3 Things 10-4
Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it.
Old investing Wisdom
The following is an excerpt from of an article written by Seeking Alpha contributor, Brad Thomas:
“In The Intelligent Investor Ben Graham wrote:
“The defensive investor must confine himself to the shares of important companies with a long record of profitable operations and in strong financial condition.”
“One of the most persuasive tests of high-quality is an uninterrupted record of dividend payments going back over many years. We think that a record of continuous dividend payments for the last 20 years or more is an important plus factor in the company’s quality rating.”
And then this is one of my favorite lines:
“Paying out a dividend does not guarantee great results. But it does improve the return of the typical stock by yanking at least some cash out of the manager’s hands before they can squander it or squirrel it away.”
That’s so true!
The dividend speaks louder than earnings. Josh Peters explains in The Ultimate Dividend Playbook that it’s “the ultimate sign of corporate strength.”
“Dividends represent a commitment by a company to its shareholders – a commitment that many of the shareholders are counting on for income.”
Here’s one more quote from Peters that I often refer to:
“The safest dividend is the one’s that’s just been raised.”
A long time ago, I was having a conversation with a good, older friend of mine and he said to me, “the fundamentals don’t change”. I can’t remember whether we were talking about business or sports but I later learned he meant the comment to apply to both subjects as well as ones we weren’t considering at the time. The above is a good reminder about the fundamentals of investing and it’s especially important to consider given the record amount of speculation we’re seeing today.
Thing Two You Are A Big Corporation Owner (At Least You Should Be) According to Pew Research Center, 55% of Americans are invested in the stock market either directly or through some kind of retirement plan (see the chart below for demographics). That’s right, 55% of Americans are part owners of big corporations. That includes the twenty-something who works at Walmart and has smartly decided to join his company’s 401k plan and the 67-year-old who is collecting a pension from a company with retirement assets invested in the stock market. The managers of those big corporations that the 55% are invested in know that providing competitive products and services is a way to build wealth for themselves and the owners of the companies. The twenty-something and the pension administrator know that working for and investing (becoming owners) of big, successful corporations is a tried and true way of building wealth. We all know that you don’t get more of something (wealth) by increasing the tax rate on it. What we all need to know is that big corporations are not our enemy. We need them to keep innovating. We need them to keep creating wealth. We need them to keep getting richer and we need them to keep creating jobs. If they do that we can all continue to create more wealth for ourselves and our families. What we ultimately need then is for the 55% of Americans who are investors to become 100%. If we can get there, it’ll get much easier to tell the difference between the good guys and bad guys when it comes to wealth creation. Tell your family and friends to ignore the noise and become owners.
Thing Three Just A Thought “Everybody you fight is not your enemy and everybody who helps you is not your friend.” - Mike Tyso