Last evening as the writer was coming home, a runner passed me, not sure what the person was training for, but it was a nice evening for a run. Investing is similar to running, there is preparation or stretching before the run, for investing you need to do  reading or research. Then there is a direction for the run – if you left your home for a 5 mile run which direction would you go? with investing, you need to have an idea of where you want to go up besides with more. The sprinters are the day traders looking for a quick entry and exit. There are marathon runners whose time horizon for training is months, similar to value investors whose time horizons are years. Most people fit something in between sprinters and marathon runners. Just about everyone has a story about buying for a short term horizon, the stock went up, then down and now it is a long term investment. With running, as long as you can run there are no bad decisions – running is good, running outdoors is great, and while you are running the other decisions about food and health just naturally seem to fall into place.

Linking to dividend producing stocks, while there are short term strategies, buying the stock to take advantage of a dividend, most strategies are for the longer term. The reason for the long time horizon is to take advantage of both the dividend payment and over the years as the company continues to pay dividends (and increase them)  the shares will be higher and you will have capital gains. One of the reasons why dividend producing companies work is due to the company paying a dividend, this act allows you to lose much less money when compared to those stocks that you had expected to sell in a short period time but went downwards. Limiting your losses and receiving an income is a great method to preserve and increase your wealth.

There are more questions than answers, till the next time – to asking questions