April 10, 2014
What is worth a few minutes of your time this morning (other than this blog, of course), is this article out of Fargo, North Dakota about a group of sixth-graders that "schooled" students from some of the top colleges in the country with their investment selections.
How does this happen? The answer isn't that crazy or far out, just simple; buy good companies that you believe in, and hold on to them, otherwise known as buy-and-hold. Dave Carlson, teacher of the sixth-grade students, allowed each child one stock switch during the contest, but encouraged his students to hold and be patient. "I thought the best idea was to pick a stock that you believe in, a company that you liked, a company that you were interested in, and stay with them," he said. I like that advice.
It is the same advice we find ourselves giving to our clients on an almost daily basis - let's own good quality positions and have a specific plan for them - in many cases, to own them for years to come. It is inherently easier to own a company that you not only know and like, but that makes products that you buy yourself. Think of Procter & Gamble (Pampers, Charmin, Tide), Johnson & Johnson (Band-Aid, Listerine, Tylenol), RPM International (Rust-Oleum), and McDonalds (we all know this one). It doesn't hurt that of the names mentioned here, all have increased their dividends for at least 37 straight years. (Note: This is not a recommendation to buy any of the companies mentioned above).
When it comes to investing, what actually works is not exciting, nor based on recommendations seen on TV or read in a magazine while sitting at the airport. Success is based on having a defined plan in place, and owning good quality positions. It helps to be patient, and to refrain from sudden reactions to bumps in the market. It worked for these sixth-graders, why not you?
Chuck Wade, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).