The Two Faced Investor
and he doesn't even realize it
In the comic book Batman, there is a villain who is half ugly and half handsome, which “obviously” represents his personality.
The question I wonder is if he understands that he is schizophrenic?
Many investors exhibit this pattern:
Experienced to novices
They want to participate in legendary bull markets but are afraid to get burned, so they wait it out until some kind of top forms and get in…
stocks that are considered “blue chips” but are trading at 52-week lows, and pay a nice dividend.
What we refer to as dogs.
The growth and momentum investors focus on the horses. The prime breed.
The reason I refer to this investor as two-faced is that the allure of safety and a 5% dividend is the same mania that has investors clamoring for a trillion-dollar company that will go up higher than the day before.
Same race, different animal.
My banker friend is wonderful, and he will succeed in his investments, but I argue: what is the point of being sadomasochistic about companies whose heyday is behind them and building a portfolio around them?
Nike, Pfizer, Campbell’s, Kraft Heinz, etc
Are they truly low risk?
While I am not the biggest fan of making predictions, I am a fan of finding the lowest risk investment on any given day and build a portfolio around that.
I do like dividends, though
(who doesn’t?)
But there is an art to it.
The art isn’t finding a 5% yield. It’s knowing which 5% is a gift and which one is a sinkhole.
The basics are covered wonderfully and are worth the price of a subscription to WSJ.com
If you follow me or read my post, I have shared a few insights over time.
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