In his new book
Antifragile: Things That Gain From Disorder
, Nassim Taleb coins a new word "neomania" to label the
belief that newer is better.
I see many investors afflicted with neomania, and I understand
the affliction. What's new instills a sense of optimism and
limitless potential. Getting in on
initial public offering (IPO) would have produced a 20,000% gain;
Cisco Systems' (
, a 50,000% gain;
, a 15,000% gain if their shares were held to this day.
These are the kind of returns that lead to a Malibu home and
endless vacations on the French Riviera.
But for every Microsoft, Cisco, and Intel there are hundreds
of FreeMarkets, U-Bids, and Onsale.coms. Countless
investors could have bought
in the 1990s. Instead, countless more bought Webvan.com,
Pets.com, and other similar disasters.
The odds simply favor failure when investing in what's new: Of
the 2,000 technology
from 1980 through 2004, a mere 5% accounted for 100% of the
$2-trillion-plus in wealth created during that period, according
to Stephen R. Waite in his book
. To that, Taleb adds that half the capitalization of the
stock market resides in fewer than 100 companies. In other words,
a few count for a lot.
Yes, but what about the likes of
, or even
? These companies are, after all, the standard-bearers of their
First, I'm leery of any Internet company maintaining its lofty
standing. Indeed, Facebook is already showing signs of user
fatigue, as MySpace did a decade earlier. What's more, I'm
sure there is some kid somewhere - in a garage or a dorm room -
furiously pounding a keyboard to develop a social-media platform
to knock Facebook of its perch.
But even if I'm wrong, investing success is still far from
Jeremy Siegel explains in his book The Future for Investors:
Why the Tried and True Triumph Over the Bold and the New, why new
investments are frequently losing investments. Siegel calls it
the "growth trap" - the tendency to overpay for shares in
fast-growing companies, primarily because investors expect too
much future growth.
Many investors appear to have fallen into Siegel's growth
trap: Facebook trades at 20 times revenue. Linkedin
trades at an 18 multiple. Google is priced more
reasonable, but still trades at over six times revenue.
The S&P 500 trades at 1.7 times revenue; the long-term
average is 1.4 times.
You'll notice that the great investors - Warren Buffett,
, Ian Cummings, Julian Robertson - eschew the new.
We take a similar tack at
High Yield Wealth
. The portfolio is composed of investments that have been around
the block a time or two. There are no pyrotechnics.
Admittedly, the vast majority of income investments are
established companies anyway. Rarely does a new company begin its
public life as a dividend payer. But even if it were otherwise,
we'd still limit our universe to Methesulah-like issues. The data
overwhelming support that what has existed in the distant pace
will continue to exist into the distant future.
And we are all for that… as long as the dividends are existing
and growing along the way.
Triple your dividends with one stock - starting this
With so many investors grabbing up shares of blue chips, yield
is getting hard to come by. In fact, the average yield of
the Dow has sunk to 2.1%. But our group of investors isn't
worried. We're collecting big monthly dividends…
up to $550 every 30 days
… from a little-known investment that
yields a whopping 12%
! If you'd like to tap into this income stream, and earn up
to triple the dividends of even the best blue chip,
click here for our full report on this