There are basically four types of people who purchase stocks: the trader, the value investor, the long-term buy and hold investor, and the income stock investor. The trader is a guy who is on amphetamines during the day and steroids at night. Traders are tight as an E string, have the personality of a cobra and makes 20-60 transactions during market hours. They can’t have children, make lousy lovers and sometimes stutter. They either burn out, go broke or get lucky. Many are in counseling. ...
The real winner is the income stock investor. These guys are also long-term investors, but only if an issue pays a dividend. They prefer dividends in excess of 4 percent and issues that regularly grow their dividends, and they reinvest every dividend every quarter. These are the smart, canny, patient investors who understand the “Rule of 72” and are wise enough to know they can’t beat the market. When I was working for Merrill Lynch’em in 1959, an income stock investor I knew told me: “Knowledge is knowing that a tomato is a fruit, and wisdom is not putting that tomato in a fruit salad.” Income stock investors sleep well at night and don’t give a freckle if the Dow is up 300 or down 300 points for the quarter. They are fiscal and political conservatives, patient fathers and good husbands. They recognize in the past 20 years that dividends accounted for nearly half of the 394 percent return of the S&P 500 Index.
Source: The Herald-News
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