Investment Advice From an Unusual Source

Sometimes you never know where you'll come across quality investment advice.  Sometimes it may be hard to find; other times it may be easy.  Sometimes you may not even be actively looking for it...But, if you have trained yourself to - as the saying goes - "know it when you see it,"  you may find it in unusual places without even looking.  Otherwise, you may miss it altogether...

Currently I am reading a book entitled, Taking the Guidon: Exceptional Leadership at the Company Level.  As the title suggests, it's a 'military' book on leadership written specifically for those either in, or preparing for, Company Command.  For those readers not affiliated with the military, Company Command is a very challenging, yet rewarding time in one's military career, where at the rank of Captain you command approximately 120 soldiers.  Company Command typically lasts for about a year to a year and a half and is a crucial step in one's military career.  In fact, many officers often base their decision of whether to stay in the military or not off of their experiences as a Company Commander.

Needless to say, this book doesn't contain outright investment advice.  I don't think the word 'investment' is ever even mentioned.  However, numerous times while I was reading I found principles that directly apply to investing - specifically patient, dividend growth investing.   Consequently, I thought I would share some of these investment lessons, despite their unusual source.  For each lesson, I have paraphrased what I learned from the book and then applied what I believe to be a matching investment principle.

Lesson #1 - The Farming Law
"You reap what you sow"

From the Book -  A farmer who wants to reap a productive harvest in the fall must plant in the spring and work the fields throughout the summer.  Just like it would be ridiculous for a farmer to skip all the hard work and still expect to harvest, there are no short-term fixes in commanding a successful company.

My application to investing - An investor who wants to live off passive income later in life must regularly set money aside, invest, and manage his portfolio throughout the early years of his life.  It would be ridiculous to wake up one day and expect passive income without the ardent discipline of growing one's portfolio over time.

Though this idea sounds straightforward, many often miss it.

Lesson #2 - Put the Big Rocks in First
"Figure out the important things and put them in your life first"

From the book - There is a finite amount of time in each day.  Focus on what is important and do not waste time worrying about what doesn't really matter in the long run.  Put the big rocks in first, and then put the smaller 'sand' in when you have time.

My application to investing - You only have so much $ available to invest.  Choose 'core holdings' and focus on those first.  Start by building your portfolio around your 'big rocks', and then add supplemental 'support' holdings later.  (In my current portfolio, for example, ANH at 3% of my portfolio, is a good example of a smaller, supplemental holding; whereas ABT at 14% I would consider a 'core' holding).

Though this idea sounds straightforward, many often miss it.

Lesson #3 - Know Where You are Going
"You must know for which harbor you are headed if you are to catch the right wind to take you there."

From the book - The leadership principles that will help you be successful include: having a clear vision; establishing and staying focused on the unit's core values; and setting and achieving short-term goals.

My application to investing - Successful investors also have a vision (or what some call an 'investment thesis').  They identify their personal 'core values' in selecting and initiating new positions, and then they stick to them.  They also create short-term goals to ensure the direction of their portfolio is is in line with their overall vision.



Though this idea sounds straightforward, many often miss it.

Lesson #4 - Continue to Grow
"You must be committed to continual learning because if you aren't moving forward, you are moving backwards."

From the book - Learning includes organizing and thinking about command ideas, reading and reflecting, and actively soliciting input from experienced leaders around you.  And, "you will always be what you have always been, if you always do what you've always done."

My Application to investing - Continuing to learn and develop your knowledge as an investor is crucial to long term success.  Read, think, and seek counsel.  There are numerous blogs and websites committed to discussing investing ideas (DividendMonk, DividendNinja, PassiveIncomeEarner, DividendGuyBlog, etc. to only name a few.)

Though this idea sounds straightforward, many often miss it.

Conclusion  
"You reap what you sow"
"Figure out the important things and put them in your life first"
"You must know for which harbor you are headed if you are to catch the right wind to take you there" * "You must be committed to continual learning because if you aren't moving forward, you are moving backwards"

All relatively simple ideas at first thought - applicable to both our daily lives as well as our investment philosophies.

Yet despite their simplicity, we often forget to apply these principles both in our lives as well as in our investment strategies.  I know I do.  Feel free to share your thoughts below.

Thanks for reading,

DivPartisan

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