I fail a LOT!
Let me say that again….I FAIL A LOT! Sometimes people ask me why I buy this stock or that stock or even why I’m even invested in stocks at all? The stock market is a casino, it’s rigged, it’s a scam.
It’s true, not every investment you make is going to rise – but the bottom line is, if you don’t TRY how will you ever know?
I once heard a great quote, “Show me a man who’s never lost money in an investment and I’ll show you a liar.”
The reality is you have to have vision and patience to be a successful investor. You have to take action and keep at it for a long time. Too many of us have become part of the “microwave” generation – we want what we want and we want it NOW! (or with the case of the microwave – within 30 seconds)
It’s why day-trading doesn’t work – when you invest your money, whether it be in stocks, oil, real estate, goats, stamps or Pokemon cards – you just can not be certain whether the next move your investment makes is up or down. You have to be willing to watch your investment fall before it rises or even rise before it falls. Over the short term, no one knows which way an investment will move.
But that’s where TIME comes in, it’s the great equalizer.
Lessons learned- Terra Nitrogen (ticker: THN)
Back in the late 1990′s I was looking for a few good income producing stocks to add to my portfolio. While watching NBR (Nightly Business Report) on my local PBS station one night I came across what looked to be a possible candidate: Terra Nitrogen (ticker: THN).
The stock was tradingin the $30-$40 range and was paying out a quarterly dividend of between $1-$3/share! I knew that this was a riskier play, but they looked to have a good niche business providing fertilizer products to mid-west farmers. I was pretty sure that farming would be around awhile and the payouts would likely continue. However by late 1998 because of some business problems the company cut it’s dividend to $ZERO and the stock price fell over the next few month, eventually reaching a low of $3.50.
My great income producer now not only wasn’t generating income, but the value of the shares had dropped by 90%! I felt vindicated that I had sold my shares in the $6 range, well off the lows. A long 2 years past and in 2000 the company reinstated a greatly reduced dividend of $.22/share. But the glory days had NOT returned – as this payout would last for only 3 quarters and then would take a 1 year break. This process of starting and stopping the reduced dividend payouts would continue until 2004 when the share price had eeked it’s way back up to $9/share and had raised it’s dividend to about $.50/share.
The business began to flourish again and the share price and dividend continued to rise. Today the quarterly payouts are again in the $1-$3 range and the share price is well above the $100/share mark. Not only has the payout increased but the shares have increased by over 2000% from their all time lows.
Commit to the long term
As I think back on this lesson, I am now recommitting to holding my positions in the DDI portfolio for the long term. For me long term is 20/30/40 years. I am optimistic that the current markets are offering good income producing shares that will continue to grow both cash flow and price appreciation over the duration of the DDI portfolio.
January is definitely off to a slow start as far as dividend increases go. This week only two companies reported dividend increases including an industrial machinery & goods company, Robbins & Myers (ticker: RBN) as well as Plains All American Pipeline, LP (ticker: PAA) an oil and natural gas pipeline management firm.
