<FOOLISH WORKSHOP>

Investing for the Long Now

by Ethan Haskel ([email protected])

Baltimore, MD (December 9, 1998) -- Most of the companies in the Beating the Standard & Poor's 500 Index (BSP) portfolio have been around a good while. Given that they represent some of the largest, most successful American corporations, you'd expect them to have amassed stellar long-term track records.

Ever try to find the long-term stock performance records for these well-established companies? I did, and I can tell you it's well-nigh impossible. Companies such as Ford <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %>, Mobil <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOB)") else Response.Write("(NYSE: MOB)") end if %>, and Gillette <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: G)") else Response.Write("(NYSE: G)") end if %> have been around since before the first World War, although you wouldn't know it from the available financial information. Check on the corporate websites for the BSP 30 companies, and undoubtedly you'll get a current stock price quote, often with performance information for the year to date. Some will show stock price data going back a few years. A few will have data for a decade.

I've searched for hours and couldn't find longer term performance on any single stock. The major stock quote services out there, including that of our dear Motley Fool, don't list information going back over a decade. Still, there's no problem whatsoever in obtaining price information on particular stocks (or the Dow averages) on a minute by minute basis.

If only the Long Now Foundation could help. This San Francisco-based organization believes that "Civilization is revving itself into a pathologically short attention span. The trend might be coming from the acceleration of technology, the short-horizon perspective of market-driven economics, the next-election perspective of democracies, or the distractions of personal multi-tasking. All are on the increase."

In Spirit magazine, Daniel Hillis, MIT professor and supercomputer architect, explains, "Our problem is that, literally, we cannot imagine the future. When I was a kid, thirty years ago, the future was a long way off. Dates like 1984 and 2001 were comfortably remote. Yet, in all this time, the future that people think about has not moved past the millennium. It's as if the future has been shrinking one year per year for my entire life."

Stewart Brand, founder of The Whole Earth Catalog, advances the concept. "For most of us, 'now' is about a week, sometimes a year. For some traditional tribes in the American northeast and Australia, 'now' is seven generations backward and forward... Just as the Apollo photographs of earth gave us a sense of 'the big here,' we need something which gives people a sense of "the long now."

The myopic view of the world is fueled by Wall Street, which makes its money by frenzied trading activity spurred by obsessions with short-term profits. The media joins in the madness, since there's much more money in selling "up-to-the-minute" daily investment advice than a good book on long-term investing.

How do we fight the ever-present temptation to think short-term? We need to develop an alternate reference system, a new clock, so to speak. The Long Now Foundation is developing just such a timepiece. Possibly to be located in the American southwest, this clock will tick once a year and chime once a century. A "cuckoo" will chirp on the turn of each millennium.

The long now view makes a lot of sense when considering investments. Finding extraordinary companies and sticking with them for a decade or more seems much more Foolish than chasing every fad or looking for the right entrance and exit points for each stock. There are also fewer transaction expenses, fewer capital gains taxes, and a lot less bother. Of all portfolios followed here in Fooldom, The Cash-King Portfolio seems to embody this concept the best.

Perhaps we could take a closer look at our Workshop screening strategies with an eye to the long now. Most of our strategies rely on yearly switchovers. Some even employ monthly stock rollovers. Why not find a screening strategy that trades a minimum of every two or three years, or even once a decade? The only one who might be disappointed is your stock broker.

For more fascinating information about the Long Now Foundation, visit their website.

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Beating the S&P year to date returns (as of 12-8-98):

Anheuser Busch    +47.9%
Emerson Electric  +14.0%
Ford              +58.1%
Kimberly-Clark     +9.9%
Texaco             +4.9%

Beating the S&P   +27.0%
S&P 500           +21.7%

Compound Annual Growth Rate from 1-2-87:

Beating the S&P   +20.7%
S&P 500           +17.3%

Check out the latest file updates for the Workshop:
New Rankings | 1998 Returns | New Database