"Yeah, but what if…?"
That's the question everyone is asking me these days. What if Europe collapses? What if Obama is re-elected? What if he isn't? What if all the money that the Fed is printing leads to hyperinflation? What if interest rates stay low for years? The list goes on and on. In today's 24-hour news cycle, people have a hard time believing that each event won't have a lasting impact on the world and our future.
Whenever I'm asked those questions, I want to emulate the campers in the Bill Murray classic Meatballs and start chanting, "It just doesn't matter."
Instead, my response to those fearful questions is, "So you're saying it's different this time?" And to my surprise, often the answer is, "Yes." Maybe it is different this time. But I doubt it. Sure, our problems are serious and need to be addressed, but the world and the United States have always had problems and crises that were either dealt with or weren't and the world kept spinning on its axis and the market kept going up. The Great Depression, World War II, The Kennedy Assassination, Watergate and 9/11 were all game changers in the United States in one way or another. Yet, the market kept doing what it has always done - go up over the years.
In fact, if you're invested for the long-term, particularly if your money is in stocks that raise the dividend every year (Perpetual Dividend Raisers), you shouldn't let any of today's issues that have politicians (and newsletter writers) breathlessly ranting, impact your investing decisions.
You see in the last 74 years, there have only been seven instances where the market did not go up over 10 years. A 91% win rate. The market has never been down over 20 years. All seven down periods were tied to the Great Depression or Great Recession. And keep in mind that not all years attached to those periods were down. For example, 2000-2010, which included two nasty bear markets, was actually up for the 10 years when you include dividends.
Including the down years of the Great Depression and Recession, stocks on average more than double every 10 years. Dividend Aristocrats - stocks that have raised their dividends for 25 years in a row - nearly triple on average.
But the way to make real money in the markets isn't to just blindly buy and hold. You still need to be in the right stocks. And investing in Perpetual Dividend Raisers - companies with a track record of annual dividend raises - are the right stocks. It's a conservative strategy that hits homeruns. You don't need to speculate on penny stocks to make great returns in the market.
For example, 10 years ago, if you bought boring Procter & Gamble (NYSE: PG) and reinvested your dividends, you more than doubled your money. Exxon Mobil (NYSE: XOM) generated a return of 169%. And if you had put $10,000 into McDonald's (NYSE: MCD) 10 years ago, your investment would have turned into $48,086. This, during a period when the S&P 500 returned 30% (including dividends) over a 10-year period.
And for investors who need income today, investing in Perpetual Dividend Raisers is about the only way to stay ahead of inflation. Munis and Treasuries sure won't. Their yields are already below the current low inflation rate. And if inflation picks up over the years, investors in those securities will be left in the dust with significantly diminished buying power. Finding the right Perpetual Dividend Raisers assures you of an increase of 8% to 10% in your annual dividend income.
Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U (and affiliated companies) must wait 24 hours after an initial trade recommendation is published on online - or 72 hours after a direct mail publication is sent - before acting on that recommendation.