discussion comment
5 years ago
You definitely have comprehension issues. The results I received were not because of any model. They were a result of my selecting a stock based upon a method I learned in the 70's, and practiced by many successful investors. That method of stock selection is still available to anyone who has the common sense to use it. This method of investing was very prevalent in the 70's. With the growing popularity of funds, due to the marketing by Wall Street, and the increase in stock mania by advisors and the media constantly hyping and sensationalizing of stocks, we now have the majority of market participants gambling in the market. You have become one of them. You short gold and stock, neither of which are sound investment practices. Yet you still consider yourself an investment professional. You just like gambling with other peoples money. You profess to have done well. I will give you the benefit of the doubt. However, have your clients done as well as you? You are making your money off of them, not for them.
Regarding all off the technical quant discussion. My argument was and still is that you do not need to buy funds to do well. You just need to buy quality stocks. The analysis was to show the evidence to support that. The real life examples provided by you and 25IQ just further supported my argument.
Again, since you appear to have a difficult time understanding this, the tools to select quality stocks are available to everyone.
My second argument was that advisors over estimate their worth and value, and are sales oriented, not return oriented. Throughout this whole thread, you have reinforced that belief.
It's funny how you try to make light of my having fractional shares. Is it your way of deflecting away from your ignorant comment? If I am getting under your skin, it is probably because you know I am right.
@25IQ, I was going to let your real estate comment go, but outing your ignorance is just too much fun. Cost to own IMO is not more important than location.
Location drives revenue. Revenue generation is the most important factor. Revenue is strongly influenced by location. Building costs are not affected to the same degree by location.
When investing, no matter what the investment, your money is made when you buy. You may have a reliable revenue stream, or you may be estimating your required revenue stream before any analysis. Your costs should be relatively predictable. If you can't get a handle on your costs, you shouldn't invest.
discussion comment
5 years ago
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flagoonerEverything written by this member is a fact.
I guess you would have to try them to find out.
discussion comment
5 years ago
Einstein had a preference for big breasts.
discussion comment
5 years ago
It will depend on the age of the stripper. The younger ones will have children too young to appreciate the concept. The older ones will have children old enough to celebrate, but due to family dysfunction, if they do any appreciation at all, they still don't let it interfere with work.
I've been to HiLiter on several mother's days. There are fewer dancers, but you can still have a good time. It could be why some dancers ask regulars "what are you doing on mother's day? The are trying to get a feel for the day in advance so they can make a work decision.
discussion comment
5 years ago
@Dadillac,
Just as I was beginning to think you may have some knowledge, you continue to make stupid ignorant comments. You can own fractional shares by re-investing your dividends. Your payments are made in $ converted to shares. Adding fractional shares to fractional shares on a quarterly basis tends to result in fractional shares.
With a supposed undergraduate and graduate degree in finance, a CFP and by supposedly managing $200 million, you didn't know this? You are nothing but a fake.
I find it had to believe that with degrees in finance you have never been exposed to it. Did your school not offer it, or did you avoid the classes because they were "the hard ones"? Or maybe it was just an online degree. You have clearly demonstrated to me that you don't know much. From your own description, you focused on planning and earning money for yourself , instead of learning how to invest, and earn for your clients
@25IQ,
You should be proud of your 7.3% return in a market that has averaged over 20% annually in the past 20 years, and around 56% PTD in the past 5 years. And these numbers are based upon an index considerably larger than what you have invested.
Did you hand pick your diversification? You have managed to underperform probably 95% of the market. You must have extraordinary stock picking skills.
Think long and slow about this. (slow thinking is probably your strong point). If I would have placed 1/2 of my funds in JNJ and CLX each, instead of 100% in JNJ, if in the course of time, 1 of these companies failed and had a total loss of investment, my 2 stock portfolio still would have doubled your return. All because of common sense investing.
And we are not talking about who has more, I could care less. I have way more than I need and have enjoyed an excellent life. I didn't mind "working for the man". I am very good at what I do, and the man always had to pay a premium over market to get me.
You continually try to let everyone know about your supposed wealth in just about every thread you participate in. Is you self esteem that low? Is your dick that small?
Are you getting back at society for treating you like the moron that you are? I wouldn't be surprised if you were part of the design/build of the failed bridge in Fla.
What is too complicated about focusing on stocks that have strong historical growth, and sell what the population needs? If you find that concept difficult to understand, you truly are an idiot.
It is not a difficult thing to learn. Just about every firm has stock screens to select stocks. The are thousands of articles and publications on picking quality stocks, there are off the shelf programs for portfolio analysis and investing for alpha. They are basically Excel programs that pretty much do everything for you. There is a large growing population of people using this successfully, they are just aren't used by most advisors.
If any of you would actually take the time to use the tools, you would be more successful in the market. And my guess as to why I never received an answer to my question of what risk you are trying to mitigate by diversification, is because you are primarily trying to minimize the risk of bad stock selection, rather than focusing on buying quality stocks.
discussion comment
5 years ago
A25IQ, great, you earn 14% in non-stock, but you fail to mention your stock returns. We are talking about stocks. If you would have invested based upon basis portfolio theory, you would have higher returns That is the point you keep missing. And again, by buying excessive stocks to diversify to reduce risk actually reduces return more than it mitigates risk. You still haven't answered my question, what risk are you trying to mitigate?
I have spent enough time trying to explain the benefits of intelligent stock investing. I am leaving Flagstaff for Vegas soon, and then will spend the rest of my month travelling thru Utah and Wyoming, spending my stock earnings. You guys can just go back to work.
We have different goals. Mine was to always be able to do whatever I want, whenever I want. I own 3 properties free and clear and actually own 6,379.24 shares of JNJ, after gifting 1,500 shares to my daughter over the years. That is all I need to enjoy my life. I have skied extensively throughout North America averaging 25-30 ski days/year. I have travelled to 44 states and all of Canada, In my younger days I was fucking the hot girls you probably dream about, and they weren't strippers or hookers. So go live your life anyway you want, just stop pretending you know anything about investing in stocks, other than how to invest for mediocrity.
discussion comment
5 years ago
You continue to make comments that show your ignorance on the subject. I am not professing to be the smartest man in the market, but I am advocating using the smartest techniques to invest. But I guess I am smarter than you on this subject because I have been schooled on the topic and have successfully used it.
You always seem to make your comments as though you are an expert. Just last week, you made comments on welders as though you were knowledgeable, only to be refuted by people with actual facts.
Throughout all of this, I bet you have never even made an attempt to research/understand portfolio theory and quantitative investing. It all comes down to mathematics.
Brokers don't like it, because it prevents them from buying the story/fad stocks of the day.
Regarding Dadillac again, this is how the market basically works. There are thousands of stocks to invest in. You have a small percentage of companies that excel and dominate their markets and have strong growth records. The rest of the of the group, feed off of them as suppliers, marketers etc. Their well being is to a degree related to the performance of the leaders. They do well, but just not as well as the leaders. You can focus on the 4 best, or you can use the four best and do what you think is diversify by adding more companies, even though they do not historically perform as well. You now think you are diversified. The market goes south. The leaders drop 10%, the followers due to their lower growth drop 20%. So much for diversification.
It all comes down to mathematics.
I imagine if I were to say that if you gather a group of 50 people, there is a 99+% probability two of them will have the same birthday, you would say I am full of shit.
It all comes down to mathematics, you either understand it or you don't.
And 25IQ, I am a happy man. I have lived an excellent and fulfilling life. I only get riled when idiots like yourself present themselves as knowledgeable on subjects they really don't have a clue about.
I have asked this before, and still have not received an answer. With all of your need to diversify into larger numbers of stocks to manage risk, what risk are you trying to reduce?
I will give Dadillac the benefit of the doubt. He probably does have some knowledge. But if he would expand his knowledge and use the tools that actually improve performance and minimize risk, his clients would perform much better.
discussion comment
5 years ago
One of my first comments in this thread was that there will be a lot of comments made by people without research. That was my polite way of saying most of the commentators are spouting bullshit. Comments over the past few days have shown me to be correct.
@25IQ, my friend died of a heart attack in 2010 while on a ski expedition in Banff. And he kept his client base under 9 clients to allow him to function as he needed without having to worry about FINRA.
@25IQ again, Bernie Madoff did not invest this way. Your comment really exemplifies how ignorant you are on the subject. The methodology of stock selection I use and suggest uses the same basic investment criteria used by Peter Lynch, Warren Buffet and countless other successful long term investors.
@ Mark94, you continually make comments that have no relevance to the subject being discussed. The fact that you appear to never be able to discuss anything intelligently is your one consistent trait.
I made reference earlier today and a while back that based on a quantitative analysis performed 20 years ago, a portfolio of just JNJ, TXN and CAT would outperform the S&P 500. I just ran the numbers, the 3 stocks returned a 34.76% annual compound growth without factoring in dividends since May 1999. (20 years ago).
In the same period, the S&P returned 23.02%. That is a significant difference, and was achieved without even weighting to maximize return.
It is quite obvious to me that no one on the board understands portfolio theory and quantitative analysis. Do a little fucking research and learn something.
It really is not that difficult to earn 30-35% per year if your underlying stocks are growing 15-20+% per year. You can do it by selecting the right stocks using basic statistical analysis and common sense. You guys have probably never earned 15-20% on a consistent annual basis because you buy shit stocks, (advisors love stocks in the news for their trading ideas). You need to stop watching CNBC to get your investment advice. Not only do you buy shit stocks, but you think you have diversified because you own a portfolio of shit stocks.
And finally, to Dadillac, if you really were an astute investor, with $100 million in stocks, you only need to build a portfolio of 8-10 stocks selected because of their long term growth. These are the stocks that perform the best and have high alpha and low beta. Do your call writing against them. Your life will be simpler, and your clients will become wealthier. And back to your comments yesterday, he was down 10% on just the stock decline, add back the extra 3% dividend capture in addition to the regular dividend and he was down 7%. At the time, those were his long term holdings. Factor in his usual 10-15 premium income from call writing and who knows how much from his buy-writes on TXN and CAT. I know my buy-writes on JNJ have 10%+ premium.
You indicated you like to short stock (gamble) and sometimes you lose. You really seem pretty cavalier about losing other peoples money.
The good thing about my strategy. If I am wrong on a buy-write, and the stock declines, I have only lost time and will continue to sell premium. As you probably don't understand, quality stocks that grow in double digits and have low beta's don't have extended periods of declines.
I can just imagine how many times you shorted a position, had it go against you, covered and then watched it decline.
Some of my most memorable stories from my friends time at Dean Witter were the ones where he would say brokers put clients into positions, have the position go south and then avoid the clients calls. Another favorite, is the stories of when the markets have serious declines, the brokers would avoid their clients.
And when clients were angry, the majority of the time it was because the broker mislead them.
Your final comment that you don't trade for fees seems consistent with your not trading for return either.
What you really need to do is fire your analysts and hire a quant.
And in case you missed my earlier point, learn about portfolio theory and quantitative analysis, your clients will appreciate it.
discussion comment
5 years ago
You guys are clearly ignorant and misinformed, again relying on "conventional wisdom", instead of facts and analysis. And I know you are full of shit for saying your average account was down only 8 %. 20% of your unmanaged funds were in mutual funds which performed poorly that year. Since you appear to not have any stock picking acumen and state you had another $100million in stocks, there is no way you were down an average of only 8% when the general market was down 40%.
Even if what you are saying is true. Losing 8% is unacceptable. Your clients didn't give you their money to lose. But in your mind it's OK because you didn't lose as much as the index.
You probably had a few accounts that did well, but there is no doubt in my mind that a majority of your clients faired worse. If I remember correctly, you said earlier that you don't actively manage all of your accounts. Are you taking credit for someone else?
You stated earlier that you couldn't do what I suggest because you have to be conservative, yet you stated you short gold and short the market. In essence, you are saying you are a market timer. Market timers have poor performance, especially large ones. And market timing is not conservative investing, it is gambling.
To 25IQ, stating that owning a stock that is over 25% of your holdings is an unnecessary risk is just another talking point used by people that don't understand how to invest and build wealth. The best way to minimize risk is to select stocks that have a long track record of growth and sell the products that the public needs, not wants. Vey few companies meet this criteria. To say JNJ or any of these companies is a big risk is really stupid. What could happen to JNJ to seriously impact them? Will the public stop buying baby products? Will they stop aging and buying pharma? These select companies have a 30+ year track record of growth with low volatility. They are large enough and diversified enough that they could qualify as their own mutual funds. The belief that you need to have at least 5 stocks to be diversified as 25IQ stated would probably be useful for those that pick their stocks based upon news or stories (which is what most clients and advisors do).
Buying 5 stocks to diversify risk doesn't reduce risk as much as it reduces overall return.
If you really want to manage risk, you would select your stocks based upon historical growth and volatility. Then you would run a statistical analysis to select the stocks meeting your criteria to determine which ones to put in your portfolio. Your modeling would then assist in the determination of weighting of the stocks for optimum risk adjusted return.. You are basically reducing risk by ending up with holdings that have a long history of outperforming the market. Not only will you outperform, but you will have significantly less volatility.
38 years ago I picked JNJ. I had a windfall of extra cash, and it met the criteria of investing that I learned as a finance student. Finance classes are the 1 thing most advisors have never done. I didn't diversify into anything other than a shitload of 30 yr zero coupon bonds yielding 18% YTM that I held for 18 years.
Now you naysayers can say it was foolish to put all of my eggs into one basket. At the time, I chose zero coupons as my diversification. If I would have wanted more stock, I would have picked a stock with similar characteristics and probably had a very similar outcome.
The key is to select your stock based upon solid growth and prospects, not whatever is the popular flavor of the month. The fact that this concept still hasn't resonated with you further reinforces my opinion that you don't understand the basic concepts of investing.
If you are going to own more than 1 or 2 stocks, than your really need to learn how to select stocks that work well together. All stocks have their own cycles and price patterns. You need to run variance/co-variance analysis to determine which of the stocks you like perform best together and what their weightings should be. Pick any 5 stocks you want. The analysis will give you the recommended weighting. By weighting alone, you can increase your return 25-100 % over equal weighting.
The majority of mutual funds own a shitload of different stocks. One of the things a lot of holdings in a portfolio does is reduce return. Instead of selecting stocks that work well together, they have so many stocks that they tend to cancel each others performance.
I stated earlier that owning JNJ, CAT and TXN only, would outperform most mutual funds. This was around 20 years ago when I ran the analysis. I am fairly confidant it still holds true today. They do well together based upon the correlation/co-variance with each other, the market and the economy.
Getting back to my friend and his returns in 2008. I don't know what his exact return for the year was. But I do know it was positive. He averaged about 30-35% per year consistently. You may think that is unachievable, but it really is not that difficult with statistical analysis.
When you own stable growing stocks with low volatility, selling covered calls and doing dividend captures is a no-brainer that easily generates double digit returns.
Trading CAT and TXN, both that have good growth but increased volatility, he would trade according to his statistical modeling, and easily generate double digits.
All of this was done with a portfolio that is low risk, and did not have unnecessary diversification.
The biggest risk out there is the financial advisor that thinks he understands investing, when in essence he doesn't. Advisors are salesmen.
discussion comment
5 years ago
Daddillac, the more you comment the more obvious it is to me that have an overinflated sense of worth as an advisor.
1. You are no different than every advisor I have ever known, they always talk about assets under management, but never the returns they provide their clients. That is very telling as to what their true goal is.
2. When I asked for a reason why JNJ is a bad risk, your response was basically 46% of revenues are pharma and the PE at 17.19 was too high and you were worried about health care reform.
That again just shows me you don't know shit about analysis and investing. Your response was basically talking points. JNJ has a year over year growth rate of 15.24%. They just increased their dividend again. Their alpha is 14, their beta is .67. This 46% revenue in pharma concerns you, when the population is aging and becoming more dependent upon pharma, you couldn't ask for a better market demand scenario for the environment where they would get 46% of their revenue. The PE of 17.19 is barely above their annual growth rate, and is not excessive. Shit the S&P PE is 22.25, almost 25% higher than JNJ and it doesn't have the growth rate or alpha. Your concern about healthcare just shows you focus on noise and feelings rather than facts and analysis. For the whole time I have owned JNJ it seems like there has always been talk about healthcare reform, yet it still grows 15.24% year.
3. My friend had 8 clients and gave them exceptional returns because he understood and knew how to incorporate statistics and quantitative analysis into is portfolio management. He did not violate any SEC or FINRA rules because he kept his client base small. He focused on providing above average returns, not on gathering assets/clients. He was constantly turning down new accounts from referrals. At his new firm, he was allowed to charge any commission he wanted within guidelines.
$100/trade was about 1/3 to 1/4 of what full service charged at the time. You really don't appear to know as much about the industry and regulations as you think you do.
4. In 2008, the S&P lost 40%. That only impacted the advisors/clients that invested in funds and tried to mimic the S&P. The smart advisors, don't focus on mimicking the S&P, they focus on beating the S&P. JNJ and CLX were two of his major holdings. In 2008 JNJ started the year at 66.70 and ended at 59.83.
CLX started at 65.17 and ended at 55.56. Both of these losses were considerably less than 40%. But to you, investing in individual stocks is more risky than diversifying into funds. Shit, add back their dividends, and they decreased less than 10%. Quickly, in 2009 they rebounded. That is what quality stocks do.
5. You talk about shorting gold for your client. That is not investing, that is speculating.
You clearly don't know how to use analysis to select stocks based upon the metrics that are important for growth. You definitely don't know how to build a portfolio based upon variance/co-variance analysis. But it appears you do know how to gather assets. I bet your clients are glad they were down so much in 2008. But I am sure you just blamed it on the market. The key is to invest in stocks not the market.
6. There are so many ways to increase your stock returns selling covered calls, dividend captures, etc. It's just a shame that you don't use these strategies to help your clients. But that would take focusing on the client, not gathering assets.
discussion comment
5 years ago
Sorry Daddillac, you are wrong again. No one has fucked me over. As I stated earlier, I had a friend who worked for Dean Witter. I have known a lot of so called financial advisors. My friend left after two years because he got tired of butting heads with the manager because he wouldn't sell Dean Witter products, and because the majority of his co-workers were financial idiots.
He went to a small local firm with 8 clients and around 3 million. Using the basic philosophy I have described, along with a lot of statistical analysis, he did very well for himself and his clients. His agreement was something to the effect of he charged $100 per trade and received 25% of profits over the return of the S&P. He never had a client leave, nor did he take on new clients. He never had a negative year. He was a true advisor and understood how to maximize return and minimize risk by applying statistics.
All you have described is that you are some one who can amass client money and offer mediocre returns and have others do the research for you.
With all that money supposedly under management, you probably still don't beat the S & P.
We obviously have two different viewpoints. To me an advisor is someone who can actually beat the market based upon his analytical tools and expertise. You can't beat the market consistently when you are large. True analysts/advisors know this and focus on maximizing return and minimizing risk.
To you, an advisor is someone who focuses how many assets they can accumulate, and the maximization of return is secondary. The goal is always to accumulate assets.
I will continue to advocate for the true advisor.
discussion comment
5 years ago
@Mark94,
as usual you are off the mark. These companies have existed and grown their stock price and dividends because they sell the basic necessities of everyday life, and will continue to do so because they adapt very well to changing economic conditions. The only thing looking back is good for is to see how many companies with hot promise failed after 10-15 years. The companies I refer to are truly too big to fail. And since they heavily weigh in the indexes and funds anything negative to them reflects to a degree in the fund.
Seriously, regarding risk, if something significant were to happen for whatever reason that would cause one of these companies to fail, due to their size it would have significant impact on anything you owned and the economy.
Let me restate my point.
You really only need 2-3 quality stocks in your portfolio to outperform the "market" over the long term. If you want more so be it. It is still better than buying funds. (which more than likely be weighted with these stocks).
Your return will be higher in both appreciation and dividend growth. The only real risk, is the risk of the company going out of business. Any economic risk would probably impact a fund worse. Look at historical charts of companies, these show growth over time, regardless of political bullshit/noise.
I could care less if you like JNJ or not. I just like giving shit to so called advisors that like to focus on funds because even though they profess to be long term oriented but ignore quality stocks.
I bet if these so called advisers were to present 3 of these companies to their clients along with the historical price and dividend growth rate and suggest they do their own mini fund of these stocks, or show them the historical appreciation of the fund along with its costs, not 1 customer would pick the fund. Funds are where the commissions are.
Now if they really were "financial advisors", they could perform variance/co-variance analysis due determine the optimum weighting of each stock.
discussion comment
5 years ago
That's right, let's not buy JNJ, it's PE is overvalued. The basic market is overvalued. You don't want to buy JNJ because you feel it is overvalued. I bet you are still selling funds comprised of overvalued stocks. JNJ is a major holding of a lot of funds.
I thought advisors were supposed to encourage long term holding and planning and not time the market. If you base your decisions on PE, you are basically trying to time the market.
You sound like the typical advisor that doesn't know shit.
discussion comment
5 years ago
Well Mr advisor, find a stock that has outperformed JNJ over the past 30 years. 46% of revenues from pharma in an aging population environment where it seems like everybody is on some type of pharma somehow doesn't seem like a bad thing. It's comments/analysis like yours that keep people from investing in quality.
I bet you have told more clients that even though your fund was down, it wasn't as bad as the index, than you have suggested they buy JNJ. Even though JNJ is one of the best performing stocks over the past 30+ years and has tripled the return of the S & P..
discussion comment
5 years ago
As I previously stated, I bought from 1981 thru 1982 not 1980.
My first purchase was 50 shares in late 1981 a few months after a 3 for 1 split for somewhere around $45-50 if I remember correctly. I added 250 shares over the next 18 months. And since I am an intelligent investor, my dividends are re-invested.
My 300 shares have split 2 for 1, 4 times since then
I took out funds in the late 90's when I sold my 0 coupon bonds (purchased in 81-82) and purchased a rental property.
discussion comment
5 years ago
The long term return of the S & P and Dow are artificially inflated due to the periodic replacement of underperforming companies with new companies. Take the makeup of the S&P 30 years ago and calculate the YTD return of those same stocks and the return decreases.
Again, advisors/salesmen really don't understand the market dynamics, they just know talking points.
Early in my career, I worked in the industry as an analyst. I have a degree in Finance and have worked with portfolio modeling and efficient market theory.
Most advisors/salesmen don't have a clue as to what they are selling. I had a friend who worked as a broker for Dean Witter 25 years ago. In his training class of 110 people, he was 1 of only 2 people with a background in finance. Everyone else in the class had a sales background with no exposure to finance/investing.
These are the type of people professing to be financial professionals.
discussion comment
5 years ago
OK so it seems like the conventional wisdom by the advisors/salesmen is to buy funds or ETF's. That is the easy way out for them because all they can do is spout talking points.
Look at the most successful funds over time. What do they have in common? They all basically own the boring stocks that outperform along with hundreds of other stocks that don't perform well. In essence, they say they are diversifying risk, when all they are doing is diversifying and reducing return.
My position is that you should do the research and pick 2-3 of the outperformers over time, that pay good dividends and track record.
A position of JNJ, TXN and CAT will consistently outperform funds. Substitute KO or MMM or any other stock that meets your criteria. You will outperform by at least 3-4% annually.
The concept of risk management is completely misused.
If you think there is a risk of owning JNJ, KO, MMM, PG or other large multi-nationals is that bad, then why would you buy a fund? They are major holdings of most funds.
There is absolutely no way IMO that a concerned investor should not invest in JNJ based upon its past performance and future expectations. Over the past 30 years it has tripled the return of the S & P. Give me 1 good argument why JNJ is a risk.
It comes down to, do you want to take charge and do your own investing and outperform, or do you want funds and mediocrity?
Once you can accumulate enough shares, you can step up your returns buy selling out of the money call options.
Advisors recommend funds because they don't know how to analyze and select stocks.
O'Neill and Investors Daily are a good starting point for learning, their CANSLIM method is useful. Read up on the philosophies of Peter Lynch.
The thing I always find most humorous about advisors/salesmen is that when their funds have negative returns, they will say "we beat the market" as if losing money was OK because you lost less than the market.
discussion comment
5 years ago
Back in the early 80's I had a job that paid very well and had excellent benefits and bonuses. I used my windfall in the 2 years to buy JNJ, 0 coupon bonds and some art.
The bonds and JNJ did very well. I am still waiting for the artist to die to see if it drums up any interest in my art.
discussion comment
5 years ago
A quality stock is a stock with a large market cap and diversified product/customer base that sells necessities not wants and fads. The company should have a history of stable management and pay a decent dividend and has a history of increasing dividends. A quality stock will grow with the economy and population growth because the population buys its product in any economic environment.
Google, Netflix, Facebook etc do not fit this criteria.
JNJ, KO, MMM, Clorox and a few others meet this criteria.
Buying funds will not be as rewarding as building your own fund.
You can buy JNJ, CAT and TXN as your holdings, and in 20 years you will have outperformed probably 95+ % of the funds.
Picking a quality stock is easier than picking a quality fund. Funds buy Kodak, GE and the latest fad technologies, many of which fizzle over time.
Funds have expense ratios and pay lower dividends than quality stocks. If you have any basic understanding of compounding, you will know that the difference between a 6% annual return and 7% annual return is significant after 20-30 years.
In the 70's investing was based on common sense and discipline. With the advent of funds, now investing is based on gimmick products and the latest fad investments.
Get informed, understand the companies product and track record and what will drive their future growth. It is not that difficult.
discussion comment
5 years ago
I think it was Peter Lynch who said, " people spend more time researching the purchase of an appliance, than they do for the purchase of a stock".
discussion comment
5 years ago
The Tylenol crisis did not damage JNJ, because it was a small blip relative to everything they do. They still managed to significantly outperform the market. Once you get past the media sensationalism, you will realize many of the losses are insured losses.
GE's problem was excessive leverage and derivatives. They were using it to goose their earnings. Their earnings were dependent on creative accounting and financial products not on selling products consumers were buying.
Their growth was not as dependent on population growth.
discussion comment
5 years ago
There you go spouting talking points instead of reality. You obviously forget Peter Lynch and others from the seventies.
Warren Buffets investments do not sway the market any more than the trading of funds. In fact, he probably has less impact because he is not a trader. His problem is that he has to over diversify because of his size. His philosophy is sound, own what people need, not what they want. Buy and hold of quality stocks outperforms any strategy.
Consumer staples grow with the economy and population, their volatility varies dependent on their own product diversification, but they still outperform over time.
discussion comment
5 years ago
April 28, 1989 the S & P closed at 309.64 and JNJ closed at 6.01.
Today, the S & P closed at 2917.52, 9.42 times 30 years ago. JNJ closed at 141.95, 23.61 times 30 years ago. JNJ has consistently been touted as one of the best managed companies for the past 40 plus years. They represent over 1.5% of the weighting of the S & P.
As successful as this company has been, most advisors don't recommend it.
discussion comment
5 years ago
Go back the last 20, 30 or 40 years. Your comments are beyond stupid. The consumer and products will change. No shit. JNJ has a history of adapting well. The public will always need diapers, baby products, medical devices etc, and JNJ will continue to dominate in those areas. JNJ is not dependent on fads like many companies today, they sell necessities.
JNJ has beaten the S&P 500 over the past 20, 30 and 40 years. They pay a minimum of .60 % dividend rate in excess of the S & P. Most funds & ETFs can't even beat the S & P over 5 yrs, let alone 20 and they charge a fee.
If you are so worried about diversification, buy 2 or 3 quality stocks. By the way, the quality stocks are the boring ones you rarely hear of. Again, look at the track record, not the "conventional wisdom".
Followers of gimmicks like dogs of the dow & best funds lists are investing based on marketing, not substance.
Most successful investors based upon return, have larger holdings of fewer stocks. Keep in mind, mathematically and in reality, when you diversify risk, you are diversify and reducing return.
discussion comment
5 years ago
Johnson and Johnson basically sells necessities and will grow with population growth and global saturation. It is so broad based it is its own ETF. Kodak did not sell necessities, along with other issues.
People are offering advice here based upon everything except research. Look at a long term chart of JNJ and the S & P 500. There are other consumer oriented stocks that mimic the growth of JNJ. You don't need funds, you need research and common sense.
There is no fund out there that I am aware of that has outperformed JNJ over the past 15-20 years.