Worth's Greatest Stock Picks of All Time: Lessons on Buying the Right Stock at the Right Time - Hardcover

Jones, W. Randall; Fenster, J. M.

Hardcover

ISBN 10: 0609609319 ISBN 13: 9780609609316

Verlag: Crown Pub, 2002

Inhaltsangabe

The founder of "Worth" magazine explains how to draw on the lessons of investment past to pick the best stocks of the future, discussing the art of identifying market trends and of selecting the right stock at the right time.

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Über die Autorin bzw. den Autor

W. Randall Jones (editor in chief of<i> Worth®</i> magazine) is the founder, chairman, and CEO of Worth Media LLC, the parent company for <i>Worth®</i>, the financial lifestyle publication for wealthy, active investors. Randy is also the voice of the ABC News Radio program <i>A Minute’s Worth</i>, syndicated daily to 4,600 ABC radio affiliates, as well as a frequent commentator on numerous television shows, including <i>The Today Show</i>, CNBC’s <i>Power Lunch and Business Center</i>, CNN’s <i>Business Unusual</i>, and Fox News programs. He resides in Manhattan and Bronxville, New York. Julie M. Fenster has written several books on personal finance and business history.

Aus dem Klappentext

Learn How to Pick the Right Stock at the Right Time<br><br>The momentum of the bull market spoiled us all―buying stock, any stock, was an almost surefire way to make a mint. Now, in a time of turbulent markets, stock picking has become a mixture of science and high art. With thousands of stocks to choose from, how can investors determine which ones will be future winners?<br><br>We all know there’s a time to buy and a time to sell every stock, but when is the right time? Timing stock buys so that you catch upward momentum is not luck, and Randy Jones shows you how to hone your buying and selling skills by striving to analyze the factors that made winners of the great stocks in the past. Why was AT&T a great stock pick in the 1920s, Polaroid a winner in the ’40s, Xerox in the ’50s, Teledyne in the ’70s, and Intel in the ’90s? The potential of these stocks was in plain sight―for those who knew how to read the signs. And perhaps as important is understanding the signs of decline and knowing when to sell.<br><br>Randy Jones analyzes twenty-five of the greatest stocks of all time, providing a framework for evaluating their strengths that can be used for future selections, including:<br><br>• Linking great management and bottom-line profits: Who were the faces behind AIG, GE, and IBM that led to profitability, and what was it about these people’s management skills that made their companies so great?<br>• Pathbreaking products: Polaroid, Xerox, and Amgen show that products that often seem to be overnight sensations were instead developed over many years, giving investors plenty of lead time to discover their potential as great investments.<br>• The innovative business model: Avon, McDonald’s, and Dell reveal that understanding how a company makes money helps you to understand its strengths and vulnerabilities.<br>• Investing during bad times: For some companies, such as Coca-Cola, Schlumberger, and Chrysler, nationwide economic downturns can actually be advantageous.<br><br>Worth’s Greatest Stock Picks of All Time has invaluable lessons for anyone in the market today.

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From Chapter One, The Link Between Great Management and Bottom-line Profits


ETERNALLY YOUNG
American International Group
1988–2000

AIG was that actuarial’s complaint—the statistical anomaly. It was a big insurance company that was still growing at a gallop, making money in good times and bad. Not many insurance companies could say the same over the last quarter of the twentieth century, which is what made AIG so cool and consistent. In other words, it was an investor’s dream.

When analyzing the quality of a company’s management, it’s natural to start at the top. Not every CEO gets to be a national media star, so it can take a bit of legwork to learn how a company is run. The process is certainly easier when there’s continuity in the executive suite.

Investors who prize continuity hit the jackpot with American International Group. What has set it apart over the years has been management’s insistence that growth take place away from the commodity segment of the business. Every single CEO of AIG felt the same way: both of them, that is.

Two Strong Leaders = One Great Company

From 1919 to the present day American International Group (AIG) has had only two CEOs, Cornelius “Neil” Starr and Maurice Greenberg, and it’s been the better company for it. The latter is bombastic and the former was reticent, but outward personalities aside, their philosophies have reflected the same values, and given AIG a distinct corporate culture. Most of all, the romance of the insurance giant, incongruous as that phrase may be, is a deep involvement in business all over the world. Since the day AIG opened its first two-room office in Shanghai in 1919, overseas revenues have been central to the business, and accounted for about 50 percent of operating income from 1988 to 2000. The company stock was not only an insurance play, but for an individual portfolio, it also offered one-step global diversification.

Both Starr and Greenberg were alike in believing that every center in the business is a profit center, or should be. One arm could not be expected to make up for another. Greenberg in particular has long believed that innovation is essential to AIG’s growth. The company, therefore, cast a wide net, including the more mundane property-and-casualty, marine, life, and auto insurance, of course, but it also would offer the more exotic, such as insuring children in day care against kidnapping and Internet websites from hackers. With so many types of policies and different entities to sell them, “innovation” has translated into a corporate structure so complicated that AIG could be called a corporate spiderweb, woven of as many as 300 subsidiaries.

To say that Greenberg wanted AIG to grow would be an understatement; by his own confession, he has thought nothing else ever since he took over in 1968. One year into his tenure, he oversaw AIG’s first public offering of shares. The stock thrived on Greenberg’s dictum for the company—earnings growth of nearly 20 percent per year. It was easier to say than to do, but from 1968 to 1998 AIG found ways, ridding the books of lagging businesses and starting or acquiring ones with glowing potential. By the mid-1980s, the company easily hit Greenberg’s target, as assets grew by an average of 34 percent from 1984 to 1988, while in each of the four preceding years growth in earnings followed at an average clip of 27 percent. During that time, the stock price languished, due to the pessimistic perception of the whole property/casualty sector. Smart investors may have been accumulating AIG stock, but the price didn’t really start to move until 1988. That year, with Asian markets booming, Wall Street looked for companies poised to benefit. AIG was belle of the ball.

Americans were hearing a great deal about the accelerating overseas economies of the Pacific Rim and AIG offered a ride along with those “tiger” economies. The stock, which had made precious little progress between 1985 and 1988, burst out, showing that insurance could still be a high-growth industry when it encompassed practically the whole world.

From 1988 to 2000, AIG stock increased from a price (adjusted for splits) of $4.85 to $110. A $10,000 investment would have been worth $226,804 after a dozen years. Even more intriguing for investors, AIG was surefooted. The stock moved upward without a noticeable downturn or even a plateau. In that sense, it only reflected the company, which turned a profit even in years when the earnings reports of other property-and-casualty companies were laid waste by hurricanes or other natural disasters. While AIG stock easily outstripped the S&P 500 (average of large companies), as well as its own brethren in the insurance sector, it also stayed ahead of the NASDAQ average. AIG was one of the anomalies of the 1990s bull market, which was largely propelled by nascent high-tech companies: it was old company, old economy, but decidedly high-growth nonetheless.

Blatant Opportunist

One of the things that helps distinguish AIG is its origins. In 1919, fresh from service in World War I, twenty-seven-year-old Berkeley grad and lawyer Neil Starr went to Shanghai looking for opportunity. He found it, all right, in a nation of millions unable to buy their own life insurance.

The Chinese people were going uninsured because the British companies that dominated the business in China wouldn’t consider selling life insurance policies to native Chinese. The only logical reason for the English position was that actuarial tables (which predict average life spans) did not yet exist for the Chinese population. These tables are key, because normally the people who issue policies depend on tables in order to set rates. So, Starr saw quite a business. He founded American Asiatic Underwriters (AIG’s predecessor) and established a pattern when he extended his company to include life insurance for Chinese nationals, estimating longevity and setting rates that ensured a profit.

Another hallmark of Starr’s young company was that its staff was exclusively Chinese. Foreign companies in China nearly always employed their own imported managers and salesmen. Starr hired locals. As his company expanded into other Asian nations and into other types of coverage, he continued the practice of relying on native-born employees. In the late 1920s, Starr, by then married to the daughter of a Canadian missionary, returned to the United States to build up the center of his empire. He purchased several of the insurance companies that his agency represented and started new firms, too, most of them with an overseas connection. During World War II, he was especially aggressive in South American markets previously dominated by German and Italian firms. Privately held, the burgeoning insurance conglomerate made a millionaire of Neil Starr, but he began to neglect it somewhat in the late 1950s, when he had a personal crisis. (He was devastated when his wife left him for a Russian painter.)

Neil Starr’s companies, which would assume the name American International Group in 1967, were global long before most other American financial firms started to look overseas. The difference was patience, as Starr and his colleagues learned the intricate art of insurance on a mosaic of more than a hundred countries. They took the time to understand local customs and to navigate regulations that baffled many U.S. firms. One of the toughest challenges was retaining sharp employees in developing economies, where AIG training often made a worker worth more than even AIG could afford to pay.

The Next Generation

Even though AIG had thousands of policies, offered by hundreds of subsidiaries, the man Neil Starr tapped to replace him...

Details zur Ausgabe

• Verlag: Crown Pub
• Erscheinungsdatum: 2002
• Sprache: Englisch
• ISBN 10: 0609609319
• ISBN 13: 9780609609316
• Einband: Gebundene Ausgabe
• Auflage: 1
• Anzahl der Seiten: 278
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: Nicht verfügbar