Hi Dipy, sorry not to reply sooner but I was away for a while. I see that you kept LSI on the front burner for me though, so maybe I'll slip away some more!!
Not trying to flog this horse too much, but I will say that I think we are both on the right track. On the one hand, to take your example of Exxon, you used a beginning year on this investment of 1980. Well, I'm from New Orleans, so let me tell you about the oil boom/bust. From 1980 to 1985 or so you would have loved owning Exxon. Then came the bust when oil prices fell from $35 to $10 a barrel. Entire subdivisions in Houston and New Orleans were abandoned. I remember folks just leaving their keys on the kitchen counter and driving into the sunset. In New Orleans we lost about 10% of the population as people left in search of work. NOT a fun time to be owning Exxon. Very doubtful that even the dividend could have sustained an ordinary investor's stomach. Then, of course, we got the Valdez tanker spill. My point is just that I'm not sure what takes more guts to stay with -- the supposedly safe Exxon and MO or some juicy high techs.
Now, on that other hand, I still kick myself sometimes for selling the old ticker symbol C -- I mean Chrysler. Forget for a moment about the Germans. When I sold Chrysler it was paying me a dividend of 12% on my cost basis. Shoot, that's better than the long-term average return from stocks. But these dang autos were supposed to be cyclical and they had had some mighty fine years. I assumed we were due for a good sales pause. It never happened. Auto sales have been humming along and the mix of trucks to cars means the profits have been bubbling. I guess when this whole economy tanks then the car sales will finally come down. Maybe interest rates will rise enough to bring them down. It would have been great to have held C for another year or two, but I always thought you bought the autos when they couldn't pay a dividend and sold them when the dividend got too rich. Oh well. This investing world just gets more and more interesting all the time.
Beachbumm |
