Investing in stocks can be highly rewarding -- or excruciatingly costly and painful. Confucius said, “Life is really simple. But we insist on making it complicated.” Warren Buffett, in applying Confucius’ wisdom to the world of investing, said “Investing is simple, but not easy.” This is a great truism for investors to always keep in mind. It’s not easy because we humans have a penchant for complicating things, especially when it comes to investing our money. Earlier in my “investing career”, I was a pure value investor but I came to appreciate that there was value in paying-up for quality. So about 25 years ago, I settled on my approach to investing which can be summarized in four compound words: Quality-Value, Large-Cap, Dividend-Growth, Long-Term - that is, a long investment horizon. My ideal holding period is forever. By “Quality-Value,” I mean quality companies whose stocks are trading at a fair price. I only want to own great businesses that are managed by seasoned professionals who are good capital allocators. And I want them to have skin in the game. By this I mean I want them to own equity in the business and think and act like owners. My goal in value investing is to find diamonds in the rough - stocks of companies that the market has temporarily undervalued. In other words, companies whose stock prices do not reflect their fundamental worth or intrinsic value. Some value investors only look at present assets and don't place any value on future growth. I include the estimation of future growth and cash flows in my investment analysis. Despite the different methodologies, it comes down to the same thing: trying to buy something for less than it is fundamentally worth. With large-cap stocks as the starting point, I focus on value and dividends, particularly dividend growth. In my experience, dividend-growth investing is a value tilt in disguise. A long investment horizon is a key advantage individual investors have in generating real net returns versus institutional investors. The “pros” are evaluated at least quarterly against benchmarks and their professional peers and are under pressure to make many buy and sell decisions within short periods of time and. As a group, they turn their portfolios over more than once a year, often for no other reason than "window-dressing." All of this activity increases costs and judgment errors, making it more difficult for them to be correct all the time. Instead of making just a few thoughtful investment decisions per year, professional portfolio managers are making hundreds. Individual investors are not under such pressure to swing at so many pitches. A speculator tries to predict the thinking and actions of others. But as someone once said, "It is difficult to make predictions, especially about the future." Because I am investing for the long term in a diversified portfolio of carefully selected companies with broad economic moats and timeless businesses, I don't have to speculate on the gyrations of global market or the behavior of other investors. By staying focused on the fundamental value of the underlying businesses in making our investment decisions in the first place, we have no need to fear fluctuations of the stock market. I don't panic in the inevitable periodic bear markets. Volatility is a fact of life for investors in the stock market. Periodic market downturns present opportunities to acquire additional shares of quality businesses when they go on sale.
My investing style focuses on what I believe is difficult to price, particularly scenarios that are simply not on analysts radar. I pay high attention to insider c suit buying, an activist on board, or a bullish revenue related thesis that is not under managements control (commodity price swings, aggressive customer growth etc).
I'm a father and grandfather. I had a wonderful career as an art director and creative director in advertising, eventually leaving my "day job" to write and illustrate children's picture books. I've been investing for a long time with no formal financial background, but I'm learning every day. I consider myself a "Dividend Bull", and I always re-invested my dividends automatically from no-load mutual funds and stocks. In the past two years, I've become more aware of dividend growth stocks, and I have been re-balancing my portfolio to be more selective in choosing dividend stocks. In light of the last two turbulent years, I'm more convinced than ever that this is a good way to go, eventually stopping my re-investing and just receiving dividends in cash. I thank SeekingAlpha and many of the fine contributors for the many things I keep learning about investing.
I enjoy studying, analyzing and making money with stocks.
Some of the best dividend growth investing authors on Seeking Alpha include the following in alphabetical order: Adam Aloisi, Chuck Carnevale, Chowder, David Crosetti, Mike Nadel, Dividend Sleuth, David Van Knapp, and Bob Wells.
I've previously worked as a fixed income trader, financial analyst and operations analyst at banks and investment firms in Canada and Colombia. My writing here at Seeking Alpha focuses on dividend stocks, Canadian and American, with a few outliers here and there. Thanks for reading!