Be Completely Honest About Your Investing Weakness

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Warren Buffett once said, “I’ve never swung at a ball while it’s still in the pitcher’s glove.” Incidentally, that perfectly describes the category of investing mistakes that I am prone to make—I am likely to be predict something way before it actually happens. I am much better at predicting what will happen than I am at predicting when it will happen.

For instance, at the end of 2011, I began writing Seeking Alpha articles mentioning that interest rates are likely to increase soon because the economy is improving. Well, one year and a half later, and we’re only now just starting to realistically consider the possibility that rates will be going up. The good news is that I have not been harmed in any way by this call—I spend my time focusing on finding excellent companies to buy at decent prices, and then letting the dividends roll in from there. When you spend your life stuffing your personal balance sheet with ownership stakes in Coca-Cola, Johnson & Johnson, Colgate-Palmolive, Exxon Mobil, and others, it is hard to screw life up from an investing perspective if you let the dividends pile up and hold those companies for the long haul as part of a diversified portfolio of stocks.

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An Important Investing Lesson From Benjamin Graham

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I was recently going over some of Benjamin Graham’s old lectures at Columbia University when I came upon one gem of wisdom that I wanted to share with you. In my paraphrase, Graham said this: Achieving satisfactory results with stock market investing is much easier than people think. Beating the S&P 500 on a reliable basis is much harder than people think.

The funny thing about investing is that we will never know how we did because it is a lifelong pursuit. Sure, if you have been investing for twenty years you can get an idea of how you have performed in relation to the S&P 500 index overall, but that tells you little about how you will be doing going forward. After all, if you have beaten the S&P 500 for the past twenty years, there is no guarantee that you will continue to do so over the next twenty. And if you trailed the S&P 500 for the past twenty years, it is possible that you may have learned from your mistakes and will perform better over the next twenty.

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Total SA: This Dividend Stock Could Be Your Own Personal Oil Well

For a couple reasons, I have never bought any stock in Total SA:

-The French government is a taxing nightmare. Last year, Total SA had a 55% income tax rate, and there is pending bills in the French legislature aimed at increasing Total SA’s tax burden even more.

-The foreign withholding tax on Total SA dividends is obnoxious to deal with, and is especially burdensome if you own your Total SA shares in a retirement account since you won’t be able to recoup the taxes that the French government chooses to levy upon your dividend checks.

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Where Should A Dividend Investor Begin?

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The best accidental side effect of running a website and writing articles for Seeking Alpha is that it occasionally allows me to stumble into friends I haven’t to in a while—the kind of people that you enjoyed being around, but then life happens, and for whatever reasons, things happen and you fall out of touch. Long story short, I recently got in touch with one of my best friends from my Freshman year at Washington & Lee, and he asked me a question about starting a long-term investing strategy and the kind of books that will send you in the right direction. Because the question was broad enough to be useful to a general audience, I thought I’d share my response with you all. I would mention his first name, but since he is the only person I’ve ever met in my life with that name, it might give too much privacy away. Anyway, he knows who he is, and without further delay, here’s my book recommendation:

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Long-Term Investing Is Easier Than You Think

I got my hands on a Kiplinger Magazine from 1990 the other day, and one article was a list of the “Top 10 Picks For The Next Decade” by an investment club that had monthly meetings in Texas. The ten picks were: Gillette (now Procter & Gamble), Philip Morris (now Altria, Philip Morris International, Kraft, and Mondelez), Coca-Cola, Wal-Mart, Disney, Pepsi, Amoco (which is now BP), Johnson & Johnson, Disney, and their wild international pick was Nestle.

All of those companies still exist today, and are much more profitable now than they were then. Some people heavily discount information like this because there was probably some investment club in Florida that predicted Enron and Woolworth as its long-term holdings.

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