Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Investor2 who wrote (1476)	9/12/1997 4:44:00 PM
From: sea_biscuit	of 42834

Wanted to add a few more words on this : The larger the number of stocks that one has in his portfolio, the closer he will get to approximating the market. And not surprisingly, his returns will be the same as that of the market. So, if you have $100,000 invested in a couple of dozen stocks and you are spending more than $200 a year in commissions, magazine subscriptions etc. etc., what you really have is an expensive market index fund of your own! So the only way to have a good chance at beating the market is to have a concentrated portfolio. Even if your universe is just the stocks from the Dow 30, you will do well. Take a look at statoninstitute.com There you will find a portfolio that is composed entirely of Dow stocks (about 10 or 12 stocks) with very little portfolio turnover. And it has returned 21.25% a year (annualized figure) over the last 17 years! Has anybody beaten this? Not many, I suppose. Super-investor Warren Buffett's returns average to 22.7% a year, while the legendary Peter Lynch racked up an amazing 29.1% when he was running the Magellan Fund. I doubt if any trader generated returns better than 21.25% a year. In fact, there are probably a lot more traders that lost their shirts than those that broke even. Maybe some of them even went to jail! :-) The biggest challenge for the average investor is to stop thinking that he is missing something by not getting into this stock or that. And to be especially hard to please when it comes to selecting a stock. Anybody who can achieve this will not only get impressive returns over time but will also be able to pursue other interests in life while the solid portfolio is chugging along on auto-pilot. (Just to drag Brinker's name again here, let me say that he would probably agree with at least a part of what I say above! ;-) ) Dipy.

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