These ideas can help you grow and protect your capital and income.
- The world’s most successful investors know the difference between price and value. When a business is worth $50 per share and you can buy shares for say $25, it is like buying a dollar for 50 cents. Search for quality companies when they sell at a discount to intrinsic value.
- I have found investing in a business that consistently increases its dividends is a smart strategy. Dividend paying companies tend to outperform those that do not, even when markets decline. Dividend paying firms that also buy back their shares can help boost returns and reduce volatility. Let the magic of compound interest work in your favor.
- Growth investing can be a trap. Many tech stocks pay no dividends and typically sell at inflated prices. Most should be avoided. Dividends matter. Many tech products become obsolete too fast.
- Look for companies with powerful brand names. Consumers spend more on names they trust. Of course exceptions exist, but big money is made on brands we know and recognize.
- Consider investing in health care firms when the shares are on sale. The demand for health care is growing because of our aging population. Ten thousand people will turn age 65 everyday for the next 15 years.
- Avoid companies with high debt. In my experience, the best investments have little or no debt.
- The ideal is to own a diversified portfolio of businesses that are well managed, have rising earnings and dividends, strong relative strength, well known brand names, low debt, and sell for bargain prices.
Finally, decide in advance when you will sell if the market goes against you. The key is to keep losses small. Many people make the mistake of hanging on too long, only to see losses grow. PCM has a disciplined asset allocation model designed to protect capital in bear markets and beat inflation. We can help you create and implement a plan based to meet your goals and priorities.