Dividend Growth Investments for October 12th
I wanted to let you know that I made another investment, likely to be the last one for the month.
You may have noticed/heard that many consumer staples companies have been selling off in the past few weeks or so. There are some fears that a few drugs like Ozempic would reduce revenues/sales for food companies, because they reduce appetite. The issue is that it is still too early to tell what percentage of the population would take them, whether they would stick to it, what side effects are out there. It seems counter-intuitive, but I don't see how many folks would be willing to sign up and stick to for a medication that costs hundreds of dollars per month, every month. It's too early to tell of course, but it does seem like the market is reacting as if these businesses would have zero terminal value. I believe these are just speculations, that are overblown.
I believe that the best time to buy some businesses is when they are on sale. When they get to be on sale however, it is usually hard to buy psychologically, because there is some narrative that sounds very ominous. In many cases, those fears are overblown, but they keep many from investing. In the case that those fears are not overblown, that's where having a sound risk management plan would be helpful. After all, successful investing is about how much you make when you are right, and how much you lose when you are wrong. Nobody bats 100% (i.e. nobody is right 100% of the time), hence why you want to limit losses when wrong, and let winners really run when you are right.
I could be wrong too. In case I am wrong, my exit plan is to hold for as long as the dividend is not cut in each case, and keep the amount invested manageable for my diversified portfolio. I keep potential losses limited, stay invested through thick or thin, which allows the companies the most time and opportunity to grow and succeed.
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