeks apart so we can have a "steady" flow of income.

I will collect no fee in this matter, I will however be a share holder. I will purchase these shares at NO discount. I will pay the same 0.25BTC that everyone else does.




Why would I do this then? I have a couple of private investors so to say. I figure that I would open it up more so that we can grow more quickly. 10% of 1,000 is 100, but 10% of 10,000 is 1,000. 

[DividendCrazy]

I've thought about this. If it doesn't grow, we might not keep up with any BTC growth. We could always sell more shares later.

I've contacted the Brokerage and they said that they can't have 1/2 of the dividend reinvested.   It's all or nothing basically. Let me talk to my other investors and see what they think.

**Edit**

I'm also estimating that I can make around 10% a year.

[001sonkit]

For the currency changing part, could you compare prices at different locations and buy/sell at correspondingly highest/cheapeast place?
eg: buy in btc-e sell at mtgox

[Korbman]

I hate to rain on people's parades, but unfortunately there's quite a number of problems with this.  

First and foremost: Who are you?
You're profile indicates that you are a 220 year old New Yorker who signed up to BitcoinTalk 5 days ago and uses an anonymous email. You did some quick posts to get out of the Newbie section and then jumped straight to Securities.
To gather investors, I've found it's best to be transparent...
1) Who are you?
2) How old are you?
4) Where do you live?
5) Where did you go to school?
6) What did you study?
7) If you're currently employed, what do you do?
8') Have you ever invested before?
9) What brokerage(s) do you currently use?
10) What brought you to Bitcoins?


Feasibility
I purchase 4 shares for 1.0 BTC. That BTC goes through your account, through Mt. Gox, to your bank account, to your brokerage, and into stocks that pay dividends. Those quarterly (or annual) dividends go back into your brokerage account, you pay our taxes, the remainder goes into your bank account, then to Mt. Gox, then back to BTC, then to us again..minus all the fees of course.
Does this sound about correct?

Let's ignore the extreme trust issues you're going to encounter when convincing people about money going into your own personal account..and instead let's focus on the investing aspect.
1) What do you plan on investing in?
2) How do you plan on getting a 10% dividend return per year, especially with only a market cap of $10,000? Describe to us your portfolio and your risk management strategy.
3) How long do you plan on keeping the same stocks in the portfolio? Dividends on short term investments are taxed as ordinary income on federal and state levels. Qualified long term dividend investments, on the other hand, are taxed as capital gains. In some circumstances, if you're ordinary tax bracket is 10-15% then you pay 0% taxes on dividends.
4) As I see you've already noted, reinvesting dividends is an "all or nothing" sort of thing. Based on how you've described your plan so far, the idea should be to not reinvest and instead provide your investors with a profit.
5) What about stock price fluctuations? For any gains, do we (as investors in you) see a profit from that as well?
6) How do you plan to mitigate any losses?
7) How are you going to compensate for BTC/USD price fluctuations?
8') Have you been granted your Series 7 and 63 licenses through FINRA and/or are you a practicing CFA or CFP?
9) Do you currently own or work for a SEC regulated organization?

All these questions are really just the tip of the iceberg here.

Aside from the questionable legality pending answers to all the above questions, there's still an insane amount of risk here, which does not seem to be worth the reward of "10%". I'm not trying to harsh or anything, but I like to know what (and who) I'm investing in before I actually put my money somewhere...and I trust others do as well.  

[DividendCrazy]

First and foremost:

1. Sadly, I cannot give out my real anything.   What I'm doing is in a questionable grey area. Seeing as what happened to Nefario, I won't be doing that.
2. I'm ~29
4(?). In America!
4. Also in America
5. Accounting
6. You wouldn't believe me if I told you!
7. Yes, I have a personal account set up and I focus on dividend stocks.
8. E*Trade & OptionsHouse
9. I've been miner for over a year and started daytrading BTC once I got a good chunk of coins. The true appeal was to essentially make money from home.

Feasibility
That is exactly right. I plan on getting a few monthly dividends, quarterly dividends, and NO annual dividends... I feel for the Bitcoin community that annual dividends wouldn't really benefit us so much.

1. REITs mostly; they are the only stocks that pay monthly dividends. I have a few oil trusts on my radar and some tobacco companies.
2. Basically stocks that are strading between $6 and $20 per share with a dividend % return of around 10% annually. I know a few that are more than that and a few that are less.
3. I do plan on keeping the same stocks in the portfolio. If I feel the stock is going bad or something more appealing happens, I'll make the switch. As of 2013, Qualified Dividends will be taxed the same as "Ordinary Dividends". I believe that if I might be able to get some dividends in December, but if further funding moves slowly then I won't be able to get any dividends out this year. (I might be able to get some in if my private investors get in soon)
4. If it's not worth reinvesting dividends, then full payouts would be a great alternative. I do want growth however. I suppose after it becomes more trusted, I could sell more shares - or look for a brokerage that's willing to invest fractionals using 1/2 the funds. If we didn't reinvest, there won't be much growth. I definitely see both sides though.
5. What happened to 5?
6. Short answer: Yes - If I stay in one stock, I have no plans of selling. If I do sell, because I feel we might have an extra amount of risk or that there might be a better investment, then yes. We as in the shareholders will reap the reward. However, I see it as if I profited $100 from a $1000 investment leaving me with $1100 after selling, then I'd invest $1100 into whatever other stock I was looking at. In the event of a liquidation, I will just buy back ALL shares using the remaining funds.
7. I watch the stocks - almost - daily. I too will have a vested interest in this and making sure that this succeeds. Plus the "private investors" are a few of my irl friends. So I want to make sure that I'm doing the VERY best that I can.
8. This is a good question! I won't really compensate in anyway. If the BTC price rises, then you get less Bitcoins - they are still valued the same or similar. If BTC drops, then you get more Bitcoins. Either way, the USD amount of the coins will be close to what the dividend was. This is also a good reason I want to reinvest. That would allow me to slowly grow more shares, dividends, and BTC.
9. No - Hence the anonymity.
10. Maybe...

As to your final statement, I COMPLETELY understand and agree with you. I can say you can trust me all day long and that won't change a thing.  

This isn't such a high risk investment. Trust is the true issue here. The questionable legality, I feel that I have that covered - through anonymity. Either way I will be investing funds. As I already have some shares sold to my private investors. I feel it will be a fun project and a GREAT way to get USD into the BTC economy that would have otherwise never ended up here.

I answered everything to the best of my knowledge/opinion. Thanks for you response and I hope that this answer suffices.

PS my profile age was a witty little joke with... myself... pulled from: http://en.wikipedia.org/wiki/New_York_Stock_Exchange
"The origin of the NYSE can be traced to May 17, 1792, when the Buttonwood Agreement was signed by 24 stockbrokers outside of 68 Wall Street in New York under a buttonwood tree on Wall Street.[9]"

Cheers!

*edited for typo*

[DividendCrazy]

I've raised over $600 of funding thus far and have already transferred it to the brokerage account.  I am expecting to get at least one dividend payment before the end of the year. It might not completely arrive in BTC land until early January.

Either way, this is pretty exciting! (Even if it is a small amount)

[DividendCrazy]

I've made a change with the way I want to handle dividend reinvestment.

I will only start reinvesting dividends once we reach FULL funding of BTC1000.

I will edit my original post to state such.

[DividendCrazy]

I paid the first dividend out!

8.01 - .044055 = 7.965945

BTC0.63783200 paid out to all shareholders.

There was no dwolla fee since this was under $10

[DividendCrazy]

Here's my TorChat ID: nkipokr4fqpqmabu

Feel free to bombard me with any questions. If I don't respond, I'm afk. I'll get back with you ASAP.

Thanks! 

[creativex]

Torchat + basic verification are not exactly confidence inspiring. Do you intend to go through the advanced verification process?

[DividendCrazy]

Torchat + basic verification are not exactly confidence inspiring. Do you intend to go through the advanced verification process?

Short answer: No

Better answer: After the SEC went all crazy on Nefario, I'm not interested in doing anything like that. Ill stick with my anon identity.

Is it really any different from other investments? I understand that I can't show you my expertise. So I will prove it through dividend payments.


I honestly thought about it before listing my company that I would come across that "wall" of trust. I did it anyway because I have a few "irl" friends that have been steady investing their mining earnings into it.

On a side note, I've almost raised enough funding to get another monthly dividend going so that I can pay two BTC dividends a month. One pays dividends mid month and the other pays dividends end of the month.

I'm providing this service to my friends mostly. However, by using the Cryptostocks platform, I'm able to manage everything easier and extend it to the entire bitcoin community. If my friends buy out all of my shares, then so be it! 

Thanks for your question!

[creativex]

Torchat + basic verification are not exactly confidence inspiring. Do you intend to go through the advanced verification process?

Short answer: No

Better answer: After the SEC went all crazy on Nefario, I'm not interested in doing anything like that. Ill stick with my anon identity.

...which you know only because someone said he said so, correct?

[DividendCrazy]

Torchat + basic verification are not exactly confidence inspiring. Do you intend to go through the advanced verification process?

Short answer: No

Better answer: After the SEC went all crazy on Nefario, I'm not interested in doing anything like that. Ill stick with my anon identity.

...which you know only because someone said he said so, correct?

https://bitcointalk.org/index.php?topic=112461.msg1218758#msg1218758

Actually he, himself said so. However, you can call him a liar I suppose...


Let's stay on track though. Feel free to PM me or TOR chat me questions/concerns that are NOT DividendCrazy related.

[Deprived]

Torchat + basic verification are not exactly confidence inspiring. Do you intend to go through the advanced verification process?

Short answer: No

Better answer: After the SEC went all crazy on Nefario, I'm not interested in doing anything like that. Ill stick with my anon identity.

...which you know only because someone said he said so, correct?

https://bitcointalk.org/index.php?topic=112461.msg1218758#msg1218758

Actually he, himself said so. However, you can call him a liar I suppose...


Let's stay on track though. Feel free to PM me or TOR chat me questions/concerns that are NOT DividendCrazy related.

That link says nothing about the SEC going crazy on nefario - it's just nefario confirming that the SEC were investigating pirate.

Getting back on topic - can you offer ANY proof at all that whatever funds you raise are being used to purchase shares (as opposed to say, being use to run a ponzi)?  I can't see a list anywhere of what you even CLAIM to be invested in - let alone any proof that you're actually invested.  As you're a new account you may not have realised, but there have benn cases in the past where people have refused to prove they were doing what they were claiming to do and instead have been running ponzis/scamming/doing something entirely different.  As you don't have any history or reputation here to lose, can you offer ANY evidence that you're acting in good faith?

[DividendCrazy]

That link says nothing about the SEC going crazy on nefario - it's just nefario confirming that the SEC were investigating pirate.

Getting back on topic - can you offer ANY proof at all that whatever funds you raise are being used to purchase shares (as opposed to say, being use to run a ponzi)?  I can't see a list anywhere of what you even CLAIM to be invested in - let alone any proof that you're actually invested.  As you're a new account you may not have realised, but there have benn cases in the past where people have refused to prove they were doing what they were claiming to do and instead have been running ponzis/scamming/doing something entirely different.  As you don't have any history or reputation here to lose, can you offer ANY evidence that you're acting in good faith?

I'll see what I can do. Statements are my first guess, but that would give up my account info. I would be willing to block it out however. Currently, I only have one company. I'm about half way to raising enough to get into another stock that I have become a fan of. Hopefully we can get into that one in January and start paying bi-monthly dividends.


Also, sorry for the bad link! I just did a quick search on Nefario and SEC, read the post and assumed that's what it was. As I stated prior, I'll just have to prove it through paying dividends. I have some funding currently sitting idle as it would be a waste to transfer it unless I plan on using it 100%. As opposed to paying fees to invest small amounts over and over again.

Either way, thank you for your interest.

[DividendCrazy]

Dividend paid of $8.01. After 15%, that comes out to $6.81. There was no Dwolla fee as it was under $10. The MTGOX buy was executed at $13.421 which equates to BTC0.5074 minus BTC0.0030444 MTGOX trading fee.

Total dividend paid: BTC0.5043556

**Update to the company**

I've raised another ~$900 of funding thanks to some big players in the market. I will be purchasing another monthly and come February, I should have two dividend payments per month on a close to bi-weekly schedule. NOT EXACTLY bi-weekly, but close to it! It will be like receiving a paycheck for owning BTC!  

Happy investing.


*edit to this*

Cryptostocks collects a small fee when paying dividends. The fee in this transaction was BTC0.00000142

[usagi]

The goal of this fund is to create some diversity in the bitcoin stock market. This fund will invest all of the BTC raised from this project into dividend paying stocks that are listed on the US stock market.

This is generally accepted to be illegal. Bitcoin is bitcoin and may be at worst a grey area but never mix bitcoin and the US stock market. You have been warned.

Edit: This will end up bringing heat on the forums and the community. You have been warned.

[DividendCrazy]

The goal of this fund is to create some diversity in the bitcoin stock market. This fund will invest all of the BTC raised from this project into dividend paying stocks that are listed on the US stock market.

This is generally accepted to be illegal. Bitcoin is bitcoin and may be at worst a grey area but never mix bitcoin and the US stock market. You have been warned.

Edit: This will end up bringing heat on the forums and the community. You have been warned.

I feel as I've taken necessary precautions to prevent such actions. I also reached out to the cryptostocks owner and made him aware of what I wanted to do prior to me starting it.

[stochastic]

To instill confidence to potential investors, you should give your personal information to an escrow agent and allow them to verify your identity and act as an auditor of your actual accounts on the brokerage.  Then if you run with your client's money, the escrow agent can release your personal identification to the world.