Richard Shaw

38 Companies with Top Financial Strength

OnW: While stats published by S&P and Value Line differ in their conclusions about the effectiveness of their projections for future performance, this article is not about performance or projections. This is about S&P and Value Line ratings as to financial strength which is not the same as prediction of market performance.

38 Companies with Top Financial Strength

COULDASHOUDA:

Interesting observations. Keep us informed of your going forward findings if you don't mind.

I would agree with your 10% attribution to "what you buy" if you refer to individual stocks or bonds, but would put a much higher attribution to what you buy in terms of asset classes (e.g. SPY versus AGG).

Not sure about the proper ratio of importance between timing of buying and selling. Certainly the lack of a sell discipline is where lots of gains are given back. Lacking personal data on that, I'd tend to guess more 50/50 in importance -- you may well be right on your skewing toward selling, but would tend by personal observation to agree that better decisions are generally made about buying than about selling, or that more time and effort are spent my most investors on what and when to buy and less on what and when to sell.

38 Companies with Top Financial Strength

Predictorman1000:

Several people had for their own and separate reasons asked me for such a list. I thought some others may have a similar information desire so I published the list. That's what and why.

My point was actually not that "if you don't know what to do invest in solid companies". My point was merely to provide data that may or may not be useful to some people.

If an investor didn't know what to do, and didn't want to engage an advisor, they should either do nothing or they should own one all world stock index fund and one broad passive bond index fund (in a suitable proportion).

Buying individual stocks is a form of active management that requires research, conviction, and staying on top of the situation.

This short article was meant to help some people who may be seeking companies rated highly for financial soundness to narrow their research effort -- nothing more than that -- it's just data.

38 Companies with Top Financial Strength

Predictorman1000:
The utility of this list or one along the same lines is for people who want to be invested for the long-term, but are greatly concerned about fundamental quality risks in their holdings. If price appreciation were the primary concern, then a different list, including emerging markets would be used. This list is purely a fundamental screen of company internals without regard to market valuation or price action. That's interesting to some and irrelevant to others. Just putting it out there for those who want to know which companies appear to be fundamentally solid. S&P and Value Line each rate a couple of hundred companies in their "A" range for financial strength, but they only agree in 91 cases --- putting the debt limitation and tangible equity restrictions on knocks the list way down.