Synopsis:
Emphasizes long-term corporate performance
From the Author:
Invest in Great Companies, Don't Trade Stocks
Like many of you, I thought that the way to make money in the stock market was to turn your funds over to money managers and let them manage your portfolio. I eventually tired of investing in mutual funds that were hot one year, but tanked the next year. I grew frustrated with money managers who charged high fees, under-performed the market, and presented me with significant short-term capital gains that eroded my returns. I concluded that profits on Wall Street were driven by portfolio turnover. Unfortunately for investors, high portfolio turnover results in higher taxes, increased brokerage commissions, and nullifies the power of compounding, an investor's' greatest ally. I learned that a fool can make investing in the stock market complex; however, the most successful investors keep it simple. I soon realized that many money managers believe that great returns produce great companies. As a result, they enter numbers into a computer, and buy the stocks that the computer selects. This is a flawed approach because in reality many of the qulaities that exist within all Great Companies never show up on the analysts' computer screens. Ultimately I concluded that I needed a core investing strategy that met several criteria. First, the ideal core strategy should be tax-efficient--short-term capital gains were killing me. Second, it should be logical--I never saw the logic of investing in poorly managed companeis in bad businesses. Third, a core strategy should be understandable--investing in great companies is understandable. Fourth, core strategies should be conservative--I don't want to wake up in the middle of the night wondering if my largest holding will drop by 50% the next day. Finally, core strategies should produce index-beating returns--I'm not looking to double my money overnight, but I do want to beat the averages. I realized that the great investors of our time succeeded because they understood companies, businesses, and evaluations, and had developed simple, sound investing strategies that they followed over the long-term. My twenty-plus years of consulting with companies like Bristol-Myers Squibb, Coca-Cola, Colgate-Palmolive, Gillette, Johnson & Johnson and others taught me that there were only a handful of well-managed companies in terrific businesses. The key was to identify the qualities that existed within these Great Companies, and then invest in these companies for the long-term. I concluded that investors shouldn't buy stocks and turn them over, they should make long-term investments in Great Companies that have delivered great returns in the past and will continue to deliver great returns in the future. I refer to this style of investing as "decade-trading," as opposed to "day-trading" which in now in vogue. Great Companies, Great Returns explains why investing in Great Companies is a wonderful core investing strategy that is tax efficient, produces excellent returns, invests in large cap, financially secure companies, and meets the needs of virtually every investor. The book goes on to describe the 12 qualities that exist within all Great Companies, and identifies the 14 Great Companies that met our standards. The book is easy to read, and appeals to both novice and experienced investors. After reading the book, you can quickly implement the Great Companies investing strategy. I hope that you enjoy Great Companies, Great Returns and that you will reap the benefits of the Great Companies investing strategy.
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