A long time ago when I was an Army cadet I was assigned what is called a “Cadre Member” (a teacher). The Army in its infinite wisdom decided the best candidates for this position were Special Operations soldiers (Generally known as “Green Berets”) based on their extensive experience and knowledge when it comes to combat, training, and leadership.
During my first year as a cadet one of my cadre members told me something that has stuck with me ever since and I believe you can apply it to almost any situation….
“Slow is Smooth & Smooth is Fast”
I remember the day like it was yesterday. At the time I knew absolutely nothing about Army tactics or how to evaluate a casualty. I literally received a brief class on the material 4 hours before our scheduled event. As a first year cadet I figured there was no way I would be chosen to represent our company in the competition but sure enough, I was! Let me tell you, I was terrified of failing the event and letting my company down.
Before the event took place my cadre member pulled me aside and told me he did not care how well I did, but expected me to complete the event without any errors. He told me not to let the task at hand place insurmountable pressure on me to the point that I could not perform what I had been trained to do. “Slow is Smooth & Smooth is Fast”
In short I ended up placing 5th out of approximately 16 teams. During the competition the cadets from the other companies let the pressure of the event shake their confidence as soldiers and in turn made mistakes which penalized them severely during the competition.
My cadre member knew from his years of experience that when you are frantic and trying to “bite off more than you can chew” more times than not you end up choking. He told me he had seen it in combat too many times. There is a huge difference between a relaxed focused individual and someone who is moving so fast that they wind up being more reckless than they are efficient.
www.nymag.com
How can we apply this principle to investing?
Over the years I have noticed a script that goes without fail every single time someone I know finds out that I “actively” invest in the stock market. Here’s how the skit plays out:
- Friend: How much money do you make?
- Me: “A couple hundred dollars a month, but it fluctuates from month to month.”
- Friend: ***Funny look on their face or a scoff***
- Me: “Over time my monthly income will grow significantly, not to mention the capital gains I realize.”
- Friend: “Uh huh I’m sure your right.” ***Eyeroll***
- Me: “I would insist you educate yourself and start investing outside your 401k so you can tailor your investing to your personal situation.”
- Friend: ***Eyes glaze over***
I guess if I am not offering up 50-100% gains overnight or offering a strategy that will allow them to quit their day jobs in a month or two, then what I have to say is worthless! They probably think to themselves “Marvin doesn’t know what he’s talking about! I need to find someone like Gordon Gecko!”
www.flix66.com
Nothing in life worth having comes easy or fast. This is the type of attitude that sets so many investors up for failure. They expect astronomical gains in the stock market. It doesn’t help that we have an Army of financial advisors stating that the average annual returns over time are between 8-12% when for the last 10 years the stock market has been relatively flat!
I am absolutely convinced that the surefire way to manage and grow your wealth in the stock market is by purchasing large stable companies that pay dividends on a consistent basis and reinvesting them. It is not sexy, it is VERY BORING, you won’t be the life of the dinner party talking about your portfolio, chances are it will be the other guy who is trading currency or commodities and is leveraged to the hilt. Your portfolio will grow slowly that is a guarantee but over time you with expand exponentially if you follow this principle.
These individual investors realize this trend and are capitalizing on it:
You should too!
Remember, Slow is Smooth & Smooth is Fast!
Here’s to our Wealth!
January 9, 2013 at 11:28 am
Thanks for the mention, and you’re right. I don’t dollar-cost average, but I do invest in large, dividend paying companies. I’m going to write more about my portfolio this year because so many people have asked.
January 10, 2013 at 11:43 am
I look forward to seeing more of your portfolio!
January 9, 2013 at 11:34 am
Haha, I love the Gecko’s smoking look. If I smoked I would look like the same way. Funny.
Love your story about how much money you are making and your imaginary (and in reality very real) friends face. I had this so many times. Actually recently I posted in one of the discussion forum that one of my accounts is making me 13.5% annual return and a few people were considering it a poor investment. I couldn’t believe my eyes. With 13.5% I will double my money every 5 years and they were considering it lackluster investment.
Well, and let’s wait when my dividend investment TD account gets the wind in its sail and shoots ahead (I didn’t want to use the word “Forward” since it was already used by an idiot).
January 10, 2013 at 11:49 am
I have to admit I love the imaginary Gordon Gekko his persona and all! I would like to say that people don’t surprise me anymore but they do. They have no sense of what the stock market is or how to utilize it. Honestly, sometimes I think people deserve to lose money because they are so lazy and stubborn. In this day and age there is NO REASON why a person cannot educate themselves on basis finance principles. But then again, it is for these reasons that guys like you and me can come in and take advantage of the market when “people be crazy!”
January 9, 2013 at 11:36 am
and btw, thanks for the mention!!!
January 9, 2013 at 12:52 pm
I have a diverse portfolio for growth over a very long time. I expect to live another 35 years and 30 years in retirement. I dollar cost average into the market and have for many years.
January 10, 2013 at 11:49 am
Glad to hear it!
January 9, 2013 at 1:03 pm
It’s unfortunate that that situation plays out more often than not. Most people just want the quick fix, which is instead of eating right and exercise we have diet pills and liposuction. Oh well, all I can do is take care of my own financial house, the whole lead a horse to water thing. Thanks for the mention!
January 10, 2013 at 11:50 am
Lead a horse to water indeed my friend!
January 9, 2013 at 3:56 pm
What you said is very true. Many people that think they can make 1000% gains in day. People who believe this usually become very upset when it doesn’t happen. Slow is definitely the way to go. I never buy a stock unless I have researched it for hours on end. Although the returns aren’t instant, you will see big returns in future if you do the homework.
January 10, 2013 at 11:55 am
I’ve had people come to me offering newsletters that guaranteed 23438% returns and I just laughed. Literally just laughed, I managed to get out “No Thank You”, but it was broken up with laughter as I hung up the phone.
January 9, 2013 at 7:37 pm
Slow is smooth…. I’m a pool player but I have little patience for slow play. Because of that I rush and I end up loosing to inferior players. If I take this to heart, my game would definitely step up a notch.
January 10, 2013 at 11:56 am
Great example Mike. I use to play pool myself “back in the day” =)
January 10, 2013 at 9:51 am
Preach it Marvin! I could not agree more…what’s the saying…slow and steady wins the race. Sure, it’s not sexy but it gets you where you need to be and if you’re disciplined can really amount to something significant in value over the long term.
January 10, 2013 at 11:56 am
That’s it! Slow and steady, when I kids become of age I am going to hammer this principle into their heads.
January 10, 2013 at 11:29 pm
Marvin,
Thanks for the mention! I’ll admit, dividend investing can be extremely slow and boring, especially during the first few years. But a couple hundred here and a couple hundred there will soon turn into a couple thousand after many years. Those same friends who ignore your progress/advice now will be begging you for your secret recipe in about 10 years.
Many people will wake up in their mid 40′s or 50′s and have a mid-life crisis wondering, “what the hell just happened all these years? Where did all my money go!?!” Hopefully people like you and me will say, “wow, I’m sooooo glad my younger self started investing so early on. I’m reaping all the rewards of that hard labor!”
Or something along those lines
Cheers!
January 11, 2013 at 12:45 am
FI Fighter, amen to that. Unfortunately I am in that category of early 40′s who started early, but realized that it was the wrong way, so starting again. That’s why I am using leverage and options to boost my account to catch up with those lost years. Nevertheless I could see the results within 2012 already. In June 2012 I started rebuilding my account, receiving a few dollars in dividends and at the beginning of 2013 I am receiving those hundreds (well, just one do far), so I can see the progress already.
As far as the boredom of dividend investing, you are totally right. That’s why I am using options as well to have some fun
January 11, 2013 at 5:34 pm
Nice post. Who cares what others think, if it works for you!
January 12, 2013 at 7:42 pm
True in so many aspects and arenas in life. Slow isn’t sexy, but it works. Work hard, invest right and the payoff will be worth it in the end.