Good investing is boring investing

You might have noticed that I haven’t posted anything since June 3rd, almost a full month ago. About 3 weeks ago, I went to write a new post, but ultimately decided I didn’t have anything meaningful to say.

That got me to thinking about how often we really need to be reading about or making meaningful changes to our investments. For Dividendium’s sake according to the search engines, it would be beneficial to post something new every week or even more often, but for our users, that would probably be a detriment.

If we were posting something new every week it would likely be a “hot stock” tip to entice you to go out and buy. Or a scandalous piece of news to make you go out and sell. But by the time its up here, there’s really not much sense in acting on it. So if you’re reading some specific tip already out in the public, then at best you are wasting your time since you aren’t going to act on it. Or at worst, you will act on it and it will most likely be the wrong action to take because this new investment will be no better than where you had your money before.

The best investing, the investing that consistently makes money, is the boring kind. You pick your strategy, place your bets, and then wait. And that’s really the hard part, the waiting. We want it to be entertaining like Vegas, but with Vegas the odds are against you. So the longer you are at the table, the more likely it is that you will lose money. In the stock market, its the opposite. The odds are in your favor, so the longer you stay in, the more likely you will make money.

The strategy we recommend is of course our Inflatable Dividends Service. Sign up, get the list, pick a few trades that satisfy you, and then hold them and collect dividends and premiums until the options expire or you are called out. Then pick some more trades and keep consistently and steadily making money. Kind of reminds me of the tortoise. Just keep putting one foot infront of the other at a steady pace and you’ll come out way ahead of the guys jumping in and out at the drop of a hat. And you’ll do it without spending hours a day reading five different newspapers, glued to CNBC, or surfing the web looking for free hot stock tips.

Inflatable Dividends Real Time Example Trades

An excellent example of what I was talking about above is our current example trade from the Inflatable Dividends Service. ALSK recently went ex-dividend on 6/27/2007. So other than checking that our stop loss wasn’t violated, the only possibly interesting day for this trade in the past month was the day before it went ex-dividend, 6/26/2007.

On 6/26, the stock, ALSK, closed at $15.84. The ex-dividend amount was $0.215. And the call option we sold, ULOJC with a strike of $15, had a bid of $1.25, but didn’t trade that day. So if the holder of our call option had executed, he would have paid $15 + $1.25 for the option or $16.25 total, and received the stock worth $15.84 and the dividend the next day of $0.215, or $16.055. Paying $16.25 for $16.055 is a quick way to go broke, so I don’t expect that the holder of our call would have done that. So we get to keep this dividend, and all the time premium from when we sold the call to now.

And that’s it. That was the day with the most potential to be exciting. And because it wasn’t exciting, we collected a dividend and get to continue holding this position. It bears repeating that the best investments are probably going to be boring.