alive

contains ads
oh, funny. my thought before beginning this post was "better sell something".
that was in response to "trouble".
Graham (here on Wikipedia) divided inteligent investors, i.e. informed investors, into two groups, defensive and enterprising. For defensive investors the top priorities are safety and ease of application, and the most defensive strategy was, as described by Graham in the twentieth century, holding all the DOW 30 plus 50% of "A rated bonds". Today that translates into buying S&P 500 index shares. Warren Buffett says "I like Vanguard". (I haven't gotten to it, but this is probably sage advice and good information. For Wikipedia on Vanguar go here.) But Graham also lists seven or nine stock selection criteria for the defensive investor. The enterprising investor can then select stocks that meet most of those criteria but miss on one or another in pursuit of better bargains and greater returns.
From 18 stocks returned by the full defensive scan on 2/2/2016 I have selected one. It meets all the defensive criteria but one. It is not presented as being the best of the best - I simply needed to pick one and took a look - but I kind of like it.
Graham's student, Warren Buffett, extended Graham's theory emphatically in the direction of long term investing. He seeks, he says, stocks he can buy and hold "forever". Using Graham's rules to look for bargains I have begun asking myself, when I'm looking over a company, whether it is something that will be around forever. About the stock I've selected today I have, as I say, a good feeling, even though it's not a defensive investment. It's an enterprising one.
Buffett also "concentrates his bets", and here, I'm afraid, I don't know. I'd probably be more comfortable with the index fund strategy.
Searching Google for "compound interest calculator" I landed here. It is my understanding the S&P 500 has reliably gained 8% per annum over thirty year periods. Using the calculator I find that a monthly investment of $100 compounded at the 8% annual rate becomes about $150,000. In fifty years it becomes about a million.
What can I say? We had better invest more ... and also be more enterprising. Let's invest $300 a month and put $200 in the index fund and invest the other $100 in more enterprising picks.