Dipy: As your own list indicates, you have a nice return on these stocks, (especially since you have prominently deleted your beloved MO, since it hasn't performed that well over the past number of years).
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But the 100 month average return of 400% on your list doesn't even come close to the 100 month average return of 20000% for my list of tech bellweathers in the past decade.
techstocks.com
Your largest flaw? You have tried to extrapolate the history of techstock price performance in the 70s, and used that as a benchmark for the markedly inferior performance of the other bellweather stocks relative to the bellweather tech stocks in the '90s. Plain and simple, you have missed the boat. The opportunity to make enormous sums of money during the 90s by investing in tech stocks has simply passed you and others by. The risk takers who have ignored the so-called sage advice of Mogdallini's grandaughter (her only real claim to fame) have sat back in self righteous indignation while those cognizant enough to recognize the new investing paradigm of our technology driven consumer society have made enormous sums--the type of returns that dwarf the returns from stocks that you espouse.
I have been investing in the market steadily since 1963, and I can tell you a little bit about some of those blue chip companies on your list-- a lot of them were the supernova consumer growth stocks of thirty five years ago, just as the tech stocks are today . I remember the admonitions from the Dipys of the day about putting one's money into a small but explosively growing company like Wal Mart or a "movie" company like Disney or a one hit wonder like 3M, or for that matter a company that "just makes hamburgers" like McDonalds. But those who saw the explosive growth in these consumer areas, forged ahead and made fortunes with their investments--only to later sit by and watch these investments touted as blue chip consumer non-durables that were somewhat recession proof because "people are always going to buy toothpaste, hamburgers, movies, drugs, scotch tape, etc." Rather the Dipys of the day would caution prudence by putting money into things that had proven historically reliable like meat processors, automobiles, and steel. The result was that the people who recognized the shift to a different sort of consumer paradigm were amply rewarded, while those who clung to the old consumer paradigm were punished.
(Two personal reflections: Of the ten largest businesses in Chicago in 1963, four were meat processors--none of them have survived. The second reflection comes from my father who passed away about a month ago at the age of 94. Not only did he remember a number of bear markets, he remembered the Dust Bowl, a depression, and a World War--all of which didn't allow him to have a "normal" adult life until he was 42. He recalled vividly how people did lose enormous fortunes in the market. However, he also recalled that the people who did not make money in the market in the twenties--i.e those who opted to sit on the sidelines were far worse off during the depression than those who did invest and make money in the 20s.)
Your reference to the performance of the tech stocks in the nifty fifties list from 1972 is less than meaningless. These stocks were reflective of technology at the time, and technology at the time was almost exclusively institution driven. Tech stocks today are consumer driven, reflecting the sort of change in consumer tastes that comes about perhaps once every thirty to forty years. Whereas in the early part of the century the super growth in consumer goods was in autos, meat, and steel, and later in the mid part of the century, the super growth in consumer goods was in fast foods, wholesale shopping, and mass entertainment, today the supernova growth is in consumer tech.
And Dipy, just as people are always going to buy toothpaste, people are always going to go online, purchase computers, and upgrade their technological capabilities.
LSI is smack dab in the middle of supplying much of the chips for the equipment for this consumer expansion, which peripherals is just on the cusp of exploding. As an independent maker of high end chips, it has an extremely impressive list of products in the high end growth area of Internet expansion. Yes, this is a competitive area, but Mr. Corrigan has chosen the high end of the business in term of quality, and it is very apparent that over time, his strategy will be enormously successful for the LSI shareholder. How successful? Between PS II, Fibre Channel, and networking, LSI has the opportunity to make $4.00 a share by 2001. That equates to a share price of $100 within the next 18 months.
By contrast, you are looking wistfully at the past, assuming that what worked twenty five years ago will work today. It does, but not in the sense that you think it will. Investing in companies with explosive growth today is the same outstanding practice as investing in companies with explosive growth was thirty years ago. What sector that growth is in doesn't mean a damn thing--except that it should be related to the consumer sector. (Say it ten times Dipy over and over, and the message will sink in) Explosive growth in the consumer sector is where the money is at because over time, tastes do become calcified to some extent.
Will some of today's tech darlings be the blue chips of tomorrow? Without a doubt. And thirty years from now, you or someone like you will be espousing the same tune about long-term investing--using examples of AOL, MSFT, CSCO, INTC, and DELL as the most prudent type of investing. But by that time, the real money will most likely be earned in the super growth companies of the time. What will that be? My guess is that biotech will ultimately become the winning play. The same biotech that was far too premature as a play in the early 90s,just as the tech was far too premature a play in the 70s.
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