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The New Year and all that jazz


by Mr. T
Columns

 

I don’t view investing as a 12-month cycle and neither should you.  Instead, investing is very much like life. Birthdays don’t mean a thing after a while, except that you are happy to have another one to celebrate. But, they really don’t change anything and neither does the fact that today is January 16 2012.
I mean, you have to suspend the belief when you can argue that somehow, today means that a specific company is any better or worse than it was last week or last month or last January. That’s not how it works. Companies evolve. They press on with their activities and the only thing that changes for them is that they have a new financial budget for the next 12 months. But, budgets are “wishful thinking”.  Many companies determine what revenue and profit they want versus the prior year and then back into the numbers for their spreadsheets. However, unless something dramatic happens to your business model, you are facing the same synergies as you did in the past year.
In my opinion, investing, especially for retired and almost-retired folks are a borderline full-time job. To manage my own investment decisions, I have created a number of screens that I run monthly to find “values” in dividend growth stocks.
Once I find a likely candidate, I do more research online with prominent investment analysts and try to absorb their spin on the company’s story. Once I am convinced that I want to go along, I set an entry point for my price - unless the company has met that entry already. Then I go along. It does not matter if it’s January or June all I want is a piece of that particular business.
I had been looking at one business for a while, watching it drift lower and lower. In the meantime, I had been reading everything I could about it.  I Googled articles and immersed myself in the pros and cons of the company, their business model and their management. I got a look at the good, the bad and the ugly.There came a time, though, when the thinking was done and it was time to take it out of the talking stage and get it into the action stage.



My thought process here is related to two ideas: 

1.  Buy low and sell high.
Try to do it in every business; get in businesses that are struggling, because of cash flow problems, management deficiencies and some other variables that you can arm twist. Be disciplined, change and look forward.

2.  I don’t have to be “in love” with a company to own it.
I do not invest for any other purpose than to make money. I make money in two ways - first and foremost, by dividend growth and secondly, by capital appreciation. I do not have to like the management or the product or the industry, in order to own a company. All I care about is “can I make money?”  Pure, simple and very mercenary.

Surely in Namibia, we need the innovators and aggressive investors. The USA has grown to be the leader because of people like George Soros, Donald Trump and many others. My desire is for you and me to start 2012 with a desire of creating one George Soros too.