How do you see those stocks you own?
Many people seem to see stock as a lottery ticket or a ticket to speculate. But there is another way.
The other way to look at things has been championed by Warren Buffet. It means to look at your stocks as evidence of your part ownership of the company behind the stock.
It seems to me that seeing oneself as part owner does not get enough exposure in the daily financial press, that when you buy stocks you become a part owner in the business.
Other Reasons
Certainly some people buy for other reasons than being a business owner; they buy to sell, they buy to speculate, they buy to brag. But these buyers are really speculators and don’t expect to stay around long. They buy and then yearn to sell. A quick score.
Seeing oneself as part owner has its own trade-offs. In my view, it is like being a silent partner. I have no influence on how the company is run. Although I vote in every election of boards of directors, and whatever other issues are on the ballot, my participation comes down to investing in the stock, and receiving dividends.
Having no influence on how the company is run has its benefits. When there is a production problem at a factory, or any other problem, no one calls me up to ask me to fix it. No one complains to me about how the problem should have been to fixed in some other way than it was done.
Why My Ownership Is
Buying the stock buys participation in the dividends issued. Early in stock ownership, the cost of buying the stock far outweighs the dividends received. But over time, it is possible for the cumulative dividends received to surpass the amount invested. Truthfully, it takes time, but it can happen. In my portfolio, there are a handful of companies with which this happened. Most have not, and I will be the first to admit it. But it is a sweet feeling when dividends outpace the cost.
Observation
It seems to me that the situation of receiving cumulatively more dividends than the original cost of the stock is akin to the admonition to live below one’s means. If we live below our means, namely, spend less than we earn, then we free up finances for other endeavors. When stocks return more dividends than they cost, it is a major win. Of course this only applies to long-term investors.
How Do You See Yourself as an Investor? Let me know here.
The illustration of a werewolf is from “The book of were-wolves: being an account of a terrible superstition” by Sabine Baring-Gould, published 1865. Courtesy Internet Archive.
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