There’s a story I came across recently that stuck with me. The kind that doesn’t scream, but hums. It came from an article on the Dividend Growth Investor site, quoting something Christopher Davis once said about his grandfather, the legendary investor Shelby Davis.
As a teenager, Christopher forgot his wallet one summer while working and asked his grandfather for a dollar to buy a street hot dog. Davis Sr. looked at him and said:
“Do you realize that if you took that dollar and invested it at 15%, when you’re my age, that dollar would be worth $1,000?”
Christopher said he learned three lessons that day:
- The power of compound interest
- The importance of not overpaying
- And not to forget his wallet
It’s the kind of story that’s almost funny until you sit with it. Because that is the math. One dollar, left alone to compound over decades at a good rate of return, does turn into a thousand. Not because of magic, but because time and discipline make fools of our short-term cravings.
That quote made me reflect on my own investing choices, especially on the times I’ve overpaid. Like when I was buying Disney.
I believed in the company (still do), and I was buying systematically for a while. I remember when it hit $180. Part of me felt like it was a little too rich, but I ignored that instinct. I thought, maybe it’ll keep going, maybe this is the new floor. So I kept buying.
But Disney hasn’t really recovered since then. I don’t regret owning it, it’s a company that will forever* stay in the vault, but I do acknowledge that overpaying ate into my returns. And that’s not just theory. It’s math.
When you overpay, even for a great company, you aren’t just risking short-term volatility. You’re handicapping your future growth. That one overpaid stock can dilute the strength of your whole portfolio. Even if another stock, like NVIDIA, earns you 20%, a different one bleeding 10% year after year can quietly swallow that gain.
That’s something I didn’t fully understand when I started. I was so focused on picking good companies that I didn’t think enough about paying good prices. But the two aren’t separate.
In fact, I think about portfolios like a garden now. You can have five healthy plants, but if two of them are diseased and draining nutrients from the soil, it affects everything. Not every investment will be perfect. But I want most of them to be strong, and I want to make sure I’m not feeding weak ones with the sun and water meant for the ones that can actually grow.
And listen, I’m not saying you have to be perfect. You won’t be. I’m not either. Even the greatest investors, whether it’s Peter Lynch, Warren Buffett, or one of my personal favorites, Joshua Kennon, have made mistakes. They’ve lost money, misjudged timing, or left money on the table. It happens. That’s part of the game.
What separates solid investors from everyone else isn’t perfection, it’s discipline. It’s continuing to do your research, understanding your margin of safety, and making the most calculated decision you can with the information in front of you.
That’s also why we don’t chase hype here.
I’ve written before on this blog about herd mentality, how following the crowd can be a shortcut to disappointment. Think about NVIDIA. Most people who jumped into it recently didn’t get in early. They got in after the headlines. They got in after the run-up. And by that point, it’s not investing, it’s chasing.
If you’re investing based on headlines, you’re probably buying someone else’s top, not your own bottom.
The real opportunity? It’s usually quiet. Boring. Unpopular. And it looks like a dollar you could’ve spent on a hot dog.
The Broke College Student 
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