Initial Value $49,945.40
June 15, 2012
Update Value $94,976.50
December 8, 2018
These are the times that try our souls – especially if you’re a buy and hold investor.
As stocks tumbled last week, the obvious temptation was to sell everything and run for the hills. But doing so would defeat the whole purpose of buy and hold. You have to stick it out for the long haul, which means in good times and bad. That means choosing good companies, staying with them, and avoiding emotional reaction to market swings.
The strategy works. Despite the sharp correction we experienced this fall my Buy and Hold Portfolio gained ground in the latest six-month period and is averaging a return of better than 11% annually since it was launched in June 2012.
The goal of this portfolio is very simple – invest your money in great stocks and then hold on to them, no matter what the market is doing. Over the long term, you should enjoy very healthy results even though there will be times, like now, when your patience will be sorely tested.
The Buy and Hold portfolio focuses on blue-chip stocks that offer long-term growth potential, but it also has a small fixed-income holding. The original weighting was 10% for each stock with a bond ETF given a 20% position.
I used several criteria to choose the stocks including a superior long-term growth profile, industry leadership, good balance sheet, and relative strength in down markets.
The objective is to generate decent cash flow (all the stocks but one pay dividends), minimize downside potential, and provide slow but steady growth. The target rate of return is 8% annually.
The new portfolio value (market price plus retained dividends/distributions) is $99,163.43, compared to $97,781.38 at the time of the last review. That represents a gain of 1.41% over the period. That may not seem like much but given the recent market retreat, I think most readers would be content with any gain at all.
Several of our stocks turned in solid gains in the period, especially BCE, UnitedHealth, and Disney. The big losers were Alphabet and TD Bank – both sound companies that will recover.
Since inception, we have a total return of 98.5%. That represents an average annual compound growth rate over six and a half years of 11.13%, which is well ahead of our 8% target.
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