Be Happy When Stock Prices Fall (Really)

Here is a quick overview of today’s movements in the stocks I “follow” on my Seeking Alpha homepage:

sastocks

As you can see, the price of every single company that I follow went down today. For some people that try to buy a stock at $30 and sell it at $70, that is bad news. It means they are losing money.

But if you craft a long-term strategy and think like a business owner, you will develop the kind of wiring that appreciates falling stocks because it matches your goals. When I invest, I am trying to buy the most future profits (in the form of dividends and retained earnings) at the lowest price I can, adjusted for risk. I make an exception here and there to DRIP into a high quality stock, or set aside 3-5% of the portfolio for speculation, but aside from those two exceptions, that’s what I’m about.

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Dividend Investing Provides Immediate Rewards For Delayed Gratification

cardinals

If we take a “big picture” look at any of us are trying to accomplish when we invest, we are almost always trying to set aside some money today with the expectation that we will have even more money during some distant tomorrow. That’s straightforward enough. If we thought that a $10,000 investment today would only be worth $9,000 in 2016, we wouldn’t do it. The tricky part that deters some people from investing is the fact that it would be more enjoyable to spend $1,000 today buying good pub food, St. Louis Cardinals baseball tickets, or Bruce Springsteen concert tickets. Those experiences provide real utility, and every dollar you invest today also means, by definition, you are not consuming something.

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Don’t Worry About Being “The Perfect Investor”

lakehouse

One of my favorite sayings is “the perfect is the enemy of the good.” The point behind that statement is that, if you are way too focused on trying to perfect everything, you won’t be able to put together anything good because you’ll find yourself waiting for some sort of “perfect” that will never come. That attitude is what got me going with the blog this week. I had done some computer repair work as a teenager and taken a computer programming class during my junior year at Washington & Lee, but beyond that, I didn’t (err, don’t) know anything about website construction. A lot of blogs out there have good layouts and are easy on the eyes, and I knew that if I waited for a perfect blog set-up, I would never get anything written. While this website is currently just a twinkle in my eye of what I want it to be, I knew I had to suck it up, say “screw perfection”, and start writing. I’m going for the “build it and they will come” approach as opposed to the “get all the ducks lined up in a row” approach that either: (1) wouldn’t have this website exist until late this summer, or (2) not have this website exist at all.

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Dividend Growth Investing In A Taxable Account

dividnedtaxble

Here is a reader question I received from Ken B., and since my reply went over 1,000+ words, I figured I would turn it into a mailbag question since it covers generally applicable ground that could be relevant for most people contemplating a dividend strategy:

I have been reading your articles on seekingalpha.com for a while now. They are truly enlightening when it comes to DGI. In most of your articles, you refer to ‘assuming an optimal tax strategy’. Wanted to get clarification on this. Does it mean that you assume investing in dividend growth stocks inside a tax sheltered plan (401k, IRA, Roth)? Also, would you suggest DGI in a taxable brokerage account? (with a 15% hit every year on qualified dividends). Wanted to get your insights on that. Thanks much.

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