Scared money never wins.
Gamblers who are desperate to turn their luck around do stupid things… like continuing to gamble after major losses to earn their money back.
I was given this piece of advice as I headed off to Las Vegas for the very first time.
And heeding these words, I brought just $500 in cash with me to limit my potential losses.
Not that I was going to lose, I told myself as I exchanged $300 for chips.
I was one confident young man 30 years ago as I headed to the blackjack tables…
But I promptly lost all $300, forcing me to exchange my remaining $200 to claw back my losses.
And then I lost that, too.
That’s why at Wide Moat Research, we do not gamble at all. We believe in finding safe, sustainable, growing income investment opportunities that have every indication of continued success over the long term.
In order to do this, you need to know the difference between speculative and smart investing.
If you do, there is still a way to effectively grow your wealth in the gambling and gaming sector without risking your hard-earned savings to speculative investing.
And then today’s investment play will work for you and not against you.
Stay Away from Speculative Investing
After my unfortunate Las Vegas gambling experience and devastating financial loss in 2008, I learned just how important it is to protect your principal at all costs.
In other words, I learned that staying away from investments that risk losing a considerable amount of money up front in the hopes of gaining even more money on the back end – was not just for “extreme conservatives.”
It is a wise and competitive advantage for every investor over the long term.
I lost a fortune in 2008 to speculative investing and had to build it all back. You can read about it here.
But the second time around I grew my fortune in smart, sustainable ways that left me in the driver’s seat.
And the key was learning the difference between speculating and smart investing.
Speculating involves guesswork and emotion-based decision making. I’m talking about things like impulse buying, buying based on the fear of missing out, and buying into trends without understanding their sustainability over the long term.
People who speculate can win, mind you, but that’s based on random dumb luck.
And luck is actually pretty darn reliable in its ability to be downright destructive.
Just take the companies I’ve written to you about in the past.
Regardless of their previously “lucky” experiences, no investor or business should ever invest more than they can afford to lose.
Late last year, when I was evaluating the company Gladstone Commercial (GOOD), I noticed that it was paying out more dividends than it earned on an annual basis.
At first glance to most investors, it looked like a great opportunity with a high dividend yield… but under the surface it was really a “sucker yield.”
GOOD was trying to draw in investors with this high yield and hoped to be able to afford to pay it with the increased number of people it suckered.
But lo and behold that gamble did not pay off, and GOOD had to cut its dividend in January. Shares are now down around 30% year-to-date.
And while I’m sorry for everyone who lost money on it, you have to understand…
That’s what happens when we treat our portfolios like a casino.
Invest in Casinos Via VICI Instead
But while I don’t recommend speculative investing as a strategy to build your portfolio, there is a reliable way to profit from casinos while simultaneously protecting your principle at all costs.
You can use smart investing to profit from casinos directly by investing in companies that will reliably grow your portfolio over time.
Let me introduce you to an investment that successfully navigated the COVID-19 pandemic in a way no one expected.
Meet VICI Properties (VICI), the real estate investment trust (REIT) that owns the entire Venetian and Palazzo resort complex on the Las Vegas Strip, which includes the famous Venetian Resort & Venetian Expo.
While Las Vegas was virtually shut down beginning on March 15, 2020, VICI continued to collect 100% of its rent and paid 100% of its taxable profits to its investors in the form of dividends.
In fact, VICI even increased its dividends during the pandemic and has grown its dividend every single year since the company listed on the New York Stock Exchange in 2018 as you can see below.
|VICI Dividend Payment|
So what is so special about this company and why do I consider this a smart investment strategy rather than a speculative one?
Three Reasons Why I Consider VICI a Smart Investment
First, VICI’s business model is sustainable over the long term in good times and bad.
Your money isn’t going to disappear the moment you invest it. Your principal is protected.
VICI owns 49 top-notch leisure facilities across the U.S. and Canada. Combined, they amount to over 120 million feet of restaurants, bars, nightclubs, sportsbooks, 60,000 hotel rooms, and the like.
VICI then rents these out to leading operators – companies that are prepared for the worst and expertly manage their businesses. As seen during the pandemic, these businesses had the money on hand to pay their rent in full and on time during pandemic shutdowns… each and every month.
Second, VICI has a wide moat.
It operates in an economic arena that’s subject to intense regulations especially in Las Vegas. This makes it almost impossible for new competitors to get in the game and compete with VICI.
No other company has been able to successfully navigate through these regulations effectively enough to be a threat to VICI’s business growth. This means VICI’s profits are protected like a castle with a wide moat.
Third, VICI’s business model is not only sustainable over the long term but it is positioned for exponential growth.
Thanks to a series of strategic acquisitions, VICI is now valued at $51 billion in enterprise value. And it safely yields anything between a 4% and 6%.
And not only that, it was the number one performing REIT in 2022, and is continuing to grow at a rapid clip.
Right now, it is trading at a discount. And as odd as it may sound concerning a company that makes its money from the gambling industry… I consider VICI a strong retirement stock.
So if you still have any hesitation about adding this REIT to your portfolio, please send me any and all questions you may have.
And for those that have questions for the CEO of VICI, Ed Pitoniak is coming on my podcast next.
I would be happy to ask him any questions you send in and look forward to sharing his answers with you.
Remember, scared money never wins.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily