Wednesday, 4 July 2012

Profits for the Long Run: Affirming the Case for Quality

Buying shares in decent, profitable businesses is a good way of minimising risk, and thereby maximising overall investing returns over the long run.

Chuck Joyce and Kimball Mayer:
"Put simply, profitability is the ultimate source of investment returns. [And] contrary to popular belief, profitability can be forecasted, and superior profitability persists. Investors systematically undervalue the unexciting stability of [such] quality stocks, except during times of financial crisis. Rather than being beholden to some black box model... we would argue that a fundamental focus on profitability remains the best way to minimize the true risk with which investors should be concerned."

Read more here:  Profits for the Long: Affirming the Case for Quality

With the passing of time, the benefi ts of low-risk investing have become more widely accepted.  Today, a wide array of low-risk strategies is now available.  

From profits, come dividends. And from dividends, come investors' incomes.

The market tends to mis-price such companies, seeing them as dull dividend machines, when it should be valuing them as dull, safe dividend machines.

Read more here:

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