True success does not come from copying what everyone else is doing. You Can’t Beat the Herd by Following the Herd.
When buying a dividend stock, the quality of the company is the number one consideration. Given enough time, a quality company will always rise above lesser competition. When your holding period is forever, it is inevitable that a superior stock will eventually out-perform second tier players. Buffett has used the quality + time formula for decades.
With the internet, everyone has access to massive amounts of financial data on public companies. Never confuse data with information - the former takes up space while the latter is useful. Your stock evaluation process should include quantitative and qualitative analysis. While it is important to understand how a company has performed using a quantitative analysis, it is more important to determine how the company will perform in the future using a qualitative analysis. This is much more difficult since no internet site provides an instant glimpse into the future.
Have a plan for managing risk. Buffett has spent a lifetime perfecting his process and abilities. Though he shuns diversification, we would be wise not to do so until our abilities are on par with his.
Life is much more than just making money. The above rings true in so many aspects of our lives. Success is measured in many different ways.
Over time we make all things overly difficult and complex. Sometimes it is good to step back, focus on the basics and avoid the needless mistakes.
Life is a journey. Find something you love and enjoy the trip! We can all learn something from like-minded individual who have been successful in their field. Still wanting more Buffett quotes?
(Photo Credit)
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"It's not the will to win that matters - everyone has that. It's the will to prepare to win that matters."
-- Legendary Alabama Coach Paul "Bear" Bryant
We all want to succeed in one way or another. Some want to be great athletes, some want to excel in business, while others want to dominate the stock market.
A great number of people in our society jump from "desire to succeed" to "living like they have". Kids out of college, often will buy an expensive car with their first paycheck. A small bonus at work will often lead to an extravagant vacation. It is no wonder that there are so many people in financial trouble today. They are missing something in the middle.
"Desiring to succeed" and "living the good life" are two like bookends - they are somewhat meaningless without any books in the middle. Those books represent preparation, hard work, long hours, self sacrifice, discipline, and everything else necessary to achieve true success. A lot of times the bookends are more ornate than the books they hold up, which makes them more desirable to the uninitiated.
I must admit I have an insatiable desire to win and my human nature sometimes wants to skip all that hard work sandwiched between my desire and the fruits of victory. Each time I try to short-cut the process it ends in disaster. "I don't need to research that stock, I have friends making a killing off of it." I bought it, and I got killed.
In my own life I have found that the good life only comes after a great deal of preparation and toil. I'll let you in on a secret - after a while you learn to like preparation and journey more than the destination.
Life is a journey, we all need to learn to enjoy it.
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You have probably picked up on the fact that I love inspirational (and other) quotes. I see quotes as a portal to someone's very soul. They reveal much about the person both good and bad. Read enough of a person's quotes and you will get to know the person. Let's spend some time getting to know John D. Rockefeller.Don't be afraid to give up the good to go for the great.
Admit it, most of us don't like drastic change. Sometimes pain lies between where we are and where we would rather be, and if the pain is bad enough, we will settle for the less desirable.Every right implies a responsibility; Every opportunity, an obligation, Every possession, a duty.
We all want our rights, our opportunities and possessions. It's the responsibilities, obligations and duties that we struggle with.Good leadership consists of showing average people how to do the work of superior people.
I love this one! I manage a department of over-achievers and have always considered myself an over-achiever.I always tried to turn every disaster into an opportunity.
Life is what we make of it. Enough bad happens, it would be easy for all of us to quit.I believe in the dignity of labor, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living.
I think I would vote for a presidential candidate that had the guts to say this - and mean it!Charity is injurious unless it helps the recipient to become independent of it.
I know I would vote for a presidential candidate that had the guts to say this - and mean it!I can think of nothing less pleasurable than a life devoted to pleasure.
The successful have always understood this concept. Unfortunately, the general population has always struggled with it.I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature.
Do it long enough and you will eventually get it right!If you want to succeed you should strike out on new paths, rather than travel the worn paths of accepted success.
You Can't Beat the Herd by Following the Herd. :)The way to make money is to buy when blood is running in the streets.
Sounds like a Buffet quote.I know of nothing more despicable and pathetic than a man who devotes all the hours of the waking day to the making of money for money's sake.
We all must have a balance in our life.Do you know the only thing that gives me pleasure? It's to see my dividends coming in.
This wouldn't have been much of a dividends site if I didn't include this one.
Based on Mr. Rockefeller's quotes, I think I would enjoy spending more time getting to know him. For more John D. Rockefeller quotes, click here.
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Where there is no vision, the people perish.
-- Proverbs 29:18
Let's look at a couple of definitions from dictionary.com:
vi·sion [vizh-uhn] : the act or power of anticipating that which will or may come to be
plan [plan] : a scheme or method of acting, doing, proceeding, making, etc., developed in advance
A vision is taking the time to think of (anticipate) in detail what the future will bring. You would need to consider future earnings, savings and economic issues such as inflation. Then based on what you foresee in the future, you would formulate an action plan to ensure the best possible outcome given your unique circumstances. You can't have a retirement plan until you have a retirement vision. It would seem to me that there are a lot or retirement plans out there but very few retirement visions.
Many people are putting money into various retirement vehicles, but they haven't taken the time to envision how it is all going to come together and ultimately if it will be enough. Unfortunately, a significant number of people are not even taking advantage of tools at their disposal. It was noted in a March 2006 CNNmoney article "Retirement: Ready or not? Not, apparently" that
only about 60 percent of workers over 40 who are eligible to participate in their 401(k)s do, and the number of workers covered by a defined-benefit pension has steadily declined. Meanwhile, young workers have the lowest 401(k) participation rates of all workers under 65.
A portion of my retirement planning includes dividend investing. One of the beauties of dividend investing is it provides you continuous feedback. As the years and decades go by you can see your earnings steadily grow as you invest your money in dividend stocks. When you hit retirement it is not that drastic change that many people fear. You have spent a lifetime preparing for it.
Time is only your friend, if you enlist him early. Wait too long and he can be formidable adversary.
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"If a man is a quitter, I'd rather find out in practice than in a game. I ask for all a player has so I'll know later what I can expect."
-- Legendary Alabama Coach Paul "Bear" Bryant
Coach Bryant would push players to the very edge of their physical tolerance and dare them to quit. Many did, but those that remained were battle-tested warriors for which failure was not an option. Adversity will either bring out the good or bad in us.
Players in my portfolio often face difficult times, much of it is often brought on by themselves. Wachovia Corp. (WB), the nation's fourth-largest bank, is the latest example of a financial institution facing adversity. WB on April 14th reported:
- A $393 million first-quarter loss
- That it is looking for a $7 billion cash infusion
- Plans to cut 500 jobs
- A provision for credit losses of $2.8 billion
- Stock offerings for an aggregate of $7 billion
- A 41% cut in its quarterly dividend to $0.375
This is not necessarily a bad thing. When the last financial shoe drops, those left standing will be battle-tested warriors ready to face adversity without blinking. My portfolio just got stronger.
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In this week's celebration of winning and champions, I thought it would be appropriate to see what one of the NFL's most inspirational coaches had to say about winning:
If winning isn't everything, why do they keep score?
-- Vince Lombardi
There is a lot of truth in that statement. We live in a highly competitive world that extends well beyond the sports field. Employers are competing for the best employees so they can better compete for your business. A better business then allows them to compete in the financial markets for your investing dollars. As investors we pit one investment against another when deciding what to add to our portfolio and it shouldn't stop there. Once an investment makes it into your portfolio, it should continue to compete with other investments to keep its spot.
To compete you must keep score. One of the metrics that I use to score an individual stock's performance is Internal Rate of Return (IRR). The IRR is the discount rate that equates the present value of an investment's cash flow to its initial cost and subsequent investments and withdrawals. In simple terms, it is the interest rate you would need to earn to make the same money off of an interest bearing account assuming the same investment.
I have extracted out of my two massive financial spreadsheets a sample model from the portfolio tab that demonstrates how to calculate an IRR for an individual stock investment. Tomorrow I will post a link to the model and describe how to use it.
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This article appeared in The Carnival of Personal Finance #127.
"The people who want to achieve and aspire to be very good in their profession don't mind the way we do things. It's not normal to want to be as good as you can be. It's normal to be average. "
-- Nick Saban, Head Football Coach, University of Alabama
Ok, I'll go ahead and fess up. I am a college football fan, more specifically a University of Alabama football fanatic (Roll Tide!). Unfortunately, we have drifted in and out of mediocrity since Coach "Bear" Bryant retired after the 1982 season. We have had highs like winning our 12th national championship in 1992 and lows of being put on NCAA probation in 2002. We have changed coaches many times since 1982 and each time I hoped the new coach would be a winner. I never knew what was coming, until Coach Saban was hired.
From the first time I heard Coach Saban speak, it was no longer a matter of if we would return to our past championship ways, I knew it was only a matter of time. This is a man that will not settle for average. He points out in his book that his philosophy and teachings are not football specific. They can be applied to anything in life, including your family, your job or even your portfolio.
So many people just put their money in an index fund and are content with earning slightly below average returns (slightly below average = average - a management fee). Don't get me wrong, that's ok for most people. If someone doesn't have the time, desire or aptitude to personally manage their investments, they should be commended for saving the best way they know how.
However, my goal is never to be average. For a market average to exist there must be stocks above and below the midpoint. I'm willing to sacrifice and put in the time and effort necessary to be above average. Time and effort doesn't always equate to success, but it sure doesn't hurt. I would have much rather tried and failed than to have never tried at all.
I'm pumped! Let's go analyze some stocks! Roll Tide!
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