Hit one out of the park; invest with the Cycle Method


I haven’t even been investing for a year and I’m already convinced it’s one of the single best decisions I’ve ever made. The craziest thing about that: I’m not even sure why I made the decision in the first place.

I knew next to nothing about investing, let alone doing it successfully. I had no idea how to get started … I just started. I opened an account, deposited some money and did what every clueless rookie should do. I read everything I could find from people who actually knew what the hell they were doing. Not just books, either. I perused blogs – which inspired me to start this one – glanced at investing articles from every corner of the web and even checked out simple stuff like social media posts. There are a ton of smart people in Facebook groups and Reddit and such … you just have to take the time to find them and pick their brains.

The advice wasn’t always exactly the same – different strokes for different folks, ya know – but I did pick up on a few common themes, one being that consistency is key. If you want to have success, regardless of your approach, you have to be consistent.

You’re not going to get a portfolio that spits out cash like an ATM machine overnight, you have to build it. And you don’t build it through sporadic, spur-of-the-moment purchases, you take time to construct it through consistent additions of solid companies. You don’t have to have thousands of dollars to invest … small but frequent investments will work just fine as long as you stay consistent with them.

That’s where the Cycle Method comes into play. Ever heard of it? No? That’s probably because I just made it up. Well, I didn’t just make it up, but came up with it a few weeks ago while watching my Indians take on the Houston Astros. Will it work? It has for me … so far. I don’t know if it will make me a millionaire any faster than any other method, but I do know it’ll keep me investing on an extremely consistent basis, which is a win in and of itself.

OK, so what exactly is the Cycle Method? Well, it’s based on baseball. That, and the handful of different ways to add to your portfolio. I’m not an investing pro (obviously!!!!!!), still scraping along at the single-A level to stick with the baseball analogy, but I’m getting a feel for the game. I can’t tell you everything there is to know about investing, but I can tell you this: there are, unless I’m a total idiot and am missing something somewhere, four ways to increase your portfolio value. After all, growing your portfolio is the whole point, right?

Right.

One of the four is completely out of your control. Your portfolio can and will appreciate via capital gains, but you can’t pick the days that happens. Sometimes you might have a week full of positive days and, well, some weeks your portfolio might dip five days in a row. You never know, but I’ve noticed most weeks feature a combination of the two. Some weeks may have more downs than ups, or vice versa, but a combo of the two is more likely than not.

Two of the four are completely up to you: cash deposits and stock purchases. You don’t need me to tell you that you can deposit funds into your account or buy stocks whenever the heck you want, so I won’t elaborate on these two.

The last one, dividends, is a combo of the two. You have a bit of pull, but can’t totally control when and how much you boost your portfolio through dividend payments. You can buy stocks based on their payment schedule, so you will have an idea when a bit of cash will be headed your way, but you can’t be totally sure long term. As far as I know, companies can change their schedules whenever they want. I don’t think many do, but I believe they can. You also can’t control how much they pay. Companies can raise, cut or even do away with their dividend all together. You can protect against this by only investing in companies with solid and sustainable dividend histories.

With the Cycle Method, my aim is to do each of those four things at least once a week. I can’t necessarily guarantee capital gains or dividend payments every week, but the beauty is, at the very least, I’ll add cash for purchases and buy a stock that will increase my forward dividend income week in and week out.

But wait, there’s more.

A cycle in baseball occurs when a player hits a single, double, triple and home run in the same game. A cycle in investing, according to my method, occurs when I get a single, double, triple and homer in the same week. A single, logically, is when my portfolio gains value in one of the four ways. If I don’t receive a dividend payment, buy a stock or deposit cash into my account, but do enjoy at least some sort of capital gain – even 0.01% would work – I’ll consider it a single. If my account dips 0.3%, I don’t make a deposit or buy a stock, but do receive a dividend, you guessed it, another single.

A double would be when two of the four happen, like make a $50 deposit and see my account appreciate at bit. I’d consider a triple a day three of the four happen, like I make a purchase, get paid a dividend and add money to my account through a deposit of some sort. A homer, well, a home run is when all four happen on the same day.

From here on out, I’ll be looking to complete a cycle each and every week. Some weeks, it might not be in the cards, but I think I’ll be in pretty good shape if I shoot for it. I think it’s totally doable, and can’t wait to start tracking it.

Investing can be heavy at times, but this turns it into more of a game. It’ll keep me engaged at all times, regardless of what the markets are doing, which is another key. Investing can be discouraging when your portfolio doesn’t seem to be going anywhere – there’s always the temptation to sell, and getting your money out of the market is always just a few clicks away – but consistency is key. You have to stay in the game if you want to win. I think this will help me do just that. 

I know most of you seasoned investing vets have your own way of doing things, so feel free to check out my blog for updates on how it’s working out for me from time to time. Those of you who are relatively new to the game, though, feel free to give it a shot and let me know what you think.

Some things to remember:

  • In order to consistently get at least one dividend a week, you have to have a fair amount of companies with different payout schedules, but it’s totally doable. Once you start opening positions – I have more than 100 companies in my portfolio – you’ll be surprised at how consistently the dividends flow into your account.
  • The deposits don’t have to be gigantic. Since you’re making them weekly, add whatever you feel comfortable with ($10-$20 would be a good starting point).
  • The stocks you buy don’t have to be hundreds of dollars, either. Their are plenty of great companies in the $10-$50 range (CSCO, HRL, T, OHI, etc.).
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