“Patience is a virtue” has long been touted as a common truth for happiness. The ability to wait for something without being agitated is considered a state of “moral excellence.” Admittedly, exercising patience is not easy and goes against our instincts. Whether waiting for a delayed flight to depart or for the stock market to turn around, the wait can be frustrating. I’m sure you can agree that not many good decisions are made when we are feeling impatient. I’m just as guilty. Like the time (or two) my wife had to stop me from chewing out our waiter when our dinner was taking much longer than expected. The extra 45 minutes of waiting was not filled with romantic, “candlelight” conversations either. No, that time was filled with anger, complaints, and death stares at the swinging kitchen door whenever a waiter would emerge. Looking back, I’m not sure why I was so agitated since I wasn’t in a hurry to get home and even wanted quality alone time with my wife. And in the end, I was served a delicious steak which was a humbling reminder that some good things take a little extra time to work out.
I understand that waiting an extra 45 minutes for dinner is no comparison to waiting months or even years for the stock market to deliver expected returns. But, if you are younger, you likely have plenty of years ahead of you to wait it out. Your current lifestyle is dependent upon your salary and career. Unemployment is at an all-time low, and wages are only going higher, so your financial security is probably not at risk. Of course, you can be angry and complain that your retirement account is down. That’s normal human behavior. Or you can view this correction as an opportunity to purchase even more shares of great long-term companies at discounted prices. You will undoubtedly be rewarded with something much better than a juicy steak. You will very likely be rewarded with future wealth and the financial freedom not to rely on a career. Stock volatility works in your favor IF you have the right mindset to take advantage of it. My advice... go for it.
And if you are already retired, you may be concerned that you do not have the time to recover temporary losses. You are likely pulling money out of your accounts each month to supplement your income and are already fully invested. You are ok to wait as well, assuming you have followed our advice and filled your portfolio with mostly dividend-paying stocks and income-focused securities. Because, unlike the long-term growth investors (me included), you are getting paid uninterrupted dividend cash distributions from your investments while you wait for the eventual recovery. Imagine if your waiter dropped cash on your table for each minute your dinner was late? You probably wouldn’t have been as upset as I was that evening at the restaurant. One of the most impactful benefits of dividend investing is getting paid while you wait. Even better is that the longer you exercise patience, the higher the amount of cash you will receive. Many stocks increase the dollar amounts they pay in the form of dividends each year. Our dividend model is no different. Our basket of recommended stocks increased dividend payouts by an average of 11% over the last year. Perhaps just enough to keep up with inflation, but a worthy accomplishment, nonetheless.
You can download a detailed spreadsheet from the link below.
Many large publicly traded stocks are ramping up their dividend payouts because, despite current macro conditions, they are still healthy, profitable, and sitting on a ton of cash.
Remember that everything is cyclical. Inflation, war, pandemics, and supply-chain crunches are not permanent. In our view, we are still in the midst of one of the greatest eras of technological innovation in our life, which will lead to less disease, more intelligent computers, better efficiencies, and greater productivity. We believe the secular bull market that began in 2010 is still alive but is dealing with the aftermath of a once-in-a-century global pandemic and all that has erupted from it.
We don’t know how long we will have to wait to finally overcome the current challenges, but we can still make the most of our time by buying low or getting paid cash until we prevail.
As Warren Buffett stated in one of his infamous Berkshire Hathaway letters, “Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America.”