Weekend Edition – A Model of Consistency
As income investors, we know that building wealth is not accomplished over night; it takes time with a lot of hard work and patience. We’re always trying to hammer home to our readers that dividend and other forms of income investing should be done with a long-term vision. But, in the event that you’re unsure of your long-term investing decisions, thinking that the supposedly boring route of dividend investing may not be the best way to build wealth, just look at another of model of consistency that has succeeded over time, the NBA’s San Antonio Spurs, to help reinforce the reasons for your investing strategy.
While watching the San Antonio Spurs play the Miami Heat in Game 4 of the NBA Finals on Thursday, I could not help but notice the similarities that the Spurs’ successful 15 year run has with a dividend investing strategy. For one, both have been considered “boring” by the uninformed. If winning 70% of regular season games and four NBA titles (with the chance of a fifth) in 16 seasons is boring, then sign me up. Similarly, investing in dividend paying stocks has resulted in more gains for investors than high-flying flavor-of-the-day growth stocks.
Moreover, neither the Spurs nor dividend investing are considered flashy, which makes it hard to build adoration by onlookers. In the NBA, where image plays a huge role in what players and teams are popular, the Spurs constantly get looked over. Even though the team has been one of, if not the most successful, teams of the past 16 years, they seem to get looked over by fans and the media. The team is just not appealing in the modern day NBA sense; they play the game with sounds fundamentals and purposely stay out of the limelight. But year in and year out they continue to win.
Dividend investing has the same problem (if you can call that a problem), because it tends to take a back seat to trading in the media. Trading, like typical NBA teams and players, is flashy, sexy, resulting in quick, short-term gains and more often than not, long-term losses! Dividend investing, on the other hand, will usually result in steady gains, compounding over time for a substantial accumulation of wealth. To complete the analogy, you can say these long-term returns are your “championship run.”
Its fitting that the Spurs’ colors are white, black, and grey; the boring colors fit the team’s personality to a tee. Though many do not give the team credit they deserve, they could be on their way to title number five, with three of its players and coach as probable future Hall of Famers. I’m sure they do not mind that they have flown under the radar for all these years. Their model of consistency should be admired, even if it does not get the attention it deserves.
Dividend investors should be sure to look at the Spurs whenever their confidence in their investing strategy starts to crack. Remember that even though there are ups and downs, in the markets and in life, over the long-run your strategy should pay off with considerable returns and a healthy nest egg.
Thank you for sharing part of your weekend with me, and please be sure to pass this post on to anyone you think we can get inspired and educated about money, building wealth, and using common sense to do so. Also, I’d like to wish all the dads out there a very happy Father’s Day, enjoy it!
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