Past Performance Is No Guarantee Of Future Results, But It’s Pretty Close
The Sharpe ratio measures the amount of return you are getting versus the amount of risk being taken. The higher the number, the better the risk-adjusted return.
Example stocks looked at:
- Procter & Gamble (NYSE: PG)
- Johnson & Johnson (NYSE: JNJ)
- Colgate-Palmolive Company (NYSE: CL)
- The Clorox Company (NYSE: CLX)
The key to obtaining incredible results is to find companies that raise dividends at a large enough rate so that they keep ahead of inflation and become wealth builders.
Reinvesting dividends protects you and allows you to profit in extended bear markets.
Be wary of the Lake Wobegon Effect, which says it is a natural human tendency to overestimate one’s capabilities. Do not overestimate your own investing capabilities. Trying to trade in and out of the market is a fool’s game. Invest in great companies that raise their dividend every year.