There are more than just a few ways to build wealth in the stock markets. Undoubtedly, you can go down the route of a passive investor and simply invest in a handful of ETFs (exchange-traded funds), index funds, mutual funds, or even index ETFs.
Though there’s absolutely nothing wrong with being a passive investor, as long as you minimize your fees or MERs (management expense ratios), I’d argue that there’s a greater sense of ownership when you pick your own stocks. And if you’re a beginner who’s looking to learn the ropes, I’d argue there are numerous reasons to “graduate” beyond just passive investing so that you can do slightly better than the averages.
While many investors shoot to do much better than the averages, I’d argue that by aiming for slightly better returns than the market averages, you’ll be able to impress yourself while steering clear of potential pitfalls. Indeed, chasing returns with little consideration for the price you’ll end up paying can be dangerous. And if you shoot for better than “slightly better,” there’s a good chance you could overestimate your tolerance for risk and be drawn into the market’s hottest momentum stocks.
Doing slightly better than the market is a big deal, especially over time
Indeed, momentum investing can come with its pitfalls, especially if you’re just a tad too late to the party. In this piece, we’ll check out one of the most intriguing ways to build wealth over the course of many years. The following play offers a good mix of value and gain potential over the long haul.
So, while others crowd into the hot trade of the day or week, it may be wise to stick with the following boring but proven market crushers to improve your chances of doing just a bit better than the market averages over an extended duration of time.
Warren Buffett previously noted that his firm will probably only be slightly better than the averages. For long-term investors, any slight edge you can get (without overextending oneself on risk) is worth taking.
Waste Connections
Let’s have a look at Waste Connections (TSX:WCN), a business that’s pretty easy for new investors to understand. The firm collects waste across its markets of interest, providing a necessary service that few other competitors can (or care to) get into.
Undoubtedly, the firm’s moat is one of the widest in Canada, especially after a few smart acquisitions. As the firm strategically consolidates while offering its recession-resilient service, I’d argue that long-term investors ought to be willing to pay up for the steady firm that’s poised to continue growing its dividend for many years (and decades) to come.
When it comes to stability and profound profitability, it’s really tough to top Waste Connections. With shares hovering at all-time highs of around $227 per share, the stock is not cheap (over 56 times trailing price to earnings). That said, given the incredible economics of its business, I’d not be afraid to nibble a bit right now with the intention of buying more on a pullback.
