First, a confession: my track record in the stock market has been nothing short of disastrous. Out of all the investments I’ve pursued, investing in stocks stands as my greatest failure.
My stock-picking choices have been so disastrous that I often joke with friends, “Do you want to know a 100% way to make money in the market? Whatever stock I advise you to buy, do the opposite and sell it short because, if you take my advice and buy that stock, you will lose your shirt.” In other words, I have to admit, my advice concerning the stock market should definitely be taken with a huge grain of salt.
Despite my failures, I believe they’ve given me valuable insights, especially for those just starting their financial journey. Sometimes, the biggest lessons come from those who have stumbled the hardest. If nothing else, I can serve as a cautionary tale of what not to do.

After decades of losses in the stock market and observing others who’ve profited, I realized my strategies were clearly flawed. Perhaps I’m being too hard on myself, though. As Thomas Edison famously said, “I have not failed. I’ve just found 10,000 ways that won’t work.” It’s a wise and gracious perspective on failure.
Andy and I have been friends since our high school days at Sahuaro High School in Tucson. Despite our close friendship, we had very different upbringings. Andy comes from a large, loving Italian family where success seems to run in their veins. He had a long career in the medical field, retiring as the CEO of a major hospital in Iowa; his sister is a prominent pediatric surgeon.
Andy’s father was a successful business owner who made investments in Tucson real estate, achieving remarkable success. He encouraged his children to pursue higher education and careers in the medical field. His father was not only a great role model but also a significant influence on Andy’s and his siblings’ achievements.
Andy was fortunate to be part of a family that epitomized the American dream: hardworking parents, risk-takers, with a strong emphasis on education and family traditions. His father’s financial savvy and business acumen were key lessons Andy absorbed, which laid the foundation for his own success.
It was through Andy that I first became interested in dividend-paying stocks. This pivotal conversation happened less than a year ago—today is January 8, 2025.
Andy and I have always enjoyed discussing financial matters. It’s a central theme in our friendship, and we often share our financial interests over lunch at a local restaurant. Some of our most memorable discussions have taken place in his car, a tradition that started back in our University of Arizona days. In those times, our talks rarely touched on money or investments; we were more focused on women and religion. After a night out, we’d sit in his car, diving into deep conversations about the topics that mattered most to us then.
Recently, the stock market has become a focal point of our discussions. Andy has done well in the market over the years, and I’m keen to learn from his experience and insights—a field where I’ve struggled significantly.
During one of our recent calls, Andy casually mentioned, “I never invest in stocks that don’t pay dividends.” Although I had heard of dividend stocks before, I never truly understood their value. They seemed like just another investment strategy, akin to options or covered calls. Dividends had never captured my attention, and I hadn’t given them serious thought.
But when Andy emphasized their importance, it sparked something in me. Given my long-standing respect for him, I realized his focus on dividend-paying stocks likely played a significant role in his financial success.
Following our conversation, the idea of dividends lingered in the back of my mind. This illustrates a fascinating aspect of human nature: we can hear a valuable truth, yet it might take time before it inspires action. Sometimes, a seed of wisdom needs weeks, months, or even years to germinate and grow.
“I do not own a single security anywhere that doesn’t pay a dividend, and I formed a mutual-fund company with that very simple philosophy.”
Kevin O’Leary
As I continued to do more research into stocks, I began taking more interest in the story of legendary investor and billionaire Warren Buffet. Buffet is a name well known to most people in the investment world and is arguably one of the greatest investors of all time, besides being the eighth richest man in the world. I had learned about him decades ago but never spent much time reading about either him or his investment company, Berkshire Hathaway.
As I mentioned, my attempts at investing in the stock market rank among the greatest financial failures of my life. To this day, I haven’t made a single penny in profit. However, one of my defining traits—whether seen as a strength or a flaw—is my bulldog persistence. When I set my mind to something, I don’t give up easily. While I dislike failure, I recognize it as an inevitable part of life.
I realized my investment strategy in the stock market was not a winning one. And what was that strategy? One thing I did when I first started trading in the market was day trading. Here is a paragraph that explains it well from the previous linked article:
How Does Day Trading Work?
Day trading, a high-stakes approach to the financial markets, involves the rapid buying and selling of securities within a single trading day. This frenetic form of trading works by capitalizing on small price movements in highly liquid stocks or other financial instruments. Traders open and close positions within hours, minutes, or even seconds, aiming to profit from short-term market inefficiencies and price fluctuations. This differs markedly from traditional “buy and hold” investment strategies, as day traders rarely maintain overnight positions, closing out all trades before the market shutters.
I didn’t fully fit the criteria of a day trader, as I often held onto stocks for more than a day and didn’t always close out all my trades by the end of each trading session. However, for the most part, I aligned with the behaviors of a trader rather than an investor. It took me years—perhaps even decades—to fully grasp and appreciate the significant differences between the two.
It was through studying Warren Buffett that the distinction between a trader and an investor, along with their underlying strategies, became clear. This understanding helped me see why I had been losing money in the stock market for so long.
Below is a short video clip of Warren Buffett discussing his investment strategy. This mini-talk was one of the key insights that helped transform my thinking about the stock market. Now, as an aside, Buffett speaks somewhat disparagingly about gold, and this is one area where I disagree with him. Why? While I understand Buffett’s point about gold’s appreciation compared to his hypothetical $10,000 investment in the S&P 500, I believe that physical precious metals hold their value, especially in a scenario like the Great Depression. Unlike stocks, in the event of a hyper-inflationary crisis that devalues fiat currency, gold and silver would unquestionably be worth far more. More importantly, during hyper inflation, you never see people burning their gold and silver for heating purposes like you see old photographs from WW2 showing people burning their Reich marks for heat.
What Buffet said that made sense to me was his concept of looking at the stock market as an investment in a small piece of successful America’s businesses. Also, he described the power of compounding, something I touched on in a previous post.
One of Buffet’s investment strategies is to find well-established businesses with consistent and prosperous financial histories who have been around for decades, pay dividends, and then invest in them—the companies and not some nameless, faceless stock with a ticker symbol. This is done through purchasing their stocks, and once you find one of these successful businesses, you hold them “forever” and don’t sell them regardless of what fluctuations will inevitably happen in the stock market universe.
My readers will remember a prior quote I shared in another post where Buffet said, “If you don’t find a way to make money while you sleep, you will work until you die.” This nugget of wisdom bears repeating because, with dividend paying stocks, you can earn money while you sleep, which is an important stepping stone on the long journey to becoming financially independent.
One of the key reasons dividend-paying stocks appeal to me is the simplicity and ease of the strategy. For example, while running a business is a great path to financial freedom, no seasoned entrepreneur would claim it’s easy. Starting, operating, and succeeding in a business is one of the most challenging undertakings.
The risks are significant—financially, emotionally, and in terms of time. Managing employees often brings some of the greatest frustrations, risks, and disappointments. When I was in business, dealing with employees was one of the main challenges that made me consider quitting for something less stressful.
“If you don’t find a way to make money while you sleep, you will work until you die.”
Warren Buffet
Another challenge I faced as a contractor was the weather. I worked year-round, enduring everything from extreme heat to cold. The brutal summer heat of Tucson, where I spent decades working outdoors, was particularly harsh, but I had to persevere to support my family.
These are just a couple of examples from the long list of challenges business owners and outdoor workers face. Every business has its unique hurdles, and every entrepreneur deals with daily obstacles and frustrations.
Earning money while you sleep is a completely different concept. As Buffett highlights, the beauty of earning money while you sleep is that it doesn’t require your active involvement. You’re not working hard while you’re asleep!
This is why dividend income is so attractive. Like earning interest on savings, it’s passive income that flows in without ongoing effort—apart from the initial work of saving and investing your money to let it grow and generate returns.
John D. Rockefeller, one of the richest men in the world when he was alive, said, “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” Here was a man who had unfathomable wealth, and though he no doubt said the above in a tongue and cheek fashion, it speaks volumes to how much importance he personally placed on dividend income.
Investing in dividend-paying stocks is not a “get rich quick” strategy. However, with a long-term perspective, especially for younger investors who can reinvest dividends until retirement—potentially decades away—it can be one of the simplest and most reliable paths to financial independence.
As I mentioned in an earlier post, adopting a long-term outlook is crucial. In the early stages of any investment strategy, returns may be small or even insignificant. There’s also the possibility of losing money, something to avoid if possible.
However, if your strategy is sound and you’ve done thorough research, it’s important not to get discouraged by slow progress or lower-than-expected returns. Investments can temporarily dip in value, and it’s essential to brace yourself for this possibility.
The key is focusing on long-term results, not short-term fluctuations. Of course, you should monitor your investments to ensure they’re not significantly losing value. Staying vigilant helps prevent major losses and keeps your strategy on track.
Finally, a warning: never put all of your financial eggs in one basket. Don’t put all—or even most—of your hard earned savings into the stock market. You can lose everything you put into stocks if the market suddenly turns south. And if you are inexperienced in trading stocks, the possibility of you losing a significant amount of your capital only increases.
If you are just starting out in this kind of investing, start out with just a little bit of money. Get your feet wet in a tiny amount of water and learn all you can before you take a big plunge and put a significant amount of your hard earned savings at risk.
If you are young (your twenties and below), I would keep most of my money in some type of CD or cash account where you are earning interest on that money. Keep cash on hand, as well. Invest a little in physical gold and silver—perhaps even other precious metals. In other words: diversify.