This post was originally written in 2014, when thanks to a Boglehead I became aware of a company called GT Advanced (ticket symbol GTAT). I apparently owned a tiny amount of stock in this company for several years (along with stock in thousands of other companies through my index funds.) This company was apparently making something called Saphire Crystal, which was going to be used in the iPhone 6 and 6 Plus. Except then Apple decided not to use it. GTAT subsequently went bankrupt with little if any warning. It went from a market capitalization of $1.5 Billion to zero in a few seconds.
The company started trading publicly in 2008. In 2013, shares were worth $2.85. Share prices peaked at $19.55 in July 2014, a gain of nearly 700% in a year. In August 2014, Jim Cramer was recommending the stock on his show. On September 8th, 2014they were trading at $17.15. On October 3rd, 2014 it was trading at $11.05. Three days later, it traded at 80 cents, representing a loss of some 93% over the weekend as the company went into bankruptcy proceedings. Many of us are too young to really remember Enron and WorldCom’s spectacular implosions, but most of us remember Lehman Brothers. The fact is that individual companies can and do disappear all the time. This has very little impact on a highly diversified investor such as someone using primarily index funds for their stock market exposure. But for someone who has decided to take on the uncompensated risk of owning individual stocks, the impact can be rather incredible.
The Boglehead provided a link to a forum where GTAT investors had been discussing the company ad nauseum for years. The posts after the bankruptcy were illuminating but heartbreaking. While it’s easy to laugh at just how dumb an investor has to be to put such a high percentage of their portfolio into the stock of a single company, there are plenty of investors out there making similar terrible mistakes. They sometimes do it out of ignorance, and other times, are simply gambling. Here were some of the more interesting posts from that forum:
From Looking Up:
I am totally numb. Just got home after working. I saved this money for over 25 years and it is gone in a day. I haven’t sold my shares because I just don’t know if the shares will be worthless soon or any chance that they may come back. I bought at $18 and 18.25 and have about 4700 shares. This is everything. My retirement and my savings for my son and me. This is so hard for me to take in because my son has special needs and this was for him and his future, especially when I’m not here any longer. He is getting of the bus soon so I need to dry my tears and put on a smile. He is the best son a mother could ever wish for. I just feel and know that I have failed him and trying to figure out what to do. Should I sell now and at least have a couple thousand for us to at least have a few weeks to figure out what to do. I feel for everyone on here who lost. I was advised by someone who I trusted dearly not to sell. My instincts told me otherwise but I put my trust in this individual because I just felt so inept at trading and believed he knew much more than me. I will more than likely have to sell our home and struggle with this only because change is so difficult for my son. I apologize for venting but I am too ashamed to share this with my family or friends. I shared this with the person who advised me to hold and my messages go unanswered.
From Todd:
All my shares gone. Lost a SIGNIFICANT amount of money to me, but not everything. Lesson learned. This will bite for a while. Index funds for me for a LONG time now
From JoeFromCranston:
ok well I am done, done managing my own retirement, done with everything. i just hope my wife does not leave me. my parents are not going to be happy, this is not good. sold it all, i am DONE.
From BgShanghai:
I can’t think of a bigger lesson in life, business and investing than the one I have learned here on this day. I will not speak for others but I will reflect upon my own mistakes and at the top of the list is having invested too large of a % in one stock. Even i knew it was wrong. I still did it.
From Bond007:
I am dead meat. All my money is in GTAT and on my stocks I was doing margin. Since I owe way more than what’s in there, I don’t know what will happen to margin. Some people were smart, I believed so much in GTAT potential and lost all my savings including my 401K, IRA. At this point, I don’t know what to do. I told my wife about this and she was upset and angry at my stupid move. But she still loves me.
The next day the same poster posted this:
This would be my last post on this forum. I am officially signing off. Thanks for all the contributions. I am still in shock and all the money is gone and I owe $107K in margin accounts. I have prepared my profit and loss for filing a case and here the final numbers…Basically my net loss is around $750K in stocks and $140K in options. All my earnings for the past 15 years are gone in one night.
All I can wish is, all of family members of TG and the crooked directors face some grueling death. Yesterday I was in the verge of committing suicide myself and with a loving family, I didn’t have the courage. Good bye to all. Time to start Life 2.0
From Stevens54:
I’m not coping well at all. I’m watching 25 years of savings going down the drain. I was stupid enough to have my entire retirement fund invested in this. All I can hope for is to eventually break even if it should ever get back to $5. This was like a punch right in the gut.
From BillBreeder:
Holding way too many [shares-] 11,250. (previously 75% holdings, sold too many apples for this)
Today begins the rest of my life, knowing someday this will be behind me. …From the moment i glanced at the ticker this morning, a state of shock took over. Didn’t feel depressed, was upset but couldn’t cry. But reading today’s post I’m in tears not due to losses but knowing I’m in the company of so many beautiful people. This isn’t the outcome any of us expected, but none the less, this forum has been the highlight of my investment career.
From Ocelot on Tuesday, October 7th:
I heard the news after getting off a plane yesterday. Ouch. I lost a lot of money. Probably the equivalent of me saving diligently for the next 12-15 years. Well, only myself to blame.
From Wonder:
I don’t know what to write. It’s just gone. All that money. I don’t want to think about what things I could have done with all that money. It makes no use. Now and then my mind wanders around and I feel a pain stabbing me, I also dreamt last night about some employers who tried to warn me but where punished in doing so. The dream was like a movie. That is exacly how I feel now, being in a movie. It just feels so unreal but is is real. I don’t wanna look at the price anymore because I have sold everything at 0.98. It is incredible.
And my personal favorite, from Wisconsincheese, one month BEFORE the bankruptcy:
Anyway, it is not me you should be jealous of but my mom whose account I manage and has around 415k shares and probably doesn’t know GTAT is on the Nasdaq. I have to set up separate accounts for her GTAT holdings so she doesn’t see all her positions at once as she has been telling me to sell for it for more than a year and I have to keep telling her to wait and hide exactly how much of her portfolio is GTAT so she doesn’t flip out about it.
If Wisconsincheese thought she was going to flip out about it because he still owned it in September, wait until she finds out he lost $4-8 Million of her money gambling in the stock market.
Some of these quotes are pretty tough to read, but I think an important lesson can be learned here if you haven’t yet learned it. That lesson is that the old adage “Don’t put all your eggs in one basket” is an old adage for a reason.
Watch The Basket Closely?
Warren Buffett has said, “Keep all your eggs in one basket, but watch that basket closely.” Many people take that as an endorsement to an alternative investment philosophy to diversification (protection against what you don’t know.) However, it’s important to understand what Warren Buffett means by watching something closely. When he buys stock in a company, he buys a big chunk of it and puts himself in a management position, where he can actually influence what the company does. That’s similar to investing a lot of your money into a small business you are the sole owner of or a handful of investment properties that you actually manage. It doesn’t mean buying a single stock (or even a few stocks) and following all the news you can find about the company on the internet or on an internet forum. It doesn’t mean putting all your money in one private real estate fund or with one real estate syndicator or even in a few different crowdfunded properties.
The US stock market has “always come back” from market corrections and bear markets (although even that isn’t guaranteed) but individual stock investments are a very different story. Do yourself a favor. Use low-cost, broadly diversified index funds or ETFs for your public stock investments. If you choose to invest in real estate, either diversify broadly or be very involved in the actual properties. Invest your money passively and your time actively.
What do you think? Do you buy individual stocks? Why or why not? Comment below!
Great post. Amazing what humans will do when lied to by someone they trust.
I very much doubt the posters on the forum have learned their lessons, tho.
Wow. almost difficult reading some of those and imagining. Shows the importance of diversification for sure – not all stocks, not all real estate, not everything in your practice/business. This is one of the reasons I use a wealth manager. It prevents me from doing something stupid (plus I have someone to blame if not happy) as I enjoy the risk taking.
I agree with the above post that most people when presented with the next ‘sure thing’ will dive in and not look back.
I have swung and hit homeruns with numerous small biotech/microcap (also have struck out) but it is a very small portion of my holdings and is looked at more as ‘casino money’ by me and my wife.
-Jon
Contract Diagnostics
Heartbreaking stuff… I let myself dabble in individual stocks (no more than 5% of overall portfolio), mainly because it’s fun. But I wouldn’t be able to sleep at night (or look away from my computer screen during the day) if I had that much of my net worth in one stock. Greed makes us do dumb things.
You read stories like this all of the time. Very sad! Equities are highly volatile and if you are going to trust your retirement to them, then you better diversify.
It hurts to read those stories. It reminds me of all the “plan B” threads back in 2008-9 during the market crash when people couldn’t endure watching their net worth drop and ended up pulling their money out of the market right before a great recovery.
We spend a lot of time thinking about our savings rate, tax efficiency, and strategies to reduce the expense ratio by a few more basis points. This is a good reminder that, though those things are important, it is probably even more important to make sure that you do not make any of the big mistakes such as not diversifying or over estimating your risk tolerance and pulling all your money out after a market drop, locking in the losses. Given a finite working time span, one may not recover from a big mistake such as this, particularly if occurs relatively late in one’s saving career.
Thankfully I learned my lesson early in life and with only a small sum of money. I was in college during the.com bubble and had about $20,000 invested in a margin account. I watched it fly high while I patted myself on the back. And then watched it crash to the ground during my first year of medical school. I ended up with a $0 balance. While losing $20,000 is not enjoyable it was well worth the lesson learned. index, index, index, no attempt whatsoever to time the market–even on small correction “discounts”.
This is a very powerful story and compilation. Unfortunately, investing in stocks is glamorized by the individual success stories of the regular people that, for the most part, got lucky building their own fortune on an individual stock. This contributes to the hopes and envy of individual people as well. Truly sad events for the people that got caught up in this.
This makes for such sad reading – and to think that this is exactly what I would have been doing if I had to listen to my friends (even to this day) talk about how good (lucky) they are at picking individual stocks – Now I tell them that I index – thanks to Jim (for all the education and guidance) and they have no idea what I am talking about. I have referred them to the WCI for further education and even bought the WCI book as gift for one of my closer friends – but they are all yet to take advantage of this.
If ever anyone had doubts about the dangers of individual stock picking – displayed in the post above is another gruesome example.
Thanks Jim – you have truly saved a generation of healthcare professionals from financial misery!
I think this post reinforces what most people on the Bogleheads forum and WCI already believe. For me, the most thought-provoking aspect of this were the comments on BH about “group-think,” and the way forums such as these can reinforce bad and dangerous ideas. I do think there is a lot of writing to back up my own investing strategy, including this website, but it makes me wonder if I am falling into the same trap as some of the people quoted above, by spending time on sites that support beliefs I already hold. Time to read some more books.
Thanks for a terrific and timely post as usual! My husband read your blog for the first time yesterday. He really liked and agreed with your voice particularly your opinions on 529’s (which he agrees with and differ a little from mine). I plan to use the credence you a gained in his eyes to my advantage on individual stock picking. I hope with time reading your blog will get him to give up that last 10% of the portfolio we have in individual stocks.
I am old enough to have lost money in Enron and Worldcom. It was a small amount for a valuable lesson. Back then, indexing was in its infancy. Active funds were so expensive that trying to develop your own diversified fund of individual stocks was tempting. When I started getting interested in investing in the mid 2000’s, Mr. Cramer was loud and seemed knowledgable. The pain of Enron and Worldcom had dulled. So I “did my homework” on Nabors Industries. I thought I was so smart. I lost money. Again thankfully a small amount. Believing there had to be a better way to invest I started reading and came upon great literature on indexing. WCI often talks about CFE (continuing financial education) like our CME. It is so worth your time. Please learn from the mistakes of others and start indexing. Your time and hard earned money are too valuable to play in a world of individual stock picking where the odds are NEVER in your favor.
!!!!!
Your portfolio and your husband’s penchant for “luck” as described this week had me flip-flopping on how to proceed. So nice to hear your husband getting a bit of investing education with the rest of us.
Thanks for all that you have shared with us.
OT: How did you know OB-GYN was the wrong specialty right away?
Before you ever buy an individual stock again read “Devil Take the Hindmost” by Edward Chancellor and “A Random Walk Down Main Street” by Burton Malkiel. Google what Warren Buffet said in 2008(to which I referred in my post). It was not to buy individual stocks but to index. Look at how he has his will written for his wife. She will be in index funds. Learn how he is winning his bet against hedge funds by indexing. Do not try to mimic him just listen to him. Spend your precious free time with your wife and kids and not in individual stocks.
The program forced my hand. I was not the only one to leave it. When you check out residencies pay attention to numbers who start vs. the numbers who finish. After I left I realized Peds fit better with my interests in public health.
It would be interesting if Jim would ever have a post, inspired by these stories, that would educate readers how to speculate (which is the selected GTAT shareholders were doing) in high risk individual securities.
On one hand, such a post could be interpreted as an endorsement, but on the other there are clearly people engaging in dangerous financial behavior. Just as some patients may engage in high-risk behaviors that a doctor could not condone, there are ways the potential harm of those behaviors can be reduced (but not eliminated). Telling a patient not to visit sex workers is clearly the best advice, but if they are going to anyway, it is best that they take measures to reduce their risk (bad analogy, no need to further elobarate).
Had the GTAT forum posters used call options instead of buying the shares, they could have reduced the harm of the company’s bankruptcy. Similarily, if they had bought puts to protect their shares from a drastic decline, they would be better off. With options, there is a liklihood that the option will expire worthless. But in certain cases (like speculating in high risk individual stocks), they can engage in their risky speculation but limited the downside risk.
If you wanted to participate in the upside of 1,000 shares, you could have bought long-dated calls. Buying 1,000 shares at peak price of $19.55 would have cost $19,550. Buying 10 long-dated, deep in the money calls ($25 strike) may have cost $3 to $5 (we can look up the actual option price, this is just an example) would have costs up to $5,000. Would you rather lose $5,000 or $19,550 (the downside is that someone could follow this strategy 4 times and lose the same amount of money, but perhaps after losing $5,000 the first time they would move on to Index Funds).
If you have a lot of gains or a lot of exposure (the guys with thousands of shares), they could have bought puts to protect themselves. They still would have lost most of their money (lets say you buy a $10 strike put when the stock is at $19, you lose money all the way down to $10), but would survive with some money left.
While I totally understand that the goal of this forum is not to tell people how to speculate, there may be value in recognizing that some will engage in this behavior despite your advise, so they should know how to do it safely.
Ah, what pain. But thank you for being so timely. Again!
I always have that little itch to “win” at the roulette table of stock-picking. I keep thinking I can pick one gem (because I’ve had at least 10 total flops). Why don’t we hear more about those who lose?
I am for-sure out of individual stocks now and forever more.
Typical human psychology really, confirmation bias can be a dangerous thing when coupled with greed and wishful thinking. Like other biases it helps to know its there so you can check yourself every now and then. Those stories were just heartbreaking.
“Picking” can work, its just you’re not really picking you’re just exposing yourself to enough picks that one works out with an upside so large it makes up for all the losses. Pretty much what venture capital folks do, you just have to have an incredible amount of money to do it. This in our arena of retirement is almost what indexing does, without the giant swings though.
I view any individual stock picking as fun money that has to be separate from everything else and not seriously considered anything but gambling. As such it has to be play money, which I wont have for a few more years.
This will continue forever
Americans looking for a fast buck and an ignorant investing public
Owning only 20 individual stocks, or bonds for that matter isn’t good. Having more than 5% of your net worth in one investment (besides your business) is a bad gamble. If you are going to own individual stocks, own 100 of them, not 1. Individual stocks are not bad investments when coupled with 100 other companies. I say index to $500k after that you have enough to make your own index/mutual fund the way you want it.
I must admit that I’m guilty of playing the stock market. During medical school and the first few years of residency I have picked up on some of what I considered irrational market downturns on some of my favorite stocks, generally in the tech sector. I’ve been lucky, perhaps even good and have outperformed the market by about 12% over the past 5 years, now allowing me to be debt free just halfway through residency. So far I’m a success story for stock picking, but this was a sobering post for me. I have always thought that I would only invest what I could afford to lose, putting all my regular 403(b) and other retirement accounts into index funds. I haven’t really lost big on the stock market so see this as a big temptation I’ll have to fight off, as the potential return can be impressive, but the risk also devastating if over-committed. Appreciate the information in this blog as always.
This post is an important reminder. I lost about 60K in 2008 (thankfully of non-retirement funds and small peanuts compared with others) with a combination of Bear Stearns, Countrywide, and a company called Syntax-Brillian (remember the Olevia TV’s before Vizio became a big name?) failing/going bankrupt. Lesson #1 is never play/gamble/stockpick with retirement funds you expect to live off of someday. Lesson #2 however (that many people forget) is that companies lie, and often they lie through their fundamentals. Yes, we have GAAP and a myriad of rules/regulations, and you can be reading Ben Graham and analyzing the heck out of those company-reported numbers, but you never really know what kind of scam the accountants and executives are running in the back room. The numbers will look good right up until they suddenly don’t. Accounting is about creativity and not about math.
What a sad, unfortunate, and entirely preventable train wreck. Stuff like this has been going on throughout human history and will continue long after we are all gone. The desire to get rich quick drives people to do some things that are often regrettable, in retrospect.
Unfortunately, there are enough stories out there, perhaps legends, of folks following this path to riches such that we will always have some gamblers out there, laying it all on the line. It was heartbreaking reading some of the personal accounts. No doubt, some lives are ruined as a result. 🙁
Great post and a good reminder about the risks of individual stocks. I know index funds are the safest and surest bet, but I like to shoot for the stars with individual stocks too. I invest mostly in index funds but invest a little in individual stocks, less than 5%.
I learned my lesson in the dotcom bust. It was a painful and expensive lesson. But I am glad that I learned it while I was young. I had big gains with Cisco and then gave it all back in the dotcom bust.
In 2008 I remember Berkshire Hathaway Class B shares and Exxon taking longer to drop than my mutual funds.
I’m shocked people invest so much in 1 company. I’ve done a pretty good job with my stock picking, but it is a small percentage of my money. Most is in Vanguard funds.
Via email:
Thanks for the sobering post. I am very sorry for these people. Clearly their financial losses have been emotionally devastating.
I’ve never owned individual stocks, just expensive diversified mutual funds. Looking at what happened to these people, even that wasn’t the worst mistake in the world!
As a doctor with a family, I simply don’t have the time nor energy to keep tabs on individual companies/stocks. Besides, I’d rather live my life than being glued to what is going on in the market every day. It’s akin to people that check their email or Facebook constantly. In the big scheme of things, it really isn’t adding that much value to one’s life IMHO.
The equation is simple: risk=reward. The problem with gamblers is that they only speak of how much money they won, but never talk of the money they lost. I’ll take less potential short term reward for less risk by investing in a diversified bundle of index funds.
As an aside, I was on the investment committee for an endowment. Prior to my joining, somehow the committee agreed to put 10% of the holdings into a hedge fund. After I came on board, I questioned why we bought that position. I was told condescendingly by one of the members (MBA from Ivy League school who owned a financial services firm) that we were lucky to even be allowed to invest in the hedge fund. Fast forward two years later, the hedge fund imploded and we got back 10 cents on the dollar. It was satisfying to point out to that member what a mistake they had made. If the committee had just put the entire endowment in an S and P 500 index fund, we would have been much better off!
This is a very powerful post. It is hard to think of how some of these people have damaged their lives. I have already passed it along to my clients in my newsletter and the click thru rate is very high. Unfortunately, stock ownership, which I am no way against, is clearly glamorized and this can have a very persuasive impact on regular people trying to get rich quick. It rarely works like that, and this is an example of the awful risk. Good story about the hedge fund as well in the comments section. Investment committees of foundations, retirement plans, etc… unfortunately can have members that do more harm than good.
Why are you sorry for them? They did it to themselves. it’s common logic, if something appears too good to be true, it probably is. For every story of ” I could have gotten 10 % of Mcdonalds for 50k” there are 1,000,000 ” I just pissed away 50k on some stupid start up.”
They were gambling and they’d be fools to not know it. Do I wish badly on them? No, but I’m certainly not sorry that the math didn’t work out in their favor. I don’t support this “everyone is a winner,” type approach. They lost and they deserved to do so. I’m not going to rag on them and say they’re a terrible person, etc etc but I’m also not going to feel bad for them.
Gambling(note I said gambling) on stocks is stupid because someone always has more information than you, a better access to trading(high freq trading) or even insider info(see congress and many others). It’s not as bad if they’re doing it long term, but it’s still a foolish choice. In the short term you’re betting that you can beat someone else 1 on 1 that likely has multiple magnitudes of advantages on you. If you’re going long term, you might as well just diversify and go index.
To NH, the last 5 yrs has been a bull market, which rewards risk taking. You can either learn from others or learn it on your own, but either way, the lesson will be the same.
Great post, WCI. I agree – a sobering reminder of the risk of individual stock picking. I will lend a bit of a different perspective on investing in stocks for retirement. I am physician in my mid-30s out of residency for 3.5 years now. Most of my retirement funds are not in index funds. I am an active investor and I pursue a style of investing called dividend growth investing. I invest primarily in large-cap companies plus some REITs with a strong history of paying consistent and growing dividends, though I also invest (1-2% of my portfolio) in small positions in smaller companies that I feel have a good chance of generating outsize returns. My eventual goal is income replacement to the point that I can meet my expenses without having to work. My goal is to have at least 25-30 positions to reduce risk. My goal is not necessarily to beat the market because I do realize that is not easy over the long term.
One might ask why I do not simply invest in index funds. I personally avoid these not because they are a poor investment (they obviously aren’t) however I am particular about ethical considerations when investing my money. So I avoid weapons manufacturers, tobacco companies, etc. This is a very personal choice and I certainly don’t judge folks who invest in more conventional mutual funds, index funds, ETFs, etc. Plus it’s nice to see cash from dividends being deposited regularly into my account!
This does take a little more time for researching stocks however I do have down-time at work that allows me to do this and it has little impact on family time so I don’t feel I’m neglecting them.
While I’m not a huge fan of active management, individual stock picking, social acceptable investing etc. if you remember the important concepts of investing- broad diversification, low-costs, appropriate level of risk etc, you’ll likely do just fine. People invested successfully in stocks long before index funds came around.
Keep in mind you lose tax benefits with income producing stocks (dividends and reits) when compared to buy and hold price appreciating equities (assuming overall similar returns). Dividend producing stocks are a decent way to go if you are retired needing the money and are in a lower tax bracket, but if you are young not needing the money and in a high tax bracket (20%+ 3.8% investment tax + state tax) they won’t be as tax efficient. Just my two cents.
Excellent point. I feel there are benefits to dividend stock investing that outweigh the tax inefficiency. It takes some of the emotion out of investing since you’re more focused on the dividend rather than stock price. When the stock price goes down, it’s seen as a positive rather than a negative because you can load up on more shares. This is given that the fundamentals of the company are intact which I try to ensure by investing only in companies with excellent financial strength and a long history of paying increasing dividends. I also would contest that similar returns would be had as studies have shown that dividend-paying stocks provide superior returns though that is not the primary reason I invest in them. Lastly I try to keep my highest-yielding stocks and those that pay ordinary dividends (rather than qualified) in Roth IRA accounts which helps tax-wise.
Studies suggest that a dividend strategy is a relatively poor way to get a value tilt to the portfolio.
While dividends are more stable than share prices, focusing too much on income can lead to significant investing errors as I wrote about here:
https://www.whitecoatinvestor.com/4-ways-income-investors-get-it-wrong/
Appreciate the response and the link. What studies are these? I think some of the errors that you suggest in your article that can be made by income investors can be avoided by a disciplined approach. Chasing yield certainly is a mistake that some individuals make but not one that I plan to make. My portfolio’s weight-adjusted average yield is a little over 3%. Certainly buying only issues with the highest yield is a recipe for disaster. But it is not improbable to come up with a portolio of high-quality companies that generates a 3% yield with a dividend growth rate of 5-7%. If the dividend is soundly supported by a company’s earnings, if those earnings are rising, and if the company is committed to shareholder return through dividends and buybacks, then value will naturally follow. The key is really to focus on earnings. Stock price will follow. As for keeping up with inflation, this issue is also resolved with choosing stocks that have dividend growth rates that are greater than inflation.
Doing all of this can be more trouble than many people are willing to deal with and that I can completely understand. This approach to investing is not for everyone as it does require more diligence.
The data suggests you’d be better off with an index fund approach that incorporates a small and value tilt, especially when you take the cost of your additional efforts and the additional uncompensated risk into account. But invest whatever way you please. So long as you have an adequate savings rate, keep costs low, maintain sufficient diversification, and take on a reasonable amount of risk, you’re probably going to be successful. Many roads to Dublin and all that. But I suggest you keep track of the time you spend doing this and also meticulously track and benchmark your returns against an appropriate benchmark. I find that the vast majority of those who do so convince themselves of the merits of a passive approach within a few years.
You could very well be right. We’ll find out in a few years I suppose. In the meantime if you have any interest in learning more about this method of investing, check out this book: http://www.amazon.com/The-Single-Best-Investment-Creating/dp/0965175081/ref=sr_1_1?ie=UTF8&qid=1414987791&sr=8-1&keywords=lowell+miller
I found it to be an excellent read. There are many (ordinary) people who invest in this manner successfully. Hopefully I will too. Cheers.
I dollar cost average a small portion of my after-tax savings into the Vanguard Dividend Growth and Dividend Appreciation mutual funds which I believe are funds composed of these dividend growth stocks. This is an easy way to invest in dividend growth stocks.