Here is an example of long term investing. About one year ago in another forum, I was criticized by a "master" for mentioning PG as an interesting stock in the disinflation environment that I foresaw as coming. I had remembered that in the 1980s, stocks like PG, MCD, KO, etc really performed very well in such a disinflation, moderate growth environment.
Of course a crucial aspect of long term investing is that one holds the stock long enough to something good to happen and/or one's views to become more widely recognized and accepted - if one is correct, but just early.
So PG one year ago was around 65. Today it's 74. So that's a 14% gain plus a 2% dividend, thus one obtained 16% under favorable tax treatment. A short term trader would need to be correct several times and realize a bit over 20% to have the same aftertax return.
Well, Mrs. B did a bit better in her Sky Fund, buying PG in March at lower prices, plus PEP and MCD. Those companies have good products, good margins, and good overseas exposure. In a disinflation environment with a declining dollar, they can outperform. And they are good long term holds for a "retired" couple having steady dividend growth.
We'll probably hold these stocks for a long time now, having gotten good entries.
To build a good long term investment portfolio really takes at least a year. Good entries don't occur every day and one needs to select stocks that will perform well in the anticipated environment.
There are good entries now under the economic trajectory that I believe is unfolding: a mid-cycle slowdown amid disinflation and solid growth in emerging market nations.
Internet related tech, energy, miners, big cap financials, select transports are my favored groups. I'd like to find one or two hot small cap growth stocks, too.
PS: A UN global warming summit in Bali ... gee .. I wonder how much fuel was burned getting all those coneheads to that far away place ? And I wonder who is paying ?
PPS: Ben Stein says GS report on credit crunch was designed to create fear so they could make money on shorts. Golly, he must read this blog, too.
P^3S: IBD says the market is in a confirmed rally. I don't see a confirm day in days 4-7; maybe they are invoking the exception that if days 2-4 are very strong overall, that can be confirmation. Perplexing ???
P^4S: There are some inarguably "smart money" groups buying distressed assets, viz. Buffet (TXU bonds) and MS (Lennar land), among others. It's starting to smell like the bottom is in or close thereto.
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13 comments:
Bunkerman...this week sure sets up for some mean beefer tricks as we make our way to that fed meeting...strap up those combat boots it should be a heck of a ride.
yes, the well-stomped mud might be really deep by now. Innumerable beefers' survival is at stake.
Hmmm ... by now that other solid matter substance might be really deep, too. It piles up really fast when beefers stay in the sme place so long.
The water hole must be quite odoriferous by now, and the water quite putrid.
It's time for the herd to move out.
I listened to Paulson - his plan seems workable if they can push it and pay attention to the details. Congress really needs to get off its butt. I wonder if the "candidates" will push it ?
Those 200,000 + 200,000 loan refis under FHA would really take the edge off the 1+ million at risk loans.
Bunkerman...will the paulson plan impact the fed thinking related to lower rates? is it possible that they are both pulling in the same direction and will get this thing right? the yeild curve laughs in their faces...too slow joe...my fear.
yes, I think they are pulling in tandem in a two man shell now - in sync. But a bit slow. Hope they don't "catch a crab" [a crew-rowing term ;-)]
i see you guys still talkin about this beefer waterin hole nonsense garbage.......what's a 'beefer trick' frosty?
I started a position in GE - looks cheap, good dividend.
that's a very long term horizon.
I figure GE can go to 45 in a year, plus the dividend gets me close enough to a 30% return.
sure looks like Friday was window dressing done by the big brokers to help out the trading bonuses.
uh Bud, like the paint on the tape at the end of the month...real buyers indeed...we can teach, it is up to you whether choose to learn.
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