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Technology Stocks : LSI Corporation -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (17751)	4/6/1999 9:22:00 PM
From: Jock Hutchinson	Read Replies (2) \| Respond to of 25814

I have included in the chart below seven companies--only one of which has paid any dividend within the past nine years. Their combined average return for this 100 month period is 20000%. You simply cannot even remotely come close to the performance of these stocks with the long-term criteria that you have selected. Why? Because the people that run these companies have the best possible dividend reinvestment policy that I know of--reinvest it in the company. I know your response. I have picked out the super winners. Fair enough Dipy. Go ahead and add seven tech losers to the list--such as AAPL or MOT or super losers like Wang. Guess what? The combined list of super winners and super losers would still obliterate any list that you could possibly compile using your formula. techstocks.com Moreover, there is a huge flaw in your logic. All of these companies have had the capabilty to double their dividends over a five year period--if they had chosen to pay dividends. But the absence of dividends in an indication of a company's strength and most importantly the investor's faith in the company . Only when a company is somewhat lacking an investor's absolute faith must it appease the investor by paying out dividends. What should Phillip Morris have done with its dividends? That's easy. It should have invested the cash flow it was generating into Microsoft, EMC, Intel, Cisco, Dell, AOL, and Yahoo. That would have been the proper strategy for a "mature" company in a cash flow positive industry. Instead, it squandered the opportunity by paying a paltry dividend that it increased year after year. Can you say "Last Call for Phillip Morris?" By the way--speaking of long-term investments in superior companies. What kind of dividend is Berkshire Hathaway paying these days? I know your answer. It has a large portfolio of companies that do pay dividends. True, but the fact that it essentially reinvests its dividends demonstrates the superior wisdom of a company investing in itself--not paying out dividends. I doubt neither the sincereity nor to some extent the wisdom of your strategy. But ultimately you must admit that your strategy is best for selecting the show and place horses in the mid-range climing races. The big stakes winners are the companys that pay nothing for a divident, opting instead to invest in their own talent and desire. And quite frankly, that strikes me as the most optimistic of all behavior--to invest in yourself and your family.