Marc Gerstein

Three Reasons to Invest in Hansen Natural

I’m a bit troubled by the disclosure at the bottom of an otherwise fine article: that HANS is the only stock you own. Two points:

I understand your desire to unlearn what they teach in your MBA program (I checked your SA bio) and a lot of the mathematical MPT concepts do, indeed, falter in the real world. But the “diversification” piece of MPT is not the problem. That part of the theory is fine; in fact, it’s downright vital. I agree that HANS is a pretty good company with a reasonably valued stock. But never, never, never, never underestimate the way the world can toss nasty curveballs at any company or stock, no matter how great. Heck, even a one quarter earnings shortfall wherein HANS does spectacularly well, but a teeny bit less spectacular than some analysts had hoped can precipitate a wicked stock plunge. So much the worse if there’s an actual business hiccup which tends to happen pretty-much all the time. I note you’re a Buffett fan. Please do not believe all the nonsense you see written about his so-called love of “focus” portfolios. In truth, he is a big-time diversifier. The list of Buffett holdings you see bandied about are actually only a small portion of the total BRK portfolio. So please, add some diversification to your portfolio. HANS isn’t the only great opportunity out there.

I suppose I should have welcomed you to SA earlier in this comment. Anyway, I do so now. Your reasoning re: HANS is sound and well presented and I expect you’ll write more in the future. But from a reader’s point of view, I will have to tell you that I’ve long ago learned to be suspicious of writers speaking bullishly on the only stock they own. Even if there is nothing shady actually occurring, it still casts a shadow on the overall credibility of what you say. Even the most honorable of investors-authors can find themselves getting too wrapped up in one thing to the point where their objectivity falters. It’s easier to see the full spectrum of issues that surround a topic when you don’t have a full-out 100% stake in how others feel about it. So besides being financially prudent, diversification is also intellectually sound.