Investing is a job. A job is where you make money. You make money in the stock market by realizing a return on investment.
Return on investment comes in two forms: capital appreciation and dividends. Of the two the only one with a degree of certainty is the cash dividend, which is a company policy and announced on a quarterly basis.
Capital appreciation is the result of good analysis. When you identify a high-quality company that offers good value, meaning a repetitive area of high dividend yield, and the company has a long-term history of dividend increases, the probabilities are that capital appreciation will follow.
When added to the dividends and dividend increases collected along the way the result is real total return, which is the only logical reason to invest in common stocks.”— Kelley Wright, IQTrends
— Broyhill 2018 annual letter
— Warren Buffett
If you had to choose between buying long-term bonds or equities, I would choose equities in a minute. If I were going to own a 30-year government bond or own equities for 30 years, I think equities will considerably outperform that 30-year bond.
I want to quickly acknowledge that in any upcoming day, week or even year, stocks will be riskier – far riskier – than short-term U.S. bonds. As an investor’s investment horizon lengthens, however, a diversified portfolio of U.S. equities becomes progressively less risky than bonds, assuming that the stocks are purchased at a sensible multiple of earnings relative to then-prevailing interest rates. It is a terrible mistake for investors with long-term horizons – among them, pension funds, college endowments and savings-minded individuals – to measure their investment ‘risk’ by their portfolio’s ratio of bonds to stocks. Often, high-grade bonds in an investment portfolio increase its risk”— Warren Buffett
— Charlie Munger
— Charlie Munger