The Decline Of A Buy-And-Hold Stock

Dig through a 1990s edition of Kiplinger’s Magazine, and you will find many lists of long-term investment suggestions that include Mattel (MAT). This is understandable. The net profits on each toy sold during this period was over 10%, and the best long-term performance range during this era came between 1982 and 1996 when the stock returned 16% annually.

If you could hop into the wayback machine, it’s easy to see why Mattel would earn a spot on the list of buy-and-hold investments when you were considering the question in, say, 1993. Barbie dolls, the signature Mattel product, used to earn over 30% net profits. Back then, it cost the United States Treasury 4.5 cents to coin a nickel, and you could be technically correct in arguing that ownership of the Barbie franchise was a better license to print money than that of the U.S. Treasury.

The Hot Wheels brand proved … Read the rest of this article!

Alphabet Stock: The Standard Oil of Big Data

There are three characteristics of a business that I find highly suggestive of an excellent investment: (1) dominant industry positions; (2) high earnings per share growth rate; and (3) very large cash reserves. These types of investments, while difficult to identify, amount to what can change one’s life when a block of the stock is purchased and held for very long periods of time.

On the short list of the biggest errors I have made in my life is the omission of recognizing Alphabet, Inc. a/k/a Google as the modern day incarnation of Standard Oil, except instead of relying upon petroleum, data is its lifeblood. The analogy even holds in the event that the European Commission or the Federal Trade Commission ever results in a breakup of the technology powerhouse. Just as ExxonMobil, Chevron, and even BP (through Amoco) would be the stockholdings today of an original Standard Oil investor, Read the rest of this article!