CMKM Diamonds Inc (fka CMKX)

[Investorman]

Unfortunately, people on penny message boards don't want to hear that they are poor investments and that investing in solid, profitable companies over long periods of time would be much more likely to make them wealthy. Many people want instant (or shorter than 2 years) gratification in the form of riches.

Time can do a lot for your bottom line. I'll give an example and call it Company "A." There are a number (over 100) companies that fit the example so I'll stick to the generic.

Let's say you bought "A" 30 years ago for $20 per share. It has split 2 for 1 five times since you bought it giving you a current cost basis of 67.5 cents per share. Assuming you bought 1000 shares originally for $20,000 and it now sells for $40 per share, you would now have 31,000 shares (due to the splits) worth $1,240,000. Now this is great but it is not the whole profit story of this investment. Since this is a blue chip and it pays a dividend (let's say .80 cents a share for discussion purposes) you are also currently getting an annual income of $24,800 without selling a single share. Of course you would have much more if you hadn't spent the dividends over the thirty years and had reinvested them in more stock, but that is more calculations than I want to do at the moment. Note that the annual dividend is greater than the cost basis of your original investment so you are now making over 100% per year on your original investment without selling it. Not bad.

Since Company "A" was a solid company you were able to do the above with low risk and few sleepless nights.