Different strokes for different folks. Some of you will only feel comfortable with conservative blue chip type stocks. Nothing wrong with that. I'll show you that the system works fine with Blue Chips. I took a group of Blue Chippers and will show you an excellent return for your money. I took six Baby Bells - Ameritech, U.S. West, Bell South, Southwest Bell, Pacific Telesis, and NYNEX plus National Semiconductor, Ford, General Motors, and Chrysler.
I originally charted these 10 stocks for three years ending in September 1987. Over Christmas 1993, I got curious how these 10 did since 1987. So I charted them through the end of 1993. I've left the spreadsheets for the first three years in the book but didn't want to waste the paper including the other six years. I will update the gain chart so you can see how you did for nine years owning the SAME 10 STOCKS. I ignored commissions and dividends (should about cancel each other out) and rounded off buys and sells to the nearest whole share.
Here are the results: you started with $100,000 ($10,000 per stock). Remember you can start with $1,500 per stock if that is what you can afford. At the end of the first year, your initial $100,000 had grown to $111,752 for an annual return of 11.7%. By the end of the second year, your original $100,000 had grown to $141,864 for a two-year return of 41.8%. You finished at the end of the third year with $158,998 for a 58.9% return for three years. That strikes me as a really good return on a conservative investment. Remember you still have better prospects ahead. I won't keep you in suspense any longer - at the end of 9 years your $100,000 has grown to $377,270 for a compounded annual gain average of 16%. The only negative found was that total cash went negative for a three month period as a couple of stocks had very large buys. Cash still only needed a loan of $5,500 in the seventh year when your portfolio was worth over $223,000. See Chapter 11 for more information on cash.
You would still have good prospects ahead with these stocks (I really would dump General Motors and find another like Intel or Microsoft). These are the perfect type stocks for the investor who wants good profits and doesn't like picking stocks.
You can always make good money playing conservative stocks. In the following pages I'll show you your year by year profits for all nine years and the system spreadsheets for the first three years. You'll see I adjusted the cash/stock ratio once a year and used any extra cash above 1/3 of the portfolio total to buy extra shares.
| AMERITECH | 12% | 11901 | 64% | 16429 | 58% | 15831 | ||
| US WEST | 12% | 11944 | 58% | 15834 | 52% | 15178 | ||
| BELL SOUTH | 12% | 12107 | 69% | 16944 | 53% | 15270 | ||
| SOUTHWEST BELL | 12% | 11970 | 53% | 15304 | 54% | 15382 | ||
| PACIFIC TELESIS | 11% | 11191 | 55% | 15498 | 58% | 15829 | ||
| CHRYSLER | 12% | 11835 | 31% | 13145 | 89% | 18916 | ||
| NAT'L SEMI | -2% | 9843 | -9% | 9131 | 42% | 14189 | ||
| NYNEX | 12% | 11506 | 62% | 16195 | 72% | 17227 | ||
| FORD | 0% | 10000 | 32% | 13194 | 93% | 19254 | ||
| GENERAL MOTORS | -6% | 9455 | -2% | 9938 | 15% | 11671 | ||
| TOTALS | 12% | 111752 | 42% | 141612 | 59% | 158747 |
| STOCK | % GAIN | PORT. | % GAIN | PORT. | % GAIN | PORT. | ||
|---|---|---|---|---|---|---|---|---|
| FOURTH | VALUE | FIFTH | VALUE | SIXTH | VALUE | |||
| YEAR | YEAR | YEAR | ||||||
| AMERITECH | 62% | 16166 | 104% | 20367 | 83% | 18269 | ||
| US WEST | 57% | 15657 | 92% | 19160 | 87% | 18660 | ||
| BELL SOUTH | 59% | 15873 | 91% | 19143 | 90% | 19034 | ||
| SOUTHWEST BELL | 62% | 16244 | 103% | 20274 | 90% | 18966 | ||
| PACIFIC TELESIS | 655 | 16479 | 129% | 22912 | 103% | 20299 | ||
| CHRYSLER | 52% | 15203 | 78% | 17752 | 127% | 22656 | ||
| NAT'L SEMI | 54% | 15381 | 84% | 18418 | 113% | 21329 | ||
| NYNEX | 69% | 16881 | 100% | 19996 | 87% | 18696 | ||
| FORD | 103% | 20297 | 116% | 21591 | 65% | 16472 | ||
| GENERAL MOTORS | 14% | 11421 | 46% | 14643 | 25% | 12489 | ||
| TOTALS | 60% | 159602 | 94% | 194256 | 87% | 186870 |
| STOCKS | % GAIN | PORT. | % GAIN | PORT. | % GAIN | PORT. | ||
|---|---|---|---|---|---|---|---|---|
| SEVENTH | TOTAL | EIGHTH | TOTAL | NINTH | TOTAL | |||
| YEAR | YEAR | YEAR | ||||||
| AMERITECH | 105% | 20475 | 124% | 22405 | 166% | 26584 | ||
| US WEST | 102% | 20156 | 116% | 21575 | 148% | 24782 | ||
| BELL SOUTH | 91% | 19116 | 108% | 20764 | 129% | 22863 | ||
| SOUTHWEST BELL | 112% | 21210 | 148% | 24793 | 204% | 30402 | ||
| PACIFIC TELESIS | 128% | 22757 | 137% | 23697 | 181% | 28121 | ||
| CHRYSLER | 210% | 30957 | 394% | 49401 | 695% | 79503 | ||
| NAT'L SEMI | 242% | 34155 | 543% | 64343 | 819% | 91934 | ||
| NYNEX | 103% | 20334 | 123% | 22303 | 142% | 24184 | ||
| FORD | 113% | 21301 | 175% | 27464 | 226% | 32573 | ||
| GENERAL MOTORS | 30% | 12951 | 24% | 12487 | 63% | 16324 | ||
| TOTALS | 123% | 223412 | 189% | 289232 | 277% | 377270 |