Nikkei86. The issue for me with an index is that when you buy you are buying all of the stocks in the index at their then current price. And similarly when you are selling.
It could be a mistake to believe large mega-caps have limited upside. Look at GE in one year, GOOG, others. OTOH, in recent past many old stalwarts - JNJ, WMT, some others -- haven't done well with stock gains. Earnings have increased, p/e's have come down, and in future, the stocks may rise (maybe). With some of these though, I feel I've been so patient that I've wasted time, so I have exited.
With stocks like JNJ, the many people watch for different reasons -- some are day or swing traders, some are indexers, some are buying for dividend, some just based on JNJ's conservative long-term history. The sum total of these people's buys/sells determines the price, not necessarily the value for someone looking at JNJ as a value stock, imo.
Not sure now if value should be "more aggressive" or not. JNJ coulda/woulda worked for me in a diversified IRA portfolio based on its (JNJ's) dividend yield + dividend increases and some hoped-for price appreciation in JNJ stock. I got all that (being in JNJ since 2/'09, with subsequent adds through 10/'10), but not enough to satisfy me. So before the fact, it seemed suitable enough and aggressive enough for me; after three-years, something wasn't aggressive enough: either I wasn't aggressive enough in buying/selling, the business just did not appreciate enough (management wasn't aggressive enough in securing business performance), or the category of stock (these large mega-caps) maybe by their size, is if not limiting, at least very trying of one's patience. I do not know. |
