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January, 2003


After three years of down markets, it would seem we are definitely due for one in which stocks go up for a change. As so many other assets seem suspect now - money market funds pay only about .5% a year; ten-year government bonds offer yields of just 4±%; real estate's bubble may be about to burst; gold is speculative and already at its highest level in a decade or so; collectibles are usually better as a hobby than an investment - the biggest risk now may not be to purchase stocks but to have too little exposure to equities.

Short-term outcomes can almost never be consistently predicted for stocks or stock mutual funds. However, for the mid- and long-term, carefully selected equities would appear to have excellent prospects.

Cable/broadcasting/telecommunications and health care/pharmaceutical sectors have been especially beaten down and would seem to offer particularly good potential.

Our favorite assets in these respective areas are: Liberty Media (L) (recent price $10.24); and Vanguard Health Care Fund (VGHCX) (recent price $98.40 - minimum investment $25,000). VGHCX has performed quite well long-term, with a ten-year 18.7% compound annual record.

With concerns over company use of profits and a presidential push for relief from dividend double-taxation, high-yielding stocks may again be more attractive. We like three with above average yields: General Electric (GE) (recent price $25.03) (3.03% dividend); SBC Communications (SBC) (recent price $27.85) (3.88% dividend); and Washington Mutual (WM) (recent price $35.29) (3.17% dividend).


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)

Value Investing / Main Index / previous / next