|
How To Create Wealth In The Stock Market
By: Charles O'Melia
First and foremost, an opportunistic strategy for creating wealth in the stock
market is needed. And the opportunistic strategy for creating wealth in the
stock market must have two ingredients, a plan and a goal. The plan must be a
definite, concrete plan of investing that would profit you and your family for
the rest of your lives.
This opportunistic investment plan you begin should not profit anyone else – not
a stockbroker, a mutual fund or a financial advisor. This means you have to have
confidence in yourself and in your own judgment as to whether the investment
plan you begin has merit. And this means that the investment plan would and
should have already been proven to you!
This definite, concrete plan you begin for creating wealth through opportunities
in the stock market must also have a goal. The goal should be clear and
specific, and once your have made up your mind to achieve that goal, then go
forward and make that goal a reality.
What are the opportunistic traits of a strategic investment plan built on a
concrete foundation that would actually allow the shareholder to profit through
all the turmoil of an up and down stock market? The secret for creating wealth
in the stock market; no matter what direction the market is heading?
As in what appears to be the most difficult investment question of all to
answer, the answer lies in simplicity itself – investing in those companies that
have a historical record of raising their dividend every year. Whether or not
you can take this statement of fact to heart is your own judgment call. But it
is this opportunistic trait that can and will create wealth for you and your
family for the rest of your lives.
A company’s ability to raise its dividend every year, coupled with stock
appreciation is a very powerful wealth creating formula!
I’m going to provide you with two examples, though there are many more, some
with even better results. The two examples are from my book, published by
American-Book Publishing – ‘The Stockopoly Plan – Investing for Retirement’
(where an investment plan and a goal are written in stone).
The first example would be a stock purchased in 1990, Comerica (CMA). What led
to the purchase of CMA? – In 1990 CMA had a 21 year history of raising their
dividend every year. Today’s CMA has a 35 year history of raising their dividend
every year. This opportunistic trait in CMA stock has garnished a little better
than a 15 percent return a year, compounded annually (just by having the
dividends reinvested back into the stock each quarter through those years – I
prove this to you in The Stockopoly Plan), for the past 14 plus years. Today’s
CMA stock just recently touched a new high at $60 dollars a share, with a
dividend yield of around 3˝ percent. In April of 2003 the stock was selling
around $37.50 a share, paying a dividend yield of around 5% a year. Am I tempted
to sell my position in CMA? Do I care if the stock drops from this lofty price
back to $37 a share? Why should I? If the stock drops back to $37 a share, my
dividends being reinvested back into the stock each quarter purchases more
shares, and my dividend income from CMA simply and dramatically accelerates. I
am also already prepared that if a buy-out offer is ever made for the company to
reap the profits of owning the stock (as well as the possibility of another
stock split).
The second example is (unfortunately) in my book, also. I say unfortunately
because my book is in the final copy edit stage, so no one has had a chance to
read and benefit from it, and since a buy-out offer was made for the stock last
week or so, the stock will no longer exist (this means a rewrite for me, before
publication). The company in question is the Rouse Co. (RSE), which was just
purchased by General Growth Properties (GGP). Oddly enough, you’ll find GGP in
my book, also – if you bother to pick it up. Anyway, that’s neither here nor
there - RSE, on the takeover bid jumped over $16.00 a share in one day! Whew!
Why couldn’t they have waited a couple of months until my book was released? RSE
had the opportunistic trait of raising their dividend every year since 1993 and
I was quite content with its performance through the years.
Well, that last paragraph blew my train of thought on this article. All I can
think about at the moment is my rewrite.
I would like to take this time to explain something to you. I have never
considered myself a writer nor am I a stock market professional. I am simply a
man with 39 years of experience and a passion for the stock market, trying to
share what wisdom those years have given me. When I sit down to write an
article, I seldom have an idea on what I’m going to say. It was the same way
when I sat down to write my book. I just meant to put down a few words on paper
for my 18-year old son so he would have a sound, concrete plan for investing in
those companies that make up the stock market (quite frankly – I didn’t want him
to blow his inheritance). Whether you find merit in what I say, I have no idea.
What I do know is that life is just too short to learn everything you need to
learn by yourself, without the help of others.
There, now I’m satisfied with that ending!
For more excerpts from the book ‘The Stockopoly Plan-
Investing for Retirement visit:
http://www.thestockopolyplan.com
About the Author:
Charles M. O’Melia is an individual investor with almost 40 years of experience
and passion for the stock market. The author of the book ‘The Stockopoly Plan –
Investing for Retirement; published by American-Book Publishing. The book can be
purchased at http://www.pdbookstore.com/comfiles/pages/CharlesMOMelia.shtml |
