The Greatest Stock Picks of All Time: Lessons on Buying the Right Stock at the Right Time - Softcover

Jones, W. Randall

Softcover

ISBN 10: 140005141X ISBN 13: 9781400051410

Verlag: Three Rivers Press, 2003

Inhaltsangabe

Worth magazine founder Randy Jones shows how to pick the best stocks of the future by learning the lessons of the greatest stocks of all time.

In a turbulent investing environment, luck must be the only way to score in the stock market, right? Not so, says Randy Jones. The people who bought McDonald’s in 1965 or Chrysler in 1980 weren’t just fortunate. Most of them knew how to read the signs of a good stock and jumped on the opportunity. Such stocks exist in every economic climate, and Jones shows readers exactly how to find them.

In The Greatest Stock Picks of All Time, Jones describes twenty-five of the best stock picks ever and explains what made them great. He shows how the smartest investors find companies that are about to zoom, giving readers a framework for analyzing stocks today. For example, Jones explains why AT&T was a great stock pick in the 1920s, Polaroid in the 1940s, Xerox in the 1950s, Teledyne in the 1970s, and Intel in the 1990s. He then guides readers to discover stocks that represent the same kinds of pathbreaking products, innovative business models, great management teams, and other harbingers of success that will certainly be characteristic of the great stock picks of tomorrow. The Greatest Stock Picks of All Time has invaluable lessons for anyone in the market today.

“Today a lot of people think they should murder their brokers, but my advice is don’t. You can stay out of jail and make a lot of money by learning from the greatest stocks of the last century and by heeding this advice for your future investments.”
—Dominick Dunne

Über diesen Titel

Über die Autorin bzw. den Autor

W. Randall Jones (editor in chief of Worth® magazine) is the founder, chairman, and CEO of Worth Media LLC, the parent company for Worth®, the financial lifestyle publication for wealthy, active investors. Randy is also the voice of the ABC News Radio program A Minute’s Worth, syndicated daily to 4,600 ABC radio affiliates, as well as a frequent commentator on numerous television shows, including The Today Show, CNBC’s Power Lunch and Business Center, CNN’s Business Unusual, 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.


From the Hardcover edition.

Aus dem Klappentext

<i>Worth</i> magazine founder Randy Jones shows how to pick the best stocks of the future by learning the lessons of the greatest stocks of all time.<br><br>In a turbulent investing environment, luck must be the only way to score in the stock market, right? Not so, says Randy Jones. The people who bought McDonald’s in 1965 or Chrysler in 1980 weren’t just fortunate. Most of them knew how to read the signs of a good stock and jumped on the opportunity. Such stocks exist in every economic climate, and Jones shows readers exactly how to find them.<br><br>In <b>The Greatest Stock Picks of All Time</b>, Jones describes twenty-five of the best stock picks ever and explains what made them great. He shows how the smartest investors find companies that are about to zoom, giving readers a framework for analyzing stocks today. For example, Jones explains why AT&T was a great stock pick in the 1920s, Polaroid in the 1940s, Xerox in the 1950s, Teledyne in the 1970s, and Intel in the 1990s. He then guides readers to discover stocks that represent the same kinds of pathbreaking products, innovative business models, great management teams, and other harbingers of success that will certainly be characteristic of the great stock picks of tomorrow. <b>The Greatest Stock Picks of All Time</b> has invaluable lessons for anyone in the market today.<br><br>“Today a lot of people think they should murder their brokers, but my advice is don’t. You can stay out of jail and make a lot of money by learning from the greatest stocks of the last century and by heeding this advice for your future investments.”<br>―Dominick Dunne

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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: Three Rivers Press
• Erscheinungsdatum: 2003
• Sprache: Englisch
• ISBN 10: 140005141X
• ISBN 13: 9781400051410
• Einband: Taschenbuch
• Anzahl der Seiten: 288
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: Nicht verfügbar