Welcome to my site. Do you recognize where “Hello World!” comes from? If you do, then you might have programmed a few. This type of program is used when someone first attempts a language, because it is easy and demonstrates basic features.
Why am I here? I don’t plan to write a blog on computer programming. It’s an enjoyable activity, but that’s really my day job. I plan on writing about investing on this blog. Specifically long term investing with assets that pay you for ownership. Besides, “investlikegrampa.com” doesn’t have a programming feel to it!
My years of investing have been fraught with peril. I started working in 2006. Can you guess when I started investing?
If you guessed at the top in 2007, then you would have been right. Everyone was making money, I figured why not me? The media was telling me how it was the right time to jump into stocks, everyone had a great stock idea and no one was loosing! Naturally, I began my investing journey.
The first stock I purchased was Buffalo Wild Wings (BWLD). It seemed like a good stock. They were making money and were pretty popular; that was about the extent of my knowledge when it came to evaluating stocks and they were good enough reasons for me. After that initial purchase and the blood bath that followed into 2009, I continued to invest in growth stocks and continued to lose money until mid-2012.
Around that time, I spoke with my Grampa about investing. He was a life long investor/entrepreneur/serial schemer. The conversation went something like this,
Me: “Hey Grampa! Started investing, I bought Buffalo Wild Wings.”
Grampa: “What is that?”
Me: “A restaurant.”
Grampa: “Do they pay a dividend?
Grampa: “If they don’t pay a dividend they aren’t worth owning.”
Preposterous, I thought, but at some point I started reading about dividend stocks. As a younger and dumber man, I had failed to grasp the basic principle of compounding (ironic, considering I have a math degree). I looked at low yielding stocks with disdain, undeserving of my time and money. Somehow, the books I read didn’t mention dividend growth or only mentioned it in passing or I just missed it( ← probably). Despite this, I was intrigued by dividends, but was impatient and didn’t want to get a measly 2.5% yield. So, I went to my trusty stock screener to look for those high yielders.
Around the time I started this, the shippers and business development companies were paying out an absurd amount of money. I invested in American Capital LTD (ACAS) and Paragon Shipping (PRGN), with 8%+ and 12%+ yields, respectively. Coincidentally, I bought these stocks at a high and after dividend cuts and falling prices, I sold them at a steep loss, but not without investing even more money! The yields were even better! Buy High/Sell Low 2, me 0. Beware falling knives!
Fortunately for me, the market hit a bottom. I had continued investing and had recovered my losses through fresh capital injections (not the best way to “preserve” your investments) and the market recovery. I signed up for several investments services and started getting in the green. Still looking for the potential high flyers, I managed to find a few that doubled and one that even quadrupled! Even with the stock market generally rising, I was still finding too many bombers.
In mid 2012, I looked through my investments and noticed that my dividend paying investments were vastly outperforming my other choices (flyers + bombers). I had stumbled into a few Blue Chips (MSFT, KO and MCD). At this point, I realized that maybe there was something to the stocks that paid dividends.
From mid 2012 to now, I converted my portfolio into dividend growth stocks and have been pleased so far. I improved my analysis (still a lot of work to do) and have investments that I am comfortable with and have a tendency to forget. Plus, it is nice to see money appear in your account that you didn’t have to work for.
If you don’t understand just yet, don’t worry. This blog is meant to help me practice what they preached. Two men of modest means, who succeeded at investing and pretty much everything else in life.