Much of your investment success comes from avoiding disasters like crypto exchange FTX. The Fear of Missing Out or FOMO is a huge pull, like gravity, on investors. Look, I’m Your Survival Guy, not Superman, but FOMO’s like kryptonite. It saps the power of self-control and “knowing better” right out of investors, and it comes when you least expect it.
If you’ve been with me, this has been a good year. But it’s been downright brutal for the non-dividend paying stocks that mainly comprise the Nasdaq and the tech sector within the S&P 500. The ride up is always more fun than the crash. But what do you expect when the size of a company, its market cap, dictates its impact on the direction of the index? The 800-pound gorillas, the “FAANGs”, drove the gains in the S&P 500 in the good years, and they’re driving it down into the rocks in the bad.
Rather than bet your retirement savings on market cap, why not focus on something more tangible that you can see, like the cold, hard cash of dividends? Market cap is driven by prices. It’s calculated by multiplying a company’s stock price by its shares outstanding. Prices are qualitative, not quantitative. You know how I feel about prices. They’re simply opinions. Dividends are facts. They’re either paid or they’re not. They’re increased, kept the same, or cut. Simple.
Action Line: In a world where emotions are running high, stick with me. I’ll help you build your own shelter from the storm. There’s nothing wrong with hunkering down in a cave.
