In
review you now have 5 stocks. Consolidated
Edison Inc. (ED) or another utility, Kraft Foods Inc. (KFT) or another food
stock, Eaton Corp (ETN) or another industrial stock, and U.S. Bancorp (USB) or
some other financial (Bank) stock of choice.
Last pick was an oil or gas my recommendation was Chevron Corp (CVX) but
any oil sector stock would do. Remember
you can own any stock in the sector not the one I recommend.
In Benjamin Graham’s book he teaches value investing. First of all I read a book written by the
author during his lifetime. (May 8, 1894
– September 21, 1976) I am not sure who is updating his work but I wanted his
pholosphy not current theroies. pg 40
“the rate of return … be dependent, on the amount of (time) intelligent effort
the investor is willing and able to bring to bear on his task. … the alert,
enteprising investor who exercises maximun intelligence and skill.” Warren Buffett, who is considered most
successful investor of the 20th century is a value investor and uses the
principles taught in this book, and what I talked about in my last post.
“it is absurd to think that the general public can ever make money out of market forcasts. … There is no basis either in logic or in
experience for assuming hat any typical or average investor can anticipate the
market movements … successfully” In this
blog I am suggesting that you disreguard the Mutual Funds and junk ETF’s. Invest for yourself in good high quality
companies. Watch the market for the
general direction. Use market tools, and
follow the stocks you invest in. Use
value investing and follow the free advice on CNBC from Cramer and Fast
Money. (sorry closed the book before I
got the page number)
“Basically, price fluctuations have only one significant
meaning for the investory. They provide
him with an opportunity to buy wisely when prices fall sharply and to sell
wisely when they advance a great deal. …
he will do better if he forgets about the stock market and pays attention to
his dividend returns and to the operating results of his company.” pg 109
I used this durring the 208 market melt down and the flash crash. No one would have lost money during the flash
crash with Procter & Gamble (PG) using a stop loss becaue you would never
use a stop loss on your stocks following this investing approach.
During the 2008 crash on or about 3/09/09 I sold all my
stocks and purchased better stocks at a fraction of their value. The stock were unloved and out of reach in
some cases before the crash in March of 2009.
Home Depot (HD) was out of favor and the stock pickers were recommending
Lowe's Companies Inc (LOW). Altria Group
Inc. (MO) was unloved due also to a lawsuit.
U.S. Bancorp (USB) being a bank was hated. All examples of broken stocks not broken
companies I picked two were recommended as stocks not to purchase. Pfizer Inc. (PFE) was the most broken company
I picked. Unloved at the time now it is
recommended at least once a week by someone on CNBC. Pfizer Inc. (PFE) is the most risky of the
three in my view and still is. My point
is I watch it closer and am more ready to sell it, even thought it is now
loved. The main point is you can buy
stocks the Hedge Funds and Mutual Funds can’t and make a lot of money when the
stocks become loved, also stocks flip flop being loved one year and hated the
next.
Go to a used bookstore and buy
the book. Start your own list of value
stocks to pick up. Spoiler this book is
written like a college textbook. You
will learn what Warren Buffett has used to become rich. You can do this too. In conclusion 50% of the gains to investors
on the stock market are from reinvested dividends. Use value investing to increase your wealth.
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