Time
Travel
Sometimes
it seems as if investors
are being asked to
do the impossible: predict
the future. And, to
some extent, it’s
true. We have to leap
years forward in our
minds to the point
when we might expect
to be cashing in some
of our investments
and, since we want
our nestegg to be as
large as possible,
to predict what will
have been the best
stocks way back in
2008. Clearly, it’s
a daunting task, and
the difficulty of
that task is no doubt
one of the main reasons
that even the Wall
Street “experts” choose
instead to focus on
the short term. At
times, we are our own
worst enemies, constantly
measuring our returns
after a few months
or years and, even
worse, being easily
led to the conclusion
that we are lagging
badly behind whatever
investment vehicle
that the financial
marketers are pushing
at that moment. The
biggest conundrum
lies in the standard
disclaimer that “past
performance does not
guaranty future results.” While
that may be true,
the past is our best
evidence of what an
investment might be
expected to do in
the future. The “universe” of
DRIP stocks is populated
by a wide variety
of companies, including
many of the most
successful firms in
corporate history.
We can rely on companies
that have increased
their earnings and
dividends for many
years, providing that
their business model
seems as viable for
the future as it has
been in the past.
But if we listen to
the short-term strategists,
we might never choose
to own those firms
or rely on proven
techniques like dollar-cost
averaging and diversification,
disciplines that our
future selves will
certainly applaud.
Our
Speculative DRIP model
portfolio on page 5
has done relatively
well since the start
of 2008. A gain of $40,790
on January 9 has turned
into a profit of $40,692
on April 9. But being
virtually unchanged
is a pretty good result
when you compare it
with the broad market
sell-off during that
time. Declines by Schering-Plough
and Sprint Nextel were
offset by gains at Mattel
and Quaker Chemical.
More important, the
portfolio still offers
plenty of opportunity
to buy depressed shares.
In January, Countrywide
agreed to be acquired
by Bank of America.
We will announce a replacement
for that stock in the
July 15 issue. |