Invest in HD: 17 years & holding
The following post is from the Fool's AOL Home Depot message board...
Date: Wed, Jun 3, 1998 10:50 EDT
From: HDHLD
boards.fool.com
I started with 600 shares of HD in 1981, the IPO. I added to this holding every year until 1992, selling only once to make a down payment on a house. In 1992 I retired at the age of 42 thanks to HD.
At that point I sold off the last split, and invested it very conservatively so that I would have an income that would let me live comfortably. As you know, the stock dropped by about 25% and remained in that range until late in 1996 when it began to move again.
I again sold off the split from last year and added that to my conservative portfolio and now can live well above "comfortably". In other words, HD has made me quite wealthy. My "conservative" portfolio is still only a third of what I have invested in HD. Why do I leave that much in HD, two reasons. As RSPEEDBALL pointed out, taxes. Unless I see HD falling by at least 30%, I will not even consider it. Taxes will eat that much.(I know because after my sale in February i owe a small fortune.) Second, HD is a great company with excellent management that is always looking for ways to increase the value of their stock for their stockholders. They are not just looking at building more big boxes, they are looking at the world physically and throught the internet. And there is a third reason. I do not need HD any more for "retirement". It is kept now just as a wealth builder.
Why am I telling you this? Because if I had listened to the many money managers I contacted when friends insisted I needed help managing my money when my stock became worth a great deal, I would have sold HD starting in 1984. Everyone of them said HD could not continue to grow at that rate. The PE was too high. The competion was on their heels. They couldn't find enough qualified people to staff the stores. The reasons to sell went on and on.
What I have learned over the last 17 years is that yes, the stock can get ahead of itself. HD can make mistakes as they did when they purchased the Bowater stores in 1985. You can see your paper worth fall 30 % in a very short period of time. But you will see HD react very quickly to any mistakes they make and correct them.. They rush into nothing without testing it over and over until they get it just to the point they want it. In other words, HD is a great growth company still.
You will have the jeifri19's of the world on this board forever. It's good to have an opposing view. It makes you think. (It does get annoying however, when items are explained very carefully and it still doesn't register, the Bonds being my point. It took Jeifri a year before he finally admitted he might be wrong.) Do your own research. Talk to employees in the stores and even the officers of the company. If you feel HD is over priced, sell or don't buy. While Jeifri has been pounding this stock, I have just purchased a home on the gulf with the profits I made off HD during that time period. So good luck to all of you and may you be as fortunate as I have been. |
