| Here's how you can set up your portfolio according to the same principles. 1. Play a Strong Hand For most of your portfolio, you should do the equivalent of holding two aces: own Perpetual Dividend Raisers. Holding two aces doesn't guarantee that you'll win the hand, just like owning a quality dividend growth stock doesn't guarantee that you'll make boatloads of money. But it greatly improves the odds. A company that has a decent dividend yield and grows its dividend by a meaningful amount will generate a solid return each year even without price appreciation... but Perpetual Dividend Raisers also tend to outperform the market over the long term. RTX (NYSE: RTX), for example, has a 2.2% dividend yield and has raised its dividend every year for over 30 years. Over the past five years, the dividend has grown by an average of more than 6% per year. Meanwhile, the stock has outperformed the S&P 500 even amid the second straight year of a raging bull market. RTX is up 36% this year, while the S&P 500 is only up 28%. The five stocks I highlight in my Ultimate Dividend Package also have strong track records of growing their dividends and creating value for shareholders. You could have the names and tickers of all five sitting in your inbox for free in a matter of minutes - just click here. 2. Give Yourself an Edge Sometimes, a good poker player will play lower-quality hands, like a 9 and an 8 of the same suit, if they're in late position and believe they have an edge. That would be the equivalent of buying a stock in an industry that is poised to benefit from current conditions. For example, if energy prices rise this winter because of the unrest in Russia, Ukraine, and the Middle East, most oil stocks will probably do well as the entire sector climbs higher. You don't necessarily need the top stock in the industry to make money. 3. Know When to Fold 'Em Then there's the bluff, which is when a player has a garbage hand, like a 10 and a 6, but plays it like it's a great hand. A good player will know whether to bluff and try to make their opponent fold a good hand or simply lay down their cards to avoid losing a lot of money. In the investing world, that could mean taking a flier on a small stock or option with an upcoming catalyst. If you're right, you can make some great money. If you're wrong, you need the discipline to get out quickly so a small loss doesn't become a big one. Don't let a trade become an investment. Have the discipline to fold your cards if it's not working out so you have enough money to play another day. Turn the Odds in Your Favor Like poker players, investors who are undisciplined can get lucky once in a while, but they will lose over time. The ones who are disciplined almost always make money over the long run. Yell and scream like Phil Hellmuth when a trade goes bad if you want... but if you make smart decisions like he does, you likely won't need to. Good investing, Marc | 
No comments:
Post a Comment