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February, 2001


There are a number of profitable investment approaches. For any strategy to work, though, it is important to follow it consistently, once having satisfied oneself that the means chosen is a good one. But because there are so many ways of going about the business of building assets into a significant nest egg, it is also best to choose a system that fits one's own personality. Here is just one way. It captured my imagination over a decade ago and has worked OK for us. It may for you as well. It is as simple as 1, 2, 3.

Professional investment managers were asked what would be a good approach for the average investor who wanted to use stocks to get ahead with investing. They assumed that such a person probably would not be terrific at analyzing and picking stocks for him or herself or at knowing when and what to sell.

Their advice:

1. Get suggestions from financial consultants and/or good investors on the best investments to buy and hold essentially forever and buy a portfolio of ten of them.

2. But since even the finest investment professionals make mistakes, after each year, from the initial purchases, sell off the asset that has performed the worst, putting the net proceeds into the asset which has performed the best.

3. However, once the number of assets has thus been reduced to five, these remaining high performers should be held "forever."

If we were purchasing such a list today, what might it contain? Individual investors can come up with such a group on their own. My bias being toward long-term value assets, the recommended picks have all been favorably mentioned in recent weeks by at least one major equity analyst who shares this philosophy:

CompanySymbolRecent Price
Freddie Mac(FRE)$67 5/8
TriContinental Corp.(TY)$22 11/16
Berkshire Hathaway(BRK.A / BRK.B)$69,800 / $2328
Citigroup, Inc.(C)$54
USG Corp.(USG)$21 11/32
Tricon Global Restaurants(YUM)$37
Toys 'R' Us(TOY)$25 5/16
Leap Wireless Int'l.(LWIN)$36 1/16
Snap-On, Inc.(SNA)$29 11/16
General Motors(GM)$54 1/8

As always, we suggest that before buying any of the above the reader first carefully research them and become comfortable with both the assets and the overall strategy.


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.

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