re: a glass or two of red wine in the evening:
This will help you live longer (an excellent rationalization, and even has some evidence to support it). I will be going to my grandma's 100th birthday party next year, and since I don't smoke now (and never inhaled), I've got a good shot at living that long. So LTB&H is good for me, into my late 80s.
Even the best DD isn't good enough to entirely predict the future. So, one-stock portfolios are not a good idea, unless you are an adrenaline junkie. But, as I just posted, there is no benefit to a portfolio of over 8 stocks (in 8 industries).
My investing strategy is: buy companies that are:
1.the best in the world at what they do
2. have a track record to evaluate (which is the best way to predict the future, and avoid wishful thinking)
3. can grow EPS by >20%/Y longterm, by just continuing to do what they have done in the past.
4. have nothing ugly in the balance sheet. That means no huge liabilities or deferred costs.
5. buy only when the market hates the company and the industry, and it is at the low end of its valuation range, at a PEG<1. The reasons why it is out of favor will go away (within a year), if my analysis of the company's longterm prospects is correct.
I've done very well with these rules, when I have the discipline to follow them, and when I have the discipline to remember the H in LTB&H. |
