Bloodbath on the Market! Everything on Sale!

Stocks crashed yesterday and for anyone that is long term, need not to worry, as long as you are in solid companies none of the fundamentals of the companies changed.  Here is an excerpt from “The Intelligent Investor” by Ben Graham and how you should see how the news was presented yesterday.

Stocks are crashing, so you turn on the television to catch the latest market news. But instead of CNBC or CNN, imagine that you can tune in to the Benjamin Graham Financial Network. On BGFN, the audio doesn’t capture that famous sour clang of the market’s closing bell; the video doesn’t home in on brokers scurrying across the floor of the stock exchange like angry rodents. Nor does BGFN run any footage of investors gasping on frozen sidewalks as red arrows whiz overhead on electronic stock tickers.

Instead, the image that fills your TV screen is the facade of the New York Stock Exchange, festooned with a huge banner reading: “SALE! 50% OFF!” As intro music, Bachman-Turner Overdrive can be heard blaring a few bars of their old barnburner, “You Ain’t Seen Nothin’ Yet.” Then the anchorman announces brightly, “Stocks became more attractive yet again today, as the Dow dropped another 2.5% on heavy volume-the fourth day in a row that stocks have gotten cheaper. Tech investors fared even better, as leading companies like Microsoft lost nearly 5% on the day, making them even more affordable. That comes on top of the good news of the past year, in which stocks have already lost 50%, putting them at bargain levels not seen in years. And some prominent analysts are optimistic that prices may drop still further in the weeks and months to come.

The newscast cuts over to market strategist lgnatz Anderson of the Wall Street firm of Ketchum & Skinner, who says.
“My forecast is for stocks to lose another 15% by June. I’m cautiously optimistic that if everything goes well, stocks could lose 25%, maybe more.”
“Let’s hope lgnatz Anderson is right,” the anchor says cheerily. “Falling stock prices would be fabulous news for any investor with a long term horizon. And now over to Wally Wood for our exclusive AccuWeather forecast.”

Happy Investing.  Lets keep on investing.

Investing for the Long Term

Frequently enough, you will get notification from traditional budgetary organizers that rapidly entering and leaving certain securities exchange ventures has the reasonable probability of being a pointless try, and for the most part the clarification “why” basically concentrates on the way that stock exchange costs are whimsical in the transient and can take forever and a day to effectively mirror the estimation of the undertaking you have at the top of the priority list. That is totally part of the condition, yet there is a whole other world to it than that: the greater part of the stock exchange’s additions come in short blasts that are uncontrollably flighty.

On the off chance that you expelled the 100 greatest days in securities exchange history since 1926, you would lose 33% of your riches. That is psyche boggling to consider—the organizations that make up the real lists, for example, the Dow Jones and the S&P 500—don’t move in some direct design that give you 10% returns every year, except climb and down in fits and spurts.

I’ll give you a few case to bring home the point:

October 13th, 2008, was one of the best single days in securities exchange history. The stock exchange went up 11.08%. Considering that we were amidst a noteworthy securities exchange revision, this day could have effectively been missed by a financial specialist that poorly planned his way out methodology. It would have sucked to offer out on October twelfth.

On October 28th, 2008 (that same month!), the share trading system went up 10.88%. The recorded normal for extensive top American stocks amid the twentieth century was increases of around 10% every year. That solitary October day in October gave financial specialist’s over a year of increases.

There is a not insignificant rundown of 98 other “critical” securities exchange picking up days that proceed with in this vein. Walk 23rd, 2009 saw the share trading system go up 6.84%. There were three diverse days in November 2008 that saw money markets move more than 6%. Walk 2008 had two separate events of almost 4% day by day picks up. July 24th, 2002, saw a 6.35% addition, and after a week on July 29th, the share trading system saw a 5.41% increase. Those are only case from the post-2000 period, yet in the event that you audit the twentieth century by and large, you will probably achieve the conclusion that the vast majority of the share trading system’s increases come in down to business spurts, and that is the thing that can “advertise timing” a slacking methodology.

That is the sort of motivation behind why you turn on the TV to CNBC, watch the folks on Wall Street, and see them look so hopeless. They are attempting to figure the transient bearing of costs, and that is a simpleton’s amusement. You can spend your life concentrating on the strategies of Walter Schloss, Warren Buffett, Irving Kahn, and Charlie Munger, and after that you can assemble a respectable quality contributing vocation for yourself. How the hellfire would you be able to be a decent market clock? Who realized that October 2008 would have two days when the share trading system went up by more noteworthy than 10% in a solitary day? Who realized that July 2002 would have a few days with 5% or more increases each? On the off chance that you think you can foresee those sort of value changes, you should purchase yourself a gem ball and drop the figment that what you are doing is contributing.

I need you to have a decent putting life that suffocates you in pay like clockwork without you stressing about business sector variances. We have these superb American organizations sitting right in front us, beseeching us to end up their proprietors. We as a whole know Coca-Cola. It’s been raising its profit for a large portion of a century. It has a 30% profit for shareholder value. It’s expenses are insane low. The volume shipments become unassumingly with time. What’s more, in the event that you purchased $10,000 worth of Coca-Cola stock a quarter century today, and reinvested the profit, you’d be producing $5 in Coca-Cola profits each day. I know a lady that works the midnight shift at Steak ‘n Shake, and it would take her a hour of working from 2 AM-3 AM each day to procure the same measure of cash as you’d be getting from your Coca-Cola possessions only to wake up in the morning.

The share trading system picks up go back and forth in short blasts. Missing those short blasts in part clarifies why most financial specialists can’t beat most list assets. That is the reason I am partial to the expression “it is time in the business sector, not timing of the business sector” that matters. Anticipating the day by day vacillations in stock cost is an unpleasant waste of time. Warm don’t need to play that. Adopt the thought process of an entrepreneur. Decide the sort of organizations you hope to be gainful quite a while from now, decide a discerning cost to pay for those stocks, turn into a proprietor, and after that kick back and gather the profits while observing the long haul soundness of the firm. Get in the propensity for organizing your life so that crisp profit money is continually getting piped into your record. Try not to stress over the everyday variances. The enormous additions come to put it plainly, erratic blasts at any rate.

May 2016 Dividend Update

I follow a dividend-growth investing strategy. I started investing for the long term in the stocks of companies that not only pay dividends, but consistently increase their dividends from year to year. Almost every single week there is a small deposit in my brokerage account, I transfer more money and buy more shares. I reinvest the dividends and invest new funds I save from my job income. My ultimate goal is to create a sustainable, rising stream of dividend income that will eventually exceed the income from my job and allow me to be financially secure in retirement. I have been working to achieve this goal by building and maintaining a compounding machine that has three key parts: dividend growth, dividend reinvestment, and investment of new funds.

Any spare change or amount that is left over at the end of the month plus any automatic contributions are transferred to my Robinhood account, because it doesn’t charge commissions to buy stocks, I am able to buy shares and add to the pile on a weekly basis.

The final tally for May 2016 in Dividend Income was $18.16

Start Investing Now

The key to getting started is getting started. If you have a few hundred bucks laying around, that’s OK. If you signup with a brokerage such as Robinhood, your commissions are basically free so the few hundred bucks you have laying around can be used to its entirely to buy stocks. Once you have your account opened, transfer the money and just do it. Get your feet wet by investing in a company that you already understand and buy products from. The best way to learn to invest is to get started.

Think long-term, dividend investing should not be seen as a fad nor something to jump in and out of. It’s a get wealthy eventually strategy. This means you need to find established companies that have paid dividends for decades, if not generations; buy those companies at reasonable prices, and then hold those companies for income, for the long-run. Over time, you will need to diversify your holdings, across sectors and across countries. Plan on holding those companies for years, decades in fact, and buy more stock when possible. You can take your time with this approach to build up a portfolio of 20-30 dividend payers (spanning many industries) that, with some luck, can fund part of your retirement without the need to sell your stocks until you want to.

Always pay yourself first. Put aside a automatic transfer from your salary each time you get paid. Regard it as the most important bill you need to pay. All things considered, you need to eat tomorrow, isn’t that so? What’s more, the future you will thank you for perseveringly setting a little aside. Even if you’re on minimum wage, still do it. Simply exchange a little sum and utilize the least expensive investing service you can find, for example, Loyal3 or Robinhood.

The stunning thing about profit development stocks as time goes on is that the arrival from value gratefulness turns out to be less and less critical over the long haul. A stock with a 3% yield and a 7% profit development rate more than 20 years will have a 176% aggregated return exclusively because of profits. This implies the cost of the stock could drop by a third amid that time and the speculator would at present see a yearly rate of return of 4.5%.

Dividend Growth Model

The Dividend Growth Model, otherwise called the Gordon Model, is a technique for deciding the estimation of a stock or business. This model is utilized as a technique for venture taking into account the current yield. It values an organization in view of the profits at present paid and also the example of profit development that the organization has shown for the future. In spite of the fact that not all financial specialists are alright with this procedure, it is a critical idea for profit speculators to get it.

Organizations with sensible payout proportions are considered as dependable and safe speculations that offer pay and in addition an open door for capital development. The profit development model reflects how an organization has performed previously.

Since it is only a pointer of past execution, it won’t ensure how an organization will do later on. Notwithstanding, we can just utilize the data that we need to settle on an educated speculation choice. In this way, in making a speculation, the profit development model is an extremely valuable apparatus for the development of your arrangement of ventures that try to give a developing pay stream. Notwithstanding, it is not the most important thing in the world of due ingenuity that ought to be performed on an organization.

Obviously, as with any valuation model, there are dangers connected with contributing in view of simply the profit development model. It does, in any case, give a decent information point to your speculation investigation.

To know whether the profit development rate development can be supported for a long time, one can likewise assess the business development and overall revenue patterns. As economic situations transform, it is helpful to keep on running potential speculations through the profit development model, representing changes in profit development rate and the profit payout.