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The Dip Is the Deal!
Published about 5 hours ago • 3 min read
Here's your weekly helping of interesting investing information and insights.
Opinion
A famous short-seller named Carson Block recently said something on a podcast that caught my attention. He thinks AI could wipe out around 15% of office jobs — things like legal work, accounting, finance, and analysis — within three years. That's millions of people who might suddenly need money. And when people need money, they sell their investments.
That's important to think about because the stock market runs partly on people buying the dip. Regular people like us with 401(k)s and brokerage accounts who keep putting money in every paycheck. But when people lose their jobs? They stop buying. Worse — they usually start selling. Block says when that happens, there's nobody left to catch the falling stock prices.
Could he be right? Maybe. Nobody really knows. But many experts think the change will be slower and messier than an overnight collapse. The correct answer is: we just don't know when, how bad, or how fast.
But this can be awesome for income investors. If the market crashes and pulls good companies down with it, dividend investors actually have an edge. Because as long as the company keeps paying its dividend, you don't have to sell. You just keep collecting checks. And if you're reinvesting those dividends while prices are low, you're buying more shares on sale. A market crash can literally accelerate your income.
That's where something like SCHD comes in. SCHD is an ETF — basically a basket of about 100 rock-solid American companies that have paid dividends for at least 10 years in a row. Think Coca-Cola, Procter & Gamble, Texas Instruments. Companies that have survived recessions, crashes, and crises and kept writing checks the whole time. SCHD currently yields around 3.4% — about double what the S&P 500 pays — and that dividend has grown roughly 11% per year over the last decade. It's not exciting, which is exactly the point.
Think about it like a job. When you take a job, you ask what it pays. Investing can work the same way. You're not just buying a stock — you're hiring a company to send you income. The key is making sure the income is coming from a healthy, sustainable source. Chasing a crazy-high yield with a shaky company is like taking a sketchy job that pays great until it suddenly doesn't.
Nobody knows if Carson Block is right. But history is pretty clear on one thing: if you own great companies that keep paying you, the crash is less a disaster and more a sale. And sales are only bad if you're the one being forced to sell.
What I'm Reading
If you're invested in any publicly traded BDCs, you likely have exposure to private credit and by extension, direct lending. Howard Marks has over 50 years in the markets and breaks down what's going on with private credit. [Link to article]
And whether TransDigm (TDG) and Copart (CPRT) should be cut.
Worth a listen if you're curious about Exor especially — it's the Agnelli family's holding company, kind of like a European Berkshire Hathaway, and not a name most retail investors know about.
Disclaimer: This is not investment advice. Do your own research before making any investment decisions.
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🎦 If you missed it, I'm eating crow in this one for calling General Electric (GE) "risky" before it's 2021 reverse split... but sharing a very important lesson learned.
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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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