Once upon a time, in the Land of Unknown, there was a hut. Inside the hut, it was total darkness except for some dim light shining upon a wooden beam which was placed in the middle of the hut from one end to the other. The beam was wide enough with the help of the dim light shinning upon it for someone to see the beam and walked on the beam towards the other end.
One day, Mr. Not Knowing called me for a challenge. He said: "Paid me a fee, and if you could cross the beam to the other end and you would be rewarded". The reward could be handsome depending on how fast I could cross it, but once I stepped on it; there was no refund and no turning back.
I took the challenge from Mr. Not Knowing. Paid him a fee. I had little difficulty to see the beam under the dim light shinning on the beam and quickly walked across the beam to the end other of the room and collected my rewards afterwards. The reward was pretty good for such a quick walk.
Mr Not Knowing asked: "Do you want to play again?". Surely, for such an easy gain, I would be silly not to play. I paid him more fees, and set my feet on the beam again. But, after walking a few steps, suddenly, the hut was brightly lit for a while and went off. To my horrible, I suddenly saw under the beam there were plenty of crocodiles with mouth open wide showing off their razor-sharp teeth and staring at me. Darkness filled the room once again leaving behind the same dim light shinning upon the beam.
I was terribly frighten, but I couldn't turn back. I nervously and slowly walked across the beam. But, I was so scare of falling into the mouth of crocodiles, that I went crawling on the beam instead of walking. Half-way through the beam, I totally lost the courage of crawling, and I sat frozen on the beam. I prayed to the Lord for help.
Suddenly, the light came back, and I saw a safety net cross the the room separating the crocodiles below from the beam. If I slipped, I would fall into the safety net but not into the mouth of crocodiles. The light went off again.
I quickly took the courage, got up but, I walked very slowly and carefully towards the end of the beam as I was still very worry whether the safety net was secured and strong enough to hold me back if fell into it.
So is there safety net in the Market? Were you be brave enough to get up and walk across the beam?
When investing in stock, always consider the Total Return.
Total Return = Capital Appreciation + Dividend Yield.
Your primary return should be capital appreciation and dividend yield is just your safety net in market should your stock falls and you fail to capture the capital appreciation in the short term.
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