3 Things 4-3
Thing One 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.” He added: “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! 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 amount of uncertainty in the markets right now.
Thing Two You Are A Big Corporation Owner (At Least You Should Be) According to the US Census Bureau, 66% of Americans are invested in the stock market either directly or through some kind of retirement plan (see the chart below). That’s right, 66% of Americans are part owners of big corporations. That includes the twenty-something-year-old who works at Walmart and has smartly decided to join his company’s 401k plan and it also includes the 67-year-old who is collecting a pension. The managers of those big corporations that the 66% 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-year-old has somehow learned that working for and investing (becoming an owner) in big, successful corporations is a tried and true way of building wealth. And the 67-year-old pensioner, whether he knows it or not, is also a beneficiary of the success of big corporations since part of the funds used to pay him are invested in the stock market. We should all know that you don’t grow more wealthy as a society by increasing the tax rates on the producers of wealth. At best, you get a redistribution of societal wealth. At worst, because taxes at a certain level disincentivize investment and production, you get less societal wealth. So what we all need to know is that big corporations are not our enemies. 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, it will help us all continue to create more wealth for ourselves and our families. What we ultimately need then is for the 66% of Americans who are investors to become 100% (via more participation in defined contribution and individual plans). The closer we get to that number, the easier it'll be to tell the difference between the good guys and bad guys - politicians and otherwise - as it pertains to wealth creation and preservation. Tell your family and friends to ignore the noise and become owners.
Thing Three Just A Thought “Receive without pride, let go without attachment.” - Marcus Aurelius