Phew…
We can all breathe again.
The Canberra Circus is finished, for now.
The ASX's 12 day winning streak is over, for now.
Interest rates are steady, for now.
Greece remains in the eurozone, for now.
World share markets are flat to down, for now, with one commentator on Bloomberg declaring…
"Until some of these Greece headlines can be removed from the equation, that's likely to inhibit short-term market upside."
In short, today's one of those days where nothing much will happen on the local share market. As I write, the S&P/ASX 200 Index is trading right around 5,800 down a few points on the day.
Still, the investing wheels keep spinning here at The Motley Fool. Every day is a stock picking day — there's a bargain out there, just waiting to be discovered.
Speaking of which, this afternoon our resident dividend expert Andrew Page will reveal his brand new ASX stock pick, exclusively to members of our Motley Fool Dividend Investor advisory service.
I've NEVER heard Andrew so excited about a stock tip. Here's exactly what he sent me this morning…
"I've just spoken with the company's Investor Relations guy for 30 minutes, and am really positive on this one.
This business has a real cost advantage over its competitors, huge growth potential, impressive systems and an awesome 6.1% fully franked dividend yield."
All will be revealed this afternoon, at 4.30pm AEDST, exclusively to Motley Fool Dividend Investor subscribers. If you're interested in finding out the name of the company, and grabbing 50% off a 2-year subscription, click here now.
The market may be flat today, but one thing is for sure — it won't last long.
Many investors are scared by share market volatility. It's why they stick with the safety of term deposits, even when they KNOW the share market beats the returns on cash, over time, hands down.
You do know that, right?
Source: Russell ASX 2014 long-term investing report
A picture tells a thousand words.
Look at the chart again. Let it sink in. Consider also, this period includes the GFC. To share market investors like me, it's an absolute thing of beauty.
The key is time. And focusing on the future.
So many people invest by looking through the rear-view mirror, focusing on the past, not the future.
They extrapolate what's happened in the most recent past, and assume that will be duplicated in the years ahead.
I can tell you right now — in 3 years time, oil will not be trading at $US50 a barrel. Iron ore will not be trading at $US60 a tonne. The RBA cash rate will not be 2.25%. And the Australian dollar will not be trading at US78 cents.
That's the easy part, of course. But so many investors spend inordinate amounts of time worrying about things that they have no control over, and making predictions that are virtually guaranteed to be wrong.
Two cases in point?
Case #1: According to Bloomberg, Citi is saying oil could fall as low as $US20 a barrel.
Case #2: According to the AFR, UBS has slapped a "sell" recommendation on Telstra Corporation Ltd (ASX: TLS), setting a price target of $4.35.
Both predictions are very likely to be wrong, although if I was a betting man, I'd say oil at $US20 is a little more possible than Telstra at $4.35.
The folks at UBS appear to be missing one vital point with their Telstra price target — that interest rates are low, and likely going lower, a situation that will likely persist for quite some time.
Their price target for Telstra assumes the company pays a full year fully franked dividend of 32 cents. If, and it's a BIG if in my opinion, the Telstra share price did fall to $4.35, Telstra shares would yield 7.4%, or 10.5% when grossed up for franking credits.
I can't see it happening. The income-starved SMSF Army wouldn't let it happen. They'd be all over it like a rash.
I realise it's easy for me to sit here in the cheap seats, taking pot shots at other predictions. But hey, life's about making the short putts, making the easy pass and hitting the full toss for a boundary.
And it's about patience. For cricket batsmen, it's about waiting for the bad ball. But it's also about staying the distance. You can't make any runs sitting in the pavilion.
The same goes for investing. You've got to be in the share market to win at it. And you've got to put the odds in your favour.
Here's all you need to do…
Buy good stocks, at fair prices, invest regularly (ideally reinvesting your dividends), and then hold your shares for the long-term.
It's a technique that's served shareholders in millionaire maker stocks Commonwealth Bank of Australia (ASX: CBA) and Woolworths Limited (ASX: WOW) very well over the last 20 or more years.
VERY WELL.
Due to the sheer size of those two companies, not to mention the premium valuation afforded Commonwealth Bank today, the future performance of those two popular stocks will look nothing like the past.
Your challenge, should you wish to accept it, is to find the big winners of tomorrow.
Who's to know if Andrew Page's forthcoming brand new ASX stock pick for Motley Fool Dividend Investor subscribers will fit the bill? The 6.1% fully franked dividend yield certainly gives it a decent head start, putting the odds more in your favour.
One thing is for sure… like all of us here at The Motley Fool, Andrew will give his stock recommendation the gift of time. The time to grow. The time to compound profits. The time to reinvest dividends. The time to grow the wealth of shareholders.
I'll close by getting out of my comfort zone. I'm going to make a prediction.
I predict the returns on ASX shares over the next 10 years will outpace those on offer from cash… just as they've done so many times before. See the chart above.
The road may not be smooth. Heck, the 10 years to December 2013 included the GFC — and the share market still gained an average of 9.2% per annum.
I realise 10 years feels like a lifetime now, especially in age of the 24-hour news cycle, second by second Tweets, and in an era where Australia could soon be welcoming its sixth new Prime Minister in the last seven years (it makes Italian politics look stable).
But whether you're 25 or 75, those 10 years will soon pass quickly enough. Telstra may or may not hit $4.35. Oil may or may not hit $US20 or $US120, or both. And interest rates may or may not hit 1%, or 8%, or both.
And still, whatever happens, my prediction stands. For me, it's the share market to win, hands down. Are you with me?
