Stock story: MO

 I bought a boring stock long time ago and have held it ever since, symbol MO.

Back then, a couple of my friends said it's unethical for me to buy MO. Because, as everyone knows, besides holding some good stuff, MO mainly holds subsidiaries that sell cigarettes, which cause lung cancer. I don't smoke. I do puff cigar once a while with my friends when playing golf. Free cigar from them so I puff it. it's free so why not. I bought MO for its dividend. I don't think it's unethical because no one puts a gun on your head to force you to smoke. If selling cigarette is unethical, then selling gas is unethical too because it damages the global environment and causes all kinds of cancers.

Back in the late 90 IT bubble, when I told people that I still had MO, they thought I was a fool and laughed at me. I can blame them, use the MO money to buy a dot.com stock, you can make 50 times in two years.

Old and boring MO weathered the bear market very well every time. Since last year, MO started to spin off stuff. First, I got some K, then later on, the rest of the MO was split into MO and PM. With PM has the highest growth among them now. So Mo turned into MO, K and PM. It's like a chicken keeps laying eggs. Looking back, adding the dividend, MO probably returns about 14% a year. Boring but steady.

The lesson from MO is, long term buy and hold still should be part of my game plan. Buy and hold stocks should be those that involving in very basic stuff, for instance, companies that sells burger, like MCD. They should have steady business and cash flow. Normally, my long term buy and hold holdings have no debt, with positive cash flow every quarter and good dividend.

The money that you use to trade should be only a portion of your wealth unless you are a proven winner that can trade to make a living. This portion should not affect your sleep at all.

That's why when I read books telling people, don't do buy and hold, I was puzzled. A lot of the trading books are good for trading, but not good for accumulating wealth. Just look around yourself and the world. How many people get rich by trading stocks? Couple of my friends who are traders in WS. Where do they put their money? You would not believe it. Mostly in index funds and bond funds. They always told me, stock trading is a scam.

You might ask now, 股帝, Why do you trade if you think it's a scam? Good question. I probably should not trade. But I find excitement and fun out of trading. And trading is a way to keep me in the market and serves as a bridge to financial world. It makes me dig deeper into a lot of economic issues and makes myself more knowledgeable.

What's the purpose of this story then? I don't want to see more and more people losing their hard earned money thinking trading is a way of making quick money. Grand-mom-in-law is a nice lady. But, it will be very sad to see more and more people yelling: "I am gone to meet Grand-mom-in-law now".