Successful Investing Is Not Sexy

Why The Real Money Is Made By Those Who Look for Excitement Elsewhere

In past articles such as Commit to a Value Philosophy, How to Think About Share Price, and 7 Keys to Successful Investing, I’ve extolled the virtues of focusing on value rather than price or recent stock market action because history has shown that you will more than likely avoid major losses and end up wealthier than you otherwise would because there is a margin of safety. The goal, in other words, is to avoid losing money on a long-term basis and work to get as much value (future profits and dividends) for a fair or low price.

I’ve also shared with you that we’ve been purchasing equities (as well as entering into some interesting derivatives transactions) at several of my companies as a result of the incredibly values we are seeing in the market. One of the things that I found especially interesting was a chart of an exchange traded fund (ETF) that tracks the ISE Water Index. Over the past seven years, $10,000 invested in to the S&P 500 has grown to $11,055. The same $10,000 invested into this boring, old-fashioned, simple-as-it-can-get water index fund has grown to more than $31,000! That’s a return of 10.5% versus 300%+! Nearly a decade after one of the greatest speculative orgies in financial history when average men and women were convinced the Internet and technology were going to change everything and make every investor a multi-millionaire, who’d have thought the real money was going to be made in water???

Successful investing is not sexy. It is not glamorous. It is somewhere just above the excitement level of watching paint dry. When it comes to growing your wealth, your biggest enemies are likely to be the dual forces of emotion and expenses. For most people, dollar cost averaging into an index fund really is the best way to help increase the odds that you and your family will have more than enough money to live the life you want.