>> I remember a conversation a few weeks ago where it was said that young people had to try getting the best results and that's the market. <<
Sounds logical doesn't it. How do you define "best results"? What time frame do you use for best results? What looks like may be best results this year may not be best results next year, in fact a good long term investment could go 10 years of under-performing and then still have market beating returns over 30 years.
For someone that lacks the knowledge that most of us have, how can they buy and hold for the long term if the requirement is defined by best? If something doesn't seem to be best anymore, doesn't that require a change, and if we are required to monitor and change doesn't that require us to have some basic knowledge skills on how to manage a portfolio?
It seems easy to say just invest in an index fund and forget about it but as retirement comes closer and closer how many people here were satisfied with just owning an index fund? I've had many people contact me over the last couple of months with requests to help them achieve their income objectives as an index fund doesn't come close to meeting those needs, and anyway isn't that what most 401K's invest in? Why invest in the same thing in a personal account?
These questions are not directed at you specifically but thrown out there for group consideration.
What I am trying to accomplish with my 5 company holdings are a small number of companies, within an established portfolio, that you can buy, hold, reinvest the dividends and simply leave them alone for a couple of decades. I'm looking for companies that even if they under-perform the market for a decade or more that after 30 years you'll still be happy with the results, so obviously one would need to pick companies they think will still be here 30 years from now.
I don't know if I can count on MSFT, AAPL or an AMZN to still be doing what they are doing for another 30 years, maybe they will, I hope so. But I do think LOW will still be selling houseware products.
KO, JNJ , KMB, D and CL have all underperformed the market over the last 10 years but if you look at them for the last 26 years (that's as far back as I can get data) then we see a different picture.
From 1/1/1995 to current date:
S&P 500 an 8.26% CAGR
KO ... 7.12%
JNJ .. 11.27%
KMB .. 8.99%
D .... 10.36%
CL ... 10.78%
So, as a group the results have been satisfying even though they haven't performed as well as most people would prefer and they simply couldn't be called "best" investments but we don't know what "best" will be going forward, so for young people I simply want something that will be steady, reliable and provide a respectable rate of return for giving no effort in managing the positions. It's the other positions I will manage.
I guess the best way way to sum it up is, if the company can't help me, I don't want it to hurt me, and if it's in proximity of market returns, it hasn't hurt me. |
