Investing isn’t about following trends or picking sides in the dividend versus growth debate. It’s about crafting a philosophy that evolves through experience, market lessons, and disciplined reasoning. As a CFA with years of market and macro experience, I’ve distilled my approach into seven principles to help you build a resilient, high-return portfolio. Let’s dive in.
1. Avoid Absolutes: Tailor Your Portfolio
Reject the idea that you must choose between dividend or growth stocks. Instead, align your portfolio with your goals—whether it’s income, growth, or both.
For example, selling covered calls on Coca-Cola can generate steady income, while holding Shopify fuels long-term growth. You can profit by buying undervalued assets (like Buffett’s 1960s American Express play), holding growing businesses (e.g., Amazon), or investing in liquidating firms for payouts above cost (not ideal).
Takeaway: Design your portfolio based on your objectives, not rigid categories.
2. Cash Flow: Avoid the Dividend Trap
High dividend payouts can starve a company’s growth or lead to risky debt. Retained cash fuels resilience and opportunity.
Consider AT&T’s 2022 dividend cut after heavy payouts strained its balance sheet. Meanwhile, Alphabet’s reinvestment in AI and cloud has driven market leadership.
Takeaway: Favor companies that balance dividends with reinvestment for sustainability.
3. Low Debt: Ensure Survival
A company with zero or low debt is built to weather disruptions.
During the 2008 crisis, debt-free homebuilder NVR thrived while leveraged competitors faltered. A clean balance sheet offers flexibility to seize opportunities or survive downturns.
Takeaway: Prioritize low-debt firms for long-term stability.
4. Reinvestment: Drive Compounding
Reinvested cash is the engine of compounding returns.
Costco’s low payout ratio (<30%) funds store expansion and low prices, driving consistent stock appreciation.
Takeaway: Seek businesses that reinvest profits into high-return opportunities.
5. Growth: Universal, Not Tech-Only
Growth isn’t just for tech—it’s essential across sectors. Look for companies expanding their total addressable market (TAM).
Walmart grows through operational excellence, while Spotify’s subscriber base soared from 96 million to over 200 million (2019–2025).
Takeaway: Invest in companies with growing TAM, regardless of industry.
6. Long-Term Thinking: Patience Wins
A 5–10 year horizon lets you capture value that short-term traders miss.
Tesla’s early investors (2015–2025) reaped massive returns by betting on its long-term EV vision, despite early volatility.
Takeaway: Think in decades to unlock compounding returns.
7. Valuation Discipline: Protect Capital
Paying too much for a stock increases risk and reduces returns.
Buying JPMorgan Chase at a low P/E during the 2020 COVID crash led to strong rebounds. Singapore’s GIC warns in its 2024/25 report of “lost decades” from overpaying.
Takeaway: Exercise price discipline to maximize returns and minimize losses.
TLDR version - Buy great companies (with huge revenue growth potential and low debt) at cheap prices and hold forever.
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