“Buy And Hold” Investing Dying, Or Maybe Dead? Let’s Check With The Grandkids

So What Can We Learn Here About The “Buy And Hold Model”?

Long-term readers of the OPTIMIZER may recall our series of experiments with buy-and-hold investment —mainly via DSPPs (Direct Stock Purchase Plans managed by transfer agents)—that began when our first grandchild was born in 2003 and continued through grandkid # 3 in 2005, after which came the dot-com and financial industry crashes, which led us to sit the sidelines on this strategy through grandkids 4, 5 & 6 as we waited for the smoke to clear.

So it’s more than time to see how buying and holding, and systematically reinvesting dividends for them actually DID:

For little Emily Sophia, here’s what we bought in January, 2003, and the current value:

$1,000 Bank of America..Thanks for buying Countrywide, BofA. What a bad bargain! ……………..$330

$1,000 Walt Disney…Triple the money+! Thanks much, Uncle Walt…………………………………$3,449

$1,000 Pfizer…Overpaid hugely for Warner-Lambert & lost even mo’ mojo afterwards……………$1,211

$1000 Southern Company…Thank you, Southern ladies and gentlemen!……………………………$2,540

$1,000 3-M..(Had to buy the 1st shares thru a broker – which cut Em’s return by $100) ………$1,525

TOTAL FOR EMILY’S $5K after 10 years …………………………………………………………….$9,055

(+81% or 8% per year: Emily would have doubled her money if 3M had a DSPP!)

For Ava Elizabeth, now 6, here’s what we bought in February, 2005 – and how she did:

$1,000 Ameren…It’s been a rocky road here: yield rose but stock fell faster ………………………. $982

$1,000 BP…….Oi! Oi! That oil spill! ………………………………………………………………………… $717

$1,000 Bank of America…Most of Ava’s $1k has gone to money heaven……………………………… $230

$1,000 Pepsico…Hasn’t really ‘hit the spot’ for Ava……………………………………………………. $1,341

$500  Merck…………………………………………………………………………………………………..  $800

$500  Pfizer …………………………………………………………………………………………………..  $648

TOTAL for Ava’s 5K after almost 8 years……………………………………………………………. $4,718

(-6% total, or -.75% per year)

For #-2 son’s first-born, here’s what we bought for little William Hagberg, in July, 2005:

$1,000 BP……..Oi! Oi! Oi! Oil spill ……………………………………………………………………………. $717

$1,000 IndyMac Bancorp…Oi again! Seemed so smart a Co, but went to ZERO! …………………………-0-

$1,000 Pfizer…(Should’a split w Merck, like we did for Ava!)…………………………………………… $1,360

$1,000 Southern Company (A dandy return on investment – esp v. Ava’s Ameren) ……………….. $1,700

$1,000 YUM! Brands…(YUM! Very tasty indeed!)………………………………………………………… $2,733

TOTAL FOR WILLIAM’S 5K after 6 1/2 years …………………………………………………………. $6,510

(+30% or 5% per year)