If You're Annoyed By Bitcoin, You Will Probably Like This

0
60

, Opinions expressed by Forbes Contributors are their own.
Adobe Stock

</div> </div> <strong>Invisible currency craze taking even more attention away from investors’ goals</strong> <p></p> <p>This is not an article about Bitcoin, but it is about the misdirection that results when investors lose their poise, start to suffer from FOMO (fear of missing out) and forget what their true investment objectives are.&nbsp; Investor behavior regarding Bitcoin and the blockchain “revolution” has been called everything from the next internet to “it should be illegal” by Nobel Prize winner Joseph Stiglitz to “crazy” by none other than Vanguard Founder Jack Bogle.</p> <p>Meanwhile, as discussed extensively in this column during 2017, it’s been a tough year for investors who prioritize generating income from their portfolio, especially if they use high-yield stocks to do so.&nbsp; And while those high-yield stocks are recently starting to participate more in the continued rally by the S&amp;P 500 and other headline stock indexes, this is a good time to raise the following concern:</p> <p><strong>Has income investing as a primary objective been forgotten?</strong></p> <p>With the Nasdaq, FAANG stocks, Bitcoin and the chaotic political scene in D.C. taking all the air out of the room, it seems to me that the simple, boring but beautiful endeavor of buying stocks and earning dividend income from owning a piece of those businesses has taken a back-row seat in an arena as large as the Los Angeles Coliseum.&nbsp; I don’t think it is the case that investors have outright abandoned dividend income investing.&nbsp; It’s just that it is hard as an individual investor to avoid getting dragged into discussions and excitement about what is trendy.&nbsp; This is the case for some investors today and it will always be the case as long as there are humans and the internet.</p> <p> </p> <p>So here, I am going to slow things down and show you something about today’s market environment that is not sexy or slick, but can potentially make a difference in your wealth and objectives in the years ahead.&nbsp; You see, we have likely entered a “melt-up” phase of this long bull market.&nbsp; That means that all the noise you hear about investment approaches that are “hot” but have little or nothing to do with your income objective will only get louder.&nbsp; The old expression was that you know we are in the melt-up phase when your taxi driver is giving you stock tips.&nbsp; Substitute Uber or Lyft for taxi and I suspect we are there.</p> <p>Here are some summary results of a study I did with Becky Gallagher, a research analyst at my firm, as part of an upcoming whitepaper on dividend investing.&nbsp; This is as big an “a-ha” moment as I have had in the past 10 years, and I am immersed in this stuff.&nbsp; Here is what we did and what we found:</p>

” readability=”48″>

Adobe Stock

Invisible currency craze taking even more attention away from investors’ goals

This is not an article about Bitcoin, but it is about the misdirection that results when investors lose their poise, start to suffer from FOMO (fear of missing out) and forget what their true investment objectives are.  Investor behavior regarding Bitcoin and the blockchain “revolution” has been called everything from the next internet to “it should be illegal” by Nobel Prize winner Joseph Stiglitz to “crazy” by none other than Vanguard Founder Jack Bogle.

Meanwhile, as discussed extensively in this column during 2017, it’s been a tough year for investors who prioritize generating income from their portfolio, especially if they use high-yield stocks to do so.  And while those high-yield stocks are recently starting to participate more in the continued rally by the S&P 500 and other headline stock indexes, this is a good time to raise the following concern:

Has income investing as a primary objective been forgotten?

With the Nasdaq, FAANG stocks, Bitcoin and the chaotic political scene in D.C. taking all the air out of the room, it seems to me that the simple, boring but beautiful endeavor of buying stocks and earning dividend income from owning a piece of those businesses has taken a back-row seat in an arena as large as the Los Angeles Coliseum.  I don’t think it is the case that investors have outright abandoned dividend income investing.  It’s just that it is hard as an individual investor to avoid getting dragged into discussions and excitement about what is trendy.  This is the case for some investors today and it will always be the case as long as there are humans and the internet.

So here, I am going to slow things down and show you something about today’s market environment that is not sexy or slick, but can potentially make a difference in your wealth and objectives in the years ahead.  You see, we have likely entered a “melt-up” phase of this long bull market.  That means that all the noise you hear about investment approaches that are “hot” but have little or nothing to do with your income objective will only get louder.  The old expression was that you know we are in the melt-up phase when your taxi driver is giving you stock tips.  Substitute Uber or Lyft for taxi and I suspect we are there.

Here are some summary results of a study I did with Becky Gallagher, a research analyst at my firm, as part of an upcoming whitepaper on dividend investing.  This is as big an “a-ha” moment as I have had in the past 10 years, and I am immersed in this stuff.  Here is what we did and what we found:


Source: Forbes

LEAVE A REPLY

Please enter your comment!
Please enter your name here