RE: Since we're talking about the market again
Interesting thought from a poster on the AMAT group (thanks to derek cao)
Fits very well with the BB philosophy:
good argument for long term investment:
And Here's To Pioneer And Mrs. Robertson Fortune Holds A Place For All Those Who Buy And Hold
Date: 2/13/98
Author: Dan Moreau
With a check for $3,005.65, Joseph and Ruth Robertson bought their first mutual fund shares on Jan. 21, 1955. Almost a year to the day later, the Salt Lake City couple made a second purchase of $1,008.78 in the same Pioneer Fund.
They left it alone. For decades they put not another penny of new money into the fund. And until Mrs. Robertson began drawing dividends and capital gains from the fund in '93, it just grew and grew - to $540,000, more than half a million dollars.
Ruth Robertson is 88 today. She's been living mostly off the pension of her husband, who died in '84. But their fund has added financial security to her retirement years. And her eight grandchildren already have received gifts from the fund.
''My husband was a cautious, careful man,'' she said. ''I learned from him to stick with what you know works and don't try for a quick gain. (The fund) proved itself, and so I left it alone.''
Robertson was 45 when she and her husband, who ran a store's dry-goods department, invested in Pioneer. Her broker then, Hal Peacock, said mutual funds were a relatively rare investment. But he knew the couple socially and was certain the fund's diversification and professional management would appeal to them.
Peacock, himself 87, is semiretired. Robertson deals with Richard Taggart, vice president of American Funds & Trusts Inc. in Salt Lake City.
Taggart said Robertson talked with him after the '87 stock market crash, asking if she should get out of the market.
''I told her to let time work for you,'' he said.
''I was a little nervous, but I stayed put,'' Robertson added.
The moral of this happy story: Long-term investors who invest in a diversified stock fund and let their money sit can make a fortune. And while starting early is best, it's more important just to get started.
Left It In
Some interesting points:
If Robertson hadn't taken any money out, her $4,000 investment would have grown to about $637,682. (See The Long View chart above.) It would have amassed another $61,815 over the 42 years if just $100 a year would have been added.
Robertson started when she was 45. If she had managed to invest the $4,000 in 1935 - amid the Great Depression - when she was 25, she'd have close to $13.1 million, before taxes.
If Robertson, who is in good health, were to leave her current balance in the fund for another seven years and it earned an average return of 10% a year, she'd have more than $1 million by 2005.
Pioneer Fund would seem an appropriate place to make this kind of decades- long commitment. It celebrates its 70th anniversary Friday, and was among the first five mutual funds in the U.S. Founder Philip Carret is still alive at 101 years of age.
Still An Influence
The present manager, John Carey, says the founder stopped making day-to-day decisions about the fund in the mid-'80s.
''He is still an influence, though he decided when he turned 100 maybe he would step down,'' Carey said. ''Independent-minded, value-oriented was Phil's philosophy.''
Since its inception, Pioneer has racked up an average total return of almost 13% a year. The S&P 500's average return for the same period was nearly 11%. Pioneer has earned an A from IBD for its 36-month return of 109%.
Carey, 48, is among only half a dozen people who've led the fund over the decades. He joined Pioneer right after completing his doctorate in history at Harvard.
Pioneer's value-oriented style still guides Carey's buying decisions. Like his predecessors, he also tends to hang onto shares once he buys them. Carey says annual turnover among the fund's 125 stocks has averaged 20% over the last 30 years.
The fund's top holding is Schering-Plough, at 3.5% of the $4 billion portfolio. Bank of New York, IBM , Ford and National City Corp. round out the top five, with T. Rowe Price , Bell Atlantic and Compaq close behind. |
