Tuesday, September 30, 2008

My Main Investment Objective: To Generate a Reliable, Growing Stream of Income from Stocks

Wow, these markets are in no way fun! I don't know about you, but I am sick of the volatility, the fear that we are seeing in the market, and the relentless pontification of the newspapers and media companies covering this like it is the end of the earth. These media companies love this kind of stuff because it sells paper. I however have decided to ignore as much of it as possible and stick to my main investment objectives. It is simple really, and it is one that I am confident that will carry me for many years to come.

Markets go up and markets go down. Remember, the tech bubble? That was supposed to be different. Remember Y2K? That was supposed to change it all. Remember 911? The markets were never supposed to be the same after that. My guess (and it is a guess) is that when we look back at this in 5 to 10 years time it will be more of the same. Just a period of intense volatility that while it was happening seemed like the end of the world was coming. Could I be wrong? Sure, but history has told us each and every time that the market recovers eventually and goes on to surprise us with new highs. Time will tell.

Where does that leave me today? As a dividend investor I have been doing some thinking and have come to the conclusion that even with these intense markets, I really have only two investment objectives. The first is to conserve my investment capital. That means that I need to continue investing to a sound and diversified asset allocation that portects me from the risks of an all equity portfolio. That means being not only in fixed income stocks, but being in emerging markets, REITS, and small-cap stocks.

The second investment objective is to continue on with my strategy of generating reliable and growing stream of income from stocks. This way, I do not need to worry about prices too much and instead can focus on watching my portfolio continue to throw off cash and eventually a growing stock price as well. History has proven that increasing dividends has the effect of raising stock prices over the long term. In the end, I believe that my stock prices will catch up once again.

Of course, I could be wrong. However, I am not going to look at the newspapers to tell me what to do...

This article was written by The Dividend Guy. You may email questions or comments to me at info@thedividendguyblog.com.


  1. DG,

    I like your approach. Just when it feels like the world is coming to an end you should step in, close your eyes and buy..

  2. These markets are fun in my opinion. I just wish I had more cash...

  3. I'm with Money Gardener - I wish I had some more money freed up to put to good use.


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