Post-Squid Investing Attitude Shift

I’ve done my share of speculative trading, but lately I’m no longer interested in dancing with the squid. At the moment I’m focused on my bond portfolio, and I’m trying to figure out how to be a *lender*, the old fashioned way, not a “bond trader”. I’d like to buy, hold to maturity, and sleep soundly at night without having to worry if a greater fool will turn up tomorrow to relieve me of my “paper” (now there’s a nice squid doublespeak term – a bond is a loan, a debt, an obligation which forces people to toil who otherwise might not – not just “paper”).

Looking at stocks, I was enamored for a while with the “Dividend Achievers” approach, e.g. the VIG or VDAIX fund. But the underlying “Dividend Achievers” index lost about 1/3 of its components in 2008-2009… Looks like dividend achievement is a bit unstable. Also, much of that dividend achievement is done with borrowing/leverage and may not be sustainable. And there are whole market sectors that need to experience destructive re-creation. I’m tempted to look more at low-debt, smaller companies (which respect their shareholders enough to pay at least some kind of dividend), with prospects for growth.

More philosophically: I don’t want to “own” something that “owes”. In my stock portfolio, I want to own things that produce, without being burdened by the high fixed costs of debt service… In my lending portfolio (bonds and bank accounts), I want to be owed, by those who don’t need my money, who I’m confident will pay me back, because they will amortize the debt and won’t need to roll the debt over. I want to be helping others do productive things and growing their way out of debt … not trapping them in it….

Lending needs to become more constructive, not predatory. And that means not giving the debt addicts another round, even when they ask for it.

And the ownership of stocks needs to be about rebuilding the real, physical, tangible, doing-cool-things economy, not speculative paper-shuffling.

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