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Technology Stocks : Dell Technologies Inc.

DELL 127.22

+3.8%

3:59 PM EST

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To: Paul Merriwether who wrote (44155)	5/21/1998 6:20:00 PM
From: Chuzzlewit	Read Replies (2) of 176387

Okay, since you guys obviously didn't take the time to read the fact that I said this was purely hypothetical, I will give you a real-life actual, honest to God case. Nothing made up. I bought TYC in 1987 for approximately $5. It is currently selling at around $55. It pays a dividend of roughly 0.1%. Neglecting the dividend, in the 11 years I've owned the stock, the annual rate of appreciation was 24.4%. Add the 0.1% and we're at 24.5%. Now, suppose I had overpaid by 10% and bought the stock for $5.50. My annual rate of return would have fallen to 23.3%. Add my dividend and I'm up to an annual rate of 23.4%. There was an article in the NY Times a few days ago when the merger of SBC and AIT was announced. In that article they pointed out that if you bought T the day before the merger and held it along with all spinoffs (and reinvested the dividends) it would have yields an annual rate of return of around 19%. The point is that as time goes by the slight overpayment for a stock has a small impact on the rate of return. That's why the buy and hold strategy is a winner over the long run. TTFN, CTC

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