Educational Links
Investment and Wealth Planning Concepts
WHY DIVIDENDS MATTER
Portfolios managed by Scholte Wealth Management strongly favour investment in dividend-growing blue chip businesses. In fact, as at the date of this writing (September 8, 2019), only one stock investment ever held in any of our client portfolios has yet to pay a dividend (Amazon Inc.). Dividends are integral to total return and enhanced portfolio stability. Importantly, dividends are a strong indicator of a company's financial health, and the requirement to pay a regularly recurring or, better yet, growing dividend enforces capital discipline upon the management of a company. The attached link provides a good primer.
Suitability Rating: 1 - Readily Accessible for all Levels of Interest
ECONOMIC GROWTH IS MORE COMMON THAN RECESSION
No less an authority than the U.S. Federal Reserve asserts that economic expansion is the normal state of the economy. In other words, expansions are the rule, and recessions are the exception. Further, over the long term, the cumulative benefits of economic growth far outweigh the damage done by recession. Simply put, ever improving productivity and population growth are the main reasons why developed economies spend more time growing than shrinking. That said, clients know that we spend much time and effort looking out for recession, because its impact on investment portfolios is disproportionately extreme. Yet it's important to reiterate that expansion is the "normal" state, and letting fear of recession excessively dictate portfolio positioning will likely result in a sub-optimal outcome.
Suitability Rating: 1.5 - The first half of the article makes the point well; the second half read if interested (you may have to "X" an ad that pops up)
NEGATIVITY BIAS: GOOD FOR EVOLUTION, NOT SO GOOD FOR INVESTMENT RETURNS
Focusing on the negative helped our ancestors avoid life-threatening dangers. But dwelling on the negative is not so beneficial when it comes to generating sound portfolio returns. As asserted above, economic growth is the normal state for the economy. Recessions do NOT lurk behind every over-hyped negative news headline. With economic growth comes improved corporate profitability and higher stock prices. We at Scholte Wealth Management strongly believe that attempting to time short-term market swings - the impulse to do so most often being rooted in fear - is a losing proposition. Accordingly, we spend a great deal of time and effort helping our clients avoid this impulse. Full disclosure: we believe recession is the exception, and certainly do attempt to reduce our clients' equity weightings if a credible and imminent threat of recession exists. Recessions do disproportionate damage to a portfolio, and we therefore spend a disproportionate amount of our time on the lookouyt for a credible threat of recession.
Suitability Rating: 1 - Readily Accessible for all Levels of Interest
