By John Reizner |
In my eBook, A Way to Wealth – The Art of Investing in Common Stocks, I outline my investing journey through both good and awful stock markets, and tell how I am to the current date winning the battle for long term profits in equities and mutual funds. The eBook profiles my unique technique for profitably investing in stocks and mutual funds. Much of my results have been achieved and profits retained by choosing stocks and funds more conservatively.
Decades ago, during the “educational” phase of my investing career, I wanted my profits in the most wealth destructive manner possible - rapidly. I avoided sound mutual funds which might have much earlier in my career started my wealth-building process. This tendency led me to invest in the volatile technology stocks of the time, many of which later fell out of favor. Many of those stocks in which I put my money 30 years ago, just like the ones many others recently invested in the dot com, “get rich-quick” technology period of the 1995-1999, will never see their old highs again. New bull markets usually have leaders different than the previous bull, so the techs of any previous buoyant market period may not be around or may be insignificant 5 or 10 years in the future. A diversified portfolio of well-chosen stocks, in this case, will get you a lot further than buying all the hot stocks of the day.
In the 1980’s, I noticed and began my research in the 1990’s into how following selected stock buying behaviors of the best investors, money managers, and company officers can lead to excellent results. This is the basic tenet I learned after years of experience with the same research materials, as well as observation and investing in the market: one is better choosing equities that are being bought by at least one of the smartest money managers around and the officers running the company as defined in my eBook. It takes time, sometimes lots of time, and patience to make money in the stock market. This often leads to investment in blue chips which may be experiencing temporary difficulties. My highly profitable investment in Wells Fargo in the early 1990's is an example of such a strategy conforming to the principles of my eBook profiled in the chapter entitled “Multiples of My Investment.” My investment in Johnson and Johnson also in the early 1990's as described in my eBook, against a stark background for pharmaceuticals, provided profits of many times my investment. These are major companies. The market will never fail over time to provide you with opportunities for stock investment.
For many investors in the meantime, investing in well managed more conservative, stock mutual funds can provide a solid foundation for future wealth and retirement. I have tested this technique with my own money: choosing the more conservative value mutual funds rather than the hot faddish ones of the day. To date most of those I chose for myself, given a 10-15 year period invested, multiplied my original investment several times over. To tell you what could go wrong, I have an acquaintance who once told me before the 2000-2003 bear market, that he had put his money in a mutual fund which had gone up 200% in each of the preceding two years. This particular fund’s money manager was known for an aggressive trading style and had been often profiled in the media. When the late 1990's market fever broke, the fund shares collapsed and there were redemptions. It became one of the worst performing funds. It seems that this story is repeated in some form in every market cycle. When I later saw my acquaintance I asked him how he was doing, he answered by stating flatly that he was not in the market anymore. The moral: look for funds, preferably value types whose managers are looking for equities selling at bargain prices, where performance gains are just fine through good markets and losses smaller in market dips. There are excellent managers out there who can accomplish a substantial growth of your invested capital over time. Look in my eBook for more specifics on both investing in individual stocks and mutual funds.