When the average investor buys a stock, he or she sits back for some reason and hopes to see the latest purchase climb steadily upwards. Unfortunately, far too many of us buy a stock only to see it drop in price after the purchase. It is almost as if the market has conspired against us, and this drives home how very difficult it is to time the market. So, if we cannot time the market, would the next best thing be to just spend time in the market?
To illustrate this concept, imagine the unthinkable happening: your stock drops 20% or more the month after you have bought it. Armageddon! But is it really the end of the world? This is not necessarily the case for investors whose objective is to earn a healthy return in excess of inflation over the long term. These investors have a long-term horizon and invest in what I call dividend Payers & Growers™, the companies that consistently pay dividends and consistently grow their dividends year in and year out.