Your Survival Guy

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Why Vanguard is too Big: Part II

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Short-term noise is an investor’s worst enemy. As if it’s not hard enough to set an appropriate course, you have the constant barrage of information that can make you feel uneasy. Times are changing. That’s a fact.

Take a look at the S&P 500 or Vanguard’s Index 500 or some other ETF. Today, seven stocks account for 26% of the index, while not one of them trades at less than 33x earnings.

You have read here that the stock market has dropped by 33% three times already this century. Doesn’t it make sense that the chances of that happening again become more likely when only seven companies rule the roost?

You know I want you to be paid to invest in this market. The way you get paid to invest is through dividends—just like the income from your rental properties. You and I know you don’t worry month to month, quarter to quarter about the price fluctuations of your properties, just as long as you get paid. That’s the mentality I want you to have about stocks.

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The measly dividends from the big seven make them look more like the seven dwarfs. Only two of them pay a dividend, and their yields average 0.88% (that’s 0.25% averaged out over all seven). Day traders love the “action” in the market. You know, through your own investing in income properties, for example, that it’s hard, especially the random phone calls when stuff breaks. But you and I know that when you think about how much you’ve made over years of compounding rental income, you never imagined how truly wealthy you are.

Meet the Seven Dividend Dwarfs

Source: Young Research & Publishing and Your Survival Guy.

Action Line: Don’t be left at the station, get hooked up to the dividend train, and join the compound interest express. There’s never a bad time to be “all aboard!”

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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