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Owning Stock Means Owning Part of a Business
When you buy stock, you’re not just picking up a random piece of paper or a digital number—you’re actually buying a slice of a real, operating business. Think about it like this: if the business thrives, so do you. And, as Warren Buffett wisely puts it, it definitely helps if you didn’t overpay for that slice.
Two Investment Scenarios to Consider
Let’s break it down with two examples, each worth $100,000:
- A 50% stake in a $200,000 small business
- 0.005% of the shares in a $2 billion public company
When you buy into a real-world business, flipping it immediately is rarely a smart move. Imagine trying to buy and sell an actual small business every day—sounds pretty crazy, right? Yet, that’s exactly what happens on the stock market all the time.
Thinking Like a Business Owner
Adopting a business owner mindset naturally steers you towards buying and holding for the long haul. This approach is fundamentally different from the rapid trading mentality many people have when it comes to stocks.
The Long-Term Investor’s Edge
As Seth Klarman wisely said, “The single greatest edge an investor can have is a long-term orientation.” Holding onto stocks for the long run means you’re investing in companies you genuinely believe will grow over time. This strategy centers on picking quality businesses—those with enduring competitive advantages.
Time: The Investor’s Best Friend
Warren Buffett famously noted, “Time is the friend of the wonderful company, the enemy of the mediocre.” Holding onto your investments long-term isn’t just about growth; it’s also smart when it comes to taxes. You only pay capital gains taxes when you sell, so by holding, your investments can keep growing without Uncle Sam taking a cut.
Dividends and the Business Owner Mindset
This business owner mindset also ties in perfectly with income investing. Owning a business for the long haul is all about enjoying the cash flow it generates. Dividend-paying stocks return some of their cash flows to you, just like you’d expect from a private business.
A company that consistently raises its dividends over the years is what Buffett would call a “wonderful business”—one with a solid competitive advantage.
Buy, Hold, and Reap the Rewards
Buy these stocks at a fair price, hold on while those dividends keep rising, and you’re golden. And this is where MaxDividends really shines.
Predictability in the important things forms the foundation of peace of mind. And peace of mind is the cornerstone of financial well-being. That’s what MaxDividends is all about.
Best regards, Max Dividends
