Fun read: 10 stocks to pick 10 years ago

[LRDave]

Buy-and-Forget Portfolio: 10 Stocks To Last The Decade | The Big Picture

Just set it and forget it!!!

 

[devans0]

But think of all the money you saved on broker fees.

 

[Richard4444]

A good reminder - thanks LRDave

 

[bondi688]

Buy-and-Forget Portfolio: 10 Stocks To Last The Decade | The Big Picture

Just set it and forget it!!!

Since everyone of the 10 stocks on the list is a loser, don't even set it, just forget it.

 

[MBAustin]

Excellent reminder of why I've always been a fund investor - thanks for sharing.

 

[haha]

I think Ritholtz's comment was on the money.

Valuation matters.

In over 30 years of investing in individual stocks, I have had very few disasters. The reason is that I know there is a great deal that I don't know, but a low price to estimated value is a good anchor to windward, no matter what.

Investor stupidity is common, but if you depend on it, it may disappear just when you need it most.

Ha

 

[azphx1972]

Very funny (and sad for those who followed the advice and purchased those stocks). I just finished reading "Eight Steps to Seven Figures" by Charles Carlson, written in 2000 but I thought might be a fun read so I borrowed it from the library. Anyway, he profiles millionaires who primarily made their fortune by investing in individual stocks, and he provides specific stock recommendations. It's interesting to see how those predictions have turned out 12 years later. Dell, for example, hasn't been doing so hot the last decade. He also recommended Finova, which I purchased, but unfortunately went bankrupt so I lost my investment.

For the average investor, index funds are a much better bet.

 

[Donzo]

Wow... was expecting a different article/outcome! I have had only a few individual stocks (pharma) over the years all the rest funds - very glad I did! Of course there were companies that would have made you rich over that time period - but picking them correctly is tough.

 

[Midpack]

Those are fun to review. I've saved a few annual investing issues from Forbes, Fortune, Money over the years for the same purpose, and none of them fare well either. I'd have more respect for the mags if they reviewed their results, though there was one (I forget which) who routinely reviewed their recommendation results one year after.

Thankfully I've been an AA, low expense index fund investor for many years.

 

[FUEGO]

If I had to pick 10 to set and forget for 10 years, I'd probably not venture too far from some top holdings of SP500 or similar. Apple, Exxon, GE google, microsoft, IBM, Chevron, J+J, Proctor + gamble, AT+T, etc. Granted you'll come close to mimicking a large/mega cap index, but you won't have to worry as much about the vagaries of the market and closely monitoring each holding.

Of course you can just buy an index fund for way more diversification for a few basis points per year in mgmt costs.

 

[NW-Bound]

Dunno about Apple or Google though. Even MS is iffy for me.

Looking at the list in the OP link, I remember that Nokia was the king of 2G PCS phones back in 2000. Nortel was also big. Nobody talks about Nokia anymore, and when Nortel died a couple of years ago, there was practically no mention of the event in the media.

About "buy the index and forget", how did Japanese investors fare who bought the Nikkei and then forgot?

 

[MichaelB]

Anyone know of a blog that looked at what really did well over that same period and then checked to see if anyone was recommending that 10 years ago? examples - Brazil, Apple, etc.

 

[FUEGO]

Dunno about Apple or Google though. Even MS is iffy for me.

Looking at the list in the OP link, I remember that Nokia was the king of 2G PCS phones back in 2000. Nortel was also big. Nobody talks about Nokia anymore, and when Nortel died a couple of years ago, there was practically no mention of the event in the media.

About "buy the index and forget", how did Japanese investors fare who bought the Nikkei and then forgot?

Yeah, I realize my list leaves out some significant sectors and overweights some (possibly) short timer tech biggies that are popular today. I'd probably swap out an apple or a google for a retailer, and find a finance stock, and industrial, etc just to round it out. Or just buy the index fund.

As for the Nikkei, pretty poorly overall. But you would have had a few percent real return if you bought before 1985 (minor deflation plus smallish dividends). Nikkei plus a decent allocation to JGBs - way better results I would guess. Nikkei plus JGBs plus a broad international ex Japan fund - even better I am sure.

 

[NW-Bound]

Nikkei plus JGBs plus a broad international ex Japan fund - even better I am sure.

Yes, there we go. My point is that one never buys then walks away.

And indexing or not, one still needs diversification beyond just one mere index. Then, one must look periodically to rebalance.

For people who are scaredy cats, the advice to not look to avoid a panic may be a sound one. But when one has taken the time to understand a bit more, well, looking daily does not have to mean day trading.

As Haha has said, "Horses for courses".

 

[powerplay]

My investment club held Nokia for awhile, but I think we sold it before it got that low. Enron was thought to be a rising star until we found out what they were really doing.

 

[NW-Bound]

As someone who buys individual stocks, I remember reading the following advice somewhere.

It says that when a stock declines a certain preset percentage from your entry point, you should just sell it. Then, after further evaluation, you can always buy it back later, if it is a good buy now at the lower price. That way, you clear your mind of the past mistake, and to reevaluate the stock anew.

The advice adds further that in most cases you would not buy it back, similarly to a person not likely to remarry someone after a divorce. Heh heh heh...

If I had followed that advice, I would have done a lot better than what I have so far. That emotional attachment to a stock causes many people to hold something until it goes bankrupt, yours truly included.

 

[jollystomper]

Interesting list. Oracle is one of the few individual stocks I own, and the 2000 price in the article was not adjusted for the stock split. However I was lucky enough to buy it in 1996 and recover my original investment by 1999, so all I hold now is pure profit, and in 16 years it has done well for me (including starting to pay out dividends in the last few years).

These days I more believe in sticking with mutual funds/ETFs, it has become much too easy for insiders to manipulate individual stock prices. What I have in individual stocks is only what I'm willing to lose completely. It is more exciting that Las Vegas, with slightly better odds.

 

[bUU]

Buy-and-Forget Portfolio: 10 Stocks To Last The Decade | The Big Picture

Just set it and forget it!!!

First... full disclosure of a personal nature: Barry and I shared a house for a month or so during college; and he and I served on the student government at the same time. He was a great guy and from all indications I am sure I'd still feel the same way today.

Second, I did some of this silly stock picking stuff myself twelve and a half years ago. I picked four stocks, though, not ten. DD, IP, SBC and CAT, in equal measures. Folks may recall these were the Dogs of the Dow at that point. As of October of this past year (the last month I held all four positions), DD was down 3.31%, IP was down 2.71%, T (SBC) was down 14.2%, and CAT was up 374.95%, so on average these holdings gained about 80% over twelve and a half years.

In 2002, I put some money into Vanguard 500 Index. Coincidentally, that holding has gained more than 80% over just ten years, underscoring the lesson that I'm better off with broad market indices than with trying to pick some magical combination of stocks that will beat the market.

 

[Free To Canoe]

A very non-random outcome. The lesson may be that if your portfolio has any of the Fortune 10 Stocks to Last the Decade this year, then sell them?

 

[Ed_The_Gypsy]

The list looks like bait for trolling for a Greater Fool. A list for gamblers, not investors; just hype, hype, hype. Financial pornography at its best.

 

[Running_Man]

First... full disclosure of a personal nature: Barry and I shared a house for a month or so during college; and he and I served on the student government at the same time. He was a great guy and from all indications I am sure I'd still feel the same way today.

Second, I did some of this silly stock picking stuff myself twelve and a half years ago. I picked four stocks, though, not ten. DD, IP, SBC and CAT, in equal measures. Folks may recall these were the Dogs of the Dow at that point. As of October of this past year (the last month I held all four positions), DD was down 3.31%, IP was down 2.71%, T (SBC) was down 14.2%, and CAT was up 374.95%, so on average these holdings gained about 80% over twelve and a half years.

In 2002, I put some money into Vanguard 500 Index. Coincidentally, that holding has gained more than 80% over just ten years, underscoring the lesson that I'm better off with broad market indices than with trying to pick some magical combination of stocks that will beat the market.

Those four are actually 4/5 of the small dogs of the Dow strategy of 2002 and perhaps an off-take of the strategy which was once called the Foolish Four where you also allocated 40% of the money to the cheapest stock. However had you actually used the small dogs of the Dow theory and refreshed annually, which would mean you would own the 5 lowest priced of the 10 highest yielding Dow stocks for one year and actually stuck to this strategy you actually would have been up over 100% in the last 12 years.

If anyone invested $100,000 in this strategy starting in 1992 the first full year after the strategy was published by Michael B O'Higgins in his book, you would have a little over $1,186,000 today versus $673,000 had you invested the same in the Vanguard S&P500.

The strategy works because it takes into consideration changes each year and that valuation matters.

 

[Running_Man]

First... full disclosure of a personal nature: Barry and I shared a house for a month or so during college; and he and I served on the student government at the same time. He was a great guy and from all indications I am sure I'd still feel the same way today.

Second, I did some of this silly stock picking stuff myself twelve and a half years ago. I picked four stocks, though, not ten. DD, IP, SBC and CAT, in equal measures. Folks may recall these were the Dogs of the Dow at that point. As of October of this past year (the last month I held all four positions), DD was down 3.31%, IP was down 2.71%, T (SBC) was down 14.2%, and CAT was up 374.95%, so on average these holdings gained about 80% over twelve and a half years.

In 2002, I put some money into Vanguard 500 Index. Coincidentally, that holding has gained more than 80% over just ten years, underscoring the lesson that I'm better off with broad market indices than with trying to pick some magical combination of stocks that will beat the market.

Those four are actually 4/5 of the small dogs of the Dow strategy of 2002 and perhaps an off-take of the strategy which was once called the Foolish Four where you also allocated 40% of the money to the cheapest stock. However had you actually used the small dogs of the Dow theory and refreshed annually, which would mean you would own the 5 lowest priced of the 10 highest yielding Dow stocks for one year.

Had you actually stuck to this strategy you actually would have been up over 100% in the last 12 years. Had you invested $100,000 in this strategy for starting in 1992 the first full year after the strategy was published by Michael B O'Higgins in his book, you would have a little over $1,186,000 today versus $673,000 had you invested the same in the Vanguard S&P500.

The strategy works because it takes into consideration changes in stocks performance each year and that relative valuation matters.

 

[Ed_The_Gypsy]

Running Man, your post shows how important regular review (and valuation) is. I always wondered how the Dogs of the Dow would turn out over the long run. A while back, it did not look consistent enough to hold my attention, though.