Let’s face it; investing can be very emotional. You’ve worked hard to earn and save for retirement only for ‘the market’ to be spooked by some country whose entire GDP is less than that of our home base of Houston. Some have even likened the stock market to a casino. Let’s take a closer look to see if you find the ‘odds’ in your favor.

Regardless of investment return, one year is an EXTREMELY short time period to be analyzing what is working in a portfolio. A common pitfall for investors is to get too emotional about the short-term price movements of stocks and make their decisions based on those.

Here’s an exercise. Forgot about short-term price movement for a moment and just simply look at the businesses that you own. Do you own great companies with expanding bottom line growth? Do you own businesses that regularly return cash to their shareholders in the form of a dividend? At CORDA, the answer is YES!

Some investors say they don’t want to take chances in the ‘casino’ and will just go out and buy a CD. So you would rather be a lender to a bank? At 2% for 5 years? At CORDA, we are not investing in fly-by-night start-ups or tech companies with no earnings. We are investing in what we believe to be sound businesses that run our daily lives. We have purchased many of these businesses at multiyear low valuations AND they pay nice dividends to reward your patience until the market rewards you with share appreciation. If all of these great businesses go under in five or ten years, I will assure you that the paper money you have in the bank will likely be worthless too!

As a ‘stat junkie’, I’d like to share some stats with you. I’m using the S&P here as measure for the overall stock market with data going back to the mid 1920’s (that’s almost 100 years of data). Looking at 1 year returns, the market is negative ~30% of the time – not bad odds if you’re going to Vegas, but still negative about 1/3rd of the time in the short run. Over ANY 5 year rolling period, the equity market is positive 86% of the time. Have a 10 year time horizon? Stay invested for 10 years and the number increases to being positive 95% of time. So even with some short-term fluctuations in the market, why alter your course if you own great business with sound financials and a growing dividend that were purchased at the right price? I’m sure you’ve heard the quote “It’s time in the market, not timing…” for successful equity investing.

There are many great quotes from one of our investing heroes, Warren Buffett. Here’s one of my favorites: In the short term, the market is a voting machine. In the long term, it is a weighing machine. As I understand it, the concept/quote was from Benjamin Graham but Buffett has repeated it often. The message is clear: What matters in the long run is a company’s actual underlying business performance and not the investing public’s fickle opinion about its prospects in the short run.


-Jeff Dodson