Читать книгу More Straight Talk on Investing - John J. Brennan - Страница 24

Many financial services firms have an interest in selling you something. If you are susceptible to the cold call from a broker or financial advisor with a hot tip, pitches about the latest tax shelter, or hype over last quarter's high-performing stock market sector, you can do a great deal of damage to your financial health.

I can't overemphasize the importance of avoiding fads. I've known many investors who have gone to great lengths to do their homework and learn what they need to do to be successful. And I've seen a few of those who did all the right things turn around and make one major mistake. Fads can lead you into great errors, the kind that can wipe out gains achieved through years of patient investing. Successful investors understand that doing the right things is not the only key to success—you also have to avoid big mistakes.

My own investment experience was shaped by a trend in the late 1960s and early 1970s when there was considerable hoopla over the so-called Nifty Fifty—“one-decision stocks” that you could supposedly buy and hold forever. At the time, the 10 largest publicly traded U.S. companies were IBM, AT&T, General Motors, Eastman Kodak, Esso, Sears, Texaco, Xerox, General Electric, and Gulf. They were seen as one-decision stocks because they were world leaders with sustainable business advantages and seemingly would always dominate the market. I remember my parents, who had very little experience with investing, giving me a single share of Eastman Kodak stock for my 16th birthday in 1970 and assuring me I would be able to hold it forever and reap the rewards.

The Nifty Fifty craze lasted until the 1973–1974 bear market dragged the one-decision stocks down with all the rest. As of December 2020, none of those former market titans rank among the 20 largest-capitalization stocks in the United States; three are among the 50 largest. Six of these companies experienced bankruptcy or a merger. Only two outperformed the broad market over the 51-year period.

As for Kodak, it posted a 10.8% loss per year from 1970 to 2020. (Kodak filed for bankruptcy in 2012, and since relisting in 2013, it has lost 76% of its value.) The Standard & Poor's (S&P) 500 Index's return for that period was 10.7%.

To put it in dollar terms, the $60 gift of Kodak stock was worth 18 cents at the end of 2020. The same investment in the S&P 500 Index was worth nearly $10,250 (assuming the reinvestment of all dividends and no taxes assessed).

In addition to a warning of fads, this case study highlights the great risk of holding single stocks. It may appear easy to select the future winner, but as we'll see, it is anything but.