The ideal stock portfolio benefits from the powerful effects of compounding by generating a high average annual return over the course of many years. It is unwise to overemphasize one year returns because it may lead to poor, emotional decisions. In fact, having a long-term horizon provides a competitive advantage over short-term traders, including most money managers and institutions. On the other hand, we recognize that annual returns may be somewhat instructive and of interest to our readers. Accordingly, we are providing the following Table 1 to illustrate the returns achieved by our individual stock selections (excluding Wells Fargo as it is a recent selection) over approximately the past year and Table 2 comparing the overall return to the return of the S&P500.
Table 1:
Company Purchase Date Initial Price* Closing Price** Return
Hershey 6/11/2018 $92.41 $138.26 50%
Starbucks 7/2/2018 $49.06 $87.79 79%
JD.com 7/24/2018 $35.31 $31.03 (12%)
Live Nation 10/25/2018 $50.70 $69.99 38%
Facebook 12/21/2018 $124.95 $196.40 57%
Totals $352.43 $523.47 49%
*Next closing price after publication
**Closing price on July 5, 2019
Table 2:
Durable Stocks 49%
S&P500 7.6%
As indicated above, the approach employed by Durable Stocks, purchasing a small number of companies with durable competitive advantages at reasonable prices relative to their intrinsic values, yielded a return of 49% compared to a return of only 7.6% for the S&P500 during the same period. Significantly, this result was achieved with little risk of permanent loss of capital in view of the strength of the companies and the margin of safety offered by their prices relative to their intrinsic values.
Published by Durable Stocks on July 7, 2019
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