Most of us have seen the classic 1940’s film, “Citizen Kane.” Over the years critics and film buffs have raved about how advanced, from a technological and stylistic framework, the film was, for its time. And about how lasting and influential the pioneering filmmaking concepts introduced by Orson Welles have been on subsequent generations of filmmakers. All well and good, but upon seeing the film for the first time, thanks to a showcasing of this epic work at Melnitz Theatre on the UCLA campus back in the 80’s, a narrative biographical snippet of Kane the empire builder, stood out for its significance, to my mind, far above all other aspects of the film. In effect the line went as follows: “Kane made his fortune not by investing, but by collecting things of value.”
The positive implications of this statement, for investors of every generation, cannot be over-stated. It begins with the ill-advised building of a portfolio designed, with input from one’s stockbroker, to “beat the market.” March 10, 2000 was typical of this short-sighted approach – it was called “The Dot-Com Crash.” And, just over a decade later, countless investors are still trying to dig out from under the rubble and carnage of what proved to be a redux version of 1929 and 1987, and what has been superseded by the yet untangled Wall Street and housing collapse of 2008 buy nem. (This is going by the assumption that the current rally of equities and Dow index levels is the latest smoke and mirrors sucker trap for investors, and a house of cards ready to again collapse in the wake of our nation’s spiraling out of control debt-ceiling and USD decimation, along with the implications of double-digit unemployment upon our economy.)
Nevertheless, intrepidly forging ahead, you want to invest in the market at this time, but given the historically documented perils of doing so, what might constitute an intelligent approach? How about taking a cue from the investment philosophy attributed to the fictitious character Citizen Kane (which was loosely based upon the life of an early 20th Century media mogul), and build an estate designed to weather the turbulent market storms which devastate the millions of investors who are out for a quick buck, not for the long haul?
This focus begins with isolating entire industries which have a history of overcoming market tide and economic reversals, in lieu of loading up on so-called “hot” sectors and individual stocks. What follows is a list of 12 leading “Blue Chip” industries, together with some researched and deemed stable and attractive companies within these industries, as a sampling of equities which would emboss anyone’s portfolio at all times, regardless of the economic and investing climate…
Gold Mining Stocks (abx.to, nem, g.to)
Real Estate Stocks (spg, vno, bxp)
Oil Stocks (oxm, cvx)
Wine Stocks (stz, deo)
Diamond Stocks (hwd, bhp, tif nile, aauky.pk)
Hotel Stocks (hot, mar)
Computer Software Stocks (msft, intc)
Pharmaceutical Stocks (nvo, bax, agn)
Investment Banking Stocks (bac, wfc, ms, jpm)
Communications Stocks (telny.pk, amov, cht, tndm)
Cosmetics Stocks (lrlcy.pk, rev, el)
Auto Manufacturing Stocks (rr.l, ddaif.pk)
The question before you is this: Do you think any of these industries or any of these mega-market cap companies will fold in a recession and prove to be a lost investment? Fact is the time to load up on value-investment stocks is when the dollar cost averaging factor is at its most attractive, when prices are low. Same as you want to buy real estate in a depressed market, not at the top of the market. You really think Rolls Royce (rr.l), or Daimler (ddaif.pk), manufacturer of the Mercedes Benz line, are going anywhere in hard times? The above-listed industries neither experience the highs nor the lows of the lesser-essential industry market components, and are not vulnerable to “dot-com” overnight liquidations. Suppose you had been in some of the above-listed stocks back in 2000, instead of letting your broker churn you into oblivion with promises of an early retirement, would you be better off, today?
The happy question for successful value-based investors is what to do with capital gains, reinvest in the source of those profits, or diversify? Well, some of the above-listed industries lend themselves to tangible investment holdings, such as taking your profit in real estate stocks and then investing in real property. Or taking your profit in wine stocks and buying a vineyard. Or taking your profit in hotel stocks and buying some motels as the stepping stone to buying a posh hotel. How about taking your profit in oil stocks and buying an oil well, or buying wildcatting drilling rights, right out of the young J. Paul Getty playbook? How about taking your profit in gold mining stocks and buying an inventory of Canadian Maple Leaf gold bullion,.99999 pure one-ounce coins?