The writer recently read “The Devils are Here” – The Hidden History of the Financial Crisis by Bethany McLean and Joe Nocera which is about the decline of real estate mortgage securities in the US and the banking crisis. One of the most important lessons to be learned is to question the basic assumptions how the industry you invest in makes money. Prior to the banking crisis, the basic assumption was real estate prices go up (some years more, some less) and rating agencies would not do anything to ruin their reputations of what the ratings mean. There were also other lesssons – the lack of regulations means people will cheat the system, when the “blue chip” agencies operate similar to the rogue agencies, great money will be earned and lost.

The choice of dividend shares is to insulate your self, as much as possible, from the extreme ups and downs of the market, for if a company is not paying a dividend for a host of reasons – this is an automatic sign to leave the market. This action does not mean, you will not be affected, but you will not lose as much as those who ride the stocks up and down and end up with an interesting ride but no money.

There are always more questions than answers, till next time – to raising questions