Much has been written here on Seeking Alpha that has gone well beyond the usual stock picking websites that flood the internet these days. If I had to point to ONE reason that SA offers far greater investor insight, it has to be our family of readers and commenters who make up the vast majority of what SA offers to everyone, for free.
Every subscriber here and every investor has their own idea as to what will work to make more money in the markets and secure a better financial future. The two categories that seemingly are the most contentious are between those who invest for growth and those who invest for income (aka DGI'ers). While it may appear that these two strategies have different goals, it actually is a personal choice. The style an investor ultimately chooses is the one that's best for their needs, goals and desires. Neither corners the market on being the best of all worlds, and nothing can crystallize that more than a wonderful comment from a Seeking Alpha subscriber and commenter.
An Article That Opened Up Many Distinctions
This article brought out the best (and worst) of both investment worlds; growth versus income and the plethora of comments that were embraced by our community in ways that showed the difference of opinions most investors have.
In my new series of articles, I will select one or two comments from our family here at SA that offer the most helpful insight, in my opinion of course, for our community at large. To me, and most other members here, the comment threads for each article are the backbone and the lifeblood of the SA community, and more often than not are of greater help than the article itself. Each comment gives meaning to so many others and many should be duly noted for that.
In this particular article, it was argued by the author that dividends are not that reliable. I found the following comment to be spot on, and should be a gateway into further discussions and dialogues:
Thanks for your article and critical view on DGI. Assuming that you are 100% correct with your analysis and conclusions, my question to you is: if "dividends are not reliable" what is reliable? What type of investment in your opinion would offer more reliable long-term return and growing income at the same time?
I'm not idealizing DGI and do not view this strategy as a perpetuum mobile, as some Seeking Alpha readers may tend to think of dividend-paying stocks. As we all know, nothing is certain in this world (except taxes and death). However this strategy offers very important elements that makes it very attractive for DGI investors: GROWTH of principal and GROWTH of income. Whether or not the growth of income will be always sufficient to beat inflation, is a question that definitely needs to be discussed. But I'm not aware of any other investment strategy that would offer similar characteristics.
The simplicity of this comment highlights that while in agreement, the commenter also raises the absolute best question: "What IS reliable"? That penetrating question reminded me of an old Lewis Carroll saying that rings so very true:
"If you don't know where you are going, any road will get you there"
A perfect comment within an outstanding article and an old saying that can bring us together to find Alpha. With this in mind, I decided to take a "baby step" into attempting to help - in as simple a way as possible for me - to just begin, hoping to help investors discover what type of investor they truly are, because reliability is a personal choice when investing.
This unscientific, informal, basic start hopefully will help folks begin the most important part of each personal investment journey - asking the question: "Why am I investing?"
I needed to start somewhere to see where this will lead, so I have put together a very simple quiz that might actually help folks begin the thought process to figure out their individual investor type.
There Are No Right Or Wrong Answers; It Is All About Discovery
The vast majority of SA subscribers already have a handle on this, but as each day passes, more and more folks come to SA to learn something, not simply to pick a stock that might make some money or lose a fortune. In this vein, here are 5 simple questions based upon two completely different types of portfolios with the barest of stock selections within each portfolio.
Combined, these small portfolios include the following stocks: Amazon (NASDAQ:AMZN), AT&T (NYSE:T), Coca Cola (NYSE:KO), Exxon Mobil (NYSE:XOM), Facebook (NASDAQ:FB), Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Johnson & Johnson (NYSE:JNJ), Netflix (NASDAQ:NFLX), Procter & Gamble (NYSE:PG), and Tesla (NASDAQ:TSLA).
Aside from being the most obvious growth stocks and the most obvious income stocks, there were no other metrics used to select the stocks aside from all of them being very well known and popular in each category.
Here are the 5 simple questions that I will ask you to answer, hopefully within your comments:
Now for the far less than simplistic results to at least begin to get everyone thinking and adding to the discussion:
You can use this as a tiny starter kit but there are many more equations to the total final answer. The idea here is to open a dialogue, a meaningful one, to help many more investors find out what path might suit them best at the present time.
Yes, many will want to make some sort of combo-platter and that is perfectly fine as well. If you choose that, which of these would be part of your little portfolio?
The Bottom Line
I hope to have this type of article, which will highlight a reader and commenter from around the Seeking Alpha world of amazing articles, on a weekly, weekend basis for all of us to hopefully participate in and bring forth even more ideas to share, and for all to reach Alpha, our ultimate goal.
Please participate and let's help others!
Disclaimer: This is a purely unscientific adventure that I hope will garner many comments from around the SA community in an effort to educate and illuminate. There are no recommendations of any approach or strategy or stock to either embrace, follow, buy or sell.
Disclosure: I am/we are long FB, JNJ, KO, PG, T, XOM.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.