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Buyandhold 2012

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  • Retirement Strategy: Did You Freak This Week? [View article]

    Old timers like me remember the dances of the 1960's. The Freak. The Jerk. The Locomotion.

    The last time I tried doing those dances without warming up first I threw my back out.

    What was my reaction to the 1,200 point drop in the Dow? I was happier than a fox at the National Hens' Convention.

    Keep on falling, I kept saying to myself. Keep on falling so that my favorite stocks (Philip Morris, Walgreens, JNJ, XOM, Apple, PepsiCo etc.) will become even more attractively priced.

    If the stock market had fallen a little more, I would have gassed up the car and driven down to Scottrade to buy a few stocks.

    But, alas, the stock marked changed direction and started to go back up.

    There's always hope for next week or next month or next year. Maybe that major stock market correction that I have been waiting for will finally happen. It's been a long time since we have had the kind of major sale in the stock market that I have always looked forward to.
    Aug 28, 2015. 02:35 PM | 2 Likes Like |Link to Comment
  • Learning From The Masters: Market Meltdown Edition [View article]
    "...the way your questions are worded, it suggests intense attention to the market."

    I have to agree with David Van Knapp about that.

    Investors on the whole spend too much time thinking about their stocks and the stock market in general.

    If you spend too much time watching the financial news, it is like watching water boiling, about as useful as gazing at your navel.

    If you have an intelligent strategy regarding the stock market, there really is not that much to think about.

    I am never going to sell any of my stocks. I will not be buying more stocks until the S&P 500 has fallen by at least 20% from its all time high. Extremely simple. Not a lot to think about.

    As far as investing in the stock market goes, the less complicated your investment strategy is the better.

    Part-Time Investor has the right idea. KISS. Keep it simple, stupid.
    Aug 28, 2015. 10:14 AM | 2 Likes Like |Link to Comment
  • The Sky Was Falling Into The Hands Of Astute Dividend Growth Investors: Did You Catch Any? [View article]

    One of my friends phoned me during the most recent stock market correction and he did not sound too happy.

    "I checked out the value of my portfolio and it fell by $200,000 in a few days," he complained.

    "Look, buddy," I replied, "I figured out recently that the value of my portfolio increases by about $1,000 every time the Dow rises by one point, and decreases by about $1,000 every time the Dow falls by one point. So a thousand point drop in the Dow is not exactly a picnic for me, either."

    Then I told him to look on the bright side. If the S&P 500 falls by at least 20% from its all time high, which would bring it down to about 1700, he would be able to add to his positions in dividend growth stocks at substantially reduced prices.

    The paradox in the stock market is that you have to temporarily lose money on paper in order to make money. The best buying opportunities are always whenever we are having major stock market corrections.
    Aug 28, 2015. 09:54 AM | 8 Likes Like |Link to Comment
  • 12 Attractive Fast-Growing Dividend Growth Stocks For High Total Return [View article]

    Even $1,000 to $1,500 can grow to a large amount ($1M).

    That is quite true, and that is the reason that it disturbs me whenever I hear anyone making sarcastic comments about investors who begin investing relatively small amounts of money.

    On January 2, 1970, McDonald's was priced at 17 cents per share. It is now priced at 96.77 per share. That means that a $1,700 investment in McDonald's in 1970 would now be worth $967,700. And that does not even include the dividends.

    The miracle of long term compounding is a beautiful thing. It's what makes investors rich in the stock market over the long term.
    Aug 27, 2015. 12:45 PM | 33 Likes Like |Link to Comment
  • What Stocks Stand Out If You Combine Smart Beta With Dividend Growth Investing? Here Are 15 Choices [View article]

    The DGI hyena pack?

    Have you ever met a dividend growth stock investor that you liked?

    You will probably not be receiving an invitation to the next dividend growth stock investors' convention.

    I have been a hardcore buy and hold dividend growth stock investor for 45 years. My 94-year-old mother has been a hardcore buy and hold dividend growth stock investor for 49 years.

    I mentioned to Mom recently that there are some investors on SA who seem to have a strong aversion to high quality dividend growth stocks and seem to prefer exchange traded funds.

    "What's not to like about dividend paying stocks such as Abbott Labs, Philip Morris, Walgreens and PepsiCo?" she asked. "Dividend paying stocks made a lot of money for me over the long term. I guess if someone doesn't want to make a lot of money over the long term, he can settle for second rate investments such as exchange traded funds."
    Aug 26, 2015. 06:27 PM | 16 Likes Like |Link to Comment
  • Oil Is Forming A Solid Bottom [View article]

    This was a top notch article. The oil stocks are definitely becoming attractively priced. The energy sector delivers outstanding long term total returns if the stocks are bought at attractive prices.

    Exxon Mobil has fallen from a high of 104 to a low of 66 and is now at 72. XOM is my largest holding, but I would seriously consider buying more shares if the S&P 500 falls to 1700 or lower.

    No one knows when the exact bottom will occur in the energy sector, but there are certainly a lot of tempting buys in the energy sector at this time.
    Aug 26, 2015. 05:35 PM | 10 Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Richard Berger, Part I [View article]
    "You cannot make a profit if you never sell."

    Richard, have you ever heard of Grace Groner? She invested $180 in Abbott Labs in 1934 and then she never sold it. Her investment in Abbott Labs is now worth more than 14 million dollars. Not to mention that the dividends are at least $400,000 a year.

    Every single investor that I know personally who made a lot of money in the stock market over the long term did it by buying high quality stocks with durable competitive advantages whenever these stocks were relatively cheap and then never selling any of these stocks.
    Aug 26, 2015. 01:58 PM | 7 Likes Like |Link to Comment
  • Never Chase Stocks When They Are Up - Cramer's Mad Money (8/25/15) [View article]
    "...I need you to be ready to do some real selling into any strength....."

    This stock market advice is so bad that it is almost toxic.

    All I can do is shake my head in astonishment that anyone could actually give such bad advice to stock market investors.
    Aug 26, 2015. 10:15 AM | 10 Likes Like |Link to Comment
  • Wall Street Breakfast: Is The Worst Over? [View article]
    Is the worst over?

    Why is it that in the financial news media any significant correction in the stock market is described in negative terms? Is the worst over? Dow drops over 1000 points! Gasp of horror!

    This is all confused thinking.

    Significant corrections in the stock market are the equivalent to big sales at a department store. What investor thinking clearly would not prefer to buy high quality stocks such as Exxon Mobil, PepsiCo, Johnson & Johnson and Apple at 20% to 50% lower than their current prices?

    The stock market does not just go straight up. It goes up 65%. Then it goes down 22%. Then it goes up 94%. Then it goes down 45%.

    Astute investors buy stocks with durable competitive advantages during major corrections in the stock market and then they never sell these stocks.
    Aug 26, 2015. 07:58 AM | 14 Likes Like |Link to Comment
  • I Own Southern Company And AGL Resources - Now What Do I Do? [View article]
    "I own Southern Company and AGL Resources. Now what do I do?"

    Chuck, you are a seasoned investor so I know that is a rhetorical question and that you know the correct answer.

    I can tell you what I would do if a were a shareholder of Southern Company and AGL Resources.

    I would never sell Southern Company. I would take the $66 per share that I received for AGL Resources and I would put it in the bank. At some point in the future when a great investment opportunity arrived, I would use that money to take advantage of that great investment opportunity.
    Aug 25, 2015. 05:17 PM | 9 Likes Like |Link to Comment
  • Stop Telling Investors To 'Not Panic' Because You Have No Idea What The Markets Will Do [View article]
    "In markets like this, you have to follow your own instincts."

    And if your instincts are bad, you will be following your instincts right off the financial cliff.

    I am sorry, but is most cases following your own instincts and allowing yourself to panic are a recipe for financial disaster.

    Someone should come up with the Ten Commandments of Successful Stock Market Investing which incorporate the investment strategies of the most successful long term investors such as Warren Buffett, Charlie Munger, Ben Graham and Peter Lynch.

    After giving it some thought, I may come up with the Ten Commandments of Successful Stock Market Investing, but I know for sure that none of the following will make the list:

    1) Allow yourself to panic whenever the stock market becomes volatile.

    2) Follow your own investment instincts no matter where they may lead you.
    Aug 25, 2015. 04:51 PM | 6 Likes Like |Link to Comment
  • Berkshire For Retirement Income [View article]

    I have been a hardcore buy and hold dividend growth stock investor for 45 years. But I am not so rigid in my preference for dividend growth stocks that I am not aware that Berkshire Hathaway has been an outstanding long term investment in spite of the fact that it has never paid a dividend.

    The biggest mistake that I ever made in my investment career was allowing myself to be talked out of buying Berkshire Hathaway when it was at 75 in 1970. Berkshire Hathaway is now at 201,300. A $7,500 investment in Berkshire Hathaway in 1970 would now be worth $20,130,000.

    Fortunately, I bought Philip Morris, Abbott Labs and Mobil in 1970 and never sold them or any of their spinoffs and that compensated for my failure to buy Berkshire Hathaway.

    In general, high quality dividend growth stocks are the best investments over the long term. But there are always exceptions to every rule. Berkshire Hathaway is definitely one of those exceptions.
    Aug 25, 2015. 11:33 AM | 5 Likes Like |Link to Comment
  • What Stocks Stand Out If You Combine Smart Beta With Dividend Growth Investing? Here Are 15 Choices [View article]

    If an investor is looking for stocks that deliver higher total returns over long periods of time, wouldn't it be easier to just compare the performance of the stock to the performance of the S&P 500 over a long period of time?

    For example, we know that stocks such as Philip Morris, Abbott Labs, PepsiCo, Walgreens, Stryker, Berkshire Hathaway and Apple have outperformed the S&P 500 over the long term.

    Once we have a list of stocks that have outperformed the S&P 500 over the long term, then we can buy stocks from that list whenever they appear to be relatively cheap.
    Aug 24, 2015. 10:03 PM | 19 Likes Like |Link to Comment
  • The True Risk To Your Dividends And What Not To Sell [View article]
    "Price declines are buying opportunities, not a reason to worry."

    Couldn't have said it better myself.

    It is not possible to make a lot of money in the stock market over the long term unless you are willing to endure significant temporary paper losses.

    Twice in the first decade of this century my common stock portfolio suffered seven figure paper losses. My common stock portfolio lost about 50% of its value twice in one decade.

    This is not the most pleasant experience, but it is an example of the way that an investor can turn lemons into lemonade.

    Instead of selling any of my stocks, I simply bought more shares of stock at substantially reduced prices. Then when the stock market went up again I was way ahead of the game.

    Buying stocks when the stock market is near an all time high and Jim Cramer is screaming BUY BUY BUY is not the best strategy. It is better to buy stocks whenever the stock market is relatively low and investors have that shell-shocked look after they have suffered large paper losses.

    The stock market has fallen by about 10% relatively quickly. When the S&P 500 falls at least 20% from its all time high, I will begin to start buying stocks again.
    Aug 24, 2015. 09:45 PM | 21 Likes Like |Link to Comment
  • Retirement Strategy: When In Doubt, Have Some T [View article]

    I will say one thing about AT&T. It's boring.

    I like boring. Can't take too much excitement at my age. Bad for the heart.

    I have been an AT&T shareholder for over 40 years. At one point, AT&T was broken up into 8 companies. Then the companies started to come back together or spin off other companies. One of them was Idearc, which went bankrupt. I think Idearc had something to do with the Yellow Pages. No wonder it went under.

    Having been an AT&T shareholder and all of the spinoffs for so long, I would characterize AT&T as Old Reliable. It doesn't set the world on fire, but it is not so volatile as to give you heart failure. Abbott Labs, Exxon Mobil and Philip Morris have performed better over the long term.

    For an investor in need of income, AT&T is not a bad choice.
    Aug 24, 2015. 06:06 PM | 15 Likes Like |Link to Comment