Turning a sow's ear into a silk purse

One often reads how awful it is to lose money in the market. Well, it's true; it is awful. But, and it is a big but, the passing of time eases the pain—and I mean completely eases the pain. I bought some Manulife stock a few months back. Since then it has fallen on hard times. The stock has diminished in value to the point that it is living in bear territory and promising to put down roots there.

So, am I going to sell, accept my loss and move on? No. Absolutely not. The price today is the price. Period. But, this new price comes with a few perks. A big perk is the yield: 5.88%. If I were to sell, where could I move my money and earn as much income?

Furthermore, at its new, and arguably improved price, Manulife has more room to grow in value. If it hits the target value envisioned by financial advisors, even taking as much as three years to get there, I will realize $3.96 in dividends for each share, plus I'll benefit from an increase of $4.78 in stock value. This is a total gain of $8.74 or 13% annually when calculated over three years.

If I insist on dwelling on the inflated price that I originally paid, then I clear $6010 over three years for an annual gain, dividends included, of 8%.

The trick to winning in the market is to buy decent firms paying good, solid dividends and then holding as planned. Play the long game. Do not fritter away your profits with too many trades. My Manulife is a sow's ear today but in three years I hope to see it replaced by a silk purse.