Each week you'll learn how to be a better dividend investor and follow the journey of a welder with a passion for passive income to $1,000,000 and beyond.
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Below Zero: Where Smart Money Grows
Published about 1 year ago • 3 min read
Presented By: The Early Bird from MarketBeat
Official Affiliate Partner: The Early Bird from MarketBeat
I was stopped at an intersection in Elk Grove Village, IL, on Tuesday morning, looking at the Elk Preserve. Good God, was it cold!
The air temperature was -8°, the wind chill was -25°, and the Elk were hanging out in an open field, naturally making me think about investing.
Our furry friends, the Elk, have been around for 25 million years and have adapted and evolved to survive the harshest winter conditions.
Our good friend, Mr. Elk
Elk shed their summer coat and grow a thick, two-layer, wooly winter coat that's 5 times warmer. They've also learned neat little tricks, such as losing less heat if they tuck their legs underneath them when lying down.
And you know what happened to the animals that didn't adapt and evolve?
They went away.
Investors adapt and evolve to survive the harshest market conditions, and those who don't likely will watch their money go away, too.
I started "investing" in penny stocks. This was a fun and frustrating way to light money on fire.
Then, I became a swing trader, which improved my results until it was time to sell. I learned I'm awful at following rules and holding too long, for better or worse.
Next, I stumbled into dividend investing, where a "buy-and-hold" tendency is an advantage—provided the correct companies are bought and held.
My buy-and-hold strategy has evolved, such as my shift away from chasing yield, buying companies without a solid dividend growth streak, a microscopic dividend growth rate, or companies with a dividend payout ratio that's chronically too high.
An example was buying AT&T (T) and Verizon (VZ). These companies operate in highly competitive and capital-intensive industries, and paying a high dividend dragged on the total investment return.
I realized that companies like this are best left for those using passive income to live without worrying about stock price growth.
If you follow my content, you know another evolution is underway. In this one, I aim for no more than 15% individual stock exposure across our entire investment net worth.
It's an admission that I'm not smart enough to "beat the market," but I still enjoy researching and picking individual companies for passive income.
But our money must survive the harshest market conditions and my stock-picking abilities.
Famed investor Joel Greenblatt's quote hits home, and sometimes I wonder, "Am I an idiot?"
I don't want to be an idiot with our money.
The goal is to have enough money and passive income to do what I want, when I want, with whom I want, and keep things I don't want to do at a minimum.
Your end goal may differ, but that makes this investing journey so much fun: meeting everyone and learning what you all are buying and investing for.
I'd love you to reply to this email and tell me your end goal or what you're buying. I'll reply to every response!
😁THANK YOU to all who responded to the last newsletter!!
William Green, author of one of my favorite investing books Richer, Wiser, Happier, was a guest on the afford anything podcast. This was a fantastic episode my wife and I listened to driving to Indianapolis, and she enjoyed the stories that William shared. Check it out!
🎦If you missed it, 18 cheap dividend stocks with strong or very strong credit ratings + a hack to get FREE Morningstar reports!
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Each week you'll learn how to be a better dividend investor and follow the journey of a welder with a passion for passive income to $1,000,000 and beyond.
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