Wednesday, May 6, 2009

Investor or Speculator

If you decide to buy stocks in a stock market, one of the important questions to ask yourself is what do you want to be? An investor or a speculator? If you want to be an investor, you are more focused on what your stock is earning you. You want stocks that at the least raise their dividend by the amount of inflation. A lot of good dividend paying stocks raise their dividend much more than the amount of inflation. These are the best sort of stocks to own.

We are currently in a bear market. Whether this is a secular bear market or a cyclical bear markets, I do not know. We could be pulling out of a cyclical bear market, or we could not be. There are lots of people that think we are in a secular bear market. They basically think that it started in 2000 and still has a number of years to run. This is like what happened in the 1970’s (1966-1982). If this is true, it might last until 2012-2014.

What has happened to my stock when we have had bear markets in the past? Whenever the market has fallen in the past, my yields have just gone up. Plus, the stocks I have bought have mostly increased their dividends over time. Since our current stock market troubles have started, I have had a couple of stocks decrease or cut their dividends, but most have done what they have done before. That is, increase their dividends. This means that I have continued to earn higher and higher dividends.

There are always cyclical bull markets within a secular bear market, so there will be times to sell. There will also be great times to buy. I am an investor, so I will continue to buy good dividend paying stocks and collect my dividends. I mostly focus on my dividends, and value my stocks and my progress with increases in dividends. I started investing in the 1970’s and there were companies then that paid dividends and increased their dividends on a regular basis.

So, what I am sayings is that I still think that the “buy and hold” method will still work. I just think that it all depends on what sort of stocks you “buy and hold”.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets.

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