Consistent Picks for Consistent Growth

So yesterday on TV, I saw a practically unbelievable display of a loser’s strategy. Talk about snatching defeat from the jaws of victory…

If you had told me someone could so completely ignore the “right” answer and so adamantly endorse the “wrong” answer, well, I wouldn’t have believed you. It just blows my mind that you can have the right answer — a clear demonstration of what works — right there in front of you, and still choose the wrong answer.

Was it sexier? Did it seem like more fun? I wish I knew…

Now, if you think I’m talking about last night’s presidential debate, well, sorry to disappoint. I simply can’t stand watching those two go at it. It’s depressing and sad that these are the best candidates that America can come up with. I have some theories about why this is true, about why Americans no longer care about substance, facts, and real discourse. But that’s not my subject for today…

I’m here to talk about football.

Now, I don’t know if you’re a football fan or not. Ultimately, it doesn’t matter. Because this is an analogy. The football part of the story simply demonstrates an all-too-common flaw in strategy.

Anyway, I’ve lived in Baltimore for about 20 years. So I’m a Baltimore Ravens fan. The Ravens are a good football franchise — they win more than they lose. They went to the playoffs five times straight, from 2008 to 2012, winning the Super Bowl in 2012. They missed the playoffs in 2013 but got back in 2014. And an injury to franchise quarterback Joe Flacco sank the 2015 season. 

It takes a lot of good decision making to get that kind of success. Still, it can be very frustrating to be a Ravens fan. Because despite the overall record of achievement, the team makes some head-scratching decisions. It sometimes seems like they win despite themselves. Yesterday’s game against the Washington Redskins offers a prime example…

Snatching Defeat from the Jaws of Victory 

Baltimore got the ball first. Of the first nine plays, five were runs, for 4, 7, 2, 35, and 1 yard. They scored a touchdown to go up 7–0. The next time they had the ball, they ran twice for no gain, threw the ball twice, and punted. (The extra down was due to a penalty.)

The third possession started with a nice pass play. Then two failed runs and a failed pass. Punt. 

Next possession: 12-yard run. Then a short pass, a failed run, and a short pass for a first down. Then a six-yard run, nine-yard run, two failed passes, then a field goal. Next possession: one run, six passes, punt. 

The final possession of the first half was three straight incomplete passes and a punt. 

The second half of the game, the Ravens ran the ball four times. Four. Everything else was a pass play. Baltimore’s lead rusher ran the ball 11 times for 95 yards. He averaged 8.5 yards a carry. Now granted, he racked up 35 yards on one run. Still, erase that run, and the man still averaged six yards a carry, which is very good. Give him the ball. But in the second half, he got four carries for 5, 2, -1, and 28 yards. 

So, yeah, the Ravens lost the game. And that’s fine — if you give it your best and lose, well, that happens. But the Ravens didn’t give it their best. The coaching staff basically stopped running the ball, even though they were having success. Why stop running the ball? 

The stats are even more telling. The Ravens ran the ball 19 times the whole game. And they averaged 6.2 yards every time they ran the ball. They passed the ball 47 times and averaged 3.8 yards per pass. 

Even to the untrained eye, these numbers are very lopsided. If you got twice the return from running the ball as you did passing it, why on earth would you throw it more than twice the number of times? 

It makes zero sense to stick with a strategy that is not effective. And in fact, to have just two actions available to you — running or passing — and to consistently choose the least effective of the two, well, how on earth does that happen?

What Choices Do You Make? 

I’m going to assume that you get my point here. When you’re investing your money, you are the coach. You tell your money where to go, what to buy, how much to buy, when to sell, etc.

So how are your results? Are you making the kind of money you should? Are you making consistent profits, growing your investment dollars year in and year out? 

We’ve had a steady bull market for seven years now. You should see the result of that in your account statements. If not, there’s something wrong, because a good, solid investment plan should be giving you good, solid results. Year in and year out…

Look, I know it’s hard not to chase hot-sounding stocks. We all want to hit the big winner and double or triple our money in a few months or whatever. But the simple fact is, these types of gains come from the same strategy that will give you a steady return. 

In my Wealth Advisory, our biggest gains come from my simplest ideas. For instance, I love great brands that have great management teams. I’ve found that a great way to find a truly great brand is to ask yourself, “Can the company raise prices and not lose business?” There aren’t as many as you think. But I think we can agree that Starbucks is a company that can raise prices if it wants. Wealth Advisory subscribers have a 161% gain on Starbucks, and there will be more. 

A couple years ago, I was looking at data center REITs, because it seemed like a good way to invest in the explosion in Internet traffic and get a good dividend. The stock I recommended is up 151%, and yeah, there’s more on the way. 

My dividend and income strategy for The Wealth Advisory isn’t very complicated. It’s not secret, and it doesn’t take a lot of “home run” swings. Instead, my assistant and I do solid research, we find good dividends that should be able to grow over time, and we end up with a solid portfolio of stocks that make consistent money. 

My recommendation to you is to take the same approach with your investments. You don’t have to hit the big play to make money. Most times the “big play” ends up in failure. Instead, take the methodical approach. Find stocks that can reasonably give you 15% a year between the dividend and earnings growth, and you’ve got a winner. 

Until next time,

Until next time,

Briton Ryle

@BritonRyle on Twitter

The Wealth Advisory on Youtube

The Wealth Advisory on Facebook

A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He is also the managing editor of the Wealth Daily e-letter. To learn more about Briton, click here.