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New Year, Same Reality 01/01/16

New Year, Same Reality


Along with planning their New Year's Eve parties, many folks have been looking forward to saying goodbye to a difficult stock market environment in the hope that things will be different once they hang the new calendar on the wall. But the world is the same as it ever was and investing will require the same patience and selectivity as it always has. if they learn anything, investors should learn that it does no good to keep jumpinig between strategies or thinking that a new week or month or year is going to provide some mystical knowledge that they had not previously possessed. It may be an emotional boost to get a fresh start each year, but the important thing is to learn the lessons that the old year provided. If those are ignored, then all the fresh start will offer is a chance to lose more money or wander in a different wilderness. As the famous philosopher Yogi Berra once said, "If you don't know where you're going, then you'll wind up somplace else."

 

The The surest way for most people to make money is to keep at it. While that may sound overly simplistic, it encompasses the most consistent winning strategies: invest what you can every pay period, reinvest dividends, and choose to own companies that prosper by serving the needs of most people. Dollar-cost averaging, for example, actually benefits from our own inability to predict the future. We rarely know when the best time to invest may be. In fact, we consistently guess wrong when it comes to new highs or lows, and our emotions goad us into making the exactly wrong moves at the wrong times...selling when prices are low and buying when prices are high. But dollar-cost averaging helps us to accumulate shares at average prices that turn out to be lower than the price after several years, simply because stocks of companies that actually earn money (and pay dividends) tend to go up over time. Compounding the dividends through reinvestment only enhances the return over time, which, after all is said and done, is the investor's greatest ally.

 

Our current Special is. . .*Ecolab Inc. (ECL) Founded in 1923 as Economics Laboratory, Ecolab is a world leader in premium water treatment, commercial cleaning, sanitizing, pest elimination, and maintenance, with about $13.6 billion in annual sales, and businesses rely on its 47,000 associates in over 1.3 million locations in over 170 countries to keep their operations clean and sanitary. It sells specialized cleaners and sanitizers, pool and spa treatment programs, and various chemical dispensing devices, and its clients include the hospitality, foodservice, institutional, and health-care industries, among others. Foreign operations account for about half of total revenues. According to Yahoo! Finance, the consensus of about 20 analysts is that Ecolab will have earned about $4.40 per share in 2015 and go on to net about $4.99 this year, compared with $4.18 in 2014. In early December, the company announced that the dividend had been increased by 6%, to $1.40 per share annually, marking the 24th consecutive annual increase. (The company has paid uninterrupted dividends for the past 79 years.)

 

What makes Ecolab so attractive is that it specializes in products and services that are becoming ever more vital to numerous industries and that it is continuing to expand both at home and abroad. A prime example is the recent bacterial outbreaks at Chipotle restaurants that caused the shutdown of numerous locations and the resulting awareness among customers in that highly competitive industry. Other examples include the need for sanitary conditions at health-care locations, the growing importance of clean water worldwide, and the pressure among petroleum and chemical companies to insure safe conditions. Over the years, Ecolab has displayed a remarkable record of consistently growing sales, earnings,and dividends and, just as important, it should continue to do so in the years ahead.