Why Investing Isn’t Sexy
My approach to investing isn’t sexy. In fact my approach is rather boring and simple, just the way I like it, because it’s profitable!
I don’t invest in the high technology companies, airlines, automotive manufactures, or entertainment companies. My portfolio doesn’t consist of flashy companies selling the latest gadgets. I avoid these companies, because they do not have:
- Regular dividend payments, or
- Consistent earnings, or
- Consistent dividend growth, or
- A long-term history of dividend payments, or
- A “virtual” monopoly in their industry, or
- A recession proof business
All of the above points stand to reduce my risk, and without them my risk goes up. I’m not interested in increasing risk to my hard earned money. Most believe the misconception that increasing risk equals increasing returns, and that is certainly not true. Increased risk has a higher probability for increased losses. Invest wisely and make money not the other way around.
Therefore instead of investing in flashy hi-tech companies, luxury brands, aircraft and automotive manufactures I invest in utility, retail, finance, insurance, food, and power companies. These companies are stable, mature, profitable, and people will continue to buy their products in good times and bad. But these stable mature companies don’t really make for entertaining talks around the water cooler. Which is why these companies generally don’t make the news either, they quietly continue to grow their business and reward shareholders.
Kelly Wright, Managing Editor at IQT said it best “…we look for high quality stocks that represent good value. While this approach may lack excitement we don’t invest for entertainment. The sole purpose of investing is to realize a return on investment (ROI).” Mr. Wright goes on to say “In the stock market there are two paths to ROI; capital appreciation and dividends. Of the two, the one with the most certainty is the dividend.”
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