Durable Dividends

Take It From A Genius: Boring Is Best

Nick Ward

56 postsOctober 15, 2021

For years I’ve expressed the opinion that the U.S. stock market is the best show in town when it comes to generating wealth for individuals looking for a better financial life.

And it pains me when I see others get so much press (largely from financial news organizations) for expressing bearish opinions.

Fear sells, I get it.

And it’s true that we have seen recent trends revolving around the “gamification” of Wall Street, especially with regard to the massive volatility that has occurred during the last couple of years in the “meme stock” space.

But, I think it’s important to note that blue chips are not “meme stocks”. They trade with strong fundamentals that grow in a fairly predictable manner and therefore, they’re much easier to evaluate. In other words, it’s easier to understand risk when fundamentally investing in blue chips.

It’s trendy to be a bear. Why? Because it means that you’re going against the grain and when individuals are able to confidently communicate contrarian opinions, they’re often viewed as brave and daring…people think, “They must be on to something if they’re willing to stick their neck out like that.”

When you look at the market’s trailing data over the long-term, one thing is clear: the U.S. averages head higher over time.

And with that in mind, it’s very important to note that bears, no matter how confident and dashing they may seem…especially the perma-bear sort, who spew doom and gloom and ignite fear in investors…are nearly always wrong.

Sure, the past cannot be used to predict the future with certainty. No one has a working crystal ball. And therefore, equities will always come with risk associated with them (due to the fact that share prices are largely based upon future estimations of cash flows).

But, this risk has been worth the reward for well over a century and if I had to guess, I’d say that investors will be saying the same thing about markets a century from now.

Yes, there are dips in the market. There are sell-offs. Heck, there are even crashes every so often. And, when someone happens to predict one of these, they’re put on a pedestal as a genius soothsayer of sorts. But, guess what? We just came off of record highs in the market. Do you know what that means? Historically speaking, long-term bullish investors are the ones who’re winning.

As I’ve said many times, it’s impossible to time the market well on a regular basis. There are simply too many variables at play for this to be done in a reliable fashion. And, that doesn’t even take into account the black swan events that tend to drive major sell-offs (which are, by their very nature, unpredictable).

Market timing is a fool’s errand. I’m sure that this statement offends some, but I’ve said it before and I’ll be saying it, over and over again, so long as I’m covering financial markets.

What’s more, it’s stressful. Trading requires much more time and energy than basic, boring, buy and hold investing. And this, combined with the fact that the vast majority of short-term traders underperform the major indexes, has allowed me to confidently rely on long-term, fundamentally driven, income oriented investing to reach financial freedom.

Maintaining a bullish outlook is boring, right? I mean, saying “buy and hold blue chips” over and over again certainly isn’t the type of sentiment that creates hype. It doesn’t drive clicks on the internet. It doesn’t lead to major headlines on the financial news channels. But…it works.

Although you’ll hear plenty of naysayers talking about trends like the “gamification” of Wall Street, I don’t buy into the notion that investing is akin to gambling. I do believe that short-term trading is just another form of gambling; however, when it comes to generating wealth, climbing the social ladder, reaching financial freedom, and retiring comfortably, I still believe that blue chip equities within the U.S. stock markets are the best assets to own.

This is especially true when you’re a dividend growth investor like me; over the long-term, collecting and re-investing dividends that are already posting reliable organic growth via annual dividend increases allows investors to slowly, but surely, facilitate a compounding process that snowballs into a very significant force once the growth turns exponential.

For this exponential growth to occur, an investor has to ignore scary headlines and maintain long-term exposure to equities. They have to show faith in the process and in the management teams of the companies that they own. It takes a high degree of intestinal fortitude to own stocks throughout periods of volatility, but those who have the patience and discipline to do so are typically rewarded (handsomely, I might add).

And thankfully, you don’t have to only take my word for it. When it comes to the boring, bullish sentiment that I constantly express and the benefits of long-term investing, I recently came across a noteworthy proponent of the buy and hold strategy.

I recently watched an interview with Matt Amodio, the record breaking Jeopardy champion who recently won 38 consecutive matches on the game show, racking up $1,518,601 in winnings, and I couldn’t have been more pleased (and frankly, surprised) at what he said when asked about his plans for his winnings.

Without a doubt, this guy has an amazing head on his shoulders. This is obvious, right? You don’t win 38 games of Jeopardy in a row unless you’re constantly the smartest guy in the room.

I often say, excellence never happens by accident.

Generally, when I say this, I’m talking about long-term dividend growth streaks and the fact that the winning cultures that blue chips have built internally allow for them to compete, take market share, grow sales, margins, earnings, and cash flows, ultimately allowing them to sustainably reward shareholders in a major way.

However, the saying certainly applies to a record breaking Jeopardy performance as well.

Not only did it take an immense amount of smarts to correctly answer 1,299 clues faster than his opponents (who’re no intellectual slouches on their own), but it also required a high degree of strategic thinking and most importantly, the ability to stay cool under pressure, for Amodio to thrive in the national spotlight that was cast on him.

Therefore, he’s someone that investors to strive to emulate and when Amodio came onto the airways on CNBC’s Squawk on the Street yesterday morning and here’s what he had to say in response to David Faber asking him what he plans to do with the sizable amount of money that he just won…

Amodio said, “I’ve got the boring answer…I’m going to do long-term invest and hold.”

My heart was smiling.

He continued, “I’m not there on the day to day trading, it’s too much for me to keep track of.”

Once again, I was so pleased to see this young man showcase confidence in the markets and his willingness to partner with companies over the long-term because of their ability to generate shareholder wealth.

Amodio said that he plans to own “Index funds paired with a small amount of bonds with yearly rebalancing.”

I will note that Amodio mentioned that he plans to use his bond exposure as a cash alternative (which generates a bit of yield) while the markets are hot and then hopes to have the opportunity to sell those bonds and use the proceeds to buy equities into weakness, whenever it may occur.

He concluded his bit by saying, “How could you go wrong?”

And you know what, I’m totally with him. This elegantly simple approach (owning blue chips and accumulating more on the dips) is all one needs to do to generate wealth and it was great to see this Computer Science Ph.D candidate from Yale highlight it for all to see.

Jim Cramer called him an “American hero” and while this is obviously a bit of hyperbole, I do think that Amodio is living out the American dream and setting a great example for others to follow.

In today’s world where “meme stocks” and reddit traders get so much of the press (setting a poor example and altering realistic expectations when it comes to generating wealth and retiring well), it was so wonderful to see a certifiable genius like Amodio show his trust in the U.S. stock market.

Cynicism can be contagious. It breeds fear. And frankly speaking, the world needs a bit more optimism.

Even though I prefer to own a portfolio of individual dividend growth stocks as opposed to the major indexes, I loved seeing Amodio’s conviction in the boring, buy and hold way of life.

I have little doubt of his future success and I’m happy to be in the same boat as he is, with regard to long-term outlook on the U.S. markets and my admittedly boring plan to retire comfortably, financially free.

Nick Ward

56 posts

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Nicholas Ward is a research analyst who currently writes for Seeking Alpha, The Dividend Kings, iREIT, and Forbes Real Estate Investor. Before that, he was Founder and Editor-in-Chief of The Dividend Growth Club, as well as the Income Minded Millennial. Nicholas has also contributed to Sure Dividend, Investing Daily, and The Street, where he covered stocks in Jim Cramer's Action Alerts PLUS Portfolio.

Nicholas holds a bachelor of arts from The University of Virginia, where he studied English and studio art. Prior to transitioning into the financial industry, he managed a vineyard in the foothills of the Blue Ridge Mountains.

Searching for Stock Market Direction

REIT Mutual Fund	Symbol
Alpine Realty Income and Growth Fund	AIGYX, AIAGX
American Century Real Estate Fund	REAIX, REACX, AREEX, AREWX, ARYCX, AREDX
Real Estate Securities Fund	MRESX
AR Capital Real Estate Income Fund	ARIAX, ARICX, ARIPX
AssetMark Real Estate Securities Fund	AFREX
Aston/Harrison Street Real Estate Fund	AARIX, ARFCX
Baron Real Estate Fund	BREIX, BREFX
BlackRock Real Estate Securities	BIREX, BAREX, BCREX
Brookfield U.S. Listed Real Estate Fund	BRUAX, BRUCX, BRUIX, BRUYX
CGM Realty Fund	CGMRX
West Loop Realty Fund	REIIX, REIAX, REICX
Cohen & Steers Institutional Realty Shares	CSRIX
Cohen & Steers Realty Income Fund	CSEIX, CSDIX, CSBIX, CSCIX
Cohen & Steers Realty Shares	CSRSX
Columbia Real Estate Equity Fund	CREAX, CREIX, CRRVX, CRERX, CREEX, CRRFX, CREWX, CRECX, CREBX
Compass EMP REC Enhanced Volatility Weighted Fund	CWRAX, CWRIX, CWRTX, CWRCX
Davis Real Estate Fund	RPFRX, DREYX, DRECX, DREBX
Delaware Real Estate Investment Trust Portfolio II	DPRTX, DPRBX
Delaware Real Estate Investment Trust Portfolio	DPREX, DPRSX, DPRRX, DPRCX
DFA Real Estate Securities Portfolio	DFREX
Dunham Real Estate Stock Fund	DAREX, DNREX, DCREX
DWS RREEF Real Estate Securities Fund	RRRRX, RRREX, RRRAX, RRRSX, RRRBX, RRRCX
DWS RREEF Real Estate Securities Income Fund	REFAX, REFCX, REFIX, REFSX
Eaton Vance Real Estate Fund	EAREX, EIREX
EII Realty Securities Fund	EIIRX
Fidelity Advisor Real Estate Fund	FHEIX, FHEAX, FHETX, FHECX, FHEBX
Fidelity Advisor Real Estate Income Fund	FRIRX, FRIQX, FRINX, FRIOX
Fidelity Real Estate Income Fund	FRIFX
Fidelity Real Estate Investment Portfolio	FRESX
Fidelity Spartan Real Estate Index Fund	FSRNX, FRXIX, FSRVX
Fidelity Series Real Estate Equity Fund	FREDX, FREFX
Fidelity Series Real Estate Income Fund	FSREX, FSRWX
Forward Real Estate Long/Short Fund	KSRYX, FRLSX, FFSRX, KSRAX, KSRCX, KSRBX
Forward Real Estate Fund	FPREX, FFREX, KREAX, KRECX
Forward Select Income Fund	KIFYX, FSIMX, FFSLX, KIFAX, KIFBX, KIFCX
Franklin Real Estate Securities Fund	FREEX, FRLAX, FRRSX, FSERX
GMO Real Estate Fund	GMORX
Goldman Sachs Real Estate Securities Fund	GREIX, GRETX, GREAX, GRESX, GRERX, GREBX, GRECX
Great-West Real Estate Fund	MXREX
Heitman REIT Fund	OARTX, OBRTX
ING Real Estate Fund	CRARX, IREWX, IDROX, CLARX, CRWRX, CRCRX, CRBCX
INVESCO Real Estate Fund	REINX, IARFX, IARIX, IARYX, IARAX, IARRX, IARCX, AARBX
Ivy Real Estate Securities Fund	IRSAX, IREIX, IRSYX, IRSRX, IREEX, IRSCX, IRSBX
John Hancock Real Estate Securities Fund	JIREX
Johnson Realty Fund	JRLTX
J.P.Morgan Realty Income Fund	URTLX, JRIRX, URTAX, URTBX, URTCX
J.P. Morgan Security Capital U.S. Core Real Estate Securities Fund	CEEAX, CEERX, CEEFX, CEESX, CEECX
J.P. Morgan U.S. Real Estate Fund	SUSIX
Lazard U.S. Realty Equity Portfolio	LREIX, LREOX
Lazard U.S. Realty Income Portfolio	LRIIX, LRIOX
Manning & Napier Real Estate Series	MNRIX, MNREX
Morgan Stanley Institutional U.S. Real Estate Portfolio	MSUSX, MUSDX, MSULX, MURSX
Natixis AEW Real Estate Fund	NRFAX, NRFYX, NRFBX, NRFCX, NRFNX
Neuberger Berman Real Estate Fund	NBRIX, NBRFX, NREAX, NRERX, NRECX, NRREX
Nuveen Real Estate Securities Fund	FREAX, FARCX, FRSSX, FREBX, FRLCX, FREGX
Oppenheimer Real Estate Fund	OREAX, OREIX, OREYX, ORENX, OREBX, ORECX
PHOCAS Real Estate Fund	PHREX
PIMCO RealEstateRealReturn Strategy Fund	PRRSX, PETPX, PETAX, PETDX, PETCX, PETBX
Pioneer Real Estate Shares	PWREX, PYREX, PCREX, PBREX
Principal Real Estate Securities Fund	PIREX, PIRPX, PREPX, PRETX, PREJX, PRRAX, PRERX, PRENX, PRAEX, PRCEX, PRLEX
ProFunds Real Estate UltraSector ProFund	REPIX
Prudential Select Real Estate Fund	SREAX
Prudential U.S. Real Estate Fund	PJEAX, PJEZX, PJECX, PJEBX
REMS Real Estate Income 50/50 Portfolio	RREIX
REMS Real Estate Value-Opportunity Fund	HLRRX, HLPPX
Rydex Real Estate Fund	RYREX, RYHRX, RYCRX
SA Real Estate Securities Fund	SAREX
SEI Institutional Mgd Real Estate Fund	SETAX, SEIRX
Spirit of America Real Estate Income & Growth Fund	SOAAX
SSgA Clarion Real Estate Fund	SSREX
Stratton Real Estate Fund	STMDX
T.Rowe Price Real Estate Fund	TRREX, PAREX
TIAA-CREF Real Estate Securities Fund	TIREX, TRRPX, TRRSX, TCREX
Vanguard REIT Index Fund	VGSNX, VGRSX, VGSLX, VGSIX
Virtus Real Estate Securities Fund	PHRAX, PHRIX, PHRCX, PHRBX

REIT ETF	Symbol
Flex Shares	ASET
Wisdom Tree Global Ex-US	DRW
S&P 500 Equal Weight	EWRE
iShares FTSE Industrial/Office	FNIO
MSCI Real Estate Index	FREL
S&P REIT Index	FRI
First Trust S&P REIT	FRI
iShares Real Estate 50	FTY
Flexshares Global	GQRE
iShares Cohen & Streers	ICF
iShares International Developed RE	IFGL
iShares US RE	IYR
Premium Yield Equity REIT	KBWY
ETRACS Monthly Pay 2x Leverage	MORL
Market Vector Mortgage	MORT
iShares Global REIT	REET
iShares FTSE Mortgage	REM
iShares Residential	REZ
IQ US Real Estate Small Cap	ROOF
iShares FTSE NAREIT Retail	RTL
DOW Jones Global RE	RWO
SPDR Dow Jones	RWR
Schwab US REIT	SCHH
Super Dividend REIT	SRET
ProShares Ultra RE	URE
Vanguard REIT	VNQ
Vanguard Global ex-US	VNQI
iShares International Developed	WPS
Wilshire US REIT	WREI
Pacer Benchmark Data & Infrastructure RE	SRVR
Pacer Benchmark Industrial RE	INDS
Pacer Benchmark Retail RE	RTL
Hoya Capital Housing	HOMZ
NetLease Corporate RE	NETL

REIT Name	Ticker	Annual Increases/yr
Federal Realty	FRT	51
Universal Health Realty	UHT	33
National Retail Properties	NNN	29
Realty Income	O	27
Tanger Outlets	SKT	26
Urstadt Biddle	UBA	25
Essex Property Trust	ESS	25
W.P.Carey	WPC	22
National Health Investors	NHI	17
Equity Lifestyle	ELS	15
Digital Realty	DLR	15

Take It From A Genius: Boring Is Best

Nick Ward

56 postsOctober 15, 2021

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